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2016 DIGILAW 417 (KER)

RENJU VARGHESE v. H. D. F. C. BANK LIMITED

2016-04-19

SHAJI P.CHALY

body2016
JUDGMENT : This writ petition is filed by the petitioner under Article 226 of the Constitution of India, challenging Ext.P1 interim order passed by an Arbitrator in I.A.No.205 of 2016 in Arbitration Reference No. 274 of 2016, dated 10.03.2016. The respondent in this writ petition is the claimant in the aforesaid proceedings. 2. Brief facts required for disposal of the writ petition are as follows: 3. Respondent has filed the claim petition before the Arbitrator contending that the respondent had financed a sum of Rs.1,22,092-71 to the petitioner herein for the purpose of purchasing a vehicle, as per a Hypothecation Agreement dated 23.05.2014. It is the further contention of the respondent that petitioner was very irregular in making payment of the instalments of the said loan and interest due thereon in accordance with the terms of the agreement. It is thus aggrieved, invoking the provisions of the agreement, respondent has instructed the Arbitrator to enter upon the terms of the reference and proceed accordingly. 4. In I.A.No.205 of 2016 filed by the respondent herein, Arbitrator passed Ext.P1 interim order, wherein the respondent was allowed to repossess the vehicle bearing Registration No.KL-40A-1500 in a lawful manner with police protection if required, and keep the vehicle in their custody until further orders from the Arbitral Tribunal. It is thus challenging Ext.P1 order passed by the Arbitrator under Sec.17 of the Arbitration and Conciliation Act, 1996 (hereinafter called 'the Act'), this writ petition is filed. It is contended that the order impugned is arbitrary and illegal. 5. The first question to be considered is whether a writ petition is maintainable under Article 226 of the Constitution of India against an interim order passed by an Arbitrator under Sec.17 of the Act. In order to maintain a writ petition under Article 226, the parameters prescribed under Article 12 of the Constitution of India are vital and a necessary concomitant. Therefore, it is to be ascertained whether an Arbitrator is 'other authorities' coming under Article 12 of the Constitution of India. An Arbitrator is appointed by parties to an agreement to arbitrate a dispute that arises by and between the parties during the period of agreement or contract, by virtue of the terms of the contract itself. Therefore, it is to be ascertained whether an Arbitrator is 'other authorities' coming under Article 12 of the Constitution of India. An Arbitrator is appointed by parties to an agreement to arbitrate a dispute that arises by and between the parties during the period of agreement or contract, by virtue of the terms of the contract itself. There may be a term of contract by which the parties may be provided with power to appoint an Arbitrator or Arbitrators or there may be a term of contract by and between the parties to seek court intervention in the matter of appointment of an Arbitrator or there may be circumstances enabling a court to appoint an Arbitrator as provided under the Act. 6. An Arbitrator, when appointed, functions as an autonomous body without any control normally by any court of law, State or any of its instrumentalities or any other judicial body, subject to the mechanism provided under the Act for filing an appeal or other proceedings under the Act itself. The fees of an Arbitrator is fixed either as per the provisions of law or as per the agreement entered into by and between the Arbitrator and the parties to the agreement. No manner of State control either deep or pervasive or otherwise is available against an Arbitrator under the provisions of the Act. An Arbitrator has to fix the place of its sittings in accordance with the agreement entered into by the parties or otherwise. The said features of functioning of the Arbitrator are sufficient enough to show that an Arbitrator is not 'other authorities' defined under Article 12 of the Constitution of India or any other instrumentality provided thereunder. 7. It is well-settled that the connotation 'other authorities' is not to be construed in a narrow sense or manner. But, however, strict interpretation will have to be provided while considering the said question in order to arrive at a conclusion with reference to the facts of each and every case. It is true that the functions and duties of the State have increased substantially with the concept of 'Welfare State' achieving predominant features and dimensions. It is also true that an Arbitrator is also a body liable to function by taking into account the fundamental rights guaranteed to the citizens under the Constitution of India. It is true that the functions and duties of the State have increased substantially with the concept of 'Welfare State' achieving predominant features and dimensions. It is also true that an Arbitrator is also a body liable to function by taking into account the fundamental rights guaranteed to the citizens under the Constitution of India. But merely because an illegality or any arbitrariness is committed by an Arbitrator, the Arbitrator cannot be termed as an 'authority' as propounded under Article 12 of the Constitution. If the Arbitrator has committed any illegality, arbitrariness, gross injustice or gross irrationality, the Act provides efficacious remedy to institute an appeal by resorting to the provisions of the Act itself. 