Bombay High Court
M/S.Roptonal Ltd (Erstwhile The Indian ... vs Anees Bazmee on 8 June, 2016
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
REVIEW PETITION (L) NO.7 OF 2016
IN
ARBITRATION APPLICATION NO.97 OF 2013
1. Roptonal Ltd (Erstwhile the Indian )
Film Company (Cyprus) Ltd. )
Omirou, 51 RIK, Aglantzia, P.C. 2121, )
Nicosia, Cyprus. )
2. Viacom 18 Media Pvt. Ltd. )
A company incorporated and registered )
under the provisions of the Companies
ig )
Act, 1956, having its office at Zion )
Bizworld, Subhas Road 'A', Vile Parle (E), )
Mumbai - 400 064. ) .. Petitioners
Versus
1. Anees Bazmee, )
An Indian Inhabitant residing at )
1502, Deep Towers, Near Shanitvan, )
Oshiwara, Andheri (W), )
Mumbai - 400 053. ) .. Respondent
---
Mr.Snehal Shah a/w Mr.Vaibhav Bhure a/w Ms.Madhu Gadodia a/w
Ms.Akshita Palvia i/by M/s.Naik Naik & Co. for the petitioners.
Mr.J.P.Sen, Senior Advocate a/w Mr.Vaibhav Goghare a/w Mr. Murlidhar
S. Khadilkar a/w Mr.Piyush Pande i/by M/s.MAG Legal for the
respondent.
---
CORAM : R.D. DHANUKA, J.
RESERVED ON : 5th May 2016
PRONOUNCED ON : 8th June 2016
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Judgment :-
. By this review petition filed by the petitioners, the
petitioners seek review/recall of the order and judgment dated 12 th June 2014 passed by this Court in Arbitration Application No.97 of 2013.
Some of the relevant facts for the purpose of deciding this petition are as under :-
2. The Viacom 18 Media Private Limited-petitioner no.2 herein was the original applicant along with the Indian Film Company (Cyprus) Limited in the Arbitration Application No.97 of 2013. The said Indian Film Company (Cyprus) Limited has merged with M/s.Roptonal Limited, Cyprus-petitioner no.1 herein on or about 19th January 2015. The petitioner no.1 is also a body incorporated outside India. The petitioner no.2 is having its registered office at Mumbai.
3. By an agreement dated 12th May 2008 executed between M/s. Indian Film Company (Cyprus) Limited and the respondent, the respondent has been assigned and transferred in favour of the Indian Film Company (Cyprus) Limited, all their rights, title and interest. By virtue of a deed of novation, all such right, title and interest of the said M/s. Indian Film Company (Cyprus) Limited and by virtue of an order of this Court passed in Company Scheme Petition No.628 of 2012 has now vested in the petitioner no.2.
4. The dispute arose between the parties, the petitioner no.2 herein and the said M/s. Indian Film Company (Cyprus) Limited invoked ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 3 rpl-7.16(j).doc arbitration agreement and requested for appointment of an arbitrator.
Since the respondent did not agree to appoint any arbitrator, the said M/s.Indian Film Company (Cyprus) Limited and the petitioner no.2 herein filed an Arbitration Application (97 of 2013) under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short "the said Act") in this Court inter alia praying for an appointment of a sole arbitrator. The said arbitration application was opposed by the respondent herein on various grounds by filing an affidavit-in-reply.
5. The respondent therein however did not raise any issue of jurisdiction of the Chief Justice or his designate of this Court to hear and entertain the said arbitration application. By an order dated 12 th June 2014, the learned designate of the Chief Justice observed that there was no dispute that the arbitration agreement exists. The learned designate appointed a former Chief Justice of Allahabad High Court as a sole arbitrator by consent of the parties. In the said order, it was made clear that except the issue that the arbitration agreement exists, all other issues raised in the affidavit-in-reply were kept open. The said arbitration application was disposed of by the said order dated 12th June 2014.
6. Pursuant to the liberty granted by the learned arbitrator, the petitioners herein filed Statement of Claim before the learned arbitrator.
The respondent has filed written statement and counter-claim in the said proceedings.
7. The petitioner no.2 and the said M/s. Indian Film Company (Cyprus) Limited had filed Arbitration Application No.166 of 2013 ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 4 rpl-7.16(j).doc against Mr.Soham Shah under Section 11(6) of the said Act inter alia praying for appointment of an arbitrator.
8. By an order dated 27th June 2014 passed by the then designate of the Chief Justice, a counsel of this Court was appointed as a sole arbitrator. By consent of the parties in the said matter, the learned designate of the Chief Justice substituted the earlier arbitrator by passing another order on 27th June 2014. The applicants in the said arbitration application thereafter noticed that since the applicant no.1 in the said arbitration application i.e.Indian Film Company Limited [formerly The Indian Film Company (Cyprus) Limited] was a company incorporated in Cyprus and admittedly was a body incorporated in the country other than India the arbitration between those parties would be an International Commercial Arbitration within the meaning of Section 2(1)(f) of the said Act and thus the application for appointment of an arbitrator could be filed only before the Chief Justice of India under Section 11(9) of the said Act and not under Section 11(6) of the said Act before the Chief Justice of this Court. The applicants in the said Arbitration Application No.166 of 2013 filed a Review Petition bearing (L) No.32 of 2015 in this Court inter alia praying for recall of the order dated 27th June 2014 passed by the then designate of the Chief Justice on the ground that the then designate of the Chief Justice had no jurisdiction to pass the said order under Section 11(6) of the said Act since one of the parties to the said proceedings was incorporated in the country other than India and there was an inherent lack of jurisdiction in the learned designate of the Chief Justice to pass any such order.
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9. The applicant applied for procedural review by filing the said Review Petition (L) No.32 of 2015. By an order and judgment dated 22nd February 2016, the learned designate of the Chief Justice recalled the order dated 27th June 2014 passed in the Arbitration Application No.166 of 2013 and dismissed the said arbitration application being without jurisdiction. The petitioners in this review petition, have also applied for procedural review and seek recall of the order and judgment dated 27th June 2014 passed by the learned designate of the Chief Justice on similar ground.
10. Mr.Shah, learned counsel appearing for the petitioners invited my attention to the averments made in the Arbitration Application (97 of 2013), the averments made in the arbitration petition filed by the petitioners under Section 9 of the said Act in this Court and the averments made in the statement of claim filed before the learned arbitrator. He submits that in all the pleadings filed by the petitioners referred to aforesaid, the petitioners had placed on record that the Indian Film Company (Cyprus) Limited was a company incorporated in Cyprus i.e. country other than India. He submits that there was no dispute between the parties that the said M/s. Indian Film Company (Cyprus) Limited was a company incorporated in Cyprus i.e. one of the countries other than India. He submits that neither the respondent raised any objection of jurisdiction when the said Arbitration Application No.97 of 2013 filed by the petitioners was heard by the designate of the Chief Justice of this Court nor the petitioners noticed that the said arbitration application could not have been filed before the Chief Justice of this High Court under Section 11(6) of the said Act in view of the arbitration ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 6 rpl-7.16(j).doc between the parties being an International Commercial Arbitration and thus the application ought to have been filed before the Chief Justice of India under Section 11(9) of the said Act.
