Ut Of J&K (Erstwhile State Of J&K) vs M/S Hans Raj Bharat Bhushan on 21 August, 2024

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Jammu & Kashmir High Court

Ut Of J&K (Erstwhile State Of J&K) vs M/S Hans Raj Bharat Bhushan on 21 August, 2024

1. The appeal has been preferred by the appellants under Section 39 read with Section 17 of J&K Arbitration Act, 1940 against the impugned Judgment dated 27.05.2022 passed by the learned Single Judge in CM No.2631/2022 filed in A.A No.01/2006 and consequently decree 2 Arb App No. 2/2022 dated 27.06.2022. The court has heard the learned counsel for the parties on the maintainability of the present appeal as the learned senior counsel appearing for the respondent had raised the issue of maintainability of the present appeal against the impugned orders.

2. The court need not go into the details of the arbitration proceedings or the award passed by the learned Arbitrator as the court is, at present, to deal with the maintainability of the appeal. The award passed by the Sole arbitrator in arbitration application No. 05/1990 was filed before this Court and was numbered as A.A No. 01/2006.

3. The appellants herein filed an application bearing IA No. 05/2006 whereby the award was challenged in terms of Sections 30 and 33 of the Arbitration Act. The respondent herein M/s Hans Raj Bharat Bhushan filed objections to the petition, filed by the appellants herein. The respondent had also prayed in the objections for making the award rule of the Court in terms of Section 17 of the Arbitration Act. The A.A No. 1/2006 registered to the award submitted by the arbitrator was dismissed by learned Single Judge vide order dated 29.06.2021 for absence of petitioner. The respondent herein in the appeal preferred an application No. 2631/2022 titled Hans Raj Bharat Bhushan Vs. State of J&K and others for making the award rule of the Court. The Court vide order dated 27.05.2022 allowed the CM No.2631/2022 and made the award dated 20.12.2005 as a rule of Court. The learned Single Judge while passing the order dated 3 Arb App No. 2/2022 27.05.2022 held that it was incumbent upon the Court while dismissing the application of appellants herein for default of appearance and for non-prosecution to make the award rule of the Court in terms of Section 17 of the J&K Arbitration Act, 1940.

4. It is suffice to mention herein that restoration application was not filed against the order dated 29.06.2021. The caption of the order dated 29.06.2021 mentions of A.A No. 01/2006 along with IA No.35/2007, IA No.5/2006 and IA No.21/2006.

5. Mr. R. K. Gupta, learned Senior counsel appearing for the respondent in the appeal has argued that the present appeal is not maintainable against the impugned orders. It is submitted that the appeal is maintainable in terms of Section 39 of the Arbitration Act only against an order passed under clause (i) to clause (vi) of the said Section. The order impugned does not fall under any such category including sub-clause (vi) which permits filing of an appeal from an order setting aside or refusing to set aside an award. The appellants did not choose to file application for setting aside the order dated 29.06.2021 and instead waited for the order to be passed on 27.05.2022. The learned Single Judge while passing the order dated 29.06.2021 was required to make the award rule of the Court but failed to do so and the order dated 27.05.2022 set the things right and the award was made rule of the Court. There was no option left with 4 Arb App No. 2/2022 the learned Single Judge but to pass the impugned order dated 27.05.2022.

6. Mr. Amit Gupta, learned AAG appearing for the appellants, has contended that the appeal is maintainable against the impugned order as the learned Single Judge has erroneously passed the order. It is also pleaded that what was dismissed by the learned Single Judge vide order dated 29.06.2021 were not only the objections (I.A No. 5/2006) filed to the A.A No.1/2006, objections to IA No.05/2006 but also A.A No. 01/2006 as is evident from the title of the order dated 29.06.2021. Further, it is argued that the award could not have been made rule of the Court in view of the decision rendered earlier by this Court in another arbitration proceedings in which the same question of law was involved. The impugned order in the present appeal amounts to refusal to set aside the award.

