Gujarat High Court
Dholera Industrial City Development ... vs M/S Spml Infra Ltd on 4 August, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20116 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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DHOLERA INDUSTRIAL CITY DEVELOPMENT LIMITED
Versus
M/S SPML INFRA LTD.
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Appearance:
MR KAMAL B. TRIVEDI, SENIOR ADVOCATE WITH MR PREMAL R
JOSHI(1327) for the Petitioner(s) No. 1
MR RS SANJANWALA, SENIOR ADVOCATE WITH MR P M BUCH(7383)
for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 04/08/2023
CAV JUDGMENT
1.Heard learned Senior Advocate Mr. Kamal B. Trivedi with learned advocate Mr. Premal R. Page 1 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Joshi for the petitioner and learned Senior Advocate Mr. R.S. Sanjanwala with learned advocate Mr. P.M. Buch for the respondents.
2.Feeling aggrieved by order dated 19.09.2022 passed by the Arbitral Tribunal in Arbitration Case No. 7 of 2021 whereby the application filed the petitioner to decide the issue of jurisdiction as a preliminary issue has been dismissed, the petitioner has preferred this petition under Articles 226 and 227 of the Constitution of India.
3.The factual matrix of the matter is that the petitioner herein - Special Purpose Vehicle of the State Government was formed on 28.01.2016 with equity participation of 49% through Centre and 51% of through State Government for procurement and construction of trunk infrastructure of Dholera Special Investment Region("DSIR").
Page 2 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 3.1) The petitioner floated a tender on 15.04.2016 inviting offers to undertake the Design, Construction, Operation and Maintenance of (i) Water Treatment Plant (WTP), (ii) Clear Water Reservoir and (iii) Potable Water Transmission Main and Master Balancing Reservoir (potable water) in DSIR.
3.2) The respondent company participated in the tender and its offer was found to be the lowest and therefore, Letter of Award was issued on 16.08.2016 by the petitioner company in favour of the respondent.
3.3) Thereafter Works Contract was executed on o9.09.2016 between the petitioner company and the respondent for the execution of the work in question.
3.4) The petitioner company terminated Page 3 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the Works Contract on 01.01.2021 in terms of clauses 23.1.1(c) and (f) of the Contract, in view of there being a gross delay caused by the respondent in completion of the contract work.
3.5) Respondent issued a notice dated 16.02.2021 under section 21 of the Arbitration and Conciliation Act, 1996 (For short "the Act, 1996") requesting reference of disputes arising out of contract to arbitration and also appointed Hon'ble Mr. Justice C.K. Thakkar as its nominee in the Arbitral Tribunal.
3.6) The petitioner appointed Hon'ble Ms. Justice Harsha Devani as its nominee in the Arbitral Tribunal on 12.03.2021. Thereafter Hon'ble Mr. Justice K.S. Jhaveri was appointed as the Presiding Officer of the Arbitral Tribunal (For short "the Tribunal") Page 4 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined by both the learned arbitrators.
3.7) The respondent company filed its Statement of Claim on 01.07.2021 and the petitioner company filed its Statement of Defence and Counter Claim on 15.09.2021.
Respondent filed its rejoinder to the Statement of Defence and Counter Claim of the petitioner company on 22.11.2021.
3.8) Between 2.11.2021 to 30.01.2022, both the sides filed their respective applications for interim award under section 31(6) of the Act, 1996 in respect of work already done in respect to which the Tribunal directed to provide information in respect of undisputed claim while fixing the hearing of the said applications for hearing on 26.02.2022.
3.9) The petitioner company filed an Page 5 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined application dated 25.02.2022 under sub-
section (2) of section 16 of the Act, 1996 read with section 21 of the Gujarat Pubic Works Contracts Disputes Arbitration Tribunal Act, 1992 (For short "the Act, 1992") questioning the jurisdiction of the Tribunal on the ground that the dispute pertains to Works Contract between a pubic undertaking and the contractor and therefore, the same is to be adjudicated by the statutory Tribunal under the Act of 1992.
3.10) The Tribunal by order dated 14.07.2022 dismissed the application filed by the petitioner under section 16(2) of the Act, 1996 mainly on the ground that the same was filed after filing of Statement of Defence and the delay in raising the plea was not justified and fixed the further hearing on merits.
Page 6 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 3.11) Being aggrieved by order dated 14.07.2022, the petitioner company filed Special Civil Application No.14481 of 2022.
This Court (Coram: Hon'ble Ms. Justice Vaibhavi D. Nanavati,) passed the order dated 28.07.2022 recording the statement made on behalf of the petitioner company that it would prefer an application before the Tribunal to decide the issue of jurisdiction as preliminary issue whereupon the petition came to be posted for hearing on 17.08.2022.
3.12) The petitioner company filed an application dated 08.08.2022 before the Tribunal requesting to frame and decide the question of jurisdiction as a preliminary issue as to whether the Tribunal has inherent jurisdiction to adjudicate upon the dispute between the parties in view of provisions of the Act, 1992.
Page 7 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 3.13) The Tribunal by order dated 09.08.2022 held that in view of the fact that the matter is sub-judice before the High Court on the same issue, it will not be appropriate for the Tribunal to entertain the application and application was adjourned with no order at that stage. The Tribunal further directed both the parties to give proposed issue on or before 23.08.2022 and fixed further hearing on 31.08.2022.
3.14) On 17.08.2022, considering the joint submission by both the parties to defer the proceedings before the Tribunal, this Court passed the order in Special Civil Application directing the parties to file appropriate application before the Tribunal for adjournment.
3.15) The petitioner submitted an application dated 23.08.2022 before the Page 8 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Tribunal to defer the framing of issues and to adjourn the matter till this Court decides the writ petition finally. The respondent company also addressed an email submitting that they have agreed to defer the framing of issues till the next date of hearing, however, requested the Tribunal to proceed with the hearing on 31.08.2022.
3.16) This Court (Coram: Hon'ble Ms. Justice Vaibhavi D. Nanavati,) by order dated 26.08.2022 disposed of the writ petition in view of consensus arrived at between the parties to make an application to request the Tribunal to decide the application dated 08.08.2022 filed by the petitioner for reliefs prayed therein at the first instance with regard to jurisdiction of the Tribunal.
3.17) The petitioner company submitted an application dated 29.08.2022 to adjudicate Page 9 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the issue of preliminary jurisdiction at first instance before undertaking any further proceedings in view of consensus arrived at between the parties as recorded by this Court.
3.18) The Tribunal passed the impugned order dated 19.09.2022 rejecting the applications dated 08.08.2022 and 29.08.2022 filed by the petitioner observing that no case was made out for framing the issue of lack of inherent jurisdiction as a preliminary issue, as prayed for in the said application and disposed of the same.
3.19) The petitioner has therefore, filed this petition challenging the aforesaid impugned order dated 19.09.2022 passed by the Tribunal.
4.At the outset, learned Senior Advocate Mr. Page 10 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined R.S. Sanjanwala appearing with learned advocate Mr. P.M. Buch raised preliminary objection with regard to the maintainability of this petition under Articles 226 and 227 of the Constitution of India against the impugned order passed by the Tribunal contending that the writ petition under Article 227 of the Constitution of India need not be entertained by this Court in view of settled legal position as held in the following decisions:
1) In case of GTPL Hathway Ltd. V. Strategic Marketing Pvt. Ltd. (judgment dated 20.04.2020 passed in Special Civil Application No.4524 of 2019).
2) In case of Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v.
Executive Engineer reported in (2022) 1Supreme Court Cases 75.
Page 11 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
3) In case of Sweta Construction v.
Chhattisgarh State Power Generation Company Limited reported in 2022 SCC OnLine SC 1447.
4) In case of Neeraj Kumarpal Shah v.
Manbhupinder Singh Barinder Singh Atwal (Judgment dated 11.03.2020 passed in Special Civil Application Nos. 3913 and 4441 of 2020)
5.With regard to the preliminary objection raised on behalf of the respondent, learned Senior Advocate Mr. Trivedi for the petitioner submitted that the Tribunal has passed the impugned order by not allowing the application to frame the preliminary issue which goes to the root of the matter and therefore, the writ petition is maintainable and the same is required to be entertained in order to save the enormous cost, time and energy of both the sides as the Tribunal Page 12 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined ought to have framed the preliminary issue with regard to the lack of inherent jurisdiction in view of provisions of the Act, 1992 which provides for statutory Tribunal.
5.1) Learned Senior Advocate Mr. Trivedi referred to and relied upon the the following provisions of the Act, 1992:
"2(1) In this Act, unless the context otherwise require,-
......
(i) "public undertaking" means-
(i) any company as defined in section 3 of the Companies Act, 1956 in which not less than fifty-one per cent of the paid up share capital is held by the State Government or any company which is a subsidiary (within the meaning of that Act) of the first mentioned company.
(ii) any corporation (not being a company as defined in section 3 of the Companies Act, 1956 or local authority) established by or under a Central Act or a State Act and owned Page 13 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined or controlled by the State Government,
(iii) such class of local authorities as the State Government may, by notification in the Official Gazette, specify:
(j) Tribunal" means the Gujarat public Works Contract Disputes Arbitration Tribunal constituted under secton 3:
(k) "Works contract" means a
contract made by the State
Government or the public undertaking with any other person for the execution of any of its works relating to construction, repairs or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake,road, well, bridge, culvert, factory or work shop or of such other work of the State Government or, as the case may be, of the public undertaking, as the State Government may, by notification in the Official Gazette specify, and includes-
(i) a contract made for the supply of goods relating to the execution of any of such works,
(ii) a contract made by the Central Stores Purchase Organisation of the State Government for purchase of sale of goods.Page 14 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
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21. The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal."
5.2) It was submitted that in view of above provisions when the petitioner company is a Government company, any dispute with regard to the Public Works Contract would lie before the Gujarat Public Works Contracts Disputes Arbitration Tribunal under the provisions of the Act, 1992.
5.3) It was submitted that by the impugned order, the Tribunal has rejected the application filed by the petitioner to frame the preliminary issue to be decided at first instance with regard to lack of inherent jurisdiction, and therefore, this Court is Page 15 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined required to interfere while exercising the supervisory jurisdiction under Article 227 of the Constitution of India.
5.4) In support of his submission, learned Senior Advocate Mr. Trivedi referred to and relied upon the following decisions:
1) In case of Deep Industries Limited v.
Oil and Natural Gas Corporation Limited and another reported in (2020 15 Supreme Court Cases 706, wherein it is observed as under:
"16) Most significant of all is the non-obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part.
Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act) Page 16 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
17) This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."
2) In case of Narmada Clean-Tech and another v. Indian Council of Arbitration and Others reported in 2020(4) GLH 364, wherein it is observed as under:
"54 It is apparent on plain reading of the para 12 quoted above that the learned Single Judge rejected the petition without entering into the Page 17 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined merits of the matter only on the ground that the order passed during the course of the arbitration proceedings cannot be challenged under Articles 226 and/or 227 of the Constitution of India and it would be open for both the sides to raise all the contentions on merits before appropriate forum in appropriate proceedings at an appropriate time in accordance with law. The learned Single Judge saying so held that the petitions were not maintainable in law."
