Indore Development Authority, Indore vs Kalyan Toll Infrastructure Ltd., Indore

S. C. SHARMA, J

The petitioner before this Court has filed this present writ petition for issuance of an appropriate writ, order or direction, directing transfer of pending

arbitral proceedings before Hon'ble Shri Justice R. S. Garg (Former Chief Justice), Shri P. C. Maru and Shri T. S. Reen [Arbitral Tribunal], to the

M.P. Arbitral Tribunal, constituted in terms of the provisions of the M. P. Madhyastham Adhikaran, 1983. It has been stated by the petitioner that the

petitioner is a Public Development Authority, constituted u/S. 38 of the M. P. Nagar Tatha Gram Nivesh Adhiniyam, 1973 for development of Indore

City and a dispute arose between the respondent â€" Kalyan Toll Infrastructure Ltd., and the petitioner â€" Indore Development Authority and in

respect of the dispute arbitral proceedings are going on in terms of the provisions of the Arbitration and Conciliation Act, 1996.

Mr. Sunil Jain, learned senior counsel has placed reliance upon the judgment delivered by Full Bench of this Court in the case of Viva Highways

Ltd., Vs. Madhya Pradesh Road Development Corporation Ltd., reported in [AIR 2017 MP 103 (FB)] and his contention is that as per the judgment

of the Full Bench, the following proposition of law stands concluded :

(i) If an agreement by whatever name called falls within the definition of ""works contract"" and difference between the parties is covered in the

definition of 'dispute' as defined under the Adhiniyam of 1983, it has to be referred for adjuciation before the Tribunal constituted under Section 3 of

the Adhiniyam of 1983.

(ii) In view of statutory provision of Section 7 of the Adhiniyam of 1983, even in cases where the parties have invorporated a clause in such

agreement regarding resolution by dispute by some other forum or under the Act of 1996, the forum subject to (i) above, would be the Tribunal under

the Adhiniyam of 1983. This conclusion, however, will presently not include the cases of terminated contract, which aspect is pending consideration

before a Larger Bench of the Supreme Court. The decision of Larger Bench will draw the curtains on this aspect.

(iii) The judgment of Jabalpur Corridor(Supra) reported in 2014 (2) MPLJ 276 and Ashoka Infraways Ltd.(Supra) reported in 2016 (2) MPLJ 685 are

overruled.

(iv) The substituted definition of ""works contract"" is clarificatory in nature, hence it will be retrospective in operation.

(v) The words ""claim of ascertained money"" have a definite connotation and therfore only such difference arising out of execution or non-execution of

a 'works contract' which are related with claims of above nature will be covered under Section 2(d) of the Adhiniyam of 1983.

He has further argued that the judgment delivered by the Full Bench has been affirmed by the Hon'ble apex Court in Civil Appeal No. 4018, decided

on 18/4/2018. He has further argued that in respect of a similar contract, the Division Bench of this Court in W.P.No. 7194/2018, by order dated

11/4/2018 has granted an interim order restraining the arbitral Tribunal from passing any final order in the matter. It has also been pointed out that in

another case, the apex Court in the case of M/s. ARSS Damoh Hirapur Road Vs. M.P. Road Development Corporation, vide order dated 4/5/2018,

has transferred the proceedings pending before the Arbitrator to the Arbitration Tribunal constituted under the provisions of M. P. Madhyastham

Adhikaran, 1983.

This Court has carefully gone through the judgment delivered by the Full Bench. However, the present case is having a chequered history. This is

not the first Writ Petition filed by the Indore Development Authority. This is the 4th Writ Petition filed by the Indore Development Authority in respect

of same arbitration proceedings which are pending before the Arbitration Tribunal comprising of Hon'ble Shri Justice R. S. Garg (Former Chief

Justice), Shri P. C. Maru and Shri T. S. Reen [Arbitral Tribunal].

In the earlier Writ Petition, copy of which has been filed by the caveator, there was a specific prayer made by the petitioner for transfer of the

arbitration proceedings from the Arbitration Tribunal to the M.P. Arbitration Tribunal, constituted under the provisions of the M. P. Madhyastham

Adhikaran, 1983. This Court by order dated 24/8/2016 passed in W.P.No. 5740/2016 has dismissed the Writ Petition. In W.P.No. 5740/2016, there

was a specific prayer for transfer of the proceedings to the Arbitration Tribunal.

