Karnataka High Court

M/S Rustumji Developments vs Mrs Zeebundeh Khaleeli on 23 March, 2022

Bench: E.S.Indiresh

      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

          DATED THIS THE 23rd DAY OF MARCH, 2022

                         BEFORE

          THE HON'BLE MR. JUSTICE E.S. INDIRESH

       WRIT PETITION NO.5019 OF 2022 (GM-CPC)

BETWEEN

      1. M/S. RUSTUMJI DEVELOPMENTS
         REPRESENTED BY ITS PROPRIETOR
         MR. N H RUSTUMJI
         G-15 AND 16, RICHMOND TOWERS
         BENGALURU-560 025.

      2. MR. N H RUSTUMJI
         S/O LATE MR. HOMI RUSTUMJI
         AGED ABOUT 68 YEARS
         M/S. RUSTUMJI DEVELOPMENTS
         PROPRIETOR
         G-15 AND 16, RICHMOND TOWERS
         BENGALURU-560 025.
                                           ...PETITIONERS

(BY SRI JOSHUA HUDSON SAMUEL, ADVOCATE)

AND

      1. MRS. ZEEBUNDEH KHALEELI
         W/O MR. WUSOOQ KHALEELI
         D/O MR. AKBAR MIRZA KHALEELI
         AGED ABOUT 53 YEARS
         R/AT 11431, 35TH AVENUE
         EDMONTON ALBERTA AB T 6J2W9
         CANADA.
                       2




2. MRS.SABAH BAKHACHE
   W/O MR. ANTOINE BAKHACHE
   AGED ABOUT 52 YEARS
   R/AT C/O WILSA MALAYSIA
   60-F2-2 PLAZA DAMASA JALAN
   KULALA LUMPUR
   MALAYSIA.

3. MRS.REIHANEH YAVUR DHALA
   W/O MR.M Y DHALA
   D/O MR. AKBAR MIRZA KHALEELI
   AGED ABOUT 49 YEARS
   R/AT VILLA NOOR
   4/6, CASURINA DRIVE, NEELANKARI
   CHENNAI-600 041.

4. MS. ESMATH KHALEELI
   D/O MR. AKBAR MIRZA KHALEELI
   AGED ABOUT 45 YEARS
   R/AT NO.26/2-1, ABSHOT LAYOUT
   SANKEY ROAD
   BENGALURU-560 052.

5. MR.MIRZA ABDUL KARIM NAMAZIE
   S/O LATE MR.MIRZA
   GHULAM HUSSAIN NAMAZIE
   AGED ABOUT 78 YEARS
   R/AT NO.81, GRANGE ROAD
   SINGAPORE-249 586.

6. JUSTICE T JAYARAMA CHOUTA (RETD)
   NO.385, SANDEESH
   5TH MAIN, 11TH CROSS
   RMV EXTENSION, 2ND STAGE
   DOLLARS COLONY
   BENGALURU-560 094.

7. JUSTICE B N KRISHNA (RETD)
   NO.209, DOUBLE ROAD
                            3




       INDIRANAGAR II STAGE
       NEXT TO VALUE MART
       BENGALURU-560 038.

    8. JUSTICE N D VENKATESH (RETD)
       NO.412, 12TH MAIN
       RAJMAHAL VILAS EXTENSION
       BENGALURU-560 080.

    9. MR.ROHINTON RUSTUMJI
       S/O LATE HOMI RUSTUMJI

   10. MRS.PIRUJA H RUSTUMJI
       W/O LATE HOMI RUSTUMJI

   11. MRS. FRENY RUSTUMJI
       W/O MR.ROHINTON RUSTUMJI

   12. MRS. BEROZE P ZAL
       W/O LATE P ZAL

   13. MR. NAVROZE ZAL
       S/O LATE P ZAL

       RESPONDENT NOS. 9 TO 13 ARE
       R/AT C/O RUSTUMJI DEVELOPMENTS
       G-15 AND 16, RICHMOND TOWERS
       12, RICHMOND ROAD
       BENGALURU-560 025.
                                        ....RESPONDENTS

(BY SRI AJESH KUMAR S, ADVOCATE FOR C/R4;
SRI P B APPAIAH, ADVOCATE FOR R1 TO R3;
SRI GANESH SHIVASWAMY, ADVOCATE FOR R5;
NOTICE TO R9 TO 13 ARE DISPENSED WITH)

     THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF
THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE
IMPUGNED ORDER DATED 10TH DECEMBER, 2021 ON IA.NO.10
                                     4




PASSED IN COM.AS.NO.47 OF 2012 PENDING BEFORE THE
LXXXVIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE
(EXCLUSIVE COMMERCIAL COURT) AT BENGALURU VIDE
ANNEXURE-J AND ETC.,

    IN THIS WRIT PETITION ARGUMENTS BEING HEARD,
JUDGMENT RESERVED, COMING ON FOR "PRONOUNCEMENT OF
ORDERS", THIS DAY, THE COURT MADE THE FOLLOWING:

                                ORDER

This Writ Petition is filed by the petitioner/plaintiffs in

Com.AS. No.47 of 2012 on the file of LXXXVIII Additional City

Civil and Sessions Judge (Exclusive Commercial Court),

Bangalore, challenging the order dated 10th December, 2021

passed on IA.10 and order dated 24th January, 2022 on IAs.11

and 12, dismissing the applications with cost.

2. The relevant facts, for adjudication of this writ petition

are that, the petitioners and the respondents 1 to 5 have

entered into a Joint Development Agreement dated 01st

November, 1994 (for short hereinafter referred to as 'JDA') for

developing the schedule property and the said JDA is subject to

fulfillment of certain terms and conditions specified in the said

document. It is the case of the petitioners herein that

respondents 1 to 5 were not in agreement with regard to the

JDA and despite the same, respondents 1 to 5 have approached

the learned Arbitrators invoking terms of the arbitral provisions

for resolution of the dispute mentioned in the JDA and the

learned Arbitrators, by award dated 16th April, 2012, awarded

compensation to the respondents 1 to 5 and the said award has

been assailed before the trial Court under Section 34 of Code of

Civil Procedure in Com.AS No.47 of 2012.

3. Petitioners are the plaintiffs and respondents are the

defendants before the proceedings under Section 34 of the

Arbitration and Conciliation Act, 1996 (for short hereinafter

referred to as "Arbitration Act"). The respondent entered

appearance and filed detailed written statement. In the

meanwhile the suit was transferred to the Commercial Court in

terms of the provisions of Commercial Courts Act, 2015. Before

the Commercial Court, the petitioners herein have filed IA.10

under Order XI Rule 16 Code of Civil Procedure, for issuance of

summons to the persons mentioned in the application to produce

the plan and to give evidence regarding the building plans

prepared by them. The petitioners have also filed IA.11 under

Section 151 of Code of Civil Procedure read with Section 16 of

the Commercial Courts Act, to reopen the case for further

evidence of plaintiff, so also, filed another application in IA.12

under Order XVIII Rule 17 of Code of Civil Procedure for recall of

PW1 to adduce further evidence in the suit. The said

applications were resisted by the respondents herein. The trial

Court, by impugned order dated 10th December, 2021, dismissed

IA.10 with cost and by order dated 24th January, 2022 dismissed

IAs.11 and 12 and posted the matter for final arguments. Being

aggrieved by the dismissal of applications, petitioners have

presented this writ petition challenging the aforementioned

orders.

2. I have heard Sri Joshua Hudson Samuel, learned

counsel appearing for the petitioner and Sri Ajesh Kumar S,

learned counsel for caveator/respondent No.4, Sri P.B. Appaiah,

learned counsel appearing for the respondents 1 to 3; and Sri

Ganesh Shivaswamy, learned counsel appearing for respondent

No.5.

