AI Structured Summary
Not yet generated for this judgment
Judgment
N.A. Britto, J.—Heard. An application for intervention filed by the applicant in an appeal filed u/s 37 of the Arbitration and Conciliation Act, 1996 ( Act, for short ) has ended up with prayer that it be considered as an application for impleadment filed under Order I, Rule 10(2) of CPC, as the applicant would at least be a proper party if not a necessary party, who has an interest in the subject matter of the dispute between the parties to the said appeal.
The appeal has been filed by the Government of Goa against an order passed by the District Court in proceedings taken u/s 9 of the said Act. That there is no procedural hurdle in entertaining this application is a matter which is no longer res integra. The objection that C.P.C., will not apply to proceeding under the Act needs to be rejected.
The order impugned in the appeal is passed by the District Court as defined in Section 2(e) of the Act as a Court of original Civil jurisdiction and is passed u/s 9 thereof which provides for interim measures to be taken during arbitral proceedings. An appeal therefrom is provided to this Court as a Court which is authorized by law to hear appeals from orders of that Court, and, both of which are Courts of Civil jurisdiction.
The Apex Court in I.T.I. Ltd. Vs. Siemens Public Communications Network Ltd., has clearly stated that although the Act does not make specific provision for the application of the Code what was required to be noted is that there was no express prohibition against the application of the Code to a proceeding arising out of Act before a Civil Court and therefore by inference it could not be held that the Code is not applicable. In the same judgment it is also observed that when a subject matter governed by that Act confers a jurisdiction on an established Court, as distinguished from a persona designata, without any words of limitation, then the ordinary incident of procedure of that Court including the right of appeal or revision against its decision is attracted. The right of second appeal to the High Court has been expressly taken away by section (3) of Section 37 of the Act, but for that reason it cannot be held that the right of revision has also been taken away. The Hon''ble Supreme Court noted the observations Viscount Haldane in National Telephone Company case:
When a question is stated to be referred to an established Court without more, it in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches.
The Apex Court referred to Lord Simonds in Adaikappa Chettiar case wherein it was stated that :
Where a legal right is in dispute and the ordinary Courts of the Country are seized of such dispute the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies, if authorized by such rules, notwithstanding that the legal right claimed arises under a special statute which does not in terms confer a right of appeal.
The Apex Court further observed that :
The power of appeal having conferred on a Civil Court all procedural provisions contained in the Code would apply to the proceedings in appeal.
The Apex Court again in Adhunik Steels Ltd. Vs. Orissa Manganese and Minerals Pvt. Ltd., , has observed as follows :
In Nepa Ltd. v. Manoj Kumar Agrawal, a learned Judge of the Madhya Pradesh High Court has suggested that when moved u/s 9 of the Act for interim protection, the provisions of the Specific Relief Act cannot be made applicable since in taking interim measures u/s 9 of the Act, the Court does not decide on the merits of the case or the rights of parties and considers only the question of existence of an arbitration clause and the necessity of taking interim measures for issuing necessary directions or orders. When the grant of relief by way of injunction is, in general governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the Court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration. For, the grant of that interim injunction has necessarily to be based on the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. u/s 28 of the Act of 1996, even the Arbitral Tribunal is enjoined to decide the dispute submitted to it, in accordance with the substantive law for the time being in force in India, if it is not an international commercial arbitration. So, it cannot certainly be inferred that Section 9 keeps out the substantive law relating to interim reliefs.
What follows from the above decisions of the Apex Court is that in deciding matters u/s 9 or an appeal u/s 37 Act, this Court would be governed the provisions of the Code ( Civil Procedure Code, 1908 ).
Before considering the merits of the application, it requires to be stated that the River Princess ( now a shipwreck ) was grounded at the place where it is on 6.6.2000 and after efforts to get it removed through the Applicant failed, the Government invoked the provisions of Goa Tourist Places ( Protection and Maintenance) Act, 2001 vide order dated 8.1.2002 and by virtue of the said order the Government has now become its owner. The Applicant herein preferred a Writ Petition bearing No. 111/2003, inter alia, challenging the vires of the said Goa Tourist Places ( Protection and Maintenance )Act, 2001 ( Act, of 2001, for short ) and the same is pending disposal before this Court. The Applicant could not obtain any interim relief in the said Writ Petition but on the contrary certain directions were issued to the Government of Goa for the removal of the said wreck by order dated 29.4.2003. After the said directions, the Government made efforts to remove the said wreck of River Princess by inviting tenders and it appears that thrice the contractors to whom the work was assigned was unable to complete the job of removal.
