AI Structured Summary
Not yet generated for this judgment
Judgment
A.S. Bopanna, J.—The petitioner is before this Court assailing the order dated 07.03.2011 passed on I.A. No. 1 in A.S. No. 26/2004, by the learned City Civil and Sessions Judge, Bangalore. The instant case has a chequered history. A Hon''ble Division Bench of this Court in W.A. No. 4020/2000 by its order dated 20.08.2001, had held the petitioner herein to be due certain amount to the respondent herein. Alleging disobedience of the said order, the respondent herein filed contempt petition against the petitioner herein in CCC (Civil) No. 3062/2001. Prior to this, the petitioner had approached the Hon''ble Supreme Court in Appeal (Civil) No. 20959/2001 against the order passed in the writ appeal. While disposing the appeal, the Hon''ble Supreme Court had granted leave to the petitioner herein to approach the Division Bench of this Court to seek modification of the order. Accordingly, the petitioner herein had filed an application but before the same was taken up for consideration, the said contempt petition arose for consideration. Though charge was framed in the contempt petition by the order dated 03.12.2002, it was recalled and as per the understanding reached between the parties, the question with regard to the liability was agreed to be referred to a former Judge of this Court as the Sole Arbitrator. It was also agreed between the parties that the challenge to the award to be passed by the Arbitrator as provided under the provisions of the Arbitration and Conciliation Act, 1996 (for short the Act'') would be made in the contempt proceedings which remained pending. The said understanding was made a part of the order and the contempt proceedings was adjourned.
The parties accordingly went through the arbitration proceedings and the learned Arbitrator passed the award on 07.03.2004. Since, the petitioner herein was held to be due the amount awarded therein, the petitioner claiming to be aggrieved by the arbitral award filed an application u/s 34 of Act before the City Civil Court in A.S. No. 26/2004 on 05.06.2004. Another application u/s 34 of the Act was also filed on the same day in the contempt petition in CCC (Civil) No. 3062/2001 However, the petitioner herein thereafter filed an application in A.S. No. 26/2004 and sought dismissal of the same, which was accordingly dismissed on 11.08.2004. Subsequently, the contempt petition in CCC (Civil) No. 3062/2001 was taken up for consideration in its usual course. By adverting only to the contention as to whether there was willful default, the Division Bench (to which I was a member) disposed of CCC (Civil) No. 3062/2001 on 07.08.2006. However, the application filed by the petitioner u/s 34 of the Act was not a part of the consideration therein, nor did the petitioner herein seek consideration of the same. Thereafter, there was a lull for sometime, until the respondent herein filed an execution petition in E.P. No. 26/2008 seeking execution of the award. Subsequent thereto, the petitioner herein filed an application in A.S. No. 26/2004 on 16.01.2009 u/s 151 of CPC seeking re-call of the order of dismissal dated 11.08.2004 and restoration of A.S. No. 26/2004 to consider the correctness of the award passed by the Arbitrator. The application was opposed by the respondent herein. The learned Judge of the City Civil Court has dismissed the application by the order dated 07.03.2011. It is against the said order, the petitioner is before this Court.
Heard, Sri Jayakumar S. Patil, learned senior counsel along with Sri V.V. Gunjal, learned counsel for the petitioner and Sri K.G. Raghavan, learned senior counsel along with Sri George Joseph, learned counsel for the respondent and perused the petition papers.
Learned senior counsel for the petitioner would strenuously contend that challenge to the award can be made only u/s 34 of the Act before the District Court and not in a contempt petition. Though such undertaking was recorded in contempt proceedings, the petitioner had in fact filed an application seeking to withdraw from such undertaking. Though no order has been passed on the same, the petitioner in any event had filed an application u/s 34 of the Act in the contempt petition as also an application (Arbitration Suit) was filed before the Civil Court. Thereafter the suit was withdrawn with the bona fide belief that the application filed in the contempt proceedings would be considered. Since the same was not done, the petitioner has thereafter filed the application seeking recall of the order of dismissal and restore the suit for consideration. In that regard, it is contended that the position of law enunciated by the Hon''ble Supreme Court is that an arbitral award can be challenged only before the District Court and not before the Court appointing the Arbitrator. In that view, the application ought to have been allowed and A.S. No. 26/2004 should have been restored, as otherwise, the petitioner would be left with no legal remedy. The restoration sought was to exercise the legal remedy available to the petitioner and as such, delay in filing the application would not arise. Even otherwise an opportunity should have, been granted to file an application and seek condonation of delay.
Learned senior counsel for the respondent on the other hand sought to sustain the order passed by the Court below contending that it would not be open for the petitioner to contend at this stage about the order made in the contempt petition making it incumbent for the parties to challenge the award in that proceedings itself. It is not only agreed by the parties but was also accepted by the Court and made a part of the order The order passed by a Division Bench of this Court in any event cannot be altered by the Civil Court or in this petition. Hence, the award in the instant case cannot be assailed before the Civil Court in the instant facts. Even otherwise, there is inordinate delay in filing the application and the Court below was justified. On withdrawal of the challenge to the award, the same had become enforceable u/s 36 of the Act. The right accrued to the respondent herein cannot be defeated by restoring the suit at this juncture. Therefore, the Civil Court was justified and the delay becomes very much relevant. If such right accrued is taken away in a casual manner, it would amount to reviving the proceedings from the stage of Section 34 of the Act, which would lead to further appeal and would cause prejudice.
