Inox Leisure Limited v. Goa State Infrastructure Development Corporation Limited
2014-10-14
B.P.DHARMADHIKARI
body2014
DigiLaw.ai
Judgment 1. Rule. Heard forthwith with the consent of the parties. 2. Mr. Jain, learned Counsel waives service of behalf of respondent. 3. By this petition filed under Article 227 of the Constitution of India, the petitioner Company challenges the order dated 07/09/2013 passed by Principal District Judge, Panaji (“PDJ” hereinafter) allowing the application at Exhibit- 20 for amendment of petition under Section 34 of Arbitration and Conciliation Act, 1996. 4. The earlier orders passed by this Court showed an effort being made to dispose of the matter finally at the stage of admission. It is not necessary to narrate facts for present adjudication. Pendency of application filed under Section 34 of above mentioned 1996 Act by the present respondent challenging the award dated 28/12/2009 by Arbitrator is not disputed. The application seeking leave to raise additional grounds vide Exhibit-20 came to be filed in the month of January, 2012 i.e. more than two years after the filing of Section 34 application and it has been allowed by the impugned order dated 07/09/2013. 5. It is in this background, Senior Advocate Shri Kantak with Advocate Nadkarni has submitted that totally new ground of bias of Arbitrator is sought to be added after expiry of period of limitation stipulated under Section 34. He submits that outer period envisaged therein is of 90 days and application has been filed more than 2 and half years back. Addition of new ground in such circumstances is not legally permitted. He seeks support from Division Bench Judgment of this Court reported at 2001(2) All MR 322 in the case of “Vastu Finvest & Holdings Pvt. Ltd. V/s. Gujarat Lease Financing Ltd.” and judgment of Hon'ble Apex Court reported at 2010 (4) SCC 518 in the case of “State of Maharashtra V/s. Hindustan Construction Company Limited.” 6. He has invited attention to consideration of this aspect in the impugned order. According to him, the impugned order erroneously concludes that the amendment is nothing but the elaboration of grounds already raised and, therefore, the learned P.D.J., on account of this impression allowed it. He has invited attention to grounds looked into by learned P.D.J. to submit that said grounds do not support the issue of bias now sought to be added. He contends that reply opposing he prayer for amendment has not been properly appreciated.
He has invited attention to grounds looked into by learned P.D.J. to submit that said grounds do not support the issue of bias now sought to be added. He contends that reply opposing he prayer for amendment has not been properly appreciated. In the alternate, he also drew support from the paragraph 13 of the Division Bench judgment of this Court mentioned supra to contend that if such ground was already contained in arbitration petition, there was no need to file amendment application. He has invited attention of Court to Provisions of Section 12(3)(a) and (4) of 1996 Act to urge that bias need to be raised at the earliest possible opportunity and before Arbitrator himself. He contends that amendment is sought only by way of an after thought. 7. Senior Advocate Shri Jagtiani with Advocate Shri Jain has supported the order passed by learned P.D.J. He argues that even in arbitration proceedings amendments are to be allowed liberally if other side is not taken by surprise and the contentions raised are supported by material already on record. He submits that here the bias became apparent only after the receipt of copy of award. Use of intemperate words by Arbitrator expose deep rooted venom against the Advocate for respondent and the bias therefore has vitiated entire order and application of mind by learned Arbitrator. The relevant extracts from the award are pressed into service by learned Senior Counsel. He contends that those observations and award of arbitrator are already on record and on the basis of that material, a pure question of law is sought to be urged by the respondent. He has invited attention to paragraphs 11, 12 and grounds S and CC of application under Section 34 to urge that the pleadings therein already show roots for such amendment and hint at bias only. He, therefore, submits that due to limited jurisdiction available under Article 227, no case is made out warranting interference. 8. In reply arguments, Senior Advocate Shri Kantak has very briefly reiterated the legal position in this respect. He also points out that the award was made by Arbitrator on 28/12/2009 and present respondent filed an application before him thereafter i.e. on 25/1/2010. But in that application, no grievance about bias was made.
