Coal India Limited vs Hyderabad Industries Ltd
2021 Latest Caselaw 290 Cal/2

                      IN THE HIGH COURT AT CALCUTTA
                       Ordinary Original Civil Jurisdiction
                                ORIGINAL SIDE


Present:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA


                I.A. No. G.A.1 of 2020 (Old No. G.A.653 of 2020)

                              AP No. 99 of 2009

                           COAL INDIA LIMITED
                                   Vs.
                        HYDERABAD INDUSTRIES LTD.




For the Applicant              :     Mr. Siddhartha Mitra, Sr. Adv.
                                     Ms. Priyanka Prasad, Adv.
                                     Mr. Pratik Shanu, Adv.




For the Petitioner/            :     Mr. Jishnu Chowdhury, Adv.
Respondent                           Mr. Ratul Das, Adv.

                                     Mr. Pradipto Ghosh, Adv.

                                     Mr. Sudhakar Prasad, Adv.



Last Heard on                  :     10.03.2021.



Delivered on                   :     15.03.2021.
                                         2


Moushumi Bhattacharya, J.

1. This is an application made by the respondent for seeking adjournment

of the proceedings for setting aside of an arbitral Award dated 27th December,

2008 for granting an opportunity to the Arbitrator for eliminating the grounds

for setting aside of the arbitral Award. The application has been made under

Section 34(4) of the Arbitration and Conciliation Act, 1996 (the Act), which

gives the option to a court, in fit cases, to adjourn the proceedings in order to

give the Arbitral Tribunal an opportunity to resume the proceedings or to

eliminate the grounds for setting aside of the arbitral Award. The applicant

herein is the respondent/Award-holder in the proceedings for setting aside of

the impugned Award.

2. Mr. Sidhartha Mitra, learned Senior Counsel for the applicant/ Award-

holder, submits that Section 34(4) of the Act empowers the court to adjourn the

proceedings in order to give the Tribunal an opportunity to take such action, as

in the opinion of the Tribunal, would eliminate the grounds for setting aside of

the arbitral Award. Counsel submits that the petitioner in A.P. No. 99 of 2009

(the application for setting aside of the Award) had rejected the applicant's

recommendation of the names of two retired judges and one Senior Advocate

and had instead recommended names of three Technical Nominees in their

place. Among the three Technical Nominees a former Director (Technical) of

Mahanadi Coalfields Ltd. a subsidiary of Coal India Limited (the petitioner in

the Section 34 application) was selected as the sole arbitrator. Counsel submits

that the petitioner did not take any steps for more than eleven years to get the

matter heard, since there was an automatic stay of the Award upon filing the

section 34 application by the petitioner. According to Counsel, the

circumstances in which a court can pass an order under Section 34(4) of the

Act had been laid down in Kinnari Mullick vs. Ghanshyam Das Damani; (2018)

11 SCC 328 and since the impugned Award has not been set aside, this court

can adjourn the proceedings for the purpose mentioned under Section 34(4) on

an written application made by the applicant Award-holder.

3. The primary contention of Mr. Jishnu Chowdhury, learned Counsel

appearing for the respondent/Award-debtor, is that the applicant was put on

notice of the grounds for setting aside of the Award, namely, that the Award

does not contain reasons, in February 2009 when the Section 34 application

was filed. The present application was, however filed in March, 2020 after

eleven years. Counsel cites several cases on the proposition that six months is

the outer limit for retention of arguments made by the parties and that courts

are duty-bound to deliver judgments within the aforesaid time period. Counsel

further submits that Section 34(4) only gives the Arbitral Tribunal an

opportunity to resume the Arbitral proceedings, but does not permit fresh

arguments. Reliance is placed on Sundaram Fastener Limited vs Assistant

Commissioner of Urban Land Tax; (1989)1 Mad LJ 72 to explain the meaning of

the word "Resume". Counsel places a similar provision in the Arbitration Act,

1940 and submits that the power to reconsider an Award does not find place in

the present 1996 Act. Two decisions of the Singapore High Court and the

Singapore Court of Appeal are cited in this regard.

