Madhya Pradesh High Court
Swadesh Kumar Agarwal vs Dinesh Kumar Agarwal on 17 November, 2017
THE HIGH COURT OF MADHYA PRADESH
RP-655-2017
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(SWADESH KUMAR AGARWAL Vs DINESH KUMAR AGARWAL)
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Jabalpur, Dated : 17-11-2017
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HIGH COURT OF MADHYA PRADESH, PRINCIPAL
SEAT AT JABALPUR
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Case No. R.P. No.655/2017
Dinesh Kumar Agrawal
Parties Name Vs.
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Vyas Kumar Agrawal and Ors.
Date of Judgment 17.11.2017
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Bench Constituted Single
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Judgment delivered by Hon'ble Shri Justice Sujoy Paul
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Whether approved for
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Petitioner: Shri A.K. Jain, Advocate
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Name of counsels for Respondent No.1: Shri Sanjay Agrawal,
parties Advocate
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Respondents 2 to 15: Shri Ashok Lalwani, Advocate M In Section 11(6) of Arbitration and Conciliation Act, 1996 Chief Justice or his designate appoint arbitrator by of exercising judicial function. Thus, it cannot be said that the order passed by rt the Chief Justice/ designate under section 11(6) of the Act is not an order ou passed by the âCourtâ.
The expression âreviewâ is used in C two distinct senses, namely,(i) a procedural review which is either h inherent or implied in a court or tribunal ig for the purpose of setting aside a Law laid down palpable erroneous order passed under a H misapprehension and (ii) a review on merits when the error sought to be corrected is one of law and is apparent on the face of the record. Review on merits can be sought for only when there exists an enabling provision expressly or impliedly. In a case where power of procedural review is invoked, the parties seeking review must substantiate the error relating to procedural part. In this type of review, the court cannot enter into merits of the order passed. Significant paragraph 17,19,20 and 26 numbers (Order) 17.11.2017 sh In this petition, the petitioner has prayed to review an order dated 7.9.2017 passed in A.C.No.29/2015. This e court by said order directed to appoint an arbitrator to ad resolve the dispute between the parties.
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2. Shri A.K. Jain, learned counsel for the petitioner submits that certain crucial documents were not placed a hy before the court in A.C.No.29/2015. He placed reliance on an order sheet dated 28.8.2009 wherein the counsel ad for the arbitrator appeared before the court below and M gave an undertaking that during the pendency of the case, the arbitrator will not proceed further. He also of relied on an order dated 12.1.2008 wherein the court rt below opined that even if the original record of arbitrator ou is summoned, it will not cause any adverse situation for the other side.
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3. Shri Jain, learned counsel for the petitioner submits h that other side filed an application under Section 14 of ig the Arbitration and Conciliation Act, 1996 (in short, 'the H Arbitration Act) assailing the appointment of the arbitrator. The said arbitrator, in the fitness of things, gave an undertaking that till decision is taken on validity of his appointment, he will not proceed further.
4. The petitioner contended that any reasonable person will behave in the same manner when his appointment itself is called in question. Learned counsel for the petitioner during the course of arguments contended that although these order sheets were not placed in the main case and no reply was filed by the present sh petitioner, the fact remains that the arbitrator was not at fault in not proceeding with and concluding the e arbitration proceedings. By taking this Court to ad paragraph 13 of the order passed on 7.9.2017, it is Pr submitted that sole reason for holding that mandate of arbitrator stood terminated is the fact that the arbitrator a hy did not proceed with the matter from 2009 to 2015, the year when A.C.No.29/2015 was filed. On the strength of ad this factual backdrop, the first contention of the M petitioner is that the aforesaid relevant facts were not placed before this Court which resulted into passing of of order dated 7.9.2017.