Then tenders were invited for removal of the said wreck for a price of Rs. 5.5 crores and with a condition that the Government would remain the owner of the wreck. However, it appears that the Respondent in the appeal as well as another contractor gave their counter offers for removal on payment of Rs. 5.5 crores and with further condition that they would become the owners of the wreck, and, accepting such a condition, an agreement was entered into on 5.1.2007 between the Appellant/State and the Respondent-Jaisu Shipping Co. Pvt. Ltd., for removal of the wreck by refloating and towing to a ship breaking yard, which was to be completed within a period of 180 days. The said contract contained a arbitration clause. The wreck, on the expiry of said 180 days, was not removed and the contract was eventually terminated.
Differences having arisen between the Government and the said Jaisu Shipping Company, the said Jaisu Shipping Company approached the Court of District Judge u/s 9 of the said Act by application dated 27.6.2008. The application was allowed and the Government has challenged the said order and that is how the appeal has been filed before this Court by the Government u/s 37 of the Act which is pending for disposal.
The Arbitral Tribunal has already been constituted and the parties have filed their respective claims. The Government is stated to have raised a claim for over Rs. 7.00 crores being the amount which was due and payable by the aid Jaisu Shipping Company at the rate of Rs. 1.00 lakh per day, the wreck remaining unremoved. The value of the wreck at present is estimated to Rs. 28 crores.
According to the Applicant, the Government had agreed to let Jaisu Shipping Company to take away the said wreck which was then valued to Rs. 30 to Rs.33 crores free of charge over and above the payment of Rs. 5.5 crores towards the cost of the removal and the said agreement was arrived at in a highly secretive manner. According to the Applicant, the Government has offered generous terms to the said Jaisu Shipping Company which are to the detriment and prejudice of the Applicant. The Applicant claims that in case the validity of the said Goa Tourist Places ( Protection and Maintenance) Act, 2001, is upheld, in terms of the said Act, only the cost of the removal could be recovered from the Applicant and the balance amount from the sale is required to be refunded to the Applicant. As per the Applicant, the said Jaisu Shipping Company is liable to pay a sum of Rs. 7.79 crores to the Government as on 8.6.2009. The Applicant has also stated that when attempts will be made in October, 2009 to remove the vessel at the end of the current monsoon, the vessel will break up during the salvage operations and thereafter the contractor will resort to break the same and remove it in cut pieces and therefore the Government ought to invite new tenders for removal and dismantling in large sections and taking it away by sea to a ship breaking yard. The Applicant has stated that would be the most practical solution of breaking the wreck and taking away. The Applicant has not only sought its impleadment but has sought various reliefs in the application including a prayer that the Applicant be permitted by Government to break the vessel in large sections and take it away by sea to a ship breaking yard. It appears that, that is what the Applicant always wanted to do and the Government wanted to prevent, but was unsuccessful, till it enacted the said Act.
The Government in its affidavit has stated that the Act is a special law and postulates and comprehends a party to an Arbitration agreement and as the applicant is not a party to the agreement dated 5.1.2007 containing the arbitration clause and the said agreement was entered into between the Appellants and the Respondent, the Applicant is a third party and cannot be allowed to intervene in the appeal. It is further stated that Section 9 provides for an application by a party to an arbitration clause against a party to the clause, and, Section 9 does not comprehend any party other than the party to the arbitration clause and therefore the proposed intervener cannot seek to intervene on the principle of Order I, Rule 10 of CPC, 1908, which is not applicable to the proceedings u/s 9 of the Act. It is also stated that the applicant did not choose any intervention before the District Court. It is, therefore, not entitled to make an application under reply at Appellate stage. It is stated that the River Princess is forfeited in favour of the Government. It is stated that the proceedings under the Act being specialized proceedings, no person other than the parties to the arbitration clause can be a party to the said proceedings. It is also stated that no attempt was made by the Applicant to intervene before the District Court which intervention was otherwise not possible because the applicant was not party to the contract and as such no intervention is possible at this stage.
Sub Rule (2) of Rule 10, Order I of CPC give powers to the Court to strike out or add parties, and it provides that Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff and defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.
Section 9 of the Act reads as follows :
S. 9.Interim measures, etc. by Court.-
A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court-
(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or
(ii)foran interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c ) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.