4. Before embarking on the strength of the contentions made on behalf of

the parties, the scope of Section 34(4) of the 1996 Act should first be stated.

Under this sub-section, on receipt of an application for setting aside of an

arbitral Award under Sub-section 1 of Section 34, the receiving court may, in

appropriate circumstances, adjourn the proceedings for a given period of time

in order to give the arbitral tribunal an opportunity to resume the arbitral

proceedings or to take such action as considered fit by the arbitral Tribunal for

the purpose of eliminating the grounds on which the Award-debtor has sought

to set aside the arbitral Award. Since the respondent has placed emphasis on

the word "Resume" used in Section 34 (4), a Single Bench decision of the

Madras High Court in Sundaram Fastener Limited vs. Assistant Commissioner

of Urban Land Tax; (1989)1 Mad LJ 72 may be useful in this context. The

decision refers to the definition of the word "Resume" in Stroud's Judicial

Dictionary, which is as follows:

"...taken for the taking again into the king's hands..."

Similar words have been used in Venkataramaiya's law Lexicon and

Legal Maxims, which uses the expression: "...Connotes taking back what was given...".

5. The argument of the respondent is that given the restrictive definition of

the word "Resume", the Arbitrator is only allowed to take back the Award and

cannot be permitted to give a fresh hearing. In other words, according to

counsel for the respondent, the application of Section 34(4) can only serve to

give an opportunity to the Arbitrator for eliminating the grounds for setting

aside of the Award by giving reasons, but would not permit the Arbitrator to do

so after giving a fresh hearing to the parties. The word "resume" also has to be

understood in the context of the doctrine of "functus officio" which lends itself

to the principle of finality in dispute resolution. Upon delivery of the award, the

arbitrator becomes functus officio having exhausted his/her mandate. Hence,

the arbitrator has to "resume" the proceedings upon the Court allowing an

application under 34(4).

6. The words used in Section 34(4) delineate the scope of the sub-section.

The power of a court to receive an application for sending the Award back to

the Arbitrator is circumscribed by two words used in Section 34(4) which are

indicative of the limited scope of the sub-section. The "or" used between the

word "Resume" and "eliminate the grounds" makes it clear that the objective of

this provision is not to facilitate perfecting an Award which has already been

delivered but only to eliminate the possible grounds on which the Award may

be set aside under Section 34(2) and (2A) of the Act. This means that Section

34(4) does not permit the arbitrator to revisit the Award for the purpose of

doing anything other than taking out the grounds which may be problematic or

fatal to the Award-holder, who seeks to sustain the Award. "Eliminate the

Grounds" used in 34(4) refers to the grounds available to an Award-debtor

under Section 34(1), 34(2) and 34 (2A) read with judicial pronouncements on

the aforesaid grounds. It is settled that an Award without reasons is amenable

to challenge. Hence, if an Award is bereft of reasons, the Arbitrator may put in

the reasons upon the Award being sent back to him/her under Section 34(4). It

is clear that Section 34(4) curtails the scope given to the Arbitrator by

restricting "such other action" only for eliminating the grounds for setting aside

of the Award and nothing more. Since the petitioner/Award-debtor (Coal India

Ltd.) has not taken the ground in the Section 34 proceedings that the

Arbitrator did not give Coal India Ltd. an opportunity of hearing, there is no

window for the arbitrator to reconsider the matter and pass a reasoned award

thereafter. The only ground taken in the Arbitration Petition is that the Award

does not contain reasons.