3. Sri Joshua Hudson Samuel, learned counsel appearing

for the petitioners argued that the trial Court, while passing the

impugned orders has observed certain aspects which would

prejudice the issues formulated in the suit. The said findings in

the impugned orders would affect the finding on the merits of

the application under Section 34 of the Arbitration Act. He

further contended that though the scope of Section 34 of the

Arbitration Act is limited, however, the trial Court, though

permitted the parties to lead evidence, ironically, dismissed the

applications seeking presence of the Architects to produce the

original plans which are essential to resolve the dispute between

the parties. Referring to the evidence of DW1 and DW2, Sri

Joshua Samuel contended that these witnesses have admitted

that they have received the plans sent by the petitioners herein

and these plans were marked before the Arbitral Tribunal as

Exhibits C61 to C68. In furtherance of the same, he referred to

the evidence of DW1 and argued that the first defendant had

sent an e-mail dated 09th October, 2005 to the plaintiff (Exhibit

R9) and DW1 admits that the plans sent were relating to the

schedule property and received the same. He also invited the

attention of court to the evidence of PW1, who had categorically

deposed that he sent Exhibits C61 to C68 to DW2 for their

consent and therefore, the learned counsel appearing for the

petitioner contended that the trial Court ought to have

considered the said aspects, despite proof is required regarding

grounds available under Section 34(2) of the Arbitration Act. Sri

Samuel, further contended that, the development plans were

drawn up in the year 2005 by one Mr. A.R. Ravindra Kumar,

Architect and same was made available to all the owners through

courier (Annexure-E) and same was sent through e-mail

(Annexure-D) and same has been acknowledged by the

defendants and in this regard, DW2 deposed that she made

efforts to trace the same and therefore, summoning of the

witnesses referred to in the application would, in a larger extent,

resolve the issue and controversy and enable the Court to decide

the matter equitably and therefore, he submitted that the

rejection of the applications by the trial Court is bad in law.

Referring to the affidavit filed along with the applications, Sri

Samuel submitted that during 1995, Mr. V.D.Giridhar, Architect,

had drawn up the development plans and same were made

available to the owners and the deposition of the Architect would

be of great assistance to resolve the dispute under Section 34 of

the Arbitration Act. To buttress his arguments on these issues,

he referred to the following judgments:

1) STATE OF CHHATISGARH v. SAL UDYOG (P) LTD.

[2022(2) SCC 275];

2) CANARA NIDHI LTD. v. M SHASHIKALA [(2019)9 SCC 462];

3) EMKAY GLOBAL FINANCIAL SERVICES LTD. v.

GIRDHAR SONDHI [(2018)9 SCC 49]

4. Per contra, Sri Appaiah, learned Counsel appearing for

respondents 1 and 3 contended that the evidence permitted to

be given under Section 34 of the Arbitration Act is to establish

that the Arbitral award under challenge suffers from infirmities

and illegality. He further contended that the petitioners had

already let their evidence and respondent had also deposed

before the Court and thereafter, the petitioners herein filed

applications IA.10, 11 and 12, which cannot be permitted to

bring in new witnesses who have not been examined before the

Arbitral Tribunal. Emphasising on application IA.10 filed by the

petitioners herein before the trial Court, Sri Appaiah argued that

the said application has been filed at the belated stage and after

completion of the evidence of parties and therefore, issuance of

summons to the witnesses to depose in the matter does

encroach the umbrella of Section 34 of the Arbitration Act.

Referring to the JDA, he argued that the petitioners were under

obligation to prepare the building plan within a period of 180

days from the date of the JDA and to submit the same to the

BBMP for sanctioning building plans and these aspects are well

within the knowledge of the petitioners and the petitioners ought

to have taken steps to summon the required witnesses to

produce the said building plan, which had been prepared in the

year 1995 and 2005, much before leading evidence by the

petitioners before the Arbitral Tribunal and therefore, seeking

reopening of the case at the stage of completion of evidence,

does not arise. Referring to the deposition of RW1, Sri Appaiah

submitted that RW1 admitted that Exhibits C61 to C68 had been

sent to the respondent and therefore, sought to justify the

impugned order passed by the trial Court. He further contended

that the impugned orders passed by the trial Court is just and

proper and do not call for interference by this Court enlarging

the scope of Section 34 of the Arbitration Act. Nextly, Sri

Appaiah submitted that Exhibits C61 to C68 are marked before

the Arbitral Tribunal by confronting the same to RW1 during his

cross examination and these documents are only building plans

purported to have been got prepared by the petitioners through

their Architects and therefore, the trial Court is justified in

rejecting the application made by the petitioners. In this regard,

he referred to paragraphs 14 and 15 of the affidavit evidence

filed by the petitioner and argued that the contents of the

affidavit is self-explanatory. He also emphasised on paragraph

40 of the cross-examination of the petitioners. Further, he

referred to points 5, 7 and 15 framed by the Arbitral Tribunal for

determination of issues involved in the dispute and argued that

the trial Court, having taken note of the entire aspect of the

matter, rejected the applications and same cannot be interfered

with in this writ petition. To buttress his arguments, Sri

Appaiah, relied upon the decision of the Hon'ble Supreme Court

in the case of EMKAY GLOBAL FINANCIAL SERVICES LIMITED v.

GIRDHAR SONDHI, reported in (2018) 9 SCC 49 and placing

reliance on paragraph 21 of the judgment, he contended that the

Writ Petition deserves to be rejected.

