Delhi High Court
Meera Goyal vs Priti Saraf on 26 February, 2020
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision:- 26.02.2020
+ O.M.P. 2/2020, I.A. 2417/2020, 2418/2020, 2419/2020
MEERA GOYAL ..... Petitioner
Through: Mr. Ashwini Kumar Mata, Sr. Adv.
with Mr. Abhishek Puri, Mr. V.
Siddharth and Mr. Manan Gambhir,
Advs.
versus
PRITI SARAF ..... Respondent
Through: Mr.Sandeep Sethi, Sr. Adv. with
Mr.Shailendra Babbar, Ms.Manisha
Parmar, Mr.Hemant Manjani &
Mr.Vinayak Marwah, Advs.
+ O.M.P.(T) 1/2020, I.A. 2414/2020, I.A. 2415/2020 & I.A. 2416/2020
MEERA GOYAL ..... Petitioner
Through: Mr. Ashwini Kumar Mata, Sr. Adv.
with Mr. Abhishek Puri, Mr. V.
Siddharth and Mr. Manan Gambhir,
Advs.
versus
PRITI SARAF ..... Respondent
Through: Mr.Sandeep Sethi, Sr. Adv. with
Mr.Shailendra Babbar, Ms.Manisha
Parmar, Mr.Hemant Manjani &
Mr.Vinayak Marwah, Advs.
CORAM:
HON'BLE MS. JUSTICE REKHA PALLI
Signature Not Verified
By:MANJU BHATT
Signing Date:26.02.2020
18:03:48
REKHA PALLI, J (ORAL)
1. This decision disposes of two petitions filed by Ms. Meera Goel who
is the respondent in the arbitration proceedings bearing case
No.REF:DAC/1405/11-16. The first petition, preferred under Section
34 of the Arbitration and Conciliation Act, 1996 ('the Act') seeks
inter-alia setting aside of the order dated 05.02.2020 passed by the
learned Arbitrator, which is sought to be termed as an 'interim Award'
by the petitioner; rejection of the respondent's claims as also
expunction of a portion of the deposition given by the claimant's
witnesses and the documents tendered in evidence by the respondent.
The second petition, preferred under Sections 14 and 15 of the
Arbitration and Conciliation Act, 1996, seeks termination of the
mandate of the present sole Arbitrator and for appointment of a
substitute Arbitrator.
2. Before dealing with the rival contentions of the parties, it would be
appropriate to notice the brief factual matrix of the matter at the
outset. The Petitioner who is the owner of property bearing No.37,
Friends Colony, East, New Delhi entered into an agreement to sell
with the respondent on 24.12.2011 for sale of a portion thereof,
admeasuring 1205.43 sq. yards for a total sale consideration of
Rs.63,28,50,750/-. The respondent paid a sum of Rs.12.50 crore to the
petitioner by way of earnest money, and thereafter paid her a further
sum of Rs.5.40 cr. in the year 2012. On 13.01.2013 the petitioner,
alleging that the respondent had failed to pay the balance sale
consideration within the time prescribed, terminated the agreement
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By:MANJU BHATT
Signing Date:26.02.2020
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dated 24.12.2011. Subsequently, the parties began communicating to
explore the possibility of a settlement, but to no avail. As a result, the
respondent preferred petitions before this Court under Sections 9 and
11 of the Act alleging that the petitioner had breached the agreement
to sell and, therefore, the earnest money was liable to be refunded to
her along with damages. The respondent also prayed for the
appointment of an Arbitrator on the ground that notwithstanding its
legal notice to the petitioner dated 28.01.2016 invoking arbitration
and seeking nomination of an arbitrator, the petitioner had failed to
respond thereto.
3. On 04.11.2016 this Court, despite the petitioner's denial of being in
breach of the agreement or having received the respondent's legal
notice, noticed the fact that the existence of the arbitration clause itself
was not disputed by the petitioner and appointed Justice Mukul
Mudgal (Retd.) as the sole Arbitrator to adjudicate the disputes
between the parties. While doing so, this Court had specifically
observed that the issues viz. whether arbitration had been invoked by
the respondent in time and whether the respondent's claim was barred
by limitation, were be decided by the learned Arbitrator.
4. Pursuant thereto in December 2016, the respondent filed its claim
petition before the learned Arbitrator by specifically stating that it had
sent a legal notice to the petitioner on 28.01.2016 invoking arbitration.
On the other hand, the petitioner filed its statement of defence by,
inter alia, opposing the respondent's claims on merits and specifically
denying the allegation of ever being served or having received the
purported legal notice dated 28.01.2016.
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By:MANJU BHATT
Signing Date:26.02.2020
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5. On 23.05.2017, the learned Arbitrator, after recording that the
respondent had filed its affidavit of admission and denial of
documents, directed the petitioner to file its affidavit of admission and
denial of documents. The parties were also directed to file their
respective affidavits of evidence on or before 10.07.2017. On this
subsequent date, even though the petitioner raised an oral objection
under Section 16 (3) of the Act contending that a part of the
respondent's claim was not covered by the agreement to sell, this
objection was not entertained by the learned Arbitrator who observed
that the same would be considered as and when raised by way of a
separate application. It is pertinent to note that the matter was
thereafter adjourned from time to time, and no application under
Section 16 was filed by the petitioner. On 22.09.2017, the respondent
was granted permission by the learned Arbitrator to amend her
statement of claim and to approach this Court for seeking assistance
for summoning of two witnesses. Consequently, the respondent
sought leave to incorporate fifteen amendments in her claim
statement, but the learned Arbitrator, vide its order dated 01.02.2018,
allowed only two of the proposed amendments, primarily being
typographical corrections. By the same order, the learned Arbitrator at
the time also recused himself on account of official commitments. As
a result, this Court, vide its order dated 21.03.2018 passed in OMP (T)
2/2018, appointed Justice B.D. Ahmed (Retd.) as the substitute
Arbitrator, who also subsequently recused from these proceedings on
19.11.2018. Finally, this Court appointed Justice Ms. Indermeet Kaur
Kochar (Retd.) as the sole Arbitrator to adjudicate the disputes
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By:MANJU BHATT
Signing Date:26.02.2020
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between these parties vide order dated 14.12.2018 passed in OMP (T)
8 of 2018.
