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Showing contexts for: arbitral tribunal constituted in Arcelormittal Nippon Steel India Ltd. vs Essar Bulk Terminal Ltd. on 17 August, 2021Matching Fragments
7.5 Thereafter, learned counsel took us to the C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 various judgments, whereby the word "entertain" is interpreted. According to Mr. Thakore, word "entertain" can only mean "till final disposal"
and it means adjudication and disposal of Section 9 application. It cannot have any other meaning in the context in which it is used, once Arbitral Tribunal is constituted. It was submitted that if Section 9(1) of the Act is looked into, it provides that a party may before or during the arbitral proceedings or at any time after making of arbitral award, but before it is enforced in accordance with Section 36 apply to a Court for interim protection, would mean that entertaining an application would not just confine to its filing. Any party can file an application under Section 9 of the Act even after constitution of an Arbitral Tribunal. Filing of an application is always permissible at any stage, but it can be entertained only if it is decided that whether remedy under Section 17 of the Act is efficacious or not. The word "entertain" can have a wider meaning than just mean "filing of an application". What is required to determine first while considering the application under Section 9(3) of the Act is to see as to whether the remedy under Section 17 of the Act is efficacious or not. Once if it is decided that the remedy under Section 17 of the Act is not efficacious, then only, such application can be entertained and decided. If it is found that remedy under Section 17 of the C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 Act is an efficacious, then, the learned Trial Judge can always say that in view of the fact that Section 17 is efficacious remedy, he should not entertain such an application. Therefore, at which stage, the application is filed is not much relevant whether it is filed before the Arbitral Tribunal is constituted or after the Arbitral Tribunal is constituted. What is important is to determine whether to entertain such an application or not and therefore, the word "entertain" must be interpreted as final adjudication of the application. There cannot be any other meaning considering the context in which the word "entertain" is used. Learned counsel Mr. Thakore took us to the Dictionary meaning of Black's Law Dictionary which reads as under:-
8.11.Mr. Sibal, learned Senior counsel for the respondent contended that reliance placed upon in case of Shalini Shyam Shetty(supra) and the proposition canvassed by the learned counsel for the petitioner is in context of Code of Civil Procedure and not in respect Arbitration Act. As far as proposition of law in case of Arbitration Act is concerned, the only applicable law is in respect of Bhaven Construction (supra). Thereafter, Mr. Sibal, learned Senior counsel for the respondent made submissions in respect of interpretation of Section 9(3) of the Act and submitted that entertainment of the application must be after Tribunal has been constituted. If C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 that is the case then plain reading of Section is that once Arbitral Tribunal is constituted then the application must be filed before the Court which is not the case here. In the instant case, application under Section 9 was filed much before the constitution of Arbitral Tribunal and order is made reserved after hearing the parties much before the constitution of Arbitral Tribunal. The order was reserved on 7.6.2021 whereas the Arbitral Tribunal was constituted more than a month thereafter on 9.7.2021.In between also, the matter was posted for orders and this aspect according to Mr. Sibal, learned Senior Counsel for the respondent was one of the most significant aspect as before constitution of Arbitral Tribunal the matter was kept for orders and therefore, once Arbitral Tribunal was constituted on 9.7.2021 the Court would not entertain application under sub-section (1) of Section 9 after 9.7.2021 as the Tribunal was constituted on that day but as bar of Section 9(3) would come into play only from 9.7.2021 and not prior thereto. It was then submitted that language of Section 9(3) is looked into. Section 9(3) provides that ".....unless the Court finds that circumstances exist which may not render efficacious". According to Mr. Sibal, learned Senior Counsel for the respondent language of Section 9(3) would suggest that if an application is filed under Section 9 after C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 9.7.2021 the date on which the Arbitral Tribunal was constituted then the Court will not entertain unless it finds that the proceedings under Section 17 is not efficacious and therefore, such provision can only apply to the situation on hand. In other words, if Section 9 application is filed after Arbitral Tribunal is constituted when the matter is before the Tribunal, Section 9 application will still lie, if the petitioner is able to show that Section 17 is not an efficacious remedy. According to Mr. Sibal, learned Senior Counsel for the respondent, argument of the petitioner is absolutely different and the say of the petitioner is that under Section 9, it is for the petitioner to show that Section 17 is not an efficacious remedy. In fact, according to Mr. Sibal, learned Senior Counsel for the respondent, it is for the Court to apply its mind and decide as to whether remedy provided under Section 17 can be said to be an efficacious remedy or not and therefore, Section 9(3) would not apply at all to the situation on hand. Further language of Section 9(1) also provides that at every stage date during or after arbitral proceedings but before its enforcement under Section 36, an application can be filed under Section 9 which also means that application under Section 9 can be filed even after Arbitral Tribunal is constituted and therefore, it is for the Court to come to a C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 conclusion that remedy provided under Section 17 is not efficacious remedy. According to Mr. Sibal, learned Senior Counsel for the respondent, therefore, in this context that the Division Bench of the Delhi High Court in case of Benara Bearings & Pistons Ltd (supra) observed that provision of Section 9 does not prevent a party from arguing under Section 9 for getting order under Section 9, even if the Tribunal is being constituted as Section 9 has not an ouster clause. It does not oust the jurisdiction of the Civil Court. If the legislature had an intention to prescribe the jurisdiction, it would have said so, moment the Tribunal is constituted an application