Delhi High Court
Engineering Projects (India) ... vs M/S Steel Authority Of India Ltd on 15 March, 2017
$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ EX.P. 316/2012 & Ex. APPL (OS) 691/2012
ENGINEERING PROJECTS (INDIA) LTD. ..... Decree Holder
Through Mr Manoj Kumar Das, Advocate.
versus
M/S STEEL AUTHORITY OF INDIA LTD ..... Judgement Debtor
Through Ms Mansi Kukreja, Advocate for
Mr Yashraj Singh Deora, Advocate.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 15.03.2017
VIBHU BAKHRU, J
1. The petitioner has filed the present petition under Section 36 of the
Arbitration and Conciliation Act, 1996 (hereafter 'the Act') seeking to
enforce the Award dated 17.02.2011 rendered by the arbitrator appointed
under the Permanent Machinery of Arbitration (hereafter 'PMA'). The PMA
was constituted pursuant to the executive order (OM) dated 22.01.2004,
which required the Central Public Sector Undertakings to resolve their, inter
se, disputes by arbitration under the PMA.
2. The said OM expressly provided that the "PMA shall not entertain the
disputes referred to it without the proper Arbitration Clause". The
arbitration clause annexed with the OM expressly provided that the Act
would be inapplicable to arbitration conducted under the PMA. The said
clause reads as under:-
"In the event of any dispute or difference relating to the
interpretation and application of the provisions of the
contracts, such disputes or difference shall be referred by
either party for Arbitration to the sole Arbitrator in the
Department of Public Enterprises to be nominated by the
Secretary to the Government of India in-charge of the
Department of Public Enterprises. The Arbitration and
Conciliation Act, 1996 shall not be applicable to arbitration
under this clause. The award of the Arbitrator shall be
binding upon the parties to the dispute, provided, however,
any party aggrieved by such award may make a further
reference for setting aside or revision of the award to the
Law Secretary, Department of Legal Affairs, Ministry of
Law & Justice, Government of India. Upon such reference
the dispute shall be decided by the Law & Justice,
Government of India. Upon such reference the dispute shall
be decided by the Law Secretary or the Special
Secretary/Additional Secretary, when so authorized by the
Law Secretary, whose decision shall bind the Parties finally
and conclusively. The Parties to the dispute will share
equally the cost of arbitration as intimated by the
Arbitrator."
3. The question as to the enforceability of an award rendered under the
PMA and the applicability of the provisions of the Act were considered by a
Division Bench of this court in M/s IRCON International Ltd. v. M/s
National Building Construction Corporation Limited : EFA (OS) No.
22/2006 decided on 28.11.2008. In the said case, the Division Bench of this
court held as under:-
"24. Resolution of disputes by arbitration is now
governed by the Arbitration and Conciliation Act, 1996,
under which parties may by means of agreement in
writing, agree to refer 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. It also makes provisions about
composition of the Arbitral Tribunal, its jurisdiction, the
conduct of arbitral proceedings, the making of arbitral
award and termination of proceedings, the recourse
against the award.
25. If by an agreement the parties exclude the provisions
of an Act they can easily escape the clutches of law
without any difficulty. Every jural relationship has to be
governed by some law of the land and the parties cannot
contract out of statute.
26. It is well established that a statute ousting jurisdiction
of a civil court must be strictly constructed, and it is for
the party seeking to oust the jurisdiction of an ordinary
civil court to establish that there is no jurisdiction. (see
AIR 1966 SC 1718 para 9; AIR 1967 SC 781 Para 13). In
the case of Smt. Ganga Bai v. Vijay Kumar AIR 1974 SC
1126 the Supreme Court held :
"There is an inherent right in every person to bring a
suit of a civil nature and unless the suit is barred by
any statute one may, at one's peril, bring a suit of
one's choice. It is no answer to a suit, howsoever
frivolous the claim, that the law confers no such right
to sue. A suit for maintainability requires no authority
of law and it is enough that no statute bars the suit."
27. The object of the rule is, that no party/person should
be left remedy less. Necessary corollary to this would be
that, if no adequate remedy is provided for by a special
statute through the Forum established under it for a
particular purpose/situation, civil courts remedy to
administer justice cannot be said to be ousted to deal with
even such cases.
28. So far as the part in the arbitration clause in the said
agreement regarding the non-applicability of the Act of
1996 is concerned, we consider that it is void and the
parties cannot by themselves exclude the statute itself
which is being drafted by the Legislature to look after the
arbitration matters."
4. In view of the aforesaid decision, the arbitral award rendered under
PMA was enforceable under Section 36 of the Act.
