Calcutta High Court
Smt. Arati Dhar vs Sri S.K. Dutta on 12 March, 2002
Equivalent citations: (2002)2CALLT207(HC), 2002(3)CHN171
Author: A.K. Ganguly
Bench: Asok Kumar Ganguly
JUDGMENT A.K. Ganguly, J.
1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter called ACA 96] for setting aside an award made and published on 21st November 2000.
2. Material facts of the case are that in terms of an agreement dated 13th July 1996 between Smt. Madhavi Chatterjee represented by her constituted attorney Mr. Sudhendu Kumar Dutta and the petitioner, Sm. Arati Dhar, she agreed to purchase proportionate share in Plot No. 37, Regent Park at Premises No. 131/37, Netaji Subhas Chandra Bose Road, Calcutta-700 040, as well as to have a flat measuring about 650 sq.ft. constructed by said Sudhendu Kumar Dutta in consideration of paying a sum of Rs. 6.50 lacs.
3. Under the terms of the said agreement the said Sudhendu Kumar Dutta was to make over possession of the flat to the petitioner within two months from the date of execution of the agreement dated 13th July 1996. The said two months expired on 13th September 1996. Under the agreement the flat earmarked for the petitioner was Flat No. 5 But the said flat could not be completed within time. It was, therefore, agreed that the respondent Mr. Sudhendu Kumar Dutta will provide an alternative accommodation to the petitioner in a flat measuring about 1000 sq. ft. area on the ground floor of Premises No. 5B, Greek Church Row, Calcutta - 700 040, on terms and conditions which are contained in a separate agreement dated 19th September 1996.
4. It was mentioned in the second agreement that after completion of the flat at the Regent- Park which the petitioner agreed to purchase under the agreement dated 13th July 1996, the petitioner would make over possession of an alternative accommodation at Greek Church Row within a period of one month from the date of completion. The case of the petitioner is that the flat of the Regent Park could not be completed with completion certificate and as such the possession of the said flat was not given to the petitioner. The petitioner, therefore, continued to stay in the alternative accommodation. The petitioner's further case is that without completing the flat at Regent Park the respondent wanted the petitioner to give up the alternative accommodation at 5B, Greek Church Row and sought to terminate the agreement dated 19th September 1996 by letter dated 25th July 1997 claiming therein damages @ Rs. 1000/- per day.
5. Various correspondences were exchanged between the parties and various disputes arose. It is alleged that the respondent kept on shifting their stand from time to time. But as the matter could not be resolved between the parties ultimately the respondent filed an application before this Hon'ble Court in 9th April 1998 under Section 11 of ACA 96 praying for appointing an Arbitrator for adjudicating of his claim for sum of Rs. 10 lacs and odd. By an order dated 28th January 2000 a learned Judge of this Court passed an order requesting the Hon'ble Chief Justice for the appointment of an arbitrator. The said order dated 28th January 2000 is set out below:
"Present:
The Hon'ble Mr. Justice Basudev Panlgrahi, January 28, 2000 Sri Sudhendu Kumar Dutta Versus Smt. Arati Dhar Dictated Order The Court: This is an application filed under Section 11 of the Arbitration and Conciliation Act 1996. An agreement was made between the petitioner and the respondent for construction of a flat measuring 650 sq. ft. being Flat No. 5 on the third floor of premises No. 131/37, Netaji Subhas Chandra Bose Road. The respondent agreed to pay the consideration amount of Rs. 6,50,000/- in respect of the concerned flat and possession would be given immediately after completion of the construction as per the terms of the agreement. On 13th July 1996 although the flat was completed within the stipulated period but the respondent failed to pay the said amount as per the said agreement. There was a clause in the Agreement to refer the disputes to an arbitrator in the event difference arises between the petitioner and the respondent. Since the respondent did not pay as per the Agreement, an application has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. Accordingly the application is allowed."
6. Thereafter by an order dated 4th May 2000 passed by the Hon'ble Chief Justice, Justice Pabltra Kumar Ghosh, a retired judge of this Court was appointed the sole Arbitrator.
7. Ultimately the arbitrator after hearing the parties gave an award to the following effect:
"The respondent is directed to pay to the claimant a sum of Rs. 16 lacs plus licence fee at the rate of Rs. 1000/- per day from 16,11.96 to 31.08.2000 with interest thereon at the rate of 18% per annum till realization and costs in relation to this proceedings assessed at Rs. 50,000/-, less the amount of Rs. 4,87,500/- which the respondent has already paid to the claimant with regard to flat at plot No. 131/37, NSC Bose Road, Calcutta-700 040."
8. Challenging the said award the learned counsel for the petitioner stated that the award of the Arbitrator is wholly without Jurisdiction. The said point relating to Jurisdiction was raised in view of the fact that the agreement dated 13th July 1996 contains an arbitration clause. The said arbitration clause is as follows:
"All disputes and differences arising out of this Agreement and in respect of the construction of the said flat and the properties appurtenant thereto shall be referred to the Arbitrator who will be appointed as per choice of the parties herein whose decision shall be final and binding on all the parties. The Arbitrator shall have summary power and may or may not keep any record of arbitration proceedings. The arbitration proceedings shall be covered by the provisions of the Indian Arbitration Act, 1940 with all modifications for the time being in force and this Agreement shall be deemed as the Agreement for reference to Arbitration."