for interim measures shall not lie before the Court. Even language of Section 9(1) also suggests that application for interim measures can be filed at any stage as stated above and there is no prohibition for a Court to pass any order even after Arbitral Tribunal is constituted. It was contended that Section 9(3) does not have any pre-condition and therefore, judgments relied upon by Mr.Thakore, learned senior counsel for the petitioner are not applicable to the facts of the present case. It was contended by Mr. Sibal, learned Senior Counsel for the respondent that judgments relied upon by the learned counsel for the petitioner in case of Kundan Lal (supra), Hindustan Commercial Bank Limited (supra) and Martin & Harris Ltd (supra) whereby C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 the word 'entertain' is interpreted in the context of facts of the respective cases and in context of language of the said statute and therefore, aforesaid interpretation of word 'entertain' is misplaced. Interpretation of word 'entertain' differs from context to context, situation to situation and varies from object of act and therefore, expression of word entertain must be understood in context of this statute. It would be misdirection in law in interpreting statute or word in a statute in the context of another statute in a different context. Mr. Sibal, learned Senior Counsel for the respondent then took us to the language of Article 134 of the Constitution of India and submitted that expression 'entertain' and 'hearing' are two different expressions and therefore entertain, hearing and disposal are three separate and distinct and cannot be mixed with each other. Referring to Section 18 of the Code of Civil Procedure, Mr.Sibal, learned Senior counsel for the respondent submitted that it depends upon the nature of proceedings and the nature of statutes, in which the word is used, the manner in which the word is used. It was submitted that while interpreting the particular word, the object and context of statute is required to be taken into consideration. Mr.Sibal, learned Senior counsel for the respondent also relying upon the language of Order 41 Rule 4 and Order 41 Rule 9 of the Code of Civil Procedure C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 reiterated that the word 'entertain' is required to be interpreted, keeping in mind the object of the statute and the context in which word is used.
Upon relying on those judgments, learned Senior counsel for the petitioner once again emphasised principle of party autonomy. The learned counsel submitted that once Arbitral Tribunal is constituted, role of Court becomes very limited and the Court is required and expected only to aid Arbitral Tribunal. Mr.Thakore, learned C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 Senior counsel for the petitioner repeated and reiterated more or less what was argued at the time of advancing principal argument. Learned counsel in its rejoinder submitted that petitioner does not have any objection if the very pleadings which are there before the Commercial Court are put before Arbitral Tribunal without any new filing. Mr. Thakore, learned Senior counsel for the petitioner while reiterating the contention already taken in his submission as well as in rejoinder, further took this Court to the facts as narrated in the application filed by the parties under Section 9 before the Commercial Court at Surat and contended that these are not matter which cannot await for the Arbitral Tribunal to decide. Mr. Thakore, learned senior counsel for the petitioner further contended that as such prayers prayed for are made for money release and the same can be decided by the Arbitral Tribunal after two months. Mr. Thakore also submitted that it is not his submission that this Court may decide the issue, however he submitted that prayers prayed for are not of such urgent nature of demolition of building which cannot be determined by the Tribunal and Tribunal is not only constituted but it has specifically provided that either party may move the Tribunal under Section 17 and prayers prayed for more adequately be determined by the Arbitrator. It was also contended that as such C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 no fresh pleadings are required and Tribunal can fix it within 15 days or one month to determine the matter. Mr. Thakore, also contended that what is nature of urgency is to be tested and tried to highlight prayers from the point of view of urgency and paying debts and interest and as such according to Mr. Thakore, learned Senior counsel for the petitioner whole claim made by the respondent is for recovery of money. It was also contended that urgency cannot be pleaded for the purpose of keeping the matter before the Court and not going before the Arbitral Tribunal. Mr. Thakore, at the end also reiterated that contention as regard Article 227 of the Constitution of India as well as judgment of the Hon'ble Supreme Court in the case of Bhaven Construction (supra), more particularly referring to para 16 and 20 contended that remedy under Section 37 is against the order on merits and not on an issue whether it should be referred to Arbitral Tribunal or not. It was contended that once it is brought to the notice of the Court that Arbitral Tribunal is constituted by merely placing order of the High Court, in such event, the Court will have to application unless of-course it finds that it is urgent and relegate parties to Arbitral Tribunal. According to Mr. Thakore that is the intent of Section 9(3) of the Act. It was contended that Court cannot pass order on merits C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 unless it comes to the conclusion that it is required to be passed because it is so urgent. It was also reiterated that urgency cannot be there in financial matter of this nature. It was contended by Mr.Thakore that even if the orders passed on merits and appeal preferred under Section 37 before the High Court, the High Court may as well as at that stage duty bound to relegate the parties to arbitration. Mr. Thakore contended that even if order is passed and appeal is preferred under Section 37 of the Act before the High Court and Arbitral Tribunal is constituted, the High Court would have to relegate the parties to arbitration unless ofcourse High Court feels that its is urgent. It is contended by Mr. Thakore that once the Arbitral Tribunal is constituted, the Court shall not exercise its jurisdiction and further referred to para 49 of the judgment of Shalini Shetty (supra) as well as judgment of Achunanan Vaidhya (supra) and Ajay Singh (supra) and contended that High Court can interfere and same would not amount to interfering with the arbitral process but it would be supporting the arbitral proceedings.