11. It is submitted that since one of the companies having been incorporated outside India, the said Arbitration Application No.97 of 2013 could not have been filed before the Chief Justice of this Court at all and thus the order passed by the learned designate of the Chief Justice on 12th June 2014 in the said arbitration application suffered from inherent lack of jurisdiction, was without jurisdiction and was nullity.
12. Learned counsel for the petitioners placed reliance on the order and judgment of this Court delivered on 22nd February 2016 in the Review Petition (L) No.32 of 2015 which was filed by the original respondent in the Arbitration Application No.166 of 2013 against the original applicants who are the original applicants i.e. Indian Film Co.
Limited [formerly The Indian Film Company (Cyprus) Limited] and M/s.Viacom 18 Media Pvt. Ltd.-petitioner no.2 herein.
13. The petitioner no.1 herein was also impleaded as a party- respondent to the said Review Petition (L) No.32 of 2015. He submits that the facts of this case and the facts in the said Review Petition (L) No.32 of 2015 are identical and thus the said order and judgment of this Court delivered on 22nd February 2016 in Review Petition (L) No.32 of 2015 would squarely apply to the facts of this case. He submits that this Court has held that even if the parties did not bring to the notice of the learned designate of the Chief Justice when the ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 7 rpl-7.16(j).doc application under Section 11 of the said Act was heard that one of the parties to the arbitration application was a body incorporated in the country other than India, the dispute would fall within definition of an "International Commercial Arbitration" under Section 2(1)(f) of the said Act, thus even by consent of the parties, learned designate of the Chief Justice of this Court could not have appointed an arbitrator in case of International Commercial Arbitration and thus question of waiver would not apply to the facts of this case in view of there being inherent lack of jurisdiction.
14. It is submitted that this Court has already held that merely because the review petitioner had not raised any objection before the learned arbitrator in the written statement, the order passed by the learned designate of the Chief Justice which order itself was without jurisdiction and which objection could not be derogable, there would be no waiver under Section 4 of the said Act. He submits that this Court after perusing the statement of claim filed by the original applicant before the learned arbitrator recorded a finding that the said claim was filed by both the applicants including the applicant no.1-company which was incorporated in the country other than India. This Court in the said Judgment held that procedural review under Article 215 of the Constitution of India is permissible.
15. It is submitted by the learned counsel for the petitioners that the original petitioner-M/s.Indian Film Company (Cyprus) Limited which was organized under the laws of Cyprus got merged and amalgamated into M/s. Indian Film Company Limited which was also a foreign incorporated entity by an order dated 4th October 2013. He submits that ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 8 rpl-7.16(j).doc invocation of the arbitration agreement in the present proceedings was admittedly by a body incorporated outside India. He submits that the present petitioner no.1 is also a body incorporated outside India and has jointly filed statement of claim with the petitioner no.2. It is submitted that contractual/commercial agreement of the respondent was with M/s. Indian Film Company (Cyprus) Limited which was incorporated in Cyprus.
16. It is submitted by the learned counsel that in view of the aforesaid admitted facts, the order passed by the learned designate of the Chief Justice on 12th June 2014 appointing a sole arbitrator suffered from an error apparent on the face of the record and was ex-facie without jurisdiction. It is submitted that since the learned arbitrator has been appointed by the learned designate of the Chief Justice of this Court who had no jurisdiction to appoint any arbitrator under Section 11(6) in the Arbitration Application No.97 of 2013, the arbitration being International Commercial Arbitration, the award if any rendered by the learned arbitrator would be contrary to Section 34(2)(a)(v) on the ground that the composition of the arbitral tribunal was in conflict with the provision of Part-I which the parties could not derogate. He submits that Sections 11(6) and 11(9) of the said Act admittedly fall under Part- I of the said Act.
17. Learned counsel for the petitioners placed reliance on the judgment of the Supreme Court in the case of National Insurance Company Limited Vs. Boghara Polycab Private Limited, reported in (2009) 1 SCC 267 and in particular paragraphs 20, 21, 22.1 to 22.3 ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 9 rpl-7.16(j).doc thereof and would submit that when the application under Section 11 is filed by a party, the Chief Justice or his designate himself has to decide (I) whether the party making application has approached the appropriate High Court or not, (ii) whether there was an arbitration agreement and
(iii) whether the party who had applied under Section 11 of the said Act was a party to such an agreement or not. He submits that when the dispute between the parties to the agreement is referred to the arbitration without intervention of the Court, the arbitral tribunal can decide the question affecting its jurisdiction: (i) whether there was an arbitration agreement; (ii) whether the arbitration agreement was valid; (iii) whether the contract in which the arbitration clause was found to be null and void and (iv) whether the invalidity extends to the arbitration clause also. He submits that the decision of the Chief Justice/his designate on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the arbitral tribunal. He submits that since the arbitration application filed by the petitioners was not before the Chief Justice of the proper Court having jurisdiction, the learned Chief Justice or his designate had to dismiss the said arbitration application and there could not have been any challenge to the appointment of the learned arbitrator before the learned arbitrator itself by a party.
18. Learned counsel for the petitioners placed reliance on the judgment of the Supreme Court in the Indian Bank Vs.Manilal Govindji Khona, reported in (2015) 3 SCC 712 on the same issue. Reliance is placed on the judgment of this Court in the case of Rosy Blue (India) Pvt. Ltd. Vs. Orbit Corporation Ltd., reported in 2013 ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 10 rpl-7.16(j).doc SCC OnLine Bom 341 decided on 27th February 2013 in support of his submission that there is a distinction between a procedural review and a review on merits and that a substantive review on merits is unavailable in respect of an order passed under Section 11 of the said Act. He submits that the present petition filed by the petitioners is a procedural review sought by the petitioners and not a review on merits.
Learned counsel for the petitioners placed reliance on the judgment of the Allahabad High Court in the case of Manish Engineering Enterprises Vs. Managing Director, IFFCO, New Delhi & Ors., reported in AIR 2008 All 56 in support of his submission that a procedural review of an order passed under Section 11 of the said Act is permissible.
