Satyendra Nath Ray vs Vck Share & Stock Broking Services ...
2021 Latest Caselaw 3832 Cal

                         In the High Court at Calcutta
                          Civil Revisional Jurisdiction
                                 Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                             C.O. No.1235 of 2021

                            Satyendra Nath Ray
                                    Vs.
                 VCK Share & Stock Broking Services Limited




For the petitioner               :     Mr.   Aniruddha Chatterjee,
                                       Mr.   Rajarshi Dutta,
                                       Mr.   V.V.V. Sastry,
                                       Mr.   Nischay Mall

For the opposite party           :     Mr. Jishnu Chowdhury,
                                       Mr. Abhijit Chowdhury,
                                       Mr. Aritra Basu

Hearing concluded on             :     15.07.2021

Judgment on                      :     19.07.2021


Sabyasachi Bhattacharyya, J:-



1.

The short questions which fall for consideration in this case are as

follows:

(i) Whether the High Court has the power of judicial review under

Article 227 of the Constitution of India over an interlocutory order

passed by an Arbitral Tribunal in view of the bar contemplated in

Section 5, read with Sections 34 and 37, of the Arbitration and

Conciliation Act, 1996; and

(ii) (Subject to the decision rendered on the preceding question,)

whether the Arbitral Tribunal refused to exercise jurisdiction vested in

it by law in refusing to permit the petitioner to move his application

for appointment of handwriting expert at the outset, instead of

deciding such issue on merits.

2. At the outset, learned counsel appearing for the opposite party

raises an objection regarding maintainability of the instant

application under Article 227 of the Constitution of India in view of

the specific bar envisaged in Section 5, read with Sections 34 and

37 of the Arbitration and Conciliation Act, 1996 Act ("the 1996

Act", for short). In support of such submission, learned counsel

cites the following judgments:

(a) SBP & CO. vs. PATEL ENGINEERING LTD. & ANR. [ (2005) 8 SCC

618 ]

(b) DEEP INDUSTRIES LIMITED vs. ONGC LTD. & ANR. [ (2020) 14

SCC 706 ]

(c) BHAVEN CONSTRUCTION vs. EXECUTIVE ENGINEER, SARDAR

SAROVAR NARMADA NIGAM LTD. & ANR. [2021 SCC OnLine SC 8 ]

3. Learned counsel further argues that the scheme of the 1996 Act

envisages early disposal of arbitral proceedings, as opposed to

matters pending in courts, and thus limits challenge against all

interlocutory orders, except those specifically enumerated in

Section 37 thereof, at the time of challenging the final award under

Section 34 of the 1996 Act. Hence, Section 5 the 1996 Act has

specifically barred judicial intervention except as provided in the

said Act itself.

4. Thus, the opposite party argues, this court ought not to exercise its

superintending powers under Article 227 of the Constitution of

India.

5. Learned counsel appearing for the opposite party contends that

Section 37 of the 1996 Act does not encompass the present

impugned order. On the other hand, since no formal application for

appointment of handwriting expert could be filed by the petitioner

before the tribunal since the tribunal shut out the petitioner from

doing so at the very outset on the ground of not having jurisdiction.

Hence, there was no scope of remedy for the petitioner either under

Section 37 or Section 34 of the 1996 Act.

6. Learned counsel submits that the proceeding, from which the

instant challenge arises, Is a statutory arbitration as governed by

the National Stock Exchange of India Limited Bye-Laws (for short,

"the said Bye-Laws"). A copy of the said Bye-Laws is annexed to the

writ petition. Chapter XI of the same deals with "ARBITRATION"

and provides for reference to arbitration, which will be governed by

the 1996 Act.

7. Clause (4) (a) (ii), sub-clause (b) provides that the Relevant

Authority may, from time to time prescribe Regulations for the

procedure to be followed by the arbitrator in conducting the

arbitral proceedings including, inter alia, terms and conditions

subject to which the arbitrator may appoint experts to report on

specific issues and the procedure to be followed in arbitral

proceedings upon such an appointment.

8. The said Bye-Law, read in conjunction with Section 26 of the 1996

Act, confers ample jurisdiction on the Arbitral Tribunal to appoint

experts to report to it on specific issues to be determined by the

arbitral tribunal and require a party to give the expert any relevant

information or to produce, or to provide access to, any relevant

documents, goods or other property for his inspection.

9. In the present dispute, since allegations have been raised before

the Tribunal regarding the veracity of signatures and authenticity

of certain documents, appointment of an expert is an essential pre-

requisite to determine such issue. Hence, learned counsel for the

opposite party argues, the Arbitral Tribunal committed a gross

jurisdictional error in precluding the petitioner even from making

an application praying for appointment of expert.