17. The question therefore which deserves consideration by this Court at this stage is interpretation of section 9 as a whole in facts arising in the case on hand. As said earlier, section 9(1) has not undergone any change or amendment except it being re-numbered as sub- section (1) of Section 9. This measure is available to a party, before commencement of arbitral proceedings, during arbitral proceedings and even after the award is passed till it is enforced in accordance with Section 36 of the Act. Sections 9(1), 9(2) and 9(3) are C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 to be read in harmonious manner and Section 9(3) cannot be read in isolation. When an application for interim measures for any of the purposes provided under section 9(1) is filed before the arbitral proceedings commences, sub- section (3) of section 9 will have no application. It is true that once the Arbitral Tribunal is constituted, sub-section (3) of section 9 will come into play. In the instant case, the eventuality as provided under sub- section (2) of Section 9 is not relevant. Section 9(3) provides that the once Arbitral Tribunal has been constituted, the Court shall not entertain the application under sub-section (1) of Section 9, unless the Court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious. In opinion of this Court, therefore, there is no ouster of the jurisdiction of the Court. Even considering the objects and reasons of introduction of sub-section (3) of Section 9, the purport and purpose of the amendment was to reduce the role of the Court and not to eradicate the role of the Court. Sub-section (3) of Section 9 therefore does not take away the jurisdiction of the Court in dealing with the application under Section 9(1) of the Act once the Arbitral Tribunal is constituted. However, later part of sub-section (3) of Section 9 clearly provides that the Court can entertain such an application under Section 9(1) C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 after the Arbitral Tribunal is constituted only if it finds that the alternative remedy as provided under section 17 is not efficacious. Though, there is no total ouster in order to reduce the role of the Court, it does provide for a restriction. The word 'entertain' as interpreted by the learned trial court with respect is very narrow in nature. The word 'entertain' occurring in sub-section (3) of section 9 would not merely mean to admit a matter for consideration, but it also entails the whole procedure till adjudication, i.e., passing of final order. Therefore, in opinion provides that if an application under section 9 is filed after constitution of Arbitral Tribunal, while entertaining such application, the Court is duty bound to examine whether remedy provided under section 17 is efficacious or not and if it finds that it is not efficacious, it can entertain and if it finds that the remedy of Arbitral Tribunal is efficacious, it can refuse to entertain application under Section 9 of the Act. Having come to the aforesaid conclusion, while examining the fact situation of the case on hand, it is an admitted position that the application under Section 9(1) was filed by the petitioner before the constitution of Arbitral Tribunal and even the application under section 9(1) filed by the respondent was before the C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 constitution of Arbitral Tribunal. It is an admitted position that both the applications under section 9(1) of the Act were heard before the constitution of Arbitral Tribunal and in fact, as per the record, the matter was kept for orders on 07.06.2021. Even that date was before constitution of Arbitral Tribunal. If the Trial Court would have pronounced the order on 07.06.2021, the situation which has arisen as on date, would not have arisen at all. However, the fact remains that the Trial Court had no occasion uptil now to examine whether the remedy under section 17 is efficacious or not in the instant case. By the application, which is subject matter of this petition, the trial court is made aware by the parties that now the Arbitral Tribunal is constituted by this Court vide order dated 09.07.2021 passed in IAAP No. 5 of 2021 and therefore, the Trial Court before passing any order will have to take into consideration the provisions of section 9(3) of the Act. However, as rightly contended by the respondent, jurisdiction of the trial court is not denuded by operation of section 9(3) of the Act and therefore, it is for the trial court to decide whether the remedy under section 17 which is similar to the remedy as provided under section 9(1) is efficacious or not and under such circumstances, the trial court cannot be prevented from passing an order. As can be seen from the scheme of the Act, Arbitration Act is a C/SCA/10492/2021 JUDGMENT DATED: 17/08/2021 complete Code in itself and if the decision is contrary or otherwise erroneous, it can be remedied by either party by filing an appeal as provided under Section 37 of the Act. Thus, though the trial court, in opinion of this Court, has committed an error in giving restricted meaning to word 'entertain', the fact remains that the trial court cannot be prevented from passing an order and/or considering whether the remedy under section 17 is efficacious or not and therefore, even though this Court does not agree with the reasons given by the Trial Court, ultimately, the trial court has rightly dismissed the same. In opinion of this Court, thus the application filed by the petitioner is a premature petition.