Rajasthan High Court - Jaipur
Johari Forts And Palaces Pvt. Ltd. vs Maharaja Narendra Singh And Ors. on 27 March, 2001
Equivalent citations: 2001(3)WLC497, 2007(2)WLN234
Author: B.S. Chauhan
Bench: B.S. Chauhan
JUDGMENT B.S. Chauhan, J.
1. The instant writ petition has been filed for setting aside the impugned order dated 7.1.2000 (Annex. 5) by which the Addl. District Judge, Bikaner has neither granted nor refused interim measures on petitioner's application under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the Act).
2. The case has a chequered history as there are larger number of cases pending between the parties in civil and criminal courts in respect of the property in dispute. There had been claims and counter-claims regarding existence of agreement between the petitioner and respondent No. I for leasing out the Lalgarh Palace, Bikaner. Property has been handed over to respondent No. 2 and the said premises are being used as a Hotel. Petitioner filed a suit for specific performance before the Civil Court, Bikaner which is still pending. The arbitration clause in the alleged agreement was resorted to and the matter is seized by the Arbitral Tribunal. Petitioner filed an application under Section 9 of the Act in the Court of District Judge, Bikaner for appointing a Receiver and directing the respondent No. 1 to furnish securities etc. Respondent No. 1 filed an application under Section 151 of the Code of Civil Procedure (for short CPC) praying that the application under Section 9 of the Act may not be decided at this stage for the reason that existence of the agreement and the veracity of its contents had been challenged before the Arbitral Tribunal. The Court disposed of the said application vide impugned judgment and order dated 7.1.2000 (Annex. 5) stating that as the existence and veracity of the agreement itself was under challenge, the application could not be decided at this stage. Hence this petition.
3. Shri S.P. Sharma and Shri M.S. Singhvi, learned counsel for the respondents have raised the preliminary objection regarding the maintainability of the writ petition on the ground that order passed under Section 9 of the Act is appealable under Section 37 of the Act. Moreso, as the suit for specific performance filed by the petitioner before the trial Court and proceedings before the Arbitral Tribunal are pending, filing of application under Section 9 of the Act amounts to abuse of the process of the Court. Thus, the application was liable to be rejected on these grounds alone.
4. On the other hand, Shri Mridul learned Sr. Advocate has submitted that impugned order does not amount to rejection of the application; it has merely been postponed, therefore, it cannot be held to be an order passed under Section 9 of the Act and thus appealable.
5. A Constitution Bench of the Hon'ble Supreme Court, in G. Veerappa Pillai v. Raman & Raman Ltd. , held that where the Statute itself provides for a appealable/revisable forum, the writ jurisdiction should not be invoked.
6. Similar view has been reiterated in Assistant Collector of Central Excise v. Dunlop India Ltd. ; R. Kishore Biswas v. State of Tripura ; and Shivgovinda Anna Patil v. State of Maharastra .
7. In C.A. Ibraham v. I.T.O. , and H.B. Gandhi v. M/s Goptnath & Sons 1992 (Suppl.) 2 SCC 312, the Hon'ble Apex Court held that where hierachy of appeals is provided by the Statute, party must exhaust the statutory remedies before resorting to writ jurisdiction.
8. Another Constitution Bench of the Hon'ble Supreme Court, in K.S. Venkataraman & Co. v. State of Madras , considered the Privy Council judgment in Raleigh Investment Co. Ltd. v. Governor General in Council AIR 1947 PC 78 and held that the writ court can entertain the petition provided the order is alleged to be without jurisdiction or has been passed in flagrant violation of the principles of natural justice, or the provisions of the Act/Rules is under challenge.
