Calcutta High Court
Efcalon Tie Up Private Limited vs Startrack Agency Private Limited on 5 June, 2017
Author: Soumen Sen
Bench: Soumen Sen
ORDER SHEET
GA No.1572 of 2017
With
RVWO No.24 of 2017
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
EFCALON TIE UP PRIVATE LIMITED
Versus
STARTRACK AGENCY PRIVATE LIMITED
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
Date : 5th June, 2017.
Appearance:
Mr. Abhrajit Mitra, Adv.
Mr. Sukrit Mukherjee, Adv.
Mr. Amritam Mondal, Adv.
...for the petitioner.
Mr. Sabyasachi Chowdhury, Adv.
Mr. Anirban Kar, Adv.
Ms. Anindita Ghosh, Adv.
Mr. Rajesh Upadhyay, Adv.
...for the respondent.
The Court : This is an application for review of an order dated 2nd August, 2016. There cannot be any doubt that this application is a clear after thought in order to scuttle the arbitration proceeding that has been commenced pursuant to the order dated 2nd August, 2016.
An argument is advanced on behalf of the petitioner that the learned counsel representing the petitioner without any authority has conceded to the appointment of an Arbitrator and the said order cannot bind the petitioner.
Mr. Abhrajit Mitra, learned senior counsel appearing on behalf of the petitioner submits that in absence of any specific direction passed by the Hon'ble Division Bench while setting aside the award that the Arbitrator shall hear the matter afresh or that the 2 matter is remanded for a fresh adjudication no application under Section 11 of the Arbitration and Conciliation Act is maintainable as the arbitration agreement has merged in the award. The learned senior counsel in order to impress upon the Court that the proceeding has attained finality and there is no fresh dispute to be adjudicated hence no appointment of an arbitrator could be made has relied upon the judgment of a Single Bench in 'Shakambari & Co. vs. Union of India (South Eastern Railway)' reported at 2009 (1) CHN 260, paragraphs 15, 16 and 17 and decision of the Supreme Court in 'K.K. John vs. State of Goa' reported at (2003) 8 Supreme Court Cases 193, paragraphs 2, 3, 5, 6 and 7. It is submitted that in the said decisions it has been categorically held that no second reference could be made on identical dispute when there in no such leave granted by the Court setting aside the award. It is submitted that the arbitration agreement has merged in award as all disputes referred to arbitration by parties have been decided and nothing more remains to be decided. This argument is based on the observation made in 'Sudhir Kumar Saha and Others vs. J.N. Chemicals Private Ltd. and Others' reported at AIR 1985 Calcutta 454.
The learned Senior Counsel has relied upon 'National Insurance Co. Ltd. vs. Boghara Polyfab (P) ltd.' reported at (2009)1 SCC 267 paragraph 22.1 for the proposition that the Court appointing an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, is required to decide about the existence of the arbitration agreement and the said matter cannot be left to the Arbitrator. The Division Bench did not make any observation with regard to the matters left out in the said decision to be adjudicated by the arbitrator on remand and in absence of such direction no fresh reference for the rest of the matters not decided and covered by the Division Bench could be adjudicated by a fresh reference.
On the scope of review a fairly recent decision of the Hon'ble Supreme Court in the case of 'Chairman & M.D. Central Bank of India & Ors. vs. Central Bank of India 3 SC/ST Employees Welfare Association & Ors.', reported at AIR 2016 SC 326, paragraphs 14 and 16 relied upon. It is submitted that since there is an error apparent on the face of the record, the Court is required to apply the principles of ex debitio justitiae so as to prevent miscarriage of justice. The submission made on behalf of the petitioner is that on 22nd August, 2016 conceding to the appointment of a fresh arbitrator was on a total misconception of law and without authority inasmuch in spite of due diligence the learned Counsel could not produce an earlier order dated 15th June, 2015 by which the earlier application was disposed of by recording that since an appeal from the order setting aside the award is pending, application for appointment of a fresh Arbitrator is premature and the respondent could be free to urge the grounds in course of the appeal or institute appropriate proceedings in respect thereof after disposal of the appeal and the order of the Division Bench dated May 20, 2016 by which the award was set aside. The aforesaid orders completely take away the right to claim any fresh reference.