3) In case of SMS Infrastructure Limited v.
Gujarat State Road Development Corporation (Judgment dated 23.04.2021 passed in Petition under Arbitration Act No.42 of 2020), wherein it is observed as under:
"1. The Arbitration Petition has been filed by the petitioner M/s. SMS Infrastructure Limited, a Company incorporated under the Companies Act, through its Power of Attorney Holder, seeking to appoint an Arbitrator to resolve the disputes between the parties as per the provisions contained under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the said Act").Page 18 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
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7. Per Contra, the learned Advocate Mr.Siraj Gori appearing for the respondent Corporation, pressing into service the provisions contained in the Arbitration Tribunal Act of 1992 in the light of the averments made in the affidavit in reply submitted that the respondent Corporation being a company incorporated under the Companies Act and wholly owned by the Government of Gujarat, it is a "public undertaking" as per the definition contained in Clause (i) of Section 2(1)(i) of the said Act.
He also submitted that the
alleged disputes having arisen
between the parties to the "works contract" as defined in Section 2(1)
(k) of the said Act, the only remedy available to the petitioner as per Clause-30 of the agreement would be to approach the Arbitration Tribunal constituted under the said Act of 1992, as may be legally permissible.
Distinguishing the decisions relied upon by the learned Advocate Mr.Sukhwani for the petitioner, more particularly the decision in case of Om Construction Company Vs. Ahmedabad Municipal Corporation and Anr. (supra), Mr.Gori submitted that none of the decisions had any application to the facts of the present case, and therefore, the present petition filed under Section 11 of the Arbitration Act is thoroughly misconceived and liable to be Page 19 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined dismissed.
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15. In the instant case, as held herein above, the respondent Corporation is a "public undertaking" as contemplated in Clause (i) of Section 2(1)(i) and the contract entered into between the parties was a "works contract"
as contemplated in Section 2(1)(k) of the said Act of 1992, and hence Section 8 of the said Act would come into play, which mandates the parties to refer the disputes arising between them to the Tribunal constituted under the Act for arbitration, within one year from the date when the dispute arises.
Section 21 thereof also provides that the provisions of the Arbitration Act,1996, shall
insofar as they are inconsistent with the provisions of the Act of 1992, cease to apply to any dispute arising from a works contract. The said provision of Section 21 has also been specifically mentioned in Clause 30 of the agreement in question and admitted by the parties. The Arbitration Tribunal Act of 1992 therefore being applicable to the facts of the case, the petitioner could not have invoked Section 11 of the Arbitration Act of 1996."
4) In case of Jagmittar Sain Bhagat and Page 20 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined others v. Director Health Services, Haryana and others reported in (2013) 10 Supreme Court Cases 136, wherein it is observed as under:
"9. Indisputably, it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior Court, and if the Court passes a decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to the roots of the cause. Such an issue can be raised at any stage of the proceedings. The finding of a Court or Tribunal becomes irrelevant and unenforceable/ inexecutable once the forum is found to have no jurisdiction. Similarly, if a Court/ Tribunal inherently lacks jurisdiction, acquiescence of party equally should not be permitted to perpetuate and perpetrate, defeating the legislative animation. The Court cannot derive jurisdiction apart from the Statute. In such eventuality the doctrine of waiver also does not apply. (Vide: United Commercial Bank Ltd. v. Their Workmen, AIR 1951 SC 230; Smt. Nai Bahu v. Lal Ramnarayan & Ors., AIR 1978 SC 22; Natraj Studios (P) Ltd. v. Navrang Studios & Anr., AIR 1981 SC 537; and Kondiba Dagadu Kadam v. Savitribai Sopan Gujar & Ors., AIR Page 21 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 1999 SC 2213).
10. In Sushil Kumar Mehta v. Gobind Ram Bohra (Dead) Thr. Lrs., (1990) 1 SCC 193, this Court, after placing reliance on large number of its earlier judgments particularly in Premier Automobiles Ltd. v. K.S. Wadke & Ors., (1976) 1 SCC 496; Kiran Singh v. Chaman Paswan, AIR 1954 SC 340; and Chandrika Misir & Anr. v. Bhaiyalal, AIR 1973 SC 2391 held, that a decree without jurisdiction is a nullity. It is a coram non judice; when a special statute gives a right and also provides for a forum for adjudication of rights, remedy has to be sought only under the provisions of that Act and the Common Law Court has no jurisdiction; where an Act creates an obligation and enforces the performance in specified manner, "performance cannot be forced in any other manner."
11. Law does not permit any court/tribunal/authority/forum to usurp jurisdiction on any ground whatsoever, in case, such a authority does not have jurisdiction on the subject matter. For the reason that it is not an objection as to the place of suing;, "it is an objection going to the nullity of the order on the ground of want of jurisdiction". Thus, for assumption of jurisdiction by a court or a tribunal, existence of Page 22 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined jurisdictional fact is a condition precedent. But once such jurisdictional fact is found to exist, the court or tribunal has power to decide on the adjudicatory facts or facts in issue. (Vide:
Setrucharlu Ramabhadra Raju Bahadur v. Maharaja of Jeypore, AIR 1919 PC 150; State of Gujarat v. Rajesh Kumar Chimanlal Barot & Anr., AIR 1996 SC 2664; Harshad Chiman Lal Modi v. D.L.F. Universal Ltd. & Anr., AIR 2005 SC 4446; and Carona Ltd. v. M/s. Parvathy Swaminathan & Sons, AIR 2008 SC 187)."
5) In case of V.G. Jagdishan v. Indofos Industries Limited reported in (2022) 6 Supreme Court Cases 167, wherein it is observed as under:
"15. In the case of D.P. Maheshwari (supra) is pressed into service by learned Senior Advocate appearing on behalf of the appellant in support of the submission that the Labour Court ought not to have given the decision only on preliminary issue and ought to have disposed of all the issues, whether preliminary or otherwise at the same time. On facts the said decision is not applicable to the facts of the case on hand. In the aforesaid decision no absolute proposition of law was laid down by this Court that even the issue touching the jurisdiction of the Page 23 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined court cannot be decided by the court as a preliminary issue and the court has to dispose of all the issues, whether preliminary or otherwise, at the same time. When the issue touches the question of territorial jurisdiction, as far as possible the same shall have to be decided first as preliminary issue. Therefore, in the present case, the Labour Court did not commit any error in deciding the issue with respect to the territorial jurisdiction as a preliminary issue in the first instance."
6) In case of MSP Infrastructure Limited v.
Madhya Pradesh Road Development Corporation Limited reported in (2015) 13 Supreme Court Cases 713, wherein it is observed as under:
"13. Section 16(2) of the Arbitration Act, 1996 reads as follows:
"16(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator."Page 24 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined On a plain reading, this provision mandates that a plea that the Tribunal does not have jurisdiction shall not be raised later than the submission of the statement of defence. There is no doubt about either the meaning of the words used in the Section nor the intention. Simply put, there is a prohibition on the party from raising a plea that the Tribunal does not have jurisdiction after the party has submitted its statement of defence. The intention is very clear. So is the mischief that it seeks to prevent. This provision disables a party from petitioning an Tribunal to challenge its jurisdiction belatedly, having submitted to the jurisdiction of the Tribunal, filed the statement of defence, led evidence, made arguments and ultimately challenged the award under Section 34 of the Arbitration Act, 1996. This is exactly what has been done by the Respondent Corporation. They did not raise the question of jurisdiction at any stage. They did not raise it in their statement of defence; they did not raise it at any time before the Tribunal; they suffered the award; they preferred a petition under Section 34 and after two years raised the question of jurisdiction of the Tribunal. In our view, the mandate of Section 34 clearly prohibits such a cause. A party is bound, by virtue of sub-section (2) of Section 16, to raise any objection it may have to the Page 25 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined jurisdiction of the Tribunal before or at the time of submission of its statement of defence, and at any time thereafter it is expressly prohibited. Suddenly, it cannot raise the question after it has submitted to the jurisdiction of the Tribunal and invited an unfavourable award. It would be quite undesirable to allow arbitrations to proceed in the same manner as civil suits with all the well-known drawbacks of delay and endless objections even after the passing of a decree.
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16. It is not possible to accept this submission. In the first place, there is nothing to warrant the inference that all objections to the jurisdiction of the Tribunal cannot be raised under Section 16 and that the Tribunal does not have power to rule on its own jurisdiction. Secondly, Parliament has employed a different phraseology in Clause (b) of Section 34. That phraseology is "the subject matter of the dispute is not capable of settlement by arbitration." This phrase does not necessarily refer to an objection to 'jurisdiction' as the term is well known. In fact, it refers to a situation where the dispute referred for arbitration, by reason of its subject matter is not capable of settlement by arbitration at all. Examples of such cases have been referred to by the Supreme Court in Page 26 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the case of Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and Ors.[1] This Court observed as follows:-
"36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grants of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
The scheme of the Act is thus clear. All objections to jurisdiction of whatever nature must be taken at the stage of the submission of the statement of defence, and must be dealt with under Section 16 of the Arbitration Act, 1996. However, if one of the parties seeks to contend that the subject matter of the Page 27 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined dispute is such as cannot be dealt with by arbitration, it may be dealt under Section 34 by the Court.
17. It was also contended by Shri Divan, that the newly added ground that the Tribunal under the Arbitration Act, 1996 had no jurisdiction to decide the dispute in question because the jurisdiction lay with the Tribunal under the M.P. Act of 1983, was a question which can be agitated under sub-clause
(ii) of clause (b) of sub-section (2) of Section 34 of the Arbitration Act, 1996. This provision enables the court to set- aside an award which is in conflict with the public policy of India. Therefore, it is contended that the amendment had been rightly allowed and it cannot be said that what was raised was only a question which pertained to jurisdiction and ought to have been raised exclusively under Section 16 of the Arbitration Act, 1996, but in fact was a question which could also have been raised under Section 34 before the Court, as has been done by the Respondent. This submission must be rejected. The contention that an award is in conflict with the public policy of India cannot be equated with the contention that Tribunal under the Central Act does not have jurisdiction and the Tribunal under the State Act, has jurisdiction to decide upon the dispute. Furthermore, it was stated that this contention might have been raised under the head that the Page 28 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Arbitral Award is in conflict with the public policy of India. In other words, it was submitted that it is the public policy of India that arbitrations should be held under the appropriate law. It was contended that unless the arbitration was held under the State Law i.e. the M.P. Act that it would be a violation of the public policy of India. This contention is misconceived since the intention of providing that the award should not be in conflict with the public policy of India is referable to the public policy of India as a whole i.e. the policy of the Union of India and not merely the policy of an individual state. Though, it cannot be said that the upholding of a state law would not be part of the public policy of India, much depends on the context. Where the question arises out of a conflict between an action under a State Law and an action under a Central Law, the term public policy of India must necessarily understood as being referable to the policy of the Union. It is well known, vide Article 1 of the Constitution, the name 'India' is the name of the Union of States and its territories include those of the States."