5. Sri Ajesh Kumar, learned counsel appearing for

respondent No.4 raised preliminary objection with regard to the

maintainability of the Writ Petition and argued that the writ

petition is not maintainable. Referring to the contentions raised

by counsel for petitioners, Sri Ajesh Kumar contended that the

petitioners cannot convert Section 34 of the Arbitration Act into

Section 96 of Code of Civil Procedure and the conduct of the

petitioners does not merit to accept the applications filed before

the trial Court. Referring to the order dated 01st August, 2019

passed by this Court in Writ Petition No.28160 of 2019, Sri Ajesh

Kumar submitted that the petitioners are protracting the

proceedings by filing repeated applications, despite this court

directing the trial Court to dispose of the matter at the earliest

and within an outer limit of four months; and he further argued

that the said applications have been filed at the belated stage,

that too, when the matter was posted for arguments. Therefore,

he contended that the applications have been rightly rejected by

the trial Court. In this regard, he relied upon the judgment the

Hon'ble Apex Court in the case of PUNJAB STATE CIVIL

SUPPLIES CORPORATION LIMITED AND ANOTHER v. M/S.

RAMESH KUMAR AND COMPANY AND OTHERS in Civil Appeal

No.6832 of 2021 decided on 13th November, 2021.

6. Sri Ganesh Shivaswamy, learned counsel appearing for

respondent No.5 adopts the submission of Sri Appaiah, learned

counsel appearing for respondents 1 to 3 on merits of the case,

however, submitted that the writ petition is maintainable.

7. In reply to the arguments advanced by the learned

counsel appearing for the respondents, Sri Joshua Hudson

Samuel, learned counsel appearing for the petitioners argued

that the impugned orders passed in applications IA.10, 11 and

12, do not fall under the provisions of Order XLIII of the Code of

Civil Procedure and therefore, Section 8 of the Commercial

Courts Act cannot over ride the Constitutional right provided

under Article 227 of the Constitution of India. Refuting the

contention of Sri Ajesh Kumar, learned counsel appearing for the

respondents 1 to 3, Sri Samuel places reliance on Judgment of

Delhi High Court rendered in the case of BLACK DIAMOND

TRACKPARTS PVT. LIMITED AND OTHERS v. BLACK DIAMOND

MOTORS PVT. LIMITED made in CM(M) 132 of 2021; and in CM

No.5689 of 2021 decided on 10th August, 2021 and the order

dated 19th July, 2021 passed by the Division Bench of this Court

in Com.AP No.99 of 2021 in the case of M/S. UMRAH

DEVELOLPERS v. SRI P. KRISHNA REDDY AND ANOTHER and

submitted that the Writ Petition is maintainable before this

Court.

8. In the light of the submissions made by the learned

counsel appearing for the parties, points that arise for

consideration in this writ petition are:

(i) Whether the writ petition is maintainable against

the impugned Order passed in Com.AS No.47 of

2012 on the file of the trial Court? and

(ii) Whether the petitioner made out a case for

interference in the impugned order passed by

the Court below?

9. I have heard the submission made by the learned

counsel appearing for the parties at length. Undisputed facts are

that the parties to the writ petition have entered into JDA dated

01st November, 1994 for developing the property mentioned in

the JDA. Respondents 1 to 5 terminated the JDA on the ground

of failure on the part of the petitioners herein to fulfill the terms

and conditions. In terms of the arbitration clause in the JDA,

respondents 1 to 5 have approached the Arbitral Tribunal.

Parties let evidence before the Arbitral Tribunal; documents were

marked. The Arbitral Tribunal, by award dated 16th April, 2012

held that the termination of JDA was valid and being aggrieved

by the same, petitioners herein have filed Com.AS No.47 of 2012

before the trial Court under Section 34 of the Arbitration Act.

Before the trial Court, parties let evidence and produced

documents. During the interregnum of hearing, when the

matter came to be posted for arguments, the plaintiff/petitioners

have filed IA.10 (Annexure-G) under Order XI and Order XVI of

Code of Civil Procedure read with the provisions of Commercial

Courts Act, 2015 seeking issuance of summons to the persons

mentioned in the application to give evidence and to produce

documents, which is in their possession, more particularly, the

building plans, and payments received from the

plaintiff/petitioner. The plaintiff/petitioners have also filed IA.11

(Annexure-K) under Section 151 Code of Civil Procedure read

with Section 16 of the Commercial Courts Act, to reopen the

case for further evidence of plaintiff by recalling the order dated

10th December, 2021. The plaintiff/petitioners have also filed

IA.12 under Order XVIII Rule 17 read section 151 of Code of

Civil Procedure read with Section 16 of the Commercial Courts

Act, seeking recalling PW1 to adduce further evidence in the suit.

