Mahendra Singh And Another vs M/S Sriram Transport Finance Co. ...
2022 Latest Caselaw 7875 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved
 
Court No. - 10
 

 
Case :- Arbitration & Conciliation Application U/S11(4) No. - 104 of 2022
 

 
Applicant :- Mahendra Singh And Another
 
Opposite Party :- M/S Sriram Transport Finance Co. Ltd.
 
Counsel for Applicant :- Pradip Kumar Srivastava
 

 
Hon'ble Rohit Ranjan Agarwal,J.

1. Heard Sri Pradip Kumar Srivastava, learned counsel for the applicants.

2. This is an application under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred as the ''Act of 1996') laying challenge to the award dated 26.03.2022 passed by Sri J.P. Narayan, Additional District & Sessions Judge (Rtd.), sole Arbitrator.

3. The Stamp Reporter has made a report that the present application under Section 34 of the Act of 1996 is not maintainable in view of the order passed in Civil Misc. Arbitration Application No. 01 of 2018.

4. Sri P.K. Srivastva, learned counsel appearing for the applicants, while addressing on the maintainability of the application under Section 34 of the Act of 1996, submitted that the word "Court" used in Section 34 read with Section 2 (1) (e) (i) means the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction. According to learned counsel, both the Principal Civil Court and the High Court has jurisdiction to entertain the application under Section 34 of the Act of 1996.

5. He has placed reliance upon decision of Apex Court rendered in case of Executive Engineer, Road Development Division No. III, Panvel Vs. Atlanta Limited, 2014 AIR (SC) 1093.

6. I have heard learned counsel for the applicants and perused the material on record.

7. The sole question which has to be adjudicated is in regard to maintainability of the application under Section 34 of the Act of 1996 before this Court against the arbitral award passed by the sole Arbitrator.

8. Before adverting to decide the issue in hand a cursory glance of provisions of Section 2 (1) (e) (i) and Section 34 of the Act of 1996 are necessary for better appreciation of the case, thus, both the provisions are extracted here as under;

"2. Definitions.--(1) In this Part, unless the context otherwise requires,--

[(e) "Court" means--

(i) in the case of an arbitration other than international commercial arbitration, 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;

..........

34. Application for setting aside arbitral award.--(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 1[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 matters 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 Part; 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.

[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in 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.]

........"

9. From the conjoint reading of both the provisions, it is clear that the word ''Court' used in Section 34 has been defined under the definition clause 2 (1) (e) (i) and it 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 arbitration if the same had been the subject matter of suit.

10. The law in regard to the maintainability of the application under Section 34 of the Act of 1996 against an arbitral award has already been settled by the various judgments of Apex Court and the matter is no more res integra.

11. In Hindustan Cooper Limited Vs. Nicco Corporation Limited, 2009 (6) SCC 69, Apex Court while dealing with the said issue held that the application under Section 34 of the Act of 1996 is to be filed before a Court which is a Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary civil jurisdiction, having jurisdiction to decide the question forming the subject matter of the arbitration. It was a case where application under Section 34 of the Act of 1996 was preferred before Jharkhand High Court which was not a Court having ordinary original civil jurisdiction, and the Apex Court found that the challenge being made directly to the High Court was not permissible under Section 34 and it remitted the matter filed under Section 34 to the Civil Court competent to hear and decide the same.

12. In case of Atlanta Limited (Supra) one of the parties had approached the Principal Civil Court at district Thane, while the other party approached Bombay High Court which had the ordinary original civil jurisdiction, the Apex Court held that the High Court was competent to entertain the application under Section 34 being the superior Court. Relevant paragraph no. 25 is extracted here as under;