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5. It is further urged that in A.C.No.29/2015, the other ou side filed I.A.No.5446/2015 wherein it was categorically pleaded that no written agreement exists between the C parties. By taking this Court to Section 7 of the h Arbitration Act, it is argued that existence of arbitration ig agreement and arbitration clause is sine qua non for H exercising the power under Section 11(6) of the Act. Putting it differently, it is argued that in absence of any arbitration agreement/clause, this Court had no occasion to appoint an arbitrator. The third contention of Shri Jain, learned counsel for the petitioner is that the power of review can be exercised in two eventualities, firstly, the review can be prayed for seeking correction of an error apparent on the face of the record. Such review must be treated to be a review on merits. For this kind of review, there must be a specific enabling provision and sh in absence thereof power of review cannot be exercised. The second kind of review is in the realm of procedural e review. He submits that the present case falls within the ad four corners of procedural review and for this purpose, Pr powers are impliedly available to the court. In support of this contention, Shri Jain, learned counsel for the a hy petitioner relied on AIR 1963 SC 1909 [Shivdeo Singh Vs. State of Punjab], (2005) 13 SCC 777 [Birla ad Cotton Spinning and Weaving Mills Ltd. And M another Vs. Kapra Mazdoor Ekta Union]. He also placed reliance on the judgment of the Supreme Court of reported in 2017 (1) MPLJ 46 [Vimal Kishor Shah Vs. rt Jayesh Dinesh Shah].
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6. Learned counsel for the petitioner submits that whether or not, a reply is filed, the fact remains that C basic ingredients on which power under Section 11(6) h ig can be exercised, were not available. This argument is based on twin reasons as noticed, firstly that an H arbitrator was not at fault in not proceeding with the dispute and secondly, there exists no arbitration agreement between the parties on the strength of which, arbitrator can be appointed.
7. Per contra, Shri Sanjay Agrawal, learned counsel for the respondent no.1 opposed the said contention by placing reliance on the order sheets dated 14.9.2008 and 29.11.2008 of the arbitrator. It is argued that the present petitioner appeared before the arbitrator, participated in the proceedings, prayed for time and in turn, filed his sh written statement. It is urged that at no point of time, the present petitioner raised any objection before the e arbitrator that no arbitration agreement exists and ad therefore, arbitration proceedings cannot be continued.
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8. Shri Agrawal argued that interestingly, while filing an application under Order 7 Rule 11 of the Code of Civil a hy Procedure by the other side, he did not raise any objection about non existence of any arbitration clause ad etc. Shri Agrawal submits that in absence of filing any M reply in main case A.C.No.29/2015, the present petitioner cannot be permitted to say that there existed of no arbitration agreement/clause. He submits that in rt addition to written agreement, Section 7 recognizes ou other mode of agreements. As per Section 7(4)(b) and
(c), the arbitration agreement can be inferred if C ingredients mentioned therein are satisfied. He submits h that all these aspects are beyond the scope of judicial ig review in a review petition. In support of the said H contention, Shri Agrawal relied on AIR 1970 SC 1273 [Patel Narshi Thakershi and others Vs. Shri Pradyuman singhji Arjunsingji], 1980 (Suppl.) SCC 420 [Grindlays Bank Ltd. Vs. CGIT], (2007) 10 SCC 742[State of Arunachal pradesh Vs. Damani Construction Co.], 2010 SCC online Allahabad 2309, [Ms. Shivhare Builders Vs. E.E.], 2012 SCC Online Delhi 5443 [Awasthi Construction Co. Vs. Govt. of NCT of Delhi and another] and (1999) 4 SCC 396 Budhia Swain and Ors. Vs. Gopinath Deb sh and Others.
