Himachal Pradesh High Court
M/S P K Construction Co And Another vs The Shimla Municipal Corporation And ... on 12 April, 2017
Bench: Mansoor Ahmad Mir, Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA CWP No. 2322 of 2016 with CWP No. 2371 of 2016 Reserved on: March 29, 2017 Decided on: April 12, 2017 .
1. CWP No. 2322 of 2016 M/s P K Construction Co and another ....Petitioners Versus The Shimla Municipal Corporation and others .Respondents
2. CWP No. 2371 of 2016 M/s ESS & ESS Joint Venture and another ....Petitioners Versus The Shimla Municipal Corporation and others .Respondents Coram Hon'ble Mr. Justice Mansoor Ahmad Mir, Chief Justice Hon'ble Mr. Justice Sandeep Sharma, Judge Whether approved for reporting? Yes.
For the petitioners : Mr. Bharat Thakur, Advocate (in both the petitions).
For the respondents : Mr. Hamender Chandel, Advocate, for respondent No.1 (in both the petitions).
Mr. Shrawan Dogra, Advocate General with Mr. Anup Rattan and Mr. Romesh Verma, Additional Advocate Generals and Mr. J.K. Verma, Deputy Advocate General, for the respondent-State (in both the petitions).
Per Sandeep Sharma, Judge Since common questions of law and facts are involved, both the petitions were clubbed and are being disposed of by this common judgment.
2. The writ petitions, though, have been filed by different entities but arise out of same and similar dispute and same reliefs ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 2 have been sought. The main reliefs, common in both the petitions, are reproduced below:
"1. Record may be called for from respondent No 3.
2. The petition be kindly heard finally & decided in the light of Section 28(3) read with S 29B(3) of the .
Arbitration & Conciliation Act, the Ground para & the statement of claim including subsequent MAs on record.
3. Exemplary/compensatory cost may be awarded to the petitioners qua respondent No.1.
4. Interest may be kindly allowed in terms of Section 31(7) of the Arbitration & Conciliation Act."
3. Since dispute in both the petitions is same and similar, for the sake of brevity, facts of CWP No. 2322 of 2016 are being discussed.
4. Respondents, i.e. Department of Urban Development and H.P. Infrastructure Development Board (in short, 'HPIDB') invited Expression of Interest (in short, 'EOI') from interested national/international independent legal entities/ joint ventures/ consortia for construction, operation/maintenance and running of parking complexes in Shimla city under Public Private Partnership mode (in short, 'PPP mode') vide Annexure P-1. Procedure was also laid down for submission of EOI therein. Petitioners in CWP No. 2322 of 2016 and CWP No. 2371 of 2016 submitted EOI for construction of parking complexes at Chotta Shimla and near Lift, respectively, as is evident from Annexure P-2 (in both the petitions).
The EOI was accepted in both the cases, vide Annexure P-2 itself.
Petitioners were required to pay Annual Concession Fee and further were asked to pay Development Fee and Construction Performance Security. Petitioners have also annexed abstract copy of Request for ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 3 Proposal (in short, 'RFP')/agreement. Art 4, 'Conditions Precedent', whereof provides that, "Subject to the express terms to the contrary, limited aspects of the Construction Period (when commenced) and .
any legitimate rights arising in law, the rights and obligations under this Concession Agreement shall take effect only upon fulfillment of all the Conditions Precedent set out in Articles 4.1 and 4.2 on or before the expiry of a period of 90 (ninety) days from the Proposal Acceptance Date. However, the Concessioning Authority may at any time at its discretion and in writing, waive fully or partially any of the Conditions Precedent of the Concessionaire."
5. In case of dispute, Art 27.3 of RFP, provides for arbitration or adjudication, which reads as under:
"27.3 Arbitration or Adjudication a. In the event that the parties are unable to resolve the Dispute through Direct Discussion under Article 27.2, the parties shall submit the Dispute for arbitration in accordance with the Arbitration & Conciliation Act, 1996. The arbitration proceedings shall be conducted by the "Secretary, Law, GoHP" as the Sole Arbitrator (the "Sole Arbitrator").
b. The Sole Arbitrator shall make a reasoned award and any award made pursuant to this Article 27.3 shall be final and binding on the Parties as from the date on which it is made and the Concessionaire and the Concessioning Authority agree to undertake to carry out the award without delay.
d. The cost incurred on the process of Arbitration including inter alia the fees of the arbitral tribunal and the cost of the proceedings shall be borne by the Parties in equal proportions. Each Party shall bear its own legal fees incurred as a result of any Dispute under this Article 27."
6. Sanction for the construction of parking complex was accorded by respondent No.1, vide Annexure P-4, dated 9.12.2011, on various conditions, one of which was that the petitioners shall dump the debris with the permission of respondent No.1.
Respondent No.1 also issued compliance certificate indicating ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 4 fulfillment of conditions by the Concessioning Authority and Concessionaire. On 26.9.2014, issue regarding completion of parking complexes at various places, including one near Lift and .
another at Chhota Shimla was also taken up in a meeting under the chairmanship of Hon'ble the Chief Minister, wherein petitioners aired the problems being faced by them regarding handing over of site. On 7.10.2014, petitioners submitted drawings of revised proposals. Vide Annexure P-8 dated 28.10.2014, Er. Amar Singh Chauhan (Independent Engineer) was asked to examine the proposal, who submitted his recommendations on 29.10.2014. Vide Annexure P-10, letter dated 5.3.2015, respondent No.1 intimated the petitioners that the construction period was over and petitioners were asked to make the parking operational. Thereafter, petitioners were asked to complete the construction work as per approved drawings and provisions of Concession Agreement dated 11.5.2015.
7. On receipt of above communication, the petitioners invoked dispute redressal process, by sending legal notices to respondent No.1 by alleging misrepresentation, fraud, undue influence, coercion and mistake of law etc. Petitioners raised issues regarding undue charge of fees, revision of project etc. and demanded that construction period be not deemed to have commenced as yet and other various issues were raised.
