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2018 DIGILAW 357 (CAL)

Ranjiv Kumar v. Sanjiv Kumar

2018-05-08

ABHIJIT GANGOPADHYAY, SANJIB BANERJEE

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JUDGMENT : Sanjib Banerjee, J. The legal question that has arisen herein is whether the rejection by the arbitrator of an objection as to the admissibility into evidence of the key document which is the subject-matter of the dispute between the parties would amount to an interim award capable of being challenged under Section 34 of the Arbitration and Conciliation Act, 1996. 2. The arbitral reference in this case was pursuant to an order of the Chief Justice or his designate on a request by the respondents under Section 11 of the Act. The arbitration agreement is contained in the very document under which, inter alia, the rights in respect of one or more immovable properties are sought to be transferred or settled in favour of the parties. The appellants had due notice of the request under Section 11 of the Act carried to the Chief Justice of this court or his designate and chose not to participate in such proceedings. Upon the arbitral reference commencing, the appellants herein objected to the primary document, which also contained the arbitration agreement, being tendered into evidence. Since the relevant document was tendered with the affidavit of evidence of the first witness called by the respondents, the appellants cross-examined such witness, obtained an answer from him to the effect that the relevant document was unstamped and immediately lodged their formal objection with the arbitrator. Such objection was overruled. The order of the arbitrator in such regard was sought to be treated as an interim award and challenged under Section 34 of the Act before the Arbitration Court. The petition pretending to be under Section 34 of the Act was dismissed by the judgment and order impugned as not maintainable since the order passed by the arbitrator could not be regarded as an interim award. 3. It is submitted on behalf of the appellants at the outset that in view of the Supreme Court dictum in the judgment reported at (2011) 14 SCC 66 (SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd.) an arbitration clause in a compulsorily registerable document which is not registered cannot be acted upon if the document is not properly stamped and the arbitration agreement therein can only be enforced after the deficit stamp duty and penalty are paid and the defect in the document is cured. (P) Ltd.) an arbitration clause in a compulsorily registerable document which is not registered cannot be acted upon if the document is not properly stamped and the arbitration agreement therein can only be enforced after the deficit stamp duty and penalty are paid and the defect in the document is cured. The appellants refer to Section 35 of the Stamp Act, 1899 and the command therein couched in negative words to emphasise that no court or any person having by law or consent of parties authority to receive evidence may act upon any instrument which is required to be stamped but is not duly stamped. The appellants assert that since the matter pertains to the very jurisdiction of the arbitral tribunal and its authority to adjudicate upon the disputes between the parties or to assume the role as an adjudicator, the decision rendered on the objection amounts to an interim award in view of a recent Supreme Court judgment rendered on January 23, 2018 in Civil Appeal No.824 of 2018 (Indian Farmers Fertilizer Co-Operative Limited v. Bhadra Products). 4. The appellants refer to Section 2(1)(c) of the Act of 1996 where an interim award has been referred to but not defined. They also rely on Section 31(6) of the Act that permits an arbitral tribunal to “make an interim arbitral award on any matter with respect to which it may make a final arbitral award” at any time during the arbitral proceedings. 5. The appellants also refer to a judgment reported at (2017) 2 SCC 228 (Centrotrade Minerals and Metal Inc. v. Hindustan Copper Limited) for the apparent acceptance therein that an arbitral award can be defined as a final decision by the arbitrators on all or a part of the disputes submitted to them, whether it concerns the merits of the dispute, jurisdiction, or a procedural issue leading them to end the proceedings. The appellants place parts of Chapter IX from Redfern and Hunter on International Arbitration (6th Ed). Several of such passages were noticed in the judgment in Centrotrade Minerals and Metal Inc.. The appellants place parts of Chapter IX from Redfern and Hunter on International Arbitration (6th Ed). Several of such passages were noticed in the judgment in Centrotrade Minerals and Metal Inc.. The appellants have also carried a single bench judgment of the Delhi High Court reported at (2005) 84 DRJ 377 (Noida Toll Bridge Company Limited v. Mitsui Marubeni Corporation) for the proposition that a decision rendered by an arbitral tribunal on an objection under Section 69 of the Partnership Act, 1932 must be regarded as an interim award and would be amenable to a challenge under Section 34 of the Act of 1996. 6. However, the sheet-anchor of the appellants’ case is the recent judgment in Indian Farmers Fertilizer Co-Operative Limited since, according to the appellants, any decision rendered by an arbitral tribunal on an issue pertaining to the overall jurisdiction of the reference would amount to an interim award capable of being challenged under Section 34 of the Act of 1996. It is, thus, that the judgment in Indian Farmers Fertilizer Co-Operative Limited calls for a detailed scrutiny. 