Rajasthan High Court - Jaipur
Raj Rajya Path Parivahan Nigam vs M/S Bhagwati Enterprises Andanr on 2 February, 2024
Author: Sameer Jain
Bench: Sameer Jain
[2023:RJ-JP:31441]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writ Petition No. 5744/2015
Rajasthan Rajya Path Parivahan Nigam, Parivahan Marg, C-
Scheme, Jaipur Through Its Chairman And Managing Director
----Petitioner
Versus
1. M/s. Bhagwati Enterprises Through Its Power Of Attorney
Holder Sh. M.s. Somani S/o Sh. M.l. Somani, 101, Classic
Centre, Ist Floor, 575 M.g. Road, Indore M.p.
2. Justice Mrs. Mohini Kapoor Retd., Sole Arbitrator, C-3,
Malviya Nagar, Infront Of St. Anselam School, Jaipur
----Respondents
For Petitioner(s) : Mr. R.N. Mathur, Sr. Adv. assisted by Mr. Utkarsh Dubey For Respondent(s) : Mr. A.K. Sharma, Sr. Adv. assisted by Mr. Tej Pratap Singh & Mr. Shobhit Vyas HON'BLE MR. JUSTICE SAMEER JAIN Order Reportable Reserved on : 17/10/2023 Pronoucned on: 02/02/2024
1. By way of the instant petition, a challenge is made to the order impugned dated 10.12.2014, passed by the Additional District Judge No.5, Jaipur Mahanagar in Civil Misc. Case No. 54/2011 titled as Rajasthan Rajya Path Parivahan Nigam vs. M/s Bhagwati Enterprises & Anr., whereby the application preferred by the petitioner on 20.09.2014, came to be dismissed and/or rejected.
2. The ineluctable and concise factual matrix, necessary for the efficacious disposal of the instant petition, is noted herein- under:-
(Downloaded on 02/02/2024 at 09:24:28 PM)
[2023:RJ-JP:31441] (2 of 29) [CW-5744/2015] 2.1 That Notice Inviting Tender i.e. NIT, for appointment of Sole Licensee for transportation of Domestic Articles/Small Commercial Goods from one place to another, through a fleet of 4000 buses was published in the daily newspapers namely, 'Rajasthan Patrika' and 'Dainik Bhaskar'.
2.2 That the terms and conditions qua the said NIT were incorporated in the Tender Form for the perusal and/or consideration of the prospective applicants. One of the terms enumerated therein, provided that the successful tenderer shall have to enter into an agreement with the petitioner, on the terms already provided for in the Tender Form.
2.3 That in response to the advertisement/NIT, four applications were received along with earnest money. The respondent no.1, who submitted the tender documents along with the letter dated 25.01.2005, was found to have offered the highest amount.
Subsequently, letter dated 31.01.2005 was sent by the petitioner to the respondent no.1, informing him of the acceptance of its proposal and thereby, called upon him to deposit the security amount of Rs. 6,66,786/- by way of a Demand Draft/Banker Cheque in terms of Condition No.4 as well as a License Fee of Rs. 40,00,716/- for six months, of a Scheduled Bank in terms of Condition No. 18 of the NIT, in order for the agreement to be executed.
2.4 That on 22.02.2005, the respondent no.1 was informed of appointment as the Sole Selling Licensee for a period of three years from 21.03.2005 to 20.03.2008 along with the applicable terms and conditions, as prescribed in the tender application. (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (3 of 29) [CW-5744/2015] 2.5 That the respondent no.1, sent letter dated 19.03.2005, to the petitioner stating therein that they had not yet received the formal terms of the agreement enabling them to execute it and thereby, initiate action for energizing the centers for providing the requisite services at the allotted office premises on bus stands. 2.6 That subsequently, the prescribed proforma for executing the agreement was provided to respondent no.1. 2.7 That on receipt of the proforma agreement, the respondent no.1 submitted letter dated 23.03.2005, requesting the petitioner to delete condition nos. 29 and 30 from the proposed terms and conditions of the agreement and also to incorporate a clause regarding 'permits'. The said letter was received on 28.03.2005. 2.8 That meanwhile, the respondent no.1 purchased non-judicial stamp paper of Rs.100/- at Indore and got the agreement in the prescribed proforma typed on it, which was signed by its proprietor, Shri. Sanjay Somani on 28.03.2005. It was also signed by two witnesses belonging to Indore, on the same date. Subsequently, the agreement was sent to Jaipur, which was signed by the Chairman of the petitioner on 29.03.2005. 2.9 That when the file containing the agreement was received back by the Financial Advisor of the petitioner, who was to sign along with the Executive Director (Administration) as witnesses, pursuant to the signatures of the Chairman of the petitioner, it was noticed that a hand-written note reading "valid goods permit is pre-requisite and clause nos.29 and 30 are not acceptable" was interpolated on Page No. 7 of the agreement by the respondent no.1, which was not there and/or was absent, when the file was sent to the Chairman of the petitioner for his signatures. (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (4 of 29) [CW-5744/2015] 2.10 That upon noticing this addition of the hand-written note, the Financial Advisor called a meeting in his Chamber on 31.03.2005 in which the Executive Director (Administration) and the Executive Manager (Advertisement) and the proprietor of the respondent no.1, participated.
