Delhi High Court

Inder Mohan Singh & Ors. vs Tripat Singh & Ors. on 23 December, 2011

Author: Manmohan Singh

*                HIGH COURT OF DELHI: NEW DELHI

                                            Judgment pronounced on: 23.12.2011

+             I.A. No.15622/2010 in Arb. P. No.390/2008


INDER MOHAN SINGH & ORS                       ..... Petitioners
               Through: Mr. Gurirder Pal Singh, Adv.

                            versus


TRIPAT SINGH & ORS                            ..... Respondents
                Through: Mr. Anil Sapra, Sr. Adv. with
                         Mr. Rakesh Malhotra, Adv.

Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order, I shall dispose of the application being I.A.

No.15622/2010 filed by the respondents under Section 151 CPC for

clarification of order dated 11.09.2009 in the matter.

2. Before filing Arbitration Application No.390/2008 the

petitioners originally filed an Arbitration Application under Section 11(6)

of the Arbitration and Conciliation Act, 1996 (hereinafter called the

"Act") bearing No.AA102 of 2008 for appointment of Arbitrator to

decide the dispute between the parties and notice in the said application

was issued. In the reply, an objection was taken by the respondents that

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.1 of 13 the arbitration application was not maintainable, as the requisite notice

was not issued by the petitioners. By order dated 29.08.2008 the said

petition was disposed of. Thereafter, the petitioners filed the present

petition in which the notice was issued. By order dated 11.09.2009,

Shri Prem Kumar, Retired Additional District Judge was appointed as

Arbitrator between the parties. The operative portion of the order reads

as under:-

"During arguments, counsel for the respondent however agreed that an Arbitrator may be appointed by the Court who should also go into the question of existence of the arbitration agreement between the parties, genuineness of the documents and all related questions. I hereby appoint Sh. Prem Kumar, Retired Additional District Judge as the Arbitrator between the parties. The petitioner shall file his claim before the Arbitrator within 30 days from today. The respondent shall file counter claim/response/etc. before the Arbitrator. It is made clear that the learned Arbitrator shall decide the issue of existence of arbitration agreement as a preliminary issue and then proceed to adjudicate the dispute between the parties, needless to state that he shall consider the genuineness/ admissibility of the documents etc."

3. Before the Arbitrator, the respondents raised preliminary

objections and also filed their Statement of Defence. In the preliminary

objections, the plea was raised about the non-existence of the arbitration

clause between the parties and it was stated that the appointment of the

learned Arbitrator was nullity and void and the learned Arbitrator had no

jurisdiction to entertain this petition.

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.2 of 13

4. The petitioners, on the other hand, moved an application

under Order XI CPC and also moved another application under

Section 45 of the Indian Evidence Act, 1872 seeking direction that the

specimen signatures of the respondents be sent to CFCL for comparison.

Admittedly, the two agreements, as alleged, are not available on record.

The contention of the petitioners is that the said two family

settlements/agreements are forged and fabricated documents.

5. The main contention of the respondents is that the learned

Arbitrator in his order has held that the High Court in order dated

11.09.2009 has taken a prima-facie view about the existence of

arbitration agreement, though in the said order, the Court did not express

any mentioning about the existence of such agreement between the

parties. Forming opinion by the learned Arbitrator regarding

prima-facie existence of the agreement on the basis of the said order was

an incorrect interpretation of facts. The other contention of the

respondents is that before passing the final order in the petition, the High

Court ought to have come to the conclusion that there is an existence of

arbitration agreement and arbitral dispute before referring the matter to

the Arbitrator. Since the High Court while appointing the Arbitrator has

not given any finding about the non-compliance of mandatory provisions

of Rule 2(iii) under Section 11(10) of the Act, the said point ought to

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.3 of 13 have been adjudicated by the High Court. The next submission of the

learned Senior counsel for the respondents is that it was for the High

Court to determine the issue of existence of agreement, rather to refer the

said question for adjudication before the Arbitrator. The learned counsel

in support of his submission has referred the following judgments:-

(i) SBP & Co. vs. Patel Engineering Ltd. and another, (2005) 8 Supreme Court Cases 618

(ii) Jindal Steel & Power Ltd. vs. N.S. Atwal, Sole Proprietor, Guru Mehar Construction, 2010 (117) DRJ 358

(iii) Indowind Energy Ltd. vs. Wescare (I) Ltd. & Anr., AIR 2010 Supreme Court 1793

(iv) State of Punjab (Now Haryana) and others vs. Amar Singh and another, AIR 1974 Supreme Court

(v) Board of Control for Cricket in India and another vs. Netaji Cricket Club and others, (2005) 4 Supreme Court Cases 741

(vi) M/s. Jain Studios Ltd. vs. Shin Satellite Public Co.

Ltd., AIR 2006 Supreme Court 2686

6. The application is strongly opposed by the petitioners on the

following grounds:-

(a) The respondents are trying to seek review of the

order dated 11.09.2009 and this Court has no power to review

its order in a petition under Section 11(6) of the Act.

