Punjab-Haryana High Court
M/S Punjab State Industrial Dev. ... vs Sunil K.Kansal on 7 May, 2012
Author: K.C. Puri
Bench: K.C. Puri
Civil Revision No.4216 of 2011 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Civil Revision No.4216 of 2011
Date of decision 07.05.2012.
M/s Punjab State Industrial Dev. Corporation Ltd.
...... Petitioners.
versus
Sunil K.Kansal
...... Respondent.
CORAM:- HON'BLE MR. JUSTICE K.C. PURI
1. Whether Reporters of Local Newspapers may be allowed to see the judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest? Present : Mr. B.S.Walia, Advocate for the petitioners.
Mr. Mukand Gupta, Advocate for the respondent.
K.C.PURI. J.
Challenge in this revision petition is the order dated 14.3.2011 passed by Shri V.P.Sirohi, learned Additional District Judge, Union Territory, Chandigarh vide which the prayer for framing issues in objection petition under Section 34 of the Arbitration & Conciliation Act, 1996 i.e. Arbitration Case No.301 of 2006 was accepted and issues were framed and also the matter was put to evidence of the petitioner. Civil Revision No.4216 of 2011 2
2. Briefly stated, the facts are that a Supplementary Financial Collaboration Agreement ( in short - SFCA ) was executed between the petitioner and the respondent subsequent to execution of FCA dated 29.3.1986 for the setting up of an open ended spinning project in the joint sector by the name of M/s Dev Spinners Limited at Dera Bassi, District Patiala wherein the petitioner was to invest in the project set up by the respondent and was to be allotted shares in the equity of M/s Dev Spinners Limited. As per clause 5 of the SFCA, the collaborator i.e. respondent was free to buy the equity holding of the petitioner in M/s Dev Spinners Limited at any time after commencement of the commercial production by the said company but after the expiry of a period of the 3rd, 4th and 5th year from the date of commencement of commercial production by the company, the respondent was bound to buy back the share holding of the petitioner in M/s Dev Spinners Limited on a price to be calculated as per criteria laid down in the FCA. The respondent failed to honour his obligation under clause 5 of the SFCA, a dispute arose between the parties and the same was referred to Arbitrator in terms of clause 7 of the SFCA. The Arbitrator passed the award dated 12.9.2006 holding the respondent liable to pay the amount as detailed in the Award. The respondent raised objections to the Award by way of objection application.
The said objection application was resisted by the petitioner. However, the learned Additional District Judge, Chandigarh for effectively adjudicating the matter vide impugned order dated 14.3.2011 (Annexure P-
2), framed the issues and put the matter for evidence of the petitioner in the Civil Revision No.4216 of 2011 3 light of the authorities of this Court in case Civil Revision No.7568 of 2009 titled as M/s Khosa Rice Mills & others vs. Punjab State Supplies Corporation Limited & others decided on 8.11.2010 and case titled as Amrik Singh and another versus Vardhan Properties and Investment Limited 2006 (4) Recent Civil Reports 521 (P&H).
4. Feeling dissatisfied with the above said order, the respondents now petitioners have filed the present revision petition.
5. I have heard learned counsel for the parties and have gone through the case file with their able assistance.
6. During the course of arguments, an interesting question which has vital affect on the decision of the cases relating to Arbitration and Conciliation Act, 1996 has been raised. The question is whether while deciding the objection under Section 34 of the Arbitration and Conciliation Act, 1996, the issues as provided under Section 14(1)(3) of the CPC should be framed ?
This Court in ruling Amrik Singh and another's case (supra) held that objections under Sections 34 should be decided after framing issues in view of PUNJAB, HARYANA AND UNION TERRITORY, CHANDIGARH ARBITRATION AND CONCILIATION RULES, 2003. However, that authority run counter to the authority Fiza Developers & Inter-Trade P. Ltd vs. AMCI (I) Ltd., & another 2009 AIR SCW 6395. In that authority, the operative part of the judgment is reproduced as under :-
Civil Revision No.4216 of 2011 4
"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 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 proceedings under Section 34 of the Act."
From the observations made by Hon'ble the Apex Court, it is clear that framing of issues as contemplated under Rule 1 Order 14 of CPC has been held not integral part of the process of proceedings under Section 34 of the Act. No doubt the said ruling has been given keeping in view the High Court of Karnataka Arbitration (Proceedings before the Courts ) Rules (2001), R.4(b). Rule 4(b) of Karnataka Arbitration (Proceedings before the Courts ) Rules is reproduced as under :-
"(b) Application under Section 14 or Section 34 shall be Civil Revision No.4216 of 2011 5 registered as an arbitration suit, the applicant being treated as the plaintiff and the parties to the award other than the applicant being treated as defendants and the proceedings thereafter shall be continued as in the case of a suit and all the provisions of the Civil Procedure Code, 1908, shall apply to such proceeding insofar as they could be made applicable."
The relevant rules in respect of PUNJAB, HARYANA AND UNION TERRITORY, CHANDIGARH ARBITRATION AND CONCILIATION RULES, 2003 is reproduced as under :-
"(1) Save as otherwise expressly provided in the Act or these Rules the following provision of the Code of Civil Procedure, 1908 (V of 1908) shall apply to the proceedings before a Court in so far as those may be applicable thereto, namely :-
(i) Sections 28, 31, 35, 35-A, 35-B, 107, 133, 135, 148-A, 149, 151 and 152 ; and
(ii) Order III, V, VI, IX, XIII, XIV, XVI to XIX, XXIV, XVI to XIX XXIV & 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."
In Karnataka Arbitration (Proceedings before the Courts ) Rules, Rule 4(b) it was envisaged that application under Section 14 or Civil Revision No.4216 of 2011 6 Section 34 of the Arbitration Act shall be registered as an arbitration suit and it was further ordered that the applicant being treated as the plaintiff and the parties to the award other than the applicant being treated as defendants and the proceedings thereafter shall be continued as in the case of a suit and all the provisions of the Civil Procedure Code, 1908, shall apply to such proceeding insofar as they could be made applicable. In spite of that the Hon'ble Apex Court held that issue should not be framed as contemplated in order 14 Rule 1 CPC. The reasoning given by the Hon'ble Apex Court is that arbitration Act is a special enactment and Section 34 provides for a speed remedy. Secondly, the arbitration award can be set aside only upon one of the ground in sub section 2 of Section 34; and thirdly the proceedings under Section 34 of the Act required to be dealt with expeditiously. So, under these circumstances, the Hon'ble Apex Court held that it is not imperative to frame issues and the case should be decided on affidavits and if any party desires he could cross-examine the witness of other party with the permission of the adjudicating authority.
So far as the authority M/s Khosa Rice Mills & others' case (supra) is concerned in that case relying upon authority of Amrik Singh's case (supra), it was ordered that the trial Court should grant opportunity to the parties to lead evidence. The point whether issue should be framed was not decided in authority M/s Khosa Rice Mills & others' case (supra).
So in view of the above discussion, the matter be put up before Hon'ble the Chief Justice to constitute a larger Bench to decide the following issue :-
Civil Revision No.4216 of 2011 7
1. Whether issues as contemplated under Order 14 Rule 1 CPC should be framed in application under Section 34 of the Arbitration and Reconciliation Act, 1996 keeping in view of Punjab, Haryana and Union Territory, Chandigarh Arbitration & Conciliation Rules 2003 ?
( K.C.PURI ) JUDGE May 07, 2012 sv