7) In case of Lion Engineering Consultants v.State of Madhya Pradesh and others reported in (2018) 16 Supreme Court Cases 758, wherein Page 29 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined it is observed as under:
"5. We may quote the observations from M/s MSP Infrastructure [(2015) 13 SCC 713)]:
"16. It is not possible to accept this submission. In the first place, there is nothing to warrant the inference that all objections to the jurisdiction of the Tribunal cannot be raised under Section 16 and that the Tribunal does not have power to rule on its own jurisdiction.
Secondly, Parliament has employed a different phraseology in Clause (b) of Section 34. That phraseology is "the subject matter of the dispute is not capable of settlement by arbitration." This phrase does not necessarily refer to an objection to 'jurisdiction' as the term is well known. In fact, it refers to a situation where the dispute referred for arbitration, by reason of its subject matter is not capable of settlement by arbitration at all. Examples of such cases have been referred to by the Supreme Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited (2011) 5 SCC 532. This Court observed as follows:-
"36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal Page 30 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grants of probate, letters of administration and succession certificate); and
(vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
The scheme of the Act is thus clear. All objections to jurisdiction of whatever nature must be taken at the stage of the submission of the statement of defence, and must be dealt with under Section 16 of the Arbitration Act, 1996. However, if one of the parties seeks to contend that the subject matter of the dispute is such as cannot be dealt with by arbitration, it may be dealt under Section 34 by the Court.
17. It was also contended by Shri Divan, that the newly added ground that the Tribunal under the Arbitration Act, 1996 had no jurisdiction to decide the dispute in question because the Page 31 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined jurisdiction lay with the Tribunal under the M.P. Act of 1983, was a question which can be agitated under sub-clause
(ii) of clause (b) of sub-
section (2) of Section 34 of the Arbitration Act, 1996. This provision enables the court to set- aside an award which is in conflict with the public policy of India. Therefore, it is contended that the amendment had been rightly allowed and it cannot be said that what was raised was only a question which pertained to jurisdiction and ought to have been raised exclusively under Section 16 of the Arbitration Act, 1996, but in fact was a question which could also have been raised under Section 34 before the Court, as has been done by the Respondent. This submission must be rejected. The contention that an award is in conflict with the public policy of India cannot be equated with the contention that Tribunal under the Central Act does not have jurisdiction and the Tribunal under the State Act, has jurisdiction to decide upon the dispute. Furthermore, it was stated that this contention might have been raised under the head that the Arbitral Award is in conflict with the public policy of India. In other words, it was submitted that it is the public policy of India that arbitrations should Page 32 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined be held under the appropriate law. It was contended that unless the arbitration was held under the State Law i.e. the M.P. Act that it would be a violation of the public policy of India. This contention is misconceived since the intention of providing that the award should not be in conflict with the public policy of India is referable to the public policy of India as a whole i.e. the policy of the Union of India and not merely the policy of an individual state. Though, it cannot be said that the upholding of a state law would not be part of the public policy of India, much depends on the context. Where the question arises out of a conflict between an action under a State Law and an action under a Central Law, the term public policy of India must necessarily be understood as being referable to the policy of the Union. It is well known, vide Article 1 of the Constitution, the name 'India' is the name of the Union of States and its territories include those of the States." (6.) Both stages are independent. Observations in Paragraphs 16 and 17 in MSP Infrastructure (supra) do not, in our view, lay down correct law. We also do not agree with the observation that the Public policy of India does not refer to a State law and refers only to an All India Page 33 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined law.
(7.) In our considered view, the public policy of India refers to law in force in India whether State law or Central law. Accordingly, we overrule the observations to the contrary in Paragraphs 16 and 17 of the judgment in MSP Infrastructures Ltd. (supra).
(8.) Since amendment application is not pressed, the appeal is rendered infructuous. The impugned order is set aside.
(9.) The matter may now be taken up by the trial court for consideration of objections under Section 34 of the Central Act. It will be open for the respondents to argue that its objection that the Act stands excluded by the M.P. Madhyastham Adhikaran Adhiniyam, 1983 could be raised even without a formal pleading, being purely a legal plea.
It will also be open to the appellant to argue to the contrary. We leave the question to be gone into by the concerned court."
8) In case of SREI Infrastructure Finance Limited v. Tuff Drilling Private Limited reported in (2018) 11 Supreme Court Cases 470, wherein it is observed as under:
"3. The undisputed facts of the case are: -The respondent filed an application under Section 11 of the Arbitration and Conciliation Act, Page 34 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 1996 (hereinafter referred to as "the 1996 Act") for referring the dispute to arbitrator on the strength of contract entered with appellant. During pendency of the application under Section 11 with consent of the parties, Sri Baskar Sen, Senior Advocate, Bar-at-Law was appointed as Arbitrator. The application under Section 11 of the 1996 Act was thus dismissed as not pressed. One-man arbitral tribunal entered into reference and called for the first sitting of the arbitral tribunal on 27.08.2011. Both the parties appeared on 27.08.2011 on which date arbitral tribunal had directed the respondent to file the statement of claim.
4. Subsequently, 19th November was fixed on which date the claimant was absent. The arbitral tribunal directed for filing statement of claim by 9th December. On 9th December, the claim could not be filed by respondent and by order dated 12.12.2011, tribunal terminated the claim under Section 25(a) by making the following observations: -
"...It appears that the claimant is not interested to proceed with the reference. No cause has been shown as to why they have not filed their Statement of Claim in spite of repeated opportunities being given to them. In view of Section 25(a) Page 35 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined of the Arbitration & Conciliation Act, 1996 the Arbitrator, therefore, has no alternative but to terminate the proceedings.
The arbitration proceedings in respect of the dispute in which Tuff Drilling Private Limited is the claimant which arose out of the agreement dated 21st January, 2008 pertaining to 1500 HP diesel electric rig is thus terminated..."
5. The Claimant filed an application dated 20.01.2012 praying for recall of the order dated 12.12.2011 with further prayer to condone the delay in filing the statement of claim by granting necessary extension of time. In the application, reasons for non-filing of the statement of the claim and for non-appearance of the claimant on 19.11.2011 and 12.12.2011 were stated in detail. The application filed by the claimant was objected by the appellant. The appellant questioned the maintainability of the application dated 20.01.2012 on the ground that arbitral tribunal has become functus officio in view of termination of the proceedings under Section 25(a), hence the arbitral tribunal cannot recall its order terminating the proceedings. The arbitral tribunal heard both the parties and by an order dated 26.04.2012 accepted the preliminary objections of the appellant holding that in view of order terminating the proceedings, he cannot pass an Page 36 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined order recommencing the arbitration proceedings. The application of the respondent claimant was thus rejected.
6. Aggrieved by the order of the arbitral tribunal dated 26.04.2012, the claimant approached the Calcutta High Court in its revisionary jurisdiction by filing C.O.No.3190 of 2012. The appellant before the High Court objected the maintainability of the application under Article 227 of the Constitution. It was further contended before the High Court that after terminating the proceedings arbitral tribunal had become functus officio and had no power to recall the order dated 12.12.2011. The High Court after considering the submissions of parties came to the conclusion that arbitral tribunal enjoys the power to recall its own order relying on the Patna High Court judgment reported in M/s Snebo Engineering Ltd. Vs. State of Bihar and Ors., AIR 2004 Patna 33. The High Court also overruled the objections of appellant that application under Article 227 by the claimant challenging the order dated 12.12.2011 was not maintainable. The High Court after entertaining the application under Article 227 held that arbitral tribunal has power to recall its own order. The High Court set aside the order of the arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the application dated Page 37 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 20.01.2012 filed by the respondent on merits. The appellant aggrieved by the judgment of Calcutta High Court has come up in this appeal. xxx
17. Section 19 of the Act provides for determination of rules of procedure. Sub-clause (1) of Section 19 provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. The words "arbitral tribunal shall not be bound" are the words of amplitude and not of a restriction. These words do not prohibit the arbitral tribunal from drawing sustenance from the fundamental principles underling the Civil Procedure Code or Indian Evidence Act but the tribunal is not bound to observe the provisions of Code with all of its rigour. As per sub-clause (2) of Section 19 the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.
21. When the arbitral tribunal without sufficient cause being shown by the claimant to file the claim statement can terminate the proceedings, subsequent to termination of proceedings, if the sufficient cause is shown, we see no impediment in the power of the arbitral tribunal to accept the show-cause and permit the claimant to file the claim. The Scheme of Section 25 of the Act clearly indicates that on sufficient cause Page 38 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined being shown, the statement of claim can be permitted to be filed even after the time as fixed by Section 23(1) has expired. Thus, even after passing the order of terminating the proceedings, if sufficient cause is shown, the claims of statement can be accepted by the arbitral tribunal by accepting the show-cause and there is no lack of the jurisdiction in the arbitral tribunal to recall the earlier order on sufficient cause being shown.
24. It is true that power of review has to be expressly conferred by a Statute. This Court in Paragraph 13 has also stated that the word review is used in two distinct senses. This Court further held that when a review is sought due to a procedural defect, such power inheres in every tribunal. In Paragraph 13, following was observed:-
"13. .... The expression "review" is used in the two distinct senses, namely (1) a procedural review which is either inherent or implied in a court or Tribunal to set aside a palpably erroneous order passed under a misapprehension by it, and (2) a review on merits when the error sought to be corrected is one of law and is apparent on the face of the record. It is in the latter sense that the court in Patel Narshi Thakershi case held that no review lies on merits unless a statute Page 39 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined specifically provides for it.
Obviously when a review is
sought due to a procedural
defect, the inadvertent error committed by the Tribunal must be corrected ex debito justitiae to prevent the abuse of its process, and such power inheres in every court or Tribunal."
