Jharkhand High Court
Ram Prasad Sharma vs Jharkhand State Housing Board And Ors. on 9 February, 2005
Equivalent citations: 2005(2)ARBLR547(JHAR), 2005(1)BLJR562, [2005(2)JCR1(JHR)], 2005 AIR JHAR HCR 922, 2005 A I H C 2167, 2005 BLJR 1 562, (2005) 2 ARBILR 547, (2005) 2 JCR 1 (JHA)
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
ORDER M.Y. Eqbal, J.
1. Heard Mr. Naresh Prasad Singh, learned counsel appearing on behalf of the petitioner on the question of maintainability of this application.
2. The instant application has been filed purported to be under Section 34, read with Section 42(2)(e) of the Arbitration and Conciliation Act, 1996 (in short the "said Act") for setting aside the award dated 15.3.2004 passed by the Managing Director, Jharkhand State Housing Board, Ranchi in compliance of the order passed by this Court in a writ petition.
3. Petitioner's case is that he was allotted a Middle Income Group (MIG) house with a piece of land by the Bihar State Housing Board, Patna in the year 1983 at a price of Rs. 82,000/-. He deposited the initial money and entered into a registered agreement with the Housing Board in 1986 and, thereafter, regularly paid installments as per the agreement. It is stated that in-spite of payment of Rs. 1,40,015.00 the Housing Board raised further demand of Rs. 84,931.00. The petitioner challenged the said demand notice dated 12.5.2003 before respondent No. 2, the Managing Director, Jharkhand State Housing Board by his representations dated 2.6.2003 and 12.9.2003 and when nothing was done the petitioner challenged the said demand notice before this Court by filing a writ petition being W.P.C. No.. 5870 of 2003. The learned Single Judge, after hearing the parties disposed of the said writ petition on 4.12.2003 by referring the matter to the Managing Director of the respondents-Housing Board in terms of Clause 25 of the Hire Purchase Agreement for passing appropriate order. The Managing Director of the Housing Board, in terms of order dated 15.3.2004 held that the petitioner is liable to pay the amount so demanded by the Board. The petitioner challenged the said order of the Managing Director in the instant petition under Section 34 read with Section 42 of the said Act.
4. Learned counsel appearing on behalf of the petitioner submitted that since the dispute raised by the petitioner was referred by this Court to the Managing Director of the Board as per Clause (25) of the Hire Purchase Agreement the order Impugned is an award and, therefore, application under Section 34 of the said Act, is maintainable before this Court for setting aside the award.
5. The Arbitration and Conciliation Act, 1996 has been enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. Section 2(e) defines the word "Court" which reads as under :
"(e) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court, in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of small causes."
6. Part 1 of the said Act, contains Sections 2 to 43 which deal with the procedure for invoking the jurisdiction of the Arbitral Tribunal. Section 5 of the Act, lays down the extent of judicial intervention according to which in a matter governed by part II of the Act, no judicial authority shall intervene except where so provided in this part.
7. Section 8 of the Act, is worth to be quoted hereinbelow which reads as under :
"8. Power to refer parties to arbitration where there is an arbitration agreement.--(1) A Judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in Sub-section (1), shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under Sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
8. This section corresponds substantively to Section 34 of the Arbitration Act. 1940. But the difference is that now a party can file an application in Court alleging the existence of arbitration agreement not later than the submission of first statement on the substance of dispute. A plain reading of the aforesaid provision shows that a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall refer the party to the arbitration. However, this section provides that application shall not be entertained unless it is accompanied by original arbitration agreement or duly certified copy thereof.
9. It is, therefore, manifest that an application has to be brought before a judicial authority for the purpose of seeking reference of the dispute to arbitration. The legislature has used the expression "judicial authority" in this provision and not "Court" as defined in Section 2(1)(e) of the said Act. The application under Section 8 of the Act, will have to be made to judicial authority before whom action may be pending and that authority will be competent to refer the parties to arbitration.
10. The purpose of this provision is that when dispute or differences have arisen between the parties to an agreement, the same have to be settled by the Arbitrator in terms of the arbitration clause and the Court has no option but to direct the parties to the arbitration of the Arbitrator agreed by the parties to the agreement.
11. In the instant case, although the dispute and differences were not referred to arbitration strictly in terms of Section 8 of the Act, but the fact remains that action was brought in the matter which is a subject of arbitration agreement before this Court, in a writ petition invoking jurisdiction under Article 226 of the Constitution. On the first hearing of the writ petition it, was brought to the notice of the Court that dispute is to be adjudicated by the named Arbitrator in terms of the arbitration agreement contained in the agreement. Although, in my opinion, the parties ought to have directed to make a request to the Hon'ble Chief Justice or his delegatee seeking a reference as contemplated in Section 11 of the said Act, but instead of that this Court referred the dispute to the named Arbitrator for adjudication. The order dated 4.12.2003 passed in W.P.(C) No. 5870 of 2003 reads as under :
"Heard learned counsel for the petitioner and learned counsel appearing for Jharkhand State Housing Board.
The petitioner has prayed for quashing the demands issued by the respondent No. 3 as contained in letter No. 120 dated 12.5.2003 (Annexure-12) and also the demand as contained in letter No. 569 dated 17.5.2003 (Annexure-13) issued by the respondent No. 2. Petitioner's case is that he is not liable to pay the enhanced price of MIG Flats on the grounds mentioned in the writ petition. It is further submitted that against the said demands, the petitioner has made representation before the Managing Director on 9.9.2003 but no order has been passed on that.
Learned counsel for the Housing Board submitted that the demand is based on the basis of the final fixation of price, which has to be paid by the petitioner. However he submitted that in terms of Clause 25 of the Hire Purchase Agreement, the petitioner may invoke arbitration clause. He fairly submitted that the Managing Director, is expected to pass a speaking order as an arbitrator, and till then the said demand will not be enforced.
In view of the said stand taken by the Housing Board the matter is referred to the arbitration to the Managing Director, Housing Board in terms of Clause 25 of Hire Purchase Agreement. The petitioner will file his statement of claim along With supporting documents before the Arbitrator within two weeks and the Housing Board will also file its statement of claim within two weeks thereafter. The Arbitrator will hear the parties and decide the matter by giving reasons in accordance with law. The parties will co-operate in the proceeding.
Till a decision is taken by the Arbitrator, the impugned demand shall not be enforced.
It is made clear that this Court has not gone into the merits of the case.
With these observations and directions, this writ petition is disposed of."
12. It is, therefore, clear that there is technical non-compliance by the parties to the agreement in not requesting the Chief Justice-or his delegatee, but in my opinion, because of non-compliance the entire arbitration proceeding and the Award cannot be vitiated. Such an Award shall be deemed to be an arbitral Award as defined in the Act. The said Award, therefore, can be challenged before this Court under Section 34 of the Act of 1996.
13. For the aforesaid reasons, I hold that the instant petition under Section 34 of the Act of 1996 for setting aside award is maintainable.