Madras High Court
Senior Divisional Commercial Manager vs Mrs.G.Bharathi on 6 March, 2020
Author: M.Sundar
Bench: M.Sundar
O.P.No.584 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 06.03.2020
CORAM
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.No.584 of 2019
Senior Divisional Commercial Manager,
Divisional Office, Commercial Branch,
Southern Railway, 2nd Floor,
NGO Annexe, Park Town,
Chennai-600 003.
... Petitioner
- Vs -
Mrs.G.Bharathi
... Respondent
Original Petition filed under Section 34 of the Arbitration and Conciliation
Act, 1996, to set aside the impugned award dated 07.01.2019 passed by the
Arbitrator and allow the OP.
For Petitioner : Mr.M.T.Arunan
For Respondent : Mr.M.Balasubramaniam
***
http://www.judis.nic.in
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O.P.No.584 of 2019
ORDER
There is a sole petitioner and a lone respondent herein. Mr.M.T.Arunan, learned counsel for petitioner and Mr.M.Balasubramaniam, learned counsel for respondent are before this Court.
2. Instant 'Original Petition' ('OP' for the sake of brevity) has been filed under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity. Be that as it may, instant OP has been filed assailing an arbitral award dated 07.01.2019 made by an Arbitral Tribunal constituted by a sole Arbitrator qua an agreement dated 29.06.2015 (hereinafter 'said contract' for the sake of brevity, clarity and convenience). One covenant in said contract is an arbitration clause and therefore, the same serves as 'arbitration agreement' between the parties being 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act.
3. PREFATORY NOTE:
Challenge to an arbitral award under Section 34 of A and C Act, going by the language in which Section 34 of A and C Act is couched, is by way of an http://www.judis.nic.in 2/29 O.P.No.584 of 2019 'application', but this Court is giving the nomenclature 'Original Petition' for such applications under Section 34 of A and C Act. Therefore, in this order, I will continue to refer to instant matter as 'OP'. A OP under Section 34 of A and C Act is neither an appeal nor a revision. It is not even a full-fledged judicial review, but it is a limited judicial review within the contours and confines of Section 34 of A and C Act. By contours and confines of Section 34 of A and C Act, this Court refers to 8 designated slots adumbrated in Section 34 of A and C Act. To be noted, 5 slots are adumbrated under Section 34(2)(a), two slots are adumbrated under Section 34(2)(b) and one slot figures under Section 34(2A). This Court chooses to deploy the term 'slots' in preference to 'grounds' as instant OP is neither an appeal nor a revision and it is not even a full-fledged judicial review as mentioned in the earlier part of this order. To put it differently, it is a mere challenge to an award. When it comes to 'challenge to an award', the principle is, if a petitioner/applicant is able to fit his case into any one or more of the eight slots neatly and snugly, the award will be dislodged or in other words set aside. If that not be so, the award will not be interfered with. This is owing to 'minimum judicial interference' in 'Alternate Dispute Resolution' ('ADR') mechanism, which is an important aspect of the sublime philosophy and salutary principles underlying the scheme of A and C Act. In http://www.judis.nic.in 3/29 O.P.No.584 of 2019 this view of the matter, this Court chooses to describe the eight slots adumbrated in Section 34 as eight pigeon holes. To be noted, some of these pigeon holes are even in the nature of keyholes and pinholes, as some of these slots have been circumscribed by limitations. To be noted, a) not entailing review on merits qua conflict with public policy of India slot, b) making re- appreciation of evidence impermissible and eliminating even erroneous application of law from patent illegality slot fall in this category.
4. FACTUAL MATRIX IN A NUTSHELL:
4(i) In the light of aforementioned prefatory note, it is not necessary to dilate in detail qua facts. In other words, short facts shorn of elaboration/details will suffice for disposal of instant OP owing to contours and confines of Section 34 of A and C Act. In this regard, this Court deems it appropriate to remind itself about Fiza Developers principle laid down by Hon'ble Supreme Court in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited reported in (2009) 17 SCC 796 and that Fiza Developers principle was reiterated by Hon'ble Supreme Court in Emkay Global case being Emkay Global Financial Services Ltd. v. Girdhar Sondhi reported in (2018) 9 SCC 49, while reiterating Fiza Developers principle, Hon'ble Supreme Court http://www.judis.nic.in 4/29 O.P.No.584 of 2019 held that Fiza Developers principle is a step in the right direction. To be noted, Fiza Developers principle is to the effect that summary procedure is to be adopted for disposal of applications under Section 34 of A and C Act.