2.11 That the proprietor of the respondent no.1 was confronted with the hand-written note on Page No. 7 of the agreement, which made it void, as the note was in contradiction to clause nos. 29 and 30, typed on Page No.6 of the agreement duly accepted by him. Accordingly, the proprietor of respondent no.1 was requested to submit a fresh agreement in the prescribed proforma. The Financial Advisor prepared a note of the meeting, which was subsequently sent to the Chairman of the petitioner. 2.12 That as the respondent no.1 was unwilling to submit a fresh agreement in the prescribed proforma, whilst insisting on executing the work as per the terms and conditions already approved, the petitioner issued a letter dated 01.04.2005 to the respondent no.1 for submitting a fresh agreement in the prescribed proforma within a period of 5 days. 2.13 That subsequently, letters dated 01.04.2005, 05.04.2005 and 06.04.2005 were sent by the respondent no.1 to the petitioner requesting for providing copy of the already executed agreement, even though the respondent no.1 did not send the petitioner the fresh agreement in the prescribed proforma. 2.14 That in this factual background, the petitioner cancelled its letter dated 22.02.2005, by way of which, the respondent no.1 was appointed as the Sole Selling Licensee. Consequently, stating failure on part of the respondent no.1 to fulfill the terms and (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (5 of 29) [CW-5744/2015] conditions of the agreement, the petitioner forfeited the earnest money as well as the security deposit vide letter dated 16.04.2005.
2.15 That respondent no.1 requested the petitioner by letter dated 03.05.2005 for appointing an arbitrator, out of the panel suggested by it. In reply, a letter dated 24.05.2005 was sent by the petitioner, intimating the respondent no.1 that in Clause 28 of the agreement, Chairman- RSRTC is named as the Arbitrator. 2.16 That thereafter, respondent no.1 filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, Act of 1996) before this Court. The said application was contested by the petitioner on the ground that as no concluded contract came into existence between the parties, the application preferred by the respondent no.1 under Section 11, is not maintainable. 2.17 That after hearing the both the sides, this Court vide order dated 16.04.2005 overruled the objections of the petitioner and appointed the respondent no.2 as the Sole Arbitrator. Being aggrieved, the petitioner filed an SLP before the Hon'ble Apex Court, wherein notices were issued upon respondent no.1 and the proceedings before the Sole Arbitrator were stayed. 2.18 That subsequently, the SLP was allowed and converted into Civil Appeal No. 5137/2007 titled as RSRTC and Anr. vs. M/s. Bhagwati Enterprises. After hearing both the sides, the same was decided by order dated 10.12.2009 whereby the objections of the petitioner were considered and it was held that as regards the first point, i.e. whether there was no concluded contract between the parties, that Section 16 of the Act of 1996 states that the Arbitral Tribunal can decide on the said issue uninfluenced by any (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (6 of 29) [CW-5744/2015] observation of this Court. In essence, the appointment of respondent no.2 as the Sole Arbitrator, was not set aside. 2.19 That thereafter, the arbitral proceedings before the sole arbitrator i.e. respondent no.2, commenced. In total, four issues were framed. Two witnesses were examined before the arbitral tribunal i.e. Sh. M.S. Somani CW-1 was examined on behalf of the respondent no.1 while Sh. J.J. Gupta, Executive Manager (Advertisement) RW-1 was examined on behalf of the petitioner. 2.20 That after hearing both the sides, the learned Arbitral Tribunal passed an award in favour of the respondent no.1 on 18.09.2011 for Rs. 6,53,20,86,367/- along with interest at 12% per annum w.e.f. 10.01.2011 till realization. 2.21 That being aggrieved of the aforesaid award, objections under Section 34 of the Act of 1996 were submitted by the petitioner before the Additional District Judge No.5, Jaipur Mahanagar (hereinafter, learned court below), to which a reply and a subsequent rejoinder were also filed. 2.22 That the petitioner also submitted an application under Section 18 of the Act of 1996 read with Section 151 of the Code of Civil Procedure (hereinafter, CPC) on 09.11.2012 praying that the statements of three witnesses, who dealt with the file at the time of execution of the agreement, may be recorded by the learned court below, as no evidence on the point could be adduced in absence of a specific issue on the point. The respondent no.1 did not file any reply to the said application. Subsequently, vide order dated 17.11.2012, the learned court below rejected the application so preferred by the petitioner, stating that there is no (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (7 of 29) [CW-5744/2015] provision for recording evidence in the proceedings initiated under Section 34 of the Act of 1996.