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.4 of 13 Therefore, the said order has attained finality.

(b) The said order dated 11.09.2009 was passed with

the consent of the parties which has not been challenged by

the respondents till date, and the only remedy, if any, was to

challenge the said order under Article 136 of the Constitution

of India by approaching the Supreme Court. In view of that,

the said order has become final under Section 11(7) of the

Act.

7. As regards the original deeds of family settlement are

concerned, it is argued by the learned counsel for the petitioners that the

original deeds of family settlement dated 27.03.2005 have always been in

possession of the respondent No.1 and despite of orders of the Arbitral

Tribunal, respondent No.1 has failed to comply with the order passed in

the petitioners‟ application under Order XI Rules 12 & 14. Not only

that, the learned counsel has also stated that the clauses of the two family

settlements have been acted upon between the parties except the parties

have to execute the relevant documents in terms and conditions of the

said settlement.

8. The last contention of the petitioners is that the respondents

under the said circumstances have to wait for the Tribunal to pass an

award and if required, the respondents can challenge the said order of

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.5 of 13 appointment of the Arbitral Tribunal under Section 34 of the Act. They

are also entitled to make their grievances and objections, if any, in the

said proceedings.

9. In support of his submissions, the learned counsel for the

petitioners has referred para-43 of the case of S.B.P. & Co. vs. Patel

Engineering Ltd. and another, reported in 2005(3) Arb. LR 285 (SC)

and particularly, paras 46(i) & (vi). The said paras read as under:-

"43. Once we arrive at the conclusion that the proceeding before the Chief Justice while entertaining an application under Section 11(6) of the Act is adjudicatory, then obviously, the outcome of that adjudication is a judicial order. Once it is a judicial order, the same, as far as the High Court is concerned would be final and the only avenue open to a party feeling aggrieved by the order of the Chief Justice would be to approach to the Supreme Court under Article 136 of the Constitution of India. If it were an order by the Chief Justice of India, the party will not have any further remedy in respect of the matters covered by the order of the Chief Justice of India or the Judge of the Supreme Court designated by him and he will have to participate in the arbitration before the tribunal only on the merits of the claim. Obviously, the dispensation in our country, does not contemplate any further appeal from the decision of the Supreme Court and there appears to be nothing objectionable in taking the view that the order of the Chief Justice of India would be final on the matters which are within his purview, while called upon to exercise his jurisdiction under Section 11 of the Act. It is also necessary to notice in this context that this conclusion of ours would really be in aid of quick disposal of arbitration claims and would avoid considerable delay in the process, an object that is sought to be achieved by the Act.

              44.           x               x    x           x
              45.           x               x    x           x


I.A. No.15622/2010 in Arb. P. No.390/2008                         Page No.6 of 13

46. We, therefore, sum up our conclusions as follows:

(i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.

                            (ii)    x x              x            x
                            (iii)   x x              x            x
                            (iv)    x x              x            x
                            (v)     x x              x            x
                            (vi)    Once the matter reaches the arbitral tribunal
                                    or the sole arbitrator, the High Court would
                                    not interfere with orders passed by the

arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Section 37 of the Act or in terms of Section 34 of the Act."

10. In support of his point about the non-maintainability of the

review petition, the learned counsel for the petitioners has referred the

following judgments:-

(A) N.S. Atwal vs. Jindal Steel & Power Ltd. decided on 10.01.2011 by Division Bench of this Court comprising Vikramajit Sen and Siddharth Mridul JJ in FAO (OS) No.268/2010. The relevant para- 15 whereof reads as under:-

"15. SBP & Co. clarifies that a decision under Section 11 is of a judicial nature. Section 5 of the Act places an embargo on a judicial authority from intervening in any dispute except where so provided by the statute. Section 11(7), we may reiterate, takes pains to state that decision under Sections 11 (4)to(6) are final. Once they attain finality the person passing the Order is rendered focus officio. This conclusion is arrived at de hors Section 37 of the Act which in terms invalidates the competence of the present Appeal. SBP & Co. itself clarifies that an Order passed under Section 11 can be assailed under Article 136 of the Constitution. That is

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.7 of 13 the remedy which the Appellant before us could have elected to. Despite our view that the impugned Order is not sustainable in law as it runs counter to the precedents on the point we abjure from setting it aside. This is for the reason that we hold that the Appeal is not maintainable. Keeping in perspective the industry and yet the brevity of counsel for the Appellant, we desist from imposing Costs."

