Zee Sports Limited now known as Zee Digital Convergence Ltd. v. Nimbus Media Pte. Ltd.
2017-01-31
N.M.JAMDAR
body2017
DigiLaw.ai
JUDGMENT : By this Chamber Summons, the Petitioner has sought an amendment to the Arbitration Petition to incorporate a ground to challenge the Award dated 3 August 2015 rendered by the learned Arbitrator. 2. On 17 January 2005, parties entered in the Heads of Agreement in respect of incorporating a joint venture company. Thereafter, various further agreements were entered into. Dispute arose between the parties regarding payment. Since the parties did not agree on the appointment of the arbitrator, an Application No. 42 of 2010 was moved by the Respondent under Section 11 of the Arbitration and Conciliation Act, 1996. The Application was taken up for consideration by the learned Judge designate. The learned Judge noted the existence of arbitration clause. A contention was raised by the Respondent – Applicant herein regarding the claim being barred by law of limitation. The learned Judge looked into the correspondence between the parties and prima-facie observed that the claim was within period of limitation and disposed of the application by order dated 24 January 2011 appointing a learned retired Judge of this Court as a sole arbitrator. Thereafter, a statement of claim was filed by the Respondent before the Arbitrator on 20 June 2011. The Applicant filed statement of defence and took up various contentions, limitation being one of the primary contention. The Respondent filed affidavit in rejoinder. The parties thereafter filed sur-rejoinder. The Respondent led evidence of its Director. The Applicant led evidence of its CEO Mr. Goenka and of Mr. Modi. The learned Arbitrator passed an Award dated 3 August 2015 allowing the claim of the Respondent of USD 1 million together with interest of USD 294,372.15 prior to the 20 June 2011 and @ 5% from 20 June 2011 till making of the award and @ 12% p.a. from the date of the award till payment. 3. The Arbitration Petition was filed on 27 October 2015. Perusal of the farad-sheet shows the Arbitration Petition came up on board on 15 February 2016 when it was adjourned at the joint request on various dates such as 28 June 2016, 19 July 2016, 26 July 2016, 2 August 2016, 23 August 2016, 13 September 2016, 15 October 2016, 27 October 2016, 28 December 2016.
Perusal of the farad-sheet shows the Arbitration Petition came up on board on 15 February 2016 when it was adjourned at the joint request on various dates such as 28 June 2016, 19 July 2016, 26 July 2016, 2 August 2016, 23 August 2016, 13 September 2016, 15 October 2016, 27 October 2016, 28 December 2016. On 17 January 2017, when the Arbitration Petition came up before me, an oral submission was advanced that the learned Counsel for the Applicant intends to file a Chamber Summons to seek amendment to the Petition to incorporate a ground. Thereafter, the present Chamber Summons is filed and is taken up for consideration. 4. By the amendment, the Applicant has sought to incorporate a ground in the Petition that the impugned award is a nullity. The gist of the amendment is that since the Respondent being an entity incorporated in Singapore, the proceedings were an international commercial arbitration, as defined under Section 2(f) of the Act and therefore, any application under Section 11 of the Act for appointment of arbitrator was required to be made to the learned Chief Justice of India to the authority designated by the learned Chief Justice of India. Since the appointment is made by the learned Judge designated by the learned Chief Justice of this Court, the order appointing the learned Arbitrator was without jurisdiction and consequently the further proceeding and the impugned award is a nullity. The Chamber Summons is admittedly moved beyond the period permissible to challenge the Award. 5. Heard Dr. Birendra Saraf, learned Counsel for the Applicant and Mr. Sanjay Jain, the learned Counsel for the Respondent. 6. Dr. Saraf submitted : a ground has already been taken in the Arbitration Petition that the Award is illegal, contrary to law, against public policy, and therefore, the amendment which is sought is only amplification of this ground. It is not a requirement of law that no new ground can ever be taken beyond the period of limitation described under the Act. This position has been made clear by the Apex Court in the decision of 2010 (4) SCC 518 , State of Maharashtra v/s. Hindustan Construction Company Ltd. The decision of the Division Bench of this Court in 2001 (2) Mh.L.J. 565 , Vastu Investment and Holding Pvt. Ltd. v/s. Gujarat Lease Financing Ltd., Mumbai has been distinguished by the Apex Court.