2.23 That thereafter, another application under Order 6 Rule 17 read with Section 151 of CPC and Section 82 of the Act of 1996 was filed by the petitioner on 11.12.2012, praying for permission to add three new paragraphs in the objection petition. However, vide order dated 15.12.2012., the learned court below rejected and/or dismissed the said application.
2.24 That being aggrieved, the petitioner preferred S.B. Civil Writ Petition No. 568/2013 titled as RRPP Nigam vs. ADJ No.5 and Ors. before this Court. After hearing both the sides, this Court vide order dated 29.01.2013, partly allowed the petition, permitting the incorporation of Paras XXIV and XXVI of the amendment application in the objections, as raised under Section 34 of the Act of 1996, subject to payment of Rs. 15,000/- as costs to respondent no.1.
2.25 That the respondent no.1 submitted the amended reply of the amended objections at a belated stage i.e. 18.01.2014. However, vide order dated 05.04.2014, after hearing both the sides, the learned court below rejected the objection application preferred by the petitioner.
2.26 That thereafter, the petitioner preferred another application before the learned court below on 20.09.2014 praying that as the respondent no.2, despite clear directions of the Hon'ble Apex Court did not frame an issue on whether the concluded contract came into existence, the parties could not lead evidence on the point. It was also averred in the said application that the respondent no.2 while passing the award dated 18.09.2011, (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (8 of 29) [CW-5744/2015] observed that the-then Chairman of the petitioner was the best witness to depose as to when and by whom the hand-written note was appended on Page No. 7 of the agreement. However, as the erstwhile Chairman was not produced in the evidence and the petitioner did not take any action against any defaulting person and also did not report the matter to the police, adverse inference was drawn against the petitioner and consequently, a sum of 6,53,20,86,367/- along with interest at 12% per annum w.e.f. 10.01.2011 till realization, was awarded to the respondent no.1. 2.27 That after hearing both the sides, vide order impugned dated 10.12.2014, the learned court below dismissed the application preferred by the petitioner for leading additional evidence. 2.28 That as a result, the instant petition is filed challenging the order dated 10.12.2014.
3. Learned Senior Counsel, Sh. R.N. Mathur, appearing on behalf of the petitioner, has submitted that the order impugned dated 10.12.2014 is illegal and improper, having been passed against the settled position of the law as well as the facts available on record. In support of the said submission, learned counsel averred that learned court below failed to appreciate the fact that the non-framing of issue regarding the non-existence of a concluded contract, which was sine qua non for determination of the dispute, the right to adduce documents and examine witnesses in support thereof flows directly from the pleadings which necessarily required evidence which could not be lead, despite being essential for the determination of the dispute between the parties. Accordingly, the learned court below erred in drawing an adverse inference against the petitioner for its (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (9 of 29) [CW-5744/2015] purported failure to initiate criminal action for fraud without appreciating that the cancellation of the alleged agreement was itself sufficient punishment. Furthermore, the Chairman of the petitioner had died by the time the evidence was recorded. However, it was still averred that the-then Chairman in his noting, had himself rebutted the contention of having allowed the deletion of Clauses 29 and 30.
4. Furthermore, Mr. R.N. Mathur, contended that the learned court below failed to appreciate that the letter dated 23.05.2005, requesting the deletion of Clauses 29 and 30, was marked on 01.04.2005 to the Chairman, thereby prelcuding/negating the factum of a concluded contract having arisen/formulated at all. Therefore, it was averred that the liberty granted by this Court would be rendered futile, if the necessary evidence is not allowed to be led. Qua the quantum of the sum awarded, learned counsel submitted that a colossal amount has been awarded to the respondent no.1 without having done an iota of work, which renders the said award ex-facie bad, liable to be quashed and set aside.
5. In addition to the contentions noted above, learned counsel submitted that upon the commencement of the arbitration proceedings before the sole arbitrator, the following issues were framed, namely:-
1. Whether the respondents have illegally rescinded the contract?
2. Whether the respondents have committed breach of trust?
3. Whether the claimants are entitled to claim Rs.
29,70,56,41,239/-?
4. To what relief the parties are entitled?" (Downloaded on 02/02/2024 at 09:24:28 PM)
[2023:RJ-JP:31441] (10 of 29) [CW-5744/2015] Therefore, in light of the limited issues so framed before the sole arbitrator, it was contended by learned counsel for the petitioner that that the learned court below failed to appreciate the fact that the right to adduce documents and examine witnesses in support thereof i.e. qua the existence of a concluded contract, flows directly from the pleadings before the arbitrator but due to non-framing of appropriate issue/questions for determination in said regard, the necessary required evidence could not be led by the petitioner and/or parties.
