Full Judgment Text
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CASE NO.:
Appeal (civil) 2522 of 1999
PETITIONER:
National Aluminium Co.Ltd.
RESPONDENT:
M/s.Pressteel & Fabrications Pvt. Ltd. & Anr.
DATE OF JUDGMENT: 18/12/2003
BENCH:
N. Santosh Hegde & B.P. Singh.
JUDGMENT:
J U D G M E N T
SANTOSH HEGDE,J.
The original appeal from which this application arises for our
consideration namely, C.A. No.2522/99 was preferred by the
respondent herein questioning the unilateral appointment of an
arbitrator made by the present applicant under the Arbitration Act,
1940. This Court in the said appeal after hearing the parties and with
the agreement of the parties appointed Hon. Mr. Justice A.M.
Ahmadi, former Chief Justice of India as the sole arbitrator. Before
the said arbitrator both the parties by consent agreed that the
proceedings should be governed by the provisions of the Arbitration
& Conciliation Act, 1996. It is on that basis the learned arbitrator
proceeded and gave a final award.
In this application, namely, I.A. No.2 in C.A. No.2522/99 made
under sections 15, 17 and 29 of the Indian Arbitration Act, 1940
praying for modification of the said award made by the arbitrator, the
applicant contends that since the dispute between the parties and the
agreement of the parties to refer such dispute to an arbitrator was prior
to the coming into force of the 1996 Act, all further proceedings
subsequent to the award should be governed by the 1940 Act and
under the said Act an aggrieved party which wants to seek
modification has to move the court which appointed the arbitrator,
hence, the applicant contends that this is the only Court before which
such an application is maintainable.
It is to be noted at this stage that the respondent in this
application was appellant in C.A. No.2522/99. The said respondent
being aggrieved by this award, itself has filed objections to the said
award before the appropriate Civil Court under section 34 read with
section 2(e) of the 1996 Act.
On the facts of this case, 2 primary questions arise for our
consideration. They are : (i) whether the proceedings in which an
impugned award has come to be made, are governed by the 1940 Act
or the 1996 Act ? and (ii) whether the appropriate court for the
purpose of challenging the said award or seeking modification of the
said award is this Court, being the court which appointed the arbitrator
or an appropriate court as contemplated under Section 34 of the 1996
Act read with section 2(e) of the said Act which contemplates said
court to be the principal civil court of original jurisdiction ?
As stated above, the argument of learned counsel appearing for
the applicant is that since this Court has appointed the sole arbitrator
in the abovesaid civil appeal under the provisions of the 1940 Act, this
Court alone has the jurisdiction to modify the impugned award. While
the respondent in this application contends that the proceedings before
the arbitrator admittedly having proceeded under the provisions of the
1996 Act by consent of parties, for the purpose of seeking
modification of the award in such proceedings, it will only be a court
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contemplated under the 1996 Act.
It is an admitted fact that after the arbitrator was appointed by
this Court, the parties by consent agreed before the arbitrator that the
proceedings should go on under the provisions of the 1996 Act though
the dispute arose prior to coming into force of this Act. Such a
procedure is permissible under section 85(2)(a) of the 1996 Act. In the
normal course having agreed to this procedure, the applicant should
not be permitted to raise a plea at this stage that the provisions of the
1940 Act would apply for challenging or seeking modification of the
award made under the 1996 Act. But the learned counsel placed
reliance on two judgments of this Court in State of M.P. etc. v. M/s.
Saith & Skeleton (P) Ltd. (1972 1 SCC 702) and M/s. Guru Nanak
Foundation v. M/s. Rattan Singh and Sons (1981 4 SCC 634) wherein
according to the applicant, this Court entertained an award for the
purpose of making it a rule of the Court because it had appointed the
arbitrator hence for the purpose of making an award a rule of the
Court it can only be the court which appointed the arbitrator in view
of the provisions of sections 2(e) and 14(2) of the 1940 Act.
Before considering the said argument of the applicant and the
two decisions referred to hereinabove, it is necessary for us to note the
contents of the Order whereby this Court had appointed Hon. Mr.
Justice A.M. Ahmadi as the sole arbitrator. That order was made by
this Court on 23.4.1999 in the abovesaid civil appeal and the relevant
portion of the order reads thus :
"Parties agree that Mr.Justice A.M. Ahmadi,
former Chief Justice of this Court, be appointed as
an Arbitrator. In view of this agreement between
the parties we allow this appeal, set aside the
judgment of the High Court and appoint Mr.Justice
A.M. Ahmadi as sole Arbitrator. The fees and
expenses of the Arbitrator shall be fixed by the
Arbitrator in consultation with the parties. The
learned Arbitrator is requested to conclude the
proceedings within four months from the day he
enters upon the Arbitration. No order as to costs."