Thereafter another Writ Petition was preferred ie., W.P.No. 7290/2016 and this Court has again dismissed the Writ Petition preferred by the Indore

Development Authority by order dated 22/11/2016. Not being satisifed by the order passed by this Court, again a third Writ Petition was preferred ie.,

W.P.No. 136/2017 and this Court has passed the following order on 12/1/2017 :

The facts of the case reveal that contract was awarded to Kalyan Toll Infrastructure Ltd., Indore (Respondent No.4) by Indore Development

Authority on 09-03-2012 for the work of design and construction of railway over bridge having viaduct including approaches and another work. A

dispute arouse between the parties and finally an Arbitration Tribunal was constituted and Hon'ble Shri Justice R.S. Garg (Former Chief Justice of

Gauhati High Court) was appointed as a third member of the Arbitral Tribunal. A writ petition was preferred by the Indore Development Authority ie

Writ Petition No. 5740/2016 for declaring the Arbitral Tribunal as illegal and contrary to the provisions as contained u/s 12(1) and 12(2) of the

Arbitration and Conciliation Act, 1996 and the Division Bench of this court has dismissed the writ petition ie WP No. 5740/2016 by order dated 24-08-

2016. Thereafter, the Indore Development Authority preferred an application u/s 14 before the Learned Special Judge (District Court) and the same

was dismissed by the Learned Special Judge. The order passed by the Learned Special Judge (District Court ) dated 17-10-2016 was again

challenged by the Indore Development Authority and the Division Bench of this court in Writ petition No. 7290/2016 (Indore Development Authority

Vs. Arbitral Tribunal, through Hon'ble Shri Justice Ramesh Garg (Retd.) and three others) has dismissed the Writ petition by order dated 22-11-2016,

which reads as under :-

“The petitioner before this Court, Indore Development Authority has filed this present writ petition being aggrieved by the order passed by the

learned Special Judge under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015, dated

17/10/2016 by which the application preferred u/S. 14 of the Arbitration & Conciliation Act, 1996 seeking revocation of mandate of the arbitrator and

quashment of proceedings before the Arbitral Tribunal was sought.

Facts of the case reveal that a contract was awarded to M/s. Kalyan Toll Infrastructure Ltd., - respondent No.4 by the Indore Development Authority

on 9/3/2012 for the work of design and construction of railway overbridge having viaduct including approaches and another work. A dispute arose

between the parties and the respondent No.4 served a notice to the Indore Development Authority to refer the matter for arbitration in accordance

with law the provision of The Arbitration and Conciliation Act, 1996 and to appoint Arbitral Tribunal. The Arbitral Tribunal was constituted and

Hon'ble Shri Justice R. S. Garg (Former Chief Justice of Gauhati High Court) was appointed as a third member of the Arbitral Tribunal. Contention of

the petitioner â€" Indore Development Authority is that Hon'ble Shri Justice R. S. Garg is a very distant relation of the Managing Director of Kalyan

Toll Infrastructure Ltd., and, therefore, a prayer was made by filing a Writ Petition ie., Writ Petition No. 5740/2016 for declaring the Arbitral Tribunal

as illegal and contrary to the provisions as contained in Sec. 12(1) and 12(2) of the Act of 1996. Another relief was sought for restraining the Tribunal

from proceeding ahead in the matter. Lastly it was prayed that the Arbitral Tribunal be directed to refer the matter to Madhyastham Adhikaran at

Bhopal for adjudication of the dispute. The petition filed by the Indore Development Authority, as already stated, was registered as Writ Petition No.

5740/2016 and the Division Bench of this Court has passed an order on 24/8/2016. The Division Bench of this Court in paragraphs 16, 17, 18 and 19

has held as under:-

The issues involved in the writ petition relating to private disputes between the parties under a contract and are not in the realm of public law. The

first and second arbitrators have been appointed by the parties, following arbitration clause in the contract; the first and second arbitrators in turn

appointed the learned third arbitrator as Presiding Arbitrator; that the writ petition has been filed against the decision of the arbitral Tribunal passed

under Section 12 of the 1996 Act, which is a complete code in itself and it sets out the procedures to be followed; that Section 5 of the Act specifically

prohibit interference by a court of law in matters governed by Part I of the Act except where so provided in the said part. Section 16 (5) of the Act

specifically provides that where an arbitral tribunal takes a decision rejecting the plea it shall continue with the arbitral proceeding and make an arbitral

award; that Section 16 (6) of the Act provides that a party aggrieved by such an arbitral award may make an application for setting aside the same

under Section 34 of the Act. Section 37 (2) of the Act, which provides for appeals against orders does not provide for an appeal against an order