6. Since this Court on 14.12.2018 had directed the proceedings to
continue from the stage that they were at before the erstwhile
Arbitrator, the present Arbitrator, upon entering reference,
commenced its mandate by taking up the respondent's application
seeking review of the order dated 01.02.2018 passed by the
Predecessor Arbitrator disallowing thirteen of its proposed fifteen
amendments to the claim statement. The review application was
rejected by a detailed order passed by learned Arbitrator on
11.03.2019 and the matter was, thereafter, adjourned to 26.04.2019
and then to 29.05.2019 for the claimant/respondent to file the
evidence of its witnesses by way of affidavit.
7. On 29.05.2019, during the examination-in-chief and part cross-
examination of the respondent's first witness (CW1), the petitioner
moved an application objecting to certain portions of CW1's affidavit
on the ground that they were beyond the scope of the pleadings on
record and referred to facts pertaining to the disallowed amendments.
However, after some arguments, this application was withdrawn by
the petitioner with liberty to raise the said issue at the time of final
arguments. When the cross examination of the respondents' witnesses
was concluded on 03.09.2019, the learned Arbitrator directed the
petitioner to file the affidavit of evidence of its witnesses within a
period of 10 days, which was duly complied with.
8. The petitioner's witness RW1, was examined and cross examined on
24.09.2019, 30.09.2019, 17.10.2019 and finally on 11.11.2019, on
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By:MANJU BHATT
Signing Date:26.02.2020
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which date the learned Arbitrator, while granting four weeks' time to
both sides to file their respective written submissions, adjourned the
matter to 12.12.2019 and 16.12.2019 for arguments. It appears that on
12.12.2019, due to non-availability of the counsel, the matter was
adjourned to 16.12.2019 on which date, part arguments were
addressed on behalf of the respondent. On the next date, i.e.,
14.01.2010, the respondent concluded its arguments before the
learned Arbitrator and the petitioner made part arguments. On this
date, however, the respondent filed an application for placing on
record certain additional documents which were stated to be copies of
the Annexures of the respondent's petitions under Sections 9 and 11 of
the Act, filed before this court in 2016 and had led to the
commencement of arbitration proceedings. The petitioner was granted
time to file its reply to the respondent's application and the next date
of hearing the matter was fixed for 27.01.2020, 04.02.2020 and
05.02.2020 for remaining arguments of the petitioner. On 27.01.2020,
the petitioner filed two applications, the first being under Section 14
(1) (a) of the Act and the second being under Section 16 read with
Section 31 (6) of the Act, whereupon the order impugned herein came
to be passed. The matter was then adjourned to 04.02.2020 to enable
the respondent to file its reply to the petitioner's applications.
9. On 04.02.2020, the learned Arbitrator allowed the respondent's
application, after observing that the documents sought to be brought
on record formed a part of the judicial record before this Court, albeit
with a specific rider that the authenticity, weight and relevance thereof
would be decided at the time of final arguments. On this date the
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By:MANJU BHATT
Signing Date:26.02.2020
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learned Arbitrator also heard part arguments on the petitioner's two
applications. Ultimately, on the next date of hearing, i.e., 05.02.2020.
the petitioner's applications came to be rejected, which order of the
learned Arbitrator has been impugned in the Section 34 petition.
10. In support of this petition Mr. Ashwani Mata, learned senior counsel
for the petitioner besides urging that an order passed by the learned
Arbitrator refusing to decide petitioner's objections under Sections
16(2) and 16(3) of the Act amounts to rejection of its pleas and,
therefore, constitutes an interim award which can be challenged under
Section 34 of the Act, has primarily raised two contentions. The first
and foremost plea of Mr. Mata is that the petitioner's objections
regarding the claims being barred by limitation and maintainability of
the claim petition under Section 16 (2) of the Act, were questions of
jurisdiction which needed to be decided as preliminary issues, as per
Section 16(5) of the Act, by the learned Arbitrator before dealing with
the claim petition on merits. He further submits that in the same way,
the petitioner's objections under Section 16(3) to the affidavits of the
respondent's witnesses bearing averments which were beyond the
scope of the pleadings on record, also amounted to the Arbitral
Tribunal exceeding its Authority and these objections were also in the
nature of jurisdictional issues, which were required to be adjudicated
as preliminary issues. He contends that Section 16(5) of the Act places
an obligation on the Arbitrator to decide all jurisdictional issues
before continuing with arbitral proceedings or adjudicating the
disputes on merits. By placing reliance on the decisions of the
Supreme Court in McDermott International Inc. Vs. Burn Standard
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By:MANJU BHATT
Signing Date:26.02.2020
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Ltd. and Ors. (2006) 11 SCC 181, Uttarakhand Purv Sainik Kalyan
Nigam Limited v. Northern Coal Field Limited 2019 SCC OnLine SC
1518 and Kvaerner Cementation India Limited Vs. Bajranglal
Agarwal and Anr. (2012) 5 SCC 214 he submits that the learned
Arbitrator while holding that the objections of the petitioner would be
considered at the stage of passing the final award, has overlooked the
fact that the arbitrator has no discretion to refrain from deciding
jurisdictional issues as preliminary issues and defer a decision
thereupon till the time of rendering the final award. He further
submits, by relying on the observations of the Supreme Court in
paragraph 35 of its decision in Uttarakhand (supra), that the learned
Arbitrator has gravely erred in holding that an objection on the
maintainability of the claim and its validity on the ground of
limitation were not questions of jurisdiction.