8. On receipt of notice from the petitioners, respondent No.1, referred the dispute to the Sole Arbitrator i.e. respondent ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 5 No.3 and requested him to conduct proceedings as per Article 27.3 of the Concession Agreement dated 15.7.2015. Petitioners filed petition before the Arbitrator, to which reply was filed by .
respondent No. 1. Petitioners filed rejoinder to the same. Petitioners also filed miscellaneous application for completing the arbitration process within specified time schedule.
9. The petitioners approached this Court by way of present petitions, which were clubbed together and listed on various dates, for ascertaining the maintainability of the same and jurisdiction of this Court. Keeping in view the reliefs prayed for in the present petition, learned counsel representing the petitioners was repeatedly asked to justify the maintainability as well as jurisdiction of this Court. At the very outset, it may be noticed that since this Court was prima facie of the view that present petitions are not maintainable, in their present form, suggestion was made to the learned counsel representing the petitioners that in case petitioners agree, direction can be issued to the learned Arbitrator to conclude the arbitration proceedings within a stipulated time.
However, the fact remains that the learned counsel representing the petitioners remained adamant on getting the matter decided on merits and insisted that the controversy at hand may be decided by this Court, on the basis of material already adduced on record by the respective parties before the Arbitrator, while exercising powers under Articles 226 and 227 of the Constitution of India. Apart from making oral submissions, which would be referred to herein below, ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 6 petitioners also filed written arguments as well as response to the query of this Court, on the point of jurisdiction. But a bare perusal of written submissions, which have been taken on record, suggests .
that these are mere repetitions of oral submissions having been made by the learned counsel representing the petitioners.
10. The petitioners filed written submissions reiterating that the matter be adjudicated by this Court, as arbitration proceedings have become infructuous since the same were not conducted by the sole Arbitrator within stipulated time, despite request of the petitioners. Learned counsel representing the petitioners, prays that the matter be decided on 'as-is-where-is' stage, since they have lost faith in the Sole Arbitrator.
11. Learned counsel representing petitioners vehemently argued that respondent No.3, i.e. Arbitrator has failed to make final awards pursuant to the references made to him, arbitration proceedings stand automatically terminated in terms of Section 29B(4) of the Arbitration & Conciliation Act, 1996 (hereafter, 'Act') and as such same is required to be decided by this Court in light of Section 28(3) read with Section 29B (3) of the Act.
12. Learned counsel for the petitioners further contended that since pleadings as well as evidence in support thereof were submitted in due course of time, respondent No.3 i.e. Arbitrator was required to make the requisite award within the period as provided under Section 29A. As per the petitioners, reference was made to the Arbitrator on 15.7.2015 and as such he was required ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 7 to pass award on or before the expiry of twelve months i.e. 20.7.2016. Learned counsel for the petitioners specifically invited the attention of this Court to the communication dated 10.6.2015, .
whereby petitioners, in terms of Article 27 of the Agreement inter se parties, invoked dispute resolution process. Learned counsel for the petitioners further contended that vide Annexure P-13, i.e. communication dated 15.7.2015, Municipal Commissioner, Shimla, who happened to be second party, in terms of agreement inter se parties, sent a communication to Secretary (Law) to the Government of Himachal Pradesh, who is the named Arbitrator in the agreement as per Article 27.3 of the Agreement, to conduct arbitration proceedings. While referring to the aforesaid communication dated 15.7.2015, learned counsel representing the petitioners, stated that the Arbitrator is deemed to have entered upon reference on 15.7.2015, because, as per explanation provided under Section 29A of the Act, Arbitral Tribunal shall be deemed to have entered upon reference on the date, on which Arbitrator received notice, in writing, of his appointment. Learned counsel for the petitioners also invited attention of this Court to various documents annexed with the petition to demonstrate that the pleadings were filed within stipulated time, but, despite that, no steps, whatsoever, were taken by the learned Arbitrator to pass award within stipulated period, as such, mandate of the Arbitrator stands terminated, because, admittedly, at no point of time, time was either extended as provided under Section 29A (3) of the Act, ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 8 with the consent of the parties, or, thereafter, by a Court, in terms of Section 29A (4) of the Act. To substantiate aforesaid argument, with regard to repeated requests for completion of arbitration .
proceedings, on or before the stipulated period i.e. 20.7.2016, attention was invited to Annexure P-21 i.e. Misc. Application having been moved by the petitioners praying therein that the arbitration proceedings may be concluded within specified time schedule.
However, it is another matter that the respondent-Municipal Corporation, while filing reply to the aforesaid application, disputed that undue delay is being caused by the Arbitrator in dealing with the matter and claimed that procedure is going on as per law. In the aforesaid background, learned counsel for the petitioners submitted that since Arbitrator has failed to pass award within stipulated period as prescribed under Section 29A of the Act, instant matter is required to be decided by this Court exercising powers under Articles 226 and 227 of the Constitution of India, in light of the provisions contained in Section 28(3) read with Section 29B(3) of the Act, because statement of claim as well as reply /counter claim filed by the opposite party including Misc.
Application, moved before Arbitrator from time to time, are on record. While concluding his arguments, learned counsel representing the petitioners, stated that the High Court's power to issue prerogative writs of certiorari, mandamus or prohibition to any person, authority or quasi judicial tribunal under Article 226 falls under its original jurisdiction, whereas power under Article ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 9 227 is both, administrative and of judicial superintendence over all subordinate courts and tribunals, and as such powers under Articles 226 and 227 are discretionary, equitable and are required .