In the decision in the case of Hindustan Construction, the Apex Court was essentially considering whether new ground could be taken in an Appeal under Section 37 of the Act when it was no so taken in an Application under Section 34 of the Act. The reason why the Apex Court did not interfere with the amendment in the said case was also that no ground was taken in the application filed under Section 34 of the Act and that a new ground containing new material and facts could not have been introduced first time in Appeal. The fact that the Respondent is an entity registered incorporated in Singapore in not a disputed position and therefore, what is sought to be introduced is only a pure question of law. The order appointing the learned Arbitrator passed by the designate of learned Chief Justice of this Court in respect of an international commercial arbitration was wholly without jurisdiction and consequently the appointment of arbitrator itself being without jurisdiction, the entire proceedings and the consequent award is a nullity. In the order passed by the learned Single Judge (R.D. Dhanuka, J.) of this Court in Review Petition (Lodg.) No.32 of 2015 in identical circumstances the order passed by the learned designate appointing an arbitrator in international commercial arbitration, was recalled. It is a settled proposition of law that an order passed without jurisdiction, when there is inherent lack of jurisdiction to pass any order, such order is a nullity and its invalidity can even be set up in execution proceedings. The learned Single Judge (S.J. Vazifdar, J.) of this Court in the case of 2011 (2) Mh.L.J., Veena wd/o. Naresh Seth and Anr. v/s. Seth Industries Ltd. Mumbai and Ors. wherein Vazifdar, J. has extended this proposition to arbitration proceedings. Attention was also drawn to the order passed by the learned Single Judge (Mrs. R.S. Dalvi, J.) in Chamber Summons No. 604 of 2014. Even though an objection was not raised before the learned arbitrator under Section 16 of the Act, the award being a nullity its invalidity is open to be challenged at any stage of the proceedings and that a ground that the award is against public policy and illegal having already been taken the Chamber Summons be allowed and the amendment be permitted to be incorporated. 7. Mr.
7. Mr. Sanjay Jain, learned Counsel for the Respondent on the other hand submitted : Section 16 of the Act is a deliberate departure from the general rule applicable in Civil suits that a decree which is a nullity can be resisted even at the time of execution of the decree. In the decision in the case of 2015 (13) SCC 713, MSP Infrastructure Ltd. v/s. Madhya Pradesh Road Development Corporation Ltd., the Apex Court has made a distinction between the law as applicable to civil disputes and to the arbitration proceedings keeping in mind the object and scheme of the Act. It is not correct to contend that new ground can be taken beyond the period of limitation and all that the Apex Court has clarified in the case of Hindustan Construction is that there is no such absolute bar, but has not deviated from the principle that there has to be a basic foundation in the pleadings. In the decisions in the case of Hindustan Construction and Vastu Investment have been reconciled by the learned Single Judge (B.P. Dharmadhikari, J.) and the position of law is reiterated that entirely new ground beyond the period of limitation cannot be taken and what is permitted is an amplification of the grounds already taken. The decision rendered in the Review Petition (Lodg.) No.32 of 2015 by R.D. Dhanuka, J. cannot be treated as a binding precedent as it is an order passed in a review under Section 11 of the Act. Reliance was placed on the decision of the Apex Court in the case of 2015 (1) SCC 32 , State of West Bengal and Ors. v/s. Associated Contractors to contend that the order passed under Section 11 of the Act does not have any value as a precedent. Reliance was also placed in the decision of the learned Single Judge in Manu/MH/0940/2016, Roptonal Ltd. and Ors. v/s. Anees Bazmee wherein the learned Single Judge (R.D. Dhanuka, J.) has also taken a view that the order passed under Section 11 cannot be treated as a precedent. The Chamber Summons has been admittedly filed after period of limitation and in fact after the matter was argued and without any explanation as to how the grounds could not be taken up earlier. The Chamber Summons is taken out only to delay the proceedings and it should be dismissed with cost. 8.