rejecting a plea under Section 16 of the Act, hence, the writ petition, challenging the order passed by the arbitral tribunal under Section 12 is not at all

maintainable; that arbitration clause is available in the agreement between the parties, hence, respondent No.2 has appointed its arbitrator, thereafter,

the petitioner had participated in the appointment process, appointed an arbitrator and they appointed learned Presiding Arbitrator and at that time he

had not raised any objection, thus, the petitioner submitted to the jurisdiction of the arbitral tribunal and that when once arbitral tribunal takes a decision

rejecting the plea on 23.04.2016 that the provision of M.P. Madhyastham Adhikaran Adhiniyam, 1983 would not apply, the arbitral tribunal continue,

thereafter, application under Section 12 has been rejected by the impugned order, no appeal against the said decisions under Section 37 is available and

the only remedy is to challenge the final award under Section 34 of the Act.

As per the scheme of Arbitration and Conciliation Act, 1996, the arbitration matter has to proceed without any hindrance or obstructions from the

Courts, particularly so by writ petition. In no uncertain terms it is clearly stipulated that for sections falling under Part I no judicial authority shall

interfere except where so specifically provided in that part. The scheme evolved by Sections 12, 13 and 16 of the Act is of the clear view that spokes

should not be put in passing the arbitral award. The arbitral tribunal may rule on its own jurisdiction, including ruling on any objection with respect to

the existence or validity of the arbitration agreement. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the

award, including any in-between 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.

The object of minimizing judicial intervention while the matter is in the process of being adjudicated upon, will certainly be defeated if the High Court

could be approached under Article 227 or under Article 226 of the Constitution of India against every orders made by the arbitral tribunal.

As per law laid down by the Constitution Bench of the Apex Court in the case of SPB & Company(supra), the writ petition is not maintainable.

The order passed on 12/08/2016 in the case of Indore Municipal Corporation vs. M/s Simplex Infrastructure Ltd.(in W.P. No.2581/2014) shall

apply mutatis mutandis in the present writ petition also and, therefore, we dismiss the writ petition on the ground of its maintainability.â€​

The Division Bench of this Court after taking into account the judgment delivered in the case of SBP & Company Vs. M/s. Patel Engineering and

another reported in 2005 (8) SCC 618 has held that a Writ Petition challenging the order passed by the Arbitral Tribunal u/S. 12 is not at all

maintainable. Not only this, the Division Bench has also observed that in the light of the Act of 1996 the petitioner shall certainly be having a remedy

to challenge the arbitral award.

Sec. 12, 13 and 14 of the Arbitration & Conciliation Act, 1996 reads as under :

Grounds for challenge.â€

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to

give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any

circumstances referred to in subsection (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only ifâ€

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware

after the appointment has been made.

Challenge procedure.â€

(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware

of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in subsection (3) of section 12, send a written

statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal

shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal

shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an

arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is

challenged is entitled to any fees.

Failure or impossibility to act.â€

(1) The mandate of an arbitrator shall terminate ifâ€

(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and

(b) he withdraws from his office or the parties agree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the

parties, apply to the Court to decide on the termination of the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of

an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.

The aforesaid statutory provision of law makes it very clear that the party challenging the arbitrator may make an application for setting aside an

arbitral award in accordance with Sec. 34. It also provides that if a challenge under any procedure agreed upon the parties is not successful, the

arbitral tribunal shall continue the arbitral proceedings and make an award.

In the present case, the Division Bench has rejected the prayer made by the Indore Development Authority for setting aside the artirbal tribunal and

this Court is of the considered opinion that the remedy available to the petitioner was to challenge the order passed by the Division Bench before

Hon'ble the Supreme Court. However, the petitioner â€" Indore Development Authority has filed an application u/S. 14 of the Arbitration &

Conciliation Act, 1996 and a similar prayer was made before the learned Special Judge which was made before the Division Bench of this Court,

meaning thereby, to quash the appointment of Hon'ble Shri Justice R. S. Garg and to quash the proceedings which took place before the Arbitrator.

Learned Special Judge has dismissed the application by passing a detailed and reasoned order as there is a remedy available to the present petitioner

to challenge the award after it is passed by the Arbitration Tribunal. Against the order passed by the learned Special Judge, the present Writ Petition

has been filed.