10. Learned counsel contends that in view of the nature of miscarriage

of justice and abuse of process of law caused by the impugned

order, and since the petitioner does not have any equally

efficacious alternative remedy, interference under Article 227 of the

Constitution is not only permissible but necessary.

11. The citations relied on by the petitioner's counsel, it is argued, do

not lay down an absolute bar to the jurisdiction of the High Courts

to interfere even with interlocutory orders of arbitral tribunals, but

restricted the criteria for such interference, which are mostly

satisfied in the instant case.

12. Learned counsel for the opposite parties cites, in support of his

contentions, the following judgments:

      (a)      PUNJAB AGRO INDISTRIES CORPN. LTD. vs. KEWAL SINGH

      DHILLON                        [ (2008) 10 SCC 128 ]

      (b)      GARWARE WALL ROPES LIMITED vs. COASTAL MANRINE

CONSTRUCTIONS AND ENGINEERING LIMITED [ (2019) 9 SCC 209 ]

(c) KRISHENA KUMAR vs. UNION OF INDIA AND OTHERS [ (1990) 4

SCC 207 ]

(d) CITYSCOPE DEVELOPERS (P) LTD. vs. AKLA BUILDERS PVT.

LTD. & ORS. [ (2000) 2 Cal LJ 539 ]

13. Upon considering the submissions, cited decisions and materials

on record, this court comes to the following decision:

14. In paragraphs 45 and 46 of SBP & Co. (supra), relied on by the

opposite party's counsel, the Supreme Court disapproved of the

stand adopted by some High Courts that any and every order

passed by the Arbitral Tribunal is capable of being corrected by the

High Court under Article 226 or 227 of the Constitution. It was

further indicated that once the arbitration has commenced in the

Tribunal, parties have to wait until the award is pronounced unless

a right of appeal is available to them under Section 37 of the 1996

Act.

15. However, the very second paragraph of the report, clarifies that the

question which fell for consideration therein was, what is the

nature of the function of the Chief Justice or his designate under

Section 11 of the 1996 Act?

16. Paragraph no. 47, where the conclusions of the report were

summed up, specifically restricts the adjudication to such

question, positing its findings on the premise that the power

exercised by the Chief Justice of the High Courts or of India is not

an administrative power but a judicial power.

17. Although even the obiter observations of the Supreme Court are

binding, paragraphs 45 and 46 merely interpreted the restrictions

already stipulated in Section 5 of the 1996 Act and restrained

judicial intervention in "any" and "every" matter.

18. The crux of the exposition of law in Deep Industries Ltd. (supra), as

summed up in paragraph no. 17 thereof, is that the remedy under

Article 227 of the Constitution is available against judgments

under Section 37 of the 1996 Act, yet the High Court would be

extremely circumspect in interfering with the same so that such

interference is restricted to orders that are passed which are

patently lacking in inherent jurisdiction.

19. In Bhaven Construction (supra), also cited by learned counsel for

the opposite party, while discussing the scope of interference in

arbitral proceedings under Article 227 of the Constitution, the

Supreme Court observed that the power needs to be exercised in

exceptional rarity, wherein one party is left remediless under the

statute or a clear 'bad faith' is shown by one of the parties.

20. On the other hand, in Punjab Agro Industries (supra), cited by the

opposite party, the Supreme Court held that SBP (supra) does not

bar a petition under Article 227 of the Constitution and do not

apply to a subordinate court functioning as designate of the Chief

Justice, as in the present case. However, the said case was also in

the limited context of an order passed under Section 11 of the 1996

Act being a judicial order and is not attracted, in terms, to the

matter under consideration before this court.

21. Garware Wall Ropes Ltd. (supra), referred to by learned counsel for

the opposite party, was also confined to the scope of Section 11 of

the 1996 Act primarily and is not relevant in the present context.

22. There cannot be any quarrel with the proposition laid down in

paragraph 19 of Krishena Kumar (supra) in so far as the doctrine of

precedent is limited to the decision itself and as to what is

necessarily involved in it. It does not mean, it was held, that the

court was bound by the various reasons given in support of it,

especially when they contain "propositions wider than the case

itself required". Abiding by such proposition, the judgments cited

by both sides in the present case, within the compass of Section 11

of the 1996 Act, are not binding in the present case.

23. As far as Cityscope Developers (P) Ltd., rendered by a learned Single

Judge of this Court is concerned, the immediately preceding

proposition was reiterated and it was held that a decision is an

authority for what it decides and not what can be logically deduced

therefrom; even a slight distinction in the fact or an additional fact

may make lot of difference in the decision making process.