19. Mr.Sen, learned senior counsel for the respondent, on the other hand, submits that admittedly the learned arbitrator was appointed by the learned designate of the Chief Justice by consent of both the parties and since consent of the parties is the foundation of jurisdiction of the learned arbitrator, any appointment made by consent of the parties, regardless of the context, would constitute a valid appointment. He submits that since the parties had agreed to the appointment of an arbitrator, irrespective of fact that the said order was passed by the learned designate of the Chief Justice of this Court under Section 11(6) of the Act, though one of the parties to the arbitration proceedings was incorporated in the country other than India, such appointment of the learned arbitrator was a valid appointment and could not be challenged on the ground that learned designate of the Chief Justice of this Court had no jurisdiction to appoint an arbitrator or that there was inherent lack ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 11 rpl-7.16(j).doc of jurisdiction of the designate of the Chief Justice to pass such order.
In support of this submission, learned senior counsel placed reliance on the judgment of the Supreme Court in the case of Narayan Prasad Lohia Vs. Nikunj Kumar Lohia & Ors., reported in (2002) 3 SCC 572 and more particularly paragraphs 14 to 16 thereof. Learned senior counsel submits that even if a party has consented to the appointment of an arbitrator, any plea that the arbitrator has no jurisdiction to decide the dispute in issue or that he is exceeding his jurisdiction has to be raised under Section 16 of the said Act. He submits that no such objection is raised by the petitioners before the learned arbitrator.
20. In support of this submission, learned senior counsel relied upon the following judgments :-
(i) The judgment of the Supreme Court in the case of Krishna Bhagya Jala Nigam Ltd. Vs. G. Harishchandra Reddy & Ors., reported in (2007) 2 SCC 720 (paragraphs 6 to 9);
(ii) The judgment of the Supreme Court in the case of Union of India Vs. Pam Development Private Limited, reported in (2014) 11 SCC 366 (paragraphs 15 to 19);
(iii) The judgment of the Supreme Court in the case of Neelakantan & Bros. Construction Vs. Superintending Engineer, National Highways Salem & Ors., reported in (1988) 4 SCC 462 (paragraph 2);
(iv) The judgment of the this Court in the case of Ganesh Benzoplast Ltd., Mumbai Vs.SAF Yeast Co. Ltd., reported in 2007 (4) Mh.L.J. 230 (paragraphs 7 to 8, 15 and 16).::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 :::
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21. The next submission of the learned senior counsel for the respondent is that since the petitioners have failed to raise such an objection under Section 16 and has proceeded with the arbitration, the petitioners would be precluded from challenging the award under Section 34 of the said Act on the ground of jurisdiction or from raising such issue of jurisdiction in any collateral proceeding. In support of this submission, he placed reliance on the judgment of the Supreme Court in the case of MSP Infrastructure Limited Vs. Madhya Pradesh Road Development Corporation Limited, reported in (2015) 13 SCC 713 and in particular paragraphs 13 to 16 thereof and the judgment of the Calcutta High Court in the case of Pradip Kumar Mandal Vs. SSK Broking Services Pvt. Ltd. & Ors., reported in AIR 2005 Calcutta 353 and in particular paragraph 18 thereof.
22. It is submitted by the learned senior counsel that since the petitioners themselves have applied for an appointment of an arbitrator under Section 11 of the said Act before the Chief Justice of this Court, the petitioners are precluded from challenging the appointment of the learned arbitrator made by the designate of the Chief Justice and more particularly in view of the fact that the said appointment of the learned arbitrator was by consent of the parties. There was no inherent lack of jurisdiction on the part of the learned designate of the Chief Justice of this Court to appoint the learned arbitrator. He submits that the petitioners have admittedly filed a statement of claim before the learned arbitrator and have proceeded with the arbitration proceedings upto the stage of evidence and thus no review petition could be filed by the petitioners for recalling the order passed by the learned designate of the Chief Justice on the ground raised in the petition or otherwise at this stage.
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23. In so far as the judgment of this Court delivered on 22 nd February 2016 relied upon by the petitioners in the case of Soham Shah Vs. The Indian Film Company Limited and Viacom 18 Media Private Limited and M/s.Roptonal Limited, Cyprus is concerned, learned senior counsel made an attempt to distinguish the said judgment on the ground that in the said matter, the parties had not consented to the appointment of the arbitrator and the said application filed under Section 11(6) of the said Act by the applicants therein was heard and disposed of by the learned designate of the Chief Justice on merits. He submits that the respondent does not dispute the view taken by this Court in the said review petition that the parties could not by consent confer jurisdiction on the Chief justice of the High Court or his designate to decide the application that ought to be decided by the Hon'ble Chief Justice of India. He submits that the respondent is however distinguishing the facts of that judgment with the facts of this matter on the ground that both being different.
24. The next submission of the learned senior counsel for the respondent is that the submission of the petitioners that even by consent of the parties, no order for appointment of the arbitrator could be passed by the learned Chief Justice or his designate under Section 11 of the said Act in this matter is incorrect. He submits that the judgment of this Court delivered on 22nd February 2016 would not constitute a binding precedent since the said judgment is per incurium. In support of this submission, learned senior counsel placed reliance on the following judgments :-
(i) Young Vs.Bristol Aeroplane Company, Limited, reported in (1944) KB 718 CA (pages 725-726 and 729-730);::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 :::
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(ii) Lancaster Motor Company (London), Limited, reported in
(1941) KB 675 CA (pages 677-678);
(iii) Municipal Corporation Of Delhi Vs. Gurnam Kaur, reported in (1989) 1 SCC 101 (page 110-111, paragraphs 11 and 12);
(iv) M/s.Hari Trading Corporation Vs. Bank of Baroda delivered on 23rd February 2015 in Writ Petition No.11459 of 2014 (pages 42-
43, Paragraph 17).
25. Without prejudice to the aforesaid submissions made by the learned senior counsel and in his alternate submission, it is submitted that since it was the petitioners' own case that the rights of the petitioner no.1 (The Foreign Company) had fully vested in the petitioner no.2-an Indian Company, the petitioner no.1 was not a necessary party and thus even in absence of consent, the Chief Justice or his designate had jurisdiction to entertain the petition filed under Section 11 of the said Act. In support of this submission, learned senior counsel placed reliance on the judgment of the Delhi High Court in the case of Larsen & Toubro Ltd. Vs. D.L.F. Industries Limited, reported in (2002) SCC OnLine 804 (Del).
26. The next submission of the learned senior counsel for the respondent is that the present review petition filed by the petitioners is an abuse of process of law. The petitioners herein had filed an application under Section 11 for appointment of an arbitrator in this Court praying for the appointment of the arbitrator, have already filed a statement of claim without demur, after considerable delay have filed the affidavits in lieu of examination-in-chief of their witnesses and on eve of the ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 15 rpl-7.16(j).doc cross-examination have sought to challenge the constitution of the arbitral tribunal by filing the present petition with an intention to delay and defeat the arbitral proceedings though the same were initiated at the petitioners' own instance.
