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2014 DIGILAW 636 (RAJ)

Anand Bhatiya Contractor v. Union of India

2014-03-04

GOVIND MATHUR

body2014
Judgment Being arising out of the award dated 31.3.2011, these three matters are heard and disposed of by this common order. Civil Misc. Application No.60/2012 is preferred by M/s Anand Bhatiya Contractor, to challenge the award aforesaid to the extent it do not accept the complete claim of the contractor. The Civil Writ Petition No.8697/2012 is preferred by the Union of India and its officers to challenge the order dated 6.8.2012, passed by learned Additional District Judge No.1, Jodhpur Metropolitan, accepting the application for execution of award dated 31.3.2011. The third one matter is an appeal preferred by Union of India to challenge the order dated 14.3.2012 passed by learned Additional District Judge No.1, Jodhpur Metropolitan, returning the application preferred as per provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') for its proper presentation before the court competent. The factual matrix necessary to be noticed to adjudicate these matters is that by an award dated 31.3.2011 the sole arbitrator partly allowed claim of the contractor M/s Anand Bhatiya (hereinafter referred to as 'the respondent'). An application, as per provisions of Section 34 of the Act of 1996 was filed by the Union of India (hereinafter referred to as 'the appellant') to set aside the arbitral award aforesaid. On receiving the notices, the respondent filed an application under Order 7 Rule 11 Code of Civil Procedure with assertion that the sole arbitrator in the matter was appointed by the person designated by the Chief Justice, therefore, in view of the provisions of Section 42 of the Act of 1996 the application under Section 34 could have been preferred before the High Court only. The application preferred under Order 7 Rule 11 Code of Civil Procedure came to be accepted by learned Additional District Judge No.1, Jodhpur Metropolitan vide order dated 14.3.2012 with a direction to return the application preferred under Section 34 of the Act of 1996 for its presentation before the court competent. While pressing the appeal, the argument advanced by learned counsel for the appellant is that the authority under Section 11(6) of the Act of 1996, though is of judicial nature, but not of a Court, thus, does not attract the provisions of Section 42 of the Act of 1996. While pressing the appeal, the argument advanced by learned counsel for the appellant is that the authority under Section 11(6) of the Act of 1996, though is of judicial nature, but not of a Court, thus, does not attract the provisions of Section 42 of the Act of 1996. Per contra, as per the respondent, the power exercised by the Chief Justice or the person or institution designated by the Chief Justice as per Section 11(6) of the Act of 1996 are judicial powers, therefore, the authority exercising this power is nothing but a Court, hence, the jurisdiction as per Section 42 of the Act of 1996, to adjudicate the application under Section 34 vests with that Court only. Learned counsel substantiated the argument by placing reliance upon a Division Bench judgment of Hon'ble Calcutta High Court (appellate side) in State of West Bengal & Anr. v. M/s G. Biswas & Company, in an FMA No.1321/2012, decided on 2.4.2013. Reliance is also placed upon a judgment of Hon'ble Supreme Court in Executive Engineer, Road Development Division No.III, Panvel & Anr. v. Atlanta Limited, reported in 2014 Law Suit (SC) 29. Heard learned counsel for the parties. The Additional District Judge accepted the application preferred under Order 7 Rule 11 Code of Civil Procedure on the count that the sole arbitrator in the instant matter was appointed by invoking authority under Section 11(6) of the Act of 1996 and that being the judicial proceeding, the application would have been filed before the Court that appointed arbitrator, being a mandate of Section 42 of the Act of 1996. Precisely, the questions for adjudication before this Court are that- (1)whether the Chief Justice or the person or institution designated by him to exercise powers under Section 11(6) of the Act of 1996 can be treated as a Court as per provisions of Section 2(1)(e) of the Act of 1996?, and (2)whether the provisions of Section 42 of the Act of 1996 can be attracted in a case where powers have been exercised by the Chief Justice or the person or institution designated by him for appointment of an arbitrator as per Section 11(6) of the Act of 1996? It is not at all in dispute that the powers under Section 11(6) of the Act of 1996 are judicial powers, however, merely on that count whether the authority exercising such power can be treated as a Court, is the issue require consideration. The term 'Court' as defined under Section 2(1)(e) of the Act of 1996 reads as under:- “'Court' means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.” The authority given for appointment of an arbitrator under Section 11 to Hon'ble the Chief Justice of India and Hon'ble the Chief Justices of the High Courts under sub-sections (4), (5) and (6) of Section 11 of the Act of 1996, is as under:- “(4) If the appointment procedure in sub-section (3) applies and-- (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b)the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5)Failing any agreement referred to in sub section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6)Where, under an appointment procedure agreed upon by the parties,--- (a)a party fails to act as required under that procedure; or (b)the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c)a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.” At this point it shall also be appropriate to refer sub-section (10) of Section 11 of the Act of 1996 that empowers the Chief Justice to make the scheme for dealing with the matters entrusted under the provisions referred above. As per sub-section (10) “The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.” It shall be important to notice here that in entire Section 11 of the Act of 1996 the term 'Court' has not been used by the legislature. The terms used are 'the Chief Justice' or 'the person or institution designated by the Chief Justice'. These terms have not been defined under the Act of 1996. Section 42 of the Act of 1996 pertains to the jurisdiction and that reads as under:- “42. Jurisdiction.-Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreeemnt and the arbitral proceedings shall be made in that Court and in no other Court.” Hon'ble Supreme Court in Rodemadan India Ltd. v. International Trade Expo Centre Ltd., reported in AIR 2006 SC 3456 , while taking note of this legal background, held as under:- “9. In short, the power under Section 11(6) is the power of a designate referred to under the Section and not that of the Supreme Court, albeit that it has now been held to have judicial characteristics by reason of the judgment in Patel Engineering (supra). In short, the power under Section 11(6) is the power of a designate referred to under the Section and not that of the Supreme Court, albeit that it has now been held to have judicial characteristics by reason of the judgment in Patel Engineering (supra). Since this is the power of the Chief Justice and not the power of the Supreme Court, the specification in Order VII Rule 1 of the Rules as to the minimum number of Judges, would have no application thereto. If the argument of the learned counsel is right, then even the Chief Justice cannot pass such an order unless he is sitting in a Bench with one or more companion Judge. No such intention is evidenced by Parliament in enacting Section 11(6) of the Act. Since Parliament has enacted a law under which the power is exercisable by the Chief Justice or his designate, who could be "any person or institution", I do not think that the requirement of Order VII Rule 1 of the Rules would apply to such a situation at all. The contention is, therefore, rejected.” With the finding aforesaid Hon'ble Supreme Court held that neither the Chief Justice nor his designate under Section 11(6) is a 'Court' as contemplated under Section 2 (1)(e) of the Act of 1996, thus, no need is there to place an application for appointment of arbitrator before a bench consisting of two Judges. As already stated, the term 'Court' is not used in Section 11 of the Act of 1996 and the authority for appointment of arbitrator is conferred to the Chief Justice of his designate. If the legislature was intending to get the applications for appointment of arbitrators by the Supreme Court or the High Court, as the case may be, then the term 'Court' itself could have been used in the provision aforesaid. The reading of Section 11 clearly indicates intent of the legislature to assign power to the Chief Justice and not to the Court. As such, the power exercised by the Chief Justice or his designate is a statutory judicial power i.e. not exercised by the 'Court' as defined under Section 2(1)(e) of the Act of 1996. So far as the law laid down by Hon'ble Supreme Court in Executive Engineer, Road Development Division No.III, Panvel & Anr. As such, the power exercised by the Chief Justice or his designate is a statutory judicial power i.e. not exercised by the 'Court' as defined under Section 2(1)(e) of the Act of 1996. So far as the law laid down by Hon'ble Supreme Court in Executive Engineer, Road Development Division No.III, Panvel & Anr. (supra), is concerned, it shall be appropriate to notice that the issue was about institution of the applications under Section 34, when the two courts i.e. a court subordinate and the High Court are having authority to exercise jurisdiction. Hon'ble Supreme Court held that one arbitral award, if challenged in two different courts by different parties to the award, would breach the principal contained in Section 42 of the Act of 1996. The eventuality as considered in this case arose as the High Court of Bombay is vested with ordinary original civil jurisdiction over the same area, for which jurisdiction is also exercised by a subordinate court. In the case aforesaid no issue as such was there about treating the powers under Section 11(6) of the Act of 1996 as of the Court as defined under Section 2(1)(e). Having considered the legal position noticed above, I am having no hesitation in holding that the powers under Section 11(6) of the Act of 1996 are of the Chief Justice and not of the 'Court'. The case aforesaid as such is having no application in present controversy. An important aspect of the matter is that Section 42 of the Act of 1996 pertains to eventuality where an application is preferred to a Court. As per the scheme of the Act of 1996 and the Rules framed thereunder, a party to an agreement is required to make a 'request' to the Chief Justice for appointment of an arbitrator. It is also pertinent to notice that as per sub-section (10) of Section 11 of the Act of 1996, the Chief Justice may make such scheme as he may deem appropriate for dealing with the matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him. The appointment of an arbitrator by the Chief Justice of India Scheme 1996 under its clauses 2, 3, 4, 5 and 6 in quite unambiguous terms mentions about 'request' i.e. to be made for appointment of an arbitrator. The scheme applicable to the High Court is para-materia to the scheme of 1996. The appointment of an arbitrator by the Chief Justice of India Scheme 1996 under its clauses 2, 3, 4, 5 and 6 in quite unambiguous terms mentions about 'request' i.e. to be made for appointment of an arbitrator. The scheme applicable to the High Court is para-materia to the scheme of 1996. The reference of the term 'application' is made under Sections 8, 9 and 10 of the Act of 1996. The legislature, if was intending to have 'application' for appointing an arbitrator too, then no need was there to refer the term 'request' in Section 11 and also under the scheme made as per Section 11(10) of the Act of 1996, as such, the term 'request' used under Section 11 of the Act of 1996 is not required to be read as 'application' referred in Section 42. The resultant is that - (1)The Chief Justice or person or institution designated by him to exercise powers under Section 11(6) of the Act of 1996 is not a 'Court' as defined under Section 2(1)(e) of the Act of 1996; and (2)The provisions of Section 42 of the Act of 1996 are not applicable where power has been exercised by the Chief Justice or his designate for appointment of an arbitrator in accordance with Section 11(6) of the Act of 1996. In view of the conclusions above, SB Civil Misc. Appeal No.1856/2012 preferred by the Union of India and its officers is allowed. The order dated 14.3.2012 passed by learned Additional District Judge No.1, Jodhpur Metropolitan, Jodhpur, accepting the application under Order 7 Rule 11 Code of Civil Procedure, is quashed. The Arbitration Application preferred by the Union of India before the court aforesaid is restored. The application is required to be decided on its merits. SB Civil Writ Petition No.8697/2012 is also allowed and the order impugned dated 6.8.2012 passed by learned Additional District Judge No.1, Jodhpur Metropolitan, Jodhpur is quashed. The application preferred by M/s Anand Bhatiya Contractor (SB Civil Misc. Application No.60/2012) is dismissed. The party concerned is at liberty to move an application, if desired before the competent court as per provisions of Section 34 of the Act of 1996.