6. Learned counsel further submitted that the learned court below further failed to appreciate the fact that the learned arbitral tribunal on the one hand did not frame any issue regarding whether or not the concluded contract came into existence between the parties (which caused prejudice to the petitioner), resulting into the required evidence for adjudicating the aforesaid point not being adduced by the petitioner and on the other hand, the sole arbitrator proceeded to draw an adverse inference against the petitioner for not having produced the-then Chairman of the petitioner for proving when and by whom, the hand-written matter was interpolated on Page No. 7 of the agreement. Thus, the approach of the sole arbitrator was wholly illogical, unjust, arbitrary and partisan.
7. On the aspect of non-initiation of disciplinary proceedings, learned counsel submitted that after the passing of the impugned award by the learned Sole Arbitrator, the petitioner served charge-sheets on the defaulting officers/officials of the Corporation. Therefore, the application of the petitioner (Annexure-10) praying for the recording of the statements of (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (11 of 29) [CW-5744/2015] three witnesses namely Sh. S.K. Khatri, C.S. Mootha and Smt. Shashi Mathur , who dealt with the file at the relevant time, should have been allowed to determine the question of concluded contract, as the said persons could not be produced in the arbitral proceedings, in the absence of any issue framed on the said point of concluded contract by the sole arbitrator i.e. respondent no.2. In this regard, it was also averred that the Chairman of the petitioner, Sh. Ram Narain Meena had also expired long before the commencement of the arbitral proceedings, thereby precluding him from deposing on the said aspect of interpolation of the hand- written note on Page 7 of the agreement.
8. Learned Senior Counsel further submitted that the respondent no.1 before the court below had contended that the application so preferred by the petitioner for recording the statements of witnesses on the aspect of concluded contract was not maintainable, as an earlier application on the same subject, had been rejected by the court below and that there is no provision for recording evidence under Section 11 of the Act of 1996. In this regard, learned counsel argued that as per the settled position of the law, every court/tribunal possesses all ancillary and inherent powers to do justice between the parties in view of the principle of law that unless any action is prohibited under the provision of law, it is to be considered as permissible even in the absence of specific provisions to that effect. It was also averred that Section 82 of the Act of 1996 gives powers to the High Court for making rules consistent with the Act of 1996. Accordingly, in exercise of those powers, this Court promulgated (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (12 of 29) [CW-5744/2015] the Rajasthan Arbitration Rules,2003 vide notification dated 27.01.2004. Rule 11 provides as below:
"(1) Save as otherwise expressly provided in this Act or these rules the following provisions of the Code of Civil Procedure 1908 and as amended by C.P.C.
(Amendment) Act, 1999 and 2002 shall apply to the proceedings before a court in so far as they may be applicable thereto, namely,
(i) Sections 28, 31, 35, 35 A, 107, 133, 135, 137, 148A, 151 and 152 and
(ii) Order III, V, VI, IX, XIII, XIV to XIX, XXIV, XLI and XLII.
(2) (a) for the purpose of facilitating application of the provisions referred to under sub-rule (1) the court may construe them with such alternations, not affecting the substance as may be necessary or proper to adopt to the matters before it; and
(b) the court may for sufficient reasons proceed otherwise than in accordance with the said provisions if it is satisfied that interest of the parties shall not thereby by prejudiced"
9. Therefore, on a perusal of the aforesaid Rule 11(1)(ii), it is evident that Orders XVI to XIX of the CPC apply to proceedings before a court. Moreover, even the learned court below, falls within the definition of a "court" as given in Section 2(i)(e) of the Act of 1996. Order XVI and XVII of the CPC deal with summoning and attendance of witnesses and hearing of the suit and examination of the witnesses. Hence, establishing the fact that the court below was competent to record the evidence of the witnesses in the proceedings initiated before it.
10. Further on the aspect of res judicata, it was submitted by Mr. Mathur, that no decision has been rendered in any suit by a competent court under any issue about the recording/non- recording of evidence of the petitioner. Thus, the principle of the res judicata shall have no applicability. Moreover, it was averred (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (13 of 29) [CW-5744/2015] that the principles of res judicata are not applicable on interlocutory orders. In addition to the aforesaid, it was also contended that the application submitted by the petitioner (marked as Annexure-10) was not barred by the doctrine of res judicata as after the rejection of the erstwhile application (marked as Annexure-1), the petitioner was permitted to amend his objections submitted under Section 34 of the Act of 1996. The petitioner submitted his amended objections on 11.02.2013. Thus, a plethora of changes had taken place in the circumstances of the case and a fresh cause of action accrued to the petitioner for submitting the application for recording the statements of witnesses. Therefore, in order to prove objection No. XXIV, the learned court below has committed a grave illegality in rejecting the application vide impugned order dated 10.12.2014.
11. Furthermore, learned counsel contended that the respondent no.1 had obtained the award dated 18.09.2011 on the basis of the forged draft agreement and thus, it can be rightly contended that the award has been procured by committing forgery and as such, is liable to be set aside under Section 34 of the Act of 1996. It was also pointed out that without undertaking no work whatsoever in pursuance to the purported agreement, the respondent no.1 has obtained an award for Rs. 6,53,20,86,367/-.