In the light of the rival contentions, firstly, the question that would arise for consideration is as to which is the appropriate Court or forum to challenge an award passed under the Act. Secondly, irrespective of the conclusion in that regard, whether in the instant facts, the benefit could be granted to the petitioner to revive the Arbitration Suit for further consideration. Thirdly, even if that be so, has the petitioner acted diligently to seek indulgence of the Court to restore the suit.
Learned senior counsel for the petitioner by relying on the decision of the Hon''ble Supreme Court in the case of Garhwal Mandal Vikas Nigam Ltd. Vs. Krishna Travel Agency has contended that the Hon''ble Supreme Court has held that the only remedy available against an award passed by the Arbitrator is to challenge it by filing a suit as provided u/s 34 of the Act. On the same proposition, a decision of a Hon''ble Division Bench of Kerala High Court in the case of Registrar General, High Court of Kerala Vs. N.B.K. Catering Service and Another, is also relied. The learned senior counsel for the respondent on the other hand sought to distinguish the said cases by contending that the decision rendered therein is in a circumstance where the appointment of Arbitrator provided u/s 11(6) of the Act had arisen for consideration. In that view, with reference to Section 2(e) and Section 4 of the Act, it is contended that the jurisdiction and cause of action as understood in the general enactments cannot be construed to be applicable to arbitration proceedings since by agreement between the parties, the forum could be agreed. It is further contended that in the instant facts, apart from the parties agreeing that any challenge to the award passed by the Arbitrator would be questioned only in the contempt proceedings wherein the Arbitrator was appointed, it was also accepted by the Court and was made a part of the order. It is his contention that the position would be different when an Arbitrator is appointed u/s 11(6) of the Act since the Chief Justice or the Designate Judge would not be a Court as defined and it is in such circumstance the award passed cannot be challenged before the same Judge who appointed the Arbitrator but before the District Court as defined in the Act. In that regard, the decision in the case of Rodemadan India Limited Vs. International Trade Expo center Limited, was referred wherein it is held that the Chief Justice or the Designate Judge is not a Court.
In the backdrop of the rival contentions by the respective learned senior counsel for the parties, I am of the opinion that on the aspect as to whether the Chief Justice or the Designate Judge would be acting as a Court or not in any event would not be very germane to advert and come to a conclusion herein on that aspect. In the instant facts, the position is clear that the Arbitrator was agreed upon between the parties and the further agreement between the parties was that the award passed by the Arbitrator would be questioned only in the said pending proceedings. It was recorded and made a part of the order passed in the contempt petition. Before considering as to whether it would bind the parties in the instant facts or not, the legal position with regard to the appropriate forum needs to be settled as provided in law to challenge an award passed by the Arbitrator.
In that regard, the decision of the Hon''ble Supreme Court in Garhwal Mandal Vikas Nigam Limited would disclose that in respect of certain disputes between the parties, they were before the competent Court and as a continuation of the said litigation, they were ultimately before the Hon''ble Supreme Court in a Special Leave Petition. In such Special Leave Petition, the Hon''ble Supreme Court by its order dated 17.12.2004 appointed a Senior Advocate as the Arbitrator by consent of the parties and the Arbitrator passed the award on 27.10.2005. Against such award, an application u/s 34 of the Act was filed before the District Court seeking to set aside the award. While the matter was pending before the District Judge, Dehradun, the applications which arose for consideration in the cited case before the Hon''ble Supreme Court was taken up for consideration. During the course of the said proceedings, it was urged before the Hon''ble Supreme Court that since the Arbitrator had been appointed by the Hon''ble Supreme Court that Court alone had the jurisdiction to consider the validity of the award. In that context, with reference to the provisions contained in Section 2(1)(e), 11(6), 34 and 37(1)(b) of the Act, the Hon''ble Supreme Court has rejected the contention that the Court which appointed the Arbitrator alone should consider the objections to such award and had directed that the District Judge, Dehradun, who is seized of the matter shall hear and dispose of the matter expeditiously. The said decision of the Hon''ble Supreme Court was relied on by the Kerala High Court in the decision cited supra and had set aside the order of the Court below which was assailed therein where it was held that the High Court which appointed the Arbitrator u/s 11(6) of the Act only can entertain the application u/s 34 of the Act. The decision relied on by the learned senior counsel for the respondent in the case of Rodemadan India Limited, not being on the said issue would not be of assistance.