9. In Titaghur Paper Mill's Co. Ltd. v. State of Orissa and Anr. , the Hon'ble Supreme Court refused to extend the ratio of its earlier judgment in State of Uttar Pradesh v. Mohammed Nooh AIR 1958 SC 86, wherein the Court had held that prerogative writ can be issued to correct the error of the Court or Tribunal below even if an appeal is provided under the Statute under certain circumstances, i.e. the order is without jurisdiction, or principles of natural justice have not been followed, and held that in case of assessment under the Taxing Statute, the principle laid down by the Privy Council in Raleigh Investment Co. Ltd. (supra) would be applicable for the reason that "the use of the machinery provided by the Act, not the result of that use, is the test".
10. While deciding the said case, the Hon'ble Supreme Court placed reliance on large number of judgments, particularly New Water Works Co. v. Hawkes Ford (1859) 6 CBNS 336; Neville v. London Express Newspapers Ltd. 1919 AC 368, and Attorney General of Trinidad & Taboco v. Gordon Grant & Co. 1935 Appeal Cases 532; and Secretary of State v. Mask & Co. AIR 1949 PC 105, wherein it had consistently been emphasised that the remedy provided by the statute must be followed and writ should not generally be entertained unless the statutory remedies are exhausted.
11. In Sheela Devi v. Jaspal Singh , the Hon'ble Apex Court has held that if the statute itself provides for a remedy of revision, writ jurisdiction cannot be invoked.
12. In Jai Singh v. Union of India , the Apex Court depricated the practice and tendency of a party approaching two different forums for the same relief. In that case the party had filed a suit and when it could not get interim relief, it approached the Writ Court by filing the writ petition, claiming the same relief. The Apex Court held that in such a situation, it is not permissible for the party to pursue two parallel remedies in respect of the same matter at the same time.
13. In J.S. Rawat v. National Air Port Authority and Ors. 1991 (1) RLR 210; Mangi Lal v. R.S.R.T.C. and Ors. 1991 (2) RLR 466, and Ramcharan Das v. State of Rajasthan and Ors. 1986 RLR 680, this Court held that no person can be permitted to choose two forums for the same relief as it amounts to abuse of process of the Court.
14. In SBCWP No. 651/2000, M/s B.S.L. Ltd., Bhilwara v. State of Rajasthan and Ors., decided on 25.8.2000, this Court relegated the parties to the appropriate forum observing that parties should approach the Writ Court only after exhausting the statutory remedies.
15. Undoubtedly, provisions of Section 37(i) of the Act provides for appeal before this Court but it is restricted to the order of granting interim measures of rejecting the same. In the instant case, the Court has held that no order could be passed as the issue of very existence of the agreement was pending before the Arbitral Tribunal. The order may not fall within the ambit of Section 37(i) of the Act. Thus petition is held to be maintainable.
16. Section 9 corresponds to the provisions of Section 41(b) of the Arbitration Act, 1940 (for short Act 1940) read with Schedule wherein the Court had power to grant interim reliefs for the purpose of and in relation to arbitration proceedings. However pendency of proceedings in relation to arbitration was a pre condition for exercise of powers by the Court to grant interim relief under Section 41(b) of the Act 1940 (vide M/s Sant Ram & Co. v. State of ajasthan and Ors. ). Under Section 41(b) of the Act 1940 the Court was required to pass an order keeping in view the three limitations which were imposed thereunder, namely; (i) Powers could be exercised to same extent and in manner as it could for the purpose, and in relation to any proceedings before it; (ii) Powers could be exercised only for the purpose and in relation to arbitration proceedings and; (Hi) Exercise of those powers was not to prejudice any power which might be vested in an arbitrator or umpire. While enacting Section 9 of the Act, the limitations above referred to have been retained except the one contained in Clause (ii).
17. Section 9 of the Act enables the party, before or during arbitral proceedings, or at any time after making of the award before it is enforced under Section 36 to apply to a Court for interim measures of protection in respect of any of the matters mentioned in the agreement including the preservation, sale of any goods which are the subject matter of the arbitration agreement and also for interim injuction or the appointment of a receiver, While entertaining such an application the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceeding before it. Section 16 provides that 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. Section 17 enables the Arbitral Tribunal to grant interim measures if such power has not been withdrawn by the parties by agreement and in such an eventuality the Arbitral Tribunal may pass an order for any interim measure of protection as the Tribunal may consider necessary in respect of the subject matter in dispute. The Tribunal may also require a party to provide appropriate security in connection with a measure under Sub-section (1) thereof.
