M.P. Road Development Corporation vs Jabalpur Corridor Pvt. Ltd.

R.S. Jha, J.—The petitioner has filed this petition being aggrieved by orders dated 8.3.2014, 18.6.2014 and 21.7.2014 passed by the Arbitral Tribunal in the dispute that is pending before it.

It is submitted by the learned counsel for the petitioner that a dispute with regard to a contract relating to construction and maintenance of the Sagar- Damoh-Jabalpur road on BOT basis is pending before the Arbitrator. It is submitted that in August 2012 the claimants concluded their argument, however thereafter the petitioner took up proceedings before the District Court, Bhopal objecting to the applicability of the Arbitration and Conciliation Act, 1996. The matter travelled up to this Court and the petition filed by the petitioner was allowed by order dated 4.12.2013 passed in W.P No.6557/2013, against which an SLP has been filed before the Supreme Court which is pending decision and is due to come up for hearing on 8.8.2014.

It is submitted that on 8.3.2014 the petitioner moved an application before the Arbitral Tribunal requesting them to order the claimants to re-argue the matter which has been dismissed by the impugned order dated 8.3.2014.

The petitioner, thereafter, moved another application for permitting the petitioner to lead additional evidence and for re-opening the case which has also been dismissed by the Arbitral Tribunal on 18.6.2014. By way of I.A No.9697/2014 the petitioner has also brought on record order dated 21.7.2014 whereby the petitioner''s application for grant of additional time to submit all oral arguments has been dismissed.

The learned counsel for the petitioner submits that interest of justice requires that the matter should be re- heard or in any case the petitioner be given due and proper opportunity of hearing specifically keeping in mind the fact that the arguments of the claimants stood closed in August 2012 and that the matter was again taken by the Arbitrator after a very long lapse of time. The learned counsel for the petitioner has relied upon the decisions of the Supreme Court rendered in the cases of R.C. Sharma Vs. Union of India (UOI) and Others, and Anil Rai Vs. State of Bihar, .

The learned Senior Counsel for the respondent has raised a preliminary objection as to the maintainability of the petition by relying upon the decisions of the Supreme Court rendered in the case of S.B.P. and Co. Vs. Patel Engineering Ltd. and Another, . The learned Senior Counsel for the respondent has also relied upon paragraph 8 of the decision of the Supreme Court in the case of Lalitkumar V. Saanghavi (D) Th. Lrs Neeta Lalit Kumar Sanghavi vs. Dharamdas V. Sanghavi & Ors. (Civil Appeal No.3148/2014 decided on 4.3.2014 wherein the law laid down in the case of SBP & Co. (supra) has been reiterated. The learned Senior Counsel for the respondent has also submitted that the petitioner had also approached the Supreme Court in the pending S.L.P and had sought stay of proceedings before the Arbitrators but the Supreme Court has rejected the application for stay after which this petition has been filed and, therefore, it deserves to be dismissed.

The Supreme Court in the case of SBP & Co. (supra) has observed as follows in paragraphs 46 & 47 as follows:-

The object of minimizing judicial intervention while the matter is in the process of being arbitrated 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 order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.

We, therefore, sum up our conclusions as follows:

i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.

ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated, Judge would be that of the Chief Justice as conferred by the statute.

(iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge.

(v) Designation of a District Judge as the authority under Section 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act.

(vi) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the Arbitral Tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms of Section 37 of the Act or in terms of Section 34 of the Act.

(vii) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that court is a judicial order, an appeal will lie against that order only under Article 136 of the Constitution to the Supreme Court.

(viii) There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under Section 11(6) of the Act.

(ix) In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.

(x) Since all were guided by the decision of this Court in M/s. Konkan Railway Corpn. Ltd. and Another Vs. M/s. Rani Construction Pvt. Ltd., and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act.

(xi) Where District Judges had been designated by the Chief Justice of the High Court under Section 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the concerned High Court or a Judge of that court designated by the Chief Justice.

(xii) The decision in Konkan Railway Corpn. Ltd. & anr. Vs. Rani Construction Pvt. Ltd. is overruled."

In the case of Lalitkumar (supra) the Supreme Court in paragraph 8 has held as under:-

�8. Within a couple of weeks thereafter, the original applicant died on 7.10.2012. The question is whether the High Court is right in dismissing the application as not maintainable. By the judgment under appeal, the Bombay High Court opined that the remedy of the appellant lies in invoking the jurisdiction of the High Court under Article 226 of the Constitution. In our view, such a view is not in accordance with the law declared by this Court in S.B.P. and Co. Vs. Patel Engineering Ltd. and Another, . The relevant portion of the judgment reads as under:

�45. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his 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. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible.�

That need not, however, necessarily mean that the application such as the one on hand is maintainable under Section 11 of the Act.�

Having heard the learned counsel for the parties, I am of the considered opinion that the Arbitration proceedings are pending since considerably long period of time and in view of the law laid down by the Supreme Court, interference by this Court in the interlocutory orders passed by the Arbitral Tribunal is not warranted.

In the circumstances, the petition filed by the petitioner is disposed of with liberty to the petitioner to take up all possible defences and objections including the objections regarding improper or inadequate opportunity of hearing, improper or non-application of mind based on the decisions of the Supreme Court relied upon by the petitioner, denial of opportunity to argue, etc. in case such an occasion arises in future proceedings under section 34 or 37 of the Act, as the case may be. It is reiterated that as this Court has not expressed any opinion on the merits of the case, the disposal of this petition would not, in any way, come in the way of the petitioner in raising the issues raised herein in the subsequent proceedings if so required.

In view of the aforesaid discussion, the impugned orders passed by the Arbitral Tribunal are hereby upheld and it is observed that the Tribunal may proceed further in the matter in accordance with law.

It goes without saying that inspite of the dismissal of the present petition, in case the Tribunal feels, at any further point of time, that it is necessary to grant any further opportunity of hearing to any of the parties, it may permit them to do so.

With the aforesaid observation and liberty the petition, filed by the petitioner, stands dismissed.

It goes without saying that the interim order passed by this Court stands vacated.

In the facts and circumstances, there shall be no order as to costs.