7. Learned counsels for both the sides have cited judgments in support of their respective arguments.

8. The moot question for determination in the present appeal is if the order passed by the learned Single Judge vide dated 27.05.2022 could be said to be an order appealable under Section 39.

9. It is evident from the record that after the award was filed by the arbitrator before this Court the appellants herein had objected to the award being made rule to the Court and had prayed for setting aside of the same. The objections filed by the State numbered as 5/2006. It 5 Arb App No. 2/2022 is only after this application had been filed by the appellants/State that the respondent herein also pleaded to make award rule of the Court while opposing the application No.5/2006.

10. It also appears from the record of A.A No. 01/2006 that both the parties remained absent on couple of hearings in the matter before the order dated 29.06.2021 came to be passed by the Court whereby the A.A No. 01/2006 along with three other IA came to be dismissed for non-prosecution. It is also made out from the order dated 29.06.2021 that the court while passing the order apparently did not go into the nature of the proceedings and the order of dismissal was passed for the reason that the petitioner had not appeared in the case. The proceedings in A.A No.1/2006 also reveal that the learned Single Judge had framed issues in A.A No.1/2006 vide order dated 14.09.2007 and had directed the parties to file affidavits of witnesses in support of the issues framed by the Court. The affidavits were also filed by the parties.

11. The case title of the proceedings showed the firm-Contractor as petitioner whereas the State was the respondent. The dismissal of the case on 29.06.2021 meant dismissal of the award filed by the learned arbitrator which was numbered as 01/2006. There can be no dispute that the award filed by the arbitrator could not be dismissed in default. The application was filed by the firm-Contractor with a prayer that the award should be made rule of the court as a consequence to the 6 Arb App No. 2/2022 dismissal of the objections of the appellants herein vide order dated 29.06.2021. On the said application filed by the respondent-Firm, the learned Single Judge made the award rule of the court on the premise that the application filed for setting aside the award having been dismissed, the consequence of the same was that the court while dismissing the application had no option but to make the award rule of the court in terms of Section 17 of the Arbitration Act.

12. This Court is of the view that order dated 27.05.2022 whereby the Court made the award rule of the court can be said to be an order refusing to set aside the award in the facts and circumstances of the case though the said order of 27.05.2022 is just projected as a modification of order dated 29.06.2021 and to set the said order right which the court while passing order dated 29.06.2021 inadvertently failed to do so.

13. Once the award had been passed by the arbitrator, it was incumbent upon the court to decide the matter on merits more so when the award had been assailed by one of the parties and the proceedings had progressed to the point where only the arguments were required to be heard in the matter. The award once placed before the court by the arbitrator had to be taken to its logical end even in the absence of one of the parties or both the parties. The argument of learned Senior counsel for the respondent that once the objector to the award was not present in the proceedings, the court had no option but to make the 7 Arb App No. 2/2022 award rule of the court cannot be accepted. The court is bound to give its finding as to whether the award is required to be made rule of the court or to be set aside/modified. The straightway acceptance of the award is not a natural consequence even if there is a default committed by the party/parties by way of absence or for any other reason. If the Court is of the opinion that the award requires some sort of intervention by the court it can pass such an order irrespective of the fact that objections to the award have not been filed by the parties to the arbitration proceedings. The judicial determination is required on the award passed by the arbitrator when submitted before the court. The award of the arbitrator may or may not be the final say and its sustainability has to be determined by the court after taking into account all aspects of the matter.

14. The Hon'ble Supreme Court in AIR 2001 SC 809 titled Union of India (UOI) and Ors. Vs. Manager, Jain and Associates while taking note of Sections 30 & 33 of the Arbitration Act held that it cannot be said that in case where objections under Sections 30 or 33 are not filed, the court is bound to pass decree in terms of the Award. The court further held that "before pronouncing judgment the court has to apply its mind to arrive at the conclusion whether there is any cause to modify or remit the award". The court also stated that when the court is to proceed without application under Sections 30 or 33 of the Act it cannot pronounce the judgment without considering the 8 Arb App No. 2/2022 provisions of Sections 15 and 16 of the Act. The court further pertinently held that the provisions of CPC are applicable and in the context of arbitration held that in arbitration proceedings there is no question of suit being filed as award is tendered for passing decree in terms of the award. The court also did not agree with the reasoning of the High Court that where no objection has been filed to the award the decree passed in terms of Section 17 of the Act cannot be said to be an ex-parte decree and, therefore, the appeal filed against ex-parte decree is not competent.

