Bangalore District Court
M/S.Classic Promoters & Developers vs ) M/S.Skyline Constructions & on 24 June, 2015
IN THE COURT OF THE VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
CCCH. 11
Dated this the 24th day of June, 2015
PRESENT: Smt.Kalpana M.Kulkarni, B.A.,LL.B.,(Spl.)
VI Addl. City Civil & Sessions Judge,
Bengaluru City.
A.S.NO: 47/2013
PLAINTIFF : M/s.CLASSIC PROMOTERS & DEVELOPERS
A Proprietorship Concern,
Having its registered Office at
City Light Building,
Balmatta Road, Mangalore -1.
Reptd. by its Proprietor.
/Vs/
DEFENDANTS : 1) M/s.Skyline Constructions &
Housing Pvt.Ltd.,
Having its registered office at
No.11, Hayes Road, Museum Road,
Bangalore-560 025.
Reptd.by its Managing Director.
2) Mr.C.K.Balakrishna,
Prl.District & Sessions Judge (Rtd.)
Sole Arbitrator, No.2209,
'Thrikanya', 80 Feet Road,
Idira Nagar, Bangalore-38.
--
ORDER
This suit is filed under Section 34(2)(ii) (iv) of the Arbitration and Conciliation Act, 1996, as against the order on preliminary issue 2 AS.47/2013 regarding maintainability dated 26.06.2013, in Arbitration Case No.A/CKB/2/2011.
2) The grounds of challenge are as under :-
It is stated that under the agreement dated 22.12.2006 at Article II Clause 6 and 7, in the event either party cannot fail to comply with obligation under this agreement or with regard to the rights and obligations there with it is specifically states that there is no scope of putting an end or terminate the agreement even if there will be any dealing in acquisition of property, but parties were required to resolve the same by necessary extension of time. The only remedy for the first Defendant was either to specifically enforce the term of agreement or persuade the Arbitrator to give the properties to the Defendant at the same terms and conditions but at an extended period of time. The termination process being beyond the scope of agreement cannot be the subject matter of a dispute as contemplated in the clause of the agreement, pertaining to appointment of arbitration. There was no dispute in the nature described in the agreement to be considered by the Arbitrator. Hence, the dispute which the 1st Defendant wanted the Arbitrator to decide being beyond the scope of the agreement, to which the 3 AS.47/2013 arbitration clause is connected, the learned Arbitrator ought to have rejected the claim petition as not maintainable and beyond its jurisdiction. The learned Arbitrator has failed to note that the Plaintiff canvassed his case that, there was no dispute to be decided and hence, sought for closure of the case and never contended that the Arbitrator could not decide the dispute. Whether a dispute exists or not and whether it has to be ruled out or not was the scope of arbitration proceedings before the learned Arbitrator who was required to decide about the same. The relevancy of the representation made by the Plaintiff before the Hon'ble Arbitrator regarding maintainability was only limited to the fact that he should have rejected the claim petition as not maintainable. The other objections which were raised were raised with regard to the proper presentation of the claim petition. The orders impugned is one sided, against law and the same deals with the dispute not contemplated by or not falling within the terms of its submission and beyond the scope thereon, hence, the award requires to be set aside.
3) On appearance, the Defendant No.1 filed statement of objections as below :-4 AS.47/2013
The application by the Plaintiff is not maintainable and the same is liable to be dismissed, as there is statutory provision for filing the instant suit. The present suit is liable to be rejected as not maintainable and for lack of jurisdiction under the Civil Procedure Code 1908 or under the Arbitration and Conciliation Act and therefore barred. The contents of para-3 to 10 of the petition are denied. The impugned order is not arbitral award, it is an interlocutory order that has been passed by the learned Arbitrator and it does not attract Section 34 of the Arbitration and Conciliation Act,1996. The appointment of the Hon'ble Arbitrator is decided by the Hon'ble High Court of Karnataka and the Plaintiff have not chosen to appeal against the said order, which attained finality, hence, it is prayed to dismiss the suit.
4) Advocate for the Plaintiff has filed written submissions on 13.11.2014. Heard the Advocate for the Defendant No.1. I have perused the records.
5) The points which are under consideration are as below:-
(1) Whether the present suit/petition/appeal/ application against the impugned order passed by the sole Arbitrator dated 26.06.2013, on preliminary issue regarding maintainability is 5 AS.47/2013 maintainable before this court/District court, under Section 34 of the Arbitration and Conciliation Act, 1996 ?
(2) Whether the present suit/petition/appeal/ application against the impugned order passed by the sole Arbitrator dated 26.06.2013, on preliminary issue regarding maintainability is maintainable before this court/District court, under Section 37 of the Arbitration and Conciliation Act, 1996 ?
(3) Whether the Plaintiff is entitled for the relief sought for?
(4) What order?
6) My answer to the above points are as below:-
Point No.1 - In the Negative;
Point No.2 - In the Negative;
Point No.3 - Does not arise for consideration;
Point No.4 - As per the final order, for following reasons.