26. There cannot be a dispute that the power exercised by the arbitral tribunal is a quasi-judicial. In view of the provisions of the 1996 Act, which confers various statutory powers and obligations on the arbitral tribunal, we do not find any such distinction between the statutory tribunal constituted under the statutory provisions or Constitution in so far as the power of procedural review is concerned. We have already noticed that Section 19 provides that arbitral tribunal shall not be bound by the rules of procedure as contained in Civil Procedure Code. Section 19 cannot be read to mean that arbitral tribunal is incapacitated in drawing sustenance from any provisions of Code of Civil Procedure. This was clearly laid down in Nahar Industrial Enterprises Limited Vs. Hong Kong and Shanghai Banking Corporation, (2009) 8 SCC 646. In Paragraph 98(n), following was stated:-
"(n) It is not bound by the
procedure laid down under the
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Code. It may however be noticed in this regard that just because the Tribunal is not bound by the Code, it does not mean that it would not have jurisdiction to exercise powers of a court as contained in the Code. "Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice." (See Industrial Credit and Investment Corpn. of India Ltd. v. Grapco Industries Ltd.[(1999) 4 SCC 710]"
27. We thus are of the view that principles underlying Order 9 Rule 9 can very well be invoked by the arbitrator. There is nothing on record to indicate that parties have agreed to the contrary. The issue, which has arisen for consideration has engaged attention of different High Courts from time to time. Patna High Court in M/s. Senbo Engineering Ltd. Vs. State of Bihar & Ors., AIR 2004 Patna 33, had occasion to consider the order terminating the proceedings under Section 25(a). Patna High Court after considering the provision has held that arbitral tribunal has power to review on sufficient cause being shown. In paragraph 32, following has been laid down:-
"32. I find the submissions of Mr. Chatterjee well founded. Mr. Page 41 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Chatterjee has relied upon the provisions of the Act itself (that is to say, the internal aids to interpretation) in support of the point that on sufficient cause being shown, the arbitral tribunal has full authority and power to recall an order under Section 25(a) of the Act. I think that one would arrive at the same conclusion on the basis of some external aids to interpretation."
5.5) Learned Senior Advocate Mr. Trivedi therefore, submitted that the impugned order passed by the Tribunal is required to be quashed and set aside with the direction to the Tribunal to frame the preliminary issue with regard to the lack of inherent jurisdiction to be decided at the first instance.
6.On the other hand, learned Senior Advocate Mr. Sanjanwala submitted that reliance placed by learned Senior Advocate for the petitioner on the provisions of Rule 2 Order XIV of the Page 42 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Code of Civil Procedure, 1908 (For short "the Code") is misplaced inasmuch as section 19 of the Act, 1996 clearly provides that the Tribunal is not bound by the provisions of the Code nor Act, 1996 contains mandate for framing of the issue either on facts or law.
It was submitted that the petitioner company has raised the plea with regard to inherent lack of jurisdiction on the part of the Tribunal under section 16(2) of the Act, 1996, however, the Tribunal has held that the plea has been raised belatedly and did not entertain the plea and therefore, the stage of raising such an issue is long over and therefore, the doctrine of estoppel would apply.
6.1) It was further submitted by learned Senior Advocate Mr. R.S. Sanjanwala that the petitioner company has failed to raise the issue under section 16(2) of the Act as per Page 43 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the provisions of the Act, 1996 as point of jurisdiction has to be raised not later than the submission of Statement of Defence and when the Tribunal has already rejected the application vide order dated 14.07.2022 to consider such issue of jurisdiction, the same could not have been agitated before the Tribunal to decide at first instance.
6.2) It was further submitted that the petitioner has already filed its Statement of Defence and counter claim and has proceeded with the matter at great length and therefore, the question of inherent lack of jurisdiction cannot be raised and there is no scope of adjudication of the issue as a question of law to be decided as a preliminary issue.
7.Learned Senior Advocate Mr. Trivedi on merits further submitted that the Tribunal ought to Page 44 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined have decided the application to frame the issues as to whether the Tribunal has inherent jurisdiction to adjudicate upon the disputes between the parties as a preliminary issue in view of the provisions of the Act, 1992. The attention of the Court was invited to Rule 2 of Order XIV of the Code to submit that in view of provisions contained therein, the application filed by the petitioner company raising point of law going to the root of the matter with regard to the jurisdiction of the Tribunal to be decided at first instance as agreed by both the sides and such a point of law can be decided at any stage even at a preliminary stage as a preliminary issue.
7.1) Learned Senior Advocate Mr. Trivedi invited the attention of the Court to various provisions of Act, 1992 to submit that the Tribunal lacked inherent jurisdiction to Page 45 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined resolve the disputes between the parties and as the Tribunal has decided the application under section 16(2) of the Act, 1996 only on the ground that the respondent has missed the bus as the application raising the issue of jurisdiction was raised by the petitioner company after filing of the pleadings, such issue ought to have been considered as a preliminary issue so as to relegate the parties before the Tribunal under the Act, 1992. It was submitted that the question of delay in raising the point of inherent lack of jurisdiction would not arise as it was decided by the Tribunal while disposing of the application under section 16(2) of the Act, 1996 that it was open to the parties to raise such issues. It was therefore, submitted that the Tribunal ought to have decided the issue of jurisdiction as a preliminary issue so as to save the time and cost of both the parties to proceed further Page 46 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined on merits.
7.2) Learned Senior Advocate Mr. Trivedi therefore, submitted that the Tribunal ought to have allowed the application filed by the petitioner company to frame the preliminary issue whether as to the Tribunal has inherent jurisdiction to adjudicate upon the disputes between the parties in view of provisions of Act, 1992 or not.
7.3) Learned Senior Advocate Mr. Trivedi submitted that the Tribunal has failed to consider that the question of inherent lack of jurisdiction would go to the root of the matter and therefore, conducting entire the arbitration proceedings without deciding such issue as a preliminary issue would be an exercise in futility and therefore, it would be in the interest of both the sides to decide the issue of lack of jurisdiction as a Page 47 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined preliminary issue.
7.4) In support of his submission that provisions of Act, 1992 shall prevail over the disputes pertaining to the Public Works Contract, learned Senior Advocate Mr. Trivedi relied upon the following decisions:
1) Judgment of this Court in case of Gujarat State Construction Corporation v.
Ghanshyambhai and Bros. reported in (1997) 3 GLR 2302, wherein it is observed as under:
"2. This Court after enlarging time under Section 28 directed the Arbitrator to Dispose of the disputes under reference as expeditiously as possible but not later than four months from the date of receipt of service of notice to both the parties after receiving writ of this Court. When the said revision was heard, the attention of this Court was not drawn to the provisions of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 Section 3 came into force on 5th December, 1991 and the remaining provisions of the Act came into force on 1st January, 1994 Page 48 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined as per the notification published in the Official Gazette. The judgment and order in the aforesaid Civil Revision Application was passed on April 10, 1995. Therefore, the provisions of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 were in force.
3. It is in this context, the applicant Gujarat State Construction Corporation, original opponent, has filed this revision application. It is contended on behalf of the applicant that instead of sending the matter to the Arbitrator, the matter may be sent to the Tribunal. The contention of the learned Advocate for the opponent in this review application is that let the matter be remitted to the Arbitrator and the applicant herein could move the Arbitrator to pass appropriate order.
Section 21 of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 reads as under:
21. The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, Court or authority shall stand transferred to the Tribunal.Page 49 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined It can be seen from the aforesaid provisions that the matter is required to be sent to the Tribunal and not to the Arbitrator. All arbitration proceedings in relation to such disputes before an Arbitrator, Umpire, Court or authority shall stand transferred to the Tribunal in view of the provisions of Section 21. Therefore, there is a fit case for review and the direction of remitting the matter to the Arbitrator for disposal of disputes under reference needs to be modified and the matter should be sent to the Tribunal for disposal in accordance with law."
2) Judgment of Division Bench of this Court in case of Vijay Construction Co. Consulting Engineers and Contractors v. Sardar Sarovar Narmada Nigam Limited reported in AIR 2018 Gujarat 116, wherein it is observed as under:
"[13] Having regard to issue involved in the present case viz. whether in view of Tribunal constituted under State Act for resolution of disputes relating to works contract, the Tribunal constituted under the Act of 1996 can be allowed to handle the disputes relating to works contract, is a matter which arise for consideration. In that view of the matter, by placing reliance on Page 50 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the judgments referred above and by referring to provisions under Section 5 and 16 of the Arbitration and Conciliation Act, 1996, we are not convinced to accept submission made by learned Counsel for the appellant that learned Single Judge has committed error by entertaining the petition at this stage. Further, it is to be noticed that order impugned dated 30.11.2010 in the petition is passed only in view of judgment in the case of Va Tech (supra) and same is held to be per incuriam in the subsequent judgment in the case of L.G.Chaudhary Engineers and Contractors (supra).
[14] In the case of M.A.Murthy (supra) relied by learned Senior Counsel Mr. Trivedi for the respondents, it is categorically held by the Hon'ble Supreme Court that normally, decision of the Court enunciating a principle of law is applicable to all cases irrespective of stage of pendency from inception. In the aforesaid judgment, it is held that doctrine of prospective overruling which is a feature of American jurisprudence is an exception to the normal principle of law. Further, in the case of Jagmittar Sain Bhagat and Ors. (supra) relied by learned Senior Counsel Mr. Trivedi for the respondents, the Hon'ble Supreme Court has held that conferment of jurisdiction is a legislative Page 51 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes a decree holding no jurisdiction over the matter, it would amount to nullity as the matter goes to the root of the matter. Both the judgments referred above, supports the case of the respondents.
[15] Further, in the case of Executive Engineer, Sardar Sarovar Narmada Nigam v/s. Bhaven Construction and Anr. reported in 2013 (1) GLR 580, the Division Bench of this Court has held that dispute arising out of public works contract is to be adjudicated by Arbitration Tribunal under the Act, 1992 and not under the Arbitration and Conciliation Act, 1996."
3) Decision of Hon'ble Apex Court in case of Madhya Pradesh Rural Road Development Autority and another v. L.G. Chaudhary Engineers and Contractors reported in (2018) 10 Supreme Court Cases 826, wherein it is observed as under:
"2.) Appointment of arbitrator in a dispute arising out of execution of a 'works contract' was the subject- matter for consideration before the High Court under section 11 of the Page 52 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Arbitration and Conciliation Act, 1996.
(3.) Appellants raised objection that the matter being covered by a special State Act, namely, M.P. Madhyastham Adhikaran Adhiniyam, 1983 ("M.P. Act", in short), the application under section 11 of the Arbitration and Conciliation Act, 1996 could not be entertained. The High Court, however, overruled the said objection relying upon the judgment of this Court in Va Tech Escher Wyass Flovel Ltd. v. MPSE Board & Another, (2011) 13 SCC 261. (4.) When the matter was considered by a Bench of this Court on 24th January, 2012 (order reported in Madhya Pradesh Rural Road Development Authority and Anr. v. L.G. Chaudhary Engineers and Contractors, (2012) 3 SCC 495), this Court held that the judgment in Va Tech Escher Wyass Flovel Ltd. (supra) was per incuriam insofar as it held that the M.P. Act stands implied repealed by the Central Act.