to be exercised in larger interests of justice. He further contended that the very purpose of empowering High Courts with powers under Articles 226 and 227, is to advance justice and to uproot injustice, rather than thwarting justice itself and no man should be subjected to injustice by violation of law. Learned counsel for the petitioners further contended that under Article 226, High Court can take cognizance of entire facts and circumstances and may pass appropriate orders to do complete and substantial justice to promote equity, honesty and fair play, because, as per the law laid down by the Apex Court, High Court must interfere where subordinate tribunal or authority or officer acts without jurisdiction, acts in excess of jurisdiction, violates natural justice, refuses to exercise jurisdiction as vested by law, where there is error apparent on the face of record, or where such act, omission, error or excess has resulted in manifest injustice. While seeking adjudication of claim, which was originally filed before the Arbitrator, learned counsel representing the petitioners submitted that Sections 11 and 15 of the Act are not applicable in as much as neither the appointment nor substitution of Arbitrator is involved, rather it is a simple case of deemed termination of mandate of the Arbitrator by application of Section 29A of the Act and as such, petitioners are entitled to invoke Constitutional remedy, because, ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 10 petitioners' fundamental right under Articles 14, 19(g) and right of tangible/intangible property under Article 300A is violated by respondents No. 1 and 2, and respondent No.3 has failed/ refused .
to make arbitral award. In support of his aforesaid contention, learned counsel representing the petitioners placed reliance upon following case law:
1. (1996) 5 SCC 54 Shangrila Food Products Ltd. v. LIC
2. (2001) 8 SCC 97, Estralla Rubber v. Dass Estate (P) Ltd.
3. (2002) 1 SCC 100, Roshan Deen v. Preeti Lal
4. (2008) 14 SCC 58, Ramesh Chandra Sankla v.
Vikram Cement
5. (2010) 8 SCC 329, Shalini Shyam Shetty v.
Rajendra Shankar Patil
6. (2015) 5 SCC 423, Radhey Shyam v. Chhabi Nath
7.
(2003) 2 SCC 107, Harbanslal Sahnia v. Indian Oil Corpn. Ltd.
8. (2011) 5 SCC 697, Union of India v. Tantia Construction (P) Ltd.
13. Mr. Hamender Chandel, learned counsel representing respondent No. 1 (Municipal Corporation), refuted aforesaid contentions having been made by the learned counsel representing the petitioners and stated that present petitions are wholly misconceived and deserve to be rejected. Mr. Chandel, further contended that instant petitions are sheer abuse of process of law by the petitioners, because, by filing the instant petitions, they are trying to get out of the arbitration proceedings, which are still in progress. Mr. Chandel, further contended that if, for the sake of arguments, contentions, with regard to automatic termination of award, in terms of Section 29A of the Act, as projected by the learned counsel representing the petitioners, are accepted, even ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 11 then, present petitions are not maintainable, because, this Court can not be asked to decide claims and counter-claims, having been filed by the respective parties in arbitration proceedings. Mr. .
Chandel, further contended that the only fall-out of the non-
compliance of Section 29A, wherein time frame has been fixed, would be termination of mandate of Arbitrator but, in that eventuality, remedy available to the petitioners is to approach appropriate court of law under Sections 11 and 15 of the Act, and not this Court under Articles 226 and 227 of the Constitution of India. Mr. Chandel, while concluding his arguments also stated that in no eventuality, dispute inter se parties, pursuant to Concession Agreement, can be resolved /adjudicated by this Court, while exercising powers under Articles 226 and 227 of the Constitution of India and law cited by the learned counsel representing the petitioners, is not applicable to the present petitions, as such, same deserve to be dismissed. In support of his aforesaid claim, he also placed reliance upon judgments passed by Apex Court in Shailesh Dhairyawan v. Mohan Balkrishna Lulla reported in (2016) 3 SCC 619 and in Huawei Technologies Co.
Ltd. v. Sterlite Technologies Ltd. reported in (2016) 1 SCC 721.
14. We have heard the learned counsel representing the parties and gone through the record.
15. Perusal of the documents available on record certainly suggests that pursuant to dispute between the parties, matter was referred to the Arbitral Tribunal (Secretary Law to the Government ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 12 of H.P.), in terms of Article 27.3 of the Agreement inter se parties, on 15.7.2015. Similarly, perusal of agreement placed on record, suggests that as per Article 27.1 of the Agreement, any .
dispute/difference or controversy of whatever nature regarding the validity, interpretation, implementation of rights and obligations arising out of, or in relation or howsoever under or in relation to Concession Agreement between the parties, shall be subject to dispute resolution procedure, as provided under Article 27.
Similarly, Article 27.3.a suggests that, if parties are unable to resolve the dispute, through direct discussion as provided under Article 27.2, they shall submit dispute for arbitration, in accordance with Arbitration & Conciliation Act, 1996, before the Sole Arbitrator i.e. Secretary Law, Government of H.P. It would be profitable to reproduce aforesaid Article:
"27.1 Dispute Resolution Any dispute, difference or controversy of whatever nature regarding the validity, interpretation, implementation or the rights and obligations arising out of, or in relation to, or howsoever arising under or in relation to this Concession Agreement between the parties, and so notified by either Party to the other Party (the "Dispute") shall be subject to the dispute resolution procedure set out in Article 27. It is specially clarified that in case of any ambiguity regarding the Works, the practices existing at the time of submission of proposal as per Good Industry Practice would prevail.
"27.3 Arbitration or Adjudication a. In the event that the parties are unable to resolve the Dispute through Direct Discussion under Article 27.2, the parties shall submit the Dispute for arbitration in accordance with the Arbitration & Conciliation Act, 1996. The arbitration proceedings shall be conducted by the "Secretary, Law, GoHP" as the Sole Arbitrator (the "Sole Arbitrator")."
16. Bare perusal of dispute resolution process as provided under Article 27, clearly suggests that dispute, if any, between the ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 13 parties, is to be decided by the Sole Arbitrator namely Secretary Law, but, admittedly, this Court sees no provision/Rule providing therein for filling up the vacancy, if any, caused due to recusal by .
the Arbitrator or due to termination of mandate of the Arbitrator before passing of final award. Perusal of communication dated 15.7.2015 clearly suggests that respondent No.1 (Municipal Corporation), on the request having been made by the petitioners, referred the matter to the Sole Arbitrator for arbitration under Article 27.3 of the Agreement and requested him to fix suitable date and venue to conduct arbitration proceedings. At this stage, it may be relevant to reproduce Section 29A of the Arbitration & Conciliation Act, 1996:
"29A. Time Limit for arbitral award.-- (1) The award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference.
