Bombay High Court
Board Of Control For Cricket In ... vs Mr. S.U. Kamdar on 18 October, 2012
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL NO. 46 OF 2012
1. Board of Control for Cricket in India,
a society registered under the Tamil Nadu Societies
Registration Act, 1975 having its registered office at M.A.
Chidambaram Stadium, 5, Victoria Hostel Road,
Chepauk, Chennai 600 005 and its head office at
Cricket Centre, Wankhede Stadium,
"D" Road, Churchgate, Mumbai 400 020 ... Appellant
ig Versus
Deccan Chronicle Holdings Limited having
its registered office at 36, Sarojini Devi Road,
Secunderabad 500 003 ... Petitioner
Mr. T.N. Subramanian, Sr. Counsel along with Mr. P.R. Raman, Mrs. Viraj Maniar,
Mrs. Akhila Premkumar, Mrs. Misab Daba, Mr. Nikhil Karnawat i/by M/s. Maniar
Srivastava Associates for the applicant/appellant.
Mr. S.U. Kamdar, Sr. counsel along with Mr. Zal Andhyarujina along with Mr.
Arcot Chandrashekar i/by M/s. Dave & Girish & Co. for respondent.
CORAM : R.D. DHANUKA, J.
DATE : 18TH OCTOBER, 2012.
ORAL JUDGMENT :
1. This appeal is filed under section 37 of the Arbitration & Conciliation Act,
1996 (hereinafter referred to as "Act") challenging the order dated 12th October, 2012
passed by the arbitral tribunal under section 17 of the Act continuing status quo order
passed by this court. Some of the relevant facts are :
2. On 10th April, 2008 the franchise agreement was entered into between the
parties whereby the respondent was granted a right to own and operate a team in the
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league subject to the terms and conditions set out therein. On 14 th September, 2012
the appellant terminated the said Franchise agreement. The respondent filed
Arbitration Petition (L) No. 1238 of 2012 in this court under section 9 of the Act for
interim measures. After hearing both the parties, this court passed an order on 1 st
October, 2012 disposing off the said Arbitration Petition (L) No. 1238 of 2012. The
said order was a conditional order granting stay of termination on respondent
complying with various conditions including the condition to submit bank guarantee
of Rs. 100 Crores of a nationalized Bank on or before 9 th October, 2012. Time to
submit bank guarantee was extended till 12th October, 2012.
3. On 12th October, 2012 at 11.00 a.m. the respondent applied for extension of
time to furnish bank guarantee. It is not in dispute that the said application made by
the respondent for extension of time to furnish the bank guarantee was declined by
this court. The arbitral tribunal issued a notice convening a meeting for issuing
directions on 12th October, 2012 at 5.00 p.m. It is not in dispute that the meeting
begun around 5.30 p.m. After directions were given by the arbitral tribunal the
respondent filed an application under section 17 of the Act for interim measures. The
respondent prayed that pending the hearing and final disposal of the arbitration
proceedings, the arbitral tribunal be pleased to stay the termination of the Franchise
agreement and maintain status quo as per order dated 1 st October 2012 passed by this
Court. By an order dated 12th October 2012, the arbitral tribunal after recording
submissions of both the parties, passed the following order :
"Status quo granted by the Hon'ble High Court and continued till to-day,
i.e. 12.10.2012 5.00 p.m. is ordered to continue. The application for
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interim relief will be heard by the Tribunal on 17.10.2012 at 11.30 a.m."
4. From the perusal of the order passed by the arbtiral tribunal, it is clear that the
prayer for continuation of status quo order prayed for by the respondent was
strongly objected by the appellant. The appellant pointed out that termination of
contract came into effect and grant of any status quo would virtually amount to grant
of mandatory relief. The arbitral tribunal however took a view that when the status
quo had been granted by this court and was operative till 5.00 p.m. of 12th October,
2012, it would be in the interest of justice if it was directed to be continued for some
time by giving an opportunity to the BCCI to file its response to the application
submitted by the respondent herein.
5. Being aggrieved by the said order dated 12th October, 2012, the appellant
filed this appeal under section 37 of the Act. In view of the extreme urgency the
matter was moved in Chambers on 13th October, 2012 when both the parties were
heard by this court. On 13th October, 2012 this court passed a detailed order granting
ad interim relief in terms of prayer clause (a) of the Civil Application and the
effect, implementation and operation of the impugned order dated 12 th October, 2012
passed by the arbitral tribunal came to be stayed. The respondents have not
challenged the said order dated 13th October, 2012 passed by this court granting ad
interim stay of the operation of the order order passed by the arbitral tribunal on 12 th
October, 2012.
