Karnataka High Court
Ultra Entertainment Solutions Pvt Ltd vs The Arbitral Tribunal on 28 November, 2013
Bench: K.L.Manjunath, A.V.Chandrashekara
®
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 28TH DAY OF NOVEMBER, 2013
PRESENT
THE HON'BLE MR JUSTICE K L MANJUNATH
AND
THE HON'BLE MR JUSTICE A V CHANDRASHEKARA
Writ Petition No. 33939 of 2013 (GM-RES)
BETWEEN:
ULTRA ENTERTAINMENT
SOLUTIONS PVT. LTD.
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 1956, AND
HAVING ITS REGISTERED OFFICE
AT 135, CONTINENTAL BUILDING,
DR. A.B. ROAD, WORLI,
MUMBAI - 400 018
REP. BY ITS AUTHORISED SIGNATORY
MR RAJESH BHASIN
S/O LATE JAGADISH RAJ BHASIN
AGED ABOUT 58 YEARS ... PETITIONER
[By Sri Hiroo Advani, Adv. for
Sri Kashyap N Naik, Adv. for
M/s Agraa legal, Advs.]
AND:
1. THE ARBITRAL TRIBUNAL
COMPRISING OF
(a) MR. JUSTICE K. JAGANNATHA
SHETTY
FATHER'S NAME NOT KNOWN
TO PETITIONER,
MAJOR
2
R/AT NO. 654, 10TH CROSS,
II STAGE, WEST OF CHORD ROAD
BANGALORE - 560 010
(b) MR. JUSTICE L. SREENIVASA
REDDY
FATHER'S NAME NOT KNOWN TO
PETITIONER
MAJOR
R/AT NO. 21/1A, LAXMI ROAD,
SHANTHINAGAR,
BANGALORE - 560 027
(c) MR. JUSTICE R.G. VAIDYANATHA
FATHER'S NAME NOT KNOWN TO
PETITIONER
MAJOR
R/AT NO.23, 4TH CROSS,
1ST FLOOR, JAYANAGAR,
1ST BLOCK,
BANGALORE - 560 011
2. THE STATE OF KARNATAKA
THROUGH UNDER SECRETARY
DEPARTMENT OF FINANCE,
VIDHANA SOUDHA,
BANGALORE - 560 001 ... RESPONDENTS
[By Sri K P Kumar, Sr. Counsel for
Sri T Suryanarayana, Adv. for
M/s King & Partridge, Advs.
R1(a-c) are deleted vide order dt.28.8.2013 ]
THIS PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED
ORDER DATED 26TH JUNE, 2013, PASSED BY THE R1, VIDE
ANNEXURE - A AND ETC.,
THIS PETITION COMING ON FOR PRELIMINARY HEARING,
THIS DAY, MANJUNATH, J., MADE THE FOLLOWING:
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ORDER
The legality and correctness of the order dt.26.6.2013 passed on an application filed by the petitioner before the Arbitral Tribunal in the matter of arbitral dispute between the petitioner and the respondent is called in question in this Writ Petition. An award came to be passed on 30.12.2006, allowing the claim of the petitioner against the respondent for a sum of Rs.4,50,00,000/- with interest thereon at the rate of 12% p.a. from 20th August 2004 till payment. An award was also passed in favour of the respondent by the majority of the members of the Tribunal directing the petitioner to pay a sum of Rs.67,57,79,000/- with interest thereon at 12% p.a. from 20th August 2007. The said award was not challenged either by the petitioner or by the respondent u/s 34 of the Arbitration and Conciliation Act. On the contrary on 1.2.2007 the respondent made an application requesting the Tribunal to pass an additional award on one of the claims made by it in 4 its counter claim contending that the same had not been contested.
2. When the said application was pending the petitioner herein made an application u/s 13 of the Arbitration and Conciliation Act, by this Writ petitioner stating that one of the Arbitrators Mr. Justice K.Shivashankar Bhat had not disclosed to the parties about his daughter who is an Advocate working in the office of the respondents Advocate. Later Shiva Shankar Bhat fairly withdrew from the office of Arbitration. In his place Hon. Mr. Justice M.P. Chinnappa was appointed as new Arbitrator. Thereafter the respondent filed a Writ Petition before this court challenging the appointment of Mr.Justice M.P. Chinnappa, which petition came to be allowed by this court and appointment of Mr. Justice M.P. Chinnappa was set aside and liberty was granted to the parties to appoint another Arbitrator in place of Mr. Justice Shivashankar Bhat.
