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2021 DIGILAW 1029 (BOM)

Prakash Askram Jain v. State of Maharashtra, Food and Urban Supply Department

2021-07-23

AVINASH G.GHAROTE

body2021
JUDGMENT : 1. Heard Mr. Thigle, learned counsel for the applicant and Mr. Munde, learned AGP for the non-applicants. 2. It is not in dispute, that an agreement for transport of food grains and other commodities come to be executed, between the applicant, and the Governor of Maharashtra, in pursuance to tenders, invited by the Collector, Nandurbar on 30/03/2001, which agreement, was for a period of 01/04/2001 to 31/05/2006, at the remuneration, as contained in term no.3 of the agreement. Mr. Thigale, learned counsel for the applicant, submits, that the contract was extended by two years and was continued till 31/05/2008. The applicant claimed entitlement to rates over and above 5% per year, which was claimed to have been agreed in term no.3 and raised a claim, that he should be paid the difference in rate between what was agreed in agreement and the rates paid for transportation in the other districts due to general increase. As this request was turned down by the District Supply Officer, Nandurbar by his communication dated 13/07/2009, the applicant invoked the arbitration clause 27, as contained in the agreement dated 30/03/2001. The Commissioner, nominated the Additional Collector, to be the Arbitrator vide his communication dated 16/02/2010. The Additional Collector, Nashik, by his order dated 10/05/2010 (page 36), rejected the claim of the applicant. The applicant, being aggrieved from the same, approached the Commissioner, who by his order dated 16/06/2011, held, that since the issue regarding difference of rates, related, to the nine districts, therefore it was desirable, that the Government should take a decision, as the government by the communication dated 08/05/2006, had already directed, that only 5% escalation should be given and nothing else. Mr. Thigle, learned counsel for the applicant submits that this order dated, 16/06/2011, cannot be termed as an award, as nothing was decided by the Commissioner therein, as a result of it, it did not satisfy the requirements of Section 31 of the Arbitration and Conciliation Act 1996 (A & C Act, for short hereinafter). Mr. Thigle, learned counsel for the applicant submits that this order dated, 16/06/2011, cannot be termed as an award, as nothing was decided by the Commissioner therein, as a result of it, it did not satisfy the requirements of Section 31 of the Arbitration and Conciliation Act 1996 (A & C Act, for short hereinafter). He further submits, that the applicant was instructed to approach the civil court, as a result of which, the applicant filed RCS No. 89 of 2012 (Prakash Askaran Jain vs. State of Maharashtra and others), which came to be decreed, on 08/02/2019, by issuance of a mandatory injunction directing the defendant no.2 therein, i.e. Divisional Commissioner, Nashik, to decide the claim/dispute of the applicant about the difference of average rate of transportation charges as prayed by the applicant, as early as possible. It is also submitted, that an appeal against the said judgment and decree is presently pending before the District Judge-I at Shahada being Civil Application No. 15/2019 which has been filed by the non-applicants. 3. It is in this background, that the application has been filed for appointment of an independent qualified arbitrator to adjudicate the dispute in terms of clause 27 of the agreement dated 30/03/2001 within stipulated time. 4. Learned counsel Mr. Thigle, contends that the judicial opinion, has always leaned in favour of referring a dispute to arbitration, and wherever, there is any doubt, the dispute should be referred to an arbitrator, for which he placed his reliance upon Vidya Droliya and others Vs. Durga Trading Corporation, 2021 (2) SCC 1 . 5. He further submits, placing reliance upon Shailesh Dhairyawan Vs. Mohan Balkrishna Lulla, 2016 (3) SCC 619 that a purposive construction needs to be adopted, in respect of arbitration maters. Further relying upon Mayavati Trading Limited Vs. Pradyuat Deb Burban, 2019 (8) SCC 714 , he submits that the role of the Court under Section 11, is limited to examination of the existence of an arbitration clause and once its existence is not disputed, there is no other option to the Court, than to appoint the arbitrator. 6. Further relying upon Mayavati Trading Limited Vs. Pradyuat Deb Burban, 2019 (8) SCC 714 , he submits that the role of the Court under Section 11, is limited to examination of the existence of an arbitration clause and once its existence is not disputed, there is no other option to the Court, than to appoint the arbitrator. 