Andhra HC (Pre-Telangana)
Chief Engineer/Construction, South ... vs M.V.V. Satyanarayana And Another on 17 October, 2000
Equivalent citations: 2001(1)ALD62, 2000(6)ALT774
Author: J. Chelameswar
Bench: J. Chelameswar
ORDER
1. These two OPs., are filed for setting aside the awards dated 10-8-1999 passed by the arbitrator Sri Justice T.N.C. Rangarajan, a former Judge of this Court. The parties are common to both these OPs., the first respondent was awarded two contracts by the petitioners herein. (The details of which may not be necessary at this stage). Suffice to state that with regard to both the contracts, the first respondent herein had earlier approached this Court for the appointment of an arbitrator by Arbitration Application Nos.11 and 8 of 1988 and this Court by a common order dated 13-3-1999 appointed the second respondent as an arbitrator in both the matters. Pursuant to the said orders of this Court, the second respondent herein entered upon the arbitration and passed awards vide his letter dated TNCRJ/AC 26 dated 10-8-1999.
2. These two petitioners are filed with a prayer to set aside the above-referred award passed by the second respondent for various grounds indicated in the respective petitions.
3. At the admission stage, a preliminary objection was raised by the first respondent saying that these two petitions purported to have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 are not maintainable, for the reason, that in view of the language of Section 34, an application for setting aside an award made by the arbitrator can be filed only in 'Court' and the expression 'Court' is defined under Section 2(e) of the Act in the following words:
" 'Court' means the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such Principal Civil Court, or any Court of Small Causes"
4. It is therefore submitted by the respondent that the petition such as the present one to set aside the award could be filed only in the Court of the Principal Civil Court of original jurisdiction, which expression as per the definition, included the High Court in exercise of its ordinary civil jurisdiction to decide the questions, forming the subject-matter of arbitration, if the same had been the subject-matter of the suit. It is further argued that the High Court of Andhra Pradesh not being a Court having ordinary original civil jurisdiction to deal with such as suit, the petitions are not maintainable.
5. On the other hand, the learned Counsel for the petitioners argued that in view of the provisions contained under Section 42 of the Act, this Court being the Court which appointed the arbitrator in both the cases, would only be the competent Court to deal with the present petitions to set aside the awards passed by the arbitrator appointed by this Court. The learned Counsel for the petitioners heavily relied upon a judgment of the Supreme Court reported in M/s. Guru Nanak Foundation v M/s. Rattan Singh and Sons, , in support of his submission.
6. Before proceeding with the revial contention, it would be appropriate to examine the decision referred to by the learned Counsel for the petitioner to decide whether the decision covers the issue on hand.
7. At the outset, it must be mentioned the said decision was rendered on the construction of the language of Arbitration Act, 1940. The brief background and the issue that arose for consideration of the Supreme Court is as follows: There was contract between the parties for the construction of a building, which contained an arbitration clause. Certain disputes and differences arose between the parties to the contract. One of the parties moved the Delhi High Court by way of a suit seeking a direction to call upon the other party to file the arbitration agreement in the Court and for a further direction to refer the disputes and the differences covered by arbitration agreement to the arbitrator to be appointed by the Court. Obviously, such a suit was filed under Section 8 of the Arbitration Act, 1940. Initially, the arbitrator was appointed by the Delhi High Court. During the pendency of the reference before the arbitrator, a petition was moved by one of the parties in the Delhi High Court purported to be one under Section 11(5) of the old Act for the removal of the arbitrator, which failed. The matter was carried in appeal to the Supreme Court by way of Special Leave Petition. In the proceedings before the Supreme Court the parties consented for the appointment of another person as an arbitrator. The arbitrator passed an award. One of the parties requested the arbitrator to file the award before the Supreme Court for appropriate further action. The arbitrator approached the Registry of the Supreme Court where he was advised that the award should be filed in the Delhi High Court only. The arbitrator accordingly filed the award and informed the parties. Thereupon the party moved the Supreme Court seeking a declaration that the award is to be filed only in the Supreme Court in view of the provisions contained under Section 14(2) read with Section 34 of the Old Act and for consequential reliefs. In the background of the abovementioned facts, their Lordships of the Supreme Court considered the Scheme and Scope of Sections 2(a), 14 and 31 of the Arbitration Act, 1940 and came to the conclusion that only the Supreme Court had the jurisdiction to deal with the matter:
"...........In view of the fact that a reference was made by this Court to the 3rd respondent and that this Court gave further direction about the manner and method of conducting the arbitration proceedings and fixed the time for completion of arbitration proceedings, this Court alone would have jurisdiction to entertain the award."
