CNG Trading Company Pvt. Ltd. v. H. P. State Electricity Board Ltd.
2017-01-10
MANSOOR AHMAD MIR, TARLOK SINGH CHAUHAN
body2017
DigiLaw.ai
JUDGMENT : Mansoor Ahmad Mir, J. The learned Single Judge, vide order, dated 27th October, 2016, while recording the reasons as to why reference was required, has referred the following question for adjudication by the larger Bench: “Whether the High Court can exercise power of superintendence vested under Article 227 of the Constitution on Arbitral Tribunals constituted under the provision of Arbitration and Conciliation Act, 1996?” 3. Before we deal with the question (supra), it is apt to give a brief history of the case herein. 4. The petitioner invoked jurisdiction of this Court by the medium of petition under Article 227 of the Constitution of India praying therein that the order, dated 19th April, 2016, made by the Arbitrator-cum-Chief Engineer (PCA), HPSEBL, whereby the application filed by the petitioner for impleadment of Society for Promotion of Information Technology and E-governance (for short “SITEG”) (DIT) as party-respondent was dismissed, be set aside. 5. Mr. G.D. Verma, learned Senior Counsel appearing on behalf of the petitioner, made the foundation of his arguments on the basis of the judgment rendered by a learned Single Judge of this Court in the case titled as M/s. M.L. Gupta And Associates versus H.P. Housing and Urban Development Authority and others, reported in 2014 (3) Shim. LC 1694. 6. Per contra, Mr. J.S. Bhogal, learned Senior Counsel appearing on behalf of the respondent, while relying upon the judgment rendered by this Court in the case titled as H.P.S.E.B. versus M/s. Ansal Properties & Anr., reported in 2005 (1) Current Law Journal (HP) 593, argued that the High Court cannot exercise power of superintendence in terms of Article 227 of the Constitution of India over the Arbitral Tribunals constituted under the Arbitration and Conciliation Act, 1996 (for short “the Act”) and thus, the petition is not maintainable. 7. The learned Single Judge, after noticing the conflicting views taken by the learned Single Judges of this Court in the judgments (supra), made a reference. 8. We have heard learned counsel for the parties. 9.
7. The learned Single Judge, after noticing the conflicting views taken by the learned Single Judges of this Court in the judgments (supra), made a reference. 8. We have heard learned counsel for the parties. 9. The Apex Court in the case titled as Lalitkumar V. Sanghavi (dead) through LRs Neeta Lalit Kumar Sanghavi and another versus Dharamdas V. Sanghavi and others, reported in (2014) 7 Supreme Court Cases 255, has determined the issue and while placing reliance on the law declared by the Apex Court in the case titled as SBP & Company versus Patel Engineering Ltd. and another, reported in (2005) 8 Supreme Court Cases 618, held that the intervention by the High Courts, in the proceedings under Articles 226 or 227 of the Constitution of India, with the orders made by the Arbitral Tribunals is not permissible. It is apt to reproduce paras 8 to 14 of the judgment herein: “8. Within a couple of weeks thereafter, the original applicant died on 7.10.2012. The question is whether the High Court is right in dismissing the application as not maintainable. By the judgment under appeal, the Bombay High Court opined that the remedy of the appellant lies in invoking the jurisdiction of the High Court under Article 226 of the Constitution. In our view, such a view is not in accordance with the law declared by this Court in S.B.P. & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618 . The relevant portion of the judgment reads as under: "45. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appeal able. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in between orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act.
The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible." That need not, however, necessarily mean that the application such as the one on hand is maintainable under Section 11 of the Act. 9. The learned Senior Counsel for the appellants, Shri Shyam Divan, submitted that if application under Section 11 is also held not maintainable, the appellants would be left remediless while their grievance subsists. On the other hand, learned senior counsel for the respondents Shri C.U. Singh submitted that the appellant's only remedy is to approach the arbitral tribunal seeking a recall of its decision to terminate the arbitration proceedings. 10. Chapter III of the Act deals with the appointment, challenge to the appointment and termination of the mandate and substitution of the arbitrator etc.: 10.1. Section 11 provides for the various modes of appointment of an arbitrator for the adjudication of the disputes which the parties agree to have resolved by arbitration. Broadly speaking, arbitrators could be appointed either by the agreement between the parties or by making an application to the Chief Justice of the High Court or the Chief Justice of India, as the case may be, as specified under Section 11 of the Act. 10.2. Section 12(3) provides for a challenge to the appointment of an arbitrator on two grounds. They are - (a) "that circumstances exist" which "give rise to justifiable doubts as to" the "independence or impartiality" of the arbitrator; (b) that the arbitrator does not "possess the qualification agreed to by the parties". 10.3.