6. He further submits, that considering the nature of the order dated 16/06/2011, passed by the Commissioner, which did not satisfy the requirement of Section 31 of the A & C Act, the provisions of Section 34 of the A & C Act were not available and therefore the order could not be challenged, before the District Judge. He submits, that the absence of challenge, for the above reason, would not come in the way of the applicant, in approaching this court under Section 11(6) of A & C Act 1996. He further submits that the order dated 16/06/2011, indicated, that the Commissioner who was acting as an arbitrator, had recused himself, by refusing to adjudicate upon the dispute submitted to him and therefore, had withdrawn from the arbitration, as a result of which, the provisions of Section 15 (1)(a) of the A & C Act, came into play, terminating the mandate of the arbitrator, due to which the requirement of fling of the present application had arisen and in view of the arbitration clause 27 in the agreement between the parties an arbitrator is required to be appointed. 7. He further submits, that it is not open for the court, to decide the issue of arbitrability, which has to be decided by the arbitrator. 8. He further submits, that the dispute between the parties as raised by the applicant, has not been decided as yet, and since the grievance of the applicant has not been addressed and redressed, the matter requires to be referred to arbitration by appointment of an arbitrator. 9. He further submits, that even otherwise, relying on TRF Ltd. Vs. Energo Engineering Projects Ltd., 2017(8) SCC 377 , that the Commissioner was ineligible to be appointed as an arbitrator, therefore, a fresh arbitrator, was required to be appointed. He submits, that the dictum in TRF (supra), was equally applicable to arbitration prior to the 2015 amendment, which came into force on 28/12/2015. 10. Energo Engineering Projects Ltd., 2017(8) SCC 377 , that the Commissioner was ineligible to be appointed as an arbitrator, therefore, a fresh arbitrator, was required to be appointed. He submits, that the dictum in TRF (supra), was equally applicable to arbitration prior to the 2015 amendment, which came into force on 28/12/2015. 10. He further submits, that even the issue of not approaching, this court under Section 11 (6)(c) of the A & C Act, 1996 within a reasonable time of the order dated 16/06/2011, would fall within the four-corners of arbitrability, which can only be decided by the arbitrator and not by this court under Section 11 (6) of A & C Act. He further lays emphasis on the language of clause (C) of Section 11 (6) of A & C Act, to contend that the Commissioner, had failed to perform the function entrusted to him, of deciding the dispute and therefore, a contingency was created, whereby the appointment of an arbitrator, became necessary. 11. Mr. Munde, the learned AGP, appearing for the non-applicants, refutes all the contentions raised by Mr. Thigale, learned counsel for the applicant. Mr. Munde submits, that the order dated 16/06/2011, passed by the Commissioner, in pursuance to a reference made to him by invoking clause 27 of the agreement dated 30/03/2001, was in fact an award and the only remedy available to the applicant, was to have challenge the same by preferring proceedings under Section 34 of the A &C Act. He invites my attention to the communication dated 27/01/2012, addressed to the applicant, in response to an appeal filed by the applicant on 13/10/2019, against the award dated 16/06/2011 before the Minister for Food and Civil Supplies, wherein it was specifically brought to the notice of the applicant that the remedy under Section 34 of the A &C Act, was available to him in respect of the award 16/06/2011 and he should approach the Civil Court for the same. He contends that it was therefore, necessary, for the applicant, to have preferred an objection under Section 34 of the A &C Act, to the court competent to entertain it. He contends that it was therefore, necessary, for the applicant, to have preferred an objection under Section 34 of the A &C Act, to the court competent to entertain it. He submits, that the Civil Judge Senior Division, Shahada, to whom the applicant approach by way of RCS No. 89 of 2012, was not the court as contemplated by Section 34 read with Section 2 (1)(e) of the A & C Act and therefore, the decree passed by him on 08/02/2019, in RCS No. 89 of 2012 was nonest in the eyes of law. 12. He submits that even otherwise, if at all any such application was presumed to be maintainable, considering the contention of the learned counsel for the applicant that the award dated 16/06/2011 was in fact not an award or for that matter, the commissioner had recused to act or had recused himself and or had withdrawn from the proceedings, it ought to have been filed within a reasonable period of the award dated 16/06/2011 and the present application under Section 11, which has been filed on 07/06/2021, after a period of nearly 8 years, was clearly not entertainable in law. Learned AGP, therefore, submits that the application needs to be dismissed. 13. For a proper appreciation of the rival contentions, it is necessary to note a few dates and events : Arbitration Application no.9 of 2021 Sr. No. Date Event 1. 