Therefore, with regard to facts, suffice to say that Railways issued a tender notice bearing reference No.M/C.79/SMU/Minutes dated 03.09.2012 inviting applications from eligible persons belonging to Scheduled Tribe category for awarding license for installing and operating a Catering Stall in Chennai Central Railway Station for a period of five years. To be noted, this Catering Stall is described as 'SMU 5'. This Court is also informed that with regard to such Stalls, there are two categories, one category is referred to a General Minor Units and other category is referred to as Special Minor Units. This Court is further informed without any disputation or disagreement that while General Minor Units are available for all categories of people, the Special Minor Units are reserved for persons belonging to Scheduled Caste and Scheduled Tribe category. This Court is informed that stall SMU 5, which forms subject matter of instant OP is a Special Minor Unit. It is submitted without any disputation that the respondent belongs to Scheduled Tribe category, she has submitted an application dated 01.10.2012 and after evaluation, her application was accepted by the Railways vide Letter of Acceptance dated 02.02.2015. Annual License http://www.judis.nic.in 5/29 O.P.No.584 of 2019 Fee was provisionally fixed at Rs.9,30,000/- [Rupees Nine Lakhs Thirty Thousand only] and security deposit was fixed at Rs.4,65,000/- [Rupees Four Lakhs and sixty five thousand only]. There is also no disputation with regard to the factual position that respondent commenced the business of running Catering Stall SMU 5 on and from 04.03.2015 and thereafter, a formal agreement came to be executed on 29.06.2015 and that agreement is 'said contract' referred to supra.
4(ii) It is the case of Railways that after two months of commencement of running of Catering Stall by the respondent, an inspection was conducted and according to Railways, certain short comings such as using additional space, food packets being packed upside down, etc., were found. It is also submitted that subsequently, several inspections were held and depending on the shortcomings, fines were imposed and some other proceedings were initiated. Ultimately, said contract was terminated by Railways on 22.08.2017. To be noted, though formal termination of the said contract was on 22.08.2017, the said Stall i.e., SMU 5 had to be closed by the respondent owing to action initiated by Railways on 22.03.2017. Therefore, respondent, who was awarded said contract for a period of five years i.e., from 04.03.2015 to 03.03.2020 had actually carried on business only for two years i.e., from 04.03.2015 to http://www.judis.nic.in 6/29 O.P.No.584 of 2019 22.03.2017. There is also no disputation or disagreement between the two parties before this Court that there was no default on the part of the respondent in payment of annual license fee of Rs.9,30,000/-.
4(iii) To be noted, this Court is informed that SMU 5 Catering Stall admeasures 60 Sq.ft or thereabouts. This court is also informed that 60 sq.ft is earmarked for the respondent and the respondent has to put up a small superstructure for vending eatables/snacks. Be that as it may, aforementioned termination notice date 22.03.2017 was assailed by the respondent leading to arbitral disputes between the parties and commencement of arbitral proceedings in accordance with the arbitration agreement between the parties. Suffice to say that a Former District Judge i.e, a retired District Judge was appointed as sole Arbitrator to constitute the Arbitral Tribunal, he embarked upon the exercise of entering upon reference, adjudicating upon the arbitral disputes and ultimately, passed aforementioned award dated 07.01.2019 [hereinafter 'impugned award' for brevity]. In the course of the arbitral proceedings, Railways made a counter claim. Vide the impugned award, Arbitral Tribunal allowed the claim made by the respondent before this Court (Claimant before Arbitral Tribunal) and dismissed the counter claim made by Railways.
http://www.judis.nic.in 7/29 O.P.No.584 of 2019 4(iv) Assailing the impugned award, instant OP has been filed by Railways.