11. Mr. Mata further submits that the learned Arbitrator has also failed to
appreciate that the question of limitation, being a mixed question of
fact and law, could be raised by the petitioner only after evidence had
been led by the parties. He, therefore, contends that the learned
Arbitrator's refusal to decide these issues under Section 16 (2) of the
Act or the petitioner's objections under Section 16 (3) of the Act on
the presumption that the pleas were raised belatedly is not only
erroneous but is also contrary to the record. It is his contention that the
issue of limitation, even though jurisdictional in nature, could be
raised only after evidence had been led. Similarly, any cause for the
petitioner to raise its objections under Section 16 (3) of the Act arose
only after evidence was tendered by the respondent's witnesses and
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By:MANJU BHATT
Signing Date:26.02.2020
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the learned Arbitrator had permitted the respondent to bring
documents on record, which were beyond the scope of the pleadings,
during the period between May to November, 2019. He, thus,
contends that the petitioner had raised these jurisdictional issues in a
timely manner, at the earliest and therefore, the learned Arbitrator
could not have refused to decide these issues on any alleged delay
attributable to the petitioner in raising these issues.
12. Insofar as the second petition under Sections 14 and 15 of the Act is
concerned whereunder the petitioner has sought termination of the
learned Arbitrator's mandate Mr. Mata, besides reiterating his
previous arguments, submits that the learned Arbitrator has given a
complete go-by to the settled principles of civil procedure and
evidence by permitting the respondent/claimant to place on record
almost 2400 pages of documents which were neither relevant, nor
admissible. He submits that in doing so, the learned Arbitrator
operated under the misconception that these documents were certified
copies of the judicial record and ignored the fact that the respondent's
attempts to amend her claims had already been rejected by the
predecessor Arbitrator. He thus contends that these lapses were clearly
indicative of the de jure inability of the learned Arbitrator to reliably
continue discharging her mandate. Mr. Mata further submits that even
though Section 18 of the Act casts a duty upon an Arbitrator to treat
opposite parties on an equal footing, yet the learned Arbitrator has,
while permitting the respondent to bring on record irrelevant,
inadmissible and voluminous documents running into 2400 pages,
rejected the petitioner's prayer to place on record the report of the
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By:MANJU BHATT
Signing Date:26.02.2020
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statutory Auditor on the specious ground that it was a private
document. He, thus, contends that the learned Arbitrator is not even
granting a fair and equal opportunity to the petitioner to present her
case.
13. Mr. Mata finally submits that the learned Arbitrator has also failed to
adhere to the schedule of fees as prescribed by the Delhi International
Arbitration Centre under the aegis whereof the arbitration is being
conducted. He submits that the learned Arbitrator was entitled to
receive fees of only Rs.25,00,000/-, besides administrative charges of
Rs.5,000/- which already stood deposited with the Delhi International
Arbitration Centre in terms of the Rules; for this purpose, he places
reliance on an email received by him from the Delhi International
Arbitration Centre on 22.02.2020. He submits that on 14.01.2020, the
learned Arbitrator, while opining that as per the Rules it was entitled
to receive a further sum of Rs.15,00,000/- over and above the sum of
Rs.25,00,000/- which additional amount was also to be borne equally
by both the parties and had already been paid, had held itself to be
entitled to receive a further amount of Rs. Rs.5,00,000/- towards
administrative expenses. She has, therefore, directed the parties to
deposit a sum of Rs.1,25,000/- each, on the next date of hearing. He,
thus, submits that not only were the parties forced to pay amounts in
excess of the fees prescribed under Schedule-IV of the Act, but they
were also compelled to pay a sum of Rs.15,00,000/- directly to the
learned Arbitrator in contravention of the Rules of Delhi International
Arbitration Centre. He submits that this is further proof of the de jure
inability of the learned Arbitrator to perform its functions. In support
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By:MANJU BHATT
Signing Date:26.02.2020
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of his aforesaid contentions, he places reliance on a decision of the
Madras High Court in Madras Fertilizers Limited, Manali, Chennai
Vs. SICGIL India Limited, 2010 (2) CTC 357, and two decisions of
the Bombay High Court in Sahyadri Earthmovers Vs. Land Finance
Limited and Anr. (2011) 6 Bom CR 393 and Parekh Industries
Limited Vs. Diamond India Limited 2019 SCC OnLine Bom 851. He
also places reliance on a decision of a Coordinate Bench of this Court
in National Highways Authority of India s. Gammon Engineers and
Contractor Pvt. Ltd. 2018 SCC Online Del 10183 to contend that
when the parties have agreed upon a certain amount of fees to be paid
to the Arbitrator, they expect the proceedings to be conducted fairly
and on the principles of proportionality and objectivity; once the
Arbitrator does not follow the schedule of fees agreed upon,
undoubtedly the Arbitrator would then be deemed to be acting beyond
its mandate. Thus, Mr. Mata contends that this is a fit case for
terminating the mandate of the learned Arbitrator and that even the
order dated 05.02.2020, as also the previous orders passed by the
Tribunal permitting the respondent's evidence and documents to be
brought on record which were beyond the scope of the pleadings, be
set aside and the respondent's claims be dismissed by this Court itself
as they are evidently barred by limitation and are not maintainable.