18. The basis difference in Section 9 and Section 17 appears to be that proceedings under Section 9 initiated even before resorting to the arbitration proceedings or during its pendency in certain matters and also after making of the Award but before its execution under Section 36 while under Section 17 orders can be passed only during the pendency of the arbitration proceedings. Parties by agreement may exclude the exercise of such power by the Tribunal.
19. The condition of pendency of arbitration proceedings in Court before it could grant interim relief does not exist under Section 9 of the Act. The provision thereof is a self-contained provision. The source of power of a Court to make orders by way of interim measures is in Section 9 of the Act and there is no independent power dehors the provisions contained therein. In Sundaram Finance Ltd. v. NEPC India Ltd. the Hon'ble Apex Court held that a party can approach the Court even prior to commencement of the arbitration proceedings under Section 21 of the Act. There has been a complete departure in this respect if compared with provisions contained in the Act 1940. In large number of cases it was found very difficult to serve the respondents therefore, the Legislature considered it necessary that the provision be made in the Act which would enable a party to get interim measures urgently in order to protect its interest.
20. In the instant case the respondent No. 1 has filed an application before the Arbitral Tribunal challenging the very existence and veracity of the agreement between the parties; and also an application under Section 151 CPC before the Court for not entertaining the application under Section 9 till his application gets decided by the Tribunal. The Court while passing the impugned order has held as under:
(i) There must be a valid agreement between the parties;
(ii) The agreement must contain arbitration clause;
(iii) Application of respondent No. 1 raising the question of very existence of the agreement and arbitration clause was pending before the Arbitral Tribunal;
21. Mr. Mridul has urged that the Court has gravely erred in holding that application under Section 9 could not be decided unless the disputed questions of facts i.e. existence of agreement etc. are settled by the Tribunal. On the contrary Mr. Singh7vi and Mr. Sharma have submitted that existence of valid agreement also providing for arbitration is a condition precedent for granting interim measures by the Court and powers to adjudicate upon such issues have been conferred exclusively upon the Tribunal itself under Section 16 of the Act. Thus Court has no jurisdiction to decide the said issues. It has further been submitted that Court can exercise the powers under Section 9 only if the reference to arbitration proceedings has been made by the Court itself under Section 8 of the Act.
22. In a given case, a party may approach the Court under Section 9, get an interim measure i.e. appointment of receiver or deposit of security and may not resort to the arbitration proceedings at all, it may amount to abuse of the process of the Court. There may be instance where an application for interim measures under Section 17 is refused by the Tribunal itself and the question would arise whether in such eventuality the same party would be able to maintain application under Section 9 of the Act. Be that as it may when a party approaches the Court under Section 9 of the Act, it is implicit that it would resort to arbitration proceedings expeditiously. Moreso, as the jurisdiction of the Court and Tribunal in this regard is concurrent, entertaining such an application by the Court is not barred.
23. Section 8 makes a reference to the judicial authority and not to Court. It is so for the reason that the expression "Court" has been defined in Clause (e) of Sub-section (1) of Section 2 of the Act in a limited connotation. Section 8(1) mandatorily requires that the application has to be made to the judicial authority before whom the action may be pending which need not be a principal Civil Court of original jurisdiction in District, including the High Court in exercise of its ordinary original jurisdiction, having jurisdiction in the arbitration matter. Such an expression was also used in Section 34 of the Act 1940. In Natrqj Studios v. Navrag Studios AIR 1981 SC 537, the Hon'ble Apex Court has held that application was required to be made to the judicial authority before which the proceedings were pending and not to the Court which had jurisdiction over the arbitration proceedings.