7. An issue on the ground of limitation was decided in favour of the claimant in the reference by the arbitral tribunal in that case and the Supreme Court held that the relevant decision had to be regarded as an interim award and, by virtue of Section 2(1)(c) of the Act of 1996, it would be an arbitral award which could be challenged under Section 34 of such Act. The Supreme Court noticed Section 2(1)(c) of the Act, Section 16 of the Act that requires an adverse decision upon a challenge to the jurisdiction of the arbitral tribunal to await the conclusion of the reference before it can be assailed under Section 34 of the said Act and Section 31(6) of the Act in considering the legal question before it. 8. The appellants rely heavily on paragraph 9 of the yet unreported judgment of the Supreme Court: “9. The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the arbitral tribunal, and that it extends to “any matter” with respect to which it may make a final arbitral award. The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the arbitral tribunal, and that it extends to “any matter” with respect to which it may make a final arbitral award. The expression “matter” is wide in nature, and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award. However, it is important to add a note of caution. In an appropriate case, the issue of more than one award may be necessitated on the facts of that case. However, by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The arbitral tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense. Ultimately, a fair means for resolution of all disputes should be uppermost in the mind of the arbitral tribunal.” 9. The judgment goes on to make a distinction between “jurisdiction” as mentioned in Section 16 of the Act which covers three clear areas and the substantive jurisdiction of the reference. According to the view expressed in Indian Farmers Fertilizer Co-Operative Limited, the word “jurisdiction” referred to in Section 16 of the Act covers only three areas: whether there is the existence of a valid arbitration agreement; whether the arbitral tribunal is properly constituted; and, whether the matters submitted to arbitration are in accordance with the arbitration agreement. According to the view expressed in Indian Farmers Fertilizer Co-Operative Limited, the word “jurisdiction” referred to in Section 16 of the Act covers only three areas: whether there is the existence of a valid arbitration agreement; whether the arbitral tribunal is properly constituted; and, whether the matters submitted to arbitration are in accordance with the arbitration agreement. On the other hand, the distinction that the judgment makes with the substantive jurisdiction of the reference (‘Jurisdiction is a coat of many colours’) is in respect of a plea of limitation or a plea of res judicata by holding that a plea of res judicata or limitation “concerns the jurisdiction of the court which tries the proceedings.” Indeed, on such aspect the judgment refers to a passage from another judgment reported at (1966) 1 SCR 102 (Pandurang Dhoni Chougule v. Maruti Hari Jadhav). It is best that such passage be seen in its entirety: “10. … It is well-settled that a plea of limitation or a plea of res judicata is a plea of law which concerns the jurisdiction of the court which tries the proceedings. A finding on these pleas in favour of the party raising them would oust the jurisdiction of the court, and so, an erroneous decision on these pleas can be said to be concerned with questions of jurisdiction which fall within the purview of Section 115 of the Code …”. 10. The appellants exhort that when there is a statutory embargo on any person having authority to receive evidence to not admit in evidence a document which is required to be stamped but is not duly stamped, an objection on such count would be of the same character as a plea of limitation or a plea of res judicata which concerns the jurisdiction of the proceedings and not merely the jurisdiction of the particular forum which is in seisin of the lis. 11. There is a short, yet complete, answer to all the hullabaloo which has been raised by the appellants upon the arbitral tribunal admitting into evidence an unstamped or insufficiently stamped (therefore, not duly stamped) document into evidence. Such answer is found in Section 19(4) of the Act of 1996. Section 19 of the Act provides as follows: “19. Determination of rules of procedure. Such answer is found in Section 19(4) of the Act of 1996. Section 19 of the Act provides as follows: “19. Determination of rules of procedure. – (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (I of 1872). (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. (3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.” 12. If it is within the domain of an arbitral tribunal’s authority to determine the admissibility of any document, any order in such regard – however deep rooted it may be in the context of the reference – cannot be regarded as an interim award or one capable of being challenged as such under Section 34 of the Act; unless in course of such order a part of the matters which are in dispute has also been finally pronounced upon or unless the arbitral proceedings are brought to an end as a result of such order. 13. A decision on an objection as to the admissibility of a document in evidence rendered by the arbitral tribunal cannot be seen to be on the same footing as a decision on an objection on the ground of limitation or an objection on the ground of res judicata. Simply put, the dictum in the judgment in Indian Farmers Fertilizer Co-Operative Limited would not be applicable in the present context. 