14. On the other hand, Mr. Sandeep Sethi, learned Senior Counsel for the
respondent, who appears on an advance notice, vehemently opposes
the maintainability of both these petitions. He submits that once it is
the petitioner's admitted case that the learned Arbitrator has, till date,
not decided its objections on merits by specifically observing that
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By:MANJU BHATT
Signing Date:26.02.2020
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since the trial was nearing completion, they would be dealt with at the
time of rendering the final award, it cannot be said that these issues
had been finally determined by the learned Arbitrator to be
characterised as an 'interim Award' amenable to a challenge under
Section 34 of the Act. He contends that before terming an order as an
interim arbitral award, it must fulfil the conditions prescribed under
Section 31(6) of the Act and must necessarily decide a contentious
issue between the parties, which is not the case in the present
petitions. For these reasons, he vehemently urges that the present
petition under Section 34 is not maintainable. In support of this
contention, he places reliance on a decision of the Supreme Court in
Indian Farmers Fertilizer Cooperative Limited Vs. Bhadra Products
(2018) 2 SCC 534 as also on the decisions of two coordinate benches
of this Court in Rhiti Sports Management Pvt. Ltd. Vs. Power Play
Sports and Events Ltd. 2018 SCC OnLine Del 8678 and ONGC Petro
Additions Limited Vs. Tecnimont S.P.A. and Anr. 2019 SCC OnLine
Del 8976.
15. Mr. Sethi further submits that even if the petitioner's objections are
deemed to have been 'rejected' under the impugned order, no
challenge to the same was permissible at this stage. By placing
reliance on the decision of the Supreme Court in S.B.P. & Co. Vs.
Patel Engineering Ltd. & Anr (2005) 6 SCC 288 and the decision of
this Court in Tangirala Srinivasa Gangadhara Baladitya vs. Sanjay
Aggarwal, Sole Arbitrator and Others 2019 SCC OnLine Del 9112,
he contends that only when the Arbitrator upholds the objections
raised under Sections 16(2) or 16(3) of the Act can an appeal be
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preferred thereon. On the other hand, when such objections are
overruled, the arbitrator is enjoined to continue with the proceedings
and pass a final award whereafter the party aggrieved may raise these
objections as grounds for challenging the final award. He further
submits that even a petition under Sections 14 and 15 of the Act is not
maintainable at this stage as it is not as if the petitioner's objections
under Section 16 (2) & 16 (3) have been finally rejected, they are yet
to be finally adjudicated and have been, for the time being, deferred
for decision till the passing of the final award.
16. Mr. Sethi submits, by placing reliance on a decision of the Supreme
Court in HRD Corporation (Marcus Oil and Chemical Division) Vs.
Gail (India) Limited (2018) 12 SCC 471, that it is only when a person
becomes ineligible to be appointed as an Arbitrator under Section
12(5) read with Schedule-VII of the Act, can he be treated as being de
jure unable to perform his functions. On the other hand, in case the
mandate of the arbitrator has been challenged on the grounds
enumerated in the Schedule V, regarding its independence and
impartiality, the same is to be determined based on the facts of each
case. In a situation where the arbitrator rejects this challenge by
holding that there are no justifiable doubts regarding his impartiality
and independence, it is enjoined to continue with the proceedings and
render a final award. It is only after the passing of the award and at the
time of laying a challenge thereto under Section 34 of the Act, that the
party aggrieved by his mandate is permitted to agitate the issue
regarding its impartiality and independence as one of the grounds in
its petition under Section 34 of the Act. To sum up, even when the
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mandate of the arbitrator has been challenged on the ground of
impartiality and independence, which challenge is subsequently
rejected, the arbitration proceedings must continue. Applying these
principles to the present case where the challenge to the mandate of
the learned Arbitrator has been laid on the ground of alleged violation
of the Code of Civil Procedure, 1908 and the Indian Evidence Act,
1872, which are also questions to be determined on the peculiar facts
of the present case, he submits that there is no reason to stall the
present arbitral proceedings, which is nearing conclusion. In support
of his aforesaid contention, he also places reliance on the decision of a
Division Bench of this Court in Progressive Career Academy Pvt.
Ltd. Vs. FIIT JEE LTD (2011) 180 DLT 714 (DB) and of two
coordinate Benches of this Court in M/s Era Infra Engineering
Limited Vs. Airport Authority of India 2018 (6) R.A.J 356 (Del) and
MBL Infrastructures Ltd. Vs. Telecommunication Consultants
India Ltd. &Ors. 2015 SCC OnLine Del 6587.
17. Mr. Sethi finally submits that even the petitioner's plea that the
learned Arbitrator had violated the schedule of fees as prescribed in
Delhi International Arbitration Centre is contrary to record. In any
event, once the learned senior counsel for the petitioner had. before
the learned Arbitrator, specifically given up his challenge on this
count as recorded in the impugned order, the petitioner is estopped
from raising this ground before this Court. He, therefore, prays that
the second petition also be dismissed with exemplary costs.
18. Having heard learned senior counsel for the parties at length, what
emerges is that the challenge in both the petitions is primarily based
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By:MANJU BHATT
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on the same set of facts and is premised on identical grounds. As
noted hereinabove, the petitioner's challenge under Section 34 is
premised on the ground that the learned Arbitrator was obligated to
decide its objections at the time when they were raised, before
proceeding to decide the respondent's claims on merits. The
additional grounds urged in support of the petition seeking
termination of the arbitrator's mandate is that the learned Arbitrator
has not adhered to the Schedule of fees as prescribed under the Rules
of the Delhi International Arbitration Centre and, besides demanding
excessive fees, has collected the fees directly from the parties.
