KERALA HIGH COURT
Year of Decision : 2010
Details
Arbitration and Conciliation Act, 1996, Section 25, 34 -- Exparte award - Setting aside - An arbitrator appointed in terms of agreement between parties, cannot set aside an ex parte award after it is signed - An arbitrator appointed under the Act becomes functuous officio once he signs the award...........
PUNJAB AND HARYANA HIGH COURT
Year of Decision : 2010
Delhi HIghcourt judgment
Arbitration and Conciliation Act, 1996, Section 34, 37 -- Delay in filing objections to arbitrating award and delay of 385 days in filing appeal - Delay due to lapse on the part of the officials of the appellant - It is duty of court to protect public money from being squandered away by Corporation who are not looking after public interest seriously -
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Supreme Court rules that are to be followed but a separate set of rules made
by the Chief Justice for the purposes of Section 11.
Sub-section 12 of Section 11 reads as follows:
“(a) Where the matters referred to in sub-sections (4), (5),
(6), (7), (8) and (10) arise in an international commercial
arbitration, the reference to ‘‘Chief Justice'' in those sub-
sections shall be construed as a reference to the ‘‘Chief Justice
of India''.
(b) Where the matters referred to in sub-sections (4), (5),
(6), (7), (8) and (10) arise in any other arbitration, the
reference to “Chief Justice” in those sub-sections shall be
construed as a reference to the Chief Justice of the High Court
within whose local limits the principal Civil Court referred to
in clause (e) of sub-section (1) of section 2 is situate and, where
the High Court itself is the Court referred to in that clause, to
the Chief Justice of that High Court.”
It is obvious that Section 11(12)(b) was necessitated in order that it be
clear that the Chief Justice of “the High Court” will only be such Chief
Justice within whose local limits the Principal Civil Court referred to in
Section 2(1)(e) is situate and the Chief Justice of that High Court which is
referred to in the inclusive part of the definition contained in Section 2(1)
(e). This sub-section also does not in any manner make the Chief Justice or
his designate “court” for the purpose of Section 42. Again, the decision of
the Chief Justice or his designate, not being the decision of the Supreme
Court or the High Court, as the case may be, has no precedential value
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being a decision of a judicial authority which is not a Court of Record.
18.
In contrast with applications moved under Section 8 and 11 of the
Act, applications moved under Section 9 are to the “court” as defined for the
passing of interim orders before or during arbitral proceedings or at any time
after the making of the arbitral Award but before its enforcement. In case an
application is made, as has been made in the present case, before a particular
court, Section 42 will apply to preclude the making of all subsequent
applications under Part-I to any court except the court to which an
application has been made under Section 9 of the Act.
19.
One of the questions that arises in the reference order is whether the
Supreme Court is a court within the meaning of Section 2(1)(e) of the Act.
In two judgments under the 1940 Act, namely,
State of Madhya Pradesh v.
Saith and Skelton (P) Ltd., (1972) 1 SCC 702
and
Guru Nanak
Foundation v. Rattan Singh & Sons, (1981) 4 SCC 634
, the Supreme
Court took the view that where an Arbitrator was appointed by the Supreme
Court itself and the Supreme Court retained seisin over the arbitration
proceedings, the Supreme Court would be “court” for the purpose of Section
2(c) of the 1940 Act. These judgments were distinguished in
National
Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. & Anr., (2004)
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1 SCC 540, Bharat Coking Coal Limited v. Annapurna Construction,
(2008) 6 SCC 732
and
Garhwal Mandal Vikas Nigam Ltd. v. Krishna
Travel Agency, (2008) 6 SCC 741
. The first of these judgments was a
judgment under the 1996 Act wherein it was held that when the Supreme
Court appoints an Arbitrator but does not retain seisin over the proceedings,
the Supreme Court will not be “court” within the meaning of Section 2(1)(e)
of the Act. Similar is the position in the third judgment, the Garhwal case.