27. Learned senior counsel submits that even if there is no arbitration agreement between the parties, the Company Court in winding up proceedings can appoint an arbitrator by consent of both the parties. He submits that even in the civil suit, even if there was no arbitration agreement recorded between the parties, the Court can by consent of the parties appoint an arbitrator. He submits that similarly in other proceedings also, any Court can appoint an arbitrator by consent of both the parties. Issue of jurisdiction of the Court is different than the issue of appointment of an arbitrator. He submits that once an express consent is given by the parties to the appointment of an arbitrator, it is not relevant as to which Court passed an order appointing an arbitrator.
He submits that even if there is any inherent defect for appointment of an arbitrator, since the parties have acquiesced by participating in the arbitral proceedings by filing statement of claim and the affidavits in lieu of examination-in-chief itself, such party cannot be allowed to challenge the appointment of an arbitrator at this stage.
28. Mr.Shah, learned counsel for the petitioners in rejoinder submits that powers of various Courts in appointing an arbitrator by consent of the parties though there does not exist any arbitration agreement is different than the powers of the Chief Justice of the High Court or his designate to appoint an arbitrator under Section 11(6) of ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 16 rpl-7.16(j).doc the said Act or the power of the Chief Justice of India under Section 11(9) of the said Act when there is a failure of consent of the parties to appoint an arbitrator though an arbitration agreement exists. Learned counsel for the petitioners placed reliance on Sections 11(2) to 11(6) and 11(9) of the said Act. He submits that once the application under Section 11(6) or Section 11(9) is filed before the Chief Justice of High Court or the Chief Justice of India as the case may be, it presupposes that there was failure of consent amongst the parties though the arbitration agreement existed.
29. It is submitted that once an application under Section 11(6) or Section 11(9) is filed, a procedure as contemplated under Section 11(6) or Section 11(9) as the case may be for the purpose of appointment of an arbitrator commences. He submits that since the parties had failed to appoint an arbitrator in accordance with the agreed procedure, assistance of Chief Justice of the High Court for appointment of an arbitrator in such a situation is mandatory and not directory. He submits that the power of the Court after amendment to Section 11 now and power of the Chief Justice or his designate prior to the amendment in an application under Section 11(6) or Section 11(9) as the case may be could not have been exercised by any other Court though the parties would have agreed to appointment of an arbitrator.
The power of the Chief Justice of High Court or the Chief Justice of India of an arbitrator as the case may be prescribed under Sections 11(6) and 11(9) respectively could be exercised only if the proceedings under those provisions were filed before the Chief Justice of High Court or the Chief Justice of India as the case may be. He submits that the provisions under Sections 11(6) and 11(9) are exception to each other.
::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 :::ppn 17 rpl-7.16(j).doc It is submitted that the Chief Justice of India or his designate cannot appoint an arbitrator in case of a domestic arbitration by exercising powers under Section 11(9) and similarly, the Chief Justice of High Court or his designate cannot appoint an arbitrator in case of International Commercial Arbitration by exercising powers under Section 11(6), even by consent of the parties.
30. The next submission of the learned counsel for the petitioners is that while appointing an arbitrator by learned designate of the Chief Justice on 12th June 2014 in Arbitration Application No.97 of 2013, the consent given by the parties was only in respect of the name of the arbitrator who was appointed by the learned designate of the Chief Justice as a sole arbitrator. He submits that neither any consent was given by the parties to the learned designate for appointing a sole arbitrator under Section 11(6) of the said Act nor such consent could be given. He submits that the learned designate of the Chief Justice has rendered a finding on merits that the arbitration agreement exists. He submits that the provision under Section 11 of the said Act is stand alone provision and is different than the other provisions of law.
31. Learned counsel for the petitioners distinguishes the judgment relied upon by the learned senior counsel for the respondent on the ground that once an appointment was made by the Chief Justice or his designate under Section 11(6) of the said Act, none of the parties could have raised an objection under Section 16 of the said Act before the learned arbitrator. He submits that even by consent of the parties, the parties could not have conferred the jurisdiction on the learned Chief Justice of the High Court or his designate for appointment of an arbitrator ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 18 rpl-7.16(j).doc under Section 11(9) in case of an International Commercial Arbitration.
He submits that the question of the said judgment delivered by this Court on 22nd February 2016 in Review Petition (L) No.32 of 2015 being per incurium did not arise. He submits that none of the judgments thus relied upon by the learned senior counsel for the respondent would apply to the facts of this case. He submits that all the judgments relied upon by the learned senior counsel dealt with the issue as to whether the objection in respect of the jurisdiction under Section 16 ought to have been raised by the respondent before the learned arbitrator or not. He submits that principles of law laid down by the Supreme Court in the case of S.B.P. & Company Vs. Patel Engineering Ltd. & Anr. reported in AIR 2006 SC 450 holding that the decision of the Chief Justice or his designate on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the arbitral tribunal and thus no such issue could be raised under Section 16 of the said Act before the learned arbitrator. He submits that the judgment of this Court in the case of Soham Shah Vs. The Indian Film Company Limited and Anr. squarely applies to the facts of this case and thus the order dated 12 th June 2014 passed by the learned designate of the Chief Justice in Arbitration Application No.97 of 2013 shows inherent lack of jurisdiction of the learned designate of the Chief Justice and thus the said order being without jurisdiction deserves to be recalled.
REASONS AND CONCLUSIONS :-
32. I shall first decide whether this review petition filed by the original applicants for seeking recall of the order and judgment dated 12 th ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 19 rpl-7.16(j).doc June,2014 passed by the learned designate of the Chief Justice in an application filed under section 11(6) of the Arbitration Act is maintainable or not.
33. It is a common ground that the petitioner no.2 herein was the original applicant along with Indian Film Company (Cyprus) Ltd. in the Arbitration Application No.97 of 2013. The said Indian Film Company (Cyprus) Ltd. has merged with M/s.Roptonal Ltd., Cyprus, the petitioner no.1 herein on or about 19th January, 2015. The petitioner no.1 is also a body incorporated outside India. The review petition has been filed by the petitioners herein on the ground that the Chief Justice of this court or his designate did not have power to appoint an arbitrator under section 11(6) of the Arbitration Act in view of the fact that one of the party to the arbitration agreement and to the said arbitration application was admittedly incorporated outside India and thus the arbitration being the "international commercial arbitration" within the meaning of section 2(1)
(f) of the Arbitration Act, the application for appointment of the arbitrator itself was not maintainable before the Chief Justice of this court but could be maintained only before the Chief Justice of India under section 11(9) of the Arbitration Act.