While Hon'ble Ganguly J., held that the State Act will cover a dispute even after termination of the 'works contract', Hon'ble Gyan Sudha Mishra J. took a different view as follows:
"51. It is no doubt true that if the matter were before an Arbitrator appointed under the Arbitration and Conciliation Act, 1996 for adjudication of any dispute including the question regarding the justification and legality as to Page 53 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined whether the cancellation of works contract was legal or illegal, then the said Arbitrator in view of the ratio of the judgment of the Supreme Court in Maharshi Dayanand University & Anr. v. Anand Coop L(C) Society, (2007) 5 SCC 295, as also in view of the persuasive reasoning assigned in the judgment and order reported in Heyman & Anr. v. Darwins, Limited, (1942) 1 All E.R. 337 (HL), would have had the jurisdiction to adjudicate the dispute regarding the justification and legality of cancellation of works contract also. But the same cannot be allowed to be raised under the M.P. Act of 1983 since the definition of 'works contract' unambiguously lays down in explicit terms as to what is the nature and scope of 'works contract' and further enumerates the specific nature of disputes arising out of the execution of works contract which would come within the definition of a 'works contract'. However, the same does not even vaguely include the issue or dispute arising out of cancellation and termination of contract due to which this question, in my considered opinion, would not fall within the jurisdiction of the M.P. State Arbitration Tribunal so as to be referred for adjudication arising out of Page 54 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined its termination."
(5.) We find from the definition under section 2(d) of the Arbitration and Conciliation Act, 1996 that even after a contract is terminated, the subject-matter of dispute is covered by the said definition. The said provision has not been even referred to in the judgment rendered by Hon'ble Gyan Sudha Mishra, J.
(6.) In view of above, we are of the opinion that the view expressed by Hon'ble Ganguly J. is the correct interpretation and not the contra view of Hon'ble Gyan Sudha Mishra J. Reference stands answered accordingly.
(7.) Taking up appeal on merits, we find that the High Court proceeded on the basis of the judgment of this Court in Va Tech Escher Wyass Flovel Ltd. (supra) which has been held to be per incuriam. The M.P.Act cannot be held to be impliedly repealed. (8.) We are, thus, is agreement with the proposed opinion of Hon'ble Ganguly J. in para 42 of the reported judgment which reads as follows:
"42. Therefore, appeal is allowed and the judgment of the High Court which is based on the reasoning of Va Tech Escher Wyass Flovel Ltd. v. M.P. SEB, Misc. Appeal No. 380 of 2003, order dated 5-3-2003 (MP) is set aside. This Court holds the decision in Va Tech Escher Wyass Page 55 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Flovel Ltd. v. M.P. SEB, (2011) 13 SCC 261 has been rendered in per incuriam. In that view of the matter the arbitration proceeding may proceed under M.P. Act of 1983 and not under the A.C. Act 1996."
37. In the circumstances, pending arbitration proceedings shall stand transferred to the M.P. Arbitration Tribunal under the M.P. Act, to be dealt with as per provisions of the M.P. Act in accordance with law. The proceedings may be carried out in continuation of earlier proceedings. The parties may take steps by moving the High Court or any other forum for transfer of records to the transferee courts in the light of this order. The appeal is accordingly disposed of. The parties may appear before the High Court/Tribunal for further proceedings on 9-7-2018."
4) Decision of Hon'ble Apex Court in case of State of Gujarat through Chief Secretary and another v. Amber Builders reported in (2020) 2 Supreme Court Cases 540, wherein it is observed as under:
(2.) At the outset, it may be noted that the Gujarat Act was enacted with a view to compulsorily refer all disputes arising out of works Page 56 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined contract entered into by the State Government or the Public Sector Undertakings with any other person for those works defined as works contract in terms of Section 2 (k) of the Gujarat Act. As far as this case is concerned, it is not disputed that the contract entered into between the appellant State and the respondent contractor was a works contract . The contract order pertaining to the parties dated 31.07.2007 contained an arbitration clause, relevant portion of which reads as follows:
"Clause : 30(1) Disputes to be referred to Tribunal : The dispute relating to this contract, so far as they relate to of the following matters, whether such disputes arise during the progress of the work of or after the completin or abandoned thereof, shall be referred to the Arbitration Tribunal, Gujarat State"
(15.) Part I of the A&C Act i.e. from Section 2 to Section 43 deals with Arbitration and Section 2(2) clearly states that the said Part would apply to all Arbitrations which take place in India. Section 2(4) makes it absolutely clear that other than Section 40(1), 41 and 43, Part I of the A&C Act shall apply to all arbitrations even if they are carried out under any other enactment as if the arbitrations were pursuant to an arbitration agreement except insofar as the Page 57 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined provisions of Part I are inconsistent with the other enactment or any rules made thereunder. A plain reading would show that the provisions of Part I of the A&C Act would apply to all arbitrations where the place of arbitration is within India. Even statutory arbitrations under other Acts would be governed by Part I. The only exception is that if there is any departure from Part I in the special enactment then the special enactment will prevail and the A&C Act will give way to the special enactment.
(16.) It is in this context that we have to examine the Gujarat Act. We have already referred to certain provision of the Gujarat Act. Reference and procedure of the Tribunal is governed by Chapter 3 of the Gujarat Act. Section 8 provides that where any dispute within the meaning of the said Act, arises between the parties, the said dispute shall be referred to arbitration under the said Act whether the agreement in question contained an arbitration clause or not. Basically, the intention of the Stage Legislature was that all disputes relating to works contract between the State Government and the persons executing the works defined as works contract would be compulsorily referred to the Arbitral Tribunal constituted under Section 3 of the Gujarat Act. Section 8(3) clearly provides that where the Tribunal admits a Page 58 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined reference under sub section (2) it will make an award or an interim award giving its reasons thereof. This Section recognizes the power of the Tribunal to make interim awards. However, as pointed above, the Tribunal took a view that an interim award could not be in the nature of an injunction.
(17.) The practice and procedure of the Tribunal is governed by Section 9 of the Act. Section 12 of the Act vests revisional powers in the High Court of Gujarat where an award or any interim award can be challenged on the grounds set out therein. The High Court also has suo motu powers in this regard. Section 13 which is relevant for our purpose reads as follows:
"13. Bar of jurisdiction of Courts.
(1) Save as otherwise provided by section 12, no Civil Court shall have jurisdiction to deal with or decide any question which the Tribunal is empowered to deal with and decide by or under this Act and no injunction shall be granted by any Civil Court in respect of any action taken or to be taken in pursuance of any power by or under this Act.
(2) No award or interim award or order made or proceedings taken under this Act by the Tribunal shall be called in question in any Civil Court.Page 59 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Section 13 specifically bars the jurisdiction of the Civil Courts. This clearly means that powers vested in a Civil Court under the A&C Act, such as the powers to grant interim relief in terms of Section 9 of the A&C Act and the powers for setting aside an award under Section 34 of the Act cannot be exercised by Civil Courts insofar as the awards made under the Gujarat Act are concerned. As far as Gujarat Act is concerned, the power to set aside/modify an award is vested in the High Court under Section 12. Section 21 of the Gujarat Act reads as follows:
"21. Arbitration Act to cease to apply. The provisions of the Arbitration Act, shall in so far as they are inconsistent with the provisions of this Act, cease to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator, umpire, court or authority shall stand transferred to the Tribunal. (18.) We are clearly of the view that the appropriate remedy for the contractor was to approach the arbitral tribunal constituted under the Gujarat Act since that would have jurisdiction to decide whether the notice issued by the Government was a legal notice and whether the Government was, in fact, entitled to recover any amount from the contractor. It would also be within the jurisdiction of the Tribunal to Page 60 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined decide whether the contractor has made out a prima facie case for grant of interim relief. We are purposely not going into the merits of the case because once we hold that the Tribunal has the jurisdiction to entertain and adjudicate upon the dispute it would not be proper for us to make any comments on the merits.
xxx (22.) On a conjoint reading and a careful analysis of the Acts together, we are of the view that insofar as the powers vested in the Arbitral Tribunal in terms of the Section 17 of the A&C Act are concerned, such powers can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned. This power is already vested in the tribunal under the Gujarat Act and Section 17 of the A&C Act compliments these powers and therefore it cannot be said that the provisions of Section 17 of the A&C Act are inconsistent with the Gujarat Act.
(23.) In view of the above discussion, both the appeals filed by the State of Gujarat are allowed, and the judgments of the High Court of Gujarat are set aside. However, liberty is given to the contractor(s) to approach the Gujarat Public Works Contract Disputes Arbitration Tribunal and if Page 61 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the Tribunal is approached within 2 months from today, the tribunal shall not dismiss the claim on the issue of limitation. It shall decide the same on merits. Pending application(s), if any, shall stand(s) disposed of."
5) In case of Sardar Sarovar Narmada Nigam Limited and Ors. v. Vijay Construction Co-
Consulting Engineers & Contractors and others (Judgment dated 26.04.2017 passed in Special Civil Application No.831 of 2022), wherein is observed as under:
"1. This petition under Article 226 and 227 of the Constitution of India has been moved by Sardar Sarovar Narmada Nigam Ltd., etc. seeking writ of mandamus and/or certiorari or any other appropriate writ, order or direction declaring the order passed by the Tribunal on 30th November, 2010 in A.R.No.16/2002 (Annexure-A) was against the provisions of Gujarat Public Works Contract Dispute Arbitration Tribunal Act and further to hold that Arbitration Reference No.16 of 2002 was maintainable before the Gujarat Public Works Contract Arbitration Tribunal and further seeking directions to the Tribunal to decide the arbitration reference Page 62 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined on merits.
xxx
3. While the aforesaid application of respondent No.1 was pending before the Tribunal for adjudication, the Hon'ble Supreme Court, on 14th January, 2010, delivered a judgment in the matter of Va Teach Escher Wyass Flovel Limited V/s. Madhya Pradesh State Electricity Board and another. In the said judgment, on interpretation of a legislation governing the field of disputes in respect of Works Contract with Public Undertakings prevalent in the State of Madhya Pradesh under the nomenclature of Madhya Pradesh Madhyasthan Adhikaran Adhiniyam, 1983, which came to be ruled that if the Works Contract contained an Arbitration clause, a dispute concerning such Works Contract by and between the parties thereto was not required to be referred to the concerned Tribunal constituted under the said legislation of the State of Madhya Pradesh, but the same was required to be referred to the Arbitration Tribunal to be constituted under the Arbitration and Conciliation Act, 1996 by following the provisions for the same made under the Works Contract. The said decision of the Hon'ble Supreme Court came to be later on reported in (2011) 13 SCC 261.
4. In view of this decision of the Hon'ble Supreme Court, respondent Page 63 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined No.1 requested the Tribunal to dispose off its aforesaid application as not maintainable so that thereafter, based upon the same, by following provisions of Arbitration contained in the Works Contract by and between the petitioner and respondent No.1, an Arbitration Tribunal could be constituted under the Arbitration and Conciliation Act, 1996 for adjudication of the claims of respondent No.1 against the petitioner. In view of this, on 30th November, 2010, the Tribunal passed an order vide which the aforesaid application of respondent No.1 came to be disposed off as not maintainable in terms of the judgment of Hon'ble Supreme Court of India.
xxx
18. Mr.Mazmudar, has further referred to the decision reported in 2013 (10) SCC 136 Jagmittor V/s. Director, Health Services; wherein, Hon'ble Supreme Court has held that indisputably it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by Superior Court and if the Court passes the decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to root of the cause.