30/03/2001 Agreement for transportation of grain entertained into between the applicant and the non-applicant no.1, which was for a period from 01/04/2001 to 31/05/2006, which came to be extended for 2 years and therefore, should expired on 31/05/2008. The agreement contained as arbitration clause 27. (page no.27) 2. 13/07/2009 Dispute arose between the parties, due to demand made by the applicant for payment of difference between the rate given to him and average rise in the rate of transportation, in other districts, which demand, was rejected. (page 88) 3. 16/02/2010 The applicant appears to have invoked the arbitration clause, as a result of which, Arbitration Proceedings no.2 of 2009 were initiated, in which an order was passed on 16.02.2010 directing the applicant to submit his statement of claim before the Additional Collector, Nandurbar, within a period of one month, whereupon the Additional Collector, Nandurbar was directed to hear the applicant and pass an order. (page 31) and the proceedings appear to have been transmitted to the Additional Collector, Nandurbar. 4. 10/05/2010 Arbitration Proceedings No.2 of 2009 were decided by the Additional Collector, Nandurbar, who by an award, rejected the claim of the applicant. (page 36-37) 5. 09/12/2010 Being aggrieved by the award by the Additional Collector, Nandurbar, the applicant filed proceedings before the Divisional Commissioner, Nashik, which was again (for the second time) registered as Arbitration Proceedings No. 2 of 2010. 6. 16/06/2011 The Divisional Commissioner, Nashik, passed an order, directing the applicant, to approach the Government in respect of his claim for an increase. 7. 13/10/2019 The applicant filed an appeal before the Hon’ble Minister, for Food and Civil Supplies against the order of the Divisional Commissioner dated 16/06/2011. 8. 20/01/2012 The applicant was issued a communication by the office of Hon’ble Minister, stating, that the remedy against the order passed by the Divisional Commissioner dated 16/06/2011, was available to the applicant, under Section 34 or 37(1)(6) of the A & C Act before the Civil court and therefore, the appeal was not maintainable. 9. 28/03/2012 The applicant, filed RCS No. 89 of 2012 before the CJSD, Shahada, styling it as an application under Section 34 of the A &C Act. 10. 08/02/2019 The CJSD, Shahada passed a decree in RCS No.89 of 2012, issuing mandatory injunction directing the Divisional Commissioner, Nashik to decide the claim / dispute of the applicant about the difference of average rate of transportation charges as prayed by the applicant, as early as possible. 11. 18/04/2019 The decree in RCS No. 89 of 2012, has been challenged by the non-applicants herein by way of an appeal being RCA No. 15 of 2019 under Section 96 read with Order 41 Rule 1 of CPC, which is presently stated to be pending. 12. 11/06/2011 The Arbitration Application No.09 of 2021 has been filed, invoking section 11 of the A & C Act, in the light of clause 27 of the agreement dated 30/03/2001, for appointment of an arbitrator. 14. 12. 11/06/2011 The Arbitration Application No.09 of 2021 has been filed, invoking section 11 of the A & C Act, in the light of clause 27 of the agreement dated 30/03/2001, for appointment of an arbitrator. 14. The arbitration clause 27 reads as under : Clause 27 : Any dispute arising under this agreement or in relation thereto including the interpretation of this Agreement either during the continuance thereof or thereafter shall be referred to the arbitration of the Commissioner of the Division where the transport work is to be carried out or any other officer authorized by him in that behalf in writing within six months of the expiry of the agreement and every such reference will be governed by the provisions of the Arbitration Act, 1940 or any modification thereof for the time being in force. The decision of such arbitrator shall be final and binding on the parties to this agreement. (emphasis supplied) 15. The prayer in the application, reads as under : “(A) The application may kindly be allowed. (B) The Hon’ble Court may graciously be pleased to appoint an independent qualified Arbitral tribunal to adjudicate the dispute in terms of clause 27 of the agreement dated 30.03.2001 (Exh.B) within stipulated period in terms of Section 29-A and 29-B of Arbitration and Conciliation Act, 1996. (C) Any other appropriate order which may deem ft, may kindly be passed in favour of the applicant as the facts and circumstances of the case may warrant”. 