34. A perusal of the record clearly indicates that though the review petitioners had filed the said Arbitration Application No.97 of 2013 under section 11(6) of the Arbitration Act inter alia praying for appointment of arbitrator, no objection was raised by the respondent about the jurisdiction of the Chief Justice or his designate to appoint an arbitrator under section 11(6) or about maintainability of the said ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 20 rpl-7.16(j).doc arbitration application (97 of 2013). Similarly the applicants to the said application also did not bring this fact to the notice of the learned designate of the Chief Justice when the said arbitration application was heard and disposed of by an order dated 12 th June, 2014. In view of these undisputed facts, the learned designate of the Chief Justice entertained the said Arbitration Application (97 of 2013) filed under section 11(6) of the Arbitration Act though the said arbitration application itself was not maintainable before the Chief Justice of this court in view of the arbitration being "international commercial arbitration" and could be filed only under section 11(9) of the Arbitration Act before Chief Justice of India. In my view the said arbitration application (97 of 2013) filed by the review petitioners herein itself was not maintainable in this court which issue goes to the root of the matter.
35. I shall now decide whether the order and judgment dated 12th June, 2014 passed by the learned designate suffered from inherent lack of jurisdiction and if so, whether this review petition invoking the procedural review for recalling of the said order is maintainable or not.
36. Seven Judges Bench of the Supreme Court in case of S.B.P.and Co. vs.Patel Engineering Ltd.& Anr. AIR 2006 SC 450 has construed the powers of Chief Justice of a High Court or his designate under section 11(6) and powers of the Chief Justice of India or his designate under section 11(9) of the Arbitration Act at great length. The Supreme Court has summed up the conclusion in the said judgment as under :-
i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section of the Act is not an administrative power. It is a judicial power.::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 :::
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ii) The power under Section of the 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 agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the judge designated would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the judge designate.
(v) Designation of a district judge as the authority under Section of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act.
(vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 22 rpl-7.16(j).doc of Section of the Act or in terms of Section of the Act.
(vii) Since an order passed by the Chief Justice of the High Court or by the designated judge of that court is a judicial order, an appeal will lie against that order only under Article 136 of the Constitution of India to the Supreme Court.
(viii) There can be no appeal against an order of the Chief Justice of India or a judge of the Supreme Court designated by him while entertaining an application under Section of the Act.
(ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to Section of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by Section of the Act.
(x) Since all were guided by the decision of this Court in Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Pvt.
Ltd. (2000)2SCC388 and orders under Section of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section of the Act.
(xi) Where District Judges had been designated by the Chief Justice of the High Court under Section of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 23 rpl-7.16(j).doc dealt with by the Chief Justice of the concerned High Court or a Judge of that court designated by the Chief Justice.
(xii) The decision in Konkan Railway Corporation Ltd. and Anr. v.
Rani Construction Pvt. Ltd. (2000) 2 SCC 388 is overruled.
37. It is held by the Supreme Court that the power under section 11(6) of the Arbitration Act is not conferred on the Supreme Court or on the High Court but is conferred on the Chief Justice of India or the Chief Justice of the High Court. The principal civil court of original jurisdiction is normally the District Court. The Parliament did not want to confer the power on the District Court, to entertain a request for appointing an arbitrator or for constituting an arbitral tribunal under Section 11 of the Act. It is held that the intention was to confer the power on the highest judicial authority in the State and in the country, on Chief Justices of High Courts and on the Chief Justice of India which provision is intended to add the greatest credibility to the arbitral process. It is held that the intention of the legislature appeared to be clear that it wanted to ensure that the power under Section 11(6) of the Act was exercised by the highest judicial authority in the concerned State or in the country so as to ensure the utmost authority to the process of constituting the arbitral tribunal.
38. It is held that when the Chief Justice of the High Court is entrusted with the power, he would be entitled to designate another judge of the High Court for exercising that power. Similarly, the Chief Justice of India would be in a position to designate another judge of the Supreme ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 24 rpl-7.16(j).doc Court to exercise the power under Section 11(6) of the Act. When so entrusted with the right to exercise such a power, the judge of the High Court and the judge of the Supreme Court would be exercising the power vested in the Chief Justice of the High Court or in the Chief Justice of India. It is held that 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 Arbitration 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.
39. Supreme Court has held that in a case where there is an arbitration agreement, a dispute has arisen and one of the parties had invoked the agreed procedure for appointment of an arbitrator and the other party has not co-operated, the party seeking an arbitration, could approach the Chief Justice of the High Court if it was an internal arbitration or of the Supreme Court if it is an international arbitration to have an arbitrator or arbitral tribunal appointed. The Chief Justice, when so requested, could appoint an arbitrator or arbitral tribunal depending on the nature of the agreement between the parties and after satisfying himself that the conditions for appointment of an arbitrator under sub- Section 11(6) of Section do exist. The Chief Justice could designate another person or institution to take the necessary measures.
40. It is held that under section 11(7) of the Arbitration Act, the said provision has given a finality to the decisions taken by the Chief ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 25 rpl-7.16(j).doc Justice or any person or institution designated by him in respect of matters falling under sub-Sections (4), (5) and (6) of Section 11. A decision on jurisdiction and on the existence of the arbitration agreement and of the person making the request being a party to that agreement and the subsistence of arbitrable dispute require to be decided and the decision on these aspects is a prelude to the Chief Justice considering whether the requirements of sub-sections (4), (5) or sub-section (6) of section 11 are satisfied when approached with the request for appointment of an arbitrator. The Chief Justice or the person or institution designated by him while functioning under section 11(6) of the Arbitration Act is bound to decide whether he has jurisdiction, whether there is an arbitration agreement, whether the applicant before him, is a party, whether the conditions for exercise of the power have been fulfilled and if an arbitrator is to be appointed, who is the fit person, in terms of the provision. Section 11(7) makes his decision on the matters entrusted to him, final. It is held that the powers under section 11(6) of the Act is not conferred on the Supreme Court or on the High Court, but it is conferred on the Chief Justice of India or the Chief Justice of the High Court.
41. It is held that the power was conferred on the highest judicial authority in the country and in the State in their capacities as Chief Justices. They have been conferred the power or the right to pass an order contemplated under Section 11 of the Act and thus such powers were not an administrative power but were exercising judicial power.
42. In my view since one of the parties to the arbitration agreement was admittedly incorporated outside India, the arbitration ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 26 rpl-7.16(j).doc being "international commercial arbitration" within the meaning of section 2(1)(f) of the Arbitration Act, the application for appointment of an arbitrator in case of any breach of the agreed procedure for appointment of an arbitrator could be filed only before the Chief Justice of India under section 11(9) when the said arbitration application (97 of 2013) came to be filed and not before the Chief Justice of this court. In my view in the facts of this case, only the Chief Justice of India or his designate could appoint an arbitrator under section 11(9) of the Arbitration Act and not Chief Justice of this court or his designate. None of the party brought these facts to the notice of the learned designate of the Chief Justice when the said order dated 12th June, 2014 was passed by the learned designate but they gave consent insofar as name of the learned arbitrator is concerned.