8. In reply arguments, Senior Advocate Shri Kantak has very briefly reiterated the legal position in this respect. He also points out that the award was made by Arbitrator on 28/12/2009 and present respondent filed an application before him thereafter i.e. on 25/1/2010. But in that application, no grievance about bias was made. He further submits that Section 34 application came to be filed by them on 25/3/2010 and therein also the alleged bias of arbitrator has not been questioned. Hence the amendment as sought is liable to be rejected. 9. After hearing the respective counsel it is apparent that only question to be looked into is whether a new ground is sought to be added by respondent by moving amendment application on 06/01/2012 or it is only elaboration of the contentions already placed for consideration before learned Principle District Judge in Section 34 application. 10. Perusal of Section 12 of 1996 Act shows that it contemplates a challenge to Arbitrator on the ground of bias during pendency of proceedings. Section 4 thereof again envisages a similar challenge and stipulates effect of omission to raise it as a ground of objection. Thus, both these provisions do not apply once an award is made by Arbitrator and same is questioned in proceedings under Section 34 for setting it aside. Reliance by Senior Advocate Kantak on these provisions is therefore mis-consented. 11. Division Bench Judgment of this Court considered a challenge to an order rejecting leave to amend and also dismissal of Arbitration Petition itself. Paragraph 9 shows arguments on behalf of the appellant that the agreement containing the arbitration clause was in fact and essence, an agreement of leave and licence. Appellant, therefore, was claimed to be a tenant under Section 5(11) of Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. It was further observed that the Court of Small Causes only had exclusive jurisdiction to entertain the dispute relating to recovery of possession and therefore arbitration proceedings were not legal. Paragraph 11 of Division Bench Judgment points out only a ground in Arbitration petition that the impugned award is in conflict with public policy and public interest.
It was further observed that the Court of Small Causes only had exclusive jurisdiction to entertain the dispute relating to recovery of possession and therefore arbitration proceedings were not legal. Paragraph 11 of Division Bench Judgment points out only a ground in Arbitration petition that the impugned award is in conflict with public policy and public interest. The appellant conceded before the Division Bench that jurisdiction of the arbitrators was never questioned when the order under Section 11 was made by High Court, nor was it raised for decision of the arbitrators as required by Section 16 of the 1996 Act. It is in this background that the Hon'ble Apex Court has found in paragraph 14 that a ground not initially raised in petition to challenge the award cannot be permitted to be subsequently raised through an amendment, if such application for amendment itself was beyond the period of limitation fixed for filing of the Arbitration Petition challenging the award. In paragraph 17, the Division Bench has again reiterated the same law when effort is to raise an independent ground of challenge. It found that if there was no effort to raise a ground as an independent ground on the basis that the petition already contained it, leave to amend is not necessary as the arguments could have been advanced on the basis of plea already raised. If it was an independent ground, same could not have been allowed to be raised after a period of three months. These findings and findings in paragraph no.13 therefore show that when a new ground or an independent ground of challenge is sought to be added, the effort cannot be countenanced if leave to amend is sought beyond 90 days stipulated in Section 34. 12. The Hon'ble Apex Court in Judgment in the case of State of Maharashtra Vs. Hindustan Construction Company Limited, (supra) has considered the similar challenge. There the application under Section 34 was rejected by District Judge, Ratnagiri on 29/06/2006. The appellant then preferred an appeal under Section 37 on 06/07/2007 before High Court of Judicature at Bombay. On 23/06/2008, they sought amendment to the memorandum of arbitration appeal by seeking to add additional grounds that the Arbitral Tribunal had exceeded jurisdiction in awarding revision of percentage for hidden expenses, overheads and profits for further additional items.
The appellant then preferred an appeal under Section 37 on 06/07/2007 before High Court of Judicature at Bombay. On 23/06/2008, they sought amendment to the memorandum of arbitration appeal by seeking to add additional grounds that the Arbitral Tribunal had exceeded jurisdiction in awarding revision of percentage for hidden expenses, overheads and profits for further additional items. Learned Single Judge dismissed the application for amendment on 09/01/2009 and thereafter the appellant approached the Hon'ble Apex Court. The Hon'ble Apex Court in paragraph 29 has observed that filing of an application for amendment to incorporate additional grounds cannot be always discouraged. It found that if such a view is taken, no amendment in the application for setting aside the award, howsoever material or relevant it may be for consideration by the Court, can be added nor existing ground amended after the prescribed period of limitation has expired although the application for setting aside the arbitral award was filed within time. Hon'ble Apex Court has held that such was not the intention of legislature while enacting Section 34. It also construed words used in Section 34(2)(b) to hold that it enables the Court to grant leave to amend if the peculiar circumstances so warrant and it is so required in the interest of justice. In paragraph 32 of Division Bench Judgment of this Court mentioned supra. It has been appreciated and it has been explained that Division Bench does not provide an absolute bar to filing of amendment in an application for setting aside arbitral award, after expiry of period of limitation. In paragraph 33, the distinction between the “material facts” and “material particulars” has been pointed out and the Hon'ble Apex Court has stated that every amendment in the application for setting aside an arbitral award cannot be taken as a fresh application. In paragraph 35, the question whether the High Court committed any error in rejecting the prayer for amendment in facts before it has been gone into. Hon'ble Apex Court noted that in application under Section 34 for setting aside the award appellant set up only five grounds namely waiver, acquiescence, delay, laches and res judicata. The grounds sought to be added in the memo of arbitration appeal by way of amendment were found to be absolutely new grounds with no foundation in the application for setting aside award.