Mr. Sabyasachi Chowdhury, learned Counsel appearing on behalf of the respondent submits that the petitioner has suppressed an order passed in an application filed under Section 9 of the Arbitration and Conciliation Act before the Division Bench during the pendency of the appeal and the Hon'ble Division Bench disposed of the said application after the appeal was disposed of by passing an interim order. The Division Bench did not accept the submission made on behalf of the petitioner that by reason of setting aside of the award, the Court has no jurisdiction to pass any interim order. The learned Counsel has also relied upon a decision of the Hon'ble Supreme Court in 'McDERMOTT International Inc. vs. Burn Standard Co. Ltd. & Ors.' reported at (2006) 11 SCC 181 paragraph 52, for the proposition that even after quashing the award, the parties would be free to begin the arbitration proceedings again and it was precisely for this purpose that a fresh reference was sought for. It is 4 submitted that the application became necessary by reason of death of the named arbitrator in the arbitration agreement.
There cannot be any doubt that the award was partially set aside. It would be evident from the observation made by the Hon'ble Division Bench in the judgment itself which reads:
"The award is, in our view, patently illegal, in so far as the award allows the appellant to remain in the said premises, enjoy the said premises and/or carry on business thereat without being saddled with any obligation whatsoever. The impugned award is unconscionable and thus, against public interest. It is well settled that an award which is unconscionable, should be set aside." (emphasis supplied) Moreover, the application filed under Section 9 of the Arbitration and Conciliation Act was disposed of after the appeal was dismissed with the following observation:
"Mr. Kapur's submission that no interim order could have been passed as there was no arbitral lis pending between the parties, is also difficult to sustain. On a perusal of Section 9 of the 1996 Act, it is patently clear that interim relief might be obtained before commencement of arbitral proceedings, during the arbitral proceedings and even after termination of the arbitral proceedings, before the award is enforced under Section 36 of the 1996 Act."
The judgment of the Division Bench dated 20th May, 2016 passed in relation to the application under Section 9 of the Arbitration and Conciliation Act is not under challenge. This has been accepted by the petitioner. It is manifest from the said observation that the parties would be at liberty to seek a fresh reference consequent upon the observation made by the Division Bench otherwise the interim order dated May 20, 2016 could not have been passed. In view of the observation made by the Division Bench that the award is unconscionable and against the public policy since the petitioner who had enjoyed the premises was relieved without being saddled with any 5 obligation gives rise to a cause of action to make a fresh reference for adjudication of such liability arising out of the agreement containing the arbitration clause. The respondent precisely for this purpose has issued a notice under Section 21 of the Arbitration and Conciliation Act. A bare reading of Section 34 of the Arbitration and Conciliation Act, 1996 makes it clear that no power has been invested by the Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in Sub-Section 4 of Section 34. This legal position has been expounded in the case of McDermott International Inc. (supra). In paragraph 8 of the said decision, the Court observed thus:
8........parliament has not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under Sub-
Section (4) of Section 34 of the Act. The object of Sub-section (4) of the Section 34 of the Act is to give an opportunity to the arbitral tribunal to resume the arbitral proceedings or to enable it to take such other action which will eliminate the grounds for setting aside the arbitral award.
It is also apposite to refer to para 52 of the decision of the Supreme Court in McDermott International Inc. v. Burn Standard Co. Ltd. [MANU/SC/8177/2006: (2006) 11 SCC 181] relied on by the learned counsel for the respondent:
"52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The Court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a 6 conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it." (emphasis supplied) The challenge to the validity of the arbitration agreement is based on the assumption that by reason of the award being set aside by the Division Bench with no observation with regard to remanding the matter for a fresh adjudication perishes the arbitration agreement is misconceived and untenable in law. If that interpretation is accepted, then it would result in miscarriage of justice. Moreover, the Division Bench was alive to this problem and has accordingly exercised its jurisdiction in passing an interim order after dismissing the application for setting aside of the award in contemplation of an arbitration proceeding. The validity of the arbitration agreement is not in dispute. The finding of this Court that the arbitration agreement is valid is not on a concession. The concession is only with regard to the exercise of jurisdiction by this Court to nominate an arbitrator. It is difficult to accept that the argument was made by the learned Counsel unconscious of the earlier orders passed in this proceeding. The earlier order denying appointment of an arbitrator by reason of pendency of the appeal also cannot come in assistance to the petitioner at this stage.
Under such circumstances, the application stands dismissed. However, there shall be no order as to costs.
(SOUMEN SEN, J.) B.Pal/A.S.