19. Before dealing with these rival contentions of the parties, it may be
appropriate to refer to the impugned order dated 05.02.2020 wherein
the learned Arbitrator has meticulously dealt with each of the grounds
taken by the petitioner. The relevant extracts of the order reads as
under:-
"There are five sub-heads recorded in the said application.
The first is
A) Failure to determine jurisdiction in section 16(5) of the
Act, it is pointed out that in the SOD itself (filed on March
2017) the challenge to the jurisdiction of the Tribunal was
stated. It is pointed out that issue of jurisdiction is a mixed
question of law and facts and the Respondent was waiting for
the evidence to be concluded before he could again raise his
flag on this objection. In the pre-hearing written submissions
submitted by the Respondent on 11.12.2019 he had
formulated the issues (A), (B), (H) to (K) which should have
been taken up as Preliminary issues and this have been
pointed out to the Tribunal on 12.12.2019 itself. The tribunal
should have in the first instance granted opportunity to the
Respondent to address his submission on these Preliminary
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issues as if this Tribunal would have concluded that it does
not have the jurisdiction /exceed jurisdiction no time would be
wasted in continuing with arguments on the main merits on
the matter. The Tribunal did not agree to this submission for
which reason the Respondent has lost confidence in this
tribunal.
B) The second objection pointed out in the body of the
application is FAILURE TO ADHERE TO THE PRINCIPLES
OF THE CODE OF CIVIL PROCEDURE AND THE INDIAN
EVIDENCE ACT. Ld. Sr. Counsel for the Respondent has
highlighted various dates of the evidence of CW-1, CW-2,
CW-3 and RW -1 to support his arguments that time and
again it had been pointed out to the Tribunal that the
evidence was beyond the pleadings and that part of the
evidence which was beyond pleadings has necessarily to be
struck off but again this objection of the Respondent was not
answered by the Tribunal.
C) The third objection raised by the Respondent is the
failure to provide equal treatment to the party to advance the
submissions. Ld. Sr. Counsel for the Respondent has
highlighted the provisions of section 18 of the said Act. It is
pointed out that various documents confronted to CW -1 had
been exhibited but the same treatment was not meted out to
the Respondent when he came into the witness box.
D) The fourth objection raised in the application is the
Failure to discharge its function to the timely manner. Qua
the arguments Ld. Sr. Counsel for the Respondent submits
that it is not his case that the Tribunal does not yet have time
to pass the award as per the stipulated period enshrined
under the Act; his submission on his core is that the
application filed by the Claimant have been allowed which
has disturbed the time line of this Tribunal.
E) The fifth objection raised in the application is the
Failure on the part of the Tribunal to adhere to schedule of
the fee as prescribed under the DIAC. Qua this objection Ld.
Sr. Counsel for the Respondent submits that it had been
agreed that in terms of claim amount raised by the Claimant
the undersigned is entitled to a fee of Rs. 37,50,000/-. The
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Tribunal has adhered to this figure. Administrative fee of Rs.
5 lakhs Rs. 2.5 lakhs each) had been imposed which is
permissible under the DIAC Rules. Ld. Sr. Counsel for the
Respondent accordingly does not press this point."
"11. As noted earlier the Claimant had completed his
arguments on 14.1.2020 on which date the Respondent had
also addressed arguments in part. The matter had been fixed
for three more dates to conclude the arguments as per time
line given by the respective counsels. It is also to be noted
that on 23.5.2017 it had been recorded that the pleadings will
form the issues. The issues highlighted by the Respondent in
his pre-hearing written submissions A, B, H to K are issues
which have been formulated by the Respondent himself. The
submission of the Ld. Sr. Counsel that he should be permitted
to start arguments when admittedly he is the respondent is an
unheard of submission. The Claimant having filed the claim
will first have to address his submission which is in
accordance with the procedure laid down in CPC. The
arguments of the Ld. Sr. Counsel for the Respondent that
evidence beyond pleadings has been permitted and the
detailed highlighting of the evidence at this juncture does not
come to his aid. This necessarily has to be answered at the
time of final arguments. Again it would be relevant to note
that in May 2019 an application had been filed by the
Respondent stating that, that part of the evidence which is
beyond pleadings should be struck off. This was noted by the
Tribunal. The Respondent at that stage had withdrawn the
application which permission had been granted to him to
address this submission at the time of final arguments. This
was vide order dated 29.05.2019. Thereafter another
application had been filed by the Respondent under Section
19(4) of the said Act which again raised a similar plea. This
application was directed to be kept in abeyance with the
objection raised in the said application to be addressed at the
time of final arguments. This was vide order dated
17.10.2019. It is not as if the Tribunal has discarded the
arguments of the Respondent or has ever given any
impression to the Respondent that his submissions will not be
heard. All arguments to be advanced by the Respondent will
be addressed by the Respondent and answered in the Award.
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No piecemeal adjudication can take place at this stage. At the
cost of repetition it is noted that no separate application
under Section 16 of the said Act has been filed. The
respondent has already addressed his arguments in part. The
Claimant has completed his arguments in the affirmative. The
trial is almost at its conclusion. This application smells and
racks of malafides. It is dismissed with cost quantified at Rs.
25,000/-.
12. The second application is termed as a formal
application filed by the Respondent where the prayer is the
issue of jurisdiction under Section 16 be decided at the first
instance.
13. Reply has been filed opposing the application.
14. The undersigned has passed a detailed order on the
first application under Section 14(1) (a) of the said Act
wherein the plea raised by the Respondent that the question of
jurisdiction be decided in the first instance has been rejected.
