Union Of India And Anr. vs M/S Kiran Construction

Heard Mrs. U. Chakraborty, the learned special counsel for the N.F. Railways, the appellant herein as well as Mr. R. Hussain, the learned

advocate for the respondent.

By this application under Article 227 of the Constitution of India, the petitioner haschallenged the order dated 23.08.2011 passed by the learned

Additional District Judge, Kamrup, Guwahati in M. Ex. Case No. 49/2007.

The case projected by the petitioner is that an arbitration dispute arose inconnection with the Contract Agreement No. GC/22 dated 22.01.1993 and

the matter was referred to arbitration. The arbitral award dated 02.12.2004 was passed, by which the claim Nos. 1 and 2 amounting to Rs.22,47,507/-

and Rs.15,46,480/- respectively was awarded in favour of the respondent and against the petitioner. From the document accompanying with this

revision as well as the affidavit and counter affidavit filed in the matter, it appears that the petitioner did not prefer any application under Section 34 of

the Arbitration and Conciliation Act, 1996 and moreover, no appeal was preferred under Section 37 of the said 1996 Act. The arbitral award was put

to execution and the said proceeding was registered as M. Ex. No. 49/2007, which was made over to the court of learned Additional District Judge,

Kamrup, Guwahati for disposal. In this application, it is projected that the authorities of the Forest Department of the State had issued a demand for

payment of royalty upon the petitioner herein in respect of the forest produced collected by the respondent on the ground that their contractor had not

provided utilization certificate. It is projected that by order dated 07.03.2005, the petitioner had demanded that the respondent should deposit a sum of

Rs.27,27,891/- towards Forest Royalty as directed by the Arbitrators, subject to statutory deduction which included a ad hoc deposit of Rs.34,28,918/-.

However, it is the admitted case of the petitioner that the respondent had denied the liability of Forest Royalty as the earth was filled up from private

land without any documentary evidence.

Be that as it may, in the proceedings of the execution case, the petitioner hereinhad filed an objection under Section 47 CPC in respect of the claim

for Rs.27,27,891/- as well as ad hoc deposit for dues of the respondent towards Forest Royalty amounting to Rs.34,24,918/-. Therefore, it was

submitted that the execution of the arbitral award dated 02.12.2004 was not valid and not sustainable and the petitioner had prayed for dismissal of the

execution proceeding. The learned executing Court, with a detailed discussion, was of the view that the issue of Forest Royalty was never raised by

the petitioner before the Arbitral Tribunal and, as such, the learned executing Court opined that the petitioner herein had waived their right of claiming

Forest Royalty, having not raised the matter in the counter claim and hence, it was held that the issue cannot be raised at a later stage. Accordingly, it

was further held that the respondent was entitled to recover the balance amount from the petitioner and thus, the execution petition was proceeded

with by issuing a writ for recovery of money.

The learned counsel for the petitioner had made a strenuous effort to lead thisCourt to the various documents annexed to this application as well as

to the stand taken by the respondent No.2 i.e. the Divisional Forest Officer, Kamrup (East) Division, Guwahati-1, and to project that there was a huge

demand of Forest Royalty against the respondent. However, for the time being, this Court is not inclined to going to the documents as produced

because before referring to the factual aspect, the petitioner was called upon to satisfy this Court on the three issues for law which arise for

adjudication of the Court which are:

(i) Whether there is any provision in Order XXI of the CPC to permit the executing Court to take cognizance on any claim for adjustment made by the

judgment debtor?

(ii) Whether a demand towards forest royalty, which did not exist and/ or raised as on 01.12.2004, admittedly being raised by the respondent No.2 vide

Annexure- B series to the affidavit-in-opposition filed on 14.03.2014 as well as raised by the Deputy Chief Engineer/ Con. Vide letter dated

07.03.2005 can be permitted to be adjusted against the award passed on 01.11.2004?

(iii) Whether it was permissible for the petitioner to raise objection as to the execution, having not filed any application for setting aside the award

under Section 34 of the Arbitration and Conciliation Act, 1996 and having not filed any appeal under Section 37 of the said 1996 Act?

This Court is required to only examine whether the order passed by the learnedcourts below suffers from any jurisdictional error as because under

the limited scope of Article 227 of the Constitution of India, it is not permissible to correct each and every error committed by the court below, if it

does not go to the root/ issue of jurisdiction. Therefore, the Court cannot go into the sufficiency and/ or justification of the demand raised by the

petitioner against the respondent.Â

In respect of all the three queries, the learned counsel for the petitioner by onceagain referring to the documents annexed to this application had

projected that the demand made by the Forest Deptt. in respect of royalty was a statutory demand raised by the State and therefore, if the petitioner is

not permitted to recover that amount from the dues arising in respect of the contract in question, there would be no scope for the petitioner to realize

the said statutory dues from the respondent No.1. It is further submitted that as the dues sought to be recovered and/ or adjusted pertains to statutory

dues relating to Forest Royalty, there was no impediment to pray for adjustment in the execution proceeding and to pray for dismissing the execution

proceeding as the demand of the petitioner was more than the arbitral award passed in favour of the respondent No. 1.

Per-contra, the learned counsel for the respondent by referring to the case ofMahanagar Telephone Nigam Ltd. Vs. Applied Electronics Ltd,

(2017) 2 SCC 37 has submitted that the Hon’ble Apex Court has held that the Arbitration and Conciliation Act, 1996 is a complete Code and in

the said Act the legislature has intentionally not kept any provision pertaining to applicability of the Civil Procedure Code and the Hon’ble Apex

Court had noted its disapproval on 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 by further holding that such an intervention was not permissible. It is

submitted that the Hon’ble Apex Court had further held that as the provision of CPC was not applicable in connection with an arbitral award,

there was no scope even for filing a cross-objection in an appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996. The learned

counsel for the respondent projects that if any corrective measure is to be taken against an arbitral award, it has to be done in accordance with the

provisions as contained in Section 37 or Section 34 of the 1996 Act. By referring to the case of National Building Construction Corporation Ltd. Vs.

Lloyds Insulation India Ltd. (2005) 2 SCC 367, it is submitted that the executing Court does not have a power to go behind the award and, as such, it is

submitted that the provisions of Section 47 CPC was not applicable and the only remedy which can be availed off by the aggrieved party against

Arbitration Act by invoking Section 34 or Section 37 of the Arbitration and Conciliation Act, 1996.

Having heard the learned counsel for both sides, having seen that the law relatingto the applicability of the various provisions of CPC having been

held to be restricted in the case of MTNL (supra) and NBCCL (supra), this Court is constrained to hold that the application filed under Section 47

CPC by the petitioner was not maintainable as the petitioner had not availed the remedy as provided under Section 34 and Section 37 of the

Arbitration and Conciliation Act, 1996. Moreover, the alleged demand of Forest Royalty having been arisen after the arbitral award was passed on

01.12.2004, such a demand could not have been adjusted from the award as no provision under the Code of Civil Procedure could be pointed out,

which permitted any adjustment to be enforced by the judgment debtor at the execution stage.

In view of the discussion above, this Court does not find that the impugned ordersuffers from any jurisdictional error. Therefore, this revision fails

and same stands dismissed.

Insofar as the query of the learned counsel for the respondent is concerned to theeffect that how the Railways can enforce its dues against the

respondent, this Court is constrained to hold that the revisional Court cannot act as Adviser to the petitioner and therefore, it would open to the

petitioner to seek such remedy as may be advised in this regard.

The parties are left to bear their own cost.