16. A bare perusal of the arbitration clause 27 in the agreement dated 30/03/2001, would indicate that it was permissible for the arbitrator i.e. Commissioner, to authorize any other officer, in writing, to conduct the arbitration. The order dated 16/02/2010 by the Divisional Commissioner, in this regard assumes significance, inasmuch as, it authorizes, the Additional Collector, Nandurbar to conduct the arbitration. The order complies with requirement of clause 27 of authorizing any other officer in that behalf in writing to conduct the arbitration, as it is in writing and is signed by the Divisional Commissioner, which is addressed to the applicant. It is not disputed, that in pursuance to this order dated 16/02/2010, authorizing the Additional Collector, Nandurbar, to enter into arbitration in terms of clause 27, the applicant, had approached the Additional Collector and had filed his claim before him which were Arbitration Proceedings No. 02 of 2009. It is not disputed, that in pursuance to this order dated 16/02/2010, authorizing the Additional Collector, Nandurbar, to enter into arbitration in terms of clause 27, the applicant, had approached the Additional Collector and had filed his claim before him which were Arbitration Proceedings No. 02 of 2009. It cannot be disputed, that in these proceedings, on 10/05/2010, the Additional Collector, Nandurbar, passed an award, rejecting the claim filed by the applicant. This award, is in writing and contains the reasons for rejecting the claim of the applicant. This award dated 10/05/2010 therefore satisfies all the requirements of an award as enumerated as in Section 31 of the A & C Act, 1996. It was thus, necessary, for the applicant, to initiate proceedings, under Section 34 of the A & C Act, 1996, before the appropriate authority, in this regard, for challenging the award dated 10/05/2010. This however, has not been done, as a result of which the award dated 10/05/2010 passed by the Additional Collector, became final. The contention of Mr. Thigle, learned Counsel for the applicant, that this is not an award but merely is an order, cannot be accepted for the reason that the same has been passed in Arbitration Proceeding No. 1/2009 which were registered consequent to the applicant having invoked the arbitration clause no. 27, in pursuance to which the Divisional Commissioner, had authorised the Additional Collector to hear and decide the arbitration proceedings, due to which the applicant went before the Additional Collector, filed his claim and took the award dated 10.05.2010. 17. The challenge, to this award dated 10/05/2010, passed by the Additional Collector, Nandurbar, before the Divisional Commissioner, Nashik by way of an appeal and its consequent registration, as Arbitration Proceedings No. 02/2010 and the further order thereupon on 16/06/2011 by the Divisional Commissioner, are all without jurisdiction whatsoever. The perusal of the order dated 16/06/2011 passed by the Divisional Commissioner, indicates in para 1 thereof, that the proceedings before the Divisional Commissioner, had been filed being aggrieved by the award dated 10/05/2010, passed by the Additional Collector, Nandurbar, in Arbitration Proceedings initiated before him and thus would be proceedings in appeal. The perusal of the order dated 16/06/2011 passed by the Divisional Commissioner, indicates in para 1 thereof, that the proceedings before the Divisional Commissioner, had been filed being aggrieved by the award dated 10/05/2010, passed by the Additional Collector, Nandurbar, in Arbitration Proceedings initiated before him and thus would be proceedings in appeal. By no stretch of imagination, the award of the Additional Collector, could have been challenged before the Divisional Commissioner, Nashik, for the reason as indicated above, any challenge was permissible only by invoking Section 34 of the A & C Act, 1996, which would lie before a court as defined in Section 2 (1)(e) of the A & C Act, 1996. The Divisional Commissioner, Nashik, was thus not the authority before whom any challenge to the award by the Additional Commissioner Nandurbar, dated 10/05/2010 could have been maintained. 18. Even otherwise, once the arbitration clause 27 stood invoked by the applicant and in terms of clause 27 the Divisional Commissioner, nominated the Additional Collector, Nandurbar to entertain and decide the arbitration proceedings by his communication in writing dated 16/02/2010, clause 27 could not have been invoked again before the Divisional Commissioner, by fling arbitration proceedings. Thus, the order dated 16/06/2011, passed by the Divisional Commissioner, construed in any manner, was clearly without jurisdiction altogether as the Divisional Commissioner could not have entertained either in appeal against the award of the Additional Collector, dated 10/05/2010, nor could have entertained any independent arbitration proceedings by virtue of clause 27. 19. The matter does not rest here, but foundered vagrantly and aimlessly which is indicated from the fact, that against the order of the Divisional Commissioner dated 16/06/2011, an appeal came to be filed before the concerned Minister, which was not entertained by intimating to the applicant, that the proper recourse, would be the invocation of the provisions under Section 34 or 37 (1)(6) of the A & C Act, 1996, which is indicated by the communication dated 20/01/2012. 