It is reiterated that this stage when the trial is almost
complete and no application under Section 16 of the said Act
having been filed earlier inspite of the direction contained in
the order dated 23.5.2017 this prayer cannot be acceded to.
All objections of the Respondent shall be answered in the
Award. Application dismissed."
20. Having noted the contents of the impugned order, the first and
foremost issue arising for my determination is whether, as vehemently
urged by the petitioner, the order dated 05.02.2020 can be termed as
an interim award. As per the petitioner, the learned Arbitrator's refusal
to decide the issues arising out of its objections at this stage
tantamounts to rejection of the prayers made in its application, which
is evident from a perusal of the aforesaid application and the
impugned order is, therefore, in the nature of a final determination. I
am unable to agree with this submission of the petitioner. When there
has been no determination by the learned Arbitrator on the objections
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raised by the petitioner, can it be stated that any right of the parties
was finally determined which is a pre-condition for an order to be
termed as an interim award under Section 31(6) of the Act? The
answer is a clear No. The learned Arbitrator has, in no uncertain
terms, stated in the impugned order that these objections of the
petitioner would be decided at the time of passing of the final award
and, therefore, it cannot be deemed as a 'rejection' of the petitioner's
objections. The fact however remains that there has been absolutely
no determination of the petitioner's objections at this stage. It merely
defers a final decision on the petitioner's objections, to a later stage
and, that too, for a justifiable reason; the same being that the trial was
almost about to end. That being the position, the impugned award
does not qualify as an interim award for the purpose of being
challenged under Section 34 of the Act. Reference in this regard may
be made to paragraphs 16 and 17 of Rhiti Sports (supra) which reads
as under:
"16. A plain reading of Section 32 of the Act indicates the fact
that the final award would embody the terms of the final
settlement of disputes (either by adjudication process or
otherwise) and would be a final culmination of the disputes
referred to arbitration. Section 31(6) of the Act expressly
provides that an Arbitral Tribunal may make an interim arbitral
award in any matter in respect of which it may make a final
award. Thus, plainly, before an order or a decision can be
termed as „interim award‟, it is necessary that it qualifies the
condition as specified under Section 31(6) of the Act: that is, it is
in respect of which the arbitral tribunal may make an arbitral
award.
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17. As indicated above, a final award would necessarily entail of
(i) all disputes in case no other award has been rendered earlier
in respect of any of the disputes referred to the arbitral tribunal,
or (ii) all the remaining disputes in case a partial or interim
award(s) have been entered prior to entering the final award. In
either event, the final award would necessarily (either through
adjudication or otherwise) entail the settlement of the dispute at
which the parties are at issue. It, thus, necessarily follows that
for an order to qualify as an arbitral award either as final or
interim, it must settle a matter at which the parties are at issue.
Further, it would require to be in the form as specified under
Section 31 of the Act."
21. Reference may also be made to paragraph 13 of ONGC Petro
Additions Limited (supra) which reads as under:
"13. In the present case, the impugned order does not decide
or finally dispose of any issue. Dr.Singhvi has attempted to
overcome the objection of maintainability by focusing on the
question of finality of the decision. He has also relied upon
certain decisions to contend that the right to lead evidence is
a valuable right and is inherently related to due process and
fairness in proceedings. There may not be much quarrel on
this proposition in law, however, the Court has to be mindful
of the fact that the order impugned in the present petition is
nothing but a procedural order. The Arbitral Tribunal while
passing such procedural order may determine certain
valuable rights of the parties. However, it does not mean that
such determination renders an order to be an award within
the meaning of Section 2(1)(c) of the Act. The determination
of a valuable right in any legal proceedings would not
necessarily result in an immediate actionable right. In order
to ascertain whether an order is an interim award or partial
award, the two most important factors that would weigh
upon the Court are the concept of "finality" and "issue". If
the nature of the order is "final" in a sense that it
conclusively decides an issue in the arbitration proceedings,
the order would qualify to be an interim award. This is not
the situation in the present case. The impugned order only
rejects OPaL's application for placing additional documents
on record. It does not decide an issue or the subject matter
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of adjudication between the parties. The arbitral tribunal
has only decided the question as to whether the Petitioner
would be permitted to file additional documents at a later
stage. The order impugned though conclusively determines
the application, however, it cannot be said that the subject
matter of arbitration and the rights of the parties in respect
thereof have been finally determined. One cannot ignore the
fact there is no provision under the Act that permits OPaL to
challenge a procedural order passed by the Arbitral Tribunal.
For an order to qualify as an "award", the test of finality is
undoubtedly essential, but that does not mean that any final
view of the Arbitral Tribunal would come within the ambit of
an "award". Dr.Singhvi also argued that the Courts should
always step in to advance the cause of justice. He submitted
that there may not be any case law directly dealing with
identical or similar facts but that should not prevent the Court
to adopt an incremental progressive attitude towards
development of law. The argument is outwardly attractive and
enchanting but, I feel that there are no milestones that the
Court has to accomplish. The role of the Court is to interpret
the law and apply it to the facts of the case. Imagine the
scenario, where the Court's perspective on growth in law runs
counter to the legislative intention that is in sync with the
modern trends. If the Act does not permit a challenge at this
stage, the Court would not take upon itself the burden to
adopt an approach that is perceived to be a rational one. The
Court has the bounden duty to apply the law as it exists and
not interpret it merely because it appears to be a more
satisfactory view. I cannot create an opening, if the door is
tightly shut. If the law permits an entry, only then the Court
can decide the extent for opening the door. The Courts may
advance development of law, but that cannot be achieved by
assuming the role of a legislator. Such move should be well
guarded and well considered. It is critical that Courts do not
go beyond the legislative intent. The Courts would also not
remove the deficiencies, if such are shown to exist in a
legislation. It is for the legislature to make amends. Heavy
weight of the claims does not allow the Court to lift the bar or
bend it to suit a particular view. I also have reservations to
say that permitting a challenge to final decisions on
procedural aspects would be a progressive approach. Under
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the current scheme of the Act, the intent is clear that such
matters be left for the Arbitral Tribunal to decide. The crux of
the matter regarding the question of maintainability cannot
be clouded by reasons and grounds that touch upon matters
of merits. I also cannot see any opening granted by the Court
in Cinevistaas (supra) that can be widened to allow this
petition, no matter how strong the case may be on merits."
