Linde India Ltd. vs Dustan G. Engineers Pvt. Ltd.

Ashim Kumar Banerjee and Arijit Banerjee, JJ.

This appeal would involve a very short question as to whether the appellant would be entitled to assail the part of the order that was passed in an application under Section 11 of the Arbitration and Conciliation Act, 1996. Mr. Amitava Ghosh, learned counsel, opposing the application would strenuously oppose the appeal by questioning the maintainability. He would refer to the well-known decision in S.B.P. and Co. Vs. Patel Engineering Ltd. and Another, . Mr. Ghosh would rely upon paragraphs 44 and 47 to contend, once it is a judicial order, the same, as far as High Court is concerned, would be final and the only avenue open to a party feeling aggrieved by the order of the Chief Justice would be to approach the Supreme Court under Article 136 of the Constitution of India, 1950. Under the appropriate provision of the said Act of 1996, the Chief Justice or his designate would be empowered to deal with the prayer for appointment of arbitrator under Section 11.

In the instant case, the learned Single Judge so nominated by the Hon''ble Chief Justice dealt with the issue. While dealing with the issue, His Lordship observed as follows:

"If such issue is decided in favour of the petitioner and against the respondent, the petitioner will be entitled to costs assessed at Rs. 2 lakhs with interest thereon from the date of the arbitral tribunal''s decision on such preliminary issue at the rate of 10% per annum which the respondent will remain liable to pay in addition to any other sum or interest or costs that may be awarded against the respondent in the reference."

The appellant would object to the extract quoted (supra).

On a combined reading of the said order we find that His Lordship doubted the maintainability of the claim and obviously the prayer for appointment of an arbitrator. However, he allowed the parties to invoke the arbitration clause and appointed an advocate of this court to act as arbitrator. While doing so, His Lordship observed, the arbitrator would decide the issue at the preliminary stage and in case it is decided in favour of the petitioner, the respondent would be compelled to pay Rs. 2 lakhs with interest @ 10% p.a. This part of the order is wholly without jurisdiction that the learned judge assumed under Section 11 of the said Act of 1996. Once the order or a part of it is without jurisdiction that could not be said to be sacrosanct being passed under Section 11 so as to take away the right of the aggrieved party to invoke Clause 15 of the Letters Patent.

Coming back to the issue on merit we find that the issue should be left to the discretion of the arbitrator. What cost would be awarded would be within the exclusive domain of the arbitrator. Direction given by His Lordship is not tenable in law. The appeal succeeds and is allowed. Part of the order quoted (supra) is set aside. The appeal is disposed of without any order as to costs.

We are told, arbitrator is waiting for a decision in this appeal. We make it clear, we have not touched the rest of the order.