Madras High Court
M/S.Aban Loyd Chile Offshore Ltd vs M/S.Subash Projects & Marketing Ltd on 8 December, 2005
Author: P.Sathasivam
Bench: P.Sathasivam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 08/12/2005
CORAM
THE HON'BLE MR.JUSTICE P.SATHASIVAM
and
THE HON'BLE MR.JUSTICE S.K. KRISHNAN
Writ Petition No.4617 of 2005
and Writ Petition No. 14408 of 2005
and W.P.M.P.No.5119 of 2005
+W.P.No.4617 of 2005:
M/s.Aban Loyd Chile Offshore Ltd.,
"Janpriya Crest",
No.96, Pantheon Road,
Egmore, Chennai-8. ..Petitioner
-Vs-
1. M/s.Subash Projects & Marketing Ltd.,
8/2, Ulsoor Road,
Bangalore-560 042,
rep.by its PRO Ms.P.Aswathy
2. Mr.Justice K.Govindarajan (Retd.),
Arbitrator,
Tee Pee Bhavan,
No.8, Justice Ramanujam Road,
Malaviya Avenue, Sastri Nagar,
Chennai-600 041. ..Respondents
W.P.No.14408 of 2005:
The Food Corporation of India,
Through its Manager (Engineering),
Zonal Office,
3, Haddows Road,
Chennai-600 006. ..Petitioner
vs.
1. M/s.Kevi Associates,
By its Managing Director
K.Venkatachalam,
Chandran Studio Building,
252, Gandhiji Road,
Erode-636 001.
2. Mr.Justice M.S.Janarthanam (Retd.),
Arbitrator,
Door No.4/12, I Floor,
Plot No.147, III Main Road,
Kamaraj Nagar, Thiruvanmiyur,
Chennai-600 041. .. Respondents
Petitions filed under Article 226 of the Constitution of India
praying for the issuance of a writ of Certiorari as stated therein.
!For petitioner in : Mr.Arvind P.Datar,
W.P.No.4617/2005 Senior Counsel for
Mr.R.Venkataravaradhan
For 1st Respondent : Mr.R.Muthukumarasamy,
in W.P.No.4617/2005 Senior Counsel for
Mr.P.D.Audikesavan
For Petitioner in : Mr.V.Srikanth
W.P.No.14408/2005
For 1st Respondent : Mr.P.Subbha Reddy
in W.P.No.14408/2005
:COMMON ORDER
(ORDER of the Court was made by P.SATHASIVAM,J.) Since the issues raised are identical in both the writ petitions, they are being disposed of by the following common order.
2. In W.P.No.4617 of 2005, M/s.Aban Loyd Chile Offshore Limited, Chennai-8, challenges the order dated 29.01.2005 in O.P.No.237 of 2002, in and by which the designate Judge appointed MR.JUSTICE K. GOVINDARAJAN, a retired Judge of this Court as Arbitrator to discharge the disputes between the parties.
3. In W.P.No.14408 of 2005, the petitioner Food Corporation of India, Chennai-6, challenges the order dated 01.04.2005 in O.P.No.282 of 2 004, wherein the very same designate Judge appointed MR.JUSTICE M.S. JANARTHANAM, Judge (Retired) as sole Arbitrator to discharge the dispute arising out of the Agreement No.DM/Civil/10 dated 04.11.2000 entered into between the petitioner and the respondent.
4. Heard Mr.Arvind P.Datar, the learned Senior Counsel for the petitioner in W.P.No.4617 of 2005, Mr.V.Srikanth, learned counsel for the petitioner in W.P.No.14408 of 2005, Mr.R.Muthukumarasamy, learned Senior Counsel for the first respondent in W.P.No.4617 of 2005 and Mr. P.Subbha Reddy, learned counsel for the first respondent in W.P.No.144 08 of 2005.
5. In the light of the order to be passed hereunder, we are of the view that there is no need to traverse all the factual details as stated by both parties.
6. Mr.Arvind P.Datar, learned senior counsel for the petitioner by drawing our attention to the Seven Judge Bench judgment of the Honourable Supreme Court in Civil Appeal 4168 of 2003 etc., 2005 SCC L.COM 7 06 (M/s.S.B.P.& Co., ..vs.. M/s.Patel Engineering Ltd. and another), would submit that in view of the law laid down therein, namely, that the Chief Justice or his designate Judge has power to decide all issues on merits, including jurisdiction, etc., the impugned order passed by the designate Judge viz., Honourable MR.JUSTICE N.V. BALASUBRAMANIAM, referring the matter to the Arbitrator without considering the objections raised by the petitioners, cannot be sustained and is liable to be interfered with. He also contended that inasmuch as the present writ petition is a continuation of the original proceedings, in the light of the recent judgment of the Supreme Court, the matter has to be remitted to the Honourable Chief Justice or his designate Judge for passing fresh orders as per the dictum laid down in the Supreme Court judgment referred to above. Mr.Srikanth, learned counsel appearing for the writ petitioner in W.P.14408 of 2005, while adopting the argument of Mr.Arvind P.Datar, also submitted that the learned Judge has not at all considered the objection, viz., that there is no clause in the agreement for appointment of Arbitrator.