7. The question which therefore becomes relevant is whether the Arbitrator

can furnish reasons to make the Award withstand the challenge under Section

34 without hearing the parties once again? This answer involves certain

relevant dates: The Award was passed by the Sole Arbitrator on 27th December,

2008; The application for setting aside of the Award was filed in February,

2009; Directions for affidavits were given on 2nd March, 2009 and affidavits

were completed in July, 2009. The Section 34 application was taken up for

consideration by this court in February, 2020. The present application under

Section 34 (4) was filed on 5th March, 2020 as recorded in an order dated 13th

March, 2020; Directions for affidavits were given in the application on 9th

December, 2020. The aforesaid dates show that the respondent/Award-holder

(Hyderabad Industries) was aware of the grounds taken for setting aside of the

Award and more specifically the ground that the Award does not contain any

reasons, from February, 2009. The respondent has however chosen to wait till

March, 2020 for making an application for sending the Award back to the

Arbitrator for supplying reasons. Having regard to the dates, there is little

doubt that the present application has been filed by the respondent to pursue a

remedy which it should have initiated eleven years back. The fact that only

directions for affidavits were given on 2nd March, 2009 and the matter was not

heard thereafter does not help the respondent Award-holder since the relevant

date in this case would be 18th February, 2009, when the respondent was

made aware of the grounds of challenge to the Award.

8. R.C. Sharma vs. Union of India & Ors; 1976 (3) SCC 574, Indu Bhusan

Jana vs. Union of India; (2009) 1 CHN 27 and Anil Rai vs. State of Bihar; (2001)

7 SCC 318 cited on behalf of the respondent Award-debtor are on the salutary

effect of prompt pronouncement of judgments, being the rallying point in these

decisions, to check against the delayed delivery of judgments. The Supreme

Court issued guidelines in Anil Rai upon noticing the trend of judgments being

delivered long after conclusion of hearing and attempted to shorten the time

between conclusion of hearing and delivery of judgments. The logical

presumption of fixing an outer limit of six months from the date of reserving of

judgments (Ref. Anil Rai vs State of Bihar; (2001) 7 SCC 318) is that the

concerned judge would only be in a position to recall the arguments made by

the parties within a reasonable period of time. Although the decisions cited

concern the courts and may not strictly be applicable to a private contractual

forum like arbitration, the logical adjunct of the cases is that it would be

impossible for any adjudicating authority to retain the arguments of parties

after a considerable length of time.

9. This court is of the view that the aforesaid decisions assist the

petitioner/Award-debtor (Coal India Ltd.) in support of the issue that the Sole

Arbitrator would not be in a position to remember the facts or the law

culminating in the Award after eleven years. In this context, the decision of the

Supreme Court in M/s. Dyna Technologies Pvt. Ltd. vs. Crompton Greaves Ltd.;

(2019) 20 SCC 1, relied on by the Award-holder, is instructive. In this decision

the Supreme Court considered the requirement of a reasoned Award as

opposed to an Award which is muddled and unclear in form and content. In

the penultimate paragraph of the decision, the Supreme Court noted that since

the litigation had continued for more than 25 years, it was appropriate to direct

the respondents before the Supreme Court to pay a certain some of money to

the appellant in full and final settlement of one of the claims.

10. The decisions cited in support of the present application namely that the

Award should be sent back to the Arbitrator for doing the needful proceed on

the basis that Section 34(4) permits a Court to do so subject to a written

application being made by the party seeking such remand. Kinnari Mullick vs.

Ghanshyam Das Damani; (2018) 11 SCC 328 was concerned with the issue

whether Section 34(4) empowers a court to relegate the parties to the Arbitral

Tribunal after having set aside the arbitral Award in question and further

whether the Court can suo-moto do so without an application being made in

that regard by the parties. Although, the applicant/Award-holder has placed

much emphasis on this decision, the relevance of Kinnari Mullick essentially

rests on the presence of a written request by the parties to seek resume of the

arbitral proceedings under Section 34(4) and before the award is set aside. The

Supreme Court relied on McDermott International Inc. vs. Burn Standard Co.

Ltd.; (2006) 11 SCC 181 to highlight that the Parliament has not conferred any

power of remand to the Court to remit the matter to the Arbitral Tribunal

except to adjourn the proceedings as provided under the sub-section. Suresh

Prabhu vs. Bombay Mercantile Co-op. Bank Ltd & Ors; 2007 SCC Online Bom

181, a Single bench decision of the Bombay High Court reiterates the limited

scope of Section 34(4) where the Arbitral Tribunal was given an opportunity to

only record a finding on the issue, namely whether the petitioner was a

Member of the Respondent No. 1 Bank and whether the Tribunal had

jurisdiction to entertain the dispute. In M/s. MMTC vs. Vicnivass Agency; 2008-

3-L.W.1063, a Single bench decision of the Madurai Bench of the Madras High

Court gave a more expansive view of the scope of Section 34(4) but reiterates

that the ultimate objective of the exercise is to eliminate the grounds for setting

aside of the Award.

