M/S Jabalpur Corridor India Private ... vs M.P. Road Development Corporation ... on 15 December, 2015

[Cites 5, Cited by 8]

Madhya Pradesh High Court

M/S Jabalpur Corridor India Private ... vs M.P. Road Development Corporation ... on 15 December, 2015

1. The petitioner has filed this petition against the order dated 30.9.2015. The main grievance of the petitioner is that the trial court has framed issues on an application filed under Section 34 of the Arbitration & Conciliation Act 1996, hereinafter called as "the Act of 1996". The action of the court is contrary to the judgment passed by the Supreme Court in Fiza Developers and Inter Trade Private Limited Vs. AMCI (India) Private Limited and another reported in (2009) 17 SCC 796.

2. Learned Senior Counsel appearing on behalf of the respondent has submitted that the respondent does not want to file any reply to the writ petition and the petition can be disposed of at this stage. In view of earlier direction of this court passed in W.P. No. 15478 of 2015 on 16.9.2015 that the trial court shall conclude the proceedings within a period of two months from the date of passing of the order. The petition is heard and disposed of finally. 2

3. On the instant of the petitioner and pursuant to the order passed by this court in W.P. No. 6557 of 2013 the matter was referred for arbitration. The Arbitration Tribunal passed an award on 22.8.2014. The respondent challenged the award before the District Court under Section 34 of the Arbitration & Conciliation Act 1996 on various grounds. In the aforesaid application, the respondent filed an application before the court for permission to lead evidence in support of the grounds raised in the application filed under Section 34 of the Act of 1996. It was rejected by the court. Against the aforesaid order a writ petition was filed which was registered as W.P. No. 15478 of 2015. This court vide order dated 16.9.2015 disposed of the aforesaid writ petition with the following observations :-

"I have considered the rival submissions made by learned counsel for the parties. In the peculiar facts of the case and with a view to afford an opportunity of fair hearing to the petitioner, I am inclined to quash the order dated 22.8.2015. It is accordingly quashed. The petitioner shall file the statement of witnesses in the form of affidavit within a period of two weeks from today before the trial court. Needless to state that the respondent would be at liberty to cross examine the witnesses of the petitioner, if so advised. In addition, the respondent shall be at liberty to lead evidence by the parties in rebuttal, if so advised. The trial court shall examine the issue relating to adducing of the evidence in the light of the law laid down by the Supreme Court in the case of Fiza Developers and Inter- Trade (supra).

Learned Senior counsel for the parties undertake before this Court that they shall not seek unnecessary adjournment and shall cooperate with the early decision of the proceeding before the Trial Court. Taking into account that the contract was rescinded in the year 2007, the trial court is directed to conclude the proceeding within a period of three months from today. With the aforesaid directions, the petition stands disposed of.

Certified copy as per rules."

4. Thereafter the court vide impugned order framed the following issues:-

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5. Learned Senior Counsel appearing on behalf of the petitioner has contended that the court has acted beyond jurisdiction in framing the issues and act of the court is contrary to law laid down by the Supreme court in Fiza Developers and Inter Trade Private Limited (supra ). In support of his contentions learned Senior Counsel has relied on the following judgments :-

(a) Ashok Vs. Sanghi Brothers (Indore) Ltd. Passed in W.P. No. 9699 of 2012,

(b) State of M.P. Vs. Som Datt Builders Pvt. Ltd. Passed in W.P. No. 1705 of 2014, ( c) Udupi Power Corporation Limited (Formerly known as Nagarajuna Power Corporation ) rep. By its Company Secretary Mr. Sunil L. Naik Vs. M/s. Simplex Infrastructures Limited rep. By Managing Director, passed in W.P. No. 37279, 37280 and 37282 of 2013,

(d) M/s. Rockbad Renovators Ltd. Vs. State of M.P. and others passed in W.P. No. 62 of 2015, 4

6. Contrary to this learned Senior Counsel appearing on behalf of the respondent has contended that the court has framed the issued to decide the controversy raised in the application filed under Section 34 of the Act of 1996. The court has not framed any additional issue, hence the act of the court is in accordance with law.