6. The learned senior counsel Mr. T.N. Subramanian, appearing for the appellant,
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submits that the order passed by this court on 12th October, 2012 was a self
operative order. The termination was stayed till 5.00 p.m., of 12 th October, 2012 on a
condition that the respondent furnishes a bank guarantee of the nationalized bank in
the sum of Rs. 100 Crores on or before 5.00 pm. of 12 th October, 2012. Various
other conditions were directed to be complied with as per the said order passed by
this court on 1st October, 2012. It is submitted that on 12 th October, 2012 at 11.00
am., when the oral application came to be made by the respondents for continuation
of ad interim order passed by this court, it was declined by S.J. Kathawala,J. It is not
in dispute that such application was made and the same was rejected by this court. It
is submitted that the order passed by this court on 1 st October, 2012 was made
operative till the disposal of the arbitral proceedings provided the respondent
therein furnishes bank guarantee of Rs. 100 Crores of the nationalized bank on or
before 5.00 p.m., of 12th October, 2012. When the application under section 17
was moved before the arbtiral tribunal, admittedly the bank guarantee of the
nationalized bank in the sum of Rs. 100 Crore was not furnished. The order dated 1 st
October, 2012 passed by this court, being self operative, termination came into effect
at 5.00 p.m., of 12th October, 2012. The oral application for extension of time to
furnish bank guarantee was already rejected by this court at 11.00 a.m., on 12 th
October, 2012. The learned arbitrator therefore, could not have passed any orders
under section 17 of the Act when such application was already rejected by this court
under section 9 of the Act. The learned counsel further submitted that there was no
statement of claim filed by the respondent before the arbitral tribunal. Unless the
pleadings were filed before the arbitral tribunal claiming substantive relief, no
application under section 17 of the Act for interim measures could be entertained
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by the arbitral tribunal. It is submitted that in any event the application filed under
section 17 of the Act was not signed by the parties but was signed by the learned
counsel. It is submitted that the arbitral tribunal thus could not have entertained such
application which was not competent in the absence of the pleadings as well as
application not having been signed by the respondent. The learned counsel placed
reliance upon the judgment of the Supreme Court in the case of M.D. Army Welfare
Housing Organization Vs. Sumangal Services Pvt. Ltd. 1 in support of this
contention. It is submitted that the grant of status quo amounted to grant of
mandatory injunction. The relief which was rejected by this court has been granted
by the arbitral tribunal which is not permissible in law.
7. Mr. Kamdar, the learned senior counsel appearing for the respondent on the
other hand submits that filing of pleadings was not mandatory before entertaining
the application under section 17 of the Act. In any event, the application filed under
section 17 of the Act itself was a pleading and thus the arbitral tribunal was
justified in passing the order of status quo. In so far as application not having been
signed by the parties is concerned, it is submitted that the said application was signed
by the counsel under the authority of the clients and he had undertaken to replace
the same by another application duly signed by the respondent.
8. is submitted by Mr. Kamdar that once this court became functious officio on
rejecting the application of the respondent under section 9 of the Act at 5.00 p.m., of
12th October, 2012, the respondent was justified in making the application under
1 2004 (9) SCC 619
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section 17 of the Act before the Arbitral Tribunal. It is submitted that the powers of
the arbitral tribunal are independent and in addition to the powers of this court
under section 9 of the Act. It is submitted that the learned arbitral tribunal is ceased
of the matter and the matter has been directed to be placed for further hearing on 17 th
October, 2012, thus this court should not interfere with the status quo order passed by
the arbitral tribunal and the ad interim order passed by this court be vacated.
9. I have heard the learned counsel and have considered the rival submissions.
10. The records of this proceedings indicate that the order dated 1 st October, 2012
passed by this court disposing off the application under section 9 of the Act filed by
the respondent, is self operative. This court passed protecting order staying the
termination of the contract on various conditions including the condition that the
respondent furnishes bank guarantee of Rs. 100 Crores of a nationalized bank in this
court on or before 5.00 p.m., of 12th October, 2012. It is not in dispute that till 5.00
p.m., of 12th October, 2012 no such bank guarantee came to be furnished. It is also
not in dispute that at 11.00 a.m., on 12 th October, 2012 an oral application came to
be made by the respondent for extension of time for furnishing the bank guarantee
which was declined by this court. The arbitral tribunal had scheduled the arbitral
meeting at 5.00 p.m. on 12th October, 2012 for giving directions. The meeting
commenced at about 5.30 p.m. After directions were issued by the arbitral tribunal,
application under section 17 came to be filed by the respondent seeking interim
measures by applying status quo order. In view of the admitted fact that the bank
guarantee was not furnished by 5.00 p.m., of 12 th October, 2012 by the respondent,
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the termination order issued by the BCCI came into effect. The oral application for
extension of time to furnish bank guarantee was declined by this court. Once this
court has declined extension of time and the termination order having come into
effect, in my view the arbitral tribunal has acted beyond its jurisdiction to grant
status quo order. If the court had declined to grant the relief, the arbitral tribunal
cannot grant that relief. The powers of the arbitral tribunal are not superior to that of
the Court. The arbitral tribunal could not sit in appeal over the order passed by this
court. The perusal of the order passed by this court on 1 st October, 2012 indicates
that
no liberty was granted by this court to the respondent to make any such
application under section 17 of the Act before the arbitral tribunal for continuation of
the status quo. In absence of any such liberty, such application made by the
respondent under section 17 for continuation of status quo itself was not
maintainable.
11. I am not inclined to accept the submissions made by the learned senior
counsel Mr. Kamdar that at 5.00 p.m., of 12 th October, 2012 this court having become
functious officio, powers of the arbitral tribunal under section 17 of the Act could
be invoked independently. This is not a case where section 17 application was made
without there being any order of this court under section 9 of the Act. There may
be a situation where an application under section 9 is made before this court and
party have applied for liberty to treat the said application as an application under
section 17 of the Act and to pursue the same before the arbitral tribunal. If any leave
is granted by this court while permitting parties to apply under section 17 of the Act,
such powers can be exercised by the arbitral tribunal under section 17 of the Act for
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continuation, modification or varying the order. In my view, once application for
extension of time was rejected by this court and termination order had came into
effect, application under section 17 made by the respondent before the arbitral
tribunal for status quo was incompetent and not maintainable. The perusal of the
order passed by the arbitral tribunal indicates that the arbitral tribunal has exercised
appellate powers over the order passed by this Court which arbitral tribunal does
not have. For the reasons recorded aforesaid, I need not decide the issue that
arbitral tribunal could not have passed status quo order as there were no pleadings
filed before arbitral tribunal.
12. I am therefore, of the view that the learned arbitrator has acted without
jurisdiction and thus the impugned order passed by the arbitral tribunal on 12th
October, 2012 is quashed and set aside. The appeal is allowed. There shall be no
order as to costs.
(R.D. DHANUKA, J.)