REASONS
7) Point No.1: At the cost of repetition, I note that being aggrieved by the impugned order passed by the learned sole Arbitrator on 26.06.2013, in case No.A/CKB/2 of 2011, the original Respondent has preferred this suit before this court under Section 34 (2)(ii) of the Arbitration and Conciliation Act, 1996. 6 AS.47/2013
8) At this stage, at the outset I note that, Section 34(2) of the Arbitration conciliation Act, 1996, mandate that when the party making the application furnishes proof of the facts and circumstances enumerated under Clause (a) (i) to (v) & (b) (i) & (ii), the 'arbitral award' may be set aside by this court.
9) Now the question that arises for consideration is, whether the order dated 26.06.2013 on preliminary issue regarding maintainability is arbitral award as contemplated under Section 2 of the Arbitration and Conciliation Act, 1996. On going through the impugned award in the backdrop of Section 2(c) and (d) of the Arbitration and Conciliation Act, as because the Arbitral Tribunal has not decided the dispute between the parties finally in respect of the dispute referred to the learned Arbitrator, the impugned order does not amount to 'award' as contemplated under the Act. In the opinion of this court, under these circumstances, as because the impugned order does not come within the purview of 'award' as contemplated under Section 2 of the Arbitration and Conciliation Act, Section 34 of the Arbitration Act, is not attracted. As such, the suit under Section 34 of the Arbitration Act, is not maintainable before this court. 7 AS.47/2013
10) No doubt, the present petition/application/suit/appeal is registered as Arbitration Suit No.47/2013. Even though it is registered as suit, the criteria to be considered is, whether this court is empowered to entertain the contents of the said petition and to grant the relief sought for in this case. As noted above, even though the present case is registered as suit, for the reasons noted above, as because there is no final award or interim award as contemplated under Section 2 of the Act, the present petition is not at all maintainable before this court. Accordingly, I answer Point No.1 in the negative.
11) Point No.2 : Now, the point that arises for consideration is, whether under any other provisions of Arbitration and Conciliation Act, the present petition/suit/application/appeal is maintainable before this court?
The perusal of the impugned order shows that it is described as order on preliminary issue regarding maintainability and the said order disclose that the said order is passed on merits. As because the said order does not amount to award or interim award, it may be considered as interlocutory order passed by the learned Arbitrator in Arbitration Case No.A/CKB/2 of 2011. 8 AS.47/2013
12) Now, the question that arises for consideration is, whether an interlocutory order passed by the learned Arbitrator in Arbitration proceedings can be challenged before this court?
In this regard, I would like to note Chapter IX Section 37 of the Arbitration and Conciliation Act, 1996, which reads as below:-
" Section 37.- Appealable orders:-
(1) An appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely:-
a) granting or refusing to grant any measure under Section 9;
b) setting aside or refusing to set aside an arbitral award under Section 34.
(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal:-
a) accepting the plea referred in sub-
Section (2) or sub-section (3) of Section 6; or
b) granting or refusing to grant an interim measure under Section 17."
13) It is evident that Section 37(2) R/w Section 2(e) of the Arbitration and Conciliation Act, empowers this court to hear the appeal in respect of the matters which come within the purview of Section 37(2)(a) and (b) of the Act, noted above. Prima facie it is evident that the grievances of the Petitioner and the contents of the 9 AS.47/2013 impugned order do not attract Section 37(2)(b) of the Act noted above. Now, the point that arise for consideration is, whether the interlocutory order dated 26.06.2013 would come within the purview of Section 37(2)(a) of the Act, so as to say that the appeal against the said interlocutory order is maintainable before this court. Obviously, Section 37(2)(a) empowers this court to entertain the appeal in respect of the orders passed by the learned Arbitrator under Section 16 of the Arbitration and Conciliation Act. For the sake of reference, I note Section 16 of the Act, which is as below :
"16. Competence of arbitral tribunal to rule on its jurisdiction.- (1) The Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the Arbitration agreement, and for that purpose,-
(a) an Arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the Arbitration clause.
(2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an Arbitrator.
(3) A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the 10 AS.47/2013 matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The Arbitral Tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.
(5) The Arbitral Tribunal shall decide on a plea referred to in sub-section(2) or sub-section (3) and, where the Arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34."
14) At this stage, I would like to note that as per the well settled law, as per Section 37(2)(a) R/w Section 16 of the Act, the order under Section 16 accepting the plea of lack of jurisdiction is appealable and the plea of lack of jurisdiction is rejected by the Arbitral Tribunal; the said order is not appealable.
In the light of these principles of law, I note that by passing impugned order, in para-41 of the order, the learned Arbitrator has come to the conclusion to proceed with the matter and fixed the matter for hearing. So, it is evident that by the impugned order, the learned Arbitrator has rejected the plea of the original Defendant that the claim of the original Plaintiff is not arbitrable one. So, it is to be noted that by passing impugned order the learned Arbitrator has 11 AS.47/2013 come to the conclusion that the said Arbitrator has jurisdiction and power to decide the matter referred as per the order of the Hon'ble High Court in Civil Misc.No.169/2010 dated 07.03.2011. As such, by plain reading of the statutory provision of Section 37(2)(a) and Section 16 of the Arbitration Act, coupled with the order of the learned Arbitrator that the arbitration proceedings are maintainable before the learned Arbitrator, that itself is sufficient to note that the learned Arbitrator did not accept that it lacks jurisdiction to decide the matter. Hence, the law does not provide right of appeal to challenge the impugned order under Section 37(2)(a) R/w Section 16 of the Arbitration Act, before this court. From that angle of the matter also, the present matter is not maintainable before this court.