8. For reaching the above conclusion, their Lordships held that, though in the normal course the award is required to be filed in the Court in which the suit involving a dispute in arbitration would be required to be filed in view of Sections 14 and 2(c) of the Act, but in view of the language of Section 31(4), it is only the Supreme Court where the arbitrator was appointed that could to deal with the award.
9. Under the old Act, the expression 'Court' is defined:
"Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under Section 21, include a Small Cause Court."
10. Under Section 8 of the old Act, under the various contingencies provided therein, one of the parties to the arbitration agreement after following the due procedure prescribed, make an application to the Court and on such an application, the Court is empowered to appoint an arbitrator or arbitrators.
11. Therefore in view of the fact that an application having had been made to the Supreme Court earlier for the removal of an arbitrator, and in which proceedings by a consent order a new arbitrator was appointed, the Supreme Court came to the conclusion that all subsequent proceedings in connection with the arbitration must also be before the Supreme Court.
12. Contrary to the Scheme of the old Act, under the present Act, no 'Court' is authorised to appoint an arbitrator. The Scheme of the present Act appears to be that where the parties agree for the resolution of the dispute by arbitration but the arbitration clause is not being given effect to, the aggrieved party may "request the Chief Justice or any person or institution designated by him" to appoint an arbitrator. Upon such request being made, the Chief Justice or his nominee either a person or institution designated by the Chief Justice is required to appoint the arbitrator. As the language of sub-sections (4) and (5) of Section 11 mandate that the appointment "shall be" made by the Chief Justice or his nominee upon the request of the party.
13. It is significant to notice that in view of the variations of the language employed, under Section 8 of the Old Act, an application is required to be made to the Court for referring a matter to the arbitration-whereas under Section 11 of the present Act, it is a request that is to be made to the Chief Justice or his nominee. This difference in language assumes importance, in my view, in the context of Section 31(4) of the old Act and Section 42 of the present Act, Both the sections contemplate an application; but under the old Act, it was "any application under the Act" - whereas under Section 42 of the present Act an application under Part I of the Act. Section 11 of the present Act occurs in Part 1 of the present Act. As I have already noticed the language employed under Section 11 does not contemplate any application, but only a request - whereas Sections 9 and 27 both of which occur in Part I of the present Act contemplate applications to be made to the 'Court' for various purposes like obtaining interim orders during the pendency of the arbitration proceedings or obtaining the assistance of the Court for securing the evidence.
14. Therefore, in my view, the expression 'Court' referred to in Section 42 is the 'Court' only where such application either under Section 9 or 27 of the Act are made earlier to the exclusion of the all other Courts.
15. Apart from that in view of the judgment of the Supreme Court reported in Konkan Railway Corporn Ltd. and others, , the Chief Justice or his nominee under Section 11 of the present Act is only acting on the administrative capacity and not discharging any judicial functioning. Their Lordships held at para 4 as follows:
"....................The nature and function performed by the Chief Justice or his nominee under sub-section (6) of Section 11 being essentially to aid the constitution of the Arbitral Tribunal cannot be held to be a judicial function as otherwise the Legislature could have used the expression 'Court' or judicial authority' instead of choosing the expression the Chief Justice or his nominee.'
16. This view of mine gains further strength logically, for the following reason -if the Chief Justice, instead of exercising the power under Section 11 of the present Act designates an independent institution which is permitted under Section 11, to act on the request made by the parties, would such an institution or for that matter if the Chief Justice nominates any person other than a sitting Judge of the High Court whether such a person would be a 'Court' either as per the definition of the expression 'Court' under the Act or otherwise. The plain answer seems to be 'No'. Therefore, in such a case if the appointment of an arbitrator under Section 11 is made by such an institution or a person, it would be illogical to think that all subsequent applications arising out of either the agreement or the arbitration proceedings shall be made before such a person or institution.
17. In the circumstances, I am of the opinion that the preliminary objection raised by the first respondent is well founded and the present petitions, in my view, are not maintainable. The petitions are accordingly dismissed.
18. The learned Counsel for the petitioners - Sri P. Gouri Shankar Sanghi submitted that in view of the order pronounced just now, the office be directed to return the papers to the petitioners for presentation before the appropriate Forum. In the circumstances, the office is therefore directed to return the papers to the petitioners so as to enable them for presentation before the appropriate Forum.