Explanation.--For the purpose of this sub-section, an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment.
(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.
(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.
(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:
Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay. (5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 14
(6) While extending the period referred to in sub-section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.
.
(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.
(8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section.
(9) An application filed under sub-section (5) shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party."
17. Perusal of explanation to Section 29 A suggests that the arbitral tribunal would be deemed to have entered upon reference, on the date, on which arbitrator or all the arbitrators, as the case may be, receive notice, in writing, of their appointment. Hence, after perusal of communication dated 15.7.2015, it can be inferred that the Sole Arbitrator, in the instant case, entered upon reference on 15.7.2015, and as such, he was required to pass Award within stipulated period i.e. twelve months, as prescribed under Section 29A. However, it is another matter that time, as referred above, could be enlarged, either with the consent of the parties, or with the intervention of the Court, on the request of respective parties.
But, in the instant case, there is nothing on record, suggestive of the fact that aforesaid time was ever extended, either with the consent of the parties in terms of Section 29A(3) or by a court of law under Section 29A(4) or Section 29A(5) of the Act.
18. Before adverting to the claim of the petitioners, with regard to determination of their claim by this Court invoking ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 15 powers under Articles 226 and 227 of the Constitution of India, it may be noticed that aforesaid Sections 29A and 29B of the Act were inserted by Arbitration & Conciliation (Amendment) Act, 2015 .
(hereafter, 'amending Act, 2015'), which admittedly came into operation on 23.10.2015. It would be profitable to refer to Sections 1 and 2 of the amending Act, 2015:
"THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015 NO. 3 OF 2016 [31st December, 2015.] An Act to amend the Arbitration and Conciliation Act, 1996. BE it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows:--
1. Short title and commencement. --(1) This Act may be called the Arbitration and Conciliation (Amendment) Act, 2015. (2) It shall be deemed to have come into force on the 23rd October, 2015.
2. Amendment of Section 2.--In the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the principal Act), in section 2,--
(I) in sub-section (1),--
(A) for clause (e), the following clause shall be substituted, namely:--
'(e) "Court" means--
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original Short title and commencement. jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-
matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;';
(B) in clause (f), in sub-clause (iii), the words "a company or" shall be omitted;
(II) in sub-section (2), the following proviso shall be inserted, namely:--
::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 16"Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act.""
.
19. If, claim with regard to automatic termination of mandate of Arbitrator, as is being projected by the learned counsel representing the petitioners, is examined and analyzed, it is revealed that reference to the Arbitrator was made on 15.7.2015 i.e. admittedly before the date of coming into operation newly inserted Sections 29A and 29B, wherein, for the first time, stipulation with regard to passing of award within stipulated time was made.
Section 1 (2) of the amending Act, 2015, specifically provides that it shall be deemed to have come into force on 23.10.2015, meaning thereby that provisions as contained under Sections 29A and 29B would come into operation only after 23.10.2015 and time frame, as prescribed in the aforesaid Sections, would not be applicable to a case, where reference was made prior to aforesaid amendment.
Since, in the instant case, reference to the Arbitrator was made on 15.7.2015, it seems that newly inserted Sections 29A and 29B have no application qua the dispute pending before Sole Arbitrator, who admittedly, entered upon reference on 15.7.2015.
20. It is well settled law that amendment, if any, is always prospective, unless specifically provided that it shall be effective retrospectively.
21. At this stage, it may be apt to reproduce Section 26 of the amending Act, 2015, as under:
::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 17"26. Act not to apply to pending arbitral proceedings. -nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
.
22. Careful perusal of aforesaid Section 26 clearly suggests that provisions contained in amending Act, 2015, whereby Sections 29A and 29B, came to be inserted, would not apply to the arbitral proceedings commenced before the date of commencement of the amended Act, save and except, where parties otherwise agree. This
23.
r to Act would apply in relation to arbitration proceedings commenced on or after date of commencement of this Act.
Close scrutiny of aforesaid provisions of law as contained in Section 26 of the amending Act, 2015, leaves no doubt in the mind of this Court that newly inserted Sections 29A and 29B are not applicable in the present case, where admittedly, arbitration proceedings had commenced on 15.7.2015 i.e. prior to promulgation of amending Act, 2015. Section 21 of the principal Act, is reproduced herein below:
"21. Commencement of arbitral proceedings.--Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."
.
24. Section 21 specifically provides that arbitral proceedings in respect of a particular dispute commence from the date on which a request for that dispute to be referred to arbitration is received by the respondent. In the instant case, petitioners, vide communication dated 10.6.2015 (Annexure P-12), ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 18 invoked dispute resolution process in terms of Article 27 of the Concession Agreement inter se parties. On receipt of aforesaid notice, respondent No.1 sent a communication to the sole .
arbitrator i.e. Secretary Law, Government of H.P., in terms of Article 27.3 of Concession Agreement.
25. Careful examination of Annexure P-13, i.e. communication dated 15.7.2015, suggests that arbitrator entered upon reference on 15.7.2015 i.e. before 23.10.2015, when amending Act, 2015 came into operation.
26. Hence, this Court has no hesitation to conclude that newly inserted Sections 29A and 29B have no application in the present arbitration proceedings, which admittedly commenced on 15.7.2015. Otherwise also, as per Section 21, reproduced herein above, arbitration proceedings in respect of a particular dispute commence from the date on which request is received by the respondent from the claimant for referring the same to arbitration.
In this case, request for referring the dispute to the arbitrator was received on 10.6.2015 i.e. approximately four months prior to the date of coming into operation of the amending Act, 2015.
27. Section 26 of the amending Act, 2015 clearly suggests that no provision of the amended Act would apply to those arbitral proceedings, which had commenced in accordance with provisions of Section 21 of principal Act, before commencement of amending Act, unless otherwise agreed upon by the parties.