The trial Court, by impugned order dated 10th December, 2021

dismissed IA.10 and by order dated 24th January, 2022

dismissed IAs.11 and 12. These orders are impugned in this

Writ Petition.

10. In view of the arguments raised by Sri Ajesh Kumar

relating to maintainability of the Writ Petition, I have carefully

considered the judgment passed by Delhi High Court in the case

of BLACK DIAMOND (supra). In the said judgment at

paragraphs 30 and 31, it is observed thus:

"30. We are of the view that once the Commercial Courts Act has expressly barred the remedy of a revision application under Section 115 of CM(M) Nos.132/2021 & 225/2021 Page 16 of 18 the CPC, with respect to the suits within its ambit, the purpose thereof cannot be permitted to be defeated by opening up the gates of Article 227 of the Constitution of India. The scope and ambit of a petition under Article 227 is much wider than the scope and ambit of a revision application under Section 115 of the CPC; whatever can be done in exercise of powers under Section 115 of the CPC, can also be done in exercise of powers under Article 227 of the Constitution. Allowing petitions under Article 227 to be preferred even against orders against which a revision application under Section 115 CPC would have been maintainable but for the bar of Section 8 of the Commercial Courts Act, would nullify the legislative mandate of the Commercial Courts Act. Recently, in Deep Industries Limited Vs. Oil and Natural Gas Corporation Limited (2020) 15 SCC 706, in the context of petitions under Article 227 of the Constitution of India with respect to orders in an appeal against an order of the Arbitral Tribunal under Section 17 of the Arbitration & Conciliation Act, 1996, it was held that if petitions under Article 226 / 227 of the Constitution against orders passed in appeals under the Arbitration Act were entertained, the entire arbitral process would be derailed and would not come to fruition for many years. It was observed that though Article 227

is a constitutional provision which remains untouched by an non-obstante Clause 5 of the Arbitration Act but what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing First Appeals under the Arbitration Act, yet the High Court would be extremely circumspect in interfering with the same taking into account the statutory policy, so that interference is restricted to orders which are patently lacking in inherent jurisdiction. Thus, though we are of the view that gates of Article 227 CM(M) Nos.132/2021 & 225/2021 Page 17 of 18 ought not to be opened with respect to orders in commercial suits at the level of the District Judge against which a revision application under Code of Civil Procedure was maintainable but which remedy has been taken away by the Commercial Courts Act, but abiding by the judgments aforesaid, hold that it cannot be said to be the law that jurisdiction under Article 227 is completely barred. However the said jurisdiction is to be exercised very sparingly and more sparingly with respect to orders in such suits which under the CPC were revisable and which remedy has been taken away by a subsequent legislation i.e. the Commercial Courts Act, and ensuring that such exercise of jurisdiction by the High Court does not negate the legislative intent and purpose behind the Commercial Courts Act and does not come in the way of expeditious disposal of commercial suits.

31. We thus hold the petition under Article 227 of the Constitution of India to be maintainable with respect to

the order impugned in CM(M) No.132/2021. However the discretion, whether in the facts and circumstances such petition is to be entertained or not, having under the roster been vested in the Single Judge, we leave it to the Single Judge to exercise such discretion."

11. It is also relevant to extract paragraph 7 of the

judgment in the case of UMRAH DEVELOPERS (supra), which

reads thus:

"7. When an order of return of plaint is passed under Rule 10 of Order VII of Code of Civil Procedure, the court directs return of the plaint to the plaintiff for presentation to proper court. In this case, there is no such order passed by the learned Judge of the Commercial Court under the impugned judgment and order. The impugned order is not appealable under any of the clauses of Rule 1 of Order XLIII of CPC. Therefore, in view of the proviso to sub-section (1A) of Section 13 of the Commercial Courts Act, this appeal is not maintainable."

