Research › Search › Judgment

J&K High Court · body

2022 DIGILAW 306 (JK)

Altaf Hussain Beg v. Shakeel-ur-Rehman Bhat

2022-06-28

ALI MOHAMMAD MAGREY, MOHD.AKRAM CHOWDHARY

body2022
ORDER : (Ali Mohammad Magrey, J.) : 1. This Writ Petition, purportedly, has its genesis in the Order dated 17th of September, 2021 passed by this Court in Arbitration Petition bearing No. 04/2021 filed by the Respondent No.1 herein under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) seeking appointment of an Arbitrator to resolve the disputes arising between the parties in connection with the Parent Partnership Deed dated 2nd of February, 2010 which contained an Arbitration Clause and the subsequent Partnership Deed dated 7th of June, 2014 providing therein that the disputes between the parties would be governed by the terms and conditions of the Parent Partnership Deed. The Court, in terms of the aforesaid Order, with the consent of the parties, appointed Hon’ble Mr Justice (Retd.) M. K. Hanjura, House No. 307, Lane No.4, Anand Vihar, Bohri, Talab Tillu, Jammu as the sole Arbitrator to make the award in accordance with the provisions of the Act. Pursuant to the aforesaid Order, the parties appeared before the Sole Arbitrator on 9th of October, 2021 and a mechanism/ procedure was devised with regard to the conduct of proceedings after hearing the parties. Thereafter, the proceedings were conducted by the Sole Arbitrator and, in terms of Order dated 15th of April, 2022, the matter was fixed for recording the statement of the Claimant/ Respondent No.1 herein. On 20th of April, 2022, the matter was again taken up on the face of a text message dated 16th of April, 2022 received by the Sole Arbitrator from the learned Counsel for the Respondent/ Petitioner herein via WhatsApp seeking framing of draft issues and the Sole Arbitrator, however, rejected the said WhatsApp message/communication by observing that the framing of issues is not an essential part of the mechanism and procedure to be expanded in an arbitration proceeding. Thereafter, an application was filed on behalf of the Respondent/ Petitioner herein seeking review of aforesaid orders dated 15th of April, 2022 and 20th of April, 2022. The Sole Arbitrator, in terms of Order dated 12th of May, 2022, rejected the application so filed by the Respondent/ Petitioner herein and fixed the matter for recording the statement of the Claimant/ Respondent No.1 herein. The Sole Arbitrator, in terms of Order dated 12th of May, 2022, rejected the application so filed by the Respondent/ Petitioner herein and fixed the matter for recording the statement of the Claimant/ Respondent No.1 herein. It is these Orders dated 15th of April, 2022; 20th of April, 2020; and 12th of May, 2022 passed by the Sole Arbitrator that have been put to challenge by the Respondent/Petitioner herein through the medium of the Petition in hand filed under Articles 226 and 227 of the Constitution. 2. When this matter was taken up for consideration, Mr M. A. Qayoom, the learned Counsel appearing on behalf of the Claimant/ Respondent No.1 herein, who is on Caveat, raised a preliminary objection with regard to the maintainability of the present Petition filed under Article 226 read with Article 227 of the Constitution. It is submitted that there is no scope for challenging the interim orders passed by the Sole Arbitrator inasmuch as the same are only a part of the proceedings with respect to conduct of the procedure being adopted in the process of arbitration and that the scheme of law does not provide for such a challenge. It is contended that the object of the Act of 1996 is that of minimizing judicial intervention and this important object is always required to be kept at the forefront as and when a Writ Petition is filed under Article 226/227 against the proceedings made under the Act of 1996. It is also argued by the learned Counsel that the impugned orders of the Sole Arbitrator, being interim in nature, are not appealable under Section 37 of the Act of 1996 and that the Petitioner/ the aggrieved party can project his grievance against the award or any in between order that might be passed by the Arbitrator only after the award is finally passed. While strengthening his argument, Mr Qayoom has referred to and relied upon the mandate of the Constitutional Bench Judgment passed by the Hon’ble Supreme Court in case titled ‘SBP & C. v. Patel Engineering Ltd. & Anr., (2005) 8 Supreme Court Cases 618’. 3. While strengthening his argument, Mr Qayoom has referred to and relied upon the mandate of the Constitutional Bench Judgment passed by the Hon’ble Supreme Court in case titled ‘SBP & C. v. Patel Engineering Ltd. & Anr., (2005) 8 Supreme Court Cases 618’. 3. Mr Z. A. Qurashi, the learned Senior Counsel, appearing on behalf of the Petitioner herein, submitted that there is no scope for the Petitioner herein to file any appeal under Section 37 of the Act as against the impugned interim orders passed by the Sole Arbitrator and, therefore, the Petitioner has been compelled to file the instant Petition before this Court. It is submitted that the approach adopted by the Sole Arbitrator in initially allowing the parties to submit the draft issues and, subsequent thereto, disallowing the framing of issues on the claim and counter claim of the parties violates the legal rights of the Petitioner. It is further submitted that the prejudice caused to the Petitioner in not framing the issues already submitted cannot be compensated or reversed in the event the award is passed against the Petitioner. It is pleaded that the Judgment passed by the Supreme Court, as referred to and relied upon by Mr Qayoom, does not bar the Petitioner from filing of the Writ Petition under Article 226/227 of the Constitution inasmuch the set of facts and the orders challenged, being different, cannot form the basis for declining to entertain the Writ Petition. It is contended that the aforesaid Judgment, in fact, supports the case of the Petitioner because the Supreme Court has made scope for filing of Writ Petition under Article 227 challenging the impugned orders passed by the Arbitral Tribunal/ Sole Arbitrator. Mr Qurashi argues that there is no remedy available under the provisions of the Act of 1996 for challenging the impugned interim orders passed by the Sole Arbitrator/ Arbitral Tribunal. Elaborating further, the learned Senior Counsel submitted that, in terms of the Order dated 22nd of January, 2022, the Sole Arbitrator, while granting ten (10) days’ time for filing response, allowed the parties to exchange the draft issues and send them to the Tribunal within six weeks, but subsequently, in terms of Order dated 20th of April, 2022, the learned Sole Arbitrator