::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 1928. In the instant case, neither letter dated 10.6.2015 nor letter dated 15.7.2015, whereby dispute was raised and thereafter request was sent to the arbitrator for adjudication, respectively, .
suggests that parties had agreed to be governed by the provisions of amending Act, 2015, meaning thereby arbitral proceedings, in the instant case, were to be governed by the provisions of principal Act, without looking into the amendments made in the amending Act, 2015. Hence, in view of discussion made herein above, this Court is of view that newly inserted Sections 29A and 29B, have no application and as such it can not be said that since Arbitrator failed to pass award within specified time of twelve months, mandate of Arbitrator stands terminated automatically.
29. This Court examined the matter from yet another angle.
If it is presumed that arbitral proceedings were to be governed in terms of provisions contained in the amending Act, 2015, even then, present petitions do not appear to be maintainable, for the reasons stated herein below.
30. True it is, that Section 29A prescribes time limit of twelve months for the arbitral tribunal to decide and pass award after entering into reference, but careful perusal of Section 29A(3) suggests that parties may, by consent, extend period specified under sub-section (1) for making award for further period, not exceeding six months. Sections 29A(4) and 29A(5) suggest that if award is not made within period specified under sub-section (1) or extended period as per sub-section (3), mandate of arbitrator shall ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 20 terminate unless court extends period on the application of any of the parties. Section 29A(5) clearly suggests that competent court may, on the application having been filed by any of the parties, .
extend period, subject to certain terms and conditions, as may be imposed by the Court. Similarly, Section 29A (6) suggests that, while extending period referred to in sub-section (4), it shall be open to the court to substitute one or all of the Arbitrators and in the event of substitution, arbitral proceedings shall continue from stage already reached and on the basis of the evidence and material already on record. Section 29A, if is read in its entirety, it contains complete mechanism to deal with situation, which may arise after termination of mandate of Arbitrator, on account of delay in passing award. At the first instance, time can be extended by Arbitrator himself, not exceeding six months, with the consent of the parties and, and thereafter, any party can move application for extension of time to the competent court of law, which may, while considering prayer for extension of time, substitute Arbitrator.
Interestingly, in the instant case, there is nothing on record suggestive of the fact that either of the parties ever consented for enlargement of time in terms of Section 29A(3). Similarly, there is nothing on record that any of the parties moved appropriate application before competent court for enlargement of time as well as substitution of Arbitrator, whose mandate allegedly stood terminated because of non-compliance of Section 29A, whereby he ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 21 was supposed to pass award within a period of twelve months from the date of entering upon reference.
31. After carefully examining Section 29A, as has been .
discussed herein above, this Court sees no force in the arguments having been made by the learned counsel representing the parties that since mandate of Arbitrator has terminated due to violation of Section 29A, dispute, as was pending before the Arbitrator, is required to be adjudicated by this Court, while exercising powers under Articles 226 and 227 of the Constitution of India, in light of Section 28(3) read with Section 29B(3) of the Act. Careful perusal of Sections 28 and 29 of the Act clearly suggests that these provisions relate to rules applicable to substance of dispute as well as decision making by the panel of arbitrators. Sections 28 and 29B are reproduced herein below:
"28. Rules applicable to substance of dispute.--(1) Where the place of arbitration is situate in India,--
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;
(b) in international commercial arbitration,--
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules;
(iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 22
(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so.
[(3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.] .
29B. Fast track procedure.--(1) Notwithstanding anything contained in this Act, the parties to an arbitration agreement, may, at any stage either before or at the time of appointment of the arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure specified in sub-section (3).
(2) The parties to the arbitration agreement, while agreeing for resolution of dispute by fast track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who shall be chosen by the parties.
(3) The arbitral tribunal shall follow the following procedure while conducting arbitration proceedings under sub-section (1):--
(a) the arbitral tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing;
(b) the arbitral tribunal shall have power to call for any further information or clarification from the parties in addition to the pleadings and documents filed by them;
(c) an oral hearing may be held only, if, all the parties make a request or if the arbitral tribunal considers it necessary to have oral hearing for clarifying certain issues;
(d) the arbitral tribunal may dispense with any technical formalities, if an oral hearing is held, and adopt such procedure as deemed appropriate for expeditious disposal of the case.
(4) The award under this section shall be made within a period of six months from the date the arbitral tribunal enters upon the reference.
(5) If the award is not made within the period specified in sub- section (4), the provisions of sub-sections (3) to (9) of section 29A shall apply to the proceedings.
(6) The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties.]"
32. Aforesaid provisions of law, nowhere provide that High Court, while exercising powers under Articles 226 and 227 of the ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 23 Constitution of India can decide the dispute, which has been subject matter of arbitration proceedings under Section 28(3) and 29B(3) of the Act, because provisions contained in sections referred .
herein above, are with regard to procedure to be followed by arbitral tribunal, while conducting arbitration proceedings.
33. Though, this Court, in view of detailed discussion made herein above, is of the view that mandate of Arbitrator has not been terminated as claimed by the petitioners in the present petitions, because arbitral proceedings, in the instant case, were to be covered by unamended Act/principal Act and not by amending Act, 2015. Otherwise also, as emerges from close scrutiny of Sections 29A and 29B of the Act, remedy, if any, after termination of mandate of arbitrator, is/was under Arbitration and Conciliation Act, 1996, and not by way of instant petitions under Articles 226 and 227.
34. At the cost of repetition, it may be stated that even if plea of petitioners is accepted that mandate of arbitrator had expired automatically in terms of Section 29A (4) since he failed to pass award within a period of twelve months, from the date of entering upon reference, petitioners herein were required to move appropriate application in the competent court of law, as prescribed under sub-sections 29A (4), 29A(5) and 29A(6) of the Act, seeking therein enlargement of time as well as substitution of sole Arbitrator as named in the concession agreement. Apart from Section 29A, as discussed above, petitioners, in the event of ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 24 termination of mandate of Arbitrator, could resort to Section 15 of the Arbitration and Conciliation Act, 1996. Section 15 of the Act reads as under:
.
"15. Termination of mandate and substitution of arbitrator.--(1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate--
(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.