(B) Mr. Shivraj Gupta and Anr. vs. Mr. Deshraj Gupta and Ors. passed in R.P. No.445/2007 in Arb. P. No.101/2005 on 22.02.2008 by Badar Durrez Ahmed, J. in which by referring the decision of the Supreme Court in the case of S.B.P. Vs. Patel Engineering Ltd. and Anr. , (2005) 8 SCC 618, it has been held in para-5 that:-

"5. x x x x

After reading the aforesaid portion of the Supreme Court decision, it immediately becomes clear that the power under Section 11(6) of the said Act is not conferred on the High Court but is conferred on the Chief Justice of the High Court. The Supreme Court has also given one of the possible reasons for specifying the authority as the Chief Justice and for not conferring any power on the High Court. The possible reason given by the Supreme Court is that had the power been conferred on the High Court, then the matter would be governed by the normal procedure of that Court, including the right of appeal and Parliament obviously wanted to avoid that situation, since one of the objects was to restrict the interference by courts in the arbitral process. It is in this context that the Supreme Court concluded that the power was conferred on the highest judicial authority in the country and in the State in their capacities as Chief Justices. It is obvious from a reading of the said observations of the Supreme Court that the power that is exercised under Section 11(6) by the Chief Justice or his designate is not a power which is exercised by them as a Court and, Therefore, would not be governed by the normal procedure of that court which includes the right of appeal as well as the power of review, revision etc. In these circumstances, I am of the view that a review petition would not be maintainable in respect of an order passed under Section 11(6) of the said Act."

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.8 of 13

11. Mr. Gurinder Pal Singh, learned counsel for the petitioners

has also argued that the respondents herein had also filed a similar review

petition against the order passed by the Arbitrator on 06.09.2010 and the

same, too, was dismissed. His further submission is that all the grounds

and the decisions referred by the respondents in support of their

submissions were relied upon before the learned Arbitrator who after

considering all the judgments rejected the contention of the respondents.

Therefore, the present application is not maintainable. The learned

counsel says that even otherwise, the order in question was passed on

11.09.2009 and the application, however, was filed after the expiry of

about 12 months. His next submission is that the earlier petition of the

petitioners was dismissed on technical grounds after filing of reply by the

respondents, and the respondent did not take the point of

non-existence of the agreement in their reply. Even when the petitioners

sent a letter suggesting three names of the Arbitrators referred in the

letter dated 08.09.2009 to the respondents and asking them to agree on

one of those names to be appointed as an Arbitrator, the respondents at

that time also did not mention about the non-existence of the agreement.

12. Under Section 16 of the Act, it was within the competence of

the Arbitral Tribunal to rule on its own jurisdiction, including the

question about the existence or validity of the Arbitration Agreement, as

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.9 of 13 by order dated 11.09.2009. On the basis of submissions of the parties

and later on with the consent of the parties which was recorded by the

court, the court passed the said order. On reading the entire order, it

becomes clear that the prayer was allowed after satisfaction and with

the consent of the parties. Therefore, now the Arbitral Tribunal has to

decide the question of its own jurisdiction under Section 16 of the Act.

13. The respondents themselves had also raised the same

objections before the Arbitrator who had rejected the said grievance and

the objections in its order dated 06.09.2010. As far as order dated

11.09.2009 is concerned, the same has become final under Section 11(7)

of the Act and in the present facts and circumstances, the present

application under Section 151 CPC as review is not maintainable.

14. As far as law in the question involved in the present case is

concerned, it has been laid down in the recent case of Indowind Energy

Ltd. Vs. Wescarre (India) Limited & Anr.; (2010) 5 SCC 306.

Relevant paras 11, 12 and 13 of the judgment read as under :

"11. Section 7 defines an arbitration agreement and it is extracted below:

"7. Arbitration agreement.--

(1) In this Part, „arbitration agreement‟ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.10 of 13 (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in--

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

The term "party" is defined in Section 2(h) as referring to a party to an arbitration agreement. The term "arbitration agreement" is defined under Section 2(b) as an agreement referred to in Section 7.

12. An analysis of sub-sections (2), (3) and (4) of Section 7 shows that an arbitration agreement will be considered to be in writing if it is contained in: (a) a document signed by the parties; or (b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other, or (d) a contract between the parties making a reference to another document containing an arbitration clause indicating a mutual intention to incorporate the arbitration clause from such other document into the contract.

I.A. No.15622/2010 in Arb. P. No.390/2008 Page No.11 of 13

13. It is fundamental that a provision for arbitration to constitute an arbitration agreement for the purpose of Section 7 should satisfy two conditions: (i) it should be between the parties to the dispute; and (ii) it should relate to or be applicable to the dispute. (See Yogi Agarwal v. Inspiration Clothes & U.)"

15. However, in the present case, the situation is quite different.

Firstly, the main petition under Section 11 has already been disposed of.

Secondly, the order dated 11.09.2009 was passed with the consent of the

parties. The said order was not challenged by the respondents. Thirdly,

the present application under Section 151 CPC has been filed in October,

2010 i.e. after the expiry of the period of 13 months. Thus, it is to be

considered how the present application in these circumstances is

maintainable.

16. Mr. Anil Sapra, learned Senior counsel appearing on behalf of

respondents submits that the application filed by the respondents may

be considered as review petition. It is admitted position that the

application is filed after expiry of one year when proceedings before the