Rajasthan High Court - Jaipur
Bhilwara - Jaipur Toll Road (P) Ltd vs State Of Rajasthan on 12 October, 2020
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. CIVIL MISC. 2nd STAY APPL. NO.9387/2020
IN
S.B. Civil Writ Petition No. 21394/2019
Bhilwara - Jaipur Toll Road (P) Ltd., a Company incorporated
under The Companies Act, 1956 having its Registered Office at
Om Tower, Church Road, M.I. Road, Jaipur And Business Office at
J-28, Subhash Marg, C-Scheme, Jaipur - 302 001 through its
Authorized Representative Shri Nemi Chand Jain.
----Petitioner
Versus
1. State of Rajasthan, through Chief Engineer (Roads),
Public Works Department, Nirman Bhawan, Jacob Road,
Jaipur (Raj.).
2. Punjab National Bank, having its registered office At 7,
Bhikaji Cama Place, Africa Avenue, New Delhi and Mid-
Corporate Branch At M.I. Road, Jaipur (Raj.).
3. ICICI Bank Limited, having its office at 10Th Floor,
Videocon Tower, Jhandewalan Extension, New Delhi.
----Respondents
For Petitioner(s) : Ms. Sakshi Srivastava, Adv.
For Respondent(s) : Mr. Rajesh Maharshi, AAG
Ms. Suruchi Kasliwal, Adv.
HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
Order
Reserved on 01/10/2020
Pronounced on 12/10/2020
1. The matter comes up on second stay application filed by the
petitioner whereby the petitioner submits that the writ petition has
been preferred challenging the order passed by the learned
Commercial Court No.1, Jaipur whereby it has stayed the order
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dated 30/10/2019 passed by the sole arbitrator under Section 17
of the Arbitration and Conciliation Act, 1996 (hereafter referred to
as 'Act of 1996') vide its order dated 02/12/2019.
2. Learned counsel for the petitioner submitted that the writ
petition has been pending before this Court since 08/01/2020 and
it is likely to take time for decision. However, it is submitted that
due to continuance of the interim order passed by the learned
Commercial Court, the petitioner-company is suffering great
hardship and its account will become NPA resulting in loss to the
public money and even the Banks are loosing money. The arbitral
proceedings are still continuing and it cannot be said that a final
order has been passed by the learned Arbitral Tribunal headed by
Hon'ble Mr. Justice PP Naolekar, Former Judge of the Supreme
Court.
3. Learned counsel for the petitioner further submitted that
power is available under Section 17 of the Act of 1996 to the
learned Arbitrator for passing orders as an interim measure of
protection in respect of securing the amount in dispute of
arbitration as per Section 17(ii)(b) of the Act of 1996. Learned
counsel for the petitioner stated at bar that while the amount may
not be handed over to the petitioner, as an interim protection, the
said amount, as directed by the learned Arbitral Tribunal, be
deposited by the respondent-State authorities with the concerned
Banks so that the same remains secured in Escrow Account with
the Bank so that the public money is not lost. At the same time,
the concerned amount shall not be utilized for any other purpose
till the disposal of the Arbitration proceedings.
4. The respondents have not filed reply to the second stay
application. However, learned Additional Advocate General for the
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respondent-State argued orally and submitted that he has
preliminary objection relating to maintainability of the writ petition
itself. He further submitted that the writ petition under Articles
226 and 227 of the Constitution does not lie against an order
passed by the learned Commercial Court as there is a specific bar
contained under Section 5 of the Act of 1996 and the power being
exercised by the concerned Commercial Court is in the nature of
an interlocutory order passed in appeal preferred under Section
37(2)(b) of the Act of 1996 before the learned Commercial Court.
He relied on judgment of the Apex Court in Deep Industries Ltd.
Vs. ONGC & Ors: 2019(17) SCALE 85; judgment of High Court
of Uttrakhand at Nainital in Delip Singh Adhikari Vs. State of
Uttarakhand & Ors. dt.23/09/2019 and judgment of this Court
in Shri Balaji Industrial Products Ltd. Vs. AIA Engineering
Ltd. & Ors.: 2018(3)WLN 411 (Raj.). He further submitted that
there is no urgency in the present matter and in view of the
directions issued by the Apex Court in Gajendra Sharma Vs. Union
of India & Anr. [Writ Petition(s) (Civil) No(s). 825/2020], the
account would not be declared as NPA.
5. Learned AAG further submitted that the learned Sole
Arbitrator order was completely illegal and direction for
termination of payment could not have been passed and the order
of interim measure was passed on 30/10/2019 i.e. a day prior to
withdrawal of the notification exempting private vehicles. The
termination of concession agreement was done on account of
exemption of levy of toll free of private vehicles plying the State
Highways. Learned AAG has submitted written statement and
stated that the present writ petition is voluminous petition which
cannot be argued through video conferencing and as the question
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of maintainability of writ petition is involved, the interim order
ought not be passed by this Court.
6. Learned counsel appearing for the respondent-Bank
submitted that even the amount is deposited in the Bank, in an
Escrow Account, the Bank would not have any objection as it
would be a protection of public money.
7. I have considered the submissions.
8. This Court in Rajasthan State Mines and Minerals Ltd.
Vs. Ankur Minmine Product Pvt. Ltd. (SB Civil Writ Petition
No.920/2009) vide order dated 07/03/2019 had formulated an
exact question which learned counsel for the respondents had
raised as under:-
"Whether a writ petition under Article 227 of the
Constitution of India will lie against an interlocutory
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Commercial Court, particularly in view of the embargo
contained in Section 8 of Commercial Courts,
Commercial Division and Commercial Appellate
Division of High Courts Act, 2015 ?"
