Dharam Prakash vs Union Of India (Uoi) And Anr.
2007 Latest Caselaw 257 Del

JUDGMENT

Mukundakam Sharma, C.J.

1. By filing this petition, the petitioner has challenged the constitutional validity of the provisions of Section 13(4) and Section 34 of the Arbitration and Conciliation Act, 1996 as being violative of Articles 14 and 21 of the Constitution of India.

2. In the writ petition, the petitioner has incorporated an additional prayer for issuance of a direction to the respondents No.1 and 2 to club the cases of similar nature to be decided by the same Arbitrator preferably by a retired Judge of this Court rather than giving these matters for adjudication to different Arbitrators. The writ petition is contested by both Union of India and Mahanagar Telephone Nigam Limited.

3. We have also heard the learned Counsel appearing for the parties on the aforesaid pleas.

4. It is submitted on behalf of the petitioner that there are six different contracts and that the said contracts revolve around similar issues of facts and law and, therefore, the said issue should have been referred to a sole Arbitrator instead of referring the same to different Arbitrators. The next submission of the counsel appearing for the petitioner was that the provisions of Section 13 and Section 34 are ultra vires to the Constitution of India. In order to buttress this contention, the counsel particularly referred to Sub-section (4) of Section 13 and Sub-section (5) of Section 13. According to the counsel, Section 13 does not provide for court intervention during the arbitration proceeding in the event of a negative decision of the Arbitral Tribunal on a challenge to an Arbitrator. The submission was that even when there is a challenge to the appointment of an Arbitrator, in that event also the Arbitrator would continue the arbitral proceedings even in case of negative decision and that he would make an arbitral award and only thereafter the challenging party would be able to file an objection before a court only as a regular action for setting aside the award as provided for under Section 34 of the Arbitration and Conciliation Act. Next submission was that even under Section 34 of the Act, no specific provision has been made to file an objection against an action of the aforesaid nature in the event of negative decision by the Arbitrator.

5. We have considered the aforesaid submission of the learned Counsel for the petitioner. It is to be noted that the aforesaid Act is enacted mainly in the pattern of the Modern Law adopted by the United Nations Commission on International Trade law. The object and the reasons of the Act clearly indicate that the intention of the Act is to lay emphasis on speedy disposal of arbitration proceedings. The Act also seeks to minimise judicial intervention in the progress and completion of arbitration proceedings, which is crystal clear from a bare reading of Section 5 of the Act which provides that no judicial authority would intervene except where so provided in the Act. Consequently, the bar on court interference on challenging the arbitral tribunal during the pendency of the arbitration proceeding was meant to minimise judicial intervention at that stage as any interference at that stage would be against the spirit with which the Act was enacted. Sub-section (5) of Section 13 of the Act lays down that challenging an arbitral award is permitted even on the grounds taken by the aggrieved party on which the challenge to the arbitral tribunal was made. There is no provision in the Act which would enable the court to remove an Arbitrator during the arbitration proceedings. But, at the same time the party having grievance against an Arbitrator cannot be said to be without a remedy and the said remedy becomes available as soon as the arbitral award is made by the Arbitrator or the arbitral tribunal. A similar challenge to the provisions of Section 13 was made in the Delhi High Court in the case of Bharat Heavy Electricals Ltd. v. C.N. Garg and Ors. reported as 2001 (57) DRJ 154 (DB). In the said petition also two questions were raised for consideration of the Division Bench, one of which pertained to the constitutional validity of the provisions of Sub-sections (3) and (4) of Section 13. A perusal of the judgment would indicate that challenge was made regarding the vires of the aforesaid provisions of Sub-sections (3) and (4) of Section 13 on the ground that there is no provision in the Act for removal of an Arbitrator by the court, though such a provision was contained in Section 11 of the Arbitration Act, 1940 and that no remedy is available to the aggrieved party under the Act for challenging the award on the ground of bias and prejudice on the part of the Arbitrator. The Division Bench of this Court considered the said submissions in the light of the provisions of Arbitration and Conciliation Act and findings were returned to the effect that it cannot be imagined that the Legislature intended not to make bias as one of the grounds of challenge to the arbitral award. Consequently, it was held by the Division Bench of this Court that it will be difficult to exclude a challenge on account of bias and prejudice on the part of the Arbitrator from the purview of Clause (ii) of Clause (b) of Sub-section (2) of Section 34 of the Act. The court concluded that there is no merit in the contention that Section 13(3) and 13(4) are ultra vires the Constitution of India on account of there being no provision in the Act to challenge an award on the ground of bias and prejudice on the part of the Arbitrator. It was further held that going on with the ethos of the new Act of speedy progress of arbitration proceedings without judicial interference coupled with the fact that an aggrieved party is not without remedy, it cannot be said that the absence of a provision regarding removal of an Arbitrator renders the relevant provisions of the statute ultra vires the Constitution. It was conclusively laid down in the said decision of the Division Bench that absence of a provision for removal of an Arbitrator does not render the relevant statutory provision invalid or ultra vires the Constitution of India.

6. We respectfully agree with the reasoning and the conclusions arrived at by the earlier Division Bench. On the aforesaid score and in the light of the aforesaid reasoning and grounds, we reject the contention of the learned Counsel for the petitioner that the provisions of Section 13(3), (4) and (5) and Section 34 of the Act are ultra vires the Constitution of India. It is clear and apparent that all the aforesaid provisions are to be harmoniously read and on harmonious reading of the said provisions, it is established that the said provisions are not ultra vires the Constitution of India, as alleged. In Union of India v. Harman Singh reported it was observed that it is the duty of the courts to promote intention of the Legislature by an intelligible and harmonious interpretation of the provisions rather than frustrate their operation. Interpretation has to be one that advances the intention of the Legislature and not one which frustrates it. Sections 34 and 13 of the Arbitration and Conciliation Act, 1996 have to be read in a harmonious manner to give full effect to both provisions with neither of them becoming redundant and meaningless. A harmonious interpretation will make the two provisions more meaningful. Harmonious interpretation is necessary to "iron out the creases". Viewed in this manner there is no conflict in the two provisions.

7. So far the next contention pertaining to appointment of one Arbitrator for different contracts are concerned, it is only to be noted that there are six different contracts containing six different arbitration clauses. When the question of appointment of the Arbitrator in respect of the petitioner's contract came up, the petitioner himself accepted the name of the Arbitrator to adjudicate the case. The petitioner has in fact rejected the names of some other Arbitrators. The same is clear and apparent on a reading of the letter dated 15th December, 2005 issued by the company of the petitioner.

8. So far reference made by the counsel for the petitioner to the order dated 12th October, 2006 is concerned, reliance on the same by the petitioner is misplaced as the same relates to another case and is not at all relevant for the purpose of the present case. Besides, each of the contracts including the present contract with the petitioner are independent contracts containing a clause for appointment of a sole Arbitrator. In accordance with the intention of the parties an Arbitrator is appointed. It also cannot be said that all the issues arising in the different contracts could be said to be similar as they are completely independent of each other. That being the position, the contention of the counsel appearing for the petitioner in this regard is also found to be without any merit and the same is dismissed.

9. Consequently, there is no merit in this writ petition, which stands dismissed, but we leave the parties to bear their own costs.