9. Shri Ashok Lalwani, learned counsel while appearing e for remaining respondents contended that (i) by order ad dated 7.9.2017, this Court decided two writ petitions, Pr one miscellaneous appeal and one application filed under the Arbitration Act. The petitioner has filed a review only a hy against order passed in A.C.No.29/2015. Unless the review is filed in all the four cases, the present review is ad not maintainable. (ii). The petitioner has not raised any M objection regarding non-existence of arbitration agreement before the arbitrator and the court below. He of did not file any reply in the main case filed under Section rt 11(6) of the Act. Thus, in the light of 2012(2) JLJ, 321 ou [Ramjilal Kulshrestha Vs. State of M.P. And Ors.], he cannot be permitted to raise an issue which was not C pleaded in the main case. (iii)Shri Lalwani submits that h ig power exercised by the Chief Justice or his designate under Section 11 (6) may be treated as judicial power H but the said authorities namely; the Chief Justice or his designate cannot be treated as âcourtâ or âtribunalâ. He relied on the statutory definition of the âcourtâ mentioned in the Arbitration Act. He placed reliance on various judgments of Supreme Court to contend that the review on merits is tenable only when there exists a specific or implied power of review with the court concerned. Since the present proceedings are not arising out of any order of court or tribunal, the question of exercising power of review does not arise.
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10. The next contention of Shri Lalwani is that the grievance of other side is relating to for a period prior to e filing of section 14 proceedings. In other words, inaction ad of arbitrator before the commencement of proceeding Pr under Section 14 was the main reason for filing an application under Section 11(6) of the Arbitration Act. It a hy is submitted that in the present case, no error apparent on the face of the record exists which requires review.
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11. The contention of learned counsel for the M respondents is that this Court has merely directed for appointment of arbitrator. This will facilitate the parties of to resolve their disputes amicably. This will not cause rt any prejudice to other side. In absence of establishing ou the prejudice, this petition is even otherwise not maintainable.
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12. No other point is pressed by counsel for the parties. h ig
13. I have heard counsel for the parties and perused H the record.
14. At the outset, I deem it proper to deal with the objection/ argument of Shri Lalwani that the order passed under section 11(6) of the Arbitration Act by Chief Justice or his designate, cannot be treated to be an order passed by the âCourtâ or âTribunalâ. Since this objection goes to the root of the matter, I deem it apposite to decide it as a first issue.
15. A question cropped-up before the Supreme Court, namely, what is the nature or function of Chief Justice or sh his designate under section 11 of the Act. Pertinently, a three judge bench in Konkan Railway Corporation e Ltd. & ... vs Rani Construction Pvt. Ltd -(2000) 7 ad SCC-201 had taken the view that it is purely an Pr administrative function. It is further held that it is neither judicial nor quasi judicial function performed by a hy the Chief Justice or his nominee. The correctness of said view was considered by seven judge bench of Supreme ad Court in S.B.P. & Company Vs. Patel Engineering M Ltd. And another-(2005) 8 SCC-618. Shri Lalwani, during the course of argument relied on para-142 of this of judgment. I am afraid that Shri Lalwani relied on rt minority view of Thakker J. In the majority view, the ou Apex Court held as under :-
â43.In this context, it has also to be C noticed that there is an ocean of difference between an institution which h has no judicial functions and an authority ig or person who is already exercising H judicial power in his capacity as a judicial authority. Therefore, only a judge of the Supreme Court or a judge of the High Court could respectively be equated with the Chief Justice of India or the Chief Justice of the High Court while exercising power under Section 11(6) of the Act as designated by the Chief Justice. A non- judicial body or institution cannot be equated with a Judge of the High Court or a Judge of the Supreme Court and it has to be held that the designation contemplated by Section 11(6) of the Act is not a designation to an institution that is incompetent to perform judicial functions. Under our dispensation a non- judicial authority cannot exercise judicial powers.
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44. Once we arrive at the conclusion that the e proceeding before the Chief Justice while ad entertaining an application under Section 11(6) of the Act is adjudicatory, then Pr obviously, the outcome of that adjudication is a judicial order. Once it is a judicial order, the same, as far as the High Court is a concerned would be final and the only hy avenue open to a party feeling aggrieved by the order of the Chief Justice would be to ad approach to the Supreme Court under Article 136 of the Constitution.
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16. The relevant conclusions drawn in para-47 reads as rt under :-
ou â(i) The power exercised by the Chief Justice of the High Court or the Chief C Justice of India under Section 11(6) of the h Act is not an administrative power. It is a judicial power.
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(ii) The power under Section 11(6) of the H Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another judge of that court and by the Chief Justice of India to another judge of the Supreme Court.