19. On the other hand, learned senior counsel, Mr.Dave, for the Page 64 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined respondent No.1 has mainly argued that Arbitration proceedings can be challenged only under Section 34 of the Arbitration and Conciliation Act, 1996. In support of this submission, he has referred to judgments of the Apex Court, namely,
(i) in the case of SBP & Co. V/s.
Patel Engineering Ltd. and another reported in (2005) 8 SCC 618 and
(ii) in the case of MSP Infrastructure Ltd. V/s. M.P. Road Development Corporation Ltd. reported in (2015) 13 SCC 713.
20. Proposition of law contained in these judgments passed by the Apex Court and relied upon by Mr.Dave cannot be disputed. However all such judgments relates to the cases where arbitration proceedings has been concluded by the Arbitration Tribunal under Section 34 of the Arbitration Tribunal Act. However, in the case in hand, the arbitration proceedings have not yet concluded and are still pending and in progress when the impugned order dated 30th November, 2010 has been passed.
21. This Court is of the considered opinion that an order passed though with conformity at the relevant time but against the provisions and without jurisdiction will be void ab-initio. This is particularly so when Supreme Court in subsequent decision has reversed its earlier decision and Division Bench of this High Court has set aside similar orders vide which the proceedings Page 65 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined were withdrawn from the Tribunal and referred to the Arbitrators under Section 34 of the Arbitration and Conciliation Act, 1996. Still further, the Co-ordinate Bench of this Court in number of petitions as referred by Mr.Mazmudar, has been decided in favour of the petitioner- Sardar Sarovar Narmada Nigam Ltd.
22. In the circumstances, the Arbitration Tribunal was not justified in rejecting the reference. Accordingly, order dated 30.11.2010 passed in Arbitration Reference No.16 of 2002 is quashed and set aside. Arbitration Reference No.16 of 2002 is restored back to the Arbitration Tribunal and the Tribunal shall proceed and decide the reference in accordance with law. Petition is allowed as per para 13(A) of the petition. Rule is made absolute. No order as to cost."
6) In case of Harshad Chimanal Modi v. DLF Universal Ltd. and another reported in (2005) 7 Supreme Court Cases 791, wherein it is observed as under:
(30.) We are unable to uphold the contention. The jurisdiction of a court may be classified into several categories. The important categories are (i) Territorial or local jurisdiction; (ii) Pecuniary jurisdiction; and (iii) Jurisdiction Page 66 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined over the subject matter. So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest possible opportunity and in any case at or before settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed to be taken at a subsequent stage. Jurisdiction as to subject matter, however, is totally distinct and stands on a different footing. Where a court has no jurisdiction over the subject matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a court having no jurisdiction is nullity. (31.) In Halsbury's Laws of England, (4th edn.), Reissue, Vol. 10; para 317; it is stated;
"317. Consent and waiver. Where, by reason of any limitation imposed by statute, charter or commission, a court is without jurisdiction to entertain any particular claim or matter, neither the acquiescence nor the express consent of the parties can confer jurisdiction upon the court, nor can consent give a court jurisdiction if a condition which goes to the jurisdiction has not been performed or fulfilled. Where the court has jurisdiction over the particular subject matter of the claim or the particular Page 67 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined parties and the only objection is whether, in the circumstances of the case, the court ought to exercise jurisdiction, the parties may agree to give jurisdiction in their particular case; or a defendant by entering an appearance without protest, or by taking steps in the proceedings, may waive his right to object to the court taking cognizance of the proceedings. No appearance or answer however can give jurisdiction to a limited court, nor can a private individual impose on a judge the jurisdiction or duty to adjudicate on a matter. A statute limiting the jurisdiction of a court may contain provisions enabling the parties to extend the jurisdiction by consent."
(32.) In Bahrein Petroleum Co., this Court also held that neither consent nor waiver nor acquiescence can confer jurisdiction upon a court, otherwise incompetent to try the suit. It is well-settled and needs no authority that 'where a court takes upon itself to exercise a jurisdiction it does not possess, its decision amounts to nothing.' A decree passed by a court having no jurisdiction is non-est and its validity can be set up whenever it is sought to be enforced as a foundation for a right, even at the stage of execution or in collateral proceedings. A decree passed by a court without jurisdiction is a Page 68 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined coram non-judice."
7) In case of Hindustan Zinc Limited (HZL) v. Ajmer Vidyut Vitran Nigam Limited reported in (2019) 17 Supreme Court Cases 82, wherein is observed as under:
"16. Shri Vaidyanathan, learned senior counsel for the appellant, has argued that the challenge to the Award was only on merits before the learned Commercial Court, and no challenge was raised stating that the Arbitrator s appointment itself would be without jurisdiction, both the parties having agreed to the order dated 12.02.2007 to refer the matter to arbitration. However, the said issue was argued and taken up before the High Court in First Appeal under Section 37 of the Arbitration Act.
(17.) We are of the view that it is settled law that if there is an inherent lack of jurisdiction, the plea can be taken up at any stage and also in collateral proceedings. This was held by this Court in Kiran Singh and Others v. Chaman Paswan and Others (1955) 1 SCR 117 as follows:
"6...It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is Page 69 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities."
8) In case of Chief General Manager (IPC) MP Power Trading Co. Ltd and another v.
Narmada Equipments Pvt. Ltd. reported in 2021 SCC OnLIne SC 255, wherein it is observed as under:
"12 From the above judgment, it is evident that this Court has held that Section 86(1)(f) of the 2003 Act is a special provision which overrides the general provisions contained in Section 11 of the 1996 Act. Section 86(1)(f) vests a statutory jurisdiction with the Page 70 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined State Electricity Commission to adjudicate upon disputes between licensees and generating companies and to refer any dispute for arbitration. The "and" between "generating companies" and "to refer any dispute for arbitration" is to be read as an "or", since the State Electricity Commission cannot obviously resolve the dispute itself and also refer it to arbitration. Section 86(1)(f) is extracted below:
"86.Functions of State Commission.-- (1) The State Commission shall discharge the following functions, namely:-
*** *** ***
(f) adjudicate upon the disputes
between the licensees and generating companies and to refer any dispute for arbitration;"
xxx
15. A similar issue was raised before a three-Judge bench of this Court in Hindustan Zinc Limited (supra), where an arbitrator was appointed by the State Electricity Commission under Section 86(1)(f) of the 2003 Act with the consent of the parties. Subsequently, the arbitral award was challenged under Section 34 of the 1996 Act before a Commercial Court, and the Commercial Court's decision was challenged in an appeal under Section 37 of the 1996 Act where it was held that the State Electricity Commission had no jurisdiction to appoint the Page 71 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined arbitrator since Section 86(1)(f) refers to disputes only between licensees and generating companies, and not licensees and consumers. When the matter reached this Court, the contention was that the objection to jurisdiction could not have been raised in a proceeding under Section 37 of the 1996 Act once the parties had consented to arbitration earlier. Speaking for the Court, Justice Rohinton F Nariman held that if there is inherent lack of jurisdiction, the plea can be taken at any stage and also in collateral proceedings. He highlighted the well-established principle that a decree passed by a court without subject matter jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon. Such a defect of jurisdiction cannot be cured even by the consent of the parties. The above dictum would apply to the present case."
9) In case of Ghanshyambhai Indravadanbhai Pandya and ors. v. Maharaja Sayajirao University (Judgment dated 02.03.2017 passed in First Appeal No. 2797 of 2016),wherein it is observed as under:
"6.01. At the outset, it is required Page 72 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined to be noted that by the impugned order the learned Commercial Court has rejected the plaint in exercise of the powers under Order 7 Rule 11(d) of the Code of Civil Procedure on the ground that in view of the provisions of the Gujarat Public Works Contract Disputes Arbitration Act, 1992, Suit Civil Court / Commercial Court shall be barred to adjudicate the dispute between the parties arising out of the public works contract. As such, the issue whether the original defendant - M.S. University can be said to be Public Undertaking as defined under the provisions of the Act of 1992 is already concluded by the Division Bench of this Court in the case of Gujarat Agricultural University (supra) and by the learned Single Judge in the case of Sardar Patel University (supra). In the case of Gujarat Agricultural University, while considering the similar provisions of the Gujarat Agricultural University Act, the Division Bench of this Court has specifically observed and held that the Gujarat Agricultural University can be said to be / called as Corporation aggregate and therefore, will be deemed to be Public Undertaking withing the meaning of section 2(i)(ii) of the Act and therefore, the dispute arising out of the Public Works Contract between the Gujarat Agricultural University and the Contractor shall have to be decided by the learned tribunal constituted under the provisions of Page 73 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the Act of 1992.
6.02. Similar view has been taken by the learned Single Judge in the case of Sardar Patel University (supra).
6.03. Under the circumstances, as such, it cannot be said that the learned Commercial Court has committed any error in holding that for the dispute between the plaintiff and thedefendant University arising out of the Public Works Contract, Suit before Civil Court / Commercial Court shall be barred and the suit before the Commercial Court shall not be maintainable and only the learned tribunal constituted under the provisions of the Act of 1992 shall have jurisdiction."
8.On merits, learned Senior Counsel Mr. R.S. Sanjanwala submitted that the order dated 19.09.2022 passed by the Tribunal is correct in law. It was submitted that the Act, 1992 is not applicable to the present proceedings, since the petitioner has failed to fulfill the mandate under Section 8 of the Act, 1992.
8.1) It was submitted that the petitioner has themselves submitted to the jurisdiction Page 74 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined of the Tribunal and the arbitral proceedings have reached an advanced stage where application of both parties for interim award under Section 31(6) of the Arbitration Act is being heard and the said applications for interim award practically stood concluded on 31.01.2022, when the petitioner filed the present round of interim applications, first under Section 16 on 25.02.2022 and then the present application on 8.08.2022 under Order XIV Rule 2 of the Code.
8.2) The attention of the Court was invited to the arbitration clause in the Contract between the parties, which reads as under:
"ARTICLE 26
26. Dispute Resolution 26.1 Dispute Resolution 26.1.1 Any dispute, difference or controversy of whatever nature howsoever arising under or out of or Page 75 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined in relation to this Agreement (including its interpretation) between the Parties, and so notified in writing by either Party to the other Party (the "Dispute") shall, in the first instance, be attempted to be resolved amicably in accordance with the conciliation procedure set forth in Clause 26.2.
....
26.3 Arbitration 26.3.1 Any Dispute which is not resolved amicably by conciliation, as provided in Clause 26.2, shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 26.3.2. Such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (the "Rules"), or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration and Conciliation Act 1996. The venue of such arbitration shall be (Gandhinagar), and the language of arbitration proceedings shall be English.
..."
8.3) Referring to the sequence of events leading to filing of the present petition, it Page 76 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined was submitted that it was amply clear that the petitioner has been blowing hot and cold with regards to their stand on the jurisdiction of the Tribunal and when it suits them, they submit to the jurisdiction and when it appears that they would not receive their desired orders, they challenge the jurisdiction of the Tribunal.