15. The aforesaid authority itself clinches the issue that even non-filing of the application under Section 30 or 33 of the Act, objecting the award, by itself shall not result into making the award rule of the court. The court has to decide the proceedings qua the award on merits. The learned Senior counsel for the firm has argued that as the appellants herein did not file an application for restoration of application filed under Section 30/33 of the Arbitration Act, therefore, could not file the present appeal cannot be accepted. Though it was open to the appellant to file an application for setting aside the order dated 29.06.2021, however, that does not come in the way of the appellants to file the appeal as the award came to be made rule of the court in the application filed for making the award rule of the court. The appellants were not necessarily required to file application for setting aside order dated 29.06.2021 and cannot be non-suited on the ground 9 Arb App No. 2/2022 that they did not file such an application. If the court intended to consider the application bearing No. 2631/2022 filed by the firm for making award rule of the court as a consequence to the order dated 29.06.2021, the court should have considered also the application filed for setting aside the award filed by the appellants herein though the application for setting aside the award was dismissed earlier vide order dated 29.06.2021 and the appellants had not taken steps to set aside the order dated 29.06.2021. At the cost of repetition, the court was bound to consider the award inspite of the fact that the application filed by the appellants for setting aside the award had been dismissed for non-prosecution. The judgment in Union of India Vs. Manager Jain (supra) applies on all fours in the present case. The court vide impugned judgment dated 27.05.2022 has for all practical purposes refused to set aside the award passed by the arbitrator. The decree has followed the judgment. It is not that the judgment passed by the learned Single Judge does not give finality to the award or that it cannot be executed so as to take it out of the realm of judgment refusing to set aside the award.

16. Mr. R.K.Gupta, learned Senior counsel for the firm has relied upon the judgment of Kerala High Court passed in MFA Nos. 1385 of 1993 in case titled "State of Kerala and another Vs. V.M.Kuriakose and others" decided on 14.08.2002, wherein the court held that where the party is aggrieved by the judgment and decree passed by court making 10 Arb App No. 2/2022 the award rule of the court it can be challenged only under Section 17 of the Act and the appeal has to be filed on specific grounds mentioned therein. The court further held that if the party is aggrieved of an order dismissing an application for setting aside the award the same has to be challenged under Section 39 (I) (VI) of the Act.

17. In Municipal Corporation of Delhi & Ors. Vs. Intnl. Security & Intelligence Agency Ltd. [Appeal (Civil) No. 1062 of 2003 decided on 06.02.2023], the Hon'ble Apex court dealt with the situation where the appeal had been dismissed being incompetent, the cross-objection to the same cannot be considered.

18. In 1991 Legal Eagle (DEL) 277 titled "Bhagwan Dass Bros v.

Ghulam Ahmed Dar and others", the court did not consider the question if the decree is appealable one in view of Section 39 (1) (VI) of the Act. The authorities cited by the respondent are distinguishable and do not apply to the facts of the case.

19. In the facts and circumstances of the case, the Court holds that the appeal is maintainable against the impugned judgment and decree.

20. The file shall come for further consideration on 10.09.2024.

                                             (PUNEET GUPTA)    (TASHI RABSTAN)
                                                 JUDGE      CHIEF JUSTICE (ACTING)
                JAMMU:
                21.08.2024
                Pawan Chopra


                                       Whether the order is speaking? Yes
                                       Whether the order is reportable? Yes




Pawan Chopra
2024.08.22 13:21
I attest to the accuracy and
integrity of this document

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Jammu & Kashmir High Court