Even under the 1940 Act, in Bharat Coking Coal, the same distinction was
made and it was held that as the Supreme Court did not retain seisin over the
proceedings after appointing an Arbitrator, the Supreme Court would not be
“court” within the meaning of the Arbitration Act, 1940.
20.
As noted above, the definition of “court” in Section 2(1)(e) is
materially different from its predecessor contained in Section 2(c) of the
1940 Act. There are a variety of reasons as to why the Supreme Court
cannot possibly be considered to be “court” within the meaning of Section
2(1)(e) even if it retains seisin over the arbitral proceedings. Firstly, as
noted above, the definition is exhaustive and recognizes only one of two
possible courts that could be “court” for the purpose of Section 2(1)(e).
Secondly, under the 1940 Act, the expression “civil court” has been held to
be wide enough to include an appellate court and, therefore would include
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the Supreme Court as was held in the two judgments aforementioned under
the 1940 Act. Even though this proposition itself is open to doubt, as the
Supreme Court exercising jurisdiction under Article 136 is not an ordinary
Appellate Court, suffice it to say that even this reason does not obtain under
the present definition, which speaks of either the Principal Civil Court or the
High Court exercising original jurisdiction. Thirdly, if an application would
have to be preferred to the Supreme Court directly, the appeal that is
available so far as applications under Sections 9 and 34 are concerned,
provided for under Section 37 of the Act, would not be available. Any
further appeal to the Supreme Court under Article 136 would also not be
available. The only other argument that could possibly be made is that all
definition sections are subject to context to the contrary. The context of
Section 42 does not in any manner lead to a conclusion that the word “court”
in Section 42 should be construed otherwise than as defined. The context of
Section 42 is merely to see that one court alone shall have jurisdiction over
all applications with respect to arbitration agreements which context does
not in any manner enable the Supreme Court to become a “court” within the
meaning of Section 42. It has aptly been stated that the rule of forum
conveniens is expressly excluded by section 42. See: JSW Steel Ltd. vs.
Jindal Praxair Oxygen Co.Ltd., (2006) 11 SCC 521 at para 59. Section 42 is
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also markedly different from Section 31(4) of the 1940 Act in that the
expression “has been made in a court competent to entertain it” does not find
place in Section 42. This is for the reason that, under Section 2(1)(e), the
competent Court is fixed as the Principal Civil Court exercising original
jurisdiction or a High Court exercising original civil jurisdiction, and no
other court. For all these reasons, we hold that the decisions under the 1940
Act would not obtain under the 1996 Act, and the Supreme Court cannot be
“court” for the purposes of Section 42.
21.
One other question that may arise is as to whether Section 42 applies
after the arbitral proceedings come to an end. It has already been held by us
that the expression “with respect to an arbitration agreement” are words of
wide import and would take in all applications made before during or after
the arbitral proceedings are over. In an earlier judgment,
Kumbha Mawji v.
Dominion of India, (1953) SCR 878,
the question which arose before the
Supreme Court was whether the expression used in Section 31(4) of the
1940 Act “in any reference” would include matters that are after the arbitral
proceedings are over and have culminated in an award. It was held that the
words “in any reference” cannot be taken to mean “in the course of a
reference”, but mean “in the matter of a reference” and that such phrase is
wide enough and comprehensive enough to cover an application made after
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the arbitration is completed and the final Award is made. (See Paras 891-
893). As has been noticed above, the expression used in Section 42 is wider
being “with respect to an arbitration agreement” and would certainly include
such applications.
22.