22. In the light of these decisions and the admitted position that the
objections raised by the petitioner qua limitation and maintainability
of the claims have not been adjudicated and the rights of the parties
have not been finally determined by way of the impugned order, I
have no hesitation in holding that the same is not an interim award.
Though the present petition under Section 34 of the Act is liable to be
rejected on this short ground alone, since extensive arguments have
been made by both sides on whether or not it was mandatory for the
learned Arbitrator to decide the petitioner's challenge under Section
16 of the Act before passing the final award, I am also proceeding to
examine this aspect.
23. As noted hereinabove, one of the reasons for the learned Arbitrator to
defer a decision on the petitioner's objections was that the petitioner,
who had admittedly raised the plea of limitation in its statement of
defence filed before the learned Arbitrator in February, 2017 chose to
wait till 27.01.2020 to move an application in this regard under
Section 16 of the Act, by which time not only had both parties led
their evidence but even the respondent had concluded its final
arguments. In my view, the learned Arbitrator rightly deferred its
decision on the petitioner's objections by holding that the same was
being raised at the fag end of the trial and therefore, it would not be
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appropriate to have a piecemeal adjudication of the same. Though the
petitioner has vehemently urged that the application under Section 16
could be moved only after evidence had been led by the parties, I am
unable to agree with this submission as well. If the petitioner was
convinced that the respondent's claim was barred by limitation and
per se not maintainable on any ground whatsoever, it was incumbent
upon the petitioner to move an application to that effect at the time of
initiation of the arbitration proceedings or shortly thereafter. In this
regard, reference may be made to the observations of the Supreme
Court in paragraph 51 of its decision in MC Dermott International
(supra), which reads as under:
"51. After the 1996 Act came into force, under Section 16 of
the Act the party questioning the jurisdiction of the arbitrator
has an obligation to raise the said question before the
arbitrator. Such a question of jurisdiction could be raised if it
is beyond the scope of his authority. It was required to be
raised during arbitration proceedings or soon after initiation
thereof. The jurisdictional question is required to be
determined as a preliminary ground. A decision taken
thereupon by the arbitrator would be the subject-matter of
challenge under Section 34 of the Act. In the event the
arbitrator opined that he had no jurisdiction in relation
thereto an appeal thereagainst was provided for under
Section 37 of the Act."
24. Once it is an admitted position that the petitioner's challenge under
Section 16 of the Act was made at a stage when the trial was about to
conclude, the petitioner's action falls foul of not only the requirement
and importance of raising an objection in a timely manner, but has
even otherwise dissuaded me from interfering with the decision of the
learned Arbitrator to decide these issues at the time of rendering the
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final award. By no stretch of imagination can it be said that the
learned Arbitrator has followed a procedure unknown in law or has
given a go-by to the provisions of the CPC or the Indian Evidence
Act. Reference may also be made to Section 19(3) of the Act which
clothes the Arbitrator to conduct the proceedings in a manner which it
considers appropriate. The same reads as under:-
"19. Determination of rules of procedure.- (3) Failing any
agreement referred to in sub-section (2), the arbitral tribunal
may, subject to this Part, conduct the proceedings in the
manner it considers appropriate."
25. There is yet another reason as to why the impugned order does not
warrant interference at this stage. The scheme of the Act leaves no
manner of doubt that the Parliament, in its wisdom, has made it
abundantly clear, by way of Section 5 of the Act, that there should be
no judicial intervention in arbitral proceedings unless it is specifically
provided for in the Act. It is also settled law that the Act does not
postulate judicial interference in arbitral proceedings on a mere
allegation of bias and impartiality at the pre-award stage and all
objections in this regard can be raised after the Award has been
published. Reference in this regard may be made to Paragraphs 21 and
22 of the decision in Progressive Career Academy Pvt. (supra):
"21. In this analysis, we must immediately observe that the
approach taken by one of us (Vikramajit Sen, J.) in Interstate
Constructions is not correct as it transgresses and infracts the
provisions of the A&C Act. Learned Single Benches have
interfered and removed arbitrators obviously on pragmatic
considerations, viz. the futility and idleness of pursuing
arbitral proceedings despite lack of faith therein because of
justifiable doubts as to the independence or impartiality of the
arbitrators. Clearly, Parliament has also proceeded on the
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compelling expediency and advisability of expeditious
conclusion of these proceedings. Relief against possible
mischief has been provided by making clarification in Section
13(5) that apart from the challenges enumerated in Section
13(4), an assault on the independence or impartiality of the
Arbitral Tribunal is permissible by way of filing Objections
on this aspect after the publishing of the Award. We,
therefore, affirm the approach in Pinaki Das Gupta, Neeru
Walia, Ahluwalia Contracts (India) Ltd. and Newton
Engineering and Chemicals Ltd.. We are of the opinion that
the Single Benches who interfered with the progress of the
proceedings of the Arbitral Tribunal in the pre-Award stage
fell in error. Humans often fall prey to suspicions which may
be proved to be ill-founded on the publication of an Award.