43. In my view even by consent of parties, the learned designate of the Chief Justice of this court could not have appointed an arbitrator under section 11(6) of the Arbitration Act in view of the arbitration being "international commercial arbitration" within the meaning of section 2(1)
(f) of the Arbitration Act. In my view, the said order dated 12 th June, 2014 passed by the learned designate of the Chief Justice suffered from inherent lack of jurisdiction and thus can be recalled by the learned designate of the Chief Justice of this court by exercising powers to have procedural review permissible under Article 215 of the Constitution of India.
44. Supreme Court in case of M/s.Sangham Tape Company vs. Hans Raj (2005) 9 SCC 331 and in case of Kapra Mazdoor Ekta Union ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 27 rpl-7.16(j).doc vs. Birla Cotton (2005) 13 SCC 777 has carved out a distinction between the powers of court to review on merits and the procedural review. It is held 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. It is held that 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 ascertains whether it had committed a procedural illegality which goes to the root of the matter and invalidates the proceeding itself, and consequently the order passed therein. Supreme Court has also given various illustrations in the said judgment as to when a court or quasi judicial authority exercise power of procedural review.
45. The Allahabad High Court in case of Manish Engineering Enterprises vs. Managing Director, IFFCO, (supra) has adverted to the above referred Supreme Court judgments and has held that the court can entertain a procedural review if it had committed a procedural illegality which goes to the root of the matter and invalidates the proceeding itself, and consequently, the order passed therein. In my view the said arbitration application (97 of 2013) filed by the petitioner herein before the Chief Justice of this court under section 11(6) of the Arbitration Act though one of the party to the arbitration agreement was incorporated outside India admittedly and the arbitration being the "international commercial arbitration", itself was not maintainable before the Chief Justice of this court, the order passed by the learned designate of the ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 28 rpl-7.16(j).doc Chief Justice consequently in such proceedings which were not maintainable before the Chief Justice of this court invalidates not only the proceedings itself but also the order passed by the learned designate of the Chief Justice therein.
46. In my view the applicants to the said arbitration application having committed a procedural illegality which goes to the root of the matter and was filed before the Chief Justice of a wrong court, not having jurisdiction, the said proceedings itself being illegal and without jurisdiction, the order passed by the learned designate of the Chief Justice therein also became illegal and without jurisdiction. In my view the petitioners have thus rightly filed the present proceedings inter alia praying for exercise of the procedural review by the learned designate of the Chief Justice and for recall of the order dated 12th June, 2014. The judgments of Supreme Court in case of M/s.Sangham Tape Company (supra) and in case of Kapra Mazdoor Ekta Union (supra) squarely apply to the facts of this case. I am in respectful agreement with the views expressed by the Allahabad High Court in case of Manish Engineering Enterprises (supra). This court in case of Rosy Blue (India) Pvt. Ltd. (supra) has adverted to the judgment of Supreme Court in case of Kapra Mazdoor Ekta Union (supra) and has taken the same view.
47. The Supreme Court in case of National Insurance Company Limited (supra) has adverted to the said judgment in case of S.B.P.and Co. vs.Patel Engineering Ltd.& Anr. (supra) and has held that while deciding an application under section 11, the Chief Justice or his designate will have to decide whether the party making the application ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 29 rpl-7.16(j).doc has approached the appropriate High Court or not and whether there is an arbitration agreement and whether the party who has applied under section 11 of the Act, is a party to such an agreement or not. In my view, since none of the parties raised objection when the said Arbitration Application No.97 of 2013 was heard by the learned designate of the Chief Justice of this court about the jurisdiction of the Chief Justice or his designate to entertain, try and dispose of the said arbitration application on the ground that the same was without jurisdiction, the learned designate of the Chief Justice of this court appointed an arbitrator in the circumstances stated aforesaid. Merely because the parties had agreed to the name when the said order came to be passed or even if the parties would have agreed to the appointment of an arbitrator without suggesting the name, in the circumstances stated aforesaid, the learned designate of the Chief Justice of this court could not have made any appointment of an arbitrator in view of the said arbitration application itself being without jurisdiction.
48. Insofar as submission of the learned senior counsel for the respondent that since the parties had agreed to the appointment of an arbitrator, irrespective of the fact that the said order was passed by the learned designate of the Chief Justice of this court under section 11(6) of the Act, though one of the party to the arbitration proceeding was incorporated in the country other than India, such appointment was a valid appointment and could not be challenged on the ground of their being inherent lack of jurisdiction is concerned, in my view there is no merit in this submission of the learned senior counsel for the respondent. As referred to aforesaid, Supreme Court in case of S.B.P.and Co. vs.Patel ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 30 rpl-7.16(j).doc Engineering Ltd.& Anr. (supra) has at great length discussed the legislative intent while conferring the powers on the Chief Justices of High Courts and Chief Justice of India under section 11(6) and 11(9) respectively.
49. In my view the powers of a Chief Justice of the High Court or his designate under section 11(6) or the powers of the Chief Justice of India or his designate under section1 11(9) of the Arbitration Act cannot be equated with the powers of a court hearing the other matters between the parties where there was no arbitration agreement recorded originally between the parties. Even if the parties have not recorded any arbitration agreement who are parties to such proceedings, the parties can arrive at an arbitration agreement even in such proceedings and agree to refer the disputes to the arbitration by recording such agreement in respect of the disputes which are capable of being adjudicated upon by arbitration. The parties in a winding up proceedings or in a civil suit or in a writ petition or in the other proceedings of similar nature if agreed to record a arbitration agreement for the first time, such arbitration agreement can be recorded by such court in which such proceedings are pending and refer their disputes to arbitration which are capable of being adjudicated upon in an arbitration.
50. In my view even when such courts exercise such powers by recording arbitration agreement for the first time in such proceedings, such courts cannot and does not exercise powers under section 11 of the Arbitration Act which powers are specifically conferred only on the Chief Justice of a High Court or his designate or the Chief Justice of India or ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 31 rpl-7.16(j).doc his designate as the case may be. In my view the learned senior counsel for the respondent is thus not correct in his submission that if by consent of parties, if an arbitrator can be appointed by courts in the proceedings other than the arbitration proceedings, the Chief Justice of the High Court or his designate can also appoint an arbitrator by consent of parties even if the arbitration was "international commercial arbitration" and one of the party to the arbitration agreement had been incorporated outside India. In my view there is no substance in the submission of the learned senior counsel that once consent was given by the parties to appoint an arbitrator in a proceeding under section 11, such party cannot challenge the jurisdiction of the Chief Justice or his designate to appoint an arbitrator though there was inherent lack of jurisdiction of the Chief Justice or his designate to pass such order.