12. Following the aforementioned decisions, I am of the

view that if the writ petition filed by the petitioner herein is not

accepted, the petitioner will be left remediless under the statute

and that apart, this Court is having a supervisory jurisdiction

against the Commercial Courts under Section 8 of the

Commercial Courts Act and in that view of the matter, the writ

petition is maintainable. In fact, the learned counsel Sri Ganesh

Shivaswamy, learned counsel appearing for the respondent No.5

supported the case of the petitioners with regard to

maintainability of the petition. Taking note of the

aforementioned aspects and law on the issue relating to

maintainability of the writ petition, I am of the view that the

present Writ Petition filed by the writ petitioner is to be

accepted. Accordingly, point No.1 framed above, is answered in

favor of the petitioners.

13. As regards point No.2 that arise for consideration is

concerned, after considering the arguments advanced by the

learned counsel appearing for the parties on the merits of the

applications, I have carefully examined the impugned orders

passed by the trial Court. At this juncture, it is relevant to

extract the provisions contemplated under Section 34 of the

Arbitration Act. The same reads thus:

"34. Application for setting aside arbitral award. --

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if--

(a) the party making the application furnishes proof that--

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not

submitted to arbitration may be set aside;

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that--

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation. --Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the

Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award."

14. Undisputably, the issue involved in this writ petition

is to be resolved through the provisions of the Arbitration Act

prior to 2015 amendment and therefore, it is useful to refer to

the dictum of Hon'ble Apex Court in respect of jurisdiction of the

trial Court under Section 34 of the Arbitration Act. In the case of

FIZA DEVELOPERS & INTER-TRADE P. LTD. v. AMCI (I) PVT LTD.

AND ANOTHER reported in (2009) 17 SCC 796, the Hon'ble

Supreme Court held that the issues need not be framed at the

stage of hearing a Section 34 application, which is a summary

procedure. The Hon'ble Apex Court, in the case of EMKAY

GLOBAL FINANCIAL SERVICES LIMITED (supra), held that the

scope of interference of the Civil Court under Section 34 of the

Arbitration Act is very limited and the proceedings are summary

in nature. It is useful to extract paragraph 21 of the said

judgment, which reads as under:

"21. It will thus be seen that speedy resolution of arbitral disputes has been the reason for enacting the 1996 Act, and continues to be the reason for adding amendments to the said Act to strengthen the aforesaid object. Quite obviously, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. It is also on the cards that if Bill No.100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments, cited by us hereinabove, correctly reflect the position in law as to furnishing proof under Section 34(2)(a). So does the Calcutta High Court judgment (supra). We may hasten to add that if the procedure followed by the Punjab and Haryana High Court judgment (supra) is to be adhered to, the time limit of one year would only be observed in most cases in the breach. We therefore overrule the said decision. We are constrained to observe that Fiza Developers (supra) was a step in the right direction as its ultimate ratio is that issues need not

be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Section 34(5) and 34(6). So read, we clarify the legal position by stating that an application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the Arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross- examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. We, therefore, set aside the judgment of the Delhi High Court and reinstate that of the learned Additional District Judge dated 22.09.2016. The appeal is accordingly allowed with no order as to costs.."

15. In the case of SMT. KINNARI MULLICK AND ANR v.

GHANSHYAM DAS DAMANI AND ANOTHER reported in (2018)11

SCC 328, the Hon'ble Apex Court, at paragraphs 15 and 16 of

the judgment, has held thus:

"15. On a bare reading of this provision, it is amply clear that the Court can defer the hearing of the

application filed under Section 34 for setting aside the award on a written request made by a party to the arbitration proceedings to facilitate the Arbitral Tribunal by resuming the arbitral proceedings or to take such other action as in the opinion of Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. The quintessence for exercising power under this provision is that the arbitral award has not been set aside. Further, the challenge to the said award has been set up under Section 34 about the deficiencies in the arbitral award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award. No power has been invested by the Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in sub-section 4 of Section 34. This legal position has been expounded in the case of McDermott International Inc. (supra). In paragraph 8 of the said decision, the Court observed thus:

"8.....parliament has not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under sub-section (4) of Section 34 of the Act. The object of sub-section (4) of Section 34 of the Act is to give an opportunity to the arbitral tribunal to resume the arbitral proceedings or to enable it to take such other action which will eliminate the grounds for setting aside the arbitral award."

16. In any case, the limited discretion available to the Court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. It is crystal clear that the Court cannot exercise this limited power of deferring the proceedings before it suo moto. Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. For, consequent to disposal of the main proceedings under Section 34 of the Act by the Court, it would become functus officio. In other words, the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court."

16. The Hon'ble Apex Court in the case of CANARA

NIDHI LIMITED v. M. SHASHIKALA AND OTHERS reported in

(2019) 9 SCC 462, held that the interference of the trial Court in

the proceedings under Section 34 of the Act is minimal in nature.