24. In Fair Air Engineers (P) Ltd. v. N.K. Modi , the Hon'ble Apex Court held that the District Forum, State Commission and National Commission constituted under the Consumer Protection Act, 1986 are also judicial authorities for the purposes of Section 34 of the Act 1940 and as such now for the purposes of Section 8 of the Act. However, there may be a case where in the arbitration agreement by inserting a particular clause the jurisdiction may be conferred upon a particular Court; say in case of any dispute only the Court at New Delhi shall have the jurisdiction, the question arises whether in such a situation the application can be filed in a Court the matter relating to arbitration proceedings is situated. In such an eventuality as the parties have excluded the jurisdiction of the said Court, Section 9 application shall lie only before the Civil Court at New Delhi (vide D.L.F. Companies Ltd. v. Standard Charted Bank ). In Khaleed Ahmed Dakhani v. Hatti Gold Mines Co. Ltd. AIR 2000 SC 1926, the Apex Court considered its earlier judgment in Patel Roadways Ltd., Bombay v. Prasad Trading Co. , and held that to reach the correct conclusion the Court has to read and interpret the terms and conditions incorporated in the agreement in view of the scope of Section 20 CPC. Moreso, agreement clause may be agreed upon at any subsequent stage and it is not necessary that parties must agree for such reference at the time of original agreement.
25. In P. Anand Gajapatti Raju and Ors. v. P.V.G. Raju AIR 2000 SC 1886, the Hon'ble Supreme Court categorically held that before the Court refer parties to arbitration, in exercise of the power under Section 8, it should be satisfied, inter alia, that there is an arbitration agreement and subject matter of the action is same as the subject matter of the arbitration agreement.
26. While deciding the case in Himet Resources Inc and Anr. v. Essar Stells Ltd. , the Apex Court referred to and relied upon its earlier judgments in Konkon Railway Corporation and Ors. v. Mahal Construction Co. , and Wellington Associates Ltd. v. Kirti Mehta , and held that though Section 16 empowers the Arbitral Tribunal to rule on its jurisdiction and the issue of existence of an agreement between the parties, the word "may" used therein suggests that the tribunal alone has not been conferred jurisdiction to decide the said issues. The power to decide the said issues have not been excluded even for the person exercising its power under Section 11 of the Act. Conferment of such power on the arbitrator under the Act merely indicates the intention of the Legislature and its anxiety to see that the arbitral process is set in motion. The language used therein does not suggest that the Court while deciding the application under Section 9 is precluded to decide the said issues.
27. Thus, in view of the above referred to legal position and fact-situation of the case, I reach the following conclusions:
(i) Application under Section 9 of the Act, seeking interim measures can be filed even before resorting to arbitration proceedings, during its pendency and after the same is made before its execution.
(ii) The arbitration clause can be agreed even after reaching the agreement.
(iii) Jurisdiction of the Court in respect of grant of interim measure is concurrent with the Arbitral Tribunal.
(iv) For deciding the application under Section 9 or even for referring the parties to arbitration proceedings under Section 8 the Court has to decide the issue of existence of the valid agreement between the parties.
(v) While referring the parties to arbitration proceedings the Court may not decide the questions relating to existence of agreement and may refer the parties to arbitration proceedings and the issue can be decided by the Tribunal.
(vi) The competence to decide the issue of existence of agreement has not exclusively been conferred upon the Tribunal. It can be decided by the Court or even the person authorised under Section 11 or by the Court while making reference under Section 8 of the Act.
(vii) Before passing an order granting interim measures, the Court has to decide the question of existence of valid agreement and cannot proceed with presumption of existence of agreement.
28. In the instant case as the Tribunal is seized with the matter and question of existence and veracity of agreement is being decided by it the Court has rightly not granted or refused the relief at this stage for the reason that the same issue is not required to be decided by two forums having concurrent jurisdiction simultaneously. Petition is devoid of any merit and is accordingly rejected. There shall be no order as to costs.