51. Insofar as judgment of Supreme Court in case of Narayan Prasad Lohia (supra) relied upon by the learned senior counsel for the respondent is concerned, the Supreme Court on conjoint reading of Sections 11 and 16 has held that the objections to the composition of the arbitral tribunal as a matter which is derogable because a party is free not to object within the time prescribed under section 16(2) and if a party chooses not to so object, there will be a deemed waiver under section 4. In the said matter the arbitral proceedings were conducted by the two arbitrators. The respondent did not raise any objection in the arbitral proceedings about the composition of the arbitral tribunal of two members by raising an objection under section 16 of the Arbitration Act. Supreme Court held that the two arbitrators could appoint a third arbitrator at a later stage if and when they differ to ensure that on a ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 32 rpl-7.16(j).doc difference of opinion the arbitration proceedings were not frustrated.
Supreme Court held that the provisions of section 10 which provides that the number of arbitrator shall not be an even number is a derogable provision and thus if an objection is not raised under section 16 before the learned arbitrator, it would amount to waiver of a right to object subsequently in view of the section 4 of the Arbitration Act.
52. In my view even if the original applicant did not bring to the notice of the learned designate of the Chief Justice that the arbitration application filed by the applicant was not maintainable before the Chief Justice of this court or the respondent did not raise any objection about the maintainability of the said arbitration application before the Chief Justice of this court and agreed to the name of the learned arbitrator being appointed, since it was a case of lack of inherent jurisdiction of the learned Chief Justice or his designate to pass any order under section 11(6) of the Arbitration Act in view of one of the parties having incorporated outside India, it would not amount to any waiver on the part of the either party under section 4 of the Arbitration Act. In my view, the provisions of section 11(6) or section 11(9) are not derogable and thus the question of waiver under section 4 of the Arbitration Act does not arise. The judgment of Supreme Court in case of Narayan Prasad Lohia (supra) relied upon by the learned senior counsel for the respondent thus does not assist the respondent and is clearly distinguishable in the facts of this case.
53. Insofar as submission of the learned senior counsel for the respondent that the petitioners herein not having raised any objection ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 33 rpl-7.16(j).doc under section 16 of the Arbitration Act before the learned arbitrator and having participated in the arbitral proceedings are precluded from challenging the appointment of the learned arbitrator made by the learned designate of the Chief Justice is concerned, Supreme Court in case of S.B.P.and Co. vs.Patel Engineering Ltd.& Anr. (supra) has dealt with this issue at great length. It is held that in a case where the arbitral tribunal has been constituted by the parties without having recourse of section 11(6) of the Act, the arbitral tribunal will have jurisdiction to decide all the matters as contemplated under section 16 of the Act. Admittedly in this case, the learned arbitrator was appointed by the intervention of the court under section 11(6) of the Arbitration Act and thus no objection under section 16 could have been raised by a party before the learned arbitrator. The principles laid down by the Supreme Court in case of S.B.P.and Co. vs.Patel Engineering Ltd.& Anr. (supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment. The judgments relied upon by the learned senior counsel for the respondent in case of (1) Krishna Bhagya Jala Nigam Ltd. (supra), (2) Union of India vs. Pam Development Private Limited (supra), (3) Neelakantan & Bros. Construction (supra) and (4) Ganesh Benzoplast Ltd. Mumbai (supra) do not apply to the facts of this case and are clearly distinguishable. Since the issue of jurisdiction had not been raised by the respondent to the said arbitration application such issue was thus deemed to have been rejected by the learned designate of the Chief Justice.
54. Insofar as submission of the learned senior counsel that the petitioners having failed to raise an issue of jurisdiction under section 16 ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 34 rpl-7.16(j).doc before the learned arbitrator, the petitioners are precluded from challenging the award under section 34 of the Arbitration Act on that ground is concerned, the learned arbitrator has admittedly not rendered any arbitral award and thus this court need not go into the issue whether such issue not having been raised before the learned arbitrator can be permitted to be raised in a petition under section 34 of the Arbitration Act or not. The judgment of Supreme Court in case of MSP Infrastructure Limited (supra) and judgment of Calcutta High Court in case of Pradip Kumar Mondal (supra) would not apply to the facts of this case and are clearly distinguishable.
55. Insofar as submission of the learned senior counsel for the respondent that the petitioners themselves had applied for an appointment of an arbitrator under section 11 before the Chief Justice of this court, the petitioners are precluded from challenging the order appointing the learned arbitrator passed by the designate of the Chief Justice and also on the ground that the petitioners have admittedly filed a statement of claim and the proceedings are proceeded upto the stage of commencement of evidence is concerned, in my view there is no merit in this submission of the learned senior counsel. The respondents themselves have not raised any issue of jurisdiction before the learned designate of the Chief Justice in the said arbitration application filed by the petitioners under section 11(6). In the facts of this case, there was inherent lack of the jurisdiction on the part of the learned designate of the Chief Justice to appoint the learned arbitrator. Merely because the petitioners have filed a statement of claim before the learned arbitrator or have filed affidavit of evidence, that would not confer jurisdiction on the learned arbitrator since he has ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 35 rpl-7.16(j).doc been appointed by the learned designate of the Chief Justice of this court who had no jurisdiction to entertain the arbitration application filed by the petitioners under section 11(6) in view of the admitted fact that one of the party had incorporated outside India. In any event, since the issue of jurisdiction was not raised by the respondent before the learned designate of the Chief Justice in the said arbitration application, the issue of jurisdiction was deemed to have been rejected by the designate by the learned Chief Justice in the said order. The learned arbitrator thus in my view could not have re-opened the said issue.
56. Since the said order was passed by the designate of the Chief Justice who had inherent lack of jurisdiction, the only remedy of the petitioners was to file a review petition by applying for procedural review which is rightly done by the petitioners in this case. Be that as it may, the issue of jurisdiction under section 16 could not have been raised by the claimants in the arbitral proceedings. The issue of jurisdiction if any could be raised only by the respondents under section 16 not later filing statement of defence.
57. Insofar as judgment of this court delivered on 22 nd February, 2016 in case of Soham Shah (supra) relied upon by the learned counsel for the petitioners and distinguished by the learned senior counsel for the respondent is concerned, learned senior counsel for the respondent has fairly conceded that the parties could not by consent confer the jurisdiction on the learned Chief Justice of the High Court or his designate to decide the application which could have been decided by the Chief Justice of India only. I do not propose to rely upon such judgment ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 36 rpl-7.16(j).doc in case of Soham Shah (supra) as a precedent in this matter since the said judgment was also delivered by the designate of the Chief Justice and cannot be considered as a binding precedent. I however propose to take the same view in the facts and circumstances of this case independently.