One more question that may arise under Section 42 is whether Section
42 would apply in cases where an application made in a court is found to be
without jurisdiction. Under Section 31(4) of the old Act, it has been held in
FCI represented by
Managing Director & Anr. v. A.M. Ahmed & Co.,
through MD & Anr., (2001) 10 SCC 532
at para 6 and
Neycer India Ltd.
v. GNB Ceramics Ltd., (2002) 9 SCC 489
at para 3 that Section 31(4) of
the 1940 Act would not be applicable if it were found that an application
was to be made before a court which had no jurisdiction. In
Jatinder Nath
v. Chopra Land Developers Pvt. Ltd., (2007) 11 SCC 453
at para 9 and
Rajasthan State Electrical Board v. Universal Petrol Chemical Limited,
(2009) 3 SCC 107
at paras 33 to 36 and
Swastik Gases (P) Ltd. v. Indian
Oil Corporation, 2013 (9) SCC 32
at para 32, it was held that where the
agreement between the parties restricted jurisdiction to only one particular
court, that court alone would have jurisdiction as neither Section 31(4) nor
Section 42 contains a non-obstante clause wiping out a contrary agreement
between the parties. It has thus been held that applications preferred to
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courts outside the exclusive court agreed to by parties would also be without
jurisdiction.
23.
Even under Section 42 itself, a Designated Judge has held in
HBM
Print Ltd. v. Scantrans India (Pvt.) Ltd., (2009) 17 SCC 338
, that where
the Chief Justice has no jurisdiction under Section 11, Section 42 will not
apply. This is quite apart from the fact that Section 42, as has been held
above, will not apply to Section 11 applications at all.
24.
If an application were to be preferred to a Court which is not a
Principal Civil Court of original jurisdiction in a district, or a High Court
exercising original jurisdiction to decide questions forming the subject
matter of an arbitration if the same had been the subject matter of a suit, then
obviously such application would be outside the four corners of Section 42.
If, for example, an application were to be filed in a court inferior to a
Principal Civil Court, or to a High Court which has no original jurisdiction,
or if an application were to be made to a court which has no subject matter
jurisdiction, such application would be outside Section 42 and would not
debar subsequent applications from being filed in a court other than such
court.
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25.
Our conclusions therefore on Section 2(1)(e) and Section 42 of the
Arbitration Act, 1996 are as follows:
(a)
Section 2(1)(e) contains an exhaustive definition marking out only
the Principal Civil Court of original jurisdiction in a district or a High Court
having original civil jurisdiction in the State, and no other court as “court”
for the purpose of Part-I of the Arbitration Act, 1996.
(b)
The expression “with respect to an arbitration agreement” makes it
clear that Section 42 will apply to all applications made whether before or
during arbitral proceedings or after an Award is pronounced under Part-I of
the 1996 Act.
(c)
However, Section 42 only applies to applications made under Part-I if
they are made to a court as defined. Since applications made under Section
8 are made to judicial authorities and since applications under Section 11 are
made to the Chief Justice or his designate, the judicial authority and the
Chief Justice or his designate not being court as defined, such applications
would be outside Section 42.
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(d)
Section 9 applications being applications made to a court and Section
34 applications to set aside arbitral awards are applications which are within
Section 42.
(e)
In no circumstances can the Supreme Court be “court” for the
purposes of Section 2(1)(e), and whether the Supreme Court does or does
not retain seisin after appointing an Arbitrator, applications will follow the
first application made before either a High Court having original jurisdiction
in the State or a Principal Civil court having original jurisdiction in the
district as the case may be.
(f)
Section 42 will apply to applications made after the arbitral
proceedings have come to an end provided they are made under Part-I.
(g)
If a first application is made to a court which is neither a Principal
Court of original jurisdiction in a district or a High Court exercising original
jurisdiction in a State, such application not being to a court as defined would
be outside Section 42. Also, an application made to a court without subject
matter jurisdiction would be outside Section 42.
The reference is answered accordingly.
26.
On the facts of the present case, nothing has been shown as to how the
High Court of Calcutta does not possess jurisdiction. It has been mentioned
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above that leave under Clause 12 has been granted. In the circumstances of
the present case, therefore, the judgment dated 11
th
April, 2005 passed by the
High Court of Calcutta is correct and does not need any interference. Civil
Appeal No.6691/2005 and Civil Appeal No.4808/2013 are hereby
dismissed.
..............................................CJI
(R.M. Lodha)
......................................J.
(Kurian Joseph)
......................................J.
(R.F. Nariman)
New Delhi,
September 10, 2014
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