(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal."
35. Aforesaid provision of law clearly suggests that where mandate of Arbitrator terminates, a substitute Arbitrator is be appointed according to Rules, which are applicable to the appointment of Arbitrator being replaced. Since, in the instant case, as clearly emerges from the Agreement, there is no provision with regard to filling up of vacancy caused due to termination of mandate of Arbitrator appointed pursuant to agreement, petitioners could always resort to provisions contained in Section 11 of the Arbitration and Conciliation Act, which is reproduced herein below:
"11 Appointment of arbitrators. --
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 25
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and--
.
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties,--
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. (6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 26
(8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to--
(a) any qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and .
impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub- section (6) to him.
(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to ''Chief Justice'' in those sub-sections shall be construed as a reference to the ''Chief Justice of India''.
(b) Where the matters referred to in sub-
sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.
(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.
(14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.
::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 27Explanation.--For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitration (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution.)"
.
36. Provisions contained in aforesaid section clearly suggest that parties are free to agree to a procedure for appointment of Arbitrator or Arbitrators and in case parties fail to appoint an Arbitrator in terms of agreement, entered between them, request can be made by either of parties, to competent court of law, be it Supreme Court or High Court, for appointing Arbitrator.
Section 11 (5) specifically deals with appointment of sole Arbitrator named in the agreement. It suggests that if parties fail to appoint sole Arbitrator as named in the agreement, within stipulated time, request can be made by either of the parties, to competent court of law for appointment of Arbitrator.
37. At this stage, it would be relevant to refer to law laid down by Apex Court, in Shailesh Dhairyawan v. Mohan Balkrishna Lulla reported in (2016) 3 SCC 619, as under:
"19. The scheme of Section 8 of the 1940 Act and the scheme of Section 15(2) of the 1996 Act now needs to be appreciated. Under Section 8(1)(b) read with Section 8(2) if a situation arises in which an arbitrator refuses to act, any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in a fresh appointment, and if such appointment is not made within 15 clear days after service of notice, the Court steps in to appoint such fresh arbitrator who, by a deeming fiction, is to act as if he has been appointed by the consent of all parties. This can only be done where the arbitration agreement does not show that it was intended that the vacancy caused be not supplied. However, under Section 15(2), where the mandate of an arbitrator terminates, a substitute arbitrator "shall" be appointed. Had Section 15(2) ended there, it would be clear that in accordance with the object sought to be ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 28 achieved by the Arbitration and Conciliation Act, 1996 in all cases and for whatever reason the mandate of an arbitrator terminates, a substitute arbitrator is mandatorily to be appointed. This Court, however, in the judgments noticed above, has interpreted the latter part of the Section as including a reference to the arbitration agreement or arbitration clause which would then be "the rules"
.
applicable to the appointment of the arbitrator being replaced. It is in this manner that the scheme of the repealed Section 8 is resurrected while construing Section 15(2). The arbitration agreement between the parties has now to be seen, and it is for this reason that unless it is clear that an arbitration agreement on the facts of a particular case excludes either expressly or by necessary implication the substitution of an arbitrator, whether named or otherwise, such a substitution must take place. In fact, sub-sections (3) and (4) of Section 15 also throw considerable light on the correct construction of sub- section (2). Under sub-section (3), when an arbitrator is replaced, any hearings previously held by the replaced arbitrator may or may not be repeated at the discretion of the newly appointed Tribunal, unless parties have agreed otherwise. Equally, orders or rulings of the earlier arbitral Tribunal are not to be invalid only because there has been a change in the composition of the earlier Tribunal, subject, of course, to a contrary agreement by parties. This also indicates that the object of speedy resolution of disputes by arbitration would best be sub-served by a substitute arbitrator continuing at the point at which the earlier arbitrator has left off."
38. Aforesaid exposition of law, as laid down by Apex Court clearly suggests that, if a situation arises in which Arbitrator refuses to act, any party may serve the other parties or the Arbitrators, as the case may be, with a written notice to concur in a fresh appointment, and if such appointment is not made within 15 days after service of notice, the Court steps in to appoint such fresh Arbitrator who, by a deeming fiction, is to act as if he has been appointed by the consent of all parties. This can only be done where the arbitration agreement does not show that it was intended that the vacancy caused be not supplied. Apex Court has further concluded that Section 15(2) specifically provides for substitution ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 29 of arbitrator, whether named or otherwise, meaning thereby substitution must take place in the event of termination of mandate of award but, definitely, that can be attained within frame work of .
provisions contained under the Act and, certainly, not by resorting to powers as contained under Articles 226 and 227 of the Constitution of India.
39. This Court, after bestowing thoughtful consideration to the material available on record as well as provisions contained in the Arbitration and Conciliation Act, 1996, is of the view that the petitioners have a specific remedy under the Act to get Sole Arbitrator substituted, after termination of his mandate. Learned counsel appearing for the petitioners, during arguments, pressed into service law as referred to herein above, to substantiate his plea, that this Court has power under Articles 226 and 227 of the Constitution of India to decide the controversy at hand in these proceedings, after looking into claims and counter-claims of the parties. But after careful examination of law cited by the learned counsel for the parties, we are afraid that the same can be made applicable to the facts and circumstances of the present case.
Needless to say that, High Court, while exercising powers under Article 226, has a prerogative of issuing writs to any person, authority or quasi-judicial authority, under its original jurisdiction, whereas power under Article 227 is more of administrative and judicial superintendence over all subordinate courts and tribunals.
True it is that constitutional powers vested in High Courts under ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 30 Articles 226 and 227 can not be fettered by any alternative remedy, as has been laid down by Apex Court, in the judgments in cases referred herein above by the learned counsel for the petitioners.
.
But in the facts and circumstances, where petitioners have already subjected themselves to arbitration proceedings, in terms of agreement, and which are still pending before the arbitral tribunal, as has been discussed in detail, this Court has no power to interfere in the same, while exercising powers under Articles 226 and 227 of the Constitution of India.
