Malanpur Steel Ltd. And Mr. S. ... vs Gannon Dunkerley & Co. Ltd. And Mr. ...
2002 Latest Caselaw 908 Del

JUDGMENT

Anil Dev Singh, J.

1. This writ petition is directed against the order of the single member Arbitral Tribunal dated October 21, 2001. By that order the Arbitral Tribunal refused to suspend the arbitration proceedings pending the final decision of the Board for Industrial and Financial Reconstruction (for short 'the BIFR') in reference made by the first petitioner under Section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'the SICA'). The facts giving rise to the writ petition are as under:-

2. The first petitioner entered into an agreement with the first respondent on May 20, 1989 whereby the first respondent was to execute civil structural works for the composite steel plant of the first petitioner at Malanpur, Gwalior, M.P., at a cost of Rs. 3.90 crores. It appears that disputes arose between the parties during the execution of the work. These were referred to an Arbitral Tribunal constituted by the sole Arbitrator, Shri Dharni Dhar. The first respondent prepared a statement of claim in which it inter alia stated that from the very threshold the first petitioner started acting in breach of the agreement in the matter of release of drawings, issue of materials etc., and failed to pay for the additional work. The first respondent submitted a statement of claim before the Arbitral Tribunal claiming a sum of Rs. 1,78,51,518.94 from the first petitioner. While the proceedings before the Arbitral Tribunal were going on, it appears that the first petitioner moved an application on May 7, 2001 under Section 22 of the SICA before the Arbitral Tribunal for suspension of the proceedings. The Arbitral Tribunal rejected the application. While doing so, it relied upon the decision of a Single Judge of this Court in Wekcast Steels Ltd. v. Cement Corporation of India, (1998) 91 Company Cases 859, wherein it was held that the provisions of Section 21 of the SICA do not apply to arbitration proceedings and the same can go on notwithstanding the fact that one of the parties to the dispute is a sick company and the reference under Section 15(1) of the SIC is pending before the BIFR. The petitioner company being aggrieved by the order passed by the Arbitral Tribunal has filed the instant writ petition seeking setting aside/quashing of the order of the Arbitral Tribunal dated October 31, 2001 and suspension of the arbitration proceedings. The learned counsel for the petitioner submitted that the arbitration proceedings cannot proceed in view of Section 20 of the SICA, and the Arbitral Tribunal, therefore, was not right in rejecting the application of the first petitioner for suspension of the proceedings.

3. On the other hand the learned counsel for the first respondent submitted that the first petitioner has not exhausted the alternative remedy of appeal available to it under Section 37 of the Arbitration & Conciliation Act, 1996 (for short 'the Act'). He also submitted that the first petitioner has wrongly invoked the jurisdiction of this Court under Article 226 of the Constitution as no cause of action has arisen within the territorial jurisdiction of this Court. According to him, the agreement and the project were executed within the District of Gohad, Bhind (M.P.). It was also submitted that the first petitioner had approached the Additional District Judge, Behind, by means of an application registered as Case No. 32 of 1998 for challenging an earlier order of Arbitral Tribunal dated August 7, 1998 passed under Section 16 of the Act. In that application, the first petitioner had questioned its jurisdiction on the ground that the disputes were beyond the scope and ambit of the arbitration clause and were not arbitrable. The learned counsel pointed out that the application was rejected by the Arbitral Tribunal on August 7, 1998. It was also pointed out that the first petitioner had also instituted a suit in the court of the Civil Judge, Ghazibad, claiming a decree of mandatory injunction against the first respondent directing it to withdraw the nomination of the Arbitrator. The learned counsel submitted that the first petitioner having recognized the jurisdictions of the courts at Bhind and Ghaziabad cannot go on filing proceedings in different courts. Besides, it was also pointed out that the first petitioner had filed an application for grant of an order for suspension of the arbitration proceedings and the application though ostensibly made under Section 22(4) of the SICA was essentially one under Section 17 of the Act.

4. We have considered the submissions of the learned counsel for the parties. We are of the opinion that since against the order passed by the Arbitral Tribunal the first petitioner has an alternative remedy of appeal, it was not justified in invoking the writ jurisdiction of this Court before exhausting the alternative remedy. While it is true that the first petitioner filed an application under Section 22(4) of the SICA before the Arbitral Tribunal, it is equally true that the Arbitration &Conciliation Act is a self-contained code. Any application which is required to be made before the Arbitral Tribunal has to be made under the Act. Therefore, the application could not have been filed under the provisions of the SICA. Obviously, the application though ostensibly made under Section 22(4) of the SICA would be one under Section 17 of the Act because any application for interim relief has to be made under Section 17 of the Act. Since the Arbitral Tribunal refused to suspend the proceedings, the first petitioner could have filed an appeal under Section 37 of the Act. Section 37 of the Act, in so far as it has a bearing to the issue in question, reads as follows:-

"37. Appealable orders. - (1).....

(a).....

(b)....

(2) An appeal shall also lie to a court from an order of the arbitral tribunal-

(a).....

(b) granting or refusing to grant an interim measure under Section 17.

(3)....."

5. Thus, the impugned order passed by the Arbitral Tribunal was appealable and there was no reason why the first petitioner did not resort to the remedy provided under Section 37 of the Arbitration & Reconciliation Act, 1996.

6. In this view of the matter, it is not necessary to go into the other issues raised by the learned counsel for the parties. Accordingly, the writ petition fails and is hereby dismissed.