5. RIVAL SUBMISSIONS AND DISPOSITIVE REASONING:
5(i) Before proceeding to deal with the rival submissions, it is necessary to mention that respondent before this Court in her capacity as claimant before the Arbitral Tribunal made the following prayer in her claim petition:
'For the reasons stated above, it is humbly prayed that this Hon'ble Court may be pleased to declare the proceedings of the Respondent herein bearing No.M/C.79/CS/SMU-5/MAS/17 dated 22.08.2017 as void, illegal, unjust and unsustainable in law and direct the Respondent herein to permit the Claimant to continue to operate the Catering Stall – SMU-5 at Platform No.2A/3 (beginning of Platform No.2A3) in Chennai Central Railway Station for the period up to, including the period of closure of the Stall by the Respondent, with a right of renewal for a further period of 3 years from the said date in terms of the Agreement dt. 29.09.2015 and direct the Respondent herein to pay the Claimant the costs of the Arbitration proceedings and pass such further or other orders as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case http://www.judis.nic.in 8/29 O.P.No.584 of 2019 and thus render justice'.
5(ii) Railways in their capacity as respondent before the Arbitral Tribunal made counter claims, which reads as follows:
'For the reasons stated above, it is humbly prayed that the Hon'ble Sole Arbitrator may be pleased to
(i) dismiss all the claims of the claimant in toto and
(ii)Uphold the termination dated 22.08.2017 of the claimant's SMU 5 catering stall contract, forfeiture of the security deposit of Rs.4,65,000/- and license fee and debarment of the claimant from future similar contracts/license of the Indian Railways for a period of one year in terms of Clause 16.1 (a), (b) & © and 17.2 of the Agreement dated 29.06.2015.
(iii)award cost of the arbitration proceedings and
(iv)pass such further or other orders as the Hon'ble Sole Arbitrator may deem fit and proper and thus render justice.' 5(iii) As already alluded to supra, Arbitral Tribunal vide impugned award, acceded to the claims made by the respondent before this Court (Claimant before Arbitral Tribunal) and negatived the counter claim made by Railways.
http://www.judis.nic.in 9/29 O.P.No.584 of 2019 5(iv) Assailing the impugned award, learned counsel appearing on behalf of Railways submitted that it is not a case of one solitary inspection, but there were a series of inspections. The respondents did not rectify the discrepancies in spite of repeated requests and warnings. It was therefore, submitted that the termination was inevitable. It was also pointed out that running such stalls are in the interest of passengers and if there are shortcomings in providing food and eatables, Railways can terminate the contract.
5(v). Learned counsel appearing on behalf of Railways also submitted that the Arbitral Tribunal had overlooked the shortcomings noticed in the inspections and the merits of termination put forth by the Railways for issuing termination.
5(vi). Responding to the above submission of learned counsel for Railways, learned counsel for respondent submitted that the respondent was not served with copies of the alleged shortcomings said to have been recorded by the Railways during inspection and proper opportunity was not been given to the respondent before inflicting penalties. It was pointed out that all these were noticed by the Arbitral Tribunal for returning it's verdict i.e., impugned award. http://www.judis.nic.in 10/29 O.P.No.584 of 2019 In this context, it becomes necessary to have a close and careful look at the OP that has been placed before this Court. In other words, as protagonist of instant OP, the manner in which Railways had laid challenge to the impugned award and the manner in which slot on which challenge is predicated is articulated in instant OP needs to be looked into and the same reads as follows:
http://www.judis.nic.in 11/29 O.P.No.584 of 2019 http://www.judis.nic.in 12/29 O.P.No.584 of 2019 http://www.judis.nic.in 13/29 O.P.No.584 of 2019 http://www.judis.nic.in 14/29 O.P.No.584 of 2019 http://www.judis.nic.in 15/29 O.P.No.584 of 2019 http://www.judis.nic.in 16/29 O.P.No.584 of 2019 http://www.judis.nic.in 17/29 O.P.No.584 of 2019 http://www.judis.nic.in 18/29 O.P.No.584 of 2019 http://www.judis.nic.in 19/29 O.P.No.584 of 2019 http://www.judis.nic.in 20/29 O.P.No.584 of 2019 http://www.judis.nic.in 21/29 O.P.No.584 of 2019 http://www.judis.nic.in 22/29 O.P.No.584 of 2019 http://www.judis.nic.in 23/29 O.P.No.584 of 2019 5(vii). A careful perusal of the OP and the grounds on which challenge to impugned award is predicated, brings to light that the entire OP is more in the nature of a regular First Appeal under Section 96 of 'The Code of Civil Procedure, 1908' [hereinafter referred to as 'CPC' for brevity]. This Court has to necessarily reminds itself that challenge to an arbitral award under Section 34 of A and c Act is within the contours and confines of Section 34 of A and C Act and all these have been alluded to supra in the Prefatory note. A challenge to an arbitral award qua an award passed in ADR mechanism, cannot be examined like a regular First Appeal under Section 96 of CPC.