9. Referring to the said arbitration clause, the learned counsel urged that the said arbitration clause is confined to the disputes arising out of the said agreement with respect to the construction of the flat at 131/37, N.S.C. Bose Road, Calcutta - 700 040. The same has nothing to do with the property at 5B, Greek Church Row. But the award has been made directing payment and also payment of license fee in respect of the Flat at 5B, Greek Church Row.
10. The learned counsel further urged that in respect of Flat No. 5B, Greek Church Row, there is a separate agreement dated 19th September 1996 and the said agreement does not contain any arbitration clause.
11. The learned counsel further urged that from the order of this Hon'ble Court on the petition of Section 11 of ACA 96 it will appear that the learned Judge has also referred to the disputes in respect of the agreement for construction of the Flat No. 5 in Premises No. 131/37, Netaji Subhas Chandra Bose Road which contains an Arbitration Clause. The said order did not refer to any alleged dispute in respect of Flat No. 5B, Greek Church Row. Therefore, the entire award of the Arbitrator is without jurisdiction.
12. The learned counsel further urged that this point relating to jurisdiction of the Arbitrator was taken on behalf of the petitioner at the very outset and certainly before the submission of the statement by her. The said stand was taken by the petitioner on 14th June 2000, order before the Arbitrator. The minutes of the arbitration proceeding held on 14th June 2000 will show that. Thereafter on 19.06.2000, the petitioner filed an application before the Hon'ble Chief Justice for recalling the order dated 04.05.2000 on the ground of Jurisdiction. The said application, on legal advise was subsequently withdrawn as the petitioner under the provision of ACA 96 was entitled to raise the question of jurisdiction before the Arbitrator.
13. The learned counsel for the petitioner has drawn the attention of this Court to the minutes of the first meeting of the Arbitrator dated 14th June 2000 in which the learned Arbitrator recorded that he received a letter from the Advocate of the petitioner stating, inter alia, that the matter is not covered by the arbitration agreement and as such, the petitioner's advocate will move the Hon'ble Chief Justice for an appropriate direction and prayed for adjournment of the matter. So the fact remains that the question of jurisdiction of the Arbitrator was raised by the petitioner at the first Instance. This point was also taken in the counter-statement of facts filed by the petitioner before the Arbitrator. In paragraphs 7, 8 and 9 it has been specifically pointed out that the Arbitrator has no jurisdiction with regard to any of the claims in Schedule A, A1, B, C, D and E of the Statement of Claims as the subsequent agreement dated 19th September 1996 does not contain any arbitration clause. It may be mentioned in this connection that the impugned award of the Arbitrator is solely in respect of license fee in respect of Premises No. 5B, Greek Church Row and the entire statement of claim under Schedule A and A1 consists of such claim of license fee and maintenance charge etc. In respect of the said premises.
14. The learned counsel for the petitioner submitted that the Arbitrator did not decide the said question of jurisdiction at all in the award. The award runs into 15 pages. The learned counsel for the petitioner points out that out of which first 11 pages are almost confined to recording the contentions of the parties. The alleged reasoning of the award starts from the bottom of page 11 of the same. But nowhere in the award the learned Arbitrator decided the point relating to his jurisdiction.
15. Since this is a point which goes to the root of the matter, this Court proposes to consider the same in some detail.
16. In dealing with this point, the learned counsel for the respondent has submitted that the second agreement dated 19th September 1996 is supplemental to the first agreement and not in derogation of the first agreement dated 13th July 1996 and the point of jurisdiction, according to the learned counsel for the respondent, has been overruled by the order of Justice Panlgrahi dated 28th January 2000 in the application under Section 11 of ACA 96 as the matter was referred to the Hon'ble Chief Justice for appointing an Arbitrator. It has been further argued that thereafter the petitioner made an application for recalling the order dated 4th May 2000 passed by the Hon'ble Chief Justice appointing an Arbitrator. By an order dated 29th June 2000 the said application was dismissed and withdraw and thereafter the petitioner filed counter-statement of claim and documents and adduced evidence before the Arbitrator. Therefore, the petitioner submitted to the jurisdiction of the Arbitrator and cannot raise this question.
17. This Court cannot accept the aforesaid contentions of the respondent.
18. Admittedly, there is no Arbitration Clause in respect of agreement dated 19th September 1996 which is concerned to the Premises No. 5B, Greek Church Row, Calcutta - 700 040. The contention of the respondent's counsel that the arbitration clause in the first agreement dated 13th July 1996 would also cover the dispute relating to the premises No. 5B, Greek Church Row, Calcutta-700 040 is wholly untenable. An arbitration agreement has been defined under Section 7 of ACA 96. The said section is set out below:
"Section 7(1) in this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreements in writing if it is contained in--
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
19. Reading the said section as a whole, this Court cannot accept the contention of the petitioner's counsel that the disputes relating to premises No. 5B, Greek Church Row, Calcutta-700 040 can be said to be covered by the arbitration clause in the agreement dated 13th July 1996 which is concerned with disputes in respect of a totally different premises. This argument is wholly untenable.