15) The ground made out by the present Plaintiff is that, the present Plaintiff/original Respondent has not challenged the power and jurisdiction of the learned Arbitrator, but, the Plaintiff has contended that there was no dispute to be decided, hence, the case to be closed and never contended that the Arbitrator could not decide the dispute. So, the gist of the contention of the Plaintiff is that, there was no arbitral dispute between the parties, as such; the question of holding arbitration proceedings does not arise. 12 AS.47/2013
16) The submissions and the contents of the order show that, it is worth to note that the learned Arbitrator placing reliance on the decision of the Hon'ble Supreme Court in S.B.P. and Co. Vs. Patel Engineering Ltd., & Anr., reported in Manu/SC/1787/2005, it has come to the conclusion that in view of passing of the order in Civil Misc.Petition No.169/2010, dated 07.03.2011 by the Hon'ble High Court of Karnataka, wherein, Arbitrator is directed to enter upon the reference, there is no scope for deciding that there is no arbitral dispute and there is no dispute for resolution and accordingly rejected the ground raised by the original Respondent, who is the present Plaintiff therein. Even though it is the submission of the present Plaintiff that he has not raised objection regarding the jurisdiction and power of the Arbitrator to decide the dispute, but his contention was that there was no dispute at all to be decided, the termination process being beyond the scope of agreement cannot be the subject matter of a dispute as contemplated in the clause of the agreement pertaining to appointment of Arbitrator, but, in the opinion of this court, the passing of the impugned order, wherein maintainability of the proceedings is considered and the learned Arbitrator has come to the conclusion to proceed with the matter holding that the arbitral proceedings are maintainable, then, 13 AS.47/2013 it is to be construed that the learned Arbitrator has expressed that the Arbitrator has power to proceed with the matter and the alleged dispute come within the jurisdiction of the Arbitrator so as to say that the interlocutory order passed by the learned Arbitrator is not appealable one before this court at this stage in view of Section 16(6) of the Act, which provides that the party aggrieved by such an arbitral award may make an application for setting side such an arbitral award in accordance with Section 34 of the Act, accordingly, I answer Point No.2 in the negative.
17) Point No.3: As because the rights and liabilities of the parties are not finally decided by the learned Arbitrator by passing impugned order, but it is only an interlocutory order regarding maintainability, the same does not come within the purview of Section 34 (2)(a) or Section 37(2) of the Arbitration and Conciliation Act, hence, the present plaint/petition/appeal or application before this court is not maintainable. Under these circumstances, consideration of the grounds raised by the Plaintiff would not arise for consideration; hence, I answer Point No.3 accordingly. 14 AS.47/2013
18) Point No.4 : I would like to note that as per the notification of the Hon'ble Principal City Civil and Sessions Judge, Bangalore, Dated: 12/08/1999, the Arbitration cases are allotted to this court (CCH-11). As such, this court is empowered to deal with the matters coming within the purview of Section 9 or Section 34 of the Arbitration and Conciliation Act, 1996. It is well settled law that right of appeal is a statutory right and unless the statute provides specific right of appeal, the aggrieved party is not entitled to prefer appeal against the order. As noted above, the grievances raised by the Plaintiff does not come within the purview of Section 34, 37, 16 of the Act, as such, this court has no power and jurisdiction to entertain the present petition and to decide the same, more so, in the opinion of this court, the statute has not provided provision to the aggrieved party/the Petitioner to address the said grievances mentioned in the petition/appeal/application/suit before this court. So, even though the Plaintiff has raised the question that there is no arbitral dispute to be decided by the learned Arbitrator, the consideration of the said question is out of the scope of Section 34 (2), Section 37(2) R/w Section 16(a) and 16(6) of the Arbitration Act and the said question raised by the Petitioner is beyond the scope and power of this petition and the court at this stage prior to 15 AS.47/2013 passing of the final award and the result would be dismissal of the case. Hence, in the opinion of this court, the present petition/suit/appeal/application does not survive for consideration on merits. In the result, I pass the following :
ORDER (1) The suit filed under section 34(2)(ii) of Arbitration and Conciliation Act, 1996, as against the order on preliminary issue regarding maintainability dated 26.06.2013, in Arbitration case No.A/CKB/2/2011; is hereby dismissed as not maintainable before this court.
(2) No order as to costs.
(Dictated to the Judgment Writer on computer, typed matter corrected and then pronounced by me in open court, dated this the 24th day of June, 2015.) (KALPANA M. KULKARNI) VI Addl.City Civil & Sessions Judge, Bengaluru City.