Madhya Pradesh High Court
Union Of India Thr vs Ms. Agrawal Construction Co. Ltd Thr on 18 January, 2017
1 WP 2756/16
Union of India & Anr. Vs. M/s Agrawal Construction Company Ltd.
18/1/17
Shri Vivek Khedkar, Advocate for the petitioners.
None for the respondent.
The powers of superintendence of this Court under Article 227 of the Constitution of India are invoked to assail the interlocutory order dated 5/4/2016 in Arbitration Case No. 23/06 whereby the application submitted by the Union of India and its functionaries, P/6 dated 5/4/2016 praying for recalling of the order framing issues and adducing of evidence by way of cross-examination in a pending proceeding under Section 34(2) of the Arbitration and Reconciliation Act, 1996 (for brevity 1996 Act) has been rejected by relying upon the decision of the Apex Court in the case of Fiza Developers & Inter-Trade P. Ltd. Vs. AMCI (I) Ltd. And another 2009 AIR SCW 6395.
Learned counsel for the petitioners submits that the decision of the Apex Court in the case of Fiza Developers & Inter-Trade P. Ltd. (supra) lays down the law that issues are not required to be framed while deciding an application under Section 34(2) of 1996 Act. It is further submitted by the learned counsel for the petitioners that procedure of CPC is not required to be followed in proceedings under Section 34(2) of 1996 Act.
The law in this regard is no more res integra in view of the decision in the case of Fiza Developers & Inter-Trade P. Ltd. (supra) which holds the field till today. The Apex Court in the said case which related to the question as to whether in proceedings under Section 34(2) of 1996 Act, issues are required to be framed are not, has dealt with the matter by considering the provision of Rule 12 of Karnataka Civil Rules of Practice which is similar to Rule 9 of M.P. Arbitration Rules 1997 (for short Rules 1997). Relevant paras 10,11 and 14 of the said decision of the Apex Court are reproduced below:-
"10. We may therefore examine the question for consideration, by bearing three factors in mind. The first is that the Act is a special enactment and section 2 WP 2756/16 Union of India & Anr. Vs. M/s Agrawal Construction Company Ltd.
34 provides for a special remedy. The second is that an arbitration award can be set aside only upon one of the grounds mentioned in sub-section (2) of Section 34 exists. The third is that proceedings under Section 34 requires to be dealt with expeditiously.
11. The scope of enquiry in a proceeding under section 34 is restricted to consideration whether any one of the grounds mentioned in sub-section (2) of Section 34 exists for setting aside the award. We may approvingly extract the analysis relating to `Grounds of Challenge' from the Law & Practice of Arbitration and Conciliation by Shri O. P. Malhotra [First Edition, Page 768, Para (I) 34-14]:
" Section 5 regulates Court intervention in arbitral process. It provides that notwithstanding anything contained in any other law for the time being in force in India, in matters governed by Part I of this Act, the Court will not intervene except where so provided in this Part. Pursuant to this policy,section 34 imposes certain restrictions on the right of the Court to set aside an arbitral award. It provides, in all, seven grounds for setting aside an award. In other words, an arbitral award can be set aside only if one or more of these seven grounds exists. The first five grounds have been set forth in section 34(2(a). In order to successfully invoke any of these grounds, a party has to plead and prove the existence of one or more of such grounds. That is to say, the party challenging the award has to discharge the burden of poof by adducing sufficient credible evidence to show the existence of any one of such grounds.
The rest two grounds are contained in section 34(2)(b) which provides that an award may be set aside by the Court on its own initiative if the subject matter of the dispute is not arbitrable or the impugned award is in conflict with the public policy of India."
The grounds for setting aside the award are specific. Therefore necessarily a petitioner who files an application will have to plead the facts necessary to make out the ingredients of any of 3 WP 2756/16 Union of India & Anr. Vs. M/s Agrawal Construction Company Ltd.
the grounds mentioned in sub-section (2) and prove the same. Therefore, the only question that arises in an application under section 34 of the Act is whether the award requires to be set aside on any of the specified grounds in sub- section (2) thereof. Sub-section (2) also clearly places the burden of proof on the person who makes the application. Therefore, the question arising for adjudication as also the person on whom the burden of proof is placed is statutorily specified. Therefore, the need for issues is obviated.