There is compelling wisdom in Parliament's decision to allow
adjudication on grounds of bias, lack of independence or
impartiality of the Tribunal only on the culmination of the
arbitral proceedings.
22. Having arrived at the conclusion that curial
interference is not possible at the pre-Award stage on the
allegations of bias or impartiality of the Arbitral Tribunal on
the one hand, and our understanding that the Appeals are not
maintainable on the other hand, is any further relief to be
granted? We think it expedient to abjure from passing any
further orders for several reasons including - firstly, the
reality that arbitration proceedings would inevitably have
already come to an end in those instances where the
arbitrator had been removed by orders of the Court, and
secondly the availability of redress under Article 136 of the
Constitution of India. All pending applications stand disposed
of. The Referral Order is answered by reiterating that the
statute does not postulate judicial interference in arbitral
proceedings till the Award is published, whereupon
Objections can be raised also on the platform of the alleged
bias of the Tribunal. This challenge is possible provided the
grievance is articulated in consonance with Section 13 of the
A&C Act."
26. Reference may also be made to paragraphs 18 and 25 of the decision
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in MBL Infrastructures Ltd. (supra) which reads as under:-
"18. The Court in Bharat Heavy Electricals Limited v. C.N.
Garg (supra) upheld the validity of Sections 13(3) and 13(4)
of the Act and in that process explained the scheme as under:
"We have already noted that a party having grievances
against an Arbitrator on account of bias and prejudice
is not without remedy. It has only to wait till the
arbitral award comes and it can challenge the award
on various grounds including bias and prejudice on the
part of the Arbitrator. Before the stage of challenge of
award under Section 34 comes, sub-Sections (1), (2)
and (3) of Section 13 envisage a situation where the
Arbitrator may on his own recuse himself on objection
being taken qua his functioning as an Arbitrator or
where both the parties agree to his removal as per
procedure accepted by them. If both fail, the Arbitrator
is required to decide on the challenge to his
functioning as an Arbitrator levelled by a party. The
Arbitrator is expected to be a fair person and if he
finds that there is substance in the allegations, an
Arbitrator is expected to dispassionately rule on such
an objection. Failing all this the last resort for an
aggrieved party is the challenge under Section 13(5)
read with Section 34. Thus 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. We are of the considered view that
absence of a provision of removal of an Arbitrator does
not render the relevant statutory provisions invalid or
ultra vires the Constitution of India."
XXX XXX
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25. The result of the above discussion is that it is not possible
for this Court to entertain the present petition seeking
removal of the learned Arbitrator under Section 14(2) of the
Act on the ground that he has become "de-facto and de-jure"
unable to perform his function as an Arbitrator. The
Petitioner will have to await the pronouncement of the Award
and if aggrieved thereby, seek appropriate remedies under
Section 34 of the Act."
27. Once it is clear that objections regarding bias and impartiality can be
raised only at the stage of the rendering the final award, there is
absolutely no reason why procedural orders like the impugned order
deferring decision on certain issues, should be interfered with at this
stage. I have also considered the decisions relied upon by the
petitioner in McDermott (supra), Uttarakhand Purv Sainik (supra)
and Kvaerner(supra) and find that none of them are applicable to the
facts of the present case. In Uttarakhand Purv Sainik and Kvaerner,
the Court was not considering interim orders passed by the learned
Arbitrator but was, in fact, dealing with objections raised before the
Court at the time of appointment of an arbitrator. Further, in
Mcdermott, the Court laid great emphasis on raising jurisdictional
issues in a timely manner or at the earliest, by specifying that the
same ought to be raised at the time of commencement of the
arbitration proceedings or soon thereafter which, admittedly, was not
the case herein. In this regard, though the petitioner had vehemently
urged that all jurisdictional questions must necessarily be decided as
preliminary issues, I am of the view that when jurisdictional issues are
so intricately intertwined with the substantial claim that without going
into the merits of the latter, no decision can be rendered on the
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former, it is not mandatory to first decide the jurisdictional issues as
preliminary matters. In fact, it is always open to the arbitrator to
provide its decision on jurisdictional issues at the time of rendering
the final award. In any event, it is always open for the petitioner to
approach this Court in case it is aggrieved by the findings of the
Arbitrator in the final award with respect to its objections on the
grounds of maintainability and limitation; the petitioner cannot be
said to be without remedy. I have, therefore, no hesitation in holding
that the impugned order warrants no interference by this Court.
28. Now, I deal with the petitioner's plea that the learned Arbitrator has
failed to adhere to the prescribed fee schedule which is the only
additional ground in support of its case for termination of the mandate
of the learned Arbitrator. In this regard, I find merit in the
respondent's contention that the petitioner, despite having raised this
plea in her application under Section 14 of the Act, had specifically
given up this ground before the learned Arbitrator and is, therefore,
estopped from raising this plea before this Court. As a result, it is not
deemed necessary to refer to the decisions relied upon by the
petitioner in this regard in SICGIL India Limited (supra), Sahyadri
Earthmovers (supra), Parekh Industries Limited (supra) and
Gammon Engineers (supra). In these circumstances, I find no reason
to terminate the mandate of the learned Arbitrator. However, in the
light of the e-mail dated 22.02.2020 addressed by the DIAC to the
petitioner on the aspect of the arbitrator's fee, this Court hopes that
the learned Arbitrator will reconsider this aspect and refund the excess
fee, if any, to the parties.
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29. Accordingly, both the petitions, being meritless, are dismissed with no
order as to costs.
REKHA PALLI, J.
FEBRUARY 25, 2020
„sdp‟
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