5. The respondent, Steel Authority of India Limited (hereafter 'SAIL'),
challenged the arbitral award by way of a writ petition, being W.P. (C)
7970/2012. The said writ petition was dismissed as the court held that SAIL
could not be permitted to impugn the jurisdiction of the Appellate Tribunal
after having participated in the proceedings before the Appellate Tribunal. It
is stated that SAIL has preferred an appeal against the said decision which is
pending consideration before the Division Bench of this court.
6. The question whether the provisions of the Act would be applicable to
an award rendered under PMA has been authoritatively settled by the
Supreme Court in a recent decision in M/s Northern Coalfield Ltd. vs
Heavy Engineering Corp. Ltd. & Anr.: 2016 (8) SCC 685; the Supreme
Court has unequivocally held that the provisions of the Act would not be
applicable to such an award. The Court summarised the law in paragraph 22
of the said judgment, which reads as under:-
"22. The net effect of the above can be summarized as under:
(i) The Permanent Machinery of Arbitration was put in place
as early as in March, 1989, even before ONGC II was decided
on 11th October, 1991.
(ii) The Permanent Machinery of Arbitration was outside the
statutory provision then regulating arbitration in this country
namely Arbitration Act, 1940 (10 of 1940).
(iii) The award made in terms of the Permanent Machinery of
Arbitration being outside the provisions of the Arbitration Act,
1940 would not constitute an award under the said legislation
and would therefore neither be amenable to be set aside under
the said statute nor be made a rule of the court to be
enforceable as a decree lawfully passed against the judgment
debtor.
(iv) The Committee on disputes set up under the orders of this
Court in the series of orders passed in ONGC cases did not
prevent filing of a suit or proceedings by one PSE/PSU against
another or by one Government department against another.
The only restriction was that even when such suit or
proceedings was instituted the same shall not be proceeded
with till such time the Committee on Disputes granted
permission to the party approaching the Court.
(v) The time limit fixed for obtaining such permission was also
only directory and did not render the suit and/or proceedings
illegal if permission was not produced within the stipulated
period.
(vi) The Committee on Disputes was required to grant
permission for instituting or pursuing the proceedings. If the
High Power Committee (COD) was unable to resolve the
dispute for reasons to be recorded by it, it was required to
grant clearance for litigation.
(vii) The Committee on Disputes experience was found to be
unsatisfactory and the directives issued by the Court regarding
its constitution and matters incidental thereto were recalled by
the Constitution Bench of this Court thereby removing the
impediment which was placed upon the Court's/Tribunal's
powers to proceed with the suit/legal proceedings. The
Department of Public Enterprises has subsequent to the recall
of orders in the ONGC line of cases modified its guidelines
deleting the requirements for a COD clearance for resorting to
the Permanent Machinery of Arbitration and;
(viii) The Permanent Machinery of Arbitration was and
continues to be outside the purview of Arbitration Act, 1940
now replaced by Arbitration and Conciliation Act, 1996."
7. In view of the above, the decision of the Division Bench of this court
in M/s IRCON International Ltd. v. M/s National Building Construction
Corporation Limited (supra), no longer holds good. As the provisions of the
Act have been held to be inapplicable to the proceedings under the PMA, the
present petition for enforcement of the award under Section 36 is not
maintainable.
8. The learned counsel appearing for the petitioner earnestly contended
that the decision in the case of M/s Northern Coalfield Ltd. (supra) cannot
be applied retrospectively and would be inapplicable to awards rendered
prior to the said decision. The said contention is unpersuasive as in the
above case, the Supreme Court considered the interpretation of the
arbitration clause as expressly agreed between the parties. Admittedly, the
agreement entered into between the parties clearly states that the provisions
of the Arbitration and Conciliation Act, 1996 would not be applicable. In the
circumstances, the question of reading the decision of the Supreme Court as
applicable only to proceedings initiated after the date of the said decision, is
unmerited.
9. The learned counsel for the petitioner also referred to the decision of
the Supreme Court in the case of Centrotrade Minerals & Metal Inc. v.
Hindustan Copper Ltd : (2006) 11 SCC 245 and on the strength of the said
decision contended that a two tier arbitration was not opposed to the
provisions of the Act. He contended that the decision in the case of M/s
Northern Coalfield Ltd. (supra) was rendered in the context of determining
the enforceability of a two tier arbitration and, therefore, the decision in
Centrotrade Minerals & Metals Inc. (supra) would impliedly overrule the
decision in the case of M/s Northern Coalfield Ltd. (supra). In my view, the
aforesaid contention is also bereft of any merit. Plainly, one of the principal
questions involved in the case of M/s Northern Coalfield Ltd. (supra) was
whether the provisions of the Act were applicable to the PMA in view of the
express language of the OM and the arbitration clause.
10. In view of the above, the present petition is dismissed for the sole
reason that a petition under Section 36 of the Act for enforcement of the
award rendered under the PMA is not maintainable.
VIBHU BAKHRU, J
MARCH 15, 2017
pkv