Hon'ble Apex Court at paragraph 17 of judgment, after referring

to EMKAY GLOBAL FINANCIAL SERVICES LIMITED case, has held

that "the legal position is thus clarified that Section 34

application will not ordinarily require anything beyond the record

that was before the arbitrator and that cross-examination of

person swearing in to the affidavits should not be allowed unless

absolutely necessary." In this regard it is also useful to extract

the observation made at paragraphs 19 and 20 of the judgment.

The same read thus:

"19. By perusal of the award, it is seen that before the arbitrator, respondent No.1 filed her written statement and other respondents also filed separate written statements. It was contended that the documents were forged. Both parties adduced oral and documentary evidence. The appellant led evidence by examining two witnesses Balakrishna Nayak (PW-1) and B.A. Baliga (PW-

2) and exhibited documents P1 to P47. Respondent Nos.1 and 2 also examined five witnesses viz. M. Shashikala (RW-1), Mamatha @ Mumtaz Hameed (RW-2), Latha (RW-3), Chitralekha Umesh (RW-4) and B.R. Nagesh (RW-5). Respondent Nos.1 and 2 also produced documentary evidence Ex.-R1 to R13. As held by the District Judge, the grounds urged in the application can very well be considered by the evidence adduced in the arbitration proceedings and considering the arbitral award. Further, the application filed by respondent Nos.1 and 2 seeking permission to adduce evidence, no ground was made out as to the necessity of adducing evidence and what was the nature of the evidence sought to be led

by respondent Nos.1 and 2. The proceedings under Section 34 of the Act are summary proceedings and is not in the nature of a regular suit. By adding sub- sections (5) and (6) to Section 34 of the Act, the Act has specified the time period of one year for disposal of the application under Section 34 of the Act. The object of sub-sections (5) and (6) to Section 34 fixing time frame to dispose of the matter filed under Section 34 of the Arbitration Act, 1996 is to avoid delay and to dispose of the application expeditiously and in any event within a period of one year from the date of which the notice referred to in Section 34(5) of the Act is served upon the other party. In the arbitration proceedings, the parties had sufficient opportunity to adduce oral and documentary evidence. The High Court did not keep in view that respondent Nos.1 and 2 have not made out grounds that it is an exceptional case to permit them to adduce evidence in the application under Section 34 of the Act. The said directions of the High Court amount to retrial on the merits of the issues decided by the arbitrator. When the order of the District Judge dismissing the application filed by respondent Nos.1 and 2 does not suffer from perversity, the High Court, in exercise of its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India, ought not to have interfered with the order passed by the District Judge and the impugned judgment cannot be sustained.

20. In the result, the impugned judgment dated 12.09.2014 passed by the High Court of Karnataka at Bangalore in Writ Petition Nos.18374-75 of 2010 (GM- RES) is set aside and these appeals are allowed. The order of the District Judge dismissing the application filed under Section 151 CPC in AS No.1 of 2008 is affirmed. The learned District Judge shall take up AS No.1 of 2008 and dispose of the same expeditiously in accordance with law. No costs.

(emphasis supplied)

17. Though the decisions in the case of EMKAY GLOBAL

FINANCIAL SERVICES LIMITED and in the case of CANARA NIDHI

(supra) are judgments rendered by the Hon'ble Supreme Court

post amendment to Arbitration Act, however, the scope of

interference by the trial Court under Section 34 of the Arbitration

Act has not changed the scenario. The ratio laid down by the

Hon'ble Apex Court prior to amendment have been given effect

to through Amendment during 2015 and therefore, no much

distinction could be made in this aspect.

18. Hon'ble Apex Court in the case of BHAVEN

CONSTRUCTION v. EXECUTIVE ENGINEER, SARDAR SAROVAR

NARMADA NIGAM LIMITED AND ANOTHER made in Civil Appeal

No.14665 of 2015 decided on 06th January, 2021, at paragraphs

16 to 21 of the judgment, has observed thus:

"16. Thereafter, respondent No.1 chose to impugn the order passed by the arbitrator under Section 16(2) of the Arbitration Act through a petition under Article 226/227 of the Indian constitution. In the usual course, the Arbitration Act provides for a mechanism of challenge under Section 34. The opening phase of Section 34 reads as 'Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3)'. The use of term 'only' as occurring under the provision serves tow purposes of making the enactment a complete code an lay down the procedure.