has held that the framing of issues is not an essential part in the arbitration proceedings. It is submitted that the learned Arbitrator, while taking such view, has referred to the orders earlier passed by it as well as the Judgment of the Supreme Court rendered in Civil Appeal No. 5139 of 2009 titled ‘Fiza Developers & Inter Trade v. Amci (I) Pvt. Ltd. & Anr.’, (2009) 17 SCC 796 ’, which Judgment is not applicable to the issue involved in the present case. It is also contended that the Judgments applied by the Sole Arbitrator in rejecting the claim of the Respondent/ Petitioner herein for framing of issues deal with proceedings under Section 34 of the Act of 1996. In the above context, the learned Senior Counsel has made an endeavour and all possible effort to demonstrate that the procedure adopted by the Sole Arbitrator in proceeding to decide the arbitral reference without framing the issues does deprive the Petitioner of substantiating his stand before the Sole Arbitrator in its true and correct perspective. 4. We heard the learned Counsel for the parties and have also gone through the pleadings on record, including the impugned orders passed by the Sole Arbitrator. 5. In view of the arguments advanced at the Bar, it has become imperative to deal with the preliminary aspect of maintainability of the Writ Petition before this Court filed under Article 226 read with Article 227 of the Constitution. 6. At the outset, what requires to be stated is that the Act of 1996 was intended to comprehensively cover international and commercial arbitrations and conciliations as also domestic arbitrations and conciliations. It envisages the making of an arbitral procedure which is fair, efficient and capable of meeting the needs of the arbitration concerned and for other matters set out in the Objects and Reasons of the Bill. An important object of this Act is minimizing judicial intervention while the matter is in the process of being arbitrated upon. The scheme of the Act of 1996 clearly provides the mechanism to be followed by the arbitrator and the parties to the arbitration. 7. Section 37 of the Act of 1996, running under the caption ‘appealable orders’, provides as under: “37. The scheme of the Act of 1996 clearly provides the mechanism to be followed by the arbitrator and the parties to the arbitration. 7. Section 37 of the Act of 1996, running under the caption ‘appealable orders’, provides as under: “37. Appealable orders: (1) Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely: a.) refusing to refer the parties to arbitration under Section 8; b.) granting or refusing to grant any measure under Section 9; c.) setting aside or refusing to set aside an arbitral award under section 34. (2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal— a.) accepting the plea referred to in sub-section (2) or subsection (3) of Section 16; or b.) granting or refusing to grant an interim measure under Section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” From the perusal of the above provision of law in the context of the interim orders under challenge in the Petition in hand, what transpires is that the said orders do not, in any manner whatsoever, come within the contours of the orders against whom the remedy of appeal has been prescribed by the scheme of law. Besides, under Section 34 of the Act of 1996, the aggrieved party has an avenue for agitating its grievance against the award, including any in-between orders that might have been passed by the Arbitral Tribunal acting under Section 16 of the Act after passed of the award. In order words, the scheme of the Act enjoins that 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. The mandate of the Act also does not approve of the proposition that this Court, under Article 226 or 227 of the Constitution, is capable of correcting any order passed by the Arbitral Tribunal and that such an intervention by this Court is impermissible. 8. The mandate of the Act also does not approve of the proposition that this Court, under Article 226 or 227 of the Constitution, is capable of correcting any order passed by the Arbitral Tribunal and that such an intervention by this Court is impermissible. 8. It needs to be mentioned here that in the event this Court, exercising jurisdiction under Article 226 or 227 of the Constitution, shows indulgence against every order made by the Arbitral Tribunal, the object of the scheme of the Act, i.e., minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated. In that view of the matter, we are of the considered view that once the arbitration has commenced in the Arbitral Tribunal, the parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage. In the present case, we reiterate that the impugned interim orders do not come within the purview of Section 37 of the Act as would give a right to the Petitioner herein to agitate his grievance prior to the passing of the final award. 9. In coming to the above conclusion with regard to the maintainability of this Petition before this Court, we find support from a Constitutional Bench Judgment rendered by the Hon’ble Supreme Court on the issue in case titled ‘SBP & C. v. Patel Engineering Ltd. & Anr., (2005) 8 Supreme Court Cases 618’, as referred to and relied upon by Mr Qayoom, the learned Counsel for the Claimant/ Respondent No.1 herein, paragraph Nos. 45 and 46, being relevant, are extracted hereinbelow, verbatim: “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 appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any inbetween orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any inbetween 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 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. 46. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 of the Constitution of India or under Article 226 of the Constitution of India against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage. 10. On the merits of the case, Mr Qurashi, the learned Senior Counsel for the Petitioner herein, has referred to and relied upon various Judgments passed by different Courts of the country, including the Hon’ble Apex Court, but since we have come to the conclusion that the present Petition is not maintainable before this Court in view of the mandate of the Scheme of the Act of 1996, as aforesaid, therefore, we feel that there is no requirement of taking note of those judgments touching upon the merits of the case. 11. 11. In view of the preceding analysis, we find that the instant Petition is not maintainable before this Court for the relief claimed therein. Accordingly, this Writ Petition is dismissed in limine, along with the connected CM. This shall also discharge Caveat No. 899/2022 accordingly.