40. No doubt, High Court, while exercising powers under Articles 226 and 227 of the Constitution of India, having regard to entire facts and circumstances and, keeping in mind, principles of equity, may pass appropriate orders to do complete and substantial justice and to promote honesty and fair play, but, certainly, can not use this power to thwart proceedings, which are underway, that too under statute i.e. Arbitration & Conciliation Act.
41. Similarly, this Court sees no dispute with the principles of law that arbitration clause is not a bar to invoke writ jurisdiction when injustice is caused and rule of law is violated. But, in the instant case, as has been stated above, petitioners have already availed alternative remedy available to them in terms of agreement, as such, present petitions filed under Articles 226 and 227, can not be allowed to be used to undo proceedings already underway before the Arbitrator under Arbitration and Conciliation Act. Apex Court, while discussing scope of Articles 226 and 227, has repeatedly held ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 31 that powers under Articles 226 and 227 are to advance justice and not to thwart it. Apex Court has specifically laid down that, even where justice is by-product of erroneous interpretation of law, High .
Court ought not to wipe out such justice in the name of correcting the error of law. (Ramesh Chandra Sankla v. Vikram Cement reported in (2008) 14 SCC 58)
42. Similarly, Apex Court in Estralla Rubber v. Dass Estate (P) Ltd. reported in (2001) 8 SCC 97 has held that power under Articles 226 and 227 of the Constitution of India does not confer an unlimited prerogative upon High Court to correct all wrong decisions or to prevent hardships caused thereby. Power under Article 227 can be exercised to interfere with orders of lower courts and tribunals only in cases of serious dereliction of duty and flagrant violation of fundamental principles of law or justice, where, in the absence of intervention by the High Court, grave injustice would remain unchecked and uncorrected.
43. Apex Court in Shalini Shyam Shetty v. Rajendra Shankar Patil, reported in (2010) 8 SCC 329, has held that High Court, while exercising powers under Article 226 can interfere if there is violation of statutory duty on the part of some statutory authority or any infraction of statute or it can be shown that a private individual is acting in collusion with a statutory authority.
44. But, in the facts and circumstances of the present case, neither there is any document available on record, suggestive of the fact that learned Arbitrator violated some statutory duties, nor the ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 32 learned counsel representing the petitioners was able to point out any infraction of statute. Moreover, since, this Court has come to conclusion that provisions contained in Sections 29A and .
29B(3)can not be made applicable to the arbitral proceedings commenced before promulgation of amending Act, 2015, there was no time limit to be adhered to by the arbitrator and as such, this Court, sees no violation of statutory duties cast upon the arbitrator under the Arbitration and Conciliation Act.
45. Apex Court in Radhey Shyam v. Chhabi Nath reported in (2015) 5 SCC 423, has also held that orders of civil court stand on different footing from the orders of authorities or tribunals or courts other than judicial/ civil courts. There are no precedents in India for the High Courts to issue writs to the subordinate courts, thus, judicial orders of civil courts are not amenable to a writ of certiorari under Article 226. Apex Court has held as under:
"27. Thus, we are of the view that judicial orders of civil courts are not amenable to a writ of certiorari under Article 226. We are also in agreement with the view of the referring Bench that a writ of mandamus does not lie against a private person not discharging any public duty. Scope of Article 227 is different from Article 226.
28. We may also deal with the submission made on behalf of the respondent that the view in Surya Dev Rai stands approved by larger Benches in Shail, Mahendra Saree Emporium and Salem Advocate Bar Assn and on that ground correctness of the said view cannot be gone into by this Bench. In Shail, though reference has been made to Surya Dev Rai, the same is only for the purpose of scope of power under Article 227 as is clear from para 3 of the said judgment. There is no discussion on the issue of maintainability of a petition under Article 226. In Mahendra Saree Emporium, reference to Surya Dev Rai is made in para 9 of the judgment only for the proposition that no subordinate legislation can whittle down the jurisdiction conferred by the Constitution. Similarly, in Salem Bar Assn. in para 40, reference to Surya Dev Rai is for the same purpose. We are, thus, unable to accept the submission of learned counsel for the respondent."::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 33
46. Learned counsel for the petitioners specifically laid emphasis on judgment passed by Apex Court in Harbanslal Sahnia v. Indian Oil Corpn. Ltd. reported in (2003) 2 SCC 107, to suggest .
that present petitions are maintainable, because inspite of availability of alternative remedy, High Court can still exercise its jurisdiction, but we are not in agreement with the aforesaid submissions of the learned counsel representing the petitioners, because, Apex Court while holding that, in appropriate case, inspite of availability of alternative remedy, High Court may exercise its jurisdiction has also laid down three contingencies, where court can interfere: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. Apex Court has held as under:
"7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors., (1998) 8 SCC 11. The present case attracts applicability of first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 34
47. In the instant case, none of the contingencies, as have been pointed out by the Apex Court, has arisen, because, neither there is any violation of fundamental right nor there is any violation .
of principles of natural justice.
48. Similarly, no orders/proceedings, which can be termed without jurisdiction or ultra vires the Act, are challenged before this Court. Apex Court, in case Lalitkumar V. Sanghavi v.
Dharamdas V. Sanghavi reported in (2014) 7 SCC 255 has specifically dealt with issue with regard to powers of High Courts to intervene in the proceedings/orders passed by Arbitral Tribunal.
Apex Court, in the aforesaid case, while placing reliance upon law laid down in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618, has held that intervention by High Courts in the proceedings under Articles 226 and 227, with the orders of arbitral tribunal, is not permissible. Apex Court has held as under:
"8. Within a couple of weeks thereafter, the original applicant died on 7.10.2012. The question is whether the High Court is right in dismissing the application as not maintainable. By the judgment under appeal, the Bombay High Court opined that the remedy of the appellant lies in invoking the jurisdiction of the High Court under Article 226 of the Constitution. In our view, such a view is not in accordance with the law declared by this Court in S.B.P. & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618. The relevant portion of the judgment reads as under:
"45. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in- between orders that might have been passed by the ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 35 arbitral tribunal acting under Section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration .
agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible."