7. On the other hand, Mr.R.Muthukumarasamy, learned senior counsel for the first respondent in W.P.4617 of 2005 submitted that first of all, the present proceedings i.e., writ petitions are not like appeals and the same are not continuation of the original proceedings. Secondly, in view of the saving clause as stated by the Honourable Supreme Court in para 46(x) of M/s. Patel Engineering Ltd., case, the said issue cannot be agitated before this Court and all the issues, including objection relating to jurisdiction can be considered by the Arbitrator. Mr.P.Subba Reddy has also raised similar contention.
8. We have carefully considered the relevant materials and the contentions raised by both sides.
9. In the first case, the contention before the designate Judge is that there is no arbitral clause in the contract, has not been accepted and the respondent therein (petitioner herein) is permitted to raise the said objection before the Arbitrator. The other contention that inasmuch as the matter in issue had been compromised in a suit by the Calcutta High Court, hence there is no need to resolve the same issue by arbitration. Here again, the designate Judge has concluded that the question of existence of agreement after the decree in the suit before the Calcutta High Court could also be raised before the Arbitrator.
10. In the later case, it is the grievance of the petitioner that in spite of their objection in the form of counter affidavit pointing out that there is no clause for arbitration, the designate Judge without advertent to those objections, appointed the Arbitrator to resolve the issue. As stated in the earlier order dated 29.01.2005, the petitioner in W.P.No.14408 of 2005 can also very well raise the same before the Arbitrator.
11. It is relevant to state that the above orders were passed by the designate Judge based on the decision of the Supreme Court in the case of Konkan Railway Corporation Ltd., ..vs.. Rani Constructions Pvt.Ltd.,(2002)2 SCC 388), wherein it is held that under section 16 of the Arbitration and Conciliation Act, 1996 (in short "the Act") the arbitral tribunal has the right to rule on any objection with regard to the existence or validity of arbitration agreement. However, in the 7 Judge Bench decision (2005 SCC L.COM
706), the Honourable Supreme Court has not accepted the dictum laid down in Konkan Railway Corporation' case (cited supra) and overruled the same. Their Lordships have held that the power exercised by the Chief Justice or his designate Judge under Section 11(6) of the Act has no administrative power, but it is a judicial power. They, further held that the Chief Justice or Designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of the said 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.
12. Clause (x) in para 46 of the said Judgment ( M/s. Patel Engineering Ltd., case,) is very relevant, which is as follows:
"Since all were guided by the decision of this Court in Konkan Railway Corpn.Ltd. & anr. Vs.Rani Construction Pvt.Ltd. ((2002) 2 SCC 388) 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".
The above clause makes it clear that 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. However, as and from the date of judgment of the Supreme Court i.e., 26.10.2005, the position as adopted in M/s.S.B.P.& Co., ..vs.. M/s.Patel Engineering Ltd., and another will govern even the pending applications under Section 11(6) of the Act. It is clear that if the clarification in para 46(x) is not stated by the Supreme Court, undoubtedly, the contentions of the petitioners have to be accepted and the issue has to be remitted to the Honourable Chief Justice or his Designate Judge. However, in view of the saving clause in para 46(x), the order passed by the Designate Judge in these cases cannot be interfered with and as observed by the designate Judge, all objections including non-availability of an arbitral clause and jurisdiction etc., have to be decided only by the Arbitrator. The said course cannot be adopted after 26.10.2005, whereby the Supreme Court delivered judgment in Patel Engineering Ltd.
13. Mr.Arvind P.Datar by pointing out that the present writ petitions are continuation of the original proceedings, the judgment of the Supreme Court dated 26.10.2005 is applicable and the matter has to be re-heard afresh either by the Chief Justice or his Designate Judge. We are unable to accept the said contention, since the above writ proceedings cannot be treated as regular appeals. It is not in dispute that both the writ petitions have been filed invoking extraordinary jurisdiction under Article 226 of the Constitution of India, questioning the order of the Designate Judge, appointing Arbitrators. In such a circumstance, in the light of clarification made by the Honourable Supreme Court in para 46(x) of Patel Engineering Ltd., case, we are of the view that the objection raised before the designate Judge regarding non-existence of arbitration clause, jurisdiction, merits of the claim, etc., are to be agitated only before the Arbitrator / Arbitral Tribunal. As stated earlier, the said course is not permissible after the judgment of the Supreme Court dated 26.10.2005. It is made clear that our present order cannot be construed that we are rejecting the stand taken by the petitioners. As observed by the designate Judge, the petitioners are free to put forth all their objections before the Arbitrator/Arbitral Tribunal.
In the light of what is stated, we do not find any merit in the writ petitions; consequently the same are dismissed. No costs. Connected WPMP., is also dismissed.
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