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3. The said order was challenged by the petitioner herein before the Hon. Supreme Court in Civil Appeal No.7955/2012. The Hon. Supreme Court by its order dt. 8.11.2012 confirmed the order of the High Court to the extent of cancelling the appointment of Mr. Justice M.P. Chinnappa as Arbitrator and appointed justice R.G.Vidyanatha as Arbitrator in place of Mr. Justice M.P.Chinnappa. After reconstitution of the Arbitral Tribunal, arguments were heard on the applications and after hearing arguments on the Memo filed by the respondent requesting the Arbitral Tribunal to pass an additional award was dismissed as not pressed. The application filed u/s 13 of the Arbitration Act, by the petitioner herein came to be dismissed on the ground that Tribunal has no jurisdiction to entertain the application filed u/s 13 of the Arbitration and Conciliation Act for review of the award passed by it.. This order is called in question in this Writ Petition.
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4. We have heard the learned counsel appearing for the petitioner, Mr. Hiroo Advani and Mr. Kumar,the learned senior counsels appearing for the parties before this court.
5. During the course of arguments, it is brought to our notice by the learned counsels appearing for both the parties that the Hon. Supreme Court while disposing of Civil Appeal No.7955/12, and appointing R.G. Vaidyanatha, in place of Mr. Justice M.P. Chinnappa has observed as hereunder:
"2. On re-constitution, the Arbitral Tribunal shall consider the applications made by the parties and the objections to such applications and dispose them of as early as possible, in accordance with law."
6. Relying upon this observation of the Hon. Supreme Court Mr. Hiroo Advani, contends that the Arbitral Tribunal has committed an error in not allowing the application filed u/s 13 of the Arbitration and Conciliation 7 Act, for de nova enquiry in regard to the award passed by the Arbitral Tribunal on 30.12.2006. According to him, since one of the Arbitrators Mr. Justice Shivashankar Bhat was disabled to hear the matter, any award passed by him would be void ab initio and therefore in all fairness, the Tribunal was required to conduct a de nova enquiry in respect of the order passed on 30.12.2006 in view of the pendency of the application filed by the respondent for passing an additional award. Relying upon Sec.15 of the Arbitration and Conciliation Act, he contends that when one of the Arbitrators was disabled, any award passed by such Arbitrator is null and void and that the Tribunal was required to rehear the matter afresh by conducting de nova enquiry. To support his argument, he has relied upon the Judgment of the Hon. Supreme Court in KAPRA MAZDOOR EKTA UNION VS. BIRLA COTTON SPINNING AND WEAVING MILLS LTD. & ANOTHER (2005) 13 SUPREME COURT CASES 777. Relying upon paragraph 14 of the order, he contends that Arbitral Tribunal had jurisdiction 8 to recall the earlier award and was required to conduct a denovo enquiry and it had has not become functus officio.
7. Per contra, Mr. Kumar, learned senior counsel for the respondent contends that none of the grounds urged by Mr. Hiroo Advani are tenable because the award was passed by the Tribunal on 30.12.2006. If really the petitioner was aggrieved by the award passed by the Arbitral Tribunal on 30.12.2006, the petitioner was required to challenge the same u/s 34 of the Arbitration and Conciliation Act and without doing so, the petitioner cannot contend that in view of the disabilities noticed by the parties, more so when an application filed by the respondent for passing an additional award was pending, the earlier matter has to be reopened. According to him, whenever an award is passed by the Arbitral Tribunal, it has become final and conclusive unless and until the same is challenged as required u/s 34 of the Arbitration Act. Taking us through para-2 of the order passed in the Civil 9 Appeal No.7955/12, he contends the Hon. Apex Court in the very same case had only directed the Arbitral Tribunal to consider all the applications in accordance with law and the Hon. Apex Court did not rule that the Tribunal was required to reopen the case and conduct a de nova enquiry on account of change of Arbitrator. According to him, pursuant to the directions of the Hon. Supreme Court, the Arbitral Tribunal has considered the application of the petitioner in accordance with law relying upon Section 33 of the Arbitration and Conciliation Act. The Arbitral Tribunal has rightly held that the Tribunal has got power to correct, incorporate or pass an additional award only if there is any computation error, clerical or typographical error and other errors of a similar nature occurring in the award. Therefore, he contends that the Tribunal is justified in rejecting the application. He further submits that the Judgment relied upon by Mr. Hiroo Advani in KAPRA MAZDOOR EKTA UNION case has no application to the facts of this case because Their Lordships according to 10 Mr.Kumar, while considering the powers of the Industrial Dispute Act, has ruled that the Industrial Labour Court has power to rehear the matter only if there is a procedural defect. Therefore, he contends that the said Judgment has no application to the facts of this case.