Shri Sonak on behalf of the Applicant contends that the applicant has a subsisting interest in the wreck. With a view to show that the applicant -intervener has interest in the subject matter of the wreck. Learned Counsel has referred to Section 7 and 8 of the Act of 2001 and has submitted that in terms thereof in case wreck is sold in public auction, any sum over and above the cost of the removal shall be payable to the applicant-owner. Referring to Section 9 and 18 of the Act of 1996 and relying on Justice Bachawat''s Law of Arbitration and Conciliation, learned Counsel has submitted that the range of interim measures of protection covered by article 9 is considerably wider than that under article 18, due to the different purposes of these two articles. Article 18 deals with the limited power of the Arbitral Tribunal to order any party to take an interim measure of protection in respect of the subject matter of the dispute and does not deal with enforcement of such orders. Article 9 deals with the compatibility of the great variety of possible measures by Courts available in different legal systems, including not only steps by the parties to conserve the subject matter or to secure evidence but also other measures, possibly required from a third party, and their enforcement. This would, in particular, include pre-award attachments and any similar seizure of assets. Contending that a party who was not a party to an agreement could file such an application, Shri Sonak has relied on the decision in the case of Arun Kapur Vs. Vikram Kapur and Others, , wherein the Court has observed as follows :-
It is settled that Section 9 is attracted only if the nature of dispute is subject matter of arbitration proceedings or agreement. It does not contemplate any such relief which does not stem from the arbitration proceedings or the disputes referred to the arbitration for adjudication. Section 9 is distinct from Section 17 inasmuch as that the petition u/s 17 is moved before the Arbitrator for an order against a party to the proceedings whereas Section 9 vest remedy in a party to the arbitration proceedings to seek interim measure of protection against a person who need not be either party to the arbitration agreement or to the arbitration proceedings.
I am unable to accept any of the submissions made on behalf of the applicant. As things stand at present, the petitioner has no interest in the subject matter of wreck which has become the property of the Government, and, as was conceded before the Division Bench that it is only in case of public auction that the excess amount was to be returned to the owner and it is nobody''s case that presently the wreck is being sold in auction. In fact its value has been included in the efforts of removal which was to be paid for to the respondent in appeal.
The observations in the Commentary as well as in Arun Kapur ( supra ) are being read out of the text and context. It may be possible for the parties to the agreement to proceed against third parties but that certainly does not permit third parties to fish in the troubled waters of the parties to an agreement. It may be true that the petition filed by the applicant is pending before this Court but fact remains that the contentions raised by the applicant have not been prima facie accepted by the Court. The Division Bench has noted that :
There is nothing on merits that persuades us to grant the application for interim reliefs. The conduct of the petitioner certainly does not merit any interference in its favour. The petitioner has in the past three years not made any attempt or efforts to remove the vessel despite obviously being aware of the disastrous consequences that have been visited upon the State, the environment, the people and the tourists in the State of Goa. It is also not without significance that the vessel is not even insured.
The Division Bench further noted :
In the event of the petitioner succeeding in the Writ Petition it would always be open to the petitioner to adopt such proceedings as may be permissible in law to recover by way of damages or otherwise what according to the petitioner is due to it.
The Division Bench has also noted the fact that the petition has been admitted need not be construed as having come to the conclusion that the petitioner has strong prima facie case in law and further held that the petitioner had not made out a strong prima facie case even in law.
The application needs to be rejected for reasons more than one. The application has been filed for the first time before the Appellate Court without filing the same before the District Court and no justification has been forthcoming from the applicant inspite of repeated questions as to why it was not filed before the District Court. The application seeking various reliefs which cannot be granted to the applicant in a dispute arising out of a breach of agreement between the parties to the agreement. The applicant is neither a necessary nor a property party to the dispute. Both parties to the appeal have opposed to his impleadment and after all what counts more is the opposition from the respondent who is the dominus lit is and he cannot be made to fight against those with whom he does not wish to. Again, if at all the intervener has any grievance, it is against the Government and he is always free to agitate his right as against the Government. Impleading him in this petition would uncertainly widen the controversy which is otherwise restricted to the breach of the agreement entered between both the parties to the appeal. It is quite possible that the Government knowing that the earlier contractors could not remove the wreck accepted its removal by the respondent for the cost of Rs. 5.5 crores plus the value of the wreck. Here again in case the Applicant suffers any loss the Applicant would be free to seek his claim against the Government but that will have nothing to do with the respondent who has come into picture only by the virtue of the said agreement dated 5.1.2007. The rights and liability arising from the breach of the said agreement would be eventually decided by the Arbitrate Tribunal and what is being decided presently are only the aspect of interim measures which were required to be taken and which were the subject matter of the order of the learned District Judge. In the above view of the matter, the applicant could be certainly termed as meddlesome interloper and his application for joinder needs to be rejected with costs payable to both the parties to the appeal. Consequently, the same is hereby dismissed.