7. The Supreme Court in in Fiza Developers and Inter Trade Private Limited (supra ) has held as under in regard to framing of issues by the court in the proceeding initiated on an application filed under Section 34 of the Act of 1996:-

23. Framing of issues is necessary only where different types of material propositions of fact or law are affirmed by one party and are denied by the other and it is therefore necessary for the court to identify the issues and specify the party on whom the burden to prove the same lies. When this exercise has already been done by the statute, there is no need for framing the issues.

24. In other words, an application under Section 34 of the Act is a single issue proceeding, where the very fact that the application has been instituted under that particular provision declares the issue involved. Any further exercise to frame issues will only delay the proceedings. It is thus clear that issues need not be framed in applications under Section 34 of the Act.

31. Application under Section 34 of the Act are summery proceedings with provision for objections by the respondent - defendant followed by an opportunity to the applicant to "prove" the existence of any ground under Section 34 (2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the respondent - defendant to place his evidence by affidavit. Where the case so warrants the court permits cross examination of the 5 person swearing to the affidavit. Therefore, the court hears arguments and/ or receives written submissions and decides the matter. This is of course the routine procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under Section 34 of the Act.

8. The Supreme Court has specifically held in the aforesaid judgment that framing of issues as contemplated under Rule 1, Order 14 of the CPC is not integral part of the process of proceeding under Section 34 of the Act.

9. Section 34 itself provides the ground on which an arbitral award may be set aside by the Court. Section 34 (2) reads as under:-

Section 34. Application for setting aside arbitral award :-

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if --

(a) the party making the application furnishes proof that--

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, 6 only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

10. From the mandates of the Section, it is clear that an arbitral award can be set aside on the grounds mentioned in section itself. It means that parity who has challenged the arbitraral award is not at liberty to raise grounds in accordance with its convenience. The framing of issues as contemplated under order 14 Rule 1 of the CPC is an exercise by the court to pin point the issues which have to be decided by the court in order to decide the controversy. It may be factual or legal. The relevant provisions of Order 14 Rule 1 of CPC reads as under :-

Order XIV :-

1. Framing of issues :- (1) Issues arise when a material propositions of fact of law is affirmed by the one party and denied by the other.

(2) Material propositions are those propositions of law of fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defence.

(3) Each material proposition affirmed by one party and denied by the other shall form the subject of a distinct issue, (4) Issues are of two kinds :-

(a) Issues of fact,

(b) Issues of law,

11. The court has to pronounce its judgment on all the issues. It means that the parties are at liberty to raise all the grounds, may be factual or 7 legal in support of relief claimed. However, this liberty is not available to a party who wants to set aside an arbitral award under Section 34 of the Act of 1996 because the Act itself prescribes the grounds on which an arbitral award can be set aside.

12. This court has already taken the same view in :-

(a) Ashok Vs. Sanghi Brothers (Indore) Ltd. Passed in W.P. No. 9699 of 2012,

(b) State of M.P. Vs. Som Datt Builders Pvt. Ltd. Passed in W.P. No. 1705 of 2014.

13. Consequently, the petition filed by the petitioner is hereby allowed. The impugned order dated 30.9.2015 is hereby set aside. No order as to costs.

(S.K. Gangele) JUDGE bks 8 HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT AT JABALPUR WRIT PETITION No. 17559 of 2015 M/s Jabalpur Corridor India Private Limited Versus.

M.P. Road Development Corporation For Petitioner : Shri Vivek Tankha, Sr. Adv assisted by Shri Shashank Shekhar, Adv.

For Respondents/ : Shri R.N. Singh, Sr. Adv assisted by Shri Deepesh Joshi, Adv.

ORDER ( /12/2015) Post for : .12.2015 (S.K. Gangele) JUDGE .12.2015

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