8. Having heard the counsel for the parties, the only point to be considered by us in this petition is whether the Arbitral Tribunal when once passes an award on merits can conduct a de nova enquiry by reopening the award or set aside its own award.
9. The facts in this case are not in dispute. It is an admitted fact that pursuant to the reference, the Arbitral Tribunal was constituted and the Arbitral Tribunal was consisting of three Hon. Retired Judges of this Court and on 30.12.2006 by majority decision, an award was passed which award has become final since the same has not been questioned either by the petitioner or by the respondent. 11
10. Later the respondent has filed an application for passing an additional award on the ground that the Tribunal had not considered one of the counter claims made by it on account of non-consideration, a request was made. After filing of such an application by the respondent, the petitioner filed an application u/s 13 of the Arbitration and Conciliation Act seeking de nova trial of the award already passed on 30.12.2006. The application filed u/s 13 of the Arbitration Act was filed by the petitioner on 16.6.2007. Under section 34 of the Arbitration and Conciliation Act, if a party is aggrieved by the Arbitral award, the party can file an application for setting aside the award under sub-clause (iii) of sub-section(2) Section 34 within a period of 90 days and the parties also have liberty to make an application for a further period of 30 days as per the proviso to sub-clause (iii) of sub-section (2) of Section 34 of the Arbitration and Conciliation Act. Even if we compute the period of 3 months and thereafter grace period of 30 days, when an application came to be filed 12 u/s 13 of the Arbitration Act, the petitioner could not have invoked sec.34 of the Arbitration and Conciliation Act because the application u/s 13 is filed on 16.6.2007.
11. Sec.33 of Arbitration & Conciliation Act, 1996 is extracted below:
33. Correction and interpretation of award; additional award. - (1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties -
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.
(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.
13(3) The arbitral tribunal may correct and error of the type referred to in clause (a) of sub- section (1), on its own initiative, within thirty days from the date of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.
(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.
(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).
(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.
12. Be that as it may, even if the respondent had not filed an application for passing an additional award, the 14 petitioner could not have made an application for requesting the Tribunal to conduct a de nova enquiry. Even if we consider, for the sake of arguments, that the petitioner even without filing an application by the respondent had filed an application for de nova enquiry, such an application cannot be entertained by any Tribunal because of the bar u/s 34 of the Arbitration Act.
13. At the first instance, there is no provision to review the award passed by the Arbitral Tribunal on its own. There is no scope under the Act to review its own award even if one of the members of the Tribunal had actively participated inspite of his disability since the party who has suffered an award is required to challenge the same in accordance with law. When the petitioner has not challenged the same by making an application u/s 34, the question of conducting a de nova enquiry by setting aside the award passed by the Tribunal on its own does not arise at all. The decision reported in 2005(13) SCC page 777 in 15 the case of KAPRA MAZDAR EKTA UNION VS. BIRLA COTTON SPINNING & WEAVING LTD. is relied upon to contend that though there is no express provision in Arbitration & Conciliation Act, 1996, to review its own award, by necessary implication it has the power to review its award and thereby allow hold a de nova enquiry. The said decision is clearly distinguishable on facts as the same came to be rendered keeping in mind the scope of Section 17-A of Industrial Disputes Act, 1947. In the present case review is not sought either on the ground of correcting typographical error or correction of some typing or mathematical mistake. It is not the case of the petitioner herein who has suffered an award that interpretation of the award is needed. Review of the award is sought for de nova trial and there is absolutely neither express provision to that effect in the Arbitration & Conciliation Act, 1996 nor it can be done by necessary implication. Such being the case neither review outside the scope of Section 33 is available nor for ordering a de nova trial. Therefore we are of the 16 opinion that the decision is distinguishable on facts and not applicable to this case.
14. Accordingly, we hold that the Arbitral Tribunal is justified in rejecting the application for de nova trial. We do not find any error or irregularity in the impugned order. Hence the *petition is dismissed. There is no order as to costs.
Sd/-
JUDGE Sd/-
JUDGE Ak *Corrected as per chamber order dt. 12-12-2013