(iii) In case of designation of a judge of the High Court or of the Supreme Court, the power that is exercised by the designated, judge would be that of the Chief Justice as conferred by the statute.
(iv) The Chief Justice or the designated judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration sh agreement, the existence or otherwise of a live claim, the existence of the condition e for the exercise of his power and on the ad qualifications of the arbitrator or arbitrators. The Chief Justice or the judge Pr designated would be entitled to seek the opinion of an institution in the matter of a nominating an arbitrator qualified in terms hy of Section 11(8) of the Act if the need arises but the order appointing the ad arbitrator could only be that of the Chief Justice or the judge designate.
(vii) Since an order passed by the Chief M Justice of the High Court or by the designated judge of that court is a judicial of order, an appeal will lie against that order only under Article 136 of the Constitution rt of India to the Supreme Court.
(xii) The decision in Konkan Railway ou Corporation Ltd. and Anr. v. Rani Construction Pvt. Ltd. is overruled.
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17. A conjoint reading of para-43,44 and 47 makes it clear like noon day that the functions performed by the Chief Justice or his designate under section 11 is a judicial function. In exercise of such function, the orders passed must be treated as judicial orders. In other words a combine reading of these paragraphs makes it clear that the order passed in section 11(6) of the Act is outcome of a judicial function and, therefore, it cannot be said that the said order is administrative in nature. Once the order passed under section 11 is held to be based on judicial sh function, it cannot be said that the said order is not passed by a court. Thus, I am unable to persuade e myself with the contention that the order passed ad under section 11(6) cannot be treated as an order Pr passed by the court. Thus, this objection being devoid of substance, is rejected. Since, Shri Lalwani, a hy learned counsel for the respondents has relied on seven judge bench judgment of the Supreme Court ad in the case of S.B.P. & Company Vs. Patel M Engineering Ltd. And another, 2005 (8) SCC 618, I am not inclined to deal with the other of judgments of lessor strength cited by Shri Lalwani rt on the similar point.
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18. In Kapra Mazdoor Ekta Union Vs. Birla Cotton SPG and Weaving Mills Ltd.-(2005)13 C SCC-777, it was held thus :-
h ig H â19. Applying these principles it is apparent that where a Court or quasi judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the Court or the quasi judicial authority is vested with power of review by express provision or by necessary implication. The procedural review belongs to a different category. In such a review, the Court or quasi judicial authority having jurisdiction to adjudicate proceeds to do so, but in doing so commits a procedural illegality which goes to the root of the matter and invalidates the proceeding itself, and consequently the order passed therein.
sh Cases where a decision is rendered by the Court or quasi judicial authority e without notice to the opposite party or ad under a mistaken impression that the notice had been served upon the Pr opposite party, or where a matter is taken up for hearing and decision on a a date other than the date fixed for its hy hearing, are some illustrative cases in which the power of procedural review ad may be invoked. In such a case the party seeking review or recall of the order does not have to substantiate the ground M that the order passed suffers from an error apparent on the face of the record of or any other ground which may justify a review. He has to establish that the rt procedure followed by the Court or the quasi judicial authority suffered from ou such illegality that it vitiated the proceeding and invalidated the order C made therein, inasmuch the opposite party concerned was not heard for no h fault of his, or that the matter was heard ig and decided on a date other than the H one fixed for hearing of the matter which he could not attend for no fault of his. In such cases, therefore, the matter has to be re-heard in accordance with law without going into the merit of the order passed. The order passed is liable to be recalled and reviewed not because it is found to be erroneous, but because it was passed in a proceeding which was itself vitiated by an error of procedure or mistake which went to the root of the matter and invalidated the entire proceeding. In Grindlays Bank Ltd. vs. Central Government Industrial Tribunal and others (supra), it was held that once it is established that the respondents were prevented from appearing at the hearing due to sufficient cause, it sh followed that the matter must be re- heard and decided again.â e (Emphasis supplied) ad Pr
19. Shri Sanjay Agarwal, relied on the judgment of Supreme Court in the case of Grindlays Bank Ltd. Vs. a hy Central Govt. Industrial Tribunal and others-1980 (Supp) SCC-420 and judgment of Allahabad High Court ad in Shivhare Builders Vs. Executive Engineer, M Provicial Division, P.W.D and ors-2010 SCC online All 2309.