The Chamber Summons has been admittedly filed after period of limitation and in fact after the matter was argued and without any explanation as to how the grounds could not be taken up earlier. The Chamber Summons is taken out only to delay the proceedings and it should be dismissed with cost. 8. The learned Single Judge (B.P. Dharmadhikari, J.) in the case of 2015(2) Mh.L.J., Inox Leisure Ltd. v/s. Goa State Infrastructure Development Corporation Ltd., after considering the decisions both in Hindustan Construction Ltd. and Vastu Investment, has reconciled the position and has held that when such amendment is moved after period of limitation, a question would arise is whether the ground sought is a new ground or only a further amplification of an existing ground. Following this test, the learned Single Judge found, in the facts of that case, that ground of bias which was sought to be incorporated by way of amendment beyond period of limitation, was not an additional ground but only an additional shade or facet of the ground which was already taken. Following this test, enquiry will have to be carried out whether a new ground is sought to be incorporated. Mr. Jain rightly pointed out that the Arbitration Petition contains elaborate and detailed grounds on each and every issue. However, as far as the present ground which is sought to be incorporated by way of an amendment, there is no foundation which can be elaborated. In ground (A), it is stated that impugned award is illegal and contrary to law and in ground (KK) it is stated that award is illegal and against public policy. If these grounds were to be all comprising, then the memo of every Arbitration Petition can contain only these two grounds. The assertion that the award is a nullity has different connotation. The ground that the designate of the learned Chief Justice of the High Court did not have to appoint an arbitrator is not even been remotely indicated. Such general default ground is taken in every petition by the draftsman. It cannot be said that what is sought to be incorporated is an amplification of an existing ground. The learned Single Judge of this Court (Mrs.
Such general default ground is taken in every petition by the draftsman. It cannot be said that what is sought to be incorporated is an amplification of an existing ground. The learned Single Judge of this Court (Mrs. R.S. Dalvi, J.) in the case of CHS 604/14 in ARBP 738/13, M/s. Ashapura Developers v/s. Aditya Birla Retail Ltd. has also reiterated the position that merely because a general ground that an arbitral tribunal has not followed the mandate of Indian Law, with no further elaboration, a contention cannot be advanced regarding inherent lack of jurisdiction by way of an amendment stating that it is an amplification. Therefore, following view taken by the two learned Single Judges of this Court, the ground which is specifically sought to be incorporated by way of an amendment cannot be said to be an amplification of the existing ground. If this is permitted, virtually any new ground can be brought in the Petition beyond the period of limitation, based on the usual default grounds. 9. To overcome this position, it was submitted by Dr. Saraf that the ground of the award being a nullity can be advanced at any stage of the proceedings even at the stage of execution, inspite of the bar of the Section 16 of the Act and the specific period of limitation provided under the Act. As far as the reliance of Dr. Saraf on the decision of this Court in Veena Seth is concerned, the learned Single Judge took into consideration the various decisions of the Apex Court in respect of the civil suits and held that a decree is passed without jurisdiction is a nullity and its invalidity can be set up even at the time of execution of the decree. The learned Single Judge no doubt held that these principles would apply to the award of the Arbitral Tribunal as well. The contentions raised before the learned Judge was regarding inherent lack of jurisdiction on the ground of bar in respect of other enactments. This decision, however, was rendered prior to the decision of the Apex Court in the case of MSP Infrastructure Ltd., which has a direct bearing on the controversy at hand. 10. In the case of MSP Infrastructure Ltd. the very question in this Petition arose for consideration of the Apex Court.