9. In Deep Industries Ltd. Vs. ONGC & Ors. (supra), while
examining the scope of provisions of the Act of 1996 and the
constitutional provisions of Article 227 as also the law laid down
by the Apex Court earlier in SBP & Co. Vs. Patel Engineering
Ltd. & Anr.: (2005) 8 SCC 618 as well as the subsequent
judgment in Punjab Agro Industries Corporation Ltd. Vs.
Kewal Singh Dhillon: (2008) 10 SCC 128 which distinguished
the earlier judgment, the Supreme Court held as under:-
"13. 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
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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."
(Underline is mine)
10. Hence, keeping in view the law as laid down by Coordinate
Bench of this Court (supra), and the view taken in Deep
Industries Ltd. Vs. ONGC & Ors. (supra), this Court rejects the
preliminary objection raised by learned counsel for the respondent
State and it is held that the writ petition is maintainable under Articles 226 & 227 of the Constitution of India before the High Court. However, the High Court would be extremely circumspect in interfering with the orders passed by the learned Commercial Court while deciding appeals under Section 37 of the Act.
11. This Court notices that in Deep Industries Ltd. Vs. ONGC & Ors. (supra), the Supreme Court has observed further as under:-
"15. It is true that in Punjab Agro Industries Corporation Limited (supra), this Court distinguished SBP & Co. (supra) stating that it will not apply to a case of non-appointment of an Arbitrator. This Court held:(Downloaded on 12/10/2020 at 09:24:47 PM)
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9. We have already noticed that though the order Under Section 11(4) is a judicial order, having regard to Section 11(7) relating to finality of such orders and the absence of any provision for appeal, the order of the Civil Judge was open to challenge in a writ petition Under Article 227 of the Constitution. The decision in SBP & Co. does not bar such a writ petition. The observations of this Court in SBP & Co. that against an order Under Section 11 of the Act, only an appeal Under Article 136 of the Constitution would lie, is with reference to the orders made by the Chief Justice of a High Court or by the designate Judge of that High Court. The said observations do not apply to a subordinate court functioning as designate of the Chief Justice.
What is important to note is that the observations of this Court in this judgment were for the reason that no provision for appeal had been given by statute against the orders passed Under Section 11, which is why the High Court's supervisory jurisdiction should first be invoked before coming to this Court Under Article 136. Given the facts of the present case, this case is equally distinguishable for the reason that in this case the 227 jurisdiction has been exercised by the High Court only after a first appeal was dismissed Under Section 37 of the Act."
12. In SBP & Co. Vs. Patel Engineering Ltd. & Anr. (supra), the Supreme Court observed as under:-
"46. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached Under Article 227 or Under Article 226 of the Constitution against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them Under Section 37 of the Act even at an earlier stage."(Downloaded on 12/10/2020 at 09:24:47 PM)
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13. Keeping in view the aforesaid judgments, this Court is of the view that the primary object of the Act of 1996 is for providing speedy and effective alternate dispute resolution system and there should be least interference in arbitral proceedings at interim stage.
14. Although first appeal under Section 37 of the Act of 1996 lies against an order passed under Section 17 of the Act of 1996, it is to be noted that under Section 29-A of the Act of 1996, which was inserted by Amendment Act, 2016, a time limit has been made within which the arbitral awards must be passed. Thus, while hearing appeals under Section 37 of the Act of 1996 against an order passed under Section 17 of the Act of 1996, if an interim stay order is passed, it would definitely affect the arbitral proceedings pending before the Sole Arbitrator. Therefore, the Court while hearing appeal under Section 37(2) of the Act of 1996 against an order passed under Section 17 of the Act of 1996, must circumspect and ought not pass interim orders specially ex-parte.
Therefore, this Court prima-facie is of the view that the interim order passed by the Court, which has been continuing since December, 2019 has definitely resulted in delaying the proceedings before the Arbitral Tribunal and would definitely affect the final verdict.
15. On merits of the case, this Court notices that the learned Sole Arbitrator passed order as under:-
"The claim of the claimant on account of default payment of Rs.191.79 crores need to be protected, as regards possession of the State Highway by the State it would be of common knowledge that after the termination of contract by the claimant and after the lapse of 120 days there is slender possibility of (Downloaded on 12/10/2020 at 09:24:47 PM) (8 of 8) [CW-21394/2019] claimant would invest money over maintenance of road. In the interest of public in general and public safety it would be appropriate for the State to take possession of the completed project. Accordingly, it is directed to the respondent No.1 to deposit an amount of Rs.191.79 crore in Escrow Account as per Clause 37.3.3 for the payment to be made in accordance with the terms and conditions of the Escrow Account. Similarly, the Government shall take steps to take actual possession of the project Highway in accordance with terms laid in Article 38 and Article 39.1 of the concession agreement."
16. Taking into consideration the aforesaid direction of the Arbitral Tribunal, this Court is of the view that the rights of the parties can be protected by directing the State to take over possession of the project highway as directed by the learned Sole Arbitrator. The amount of Rs. 191.79 crore shall be deposited with the Respondent-Banks equally in the Escrow Account by the State and shall not be released to the petitioner. It shall be kept with the Bank and would not be utilized for payment to the petitioner till final disposal of the appeal pending before the learned Commercial Court.
17. It is informed that the learned Commercial Court is ceased with the matter and is continuing to hear the case.
18. In view of the above, this second stay application is disposed of accordingly.
(SANJEEV PRAKASH SHARMA),J Raghu/ (Downloaded on 12/10/2020 at 09:24:47 PM) Powered by TCPDF (www.tcpdf.org)