This Court is of the considered opinion that the present Writ Petition is nothing but a second attempt by the petitioner before this Court for quashment

of the arbitration Tribunal. In the earlier attempt the Indore Development Authority has not succeeded before this Court and now a second petition has

been filed before this Court. This Court is of the considered opinion that the Division Bench of this Court has considered all the aspects of the case in

the earlier order and the learned Special Judge was justified in passing the impugned order. Learned counsel for the petitioner has argued before this

Court and as reflected from the cause title, the present Writ Petition is a Writ Petition under Article 227 of the Constitution of India, this Court is of

the considered opinion that there is no perversity / illegality in the order passed by the learned Special Judge nor the order can be said to be an order

passed without jurisdiction.

The Apex Court in the case of Shalini Shyam Shetty Vs. Rajendra Shankar Patil reported in 2010 (8) SCC 329in paragraph No.49 has held as under:-

On an analysis of the aforesaid decisions of this Court, the following principles on the exercise of High Court's jurisdiction under Article 227 of

the Constitution may be formulated:

(a) A petition under Article 226 of the Constitution is different from a petition under Article 227. The mode of exercise of power by High Court under

these two Articles is also different.

(b) In any event, a petition under Article 227 cannot be called a writ petition. The history of the conferment of writ jurisdiction on High Courts is

substantially different from the history of conferment of the power of Superintendence on the High Courts under Article 227 and have been discussed

above.

(c) High Courts cannot, on the drop of a hat, in exercise of its power of superintendence under Article 227 of the Constitution, interfere with the

orders of tribunals or Courts inferior to it. Nor can it, in exercise of this power, act as a Court of appeal over the orders of Court or tribunal

subordinate to it. In cases where an alternative statutory mode of redressal has been provided, that would also operate as a restrain on the exercise of

this power by the High Court.

(d) The parameters of interference by High Courts in exercise of its power of superintendence have been repeatedly laid down by this Court. In this

regard the High Court must be guided by the principles laid down by the Constitution Bench of this Court in Waryam Singh (supra) and the principles

in Waryam Singh (supra) have been repeatedly followed by subsequent Constitution Benches and various other decisions of this Court.

(e) According to the ratio in Waryam Singh (supra), followed in subsequent cases, the High Court in exercise of its jurisdiction of superintendence can

interfere in order only to keep the tribunals and Courts subordinate to it, `within the bounds of their authority'.

(f) In order to ensure that law is followed by such tribunals and Courts by exercising jurisdiction which is vested in them and by not declining to

exercise the jurisdiction which is vested in them.

(g) Apart from the situations pointed in (e) and (f), High Court can interfere in exercise of its power of superintendence when there has been a patent

perversity in the orders of tribunals and Courts subordinate to it or where there has been a gross and manifest failure of justice or the basic principles

of natural justice have been flouted.

(h) In exercise of its power of superintendence High Court cannot interfere to correct mere errors of law or fact or just because another view than

the one taken by the tribunals or Courts subordinate to it, is a possible view. In other words the jurisdiction has to be very sparingly exercised.

(i) High Court's power of superintendence under Article 227 cannot be curtailed by any statute. It has been declared a part of the basic structure of

the Constitution by the Constitution Bench of this Court in the case of L. Chandra Kumar vs. Union of India & others, reported in (1997) 3 SCC 261

and therefore abridgement by a Constitutional amendment is also very doubtful.

(j) It may be true that a statutory amendment of a rather cognate provision, like Section 115 of the Civil Procedure Code by the Civil Procedure Code

(Amendment) Act, 1999 does not and cannot cut down the ambit of High Court's power under Article 227. At the same time, it must be remembered

that such statutory amendment does not correspondingly expand the High Court's jurisdiction of superintendence under Article 227.

(k) The power is discretionary and has to be exercised on equitable principle. In an appropriate case,the power can be exercised suo motu.

(l) On a proper appreciation of the wide and unfettered power of the High Court under Article 227, it transpires that the main object of this Article is

to keep strict administrative and judicial control by the High Court on the administration of justice within its territory.

(m) The object of superintendence, both administrative and judicial, is to maintain efficiency, smooth and orderly functioning of the entire machinery of

justice in such a way as it does not bring it into any disrepute. The power of interference under this Article is to be kept to the minimum to ensure that

the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the

functioning of the tribunals and Courts subordinate to High Court.

(n) This reserve and exceptional power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed

for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 is meant for protection of individual

grievance. Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above.

(o) An improper and a frequent exercise of this power will be counter-productive and will divest this extraordinary power of its strength and vitality.