It is to be noted that as per the above order, this Court has not
retained any power or control over the arbitration proceedings while
appointing the arbitrator by consent of parties, on the contrary, it
seems this Court has merely recorded a submission of the parties as to
their agreement in appointing a particular arbitrator. Even the time
limit fixed therein is only a request to the learned arbitrator to
conclude the proceedings within 3 months from the day he enters
upon the arbitration and it is not a mandate in the sense that the failure
to do so would have entitled the parties to approach this Court for
suitable remedy. On facts, it is admitted that the learned arbitrator has
extended the time suo motu a few times before making the award,
without reference to this Court, therefore, it is clear on facts of this
case that it is the arbitrator who had the control over the proceedings
and not this Court. Therefore, in our opinion, the two judgments relied
on by the applicant do not help the applicant because in those
judgments this Court had held that while appointing an arbitrator this
Court had retained control over the arbitral proceedings, therefore,
under the provisions of the 1940 Act, it was this Court which could
entertain an application for making the award a rule of the Court and
not any other court.
The next question to be considered by us in this application is
whether the dispute having arisen prior to the coming into force of the
1996 Act and the proceedings having continued under the provisions
of the 1996 Act, would the provisions of the 1940 Act still be
applicable for making an application for the modification of the
award, and if so, before which court. First part of this issue need not
detain us because of the admitted fact that by consent of the parties
provisions of 1996 Act have been made applicable to the proceedings
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which is in conformity with Section 85(2)(a) of 1996 Act, hence, it is
futile to contend that for the purpose of challenge to the Award 1940
Act will apply. Hence, we reject this contention. In regard to the
forum before which the application for modification or setting aside
the award is concerned, we find no difficulty in coming to the
conclusion that in view of the provisions of section 34 read with
section 2(e) of the 1996 Act that it is not this Court which has the
jurisdiction to entertain an application for modification of the award
and it could only be the principal civil court of original jurisdiction as
contemplated under section 2(e) of the Act, therefore, in our opinion,
this application is not maintainable before this Court.
Learned counsel for the applicant then contended that nearly 16
years have gone-by since the dispute between the parties arose and
since the said dispute was first referred to an arbitrator. After the
passage of such a long time, the applicant has been able to get only a
partial award in his favour, but still he is unable to enjoy the fruits of
that award also because of the proceedings initiated under section 34
of the 1996 Act. In this factual background, he prays that to do
complete justice, we should consider the objections of both the parties
to the said award and decide the same in these proceedings. Since we
have come to the conclusion that the parties having agreed to the
procedure under the 1996 Act to be followed by the arbitrator for the
post-award proceedings also, the provisions of the said Act would
prevail and the said statute having specifically provided for a remedy
under section 34 of the 1996 Act, it may not be proper for us to
exercise our jurisdiction under Article 142 of the Constitution to
adjudicate upon the objections filed by both the parties to the award.
Learned counsel then prayed that at least the amount representing that
part of the award which is in their favour should be directed to be
deposited in the competent civil court by the respondents herein so
that the applicant could enjoy the fruits of the said award during
further proceedings. At one point of time, considering the award as a
money decree, we were inclined to direct the party to deposit the
awarded amount in the court below so that the applicant can withdraw
it on such terms and conditions as the said court might permit them to
do as an interim measure. But then we noticed from the mandatory
language of section 34 of the 1996 Act, that an award, when
challenged under section 34 within the time stipulated therein,
becomes unexecutable. There is no discretion left with the court to
pass any interlocutory order in regard to the said award except to
adjudicate on the correctness of the claim made by the applicant
therein. Therefore, that being the legislative intent, any direction from
us contrary to that, also becomes impermissible. On facts of this case,
there being no exceptional situation which would compel us to ignore
such statutory provision, and to use our jurisdiction under Article 142,
we restrain ourselves from passing any such order, as prayed for by
the applicant.
However, we do notice that this automatic suspension of the
execution of the award, the moment an application challenging the
said award is filed under section 34 of the Act leaving no discretion in
the court to put the parties on terms, in our opinion, defeats the very
objective of the alternate dispute resolution system to which
arbitration belongs. We do find that there is a recommendation made
by the concerned Ministry to the Parliament to amend section 34 with
a proposal to empower the civil court to pass suitable interim orders in
such cases. In view of the urgency of such amendment, we sincerely
hope that necessary steps would be taken by the authorities concerned
at the earliest to bring about the required change in law.
For the reasons stated above, this application fails and the same
is dismissed with a direction to the applicant to file its objections to
the award before the court concerned and if the same are filed within
30 days from today, the delay in regard to the filing of the objections
as contemplated under section 34 of the 1996 Act shall be condoned
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by the said court since the time consumed was in bona fide
prosecution of the application in a wrong forum.
With the above observations, this application fails and the same
is dismissed.