12. Therefore, in conclusion, learned Senior Counsel submitted that since the inception of the proceedings, which started under Section 11 of the Act of 1996, the specific preliminary objection of the petitioner qua the agreement not being a concluded contract has not been considered, which potentially precludes the validity of the entire arbitral proceedings. (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (14 of 29) [CW-5744/2015] As a result, no issue qua the same was framed before the arbitral tribunal, thereby prelcuding the petitioner from raising any evidence and/or adducing any documents/witnesses to that effect. The said objection ought to be duly considered by the competent court and accordingly, opportunity ought to be given to for bringing evidence qua the said aspect on record. In support of the arguments raised above, reliance was placed upon the dictum of the Hon'ble Apex Court as enunciated in Alpine Housing vs. Ashok Dhariwal: Civil Appeal No. 73/2023, M/s M.K. Global vs. Girdhar Soni reported in (2018) 9 SCC 49 and Fiza Developers vs. AMCI reported in (2009) 17 SCC 796. While placing reliance upon the said judgments, it was averred that if certain aspect(s) necessary for the determination of the lis are not on record, but are relevant to the determination of the issues arising under Section 34(2)(a), the same may be brought to the notice of the court by way of affidavits, cross-examinations, looking to the fact that the truth shall emerge as a result of leading the said evidence(s) between both the parties. Accordingly, it was prayed that the order impugned be quashed and set aside and resultantly, the application preferred by the petitioner i.e.Annexure-10, be allowed.
13. Per contra, learned Senior Counsel, Mr. A.K. Sharma, appearing on behalf of the respondents, has submitted that the order impugned calls for no interference of this Court, as the same has been passed in consonance with the settled position of the law as well as the facts available on record. In support of the said submission, it was averred that there is no vested right in parties to lead evidence in proceedings initiated under Section 34 of the (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (15 of 29) [CW-5744/2015] Act of 1996 as the said Act mandates speedy disposal of cases. Learned counsel further submitted that the issues which were not required to be framed cannot be considered under the summary proceedings, that too under an objection petition arising out of Section 34 of the Act of 1996. It was further contended that as per the provisions of Section 16(2) of the Act of 1996, the petitioner failed to bring any objection before the learned arbitrator, in spite of specific findings of the Hon'ble Apex Court to that effect. It was also contended that the plea of the arbitral tribunal having no jurisdiction qua adjudication can be raised not later than the submission of statement of defects.
14. Furthermore, learned Senior Counsel submitted that the arbitral tribunal had raised four specifically claimed issues, which could only be raised, if the contract was concluded. Mr. A.K. Sharma also contended that as per the Scheme of the Act of 1996, any interim order should not be entertained in the petitions filed under Article 226/227 of the Constitution of India, as was held by the judgment of the Hon'ble Apex Court as enunciated in SBP vs. Patel Engineering reported in (2005) 8 SCC 618. Learned counsel also relied upon the judgment of the Hon'ble Apex Court as enunciated in Arvind Construction vs. Executive Engineer Sardar Sarovar reported in (2022) 1 SCC 75. In light of the above, it was averred that once in the Year 2012, on the same subject, the learned court below has rejected the claim of adducing additional evidence, the said issue has attained finality and therefore, going forward, any claim to that effect, would be barred by the doctrine of res judicata.
(Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (16 of 29) [CW-5744/2015]
15. In conclusion, on the aspect of the doctrine of res judicata being applicable at the interim stage, reliance was placed upon the dictum of the Hon'ble Apex Court as enunciated in (2013) 15 SCC 655 titled as Erach Boman Khavar vs. Tukaram Sridhar Bhat and Ors. Accordingly, it was prayed that no interference is called for with the order impugned and as a result, the instant petition ought to be dismissed.
16. Heard learned counsel for both the sides, scanned the record of the petition and perused the judgments cited at Bar.
17. Anterior to the discussion on merits, this Court deems it appropriate to summarily draw out the fundamental tenets of arbitration as an alternate dispute mechanism, which shall have a direct bearing on the lis before us. They are noted herein-under:-
17.1 One of the aims and object of arbitration as an alternate dispute mechanism, more particularly the consolidated Act of 1996, is to dispense contesting parties with a fair and efficient procedure for resolving their disputes. For such resolution, the Act of 1996 envisages speedy disposal, highlighting the time taken for resolving the dispute, to be of essence.
17.2 Arbitral Tribunals, whilst passing arbitral awards, are tasked with the common parlance duty to ensure that the awards passed are well-defined, unambiguous and categorically answer the claims made and the disputes so referred, by way of the arbitration agreements, albeit whilst remaining within the realms of their jurisdiction.
17.3 With the aforesaid, the role of the Courts in such arbitral proceedings was minimized, so as to make the alternate dispute (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (17 of 29) [CW-5744/2015] mechanism strong, self-sufficient, and more importantly, time efficient.