20. Now, the order of Justice Panlgrahi dated 28th January 2000, has been setout herein above. From the said order it is clear that Justice Panlgrahi confined His Lordship's order only to disputes between the parties in respect of Flat No. 5 measuring 650 sq. ft. on the 3rd Floor of Premises No. 131/37, N.S.C. Bose Road, Calcutta - 700 040. In the order of Justice Panigrahi, there is no whisper of the Premises No. 5B, Greek Church Row. Similarly, in the order of the Hon'ble Chief Justice appointing an Arbitrator there is no whisper in respect of the said premises at 5B, Greek Church Row.
21. Therefore, the question of jurisdiction over dispute in respect of Premises No. 5B, Greek Church Row, was never the subject matter of the order of either Justice Panigrahi or that of the Hon'ble Chief Justice.
22. Apart from that the apex Court held in the case of Konkan Railway Corporation v. Rani Construction (P) Ltd., reported in AIR 2002 SCW 426 that the order of the Court in Section 11 application is administrative in character. So an order, which is administrative in nature, cannot decide the question of jurisdiction. In the same judgment it has been held that under Section 16 of ACA 96, the arbitrator's authority to decide jurisdiction under Section 16 is not confined only to the width of its jurisdiction but it also goes to the very root of its jurisdiction (Para. 21, Page 441 of the report).
23. Now, the argument that by appearing before the Arbitrator there is submission by the petitioner to the jurisdiction of the Arbitrator is not tenable in view of the provisions of ACA 96. Section 34 of ACA 96 provides for the grounds on which an award can be set aside. One of the grounds for setting aside an award is provided under Section 34(2)(a)(iv). The said provision is set out below:
"34(2)--An arbitral award may be set aside by the Court only if--(a) The party making the application furnishes proof that--
(iv) The arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decision on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside."
24. So far as the decision on the question of the jurisdiction of the Arbitrator is concerned the same is as pointed out above, provided for under Section 16 of ACA 96. The relevant provisions of ACA 96 in this connection are 16(2), 16(3) and 16(5). Those provisions are set out below:
"16(2). A plea that the, arbitral Tribunal does not have jurisdiction shall be raised not later than the submissions of the statement of defence; however, a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of, an Arbitrator.
16(3). A plea that the arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
16(5). The arbitral Tribunal shall decide on a plea referred to in Subsection (2) of Sub-section (3) and, where the arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceeding and make an arbitral award."
25. It is clear from a conjoint reading of the aforesaid three Sub-sections of Section 16 of ACA 96 that the Arbitrator is under an obligation to decide the plea of Jurisdiction and his authority to continue the arbitration depends on his decision regarding the plea about his jurisdiction. In other words Sub-section (5) of Section 16 envisages that the Arbitrator may reject the plea about jurisdiction and then continue with the proceeding and make an award. In the instant case, without rejecting the question to his jurisdiction, the Arbitrator has proceeded with the award and as such has committed grave errors of law.
26. It may also be noted in this connection that Section 16(1) of ACA 96 is also relevant. If Section 16(1) is read with Section 16(2) it is made clear that the plea relating to jurisdiction of the arbitral tribunal should be raised not later than the submission of the statement of defence. In the Instant case, the plea was raised even before the submission of statement of defence by the petitioner namely on 14th June 2000 when the Arbitrator first entered upon reference. The said submission was also repeated in the counter-statement of defence filed by the petitioner. But Sub-section 2 of Section 16 of ACA 96 clearly provides that a party shall not be precluded from raising the said plea merely because either (i) he has appointed or (ii) participated in the appointment of an Arbitrator. Therefore, the order passed for appointment of an Arbitrator at the stage of Section 11 cannot preclude the petitioner from raising the plea of jurisdiction of the Arbitrator. In the instant case, there is no submission by the petitioner to the jurisdiction of the Arbitrator, since the plea of lack of Jurisdiction was raised at the earliest stage. But since the Arbitrator did not decide that said plea and, in fact, proceeded with the arbitration without deciding the said question at all, the petitioner had no option left but to attend the proceeding before the Arbitrator.
27. Since the question of jurisdiction goes to the root of the matter other questions raised by the parties in this case need not be considered by this Court. This Court holds that the Arbitrator had no jurisdiction to pass the award which it had passed in respect of the license fee for occupation of Flat at 5B, Greek Church Row, Calcutta - 700 040. Since the entire award is in respect of that premises, there is no good part of the award which is severable. The entire award is set aside. The application succeeds.
28. There will be no order as to costs.