8.4) It was submitted that the Hon'ble Supreme Court in the context of the Act, 1996 vis a vis special statute such as the Act,1992 has held that once a party has by conduct opted for the contractual arbitration proceedings and not raised an objection to the jurisdiction at the appropriate stage, then it shall not be permitted to do so later to defeat the award. Reliance in this regard is placed on the following decisions:
1) In case of Sweta Construction v.Page 77 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Chhattisgarh State Power Generation Co. Ltd., reported in 2022 SCC OnLine SC 1447, wherein it is observed as under:-
"17. We are also of the view that in particular facts of the present case, the position is even more gross because when the appellant claimed arbitration, the respondent accepted invocation of arbitration, suggested a panel of Arbitrators, the appellant chose one of the Arbitrators out of the two suggested and the Arbitrator was so appointed as the sole Arbitrator. Thus, the arbitration proceedings commenced in pursuance to the acts: of the respondent and it cannot be permitted to get away to say that the whole process was gone through because of some misconception or inappropriate legal advice. Arbitration by consent is always possible. The mode and manner of conduct of arbitration is possible and how those arbitration proceedings would be governed is also a matter of consent. If at all there were any rights of the respondent to have claimed arbitration under the Adhiniyam, that right was never exercised or waived. The respondent cannot be reprobate permitted and that to too proceedings and that too approbate in and arbitration in dispute or resolution through the method of arbitration defeating the very purpose of an alternative dispute Page 78 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined resolution to arbitration as an expeditious remedy."
2) In case of M.P. Housing and Infrastructure Development Board v. K.P. Dwivedi, reported in (2022) 3 SCC 783, wherein it is observed as under:-
"15. The short question which is posed before this Court for consideration is, whether, in view of the award declared by the Housing Commissioner, M.P. Housing Board, who was appointed as an arbitrator pursuant to the order [K.P. Dwivedi v. M.P. Housing Board, WP No. 9131 of 2008, order dated 20-8- 2008 (MP)] passed by the High Court in Writ Petition No. 9131 of 2008, was it open for the respondent contractor thereafter to file a reference before the M.P. Arbitration Tribunal with respect to the very claim/claims which were the subject-matter of arbitration before the arbitrator Housing Commissioner.
16. It is the case on behalf of the respondent contractor that as the contract was a "works contract" and therefore, the dispute between the appellants and the respondent contractor could only be decided by the learned Arbitral Tribunal constituted under the 1983 Act, therefore, the Housing Commissioner Page 79 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined had no authority to act as an arbitrator and decide the dispute between the parties and the award passed by the arbitrator Housing Commissioner can be said to be non est and wholly without jurisdiction.
26. At the outset, it is required to be noted that as such the earlier order [K.P. Dwivedi v. M.P. Housing Board, WP No. 9131 of 2008, order dated 20-8-2008 (MP) passed by the High Court in Writ Petition No. 9131 of 2008, by which the dispute between the parties was referred to the arbitrator Housing Commissioner was a consent order. It was the respondent contractor who filed Writ Petition No. 9131 of 2008 submitting that he has invoked the arbitration clause. Thereafter the respondent contractor submitted the claim before the arbitrator Housing Commissioner who passed an award. The respondent contractor did not challenge the award passed by the arbitrator - Housing Commissioner and therefore, as such the award passed by the arbitrator Housing Commissioner dated 7-11-2008 has attained finality.
33. Even otherwise it is required to be noted that no objection was raised by the respondent contractor before the arbitrator - Housing Commissioner on the jurisdiction of the Housing Commissioner to act as an arbitrator. On the contrary as observed hereinabove the order passed by the High Court referring the dispute between the parties for adjudication Page 80 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined to the arbitrator Housing Commissioner was a consent order and the respondent contractor conceded to and accepted the said order and submitted his claim before the arbitrator Housing Commissioner. The arbitrator Housing Commissioner also passed an award on the said claim. Therefore, as no objections were raised by the respondent contractor at the appropriate stage, the award cannot be annulled subsequently. At the cost of repetition, it is observed that at no point of time the respondent contractor had challenged the award passed by the arbitrator Housing Commissioner and as observed and held hereinabove even no court has set aside the award declared by the arbitrator- Housing Commissioner dated 7-11-2008 and the same has attained finality. Therefore, the same is binding between the parties. Hence, the subsequent fresh reference petition before the learned Arbitral Tribunal under the 1983 Act for the very same claims which were raised before the arbitrator Housing Commissioner would not be maintainable at all. We agree with the view taken by the Arbitral Tribunal."
8.5) It was further submitted that the learned Tribunal has correctly observed that the present proceeding is nothing but an attempt to delay the proceedings.
Page 81 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 8.6) It was further submitted that on the issue of the mandate of one year provided under Section 8 of the Act, 1992 this Court in the following cases have held that the limitation period to apply to the statutory Arbitral Tribunal is one year, subject to condonation of delay for sufficient cause as provided under Section 17 of the Act, 1992: -
1) B. Patel & Co. v. State of Gujarat, reported in 1998 (3) G.L.R. 1913.
2) State of Gujarat v. Mahendra Construction, reported in 2010 SCC OnLine Guj 480.
3) Kaushik Construction Company v. State of Gujarat, reported in 2001 SCC OnLine Guj 235.
8.7) It was further submitted that in the present case no such application has been Page 82 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined made under Section 8 of the Act, 1992 till date by the petitioner for their alleged counter claim which clearly shows that they have themselves opted for the contractual arbitration proceedings which is going on before the Tribunal.
8.8) It was submitted that the Act, 1996 is a special legislation and the application made by the petitioner under Order XIV Rule 2 of the Code is misconceived and seeks to invoke general provisions of the Code to overcome its failure under the specific provision, i.e., Section 16 of the Act, 1996.
It was submitted that the petitioner is seeking to achieve indirectly, what it failed to achieve directly in its application under Section 16 of the Act, 1996. It was submitted that it is settled law that the Act, 1996 is a complete code in itself and not bound by procedural technicalities of the Code and the Page 83 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Evidence Act. Reliance in this regard is placed on the Supreme Court's decision in the case of Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., reported in (2011) 8 SCC 333.
8.9) Learned Senior Counsel Mr. Sanjanwala drew attention of the Court to Section 19 of the Act,1996 which reads as under:
"19. Determination of rules of procedure. -- (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (V of 1908) or the Indian Evidence Act, 1872 (1 of 1872)."
8.10) It was submitted that the principles of generalia specialibus non derogant, squarely applies to the facts of the present case. Referring to the decision of the Hon'ble Supreme Court in case of PASL Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd., reported in (2021) 7 SCC 1, Page 84 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined it was submitted that the Apex Court held that when there was an apparent conflict between the Commercial Courts Act, 2015 and the Arbitration Act, held that the special law, i.e., the Arbitration Act must be allowed its full play and the general law cannot over-ride the special law, even though it contains a non-obstante clause.
8.11) It was submitted that in the present case the petitioner took recourse to the remedy under Section 16 of the Act,1996 to challenge the jurisdiction of the Arbitral Tribunal which challenge was repelled by the Tribunal vide Order dated 14.07.2022. It was submitted that this order has attained finality at this stage, inasmuch as the petitioner challenged the said order before this Court by way of Special Civil Application No. 14481 of 2022, and did not press the said petition. It was submitted Page 85 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined that this Court vide Order dated 26.08.2022 disposed of the above writ petition by recording the consent of the parties to proceed before the Arbitral Tribunal for framing of issues on the aspect of jurisdiction.
8.12) Learned Senior Advocate Mr. Sanjanwala submitted that by virtue of the present application under Order XIV Rule 2 of the CPC, the petitioner is seeking to re-
agitate the same issue at a preliminary stage, which it tried and failed under Section 16 of the Arbitration Act which is a malafide attempt to overcome the limitation imposed under Section 16(2) of the Act, 1996 which warrants that the issue of limitation must be raised at the time of filing of the Statement of Defence, which the petitioner herein has failed to do in the present case.
Page 86 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 8.13) Referring to the decision of the Hon'ble Supreme Court in the case of Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad, reported in (2005) 11 SCC 314, it was submitted that the Apex Court has held that it is trite law that what cannot be done directly cannot be done indirectly.
8.14) Learned Senior Advocate Mr. Sanajanwala submitted that the petitioner having opted for the remedy under Section 16 and failed cannot now seek to re-agitate the same issue by the present application under Order XIV Rule 2 of the Code. The Tribunal has consciously left open the issue of jurisdiction to be decided at the final hearing stage and not foreclosed the rights of the petitioner and the petitioner is not rendered remediless and as such, all issues have been kept open to be decided at the time of final arguments.
Page 87 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 8.15) It was submitted that the petitioner has themselves submitted to the jurisdiction and made a counter claim as well as an application for interim award, which was argued at great length and only when the Tribunal sought a calculation working sheet, did the petitioner raise the issue of jurisdiction. This clearly is not a bonafide action by the petitioner and such a party deserves no indulgence by this Court under discretionary jurisdiction under Article 226/227 of the Constitution of India.
8.16) It was therefore, submitted that the present petition is bereft of any merit and is nothing but a dilatory tactic on the part of the petitioner to avoid adverse orders in the Arbitral proceedings and therefore, the petition be dismissed with cost.
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9.Having heard the learned Senior Advocates on both the sides and having perused the impugned order, it appears that the Tribunal after considering the submissions made by both the sides referred to the order dated 14.07.2022 whereby it was held that it has no jurisdiction to decide the application under section 16(2) of the Act and further observed in paragraph no.16 of the said order as under:
"16.0 The observations made hereinabove are tentative and it will be open for both the sides to adjudicate upon this point while deciding all issues in the main Arbitration case."
10. Thus the Tribunal has left the issue open to be decided along with all other issues during the course of the proceedings and not as a preliminary issue.
11. The Tribunal while disposing of the Page 89 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined application filed by the petitioner has held as under:
"10.0 In the considered opinion of this Tribunal, sub-rule (2) of Order XIV of the Code of Civil Procedure would not come to the aid of the orig. respondent, inasmuch as under
the provisions of sub-section (2) of section 16 of the Arbitration Act, it was permissible for the respondent to raise the plea that the Arbitral Tribunal does not have jurisdiction not later than the submission of the statement of defence and under sub-section (4) thereof, the Tribunal could admit a later plea if it considered the delay justified; however, the respondent filed the application under sub-section (2) of section 16 of the Arbitration Act much later than the submission of the statement of defence and did not explain the delay, as a result whereof the Tribunal rejected the application on the ground that it did not have jurisdiction to decide the application. Therefore, the orig. respondent having first attempted to get the issue regarding lack of jurisdiction on the part of the Tribunal decided under sub- section (2) of section 16 of the Arbitration Act cannot seek to have another innings by resorting to sub-rule (2) of Order XIV of the Code.Page 90 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 10.1 Besides, the present proceedings are under the provisions of the Arbitration and Conciliation Act, 1996. Sub-section (2) of Section 16 of the Arbitration Act is a specific provision which empowers the Tribunal to rule on its own jurisdiction provided the requirements thereof are satisfied. Therefore, when there is a specific provision in the statute itself, one cannot fall back upon the general provisions of the Code of Civil Procedure. More importantly,one cannot first resort to the specific power under the Arbitration Act and upon being unsuccessful in such attempt, seek to invoke the general provisions of the Code of Civil Procedure, inasmuch as it would amount to rendering nugatory the order made under a specific provision of the Arbitration Act.