"25. All the same, it is imperative for us to determine, which of the above two courts which have been approached by the rival parties, should be the one, to adjudicate upon the disputes raised. For an answer to the controversy in hand, recourse ought to be made first of all to the provisions of the Arbitration Act. On the failure to reach a positive conclusion, other principles of law, may have to be relied upon. Having given out thoughtful consideration to the issue in hand, we are of the view, that the rightful answer can be determined from Section 2(1)(e) of the Arbitration Act, which defines the term "Court". We shall endeavour to determine this issue, by examining how litigation is divided between a High Court exercising "ordinary original civil jurisdiction", and the "principal civil court of original jurisdiction" in a district. What needs to be kept in mind is, that the High Court of Bombay is vested with "ordinary original civil jurisdiction" over the same area, over which jurisdiction is also exercised by the "principal Civil Court of original jurisdiction" for the District of Greater Mumbai (i.e. the Principal District Judge, Greater Mumbai). Jurisdiction of the above two courts on the "ordinary original civil side" is over the area of Greater Mumbai. Whilst examining the submissions advanced by the learned counsel for the appellant under Section 15 of the Code of Civil Procedure, we have already concluded, that in the above situation, jurisdiction will vest with the High Court and not with the District Judge. The aforesaid choice of jurisdiction has been expressed in Section 2(1)(e) of the Arbitration Act, without any fetters whatsoever. It is not the case of the appellants before us, that because of pecuniary dimensions, and/or any other consideration(s), jurisdiction in the two alternatives mentioned above, would lie with the Principal District Judge, Greater Mumbai. Under the scheme of the provisions of the Arbitration Act therefore, if the choice is between the High Court (in exercise of its "ordinary original civil jurisdiction") on the one hand, and the "principal civil court of original jurisdiction" in the District i.e. the District Judge on the other; Section 2(1)(e) of the Arbitration Act has made the choice in favour of the High Court. This in fact impliedly discloses a legislative intent. To our mind therefore, it makes no difference, if the "principal civil court of original jurisdiction", is in the same district over which the High Court exercises original jurisdiction, or some other district. In case an option is to be exercised between a High Court (under its "ordinary original civil jurisdiction") on the one hand, and a District Court (as "principal Civil Court of original jurisdiction") on the other, the choice under the Arbitration Act has to be exercised in favour of the High Court."

13. In State of West Bengal Vs. Associated Contractors, AIR 2015 (SC) 260, Apex Court considering the decision rendered in Atlanta Limited (Supra) as well as 7 Judge Bench decision in case of S.B.P. Company Vs. Patel Engineering Limited and another (2005) 8 SCC 618, held as under;

"25. Our conclusions therefore on Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows:

(a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part-I of the Arbitration Act, 1996.

(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an Award is pronounced under Part-I of the 1996 Act.

(c) However, Section 42 only applies to applications made under Part-I if they are made to a court as defined. Since applications made under Section 8 are made to judicial authorities and since applications under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42.

(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.

(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an Arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil court having original jurisdiction in the district as the case may be.

(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part-I.

(g) If a first application is made to a court which is neither a Principal Court of original jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42. Also, an application made to a court without subject matter jurisdiction would be outside Section 42.

The reference is answered accordingly."

14. A coordinate Bench of this Court in case of P.T.C. Techno Private Limited Vs. Samsung India Electronics Private Limited, Civil Misc. Arbitration Application No. 01 of 2018, decided on 26.02.2019 held that Allahabad High Court does not exercise ordinary original civil jurisdiction, hence the application under Section 34 was not maintainable before this Court.

15. The judgment in Atlanta Limited (Supra) relied on by the the applicants' counsel is of no help to him as Bombay High Court exercises ordinary original civil jurisdiction and, thus, Apex Court held that in view of Section 2 (1) (e) (i) it was empowered to entertain the application under Section 34 being a Court.

16. The said ratio is not applicable in the present case as Allahabad High Court does not exercises ordinary original civil jurisdiction and, thus, would not come within the ambit of Court as provided under Section 34 read with Section 2 (1) (e) (i) of the Act of 1996.

17. The application moved by the applicants under Section 34 of the Act of 1996 challenging the arbitral award passed by the sole Arbitrator is only maintainable before the Principal Civil Court of original jurisdiction and not this Court.

18. In view of the law laid down by the Apex Court in case of Atlanta Limited (Supra) and Associated Contractors (Supra), the present application under Section 34 of the Act of 1996 is not maintainable and same is hereby dismissed as not maintainable.

Order Date :- 25.07.2022

Shekhar