5(viii). Notwithstanding the above position which is indisputable, this Court examined instant OP on hand in the light of the submissions made by http://www.judis.nic.in 24/29 O.P.No.584 of 2019 learned counsel for petitioner and the contra submissions made by learned counsel for respondent. This Court is left with the considered view that instant OP does not fit into anyone of the eight pigeon holes in Section 34 of A and C Act. If a challenge to an arbitral award does not fit into anyone of the eight pigeon holes in Section 34 of A and C Act, the award cannot be dislodged or in other words, the award cannot be set aside.
5(ix). To be noted, the entire OP has been scanned and reproduced supra to appreciate this aspect of the matter.
5(x). Furthermore, this Court read through the impugned award. A careful reading of the impugned award, leaves this Court with a considered view that it is cogent, coherent and the issues have been dealt with by deploying adequate fidelity of judicial approach. Applying the Wednesbury principle of reasonableness, this Court also finds that there is nothing irrational or perverse in the impugned award. Applying audi alteram partem principle, does not arise in instant case as it is nobody's case qua impugned award that 'Natural Justice principle' (NJP) has been violated.
http://www.judis.nic.in 25/29 O.P.No.584 of 2019 5(xi) In other words, notwithstanding instant OP being articulated as if it is a regular First Appeal under Section 96 of CPC, this Court, embarked upon the exercise of examining impugned award by applying Section 34 principles tested whether impugned award is in conflict with public policy and satisfied itself that impugned award is not vitiated by the vice of being in conflict with public policy of India. To be noted, on and from 23.10.2015, the term/expression 'public policy' stands statutorily explained vide Explanation 1 to aforementioned Section 34(2)(b)(ii) of A and C Act.
5(xii) Hon'ble Supreme Court in ONGC Ltd. v. Western Geco International Ltd., reported in (2014) 9 SCC 263 reiterated in Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49 dealing with public policy qua A and C Act culled out three distinct juristic principles. Not only three distinct juristic principles were culled out, but litmus tests for each of the three distinct juristic principles were also laid down. The three distinct juristic principles qua public policy culled out by Hon'ble Supreme Court are
a) Judicial approach;
b) Natural justice principle (NJP for brevity); and
c) Irrationality/perversity.
http://www.judis.nic.in 26/29 O.P.No.584 of 2019 5(xiii) The tests for the aforesaid three distinct juristic principles are a) fidelity to judicial approach; b) audi alteram partem and c) time honoured Wednesbury principle of reasonableness. To be noted, these principles were laid down by Hon'ble Supreme Court in aforementioned Western Geco case law and reiterated in Associate Builders case, both of which were rendered by Hon'ble Supreme Court prior to 23.10.2015. Be that as it may, this principle continues to govern the field post 23.10.2015 also as the Western Geco principle, more particularly the three distinct juristic principles culled out by Hon'ble Supreme Court and reiterated in Associate Builders case was reaffirmed by the Supreme Court in Centrotrade Minerals and Metal Inc. Vs. Hindustan Copper Ltd., reported in (2017) 2 SCC 228 which was rendered post 23.10.2015. As already alluded to supra, this Court tested the award by applying aforementioned three principles to satisfy itself that the award is not in conflict with public policy of India, it is not in contravention with fundamental policy of Indian law though there is an articulation with specificity in this regard by Railways.
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6. CONCLUSION:
In the light of the narrative set out supra under the caption Rival submissions and Dispositive Reasoning, this Court has no hesitation in coming to the conclusion that the impugned award does not deserve to be interfered with.
7. DECISION:
Instant OP is dismissed. Considering the nature of the matter, parties are left to bear their respective costs.
06.03.2020 Speaking Order Index : Yes kmi http://www.judis.nic.in 28/29 O.P.No.584 of 2019 M.SUNDAR. J., kmi O.P.No.584 of 2019 06.03.2020 http://www.judis.nic.in 29/29