10.2 It is a well-established doctrine of interpretation that where under a specific section or rule a particular subject has received special treatment, such provision will exclude the applicability of any general provision which might otherwise cover the said topic. (See Maharashtra State Board of Secondary & Higher Secondary Education v. Paritosh Bhupeshkumar Sheth (1984) 4 SCC 27.) 10.3 Strong reliance has been placed by the learned counsel for the orig. respondent on the observations made Page 91 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined in paragraph 16 of the order dated 14.07.2022 of this Tribunal made on the application under sub-section (2) of section 16 of the Arbitration Act; however, on a plain reading of the contents of paragraph 16 of the said order it is clear that the Tribunal has left it open for the parties to raise the point while deciding all the issues in the main arbitration case. Therefore, the point can be decided with all other issues and the question of deciding the same as a preliminary issue will not arise. As rightly submitted by Mr.Saha, learned counsel for the claimant, deciding the issue as a preliminary issue would amount to doing indirectly what cannot be done directly.
11.0 The Tribunal (GPWCDAT) was in existence when the matter was referred to this Tribunal and the same was constituted pursuant to the agreement between the parties and both the parties had appeared before the Tribunal and have filed their Statement of Claim, reply to the Statement of Claim, Rejoinder, Counter-Claim, interim applications by both the sides and after hearing the interim applications, when the Tribunal had called upon to produce the Accounts, at that time, this point is raised. This is nothing but to delay the proceedings and in our considered view, the Issue is squarely covered by our earlier decision and this cannot be decided Page 92 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined as a preliminary Issue in view of the agreement between the parties.
12.0 In light of the above discussion, no case is made out for framing the issue of lack of inherent jurisdiction as a preliminary issue as prayed for in the application. The application, therefore, fails and is accordingly rejected.
13.0 In view of the above, this application dated 29.8.2022 stands disposed of. It is clarified that the earlier application dated 8.8.2022 also stands disposed of."
12. The aforesaid observations made by the Tribunal in the impugned order are not required to be interfered at this stage in view of settled legal position that this Court would not exercise its writ jurisdiction in the arbitration proceedings as held by the Apex Court in the following decisions:
1) In case of GTPL Hathway Ltd. (supra), wherein it is held as under:Page 93 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023
NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined "14. In view of aforesaid conspectus of law, and considering the provisions of the Act, 1996, the order passed by the Arbitration Tribunal during the course of Arbitration cannot be challenged by the petitioner under Articles 226 and/or 227 of the Constitution of India when the constitution bench of the Apex Court in case of M/s. S.B.P. and Co. v. M/s.
Patel Engineering Ltd. and Anr.(supra) has disapproved the stand that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Articles 226 and 227 of the Constitution of India and has categorically held that such intervention by the High Court is not permissible. The Apex Court in case of M/s. Deep Industries Limited v. Oil and Natural Gas Corporation (supra) has held that it is also important to notice that the seven-Judge Bench has referred to the object of the Act being that of minimizing judicial intervention and that this important object should always be kept in the forefront when a 227 petition is being disposed of against proceedings that are decided under the Act,1996 and that the policy of the Act is speedy disposal of arbitration cases as the Act,1996 is 'self-contained' Code and deals with all the cases.
15. In view of aforesaid settled legal proposition, considering the policy, object and the provisions of the Act,1996, an order passed during arbitration proceedings by the Page 94 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Arbitration Tribunal cannot be challenged under Articles 226 and 227 of the Constitution of India as the Act,1996 is a special act and a self- contained code dealing with arbitration. Therefore, the impugned order of the Arbitration Tribunal deciding the preliminary objection raised by the petitioner cannot be challenged under Article 226 or 227 of the Constitution of India."
2) In case of Narmada Clean-Tech and another (supra), wherein it is held as under:
"54 It is apparent on plain reading of the para 12 quoted above that the learned Single Judge rejected the petition without entering into the merits of the matter only on the ground that the order passed during the course of the arbitration proceedings cannot be challenged under Articles 226 and/or 227 of the Constitution of India and it would be open for both the sides to raise all the contentions on merits before appropriate forum in appropriate proceedings at an appropriate time in accordance with law. The learned Single Judge saying so held that the petitions were not maintainable in law."
3) In case of Deep Industries Limited (supra) wherein it is held as under:
Page 95 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined "16) Most significant of all is the non-obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part.
Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act)
17) This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us Page 96 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."
4) In case of Bhaven Construction Through Authorised Signatory Premjibhai K. Shah (supra), wherein it is held as under:
"23. Respondent No. 1 did not take legal recourse against the appointment of the sole arbitrator, and rather submitted themselves before the tribunal to adjudicate on the jurisdiction issue as well as on the merits. In this situation, the Respondent No. 1 has to endure the natural consequences of submitting themselves to the jurisdiction of the sole arbitrator, which can be challenged, through an application under Section 34. It may be noted that in the present case, the award has already been passed during the pendency of this appeal, and the Respondent No. 1 has already preferred a challenge under Section 34 to the same. Respondent No. 1 has not been able to show any exceptional circumstance, which mandates the exercise of jurisdiction under Articles 226 and 227 of the Constitution.
25. The Gujarat Act was enacted in 1992 with the object to provide for the constitution of a tribunal to arbitrate disputes particularly arising from works contract to which Page 97 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the State Government or a public undertaking is a party. A works contract is defined under Section 2(k) of the Gujarat Act. The definition includes within itself a contract for supply of goods relating to the execution of any of the works specified under the section. However, a plain reading of the contract between the parties indicates that it was for both manufacturing as well as supply of bricks. Importantly, a contract for manufacture simpliciter is not a works contract under the definition provided under Section 2(k). The pertinent question therefore is whether the present contract, which is composite in nature, falls within the ambit of a works contract under Section 2(k) of the Gujarat Act. This is a question that requires contractual interpretation, and is a matter of evidence, especially when both parties have taken contradictory stands regarding this issue. It is a settled law that the interpretation of contracts in such cases shall generally not be done in the writ jurisdiction. Further, the mere fact that the Gujarat Act might apply may not be sufficient for the writ courts to entertain the plea of Respondent No. 1 to challenge the ruling of the arbitrator under Section 16 of the Arbitration Act."
5) In case of Sweta Construction (supra), wherein it is held as under:
Page 98 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined "15. However, as pointed by learned counsel for the respondent, there appears to be some lack of clarity on the issue raised in the present petition on account of the same three Judge Bench having opined in another order passed in Lion Engineering Consultants v. State of Madhya Pradesh3 on 22.03.2018 i.e., about three weeks after that. The issue however, raised was whether there was any bar to the plea of jurisdiction being raised by way of an objection under Section 34 of the 1996 Act even if no objection was raised under Section 16 of that Act.
It was opined that public policy of India refers to law enforced in India i.e., both Central law as well as the State law. The respondent State was given liberty to argue before the trial Court its objections that 1996 Act stood excluded by the State Adhiniyam even without formal pleadings being a pure legal plea. This was in the context of an amendment sought being beyond limitation. In that context there is an observation in one sentence, "we do not see any bar to plea of jurisdiction being raised by way of an objection under Section 34 of the Act even if no objection was raised under Section 16 of that Act.
16. If we appreciate the aforesaid observation and that too emerging from identical Bench in the two matters, we would have to construe as what is meant by this sentence Page 99 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined extracted aforesaid. We take note of the fact that this is an order and not a judgment. The controversy before the court was something different as noticed by us aforesaid. In that context, this sentence has been inserted, but that does not take away the law laid down in the substantive judgment dealing with the issue at hand in respect of awards already made where petitions were pending before the competent Court under Section 34 of the said Act. This Court in the context of the 1996 Act and the Adhiniyam, keeping in mind the cleavage of judicial view earlier and expounding on the law in that judgment has in succinct terms set out that the objections under Section 34 of the said Act, where no such plea of jurisdiction was raised in proceedings before the Arbitrator, should not be dealt with "alone" on the plea of jurisdiction i.e., it should be considered on merits. One can say that possibly this part of the order can also be read as one made under Article 142 of the Constitution of India to do substantive justice inter se the parties, more so, when arbitration as an alternative dispute resolution mechanism presupposes an expeditious disposal of commercial disputes and that objective would stand nullified if a contrary view was taken.
17. We are also of the view that in particular facts of the present Page 100 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined case, the position is even more gross because when the appellant claimed arbitration, the respondent accepted invocation of arbitration, suggested a panel of Arbitrators, the appellant chose one of the Arbitrators out of the two suggested and the Arbitrator was so appointed as the sole Arbitrator. Thus, the arbitration proceedings commenced in pursuance to the acts of the respondent and it cannot be permitted to get away to say that the whole process was gone through because of some misconception or inappropriate legal advice. Arbitration by consent is always possible. The mode and manner of conduct of arbitration is possible and how those arbitration proceedings would be governed is also a matter of consent. If at all there were any rights of the respondent to have claimed arbitration under the Adhiniyam, that right was never exercised or waived. The respondent cannot be permitted to approbate and reprobate and that too in arbitration proceedings and that too in dispute or resolution through the method of arbitration defeating the very purpose of an alternative dispute resolution to arbitration as an expeditious remedy."
13. Therefore, in view of above settled legal position, this Court has examined the Page 101 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023 NEUTRAL CITATION C/SCA/20116/2022 CAV JUDGMENT DATED: 04/08/2023 undefined matter on merits also and is in agreement with the observations made by the Tribunal as reproduced here-in-above that the point with regard to the lack of inherent jurisdiction can be decided with all other issues and question of deciding the same as a preliminary issue would not arise as it would amount to doing action indirectly by the petitioner company which it could not do it by filing an application under section 16(2) of the Act, 1996 as the order dated 14.07.2022 passed by the Tribunal has remained as it is rejecting the application to decide its jurisdiction under section 16(2) of the Act, 1996.
14. Even otherwise this Court would not like to entertain the petition under Article 227 of the Constitution of India in view of aforesaid legal position.
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15. The petition therefore, being devoid of any merit is hereby dismissed. Rule is discharged.
(BHARGAV D. KARIA, J) After pronouncement of the Judgment, learned advocate Mr.Premal Joshi submitted that the same may be stayed.
As no stay was granted by this Court during the pendency of the petition, the request is rejected.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 103 of 103 Downloaded on : Sun Sep 17 00:08:39 IST 2023