14. But it is submitted, with due respect and some diffidence, that the law as declared in the Indian Farmers Fertilizer Co-Operative Limited case may call for a second look. This part of the discussion is prefaced with the caveat that the dictum in such judgment does not apply to the present case, for, if it did, it would be binding on this court. It appears, it may be added with all humility, that the expression “any matter” in Section 31(6) of the Act of 1996 covers only such matters which would close a part of the lis. It appears, it may be added with all humility, that the expression “any matter” in Section 31(6) of the Act of 1996 covers only such matters which would close a part of the lis. An adjudication on an objection on the ground of limitation is not an end by itself (particularly if the objection is overruled); it is only the means to the end. Just as several issues have to be decided before coming to the grant of any final relief, the expression “any matter” has more to do with the grant or refusal of a final relief and, probably, nothing to do with the means in assessing the entitlement to such final relief. 15. Just as it is possible for several decrees to be passed in course of a civil suit, in an arbitral reference there may be several interim or partial awards before the final award is pronounced. Just as in a civil suit, the decrees passed before the conclusion of the entire lis would finally dispose of the matters covered thereby, an interim or a partial award would also finally dispose of the matters covered thereby and will not be a part of the final award. While it is easy to appreciate that there may not be any justification to continue an arbitral reference when an obvious issue on the ground of limitation has been erroneously decided, in view of Section 5 of the Act of 1996 and the authority of the court being limited under such statute, the court cannot venture into areas not permitted by the statute for the court to take up. It is possible that an unimpeachable objection under Section 16 of the Act is erroneously decided. Yet the objector has to suffer the entire reference before the objection can be canvassed upon an award being rendered by the arbitral tribunal. Similarly, a plea of limitation or a plea of res judicata, it is submitted with respect, the decision whereon are only stepping stones to the end of the lis, cannot be carved out to be subjected to a challenge under Section 34 of the Act if the objection on either such ground is overruled. Similarly, a plea of limitation or a plea of res judicata, it is submitted with respect, the decision whereon are only stepping stones to the end of the lis, cannot be carved out to be subjected to a challenge under Section 34 of the Act if the objection on either such ground is overruled. Just as in a suit every decree is appellable, but orders on the jurisdictional issues are not, in an arbitral reference it is only the awards, including interim awards, that are amenable to challenge under Section 34, particularly in the absence of any revisional jurisdiction in such regard. 16. It is not the character of an objection that determines the nature of the remedy available to the objector upon the objection being overruled by an arbitral tribunal. It is only the nature of the order on the objection that is the guiding factor. Indeed, such distinction was noticed in Pandurang Dhoni Chougule and is evident from the passage from such judgment relied upon in Indian Farmers Fertilizer Co-Operative Limited and quoted above. An objection may result in it being accepted or overruled: if it is accepted and the reference comes to an end, surely such order will deemed to be an award and will be amenable to a challenge under Section 34 of the Act; if, however, the objection is overruled, nothing is decided finally thereby as it only implies that the reference may continue. 17. It is possible that even if a plea of limitation or res judicata is overruled by an arbitral tribunal and the reference is continued, the claim may thereafter fail on merits. Seen from such perspective, the order overruling the objection would not have finally dealt with “any matter with respect to which it (the arbitral tribunal) may make a final arbitral award.” 18. However, even without deciding the matter on the discussion in the immediate four preceding paragraphs, it can safely be said that the rejection of an objection as to the admissibility of a document by an arbitral tribunal cannot be regarded as an interim award. 19. The issues involved in Centrotrade Minerals and Metal Inc. were whether a two-tier arbitration was contemplated under the 1996 Act and whether the award at the second tier being of foreign origin could be challenged in India. These questions are not relevant in the present context. 19. The issues involved in Centrotrade Minerals and Metal Inc. were whether a two-tier arbitration was contemplated under the 1996 Act and whether the award at the second tier being of foreign origin could be challenged in India. These questions are not relevant in the present context. As to the judgment of the Delhi High Court in Noida Toll Bridge Company Limited, the opinion is unacceptable since an adverse decision on an objection under Section 69 of the Partnership Act would only be a step in deciding the reference and neither the conclusion of the reference nor the conclusion of any matter with respect to which the arbitral tribunal may make a final arbitral award. 20. In any event, since the arbitration agreement in this case is deemed to have been tendered into evidence in course of the request under Section 11 of the Act by virtue of the dictum in SMS Tea, the objection as to the admissibility of the document could not have been canvassed before the arbitral tribunal constituted pursuant to the request made under Section 11 of the Act in view of Section 36 of the Stamp Act. 21. Since the reasons in the order impugned dated February 13, 2018 are much on the same lines as indicated hereinabove, such order does not call for any interference. APO 60 of 2018 and GA 506 of 2018 stand dismissed. 22. There will, however, be no order as to costs. 23. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. I agree. Abhijit Gangopadhyay, J.