20. The aimless wandering did not stop there, but surprisingly, RCS No. 89 of 2012, came to be filed before the Civil Judge Senior Division, Shahada, invoking Section 34 of the A & C Act, 1996. The title of the suit and the prayer made therein, for the sake of ready reference are reproduced as under: "Other Language" Prayer : "Other Language" 21. The title of the suit and the prayer made therein, for the sake of ready reference are reproduced as under: "Other Language" Prayer : "Other Language" 21. Shockingly, the Civil Judge Senior Judge Senior Division, Shahada, not only entertained the proceedings filed before it under the provisions of Section 34 of the A & C Act, 1996, but went on to decide the same by the judgment dated 08/02/2019, granting a decree in the following terms. “ORDER 1. Suit is decreed with cots. 2. Issue mandatory injunction directing the Defendant No.2 to decide the claim/dispute of the plaintiff about difference of average rate of transportation charges as prayed by the plaintiff as early as possible. 3. Decree be drawn up accordingly. (Dictated and pronounced in open Court)” 22. It is beyond comprehension as to how proceedings under Section 34 of the A & C Act, 1996, were filed before the CJSD, Shahada, were registered as RCS No. 89 of 2012 or for that matter went to trial and resulted in the passing of a judgment and decree on 08/02/2019. Needless to say, that the institution, consideration and decision of RCS No. 89 of 2012, all is absolutely without jurisdiction altogether, as the CJSD, Shahada, cannot be considered to be a court under Section 2(1)(e) of the A & C Act, 1996, so as to entertain and decide proceedings under Section 34 of the A & C Act, 1996. 23. It is, thus evident, that all the proceedings right from the one filed before the Divisional Commissioner, Nashik, the appeal before the Minister, and the institution and decision of RCS No. 89 of 2012 are all without jurisdiction whatsoever. 24. It is thus, apparent that what was indeed an award and was required to be challenged by invoking Section 34 of the A & C Act, 1996, was the award passed by the Additional Collector, Nandurbar on 10/05/2010, which has not been done and thus has now attained finality. 25. The contention of Mr. 24. It is thus, apparent that what was indeed an award and was required to be challenged by invoking Section 34 of the A & C Act, 1996, was the award passed by the Additional Collector, Nandurbar on 10/05/2010, which has not been done and thus has now attained finality. 25. The contention of Mr. Thigle, learned counsel for the applicant, that the provisions of Section 11 (6) are now invocable by the aid of clause (c) of Section 11(6) or Section 15 (1)(a) of the A & C Act, 1996, is absolutely without any substance whatsoever, as the arbitration clause has already been invoked and an award has been passed consequent to such invocation, by the Additional Collector Nandurbar, in Arbitration Proceeding No. 2 of 2009, on 10/05/2010, as a result of which, the arbitration clause, stands worked out fully, and now cannot be invoked again. 26. The reliance on Vidya Droliya (supra), Mayawati Trading (supra), Shailash (supra) and TRF Ltd.,(supra) is clearly misplaced, as in none of the above judgments, situation arose where the arbitration clause was invoked and an award was already passed. Any change of arbitrator, due to the mandate of Section 12 of A & C Act, 1996 by introduction of the Sixth Schedule w.e.f. 23/10/2015, even if it is held to be applicable retrospectively, would only apply to pending arbitration proceedings and not to proceedings which already stood concluded by passing of an award. Similarly, the contention that arbitrability is to be decided by the arbitrator, does not in any way assist the learned counsel in view of the fact, that Section 11 (6) of the A & C Act, 1996, is not open to be invoked as the award already stands passed by the Additional Collector on 10/05/2010. The application, purely appears to have been filed, upon a misconception, that the arbitration clause is still alive and is not worked out, which is not the case at all in view of what has been said above. 27. Even presuming the contention, of Mr. The application, purely appears to have been filed, upon a misconception, that the arbitration clause is still alive and is not worked out, which is not the case at all in view of what has been said above. 27. Even presuming the contention, of Mr. Thigle, learned Counsel for the applicant that the order dated 16/06/2011 by the Commissioner was not an award and the Commissioner, had recused / withdrawn himself from the proceedings or had refused himself from the proceedings or had refused to act as per the mandate conferred upon him, thereby attracting section 15 (1) (a) of the A & C Act, 1996, any application if at all the same could have been said to have been permissibly (which has already been held not to be so) ought to have been filed within a reasonable time and the delay of more than 8 years is clearly fatal. The entire purport of an arbitration clause and its invocation and institution of consequent proceedings after expeditious decision of disputes, which stands totally frustrated by any delay. On this count also, the application could not be tenable. 28. The application, therefore, is clearly misconceived and is not maintainable in law also. Thus, for the reasons stated above, the application is dismissed.