This decision, however, was rendered prior to the decision of the Apex Court in the case of MSP Infrastructure Ltd., which has a direct bearing on the controversy at hand. 10. In the case of MSP Infrastructure Ltd. the very question in this Petition arose for consideration of the Apex Court. It was whether a party can be permitted to amend the Petition to incorporate a challenge to the jurisdiction of the Arbitrators having not taken the same before the Arbitrators. Identical argument that the award being a nullity, this objection can be raised at any time, was raised. In this case a contract was entered into between the parties. A dispute arose and a civil suit was filed. The suit was disposed of by the court by recording terms of settlement and the matter was referred for arbitration. The Arbiral Tribunal made its award. Aggrieved by the award, a petition was filed under Section 34 of the Act. Two years after filing the Petition, an application for amendment was moved to add an additional ground regarding the jurisdiction of the tribunal and that the award was nullity. In this context the Apex Court considered the position of law in respect of challenge to the award on the ground of the award being nullity in the arbitral proceedings. The Apex Court took note of Section 16 of the Act and held that this provision makes a legislative intent clear that a challenge to the jurisdiction of the Arbitrator cannot be raised after the stage stipulated under the Act is crossed. The Apex Court negatived the contention of the respondent therein that the parties were entitled under law to raise objection regarding award being nullity at any stage of the matter even in respect of proceeding under the Act. This submission was identical to the submission which is advanced in the present matter. The Apex Court categorically held that though the law is settled in respect of civil suit, it is not so in case of arbitral proceedings, which the legislature has taken care that they must be resolved speedily and without the complexity and technicalities of the civil suit. Considering Section 16 and limited scope of Section 34, the Apex Court made it clear that an amendment granted by the High Court was contrary to law and should not have been allowed.
Considering Section 16 and limited scope of Section 34, the Apex Court made it clear that an amendment granted by the High Court was contrary to law and should not have been allowed. This decision squarely applies to the facts of the present case. Though Dr. Saraf sought to distinguish the decision on the ground that reference was made to the Arbitrator was by consent, the ratio laid down by the Apex Court, emphasizing the stringent provisions of the Act regarding the stage which the objection has to be taken, it cannot be diluted by needlessly dissecting the facts. 11. As regard the order passed by the learned Single Judge (R.D. Dhanuka, J.) as a designate under Section 11 of the Act in the case of RPL 32/15 in ARBP 166/13, Soham Shah v/s. The Indian Film Company Limited, it is the contention of Mr. Jain that it do not have any value as a precedent, in view of the decision of the Apex Court in State of West Bengal. The Apex Court in the case of State of West Bengal has held that orders passed under Section 11 of the Act by the designate of the Chief Justice cannot constitute a binding precedent. Even assuming the order Soham Shah has value as a precedent, it is clearly distinguishable on facts. In this case the Petitioner had approached the learned Single Judge to review the order appointing the arbitrator before the arbitration proceedings were concluded and the award was rendered and it is in that context that the learned Judge held that the order could be recalled in view of the objection to the jurisdiction of the Arbitral Tribunal. Though this decision is rendered on 22 February 2016, the decision of the Apex Court in MSP Infrastructure was not noticed. In the order passed in the matter of Roptonal Ltd., the decision of the Apex Court in the case of MSP Infrastructure was cited before the learned Judge and the learned Judge held that since the award was not rendered, the decision in the case of MSP Infrastructure was not applicable and the question whether such ground can be taken in the Petition under Section 34 of the Act need not be gone into.
The two decisions of the learned Single Judge will have to seen, keeping in mind the provision of Section 16(4) of the Act where the Arbitrator has a discretion to permit a challenge to the jurisdiction even after the stage under Section 16(2) is crossed. However, once the arbiral proceedings are culminated, the dicta of the Apex Court in the case of MSP Infrastructure, will govern. 12. In the present case no objection is raised by the Applicant in the statement of defence, nor during the arbitral proceedings, nor in the petition filed under Section 34 within limitation. No foundation was laid. As rightly contended by Mr. Jain, the Chamber Summons is moved only to delay the proceedings. The amendment sought being a completely new ground after the period of limitation, cannot be permitted to be incorporated. In that circumstances, the prayers in the Chamber Summons cannot be granted. The Chamber Summons is accordingly rejected.