Corp. Ltd. vs . M/S Garg Dal And Besan Mills A/W
2023 Latest Caselaw 15825 HP

The Managing Director, H.P. State Civil supplies Corp. Ltd. Vs. M/S Garg Dal and Besan Mills a/w connected matters

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Arb. Case No. 69 of 2015 and 28 of 2016

Arb. Case No. 69 of 2015

10.10.2023 Present: Mr. Atul Jhingan, Advocate, for the applicant/claimant.

Mr. Prashant Sharma, Advocate, for the respondent/non-claimant.

Arb. Case No. 28 of 2016

Mr. Prashant Sharma, Advocate, for the applicant/claimant

Mr. Atul Jhingan, Advocate, for the

respondent/non-claimant.

During the course of hearing, it has been

pointed out that as per para 1(i) of the Award dated 3rd

June, 2015 the present claim petitions were filed for the

recovery of ₹47,71,450.25 (Rupees Forty Seven Lakhs,

Seventy One Thousand Four Hundred Fifty and Paisa

Twenty Five only) and interest @18% per annum, which

lies within the pecuniary jurisdiction of learned District

Judge, after the enhancement of the pecuniary

jurisdiction. Therefore, the matter is required to be

remitted to the learned District Judge, Shimla for its

disposal as per the law.

2. It appears from the Award that the learned

Arbitrator was appointed by Hon'ble the Chief Justice in

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exercise of the power under Section 6(11) of the

Arbitration and Conciliation Act, 1996.

3. The jurisdiction of the learned District Judges

has been increased to rupees One Crore, therefore, the

claim petition would be maintainable before the learned

District Judge, as the learned District Judge is the

Principal Court of original jurisdiction for claims up to

rupees one crore. It was laid down by the Hon'ble

Supreme Court in Garhwal Mandal Vikas Nigam Ltd. v.

Krishna Travel Agency, (2008) 6 SCC 741 that even if the

Arbitrator is appointed by the High Court, the Principal

Court of original jurisdiction will be the District Judge

and not the High Court. It was observed:-

"7. As against this, learned counsel for the respondent applicant has invited our attention to the decision in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. [(2004) 1 SCC 540] In this judgment, both these decisions were considered by Their Lordships and after reference to both these decisions by this Court and a reference to the 1996 Act, Their Lordships observed: (SCC p. 545, para 9) "9. ... In regard to the forum before which the application for modification or setting aside the award is concerned, we find no difficulty in coming to the conclusion that in view of the provisions of Section 34 read with Section 2(1)(e) of the 1996 Act it is not this Court which has the jurisdiction to entertain an application for modification of the award and it could only be the Principal Civil Court of

Original Jurisdiction as contemplated under Section 2(1)(e) of the Act, therefore, in our opinion, this application is not maintainable before this Court."

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This judgment was followed subsequently in State of Goa v. Western Builders [(2006) 6 SCC 239] to which one of us (Hon'ble Mr Justice A.K. Mathur)

was a party, it was observed: (SCC pp. 247-48, para 21) "21. In National Aluminium Co.

                Ltd. v. Pressteel    &     Fabrications     (P)





                Ltd. [(2004)      1   SCC   540]     unilateral

appointment of the arbitrator under the Arbitration Act, 1940 was challenged. This Court in the said appeal after hearing the r parties appointed a sole arbitrator. Before

the sole arbitrator both parties by consent agreed that the proceedings should be governed by the provisions of the Arbitration and Conciliation Act, 1996. The

arbitrator proceeded on that basis and gave a final award. That final award was challenged. The question arose whether the

proceeding shall be governed by the 1940 Act or by the 1996 Act? And which is the

appropriate court. The dispute prolonged for nearly 16 years. This Court dismissed the appeal and held that in the present case,

proceedings should go on under the provisions of the Act, 1996 though the dispute arose prior to coming into force of the Act, 1996, the appropriate forum for challenging the award under Section 34 was the Principal Civil Court of Original Jurisdiction as contemplated under Section 2(1)(e) of the Act, 1996."

8. Apart from these four cases, which have been brought to our notice, the position of law is very clear that in case the argument of the learned counsel is accepted, that would mean that in every case where this Court passes an order, be it on appeal from the order passed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, this Court will become a Principal Civil Court of Original Jurisdiction. If the

argument is further taken to its logical conclusion that would mean that the parties will have to approach this Court by making an application

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under Section 34 i.e. for setting aside the award.

The expression "court" used in Section 34 of the Act will also have to be understood ignoring the

definition of "court" in the Act.

9. There is another facet of the problem. The party will be deprived of the right to file an appeal under Section 37(1(b) of the Arbitration and

Conciliation Act. This means that a valuable right of appeal will be lost. Therefore, in the scheme of things, the submission of the learned counsel cannot be accepted. Taking this argument to a

further logical conclusion, when the appointment

is made by the High Court under Section 11(6) of the Arbitration and Conciliation Act, then in that case, in every appointment made by the High Court in the exercise of its power under Section

11(6), the High Court will become the Principal Civil Court of Original Jurisdiction, as defined in Section 2(1)(e) of the 1996 Act. That is certainly

not the intention of the legislature. Once an arbitrator is appointed then the appropriate

forum for filing the award and for challenging the same, will be the Principal Civil Court of Original Jurisdiction. Thus, the parties will have the right

to move under Section 34 of the 1996 Act and to appeal under Section 37 of the 1996 Act. Therefore, in the scheme of things, if the appointment is made by the High Court or by this Court, the Principal Civil Court of Original Jurisdiction remains the same as contemplated under Section 2(1)(e) of the 1996 Act.

10. We further reiterate that the view taken by this Court in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd. [(2004) 1 SCC 540] and State of Goa v. Western Builders [(2006) 6 SCC 239] is the correct approach and we reaffirm the view that in case any appointment of arbitrator is made by the High Court under Section 11(6), the Principal Civil Court of Original Jurisdiction remains the District Court and not the High Court, and likewise, if an appointment of the arbitrator is made by this

Court, in that case also, the objection can only be filed before the Principal Civil Court of Original Jurisdiction as defined in Section 2(1)(e) of the

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1996 Act. Thus, in this view of the matter, we hold

that the plea raised by learned counsel for the petitioner that this Court should entertain the

award given by the arbitrator appointed by this Court and all objections to it should be disposed of by this Court is unacceptable and consequently, the prayer made in the application is rejected."

4.

The Arbitral Tribunal has held its proceedings

at Shimla; therefore, the learned District Judge, Shimla

will have the jurisdiction to try and entertain the present

applications. Hence, the applications are assigned to

learned District Judge, Shimla for disposal as per law.

5. The parties through their respective counsel

are directed to remain present before the Court of learned

District Judge, Shimla on 03.11.2023. The record be sent

forthwith so as to reach before the Court of District

learned Judge, Shimla well before the date fixed.

(Rakesh Kainthla) Judge

October 10, 2023 (ravinder)