Bombay High Court

M/S. Western Coalfields Limited, ... vs M/S. Mahabeer Construction ... on 27 April, 2022

Bench: Manish Pitale

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     NAGPUR BENCH AT NAGPUR

                      WRIT PETITION NO. 4821 OF 2021

M/s. Western Coalfields Limited,
a body corporate registered under the
Companies Act having its office at Coal                           .. Petitioner
Estate, Seminary Hills, Civil Lines,
Nagpur-1

                    Versus

1. M/s. Mahabeer Construction Company,
a registered partnership firm having its
office at B-5, Shastri Nagar, Mul Road,
Chandrapur,      Tahsil     and    District
Chandrapur.                                                       .. Respondents

2. A. G. Watwe
(deleted)

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        Mr. C. S. Samudra, Advocate for petitioner
                Mr. M. P. Khajanchi, Advocate for respondent
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               CORAM            :      MANISH PITALE, J.

               DATE            :       27/04/2022

ORAL JUDGMENT:

Rule. Rule made returnable forthwith. Heard finally with

consent of the learned counsel appearing for the rival parties.

(2) By this petition, the petitioner- Western Coalfields

Ltd. has challenged orders passed by the Court of Principal District

Judge, Chandrapur, under the provisions of the Arbitration and 2 CORRECTED-919.wp.4821.2021judge.odt

Conciliation Act, 1996 (herein after referred to as 'the said Act'), which

according to the petitioner are not in consonance with the provisions

of the said Act and the law laid down in that regard.

(3) In the present case, the parties were before the

Court below in applications under Section 34 of the said Act,

challenging an award dated 27.08.2005, passed by the arbitrator.

(4) By judgment and order dated 07.06.2017, the Court

below disposed of both the applications by setting aside the award

dated 27.08.2005. The Court below then remanded the matter to the

arbitrator for decision afresh, in accordance with law.

(5) Pursuant thereto, a revised award was passed by the

arbitrator on 02.10.2017, which was again made subject matter of

proceedings under Section 34 of the said Act before the Court below.

In the said proceedings, the Court below passed the impugned order

dated 20.02.2021, purporting to exercise power under Section 34 (4)

of the said Act. The proceeding under Section 34 was kept pending

and the matter was sent back to the arbitrator, only for deciding the

issue of limitation. It appears that, thereafter, the arbitrator expressed 3 CORRECTED-919.wp.4821.2021judge.odt

difficulty in continuing with the arbitration proceeding, due to which

the petitioner was constrained to approach the Court below for

appropriate directions. By the impugned order dated 21.08.2021, the

Court below directed that steps be taken for appointment of new

arbitrator in terms of the arbitration agreement between the parties.

(6) On 03.12.2021, this Court issued notice for final

disposal and granted ad-interim stay in favour of the petitioner. Upon

service of notice the respondent has appeared through counsel.

(7) Mr. S. S. Samudra, learned counsel appearing for

the petitioner, invited attention of this Court to the provisions of the

said Act, particularly Section 34 thereof. He placed reliance on

judgment of the Hon'ble Supreme Court in the case of Kinnari Mullick

and Anr. .v/s.Ghanshyam Das Damani, reported in (2018) 11 SCC 328,

to contend that power under Section 34(4) of the said Act could have

been exercised by the Court below only upon a written application by

either party and that such power could not have been exercised suo

motu. It was further submitted that perusal of the impugned order

dated 20.02.2021, would show that the Court below exercised power

suo motu to remand the matter to the arbitrator, only on the question 4 CORRECTED-919.wp.4821.2021judge.odt

of limitation, while keeping the application under Section 34 of the

said Act pending. On this basis, it was submitted that the aforesaid

impugned order deserved to be set aside. It was pointed out that if the

aforesaid contention was accepted, the subsequent impugned order

dated 21.08.2021, would have to be set aside. As regards the

impugned judgment and order dated 07.06.2017, passed by the Court

below, it was submitted that under the provisions of the said Act the

Court could not have remanded the matter back to the arbitrator for

decision afresh and at the most the award could have been set aside.

On this basis it was submitted that the writ petition deserved to be

allowed.

(8) Mr. M. P. Khajanchi, learned counsel appearing for

the respondent submitted that in so far as the judgment and order

dated 07.06.2017 was concerned, no interference was warranted, for

the reason that the present writ petition was filed in the year 2021, by

which time revised award was already passed by the arbitrator on

02.10.2017 and the parties were already before the Court below in the

proceeding initiated under Section 34 of the said Act. Hence, it was

submitted that even if, as per law, the judgment and order dated 5 CORRECTED-919.wp.4821.2021judge.odt

07.06.2017 was not sustainable to the extent that the matter was

remanded to the arbitrator for decision afresh, in view of the

subsequent events, this Court may not interfere with the said order.

(9) As regards impugned order dated 20.02.2021,

attention of this Court was invited to actions of the petitioner

subsequent to passing of the said impugned order, including filing of

pursis, joint pursis and applications before the Court below, indicating

that the petitioner had acquiesced to the impugned order dated

20.02.2021. It was submitted that such material in all fairness ought

to have been placed by the petitioner before this Court. But the same

was suppressed. By relying upon the judgment of the Supreme Court

in the case of Shri K. Jayaram and Ors. .v/s. Bangalore Development

Authority and ors., reported in, 2021 (14) SCALE 663, learned

counsel submitted that in these circumstances, since the petitioner had

approached this Court in the present petition with unclean hands, the

petition ought to have been dismissed. It was conceded that if the

order dated 20.02.2021, was found to be unsustainable by this Court,

the subsequent impugned order dated 21.08.2021, would have to be

set aside.

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(10)              This Court has considered the rival submissions in

the backdrop of material placed on record. Although it is found that

the judgment and order dated 07.06.2017, passed by the Court below

is unsustainable, to the extent that it remanded the matter back to the

arbitrator for decision afresh, considering the subsequent events that

have taken place, particularly in the light of the fact that a revised

award is already before the Court below, this Court is not inclined to

interfere with the said judgment and order dated 07.06.2017.

(11) In so far as the impugned order dated 20.02.2021 is

concerned, the position of law laid down by the Supreme Court in the

case of Kinnari Mullick v.s/ Ghanshyam Damani (supra) is absolutely

clear. It has been held in the context of the manner in which power

can be exercised under Section 34 of the said Act as follows:

"16. In any case, the limited discretion available to the Court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. It is crystal clear that the Court cannot exercise this limited power of deferring the proceedings before it suo motu. Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. For, consequent to disposal of the main proceedings under Section 34 of the Act by the Court, it would become functus officio. In other words, the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court."

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(12)               It is evident from the said position of law clarified

by the Supreme Court that power under Section 34 (4) of the said Act

can be exercised only upon a written application by a party to the

arbitration proceeding and that such power cannot be exercised by the

Court suo motu. Perusal of the impugned order shows that there was

no application by either party to the arbitration proceeding for

invoking Section 34 (4) of the said Act and the Court below erred in

invoking the said power suo motu. On this short ground, the

impugned order deserves to be set aside. In so far as the aspect of

acquiescence on the part of the petitioner is concerned, when this

Court has found that the impugned order could not have been passed

by the Court below as a matter of law, mere acquiescence on the part

of the petitioner would not take the case of the respondent any further.