That need not, however, necessarily mean that the application such as the one on hand is maintainable under Section 11 of the Act.
9. Learned senior counsel for the appellants, Shri Shyam Divan, submitted that if application under Section 11 is also held not maintainable, the appellants would be left remediless while their grievance subsists. On the other hand, learned senior counsel for the respondents Shri C.U. Singh submitted that the appellant's only remedy is to approach the arbitral tribunal seeking a recall of its decision to terminate the arbitration proceedings.
10. Chapter III of the Act deals with the appointment, challenge to the appointment and termination of the mandate and substitution of the arbitrator etc. 10.1 Section 11 provides for the various modes of appointment of an arbitrator for the adjudication of the disputes which the parties agree to have resolved by arbitration. Broadly speaking, arbitrators could be appointed either by the agreement between the parties or by making an application to the Chief Justice of the High Court or the Chief Justice of India, as the case may be, as specified under Section 11 of the Act.
10.2 Section 12(3) provides for a challenge to the appointment of an arbitrator on two grounds. They are -
(a) "that circumstances exist" which "give rise to justifiable doubts as to" the "independence or impartiality" of the arbitrator;
(b) that the arbitrator does not "possess the qualification agreed to by the parties".
::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 3610.3 Section 14 declares that "the mandate of an arbitrator shall terminate" in the circumstances specified therein. They are-
"14. Failure or impossibility to act.--(1) The mandate of an arbitrator shall terminate if--
(a) he becomes de jure or de facto unable to .
perform his functions or for other reasons fails to act without undue delay; and
(b) he withdraws from his office or the parties agree to the termination of the mandate."
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-
section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate."
Section 14(2) provides that if there is any controversy regarding the termination of the mandate of the arbitrator on any of the grounds referred to in the clause (a) then an application may be made to the Court - "to decide on the termination of the mandate".
11. Section 32 of the Act on the other hand deals with the termination of arbitral proceedings.[1] From the language of Section 32, it can be seen that arbitral proceedings get terminated either in the making of the final arbitral award or by an order of the arbitral tribunal under sub-Section 2.
Sub-section (2) provides that the arbitral tribunal shall issue an order for the termination of the arbitral proceedings in the three contingencies mentioned in sub-clauses (a) to (c) thereof.
12. On the facts of the present case, the applicability of sub-clauses (a) and (b) of Section 32(2) is clearly ruled out and we are of the opinion that the order dated 29th October, 2007 by which the Tribunal terminated the arbitral proceedings could only fall within the scope of Section 32, sub-Section (2), sub-clause (c) i.e. the continuation of the proceedings has become impossible. By virtue of Section 32(3), on the termination of the arbitral proceedings, the mandate of the arbitral tribunal also comes to an end. Having regard to the scheme of the Act and more particularly on a cumulative reading of Section 32 and Section 14, the question whether the mandate of the arbitrator stood legally terminated or not can be examined by the court "as provided under Section 14(2)".
13. The expression "Court" is a defined expression under Section 2(1)(e) which reads as follows:-
"2. Section 2(1)(e) "Court" means the principal Civil Court of original jurisdiction in a district, and ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 37 includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject- matter of a suit, but does not- include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;"
.
14. Therefore, we are of the opinion, the apprehension of the appellant that they would be left remediless is without basis in law."
49. Recently, Apex Court, in case Union of India v. M/s Ambica Construction reported in AIR 2016 SC 1441, has specifically held that Arbitrator is not a Court, but outcome of an agreement. It is held as under:
"6. "Court" has been defined in section 2(c) of the Act to mean a civil court having jurisdiction to decide the questions forming the subject- matter of the reference. Section 41 of the Act is extracted hereunder:
"41. Procedure and powers of Court. - Subject to the provisions of this Act and of rules made thereunder :
(a) The provisions of the Code of Civil Procedure, 1908 (5 of 1908), shall apply to all proceedings before the Court, and to all appeals, under this Act, and
(b) The Court shall have, for the purpose of, and in relation to arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to any proceedings before the Court:
Provided that nothing in CI. (b) shall be taken to prejudice any power which may be vested in an Arbitrator or umpire for making orders with respect to any of such matters."
The court can exercise the power specified in Second Schedule of the Act. However, Arbitrator is not a court. Arbitrator is the outcome of agreement. He decides the disputes as per the agreement entered into between the parties. Arbitration is an alternative forum for resolution of disputes but an Arbitrator ipso facto does not enjoy or possess all the powers conferred on the courts of law."
50. Division Bench of this Court relying upon judgment having been passed by Apex Court has also held in case M/s CNG ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP 38 Trading Company Pvt. Ltd. Versus H.P. State Electricity Board Ltd. reported in 2017(1) Him L.R. (DB) 423, that intervention of High Court in the proceedings under Articles 226 and 227, with .
the orders made by the arbitral tribunal is not permissible.
51. Consequently, in view of detailed discussion as well as law discussed herein above, this Court sees no occasion to interfere in the matter, while exercising powers under Articles 226 and 227 of the Constitution of India. Though, this Court is of the view, for the reasons stated above, that Sections 29A and 29B of the amending Act, 2015, are not applicable to the present arbitral proceedings since the proceedings had commenced before promulgation of the amending Act, 2015. But, even otherwise, there is self contained mechanism under Sections 29A and 29B to deal with the situation, which may arise after termination of the mandate of the arbitrator. Section 15 of the Act, 1996 also provides procedure to deal with a situation, which may arise after termination of mandate of the arbitrator and, as such, this Court sees no reason to interfere in the matter or to decide the dispute in the present petitions, as prayed for by the petitioners.
52. The writ petitions are dismissed being devoid of merits.
Pending applications, if any, are also disposed of.
(Mansoor Ahmad Mir) Chief Justice (Sandeep Sharma) Judge April 12, 2017 (vikrant) ::: Downloaded on - 16/04/2017 00:11:43 :::HCHP