In the light of the aforesaid judgment delivered by the apex Court, this Court is of the considered opinin that the order of the learned Special Judge

does not suffers from any patent illegality nor any jurisdictional error has been committed by the Court below.

Accordingly, the admission is declined.â€​

The Indore Development Authority knowing fully well that earlier an application u/s 14 has been dismissed by the Learned Special Judge (District

Court )and the order of the learned Special Judge (District Court) has been affirmed by the Division Bench again preferred an application u/s 14 of

the Arbitration and Conciliation Act, 1996 and the learned Special Judge by order dated 19-12-2016 has dismissed the same. The Indore Development

Authority has now filed third writ petition before this court. This court has already decided the issue by order dated 22-11-2016 and un-successful

attempts are being made by the Indore Development Authority by filing an application u/s 14 before the Special Judge (District Court) which is nothing

but a sheer abuse process of law.

The another important aspect of the case is that the judgment delivered in earlier Writ Petition ie Writ petition No. 5740/2016 has been deliberately

suppressed by the Indore Development Authority. In column No.2 of the Writ Petition which is supported by an affidavit of one Mr Rajeev Saxena,

who is Assistant Engineer, Indore Development Authority it has no were been stated that a petition was filed earlier and they have not given any

reference of any previously filed petitions in Column No.2 and there is no whisper about the judgment delivered in Writ Petition No. 5740/2016 which

was decided on 24-08-2016 in the entire writ petition. The Indore Development Authority is guilty of suppressing the material facts in the present case,

which is very serious matter. The petitioner has not come with clean hands before this court and this court has earlier decided the same controversy.

Meaning thereby the order passed by the learned Special Judge (District Court) on an application preferred u/s 14 of the Arbitration and Conciliation

Act, 1996 was upheld. There appears to be no justification in taking different view in the matter.

Resultantly, the admission is declined and as there is suppression of facts on behalf of the Indore Development Authority a costs of Rs. 50,000/- (Fifty

thousand only) is imposed upon Indore Development Authority and the same be paid to Kalyan Toll Infrastructure Ltd., Indore, within a period of

thirty days, from today.

The order passed by this Court was subjected to judicial scrutiny by filing Special Leave Petition before the apex Court and the apex Court has

passed an order dated 23/2/2017 dismissing the SLP preferred by the Indore Development Authority. The order dated 23/2/2017, reads as under :

We have heard learned Attorney General for India representing the petitioner.

No ground to interfere with the impugned order is made out, in exercise of our jurisdiction under Article 136 of the Constitution of India.

The special leave petition is accordingly dismissed. As a sequel to the above, pending miscellaneous application, if any, also stands disposed of.

It is noteworthy to mention that this Court has even inflicted cost of Rs.50,000/- upon the Indore Development Authority for filing repeated Writ

Petitions in respect of the same cause of action. The most important aspect of the case is that against the order dated 22/11/2016 passed by this Court

dismissing the Writ Petition of Indore Development Authority, SLP was preferred ie., SLP No. 1467/2017 and the Hon'ble Supreme Court on

6/11/2017 has passed the following order :

After having failed in a Writ Petition, which was rightly rejected on 24.08.2016 on the ground that after the Tribunal rejects a challenge to its

contitution only a challenge post-award would be adjuciatable, a second application, this time under Section 14(2) of the Arbitration Act, was rejected.

Against this, a Writ Petition was rejected reiterating what was stated in the rejection to the first petition and stating that this was a second bite at the

same cherry, with which we entirely agree.

The special Leave Petition is dismissed.

Now, the fourth Writ Petition has been filed by the Indore Development Authority and the only change is the judgment delivered by the Full Bench

on 5/5/2017 in A.A.No. 14/2017.

This Court is of the considered opinion that the judgment delivered by the Full Bench was very much in existence on 06/11/2017 when the apex

Court has passed an order in SLP No. 1467/2017. It has been informed by the learned counsel the the matter has been fixed for delivery of Award on

26/05/2018. Today is 28/05/2018. It has been further stated that now the Arbitrator has listed the matter for final arguments on 26/05/2018, and again

26/05/2018 is already over. This Court is of the considered opinion that there are already two orders passed by the Hon'ble Supreme Court dated

06/11/2017 and 23/02/2017 and this Court does not find any reason to pass any order in respect of the transfer of the proceedings to the Arbitration

Tribunal, constituted in terms of the provisions of the M. P. Madhyastham Adhikaran, 1983. The Arbitration Tribunal, which is seized of the matter

shall certainly be free to proceed ahead in accordance with law. Accordingly, admission is declined.