18. A co-joint analysis of Section 7 and 8 of the Act of 1996 makes it abundantly clear that an arbitration proceeding or a reference in said regard, shall not subsist unless an arbitration agreement to the said effect, exists. Section 7 expressly connotes that an arbitration agreement means a promise by parties to settle any disputes between them about a specific legal relationship using arbitration. This applies whether the disputes are mentioned in a contract or not. Therefore, one of the indispensable ingredient for triggering and/or invoking arbitration is the existence and constitution of a valid arbitration agreement which possesses enforceability i.e. a valid contract, which is duly executed with an arbitral clause. Failing the existence of the said enforceability with the aid of a contract, the proceedings initiated under the Act of 1996 shall seize to operate and/or will not be invoked. Additionally, another key ingredient, being the sine qua non for constituting a valid arbitration agreement is consensus ad idem i.e. agreeing to the same thing, in the same sense, by the parties.
19. In the facts and circumstances of the instant case, it is an admitted position that a dispute arose between the contesting parties at the initial stage of execution of the agreement, that is to say, when the when the file containing the agreement was received back by the Financial Advisor of the petitioner, who was to sign along with the Executive Director (Administration) as witnesses, pursuant to the signatures of the Chairman of the petitioner, when it was noticed that a hand-written note reading (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (18 of 29) [CW-5744/2015] "valid goods permit is pre-requisite and clause nos.29 and 30 are not acceptable" was interpolated on Page No. 7 of the agreement by the respondent no.1, which was not there and/or was absent, when the file was sent to the Chairman of the petitioner for his signatures. Resultantly, the witnesses i.e. Financial Advisor and Executive Director (Administration) had not signed the said agreement upon noticing the said interpolation. Moreover, subsequently, even when the proprietor of respondent no.1 was requested to submit a fresh agreement in the prescribed proforma. However, respondent no.1 was unwilling to submit a fresh agreement, whilst insisting on executing the work as per the terms and conditions already deemed to be approved. Therefore, without an iota of doubt, it can be conclusively said that the present dispute between the parties, which stemmed from the aforesaid sequence of events, was at the initial stage of execution of the agreement.
20. As a result, the contesting parties knocked the doors of the Hon'ble Apex Court, whereby vide order dated 10.12.2009, as passed in Civil Appeal No. 5137 of 2007 titled as Rajasthan S.R.T.C. and Anr. vs. M/s. Bhagwati Enterprises, the following order was passed, relevant portion of which is reproduced herein-under:-
"The matter relates to the Arbitration and Conciliation Act, 1996 (for short, 'The Act'). Two points were argued before the High Court (i) there was no concluded contract between the parties; and (ii) that the named arbitrator namely the Chairman of the Rajasthan State Road Transport Corporation could alone be appointed as arbitrator.
As regards the first point, we may mention that Section 16 of the Act states that the Arbitral (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (19 of 29) [CW-5744/2015] Tribunal can rule on its own jurisdiction including on the question about the existence or validity of the arbitration agreement. Hence, this point as to whether there was a concluded contract between the parties can be raised before the arbitrator and we direct that the arbitrator will decide the same uninfluenced by any observations of the High Court."
21. In this background, it is noted that despite categoric liberty being given to the petitioner to raise the objection qua the existence of the concluded contract before the arbitral tribunal coupled with the express direction issued to the learned arbitrator to decide upon the said objection uninfluenced by any previous observations of the High Court, no issue pertaining to the said objection i.e. that whether a concluded contract existed between the parties, was formulated by the arbitral tribunal, despite a preliminary objection to that effect having been taken by the petitioner. Rather, the only issues formulated by the arbitral tribunal, are noted herein-under:-
"1. Whether the respondents have illegally rescinded the contract?
2. Whether the respondents have committed breach of trust?
3. Whether the claimants are entitled to claim Rs. 29,70,56,41,239/-?
4. To what relief the parties are entitled?"
22. Therefore, resultantly, in blatant ignorance of the petitioner's preliminary objection, as well as the directions/liberty granted by the Hon'ble Apex Court vide order dated 10.12.2009, no issue was framed in order to ascertain whether a concluded contract existed between the contesting parties. Rather, in absence of the formulation of the said issue, which forms the very foundation of the dispute at hand, the arbitral tribunal proceeded to adjudicate upon the four incidental issues so framed, and (Downloaded on 02/02/2024 at 09:24:28 PM) [2023:RJ-JP:31441] (20 of 29) [CW-5744/2015] without noting the fact that no work had been undertaken by respondent no.1 yet, awarded them a sum of Rs. 6,53,20,86,357/- along with interest.