58. Insofar as the submission of the learned senior counsel that the said judgment dated 22nd February, 2016 in case of Soham Shah (supra) would not constitute a binding precedent since the said judgment is per incuriam is concerned, the learned senior counsel for the respondent could not point out as to how the said judgment is per incuriam. Be that as it may, since I have not proposed to rely upon the said judgment as a binding precedent, it is not necessary to consider the submission of the learned senior counsel that the said judgment is per incuriam. The judgments in case of (1) Young vs.Bristol Aeroplace Company Limited (supra), (2) Lancaster Motor Company (London) Limited (supra), (3) Municipal Corporation of Delhi (supra) and (4) M/s.Hari Trading Corporation (supra), relied upon by the learned senior counsel on this issue thus would not apply to the facts of this case.
Reliance placed thereon is misplaced.
59. Insofar as submission of the learned senior counsel for the respondent that since it was the petitioners' own case that the rights of the petitioner no.1 had fully vested in the petitioner no.2 an Indian company, petitioner no.1 was not a necessary party and thus in absence of its consent, the Chief Justice or his designate had jurisdiction to entertain the petition under section 11 of the Arbitration Act is concerned, a perusal of the statement of claim filed by the petitioners before the learned arbitrator ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 37 rpl-7.16(j).doc forming part of record of these proceedings clearly indicates that both the petitioners have applied for reliefs in the arbitral proceedings. There is thus no merit in this submission of the learned senior counsel. Reliance placed on the judgment of Delhi High Court in case of Larsen & Tourbo (supra) on this issue is thus misplaced.
60. Insofar as submission of the learned senior counsel for the respondent that the present review petition filed by the petitioners is an abuse of process of law in view of the petitioners having filed a statement of claim and affidavit in lieu of examination in chief is concerned, it is a matter of record that the respondent also did not raise any issue of jurisdiction before the learned arbitrator or before the learned designate of the Chief Justice in the arbitration application filed by the petitioners. Merely because statement of claim or affidavit of evidence is filed by the petitioners, it would not preclude the petitioners from seeking procedural review in view of the fact that the said order passed by the learned designate of the Chief Justice was without jurisdiction and nullity. In my view there is thus no merit in this submission of the learned senior counsel.
61. In my view the powers of the Chief Justice of High Court or his designate under section 11(6) and power of Chief Justice of India or his designate can be exercised only when there is failure of consent of parties though there is an arbitration agreement exist and cannot be equated with powers of court in other proceedings where there was no arbitration agreement recorded between the parties initially. Pursuant to the powers conferred on the Chief Justice of the High Courts and the ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 38 rpl-7.16(j).doc Supreme Court, courts have framed schemes for appointment of arbitrator and have framed rules. Since the parties had failed to appoint an arbitrator in accordance with the agreed procedure, the assistance of the Chief Justice of the High Court or the Chief Justice of India for appointment of an arbitrator in such a situation is mandatory and not directory. Such powers under section 11(6) or under section 11(9) cannot be exercised by any other court even by consent of parties. Similar powers which vest in the Chief Justice of India under section 11(9) could not have been exercised by the Chief Justice of a High Court or his designate under section 11(6) even by consent of parties. The provisions under section 11(6) and 11(9) are exception to each other.
62. Supreme Court in case of Zuari Cement Ltd. vs. Regional Director, ESIC Hyderabad & Ors. (2015) 7 SCC 690 has held that where there is want of jurisdiction, the order passed by the court/tribunal is a nullity or non est. What is relevant is whether the court had the power to grant the relief asked for. Supreme Court has dealt with an order passed by the High Court directing the appellant to approach the ESI Court constituted under section 74 of the ESIS Act for the reliefs which the appellant had claimed in the writ petition. None of the parties to the said proceedings challenged the order of the High Court but subjected themselves to the jurisdiction of the ESIS Court. It is held by the Supreme Court that neither order of the High Court nor the act of the corporation subjecting itself to the jurisdiction of the ESIS Court would confer the jurisdiction upon ESIS Court to determine the question of exemption from the operation of the Act. It is held that by consent, the parties cannot agree to jurisdiction in the court to try the dispute when the ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 39 rpl-7.16(j).doc court does not have jurisdiction. It is held that the objection as to want of jurisdiction can be raised at any stage when the court lacks jurisdiction, the fact that the parties earlier acquiesced in the proceedings is of no consequence. Though the High Court had directed one of the parties to approach the ESIS Court constituted under section 74 of the ESIS Act and such party had approached the ESIS Court pursuant to the said order passed by the High Court, the Supreme Court having held that the ESI Court could not have decided the said issue involved in the said proceedings, the order passed by the ESI Court was declared the non est.
63. Insofar as submission of the learned counsel for the petitioners that the parties had given consent only in respect of the name of the learned arbitrator who was appointed by the learned designate of the Chief Justice and no consent for appointment of the sole arbitrator is concerned, a perusal of the said order dated 12th June, 2014 clearly indicates that the parties had agreed to the name of a former Chief Justice of Allahabad High Court as a sole arbitrator. Be that as it may, even by consent for appointment of an arbitrator by parties could not have conferred jurisdiction on the learned designate of the Chief Justice under section 11(6) for the reasons recorded aforesaid. In my view the present proceeding is seeking procedural review of the order dated 12th June, 2014 is thus maintainable. The petitioners have made out a case for recall of the order dated 12th June, 2014 passed by the learned designate of the Chief Justice and the said order thus deserves to be recalled.
64. In my view since the designate of the Chief Justice did not have power to appoint an arbitrator in case of international commercial ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 ::: ppn 40 rpl-7.16(j).doc arbitration and such power vest only in the Chief Justice of India under section 11(9)of the Arbitration Act, even such an order passed by the learned designate of the Chief Justice would not confer the jurisdiction on the learned arbitrator though the parties to the arbitration application had not raised any objection about maintainability of the said arbitration application and had acquiesced in the arbitration application filed before the Chief Justice of this court and the same was of no consequence. In my view, the judgment of Supreme Court in case of Zuari Cement Ltd.
(supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment.
65. I, therefore, pass the following order:-
(a) Order dated 12th June, 2014 passed by the learned designate of the Chief Justice in arbitration application No.97 of 2013 is recalled.
(b) Arbitration Application No.97 of 2013 is dismissed being without jurisdiction.
(c) Review Petition (L) No.7 of 2016 is allowed in the aforesaid terms.
(d) No order as to costs.
(R.D. DHANUKA, J.) ::: Uploaded on - 08/06/2016 ::: Downloaded on - 09/06/2016 00:00:07 :::