10.2. Section 12(3) provides for a challenge to the appointment of an arbitrator on two grounds. They are - (a) "that circumstances exist" which "give rise to justifiable doubts as to" the "independence or impartiality" of the arbitrator; (b) that the arbitrator does not "possess the qualification agreed to by the parties". 10.3. Section 14 declares that "the mandate of an arbitrator shall terminate" in the circumstances specified therein. They are" - 14. Failure or impossibility to act. – (1) The mandate of an arbitrator shall terminate if - (a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to the termination of the mandate." (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-Section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate." Section 14(2) provides that if there is any controversy regarding the termination of the mandate of the arbitrator on any of the grounds referred to in the clause (a) then an application may be made to the Court "to decide on the termination of the mandate". 11. Section 32 of the Act on the other hand deals with the termination of arbitral proceedings. From the language of Section 32, it can be seen that arbitral proceedings get terminated either in the making of the final arbitral award or by an order of the arbitral tribunal under sub-Section 2. Sub-Section (2) provides that the arbitral tribunal shall issue an order for the termination of the arbitral proceedings in the three contingencies mentioned in sub-clauses (a) to (c) thereof. 12. On the facts of the present case, the applicability of sub-clauses (a) and (b) of Section 32(2) is clearly ruled out and we are of the opinion that the order dated 29.10.2007 by which the Tribunal terminated the arbitral proceedings could only fall within the scope of Section 32, sub-Section (2), sub-clause (c) i.e. the continuation of the proceedings has become impossible. By virtue of Section 32(3), on the termination of the arbitral proceedings, the mandate of the arbitral tribunal also comes to an end.
By virtue of Section 32(3), on the termination of the arbitral proceedings, the mandate of the arbitral tribunal also comes to an end. Having regard to the scheme of the Act and more particularly on a cumulative reading of Section 32 and Section 14, the question whether the mandate of the arbitrator stood legally terminated or not can be examined by the court "as provided under Section 14(2)". 13. The expression "court" is a defined expression under Section 2(1)(e) which reads as follows:" 2(1)(e) '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;" 14. Therefore, we are of the opinion, the apprehension of the appellant that they would be left remediless is without basis in law.” (Emphasis added) 10. In the case titled as Union of India versus M/s. Ambica Construction, reported in AIR 2016 Supreme Court 1441, the Apex Court, while discussing Sections 2(c) and 41 of the Act, has held that the Arbitrator is not a Court, but outcome of an agreement. It is profitable to reproduce para 6 of the judgment herein: “6. "Court" has been defined in section 2(c) of the Act to mean a civil court having jurisdiction to decide the questions forming the subject-matter of the reference. Section 41 of the Act is extracted hereunder: "41. Procedure and powers of Court. Subject to the provisions of this Act and of rules made thereunder : (a) The provisions of the Code of Civil Procedure, 1908 (5 of 1908), shall apply to all proceedings before the Court, and to all appeals, under this Act, and (b) The Court shall have, for the purpose of, and in relation to arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to any proceedings before the Court: Provided that nothing in CI.
(b) shall be taken to prejudice any power which may be vested in an Arbitrator or umpire for making orders with respect to any of such matters." The court can exercise the power specified in Second Schedule of the Act. However, Arbitrator is not a court. Arbitrator is the outcome of agreement. He decides the disputes as per the agreement entered into between the parties. Arbitration is an alternative forum for resolution of disputes but an Arbitrator ipso facto does not enjoy or possess all the powers conferred on the courts of law.” (Emphasis added) 11. It is worthwhile to record herein that in para 18 of the judgment in M/s. M.L. Gupta's case (supra), the learned Single Judge has discussed the judgment rendered by the Apex Court in SBP & Company's case (supra), but despite that has fallen in an error. 12. Mr. G.D. Verma, learned Senior Counsel appearing on behalf of the petitioner, argued that the petitioner will be left remediless. 13. This question was also raised before the Apex Court in Lalitkumar V. Sanghavi's case (supra) and was replied in para 14 of the judgment, reproduced hereinabove. 14. Having said so, it is held that the judgment made by the learned Single Judge in M/s. Ansal Properties' case (supra) is in tune with the judgments rendered by the Apex Court, reproduced hereinabove and the judgment in M/s. M.L. Gupta's case (supra) is in conflict with the said Apex Court judgments, is, accordingly, overruled. 15. The reference is answered accordingly. 16. In view of the discussions made hereinabove, the petition merits to be dismissed being not maintainable. 17. The petitioner is at liberty to work out the remedy(ies) in terms of the mandate of the Act. 18. The petition is dismissed accordingly along with all pending applications.