8. Moreover, an Arbitrator while deciding a dispute in a commercial transaction entered into by and between private parties is not discharging any public duty so as to affect the public at large. Whatever decision taken by an Arbitrator is only affecting a party or parties to the said proceeding and not the public at large. Of course, the 'other authorities' coming under Article 12 of the Constitution is to be seen with a broader outlook in order to ensure that the fundamental guarantees and Constitutional rights are not violated by any authority. But it must be realized that, in order to achieve such a result, the connotation 'other authorities' should not be stretched or enlarged to an extent so as to do violence to the purpose, purport and intent of the definition of Article 12, especially when an efficacious remedy is provided under a statute to challenge any order passed. To put it otherwise, the kind of enlargement and stretch that can be provided to 'other authorities' are circumscribed by meaningful and thoughtful limitations. 9. Therefore, taking into account the cumulative facts and circumstances and the law involved, it can be seen that an Arbitrator is not an 'authority' coming under "other authorities" prescribed under Article 12 of the Constitution of India, enabling a party suffered with an order under the Act to invoke the extraordinary jurisdiction of this Court conferred under Article 226 of the Constitution of India. 10. That apart, the Arbitration and Conciliation Act, 1996 was amended and certain provisions are incorporated as per the Amendment Act No.3 of 2016, which came into force with effect from 23.10.2015. 10. That apart, the Arbitration and Conciliation Act, 1996 was amended and certain provisions are incorporated as per the Amendment Act No.3 of 2016, which came into force with effect from 23.10.2015. Sec.17 of the Arbitration and Conciliation Act, 1996 after the amendment reads as follows: "17. Interim measures ordered by arbitral tribunal.--(1) A party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to the arbital tribunal-- (i) for the appointment of a guardian for a minor or person of unsound mind for the purpose of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:-- (a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it. (2) Subject to any orders passed in an appeal under section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the Court." 11. On a reading of Sec.17, it can be seen that an Arbitrator is vested with sufficient powers for making interim measure of protection in respect of the matters mentioned thereunder. On a reading of Sec.17, it can be seen that an Arbitrator is vested with sufficient powers for making interim measure of protection in respect of the matters mentioned thereunder. As per sub-section (2) of Sec.17, any order issued by the arbitral tribunal under Sec.17 is deemed to be an order of the court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908, in the same manner as if it were an order of the Court. 12. That apart, any order passed by an Arbitrator under Sec.17 is an appealable order as provided under sub-section (2)(b) of Sec.37 of the Arbitration and Conciliation Act, 1996. Therefore, the petitioner is vested with an efficacious remedy of challenging any interim order passed by the Arbitrator by resorting to Sec.37 of the Act, by which mechanism, petitioner is at liberty to point out any illegality in the order impugned including violation of any fundamental right or other provisions of the Constitution of India. Therefore, viewed in that circumstances also, I am of the considered opinion that a writ petition under Article 226 of the Constitution of India is not the remedy available to the petitioner to challenge an order passed under Sec.17 of the Act. 13. Therefore, reckoning the above facts and circumstances and the law involved in the subject matter, I have to reach an irresistible conclusion that this writ petition is not maintainable under law. Therefore, the same is dismissed, however, leaving open liberty of the petitioner to seek the statutory remedies provided under the Act.