The grounds sought to be added in the memo of arbitration appeal by way of amendment were found to be absolutely new grounds with no foundation in the application for setting aside award. The proposed amendment seen in para 7 of the precedent is briefly mentioned by me above. The Hon'ble Apex Court found that such grounds containing new material/facts could not have been introduced for the first time in an appeal when admittedly same were not originally raised in the arbitration petition for setting aside the award. Hon'ble Apex Court also took note of the fact that there was no effort made to seek amendment in main petition under Section 34 before the Court concerned or even at appellate stage. In present matter some pleas having bearing an impartial conduct of proceedings or hostile/unequal treatment already figured. It cannot be said that the plea on all pervading bias striking at the root of the matter was given up. 13. Thus, question before this Court is whether ground sought to be added is a new ground or it is further elaboration or amplification on grounds already pleaded. Learned P.D.J. in order dated 07/09/2013 has not found it to be a new ground. On the contrary, its conclusion is “It is thus evident that though not expressly stated, the ground of bias was already raised in the application. By the proposed amendment, the applicant has only sought to include further particulars/instances to bolster the ground of bias. Hence, I am unable to accept the contention that the applicant has sought to introduce a new ground after expiry of limitation.” 14. The ground added is ground (EE) which states that Arbitrator acted with bias and ground bases itself upon observations made by arbitrator in paragraphs 7, 9 and 12 of the award. Thus paragraphs are also added as part of ground (EE). Thereafter there are other grounds i.e. ground (FF), (GG), (HH), (II), (JJ) and (KK). When all later grounds are perused, it is apparent that it is in furtherance of ground (EE) and paragraphs 7, 9 and 12 in arbitration award. Whether the words employed by the arbitrator in 07/09/2012 are intemperate or improper words sufficient to indicate any bias or then whether bias, if any, resulting there from is sufficient to vitiate the entire award are questions not relevant at this stage.
Whether the words employed by the arbitrator in 07/09/2012 are intemperate or improper words sufficient to indicate any bias or then whether bias, if any, resulting there from is sufficient to vitiate the entire award are questions not relevant at this stage. In application under Section 34 of 1996 Act, in paragraph 11, the respondent has pleaded that it had sought to amend the statement of defence before Arbitrator but Arbitrator did not consider their application and refused to hear their Advocate solely on the ground of delay. They have further stated in paragraph 12 thereof that arbitrator in his award attributed certain submissions to the advocate of applicant and that such submissions were never made. The application under Section 33 was made on 25/01/2010 before the said arbitrator for deleting said observations but arbitrator did not accept it on record on a ground that its previous notice was not given to the other side. Present respondent in said paragraph 12 has pleaded that their legal assistant submitted before arbitrator that such notice was duly served but the arbitrator refused to believe the legal assistant and did not take the application on record. In ground “C” again rejecting application for amendment has been commented upon by pointing out that said rejection was supported by arbitrator by giving some reasons in final award. It is contended that such conduct was not only perverse or arbitrary but constituted misconduct of arbitration proceedings. In ground (D) and (E) again certain procedural lacunae have been pointed out. In ground (S), reliance upon deposition of Mr. Sandeep Chodankar after labeling him as most untrustworthy witness by arbitrator is again assailed as misconduct. In ground (CC) it is alleged that arbitrator applied different yardsticks while appreciating admissions from parties. Efforts in said grounds appear to be to demonstrate the absence of impartiality in learned arbitrator. 15. It is not necessary for this Court to elaborate more. The observations made by learned arbitrator are part of arbitration award dated 28/12/2009. Grounds which impinged upon the impartiality of arbitrator or correctness of procedure followed by him are already there in main application under Section 34 for setting aside award filed by present respondent. Additional grounds sought only attempt to add to the same by pointing out an additional shade or facet which according to respondent exposes bias on part of learned arbitrator.
Additional grounds sought only attempt to add to the same by pointing out an additional shade or facet which according to respondent exposes bias on part of learned arbitrator. The bias is contended to surface only after reading of paras 7, 9 and 12 of award. In the light of pleadings in application under Section 34 as filed, it cannot therefore be said that a new ground is being added by amendment. Merits of amendment or correctness of plea added are not relevant at this stage and same can be assailed when Section 34 application is heard on merits. Learned P.D.J. has appreciated all relevant aspects and I do not find any jurisdictional error or perversity in the approach of P.D.J. No case is made out warranting any need of interference by this Court under Article 227 of Constitution of India. 16. Writ Petition is accordingly dismissed. Rule discharged. No costs.