Although it was further suggested in the said report that the

Arbitral Tribunals come within the purview of Article 227 of the

Constitution, such ratio, read in the context of the now-settled

position of law, as exposited in some of the Supreme Court

decisions cited by the opposite party, has now been restricted to a

very limited window as far as judicial intervention under Article

227 is concerned.

24. In the advocate's letter dated June 16, 2021, sent on behalf of the

petitioner, objection was taken to the observation in the minutes

recorded by the Arbitral Tribunal of its order dated June 15, 2021

which stated that the Tribunal could not pass directions for

appointment of handwriting expert on the plea that such directions

are beyond the purview of the Arbitral Tribunal.

25. Thus, the Tribunal shut out the petitioner at a nascent stage of the

arbitral proceeding, even before determination of the procedure to

be followed in the arbitral proceeding, from applying for

appointment of a handwriting expert on the flimsy ground that

such an order was beyond the purview of the Tribunal.

26. Such ground is categorically negated by Section 26 of the 1996

Act, which specifically confers the power on the arbitral tribunal to

appoint expert(s) to report to it on specific issues to be determined

by the tribunal and to require a party to give the expert any

relevant information or produce, or to provide access to, any

relevant documents, etc. for the expert's inspection.

27. Clause 4 (a) (ii), sub-clause (b) under Chapter XI of the said Bye-

Laws empowers the Relevant Authority to prescribe Regulations for

the procedure to be followed by the arbitrator in conducting the

arbitral proceedings, in particular providing for the terms and

conditions subject to which the arbitrator may appoint experts to

report on specific issues and the procedure to be followed in

arbitral proceedings upon such an appointment.

28. Chapter XI of the said Bye-Laws applies the provisions of the 1996

Act to the arbitral proceedings envisaged by the Bye-Laws, which

includes Section 26 of the 1996 Act.

29. Hence, the arbitral tribunal, in the present case, patently refused

to exercise jurisdiction vested in law in precluding the petitioner

from even applying for appointment of handwriting expert, prior to

laying down the procedure to be followed by it, as required by

Clause 4 (a) (ii) of the said Bye-laws. The tribunal overlooked its

powers under Section 26 of the 1996 Act outright in refusing any

opportunity to file an application for such appointment, let alone

considering on merit the necessity thereof, particularly in view of

the specific disputes sought to be raised regarding the veracity of

certain documents and signatures relied on by the parties in the

arbitral proceedings.

30. Thus, on a meaningful reading of the reports cited by the opposite

party on the limited scope of judicial intervention under Section

227 of the Constitution of India, in the light of the bar

contemplated under Section 5 of the 1996 Act, which is a

subordinate piece of legislation in the backdrop of the grundnorm of

the Indian legal infrastructure, that is, the Constitution of India.

31. Not only was the impugned decision of the tribunal to refuse an

opportunity to apply for handwriting expert appointment without

jurisdiction, the same, particularly at the inchoate stage prior to

deciding even the procedure to be followed in conducting the

arbitral proceeding, resulted in a gross miscarriage of justice, fit to

be interfered under Article 227 of the Constitution of India.

32. That apart, as rightly argued by the petitioner, the remedy under

Section 34 of the 1996 Act would be illusory, in the absence of any

formal application for appointment of handwriting expert being

permitted to be filed, let alone adjudicated, more so since the final

award will be devoid of the benefit of the opinion of an expert,

which is prima facie necessary in the context of issues germane to

the arbitral proceeding.

33. Hence, both the questions formulated at the inception of this order

are decided in favour of the petitioner.

34. In view of the above considerations, C.O. No. 1235 of 2021 is

allowed on contest, thereby setting aside the impugned order dated

June 15, 2021 of the Arbitral Tribunal in Arbitration Matter No.

NSEKRO/030722/19-20/ISC/IGRP/ARB (Satyendra Nath Roy vs.

VCK Share & Stock Broking Services Limited). The petitioner is

permitted to apply formally before the Arbitral Tribunal for

appointment of a handwriting expert. If such an application is

made, the Tribunal shall adjudicate the same on merits, upon

giving opportunity of filing written objection to the opposite party

and upon hearing both parties, without being influenced by any of

the observations made in this order or the order impugned herein,

as expeditiously as possible, keeping in mind the statutory

temporal frame-work for disposing of arbitral proceedings.

35. There will be no order as to costs.

36. Urgent certified copies of this order shall be supplied to the parties

applying for the same, upon due compliance of all requisite

formalities.

( Sabyasachi Bhattacharyya, J. )