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20. Interestingly, the common string in these judgments rt cited by Shri Jain and Shri Agarwal is that review on ou merits is impermissible unless there exists an enabling provision in the statute or the said power is impliedly C available to the court. However, the procedural review is h dealt with in a different manner. In Grindlay Bank ig (supra), it was held that the expression âreviewâ is H used in two distinct senses, namely, (i) a procedural review which is either inherent or implied in a court or Tribunal to set aside a palpably erroneous order passed under a misapprehension by it, and (ii) a review on merits when the error sought to be corrected is one of law and is apparent on the fact of the record. As noticed, in the said judgments cited by both the parties, the principle laid down are common which are based on the judgment of Grindlays Bank (supra).
21. In view of said principle, it is clear that if error is sh relating to procedural review, the power of court can be treated to be inherent. It is important to note here that e in Damani Construction (supra), the Apex Court did ad not deal with the aspect of procedural review. Thus, the Pr judgments of Damani Construction and Budhia Swain (supra) are of no help to the other side.
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22. The interesting conundrum on the basis of aforesaid factual backdrop is whether the present review can be ad treated as a procedural review ? This aspect requires M serious consideration.
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23. In the present case, this is not in dispute that the annexures filed with the review petition were not rt filed by the parties in the main case. The review ou petitioner has not pointed out any manifest C procedural error while passing the order under h review. The whole argument of Shri A.K.Jain, ig learned counsel for the petitioner is based on para H 19 of the judgment of the Supreme Court in the case of Kapra Mazdoor Ekta Union (supra). A plain reading of the said para makes it crystal clear that procedural review and review on merits are two different facets. Review on merits is permissible only if court or quasi judicial authority is vested with the power of review by expressed provision or by necessary implication.
24. In the present case, the argument of Shri Jain is that the petitioner is not claiming review on merits and, therefore, question of existence of enabling sh provision for review by express provision or by necessary implication does not arise. It is condign to e see whether the grounds raised by the petitioner fall ad within the ambit of âprocedural reviewâ.
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25. In the case of Kapra Mazdoor Ekta Union (supra), in no uncertain terms it was made clear that a hy power of procedural review may be invoked in a case where party seeking review does not have to ad substantiate the ground that the order suffers from M an error apparent on the face of the record. He is also not required to justify a review on the basis of of other grounds. In such review, petitioner must rt establish that procedure adopted by the Court ou suffered from an illegality which vitiated the proceeding or invalidated the order. The Apex Court C gave illustrations in this regard in para 19. Further h more, it was clarified that where there are ig procedural flaws like the other side was not put to H notice, matter was heard before the date for which notice was issued etc, review is permissible without going into the merits of the order passed. The words of caution were inserted in para 19 that such order is liable to be recalled and reviewed not because it is found to be erroneous, but because it was passed in a proceeding which itself was vitiated by an error of procedure which went to the root of the matter. If the petitioner's case is tested on the anvil of this judgment of Kapra Mazdoor Ekta Union (supra), it sh will be clear that the error pointed out are not related to the procedural part but the same are e related to the merits of the case.
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26. In view of principles laid down in Kapra Pr Mazdoor Ekta Union (supra), this court is unable to hold that the review prayed for is in the nature of a hy procedural review. Since no express or implied provision for review exists under Arbitration and ad Conciliation Act, 1996, the present review petition M cannot be entertained. Consequently, review petition is dismissed.
of rt ou C h (Sujoy Paul) ig Judge H P/MKL/AM Digitally signed by MANOJ KUMAR LALWANI Date: 2017.11.17 03:35:39 -08'00' H ig h MKL C ou rt of M ad hy a Pr ad e sh JUDGE (SUJOY PAUL)