11. A comparative assessment of section 16(1) of the Arbitration Act, 1940

with the present section 34(4) would give an interesting insight into the

possible intent behind the change brought about by the 1996 Act. Section 16(1)

of the 1940 Act stood as ;

"16. Power to remit award (1) The Court may from time to time remit the award. or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit-

(a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred ; or (b) where the award is so indefinite as to be incapable of execution ; or (c) where an objection to the legality of the award is apparent upon the face of it."

Which under the 1996 Act stands transformed as:

"34. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award."

12. The above shows that under the erstwhile provision under the 1940 Act,

there was a power to remit the award to the Arbitrator "for reconsideration" on

any of the conditions present under clauses under 16(1). The power to

reconsider the award or any related matter is conspicuous by its absence in

34(4) where the section 34 Court retains control over the matter by simply

adjourning the proceedings for the limited purpose of giving an opportunity to

the arbitrator to eliminate the grounds which makes the award vulnerable to

challenge. Significantly, "eliminate the grounds" has been introduced in the

1996 Act thereby specifying the parameters within which the arbitrator is to

act. The omission of 'reconsideration' is also in keeping with the UNCITRAL

Model Law which provides the framework for the 1996 Act; section 34(4) of the

1996 Act is based on and is substantially similar to Article 34 (4) of the

UNCITRAL Model Law as is set out below:

"34. (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside."

13. The Singapore High Court in Tan Poh Leng Stanley vs. Tang Boon Jek

Jeffrey; [2000] SGHC 260 relied on Article 34(4) of the UNCITRAL Model Law in

deciding whether an arbitrator has the power to revisit and reverse a final

award. The Court held that the absence of the power in the Model Law to

reconsider an award is founded on the principle of finality and public policy to

bring commercial disputes to an early end. The Singapore Court of Appeal in

AKN v ALC; [2015] SGCA 63 held that there is nothing to warrant the

conclusion that the tribunal which made the award would determine afresh the

matters that had been dealt with in the award.

14. Although, Section 34 (4) does not mention a time limit, within which, an

application has to be made by a party, who seeks to take advantage of the said

provision, the overall objective of Section 34(4) has to be read into the words

particularly used in the context of the changes inserted by the 1996 Act. As

stated above, the court will now "adjourn" the proceedings as opposed to "remit

the Award...for consideration...", which was the procedure recommended

earlier. Further the Arbitral Tribunal now "will (only) eliminate the grounds for

setting aside the arbitral Award". The legislative intent is thus clear; the words

"...or to take such action as in the opinion of arbitral Tribunal..." will exclude

reconsideration of the Award for the purpose of eliminating the grounds on

which the Award can be challenged under Section 34(1), 34(2) and 34(2A). The

UNCITRAL Model Law lends weight to a restrictive interpretation of this

Section. It is crucial to bear in mind that the primary ground of challenge to

the impugned Award is that the Award is an unreasoned Award (Ground XI).

There is no ground complaining that the petitioner in the Section 34

proceeding was not given a hearing. Hence, permitting the Arbitrator to hear

the parties de novo will enlarge the mandate of Section 34(4) in the facts of this

case. It is more important to bear in mind that the Award was passed by the

Sole Arbitrator on 27th December, 2008 and 13 years have passed since the

Arbitrator last heard the matter. It is impractical even to expect that the

Arbitrator, without hearing the parties, will be in a position to supply the

reasons in the Award. This would be an unreasonable demand on the

Arbitrator to say the least.

15. G.A. 1 of 2020 is dismissed in view of the above reasons without any

order as to costs. The petitioner in A.P. 99 of 2009 will be at liberty to mention

for listing of the matter.

Urgent Photostat certified copy of this Judgment, if applied for, be

supplied to the parties upon compliance of all requisite formalities.

(MOUSHUMI BHATTACHARYA, J.)