23. On the aspect of raising an objection qua the subject matter of the proceedings before the learned arbitral tribunal at a belated stage, reliance can be placed upon the dictum of the Hon'ble Apex Court, as enunciated in Harshad Chiman Lal Modi vs. DLF Universal and Ors. reported in (2005) 7 SCC 791. The relevant extract is noted herein-under:-
"28. We are unable to uphold the contention. The jurisdiction of a court may be classified into several categories. The important categories are (i) Territorial or local jurisdiction; (ii) Pecuniary jurisdiction; and (iii) Jurisdiction over the subject matter. So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest possible opportunity and in any case at or before settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed to be taken at a subsequent stage. Jurisdiction as to subject matter, however, is totally distinct and stands on a different footing. Where a court has no jurisdiction over the subject matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a court having no jurisdiction is nullity.
29. In Halsbury's Laws of England, (4th edn.), Reissue, Vol. 10; para 317; it is stated; 317. Consent and waiver. Where, by reason of any limitation imposed by statute, charter or commission, a court is without jurisdiction to entertain any particular claim or matter, neither the (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (21 of 29) [CW-5744/2015] acquiescence nor the express consent of the parties can confer jurisdiction upon the court, nor can consent give a court jurisdiction if a condition which goes to the jurisdiction has not been performed or fulfilled. Where the court has jurisdiction over the particular subject matter of the claim or the particular parties and the only objection is whether, in the circumstances of the case, the court ought to exercise jurisdiction, the parties may agree to give jurisdiction in their particular case; or a defendant by entering an appearance without protest, or by taking steps in the proceedings, may waive his right to object to the court taking cognizance of the proceedings. No appearance or answer, however, can give jurisdiction to a limited court, nor can a private individual impose on a judge the jurisdiction or duty to adjudicate on a matter. A statute limiting the jurisdiction of a court may contain provisions enabling the parties to extend the jurisdiction by consent."
30. In Bahrein Petroleum Co., this Court also held that neither consent nor waiver nor acquiescence can confer jurisdiction upon a court, otherwise incompetent to try the suit. It is well-settled and needs no authority that 'where a court takes upon itself to exercise a jurisdiction it does not possess, its decision amounts to nothing.' A decree passed by a court having no jurisdiction is non-est and its validity can be set up whenever it is sought to be enforced as a foundation for a right, even at the stage of execution or in collateral proceedings. A decree passed by a court without jurisdiction is a coram non judice.
31. In Kiran Singh v. Chaman Paswan [1955]1SCR117, this Court declared; "It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set up whenever and it (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (22 of 29) [CW-5744/2015] is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction ... strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties."
24. Therefore, on the aspect of raising an objection qua the subject-matter jurisdiction at a belated stage, the law as propelled by the Hon'ble Apex Court is fairly intelligible. In essence, it is held that whenever a dispute arises, qua the subject-matter jurisdiction of a suit/dispute, as opposed to the pecuniary and territorial jurisdiction qua which the objection has to be filed at the earliest opportunity i.e. before the framing of issues, the objection may be preferred at any stage, especially looking to the fact that an objection of such nature, stemming from the subject matter of the suit, constitutes the very foundation of the dispute, capable of rendering the adjudicatory body incompetent to preside over such a dispute. Moreover, any order passed by an incompetent authority, lacking jurisdiction to adjudicate upon the same, shall be a nullity in the eyes of the law.
25. In the facts and circumstances of the case, it is an admitted position that since the very inception of proceedings and/or the birth of dispute between the parties i.e. right from the filing of the initial application by the respondent no.1 under Section 11 of the Act of 1996 for the appointment of an arbitrator, till the matter traveled to this Court as well as the Hon'ble Apex Court and thereafter, the learned court below which passed the order impugned, the petitioner has consistently raised an (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (23 of 29) [CW-5744/2015] objection qua the subject matter jurisdiction i.e. on the ground that as no concluded contract came into existence between the parties, the application preferred by the respondent no.1 under Section 11, is not maintainable. However, despite having invariably raised the same objection time and again, no heed was paid to the same by the arbitral tribunal, even after directions for considering the same were issued by the Hon'ble Apex Court vide order dated 10.12.2009. Resultantly, no finding on the paramount objection striking the foundation of the dispute at hand, was given by the arbitral tribunal.