Therefore by placing reliance on the decision in the case of Garhwal Mandal Vikas Nigam Limited, I am of the opinion that the position of law on that aspect is clear. In that view, irrespective of the manner in which an Arbitrator is appointed and the proceedings are held in terms of the Act, the challenge to the award by the aggrieved party as contemplated u/s 34 of the Act can be instituted only before a Court as defined u/s 2(1)(e) of the Act and not in a proceedings wherein the Arbitrator was appointed even if such appointment was made by a Court before which such proceedings was pending. This is clear in view of the fact that in the cited case the Arbitrator was appointed in a SLP where the Hon''ble Supreme Court was acting as a Court and not in a proceedings where the Chief Justice or the Designate Judge of the Hon''ble Supreme Court had exercised the powers u/s 11(6) of the Act and yet the Hon''ble Supreme Court has rejected the contention and held that the District Judge would proceed with the matter.
Having crystallized the position of law, the question therefore would be as to whether in the instant facts, in the nature of proceedings arising herein, this Court can find fault with the decision taken by the Court below on the application filed by the petitioner herein. The learned senior counsel for the petitioner contended that the legal position became clear only after the order was passed by the Hon''ble Supreme Court and as such, the application was filed before the Court below. In that regard, it is seen that the legal position enunciated by the Hon''ble Supreme Court by the cited decision was by the order dated 24.01.2007. The petitioner herein had also referred to a decision in the case of Union of India-vs.-C. Subba Reddy C.P. No. 2092/2003 decided on 06.02.2004, while filing the application before the Court below for recall of the order dated 11.08.2004 passed in A.S. No. 26/2004. However what is necessary to be noticed is that the order in CCC (Civil) No. 3062/2001 wherein the Arbitrator was appointed and it was observed that the challenge to the award would be made only in that proceedings was passed on 10.01.2003. In such situation, the order passed by the Division Bench of this Court inter se between the parties cannot be said to be contrary to the legal position that was before the Court as on that date nor can the Court below or this Court while entertaining a writ petition as a Single Judge state as to whether the order of the Division Bench was per-incuriam as judicial discipline would not permit the same.
Further, what is necessary to notice is also that the petitioners themselves have contended that an application dated 16.12.2010 (Annexure-F) was filed in CCC (Civil) No. 3062/2001 placing the legal position and seeking appropriate direction since the undertaking given to challenge the award in such proceedings was to be withdrawn in view of the legal position. However, there is no details with regard to the actual filing of the application or consideration of the same. That apart, the petitioner while filing the A.S. No. 26/2004 u/s 34 of the Act on 05.06.2004 is stated to have simultaneously filed an application u/s 34 in CCC (Civil) No. 3062/2001 on the same day as it was still pending consideration. The contempt petition in CCC (Civil) No. 3062/2001 was ultimately disposed of on 07.08.2006. Neither during the pendency of the contempt petition nor at the time of disposal of the petition, the petitioner had chosen to press the application for consideration with regard to the validity of the award nor was the legal position brought to the notice of the Division Bench for seeking appropriate leave to abandon the application before it and press for consideration of the suit in A.S. No. 26/2004 by seeking for setting aside of the dismissal order dated 11.08.2004. In such situation, when the order dated 10.01.2003 passed by a Division Bench in CCC (Civil) No. 3062/2001 was binding on the parties and when the modification of the said order was not made therein nor was leave granted to the petitioner in any other manner, if the application presently filed on 16.01.2009 u/s 151 of CPC was entertained by the District Judge in A.S. No. 26/2004 so as to restore the suit and consider the validity of the award, it would have amounted to altering or modifying an order passed by a Division Bench of this Court in a proceedings inter-se between the parties. When that was not permissible to be done by the learned District Judge and in that view, has taken a decision to dismiss the application, certainly this Court while examining the correctness or otherwise of such order cannot take any other view.
That apart, what is also to be kept in view is as to whether the application filed by the petitioner before the trial Court could have been acted upon in a mechanical manner when the petitioner had approached the Court below belatedly. From the narration of the facts herein, it is clear that the appointment of the Arbitrator and the manner of challenge to the award was regulated by the order dated 10.01.2003. The award was passed on 07.03.2004. Though the challenge to the award was made within the time prescribed in Section 34 of the Act by filing application in the contempt proceedings as well as before the District Court on 05.06.2004, the petitioner did not take appropriate steps to prosecute either of them. As noticed, the contempt proceedings was disposed of on 07.08.2006. Even thereafter no steps were taken by the petitioner to have the adjudication of the correctness or otherwise of the award until the application for restoration was filed in A.S. No. 26/2004 on 16.01.2009. From the intervening circumstance, it is seen that since the challenge to the award was not pending nor was there any stay of the award, the respondent herein has filed an Execution Petition in E.P. No. 26/2008 on 02.01.2008 and the petitioner herein had entered appearance in the said proceedings on 19.07.2008. The recall application was filed on 16.01.2009 in respect of the dismissal order dated 11.08.2004 i.e., after about 4 years 5 months and even from 07.08.2006 i.e., from the date of disposal of the contempt petition, the application is after about 2 years 5 months. These aspects would indicate that the petitioner has not acted bona fide and diligently in seeking redressal of their grievance. This would be one more reason to conclude that the Court below could not have entertained the application in a mechanical manner and as such, the Court below was justified even on that count. In the result, I see no merit in this petition, which is accordingly dismissed with no order as to costs.