Framing of issues is necessary only where different types of material propositions of fact or law are affirmed by one party and are denied by the other and it is therefore necessary for the Court to identify the issues and specify the party on whom the burden to prove the same lies.
When this exercise has already been done by the statute, there is no need for framing the issues. In other words, an application under section 34 of the Act is a single issue proceeding, where the very fact that the application has been instituted under that particular provision declares the issue involved. Any further exercise to frame issues will only delay the proceedings. It is thus clear that issues need not be framed in applications under section 34 of the Act.
What is the effect of Rule 4(b) of the Karnataka Rules ?
14. Having regard to the object of the Act, that is providing an expeditious alternative binding dispute resolution process with minimal Court intervention, it is difficult to envisage proceedings under section 34 of the Act as full-fledged regular civil suits under Code of Civil Procedure. Applications under section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent, followed by an opportunity to the applicant to `prove' the existence of any ground under section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants, the Court permits cross-examination of the persons swearing to the affidavit. Thereafter, Court hears arguments and/or receives written submissions and decides the matter. This is of course the routine 4 WP 2756/16 Union of India & Anr. Vs. M/s Agrawal Construction Company Ltd.
procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under section 34 of the Act.
The Apex Court in the case of Fiza Developers & Inter-Trade P. Ltd. (surpa) has held that there is no wholesale or automatic import of all the provisions of the CPC applicable for conduction of civil suit for the purpose of deciding application under Section 34(2) of 1996 Act but the procedure of CPC so far as facts and circumstances require can be applied by the Court.
For ready reference and convenience, Rule 9 of Rules 1997 is reproduced below:-
"9 (1) Save as otherwise expressly provided in the Act of these Rules, the following provisions of the Code of Civil Procedure, 1908 (V of 1908) shall apply to the proceedings before a Court in so far as they may be applicable thereto: namely : -
(i) Sections 28, 31, 35, 35A, 35B, 107, 133, 135, 148A, 149, 151 and 152, and;
(ii) Or.III, V, VI, IX, XIII, XIV, XVI, to XIX, XXIV and XLI.
(2) (a) For the purpose of facilitating the application of the provisions referred to under sub -section (1) the Court may construe them with such alterations, not affecting the substance, as may be necessary or proper to adopt to the matters before it; and
(b) The Court may, for sufficient reasons proceed otherwise than in accordance with the said provisions if it is satisfied that the interests of the parties shall not thereby be prejudiced."
Thus the Court is vested with jurisdiction to adopt procedure laid down by the CPC as per Rule 9 (supra) if attending facts of the case under Section 34 of 1996 Act justify doing so.
In the instant case, the charges had been framed and the order for adducing evidence by way of cross-examination was passed prior to 5 WP 2756/16 Union of India & Anr. Vs. M/s Agrawal Construction Company Ltd.
filing of the application for recalling of the said order by the Union of India.
In this view of the matter, the Court is not bereft of the jurisdiction to adopt any of the procedure prescribed in CPC as per Rule 9 of 1997 Rules (supra) for deciding application under Section 34(2) of 1996 Act. Which particular procedure prescribed in CPC is to be followed by the Court is for the Court to decide based upon the attending facts and circumstances. The law laid down by the Apex Court in Fiza Developers & Inter-Trade P. Ltd. (surpa) is only to the extent that the Court is not bound by the procedure laid down in CPC and thus has discretion to adopt any of the permissible procedure if occasion arises and if the facts and circumstances prevailing in the proceedings under 34(2) of 1996 Act demands.
It is trite principle of law that merely because a different view is possible which the Court-below could have taken in the given facts and circumstances cannot be a good ground to interfere in the limited supervisory jurisdiction of this Court under Article 227 of Constitution especially in the absence of any material to point out transgression of jurisdiction limits set by law. The Apex court decision in the case of Shalini Shyam Shetty Vs. Rajendra Shankar Patil (2010) 8 SCC 329] is worthy of reference.
In view of the above, no fault can be found with the order of the Court-below dated 5/4/2016 in Arbitration Case No. 23/06, which is accordingly upheld and W.P.No. 2756/16 stands dismissed.
(Sheel Nagu) Judge (Bu)