26. Furthermore, even after the passing of the award by the arbitral tribunal in favour of the respondent no.1 on 18.09.2011, the petitioner filed objections under Section 34 of the Act of 1996 wherein an application under Section 18 of the Act of 1996 read with Section 151 of the Code of Civil Procedure (hereinafter, CPC) was also filed on 09.11.2012 praying that the statements of three witnesses, who dealt with the file at the time of execution of the agreement, may be recorded by the learned court below, as no evidence on the point could be adduced in absence of a specific issue on the existence/non-existence of a concluded contract. However, vide order dated 17.11.2012, the learned court below rejected the application so preferred by the petitioner, stating that there is no provision for recording evidence in the proceedings initiated under Section 34 of the Act of 1996. Subsequently, another application under Order 6 Rule 17 read with Section 151 of CPC and Section 82 of the Act of 1996 was filed by the petitioner on 11.12.2012, praying for permission to add three (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (24 of 29) [CW-5744/2015] new paragraphs in the objection petition. However, vide order dated 15.12.2012., the learned court below rejected and/or dismissed the said application as well. Being aggrieved, the petitioner preferred S.B. Civil Writ Petition No. 568/2013 titled as RRPP Nigam vs. ADJ No.5 and Ors. before this Court whereby, after hearing both the sides, this Court vide order dated 29.01.2013, partly allowed the petition, permitting the incorporation of Paras XXIV and XXVI of the amendment application in the objections, as raised under Section 34 of the Act of 1996. Even the after the said amendment in the objections so filed, vide order dated 05.04.2014, the learned court below rejected the objection application preferred by the petitioner for adducing evidence and/or filing affidavits to exhibit the non- existence of a concluded contract.
27. Furthermore, in order to draw the attention of the court below to the non-consideration of the petitioner's premier objection qua the non-existence of a concluded contract, the petitioner preferred another application before the learned court below on 20.09.2014 praying that as the respondent no.2, despite clear directions of the Hon'ble Apex Court did not frame an issue on whether the concluded contract came into existence, the parties could not lead evidence on the point and therefore, they should be permitted to do so. Howsoever, without paying any heed to the aspect of non-framing of any issue regarding the foundational preliminary objection taken by the petitioner regarding the non-existence of a concluded contract, the court below, in ignorance of the order of the Hon'ble Apex Court's order (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (25 of 29) [CW-5744/2015] dated 10.12.2009, dismissed the application dated 20.09.2014, vide the order impugned.
28. Therefore, it can be conclusively said that the learned arbitral tribunal had failed to examine the issue of concluded contract, despite a preliminary objection to that effect having been raised by the petitioner on numerous occasions. Moreover, it is noted that the said objection ought to have been considered by the learned arbitral tribunal, prior to the formulation of the four issues so framed, as the said objection struck the very core of the dispute as raised before the tribunal. The said shortcoming of the arbitral tribunal to entertain the preliminary objection qua the subject matter jurisdiction i.e. non-existence of a concluded contract, is further highlighted by the fact that the same was not taken note of, despite the directions of the Hon'ble Apex Court directing the arbitrator to adjudicate upon the petitioner's preliminary objection, uninfluenced by any observations of the High Court, vide order dated 10.12.2009.
29. Accordingly, in the view of this Court, when the preliminary objection as raised by the petitioner was not duly considered by the learned arbitral tribunal, the responsibility to do so by way of entertaining the objections raised under Section 34 of the Act of 1996 fell upon the learned court below, before which the petitioner had sought permission to lead evidence and/or file appropriate affidavits, in order to establish the factum of the existence/non-existence of a concluded contract.
Section 34: Application for setting aside arbitral award (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (26 of 29) [CW-5744/2015] (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application 3[establishes on the basis of the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(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 decisions on matter 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; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Past; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
1[Explanation 1.-- For the avoidance of any doubt, it is clarified that an award is in (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (27 of 29) [CW-5744/2015] conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] 2[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.] (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-
section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (28 of 29) [CW-5744/2015] other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
[(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-
section (5) is served upon the other party.]
30. Upon an analysis of Section 34 of the Act of 1996, it is noted that courts may set aside an arbitral award if it is in conflict with the public policy of India. Explanation 1, annexed with the provision, further provides clarity on what constitutes the "public policy of India". In this regard, it is noted that an arbitral award shall be said to against the public policy of India, provided that the same is passed in contravention of the fundamental policy of Indian law, such as in the present case, wherein the award dated 18.09.2011 was passed in favour of the respondent no.1, in blatant ignorance of the preliminary objection raised by the petitioner qua the subject matter of the dispute, especially when the Hon'ble Apex Court vide order dated 10.12.2009 had also directed the arbitral tribunal to duly consider the said objection pertaining to the existence/non-existence of a concluded contract between the contesting parties, determination of which formed the cornerstone of the dispute in-toto.
31. Accordingly, in light of the observations made herein- above, this Court deems it fit to set aside the order impugned (Downloaded on 02/02/2024 at 09:24:29 PM) [2023:RJ-JP:31441] (29 of 29) [CW-5744/2015] dated 10.12.2014, with a direction to the learned court below to carry out the adjudication proceedings in-toto within an upper limit of six months. While doing so, the learned court below shall primarily delve into the preliminary objection raised by the petitioner qua the existence/non-existence of a concluded contract between the contesting parties, and only thereafter, if the need so arises, delve into the merits of the case. Due opportunity of hearing be presented to both the sides.
32. As a result, the instant writ petition is allowed in above terms. Pending applications, if any, stand disposed of.
(SAMEER JAIN),J JKP/312 (Downloaded on 02/02/2024 at 09:24:29 PM) Powered by TCPDF (www.tcpdf.org)