17. In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337, this Court referred to several judgments and held:

"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by

parliamentary legislation - L. Chandra Kumar v.

Union of India, (1997) 3 SCC 261. However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/ instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient.

18. In this context we may observe M/s. Deep Industries Limited v. Oil and Natural Gas Corporation Limited, (2019) SCC Online SC 1602, wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analyzed as under:

15. Most significant of all is the non-obstante clause contained in Section 5 which states that notwithstanding anything contained in any other

law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act)

16. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non- obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."

19. In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or 'bad faith' on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits,

which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending.

20. Viewed from a different perspective, the arbitral process is strictly conditioned upon time limitation and modeled on the 'principle of unbreakability'. This Court in P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445, observed:

36.3. Third, Section 34(3) reflects the principle of unbreakability. Dr Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd Edn., observed:

"An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if a party has made a request for correction or interpretation of the award under Article 33 does the time-limit of three months begin after the tribunal has disposed of the request. This exception from the three-

month time-limit was subject to criticism in the working group due to fears that it could be used as a delaying tactics. However, although "an unbreakable time-limit for applications for setting aside" was sought as being desirable for the sake of "certainty and expediency" the prevailing view was that the words ought to be retained "since they presented the reasonable consequence of Article 33".

According to this "unbreakability" of time- limit and true to the "certainty and

expediency" of the arbitral awards, any grounds for setting aside the award that emerge after the three-month time-limit has expired cannot be raised.

37. Extending Section 17 of the Limitation Act would go contrary to the principle of "unbreakability" enshrined under Section 34(3) of the Arbitration Act.

If the Courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished.

21. The High Court did not appreciate the limitations under Articles 226 and 227 of the Constitution and reasoned that the Appellant had undertaken to appoint an arbitrator unilaterally, thereby rendering the Respondent No. 1 remediless. However, a plain reading of the arbitration agreement points to the fact that the Appellant herein had actually acted in accordance with the procedure laid down without any mala fides."

19. Hon'ble Supreme Court in the case of KANDLA

EXPORT CORPORATION AND ANOTHER v. OCI CORPORATION

AND ANOTHER reported in (2018)14 SCC 715, has held thus:

"28. The matter can be looked at from a slightly different angle. Given the objects of both the statutes, it is clear that arbitration itself is meant to be a speedy

resolution of disputes between parties. Equally, enforcement of foreign awards should take place as soon as possible if India is to remain as an equal partner, commercially speaking, in the international community. In point of fact, the raison d'être for the enactment of the Commercial Courts Act is that commercial disputes involving high amounts of money should be speedily decided. Given the objects of both the enactments, if we were to provide an additional appeal, when Section 50 does away with an appeal so as to speedily enforce foreign awards, we would be turning the Arbitration Act and the Commercial Courts Act on their heads.

Admittedly, if the amount contained in a foreign award to be enforced in India were less than Rs. one crore, and a Single Judge of a High Court were to enforce such award, no appeal would lie, in keeping with the object of speedy enforcement of foreign awards. However, if, in the same fact circumstance, a foreign award were to be for Rs.one crore or more, if the Appellants are correct, enforcement of such award would be further delayed by providing an appeal under Section 13(1) of the Commercial Courts Act. Any such interpretation would lead to absurdity, and would be directly contrary to the object sought to be achieved by the Commercial Courts Act, viz., speedy resolution of disputes of a commercial nature involving a sum of Rs.1 crore and over. For this reason also, we feel that Section 13(1) of the Commercial Courts Act must be construed in accordance with the object sought to be achieved by the Act. Any construction of Section 13 of the

Commercial Courts Act, which would lead to further delay, instead of an expeditious enforcement of a foreign award must, therefore, be eschewed. Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving effect to the special statute i.e. the Arbitration Act, vis-à-vis the more general statute, namely the Commercial Courts Act, being left to operate in spheres other than arbitration."

20. The Hon'ble Supreme Court in the case of PUNJAB

STATE CIVIL SUPPLIES CORPORATION LIMITED AND ANOTHER

(supra), at paragraph 11 of the judgment, has held thus:

"While considering a petition under Section 34 of the 1996 Act, it is well-settled that the Court does not act as an appellate forum. The grounds on which interference with an arbitral award is contemplated are structured by the provisions of Section 34. The District Judge had correctly come to the conclusion that there was no warrant for interference with the arbitral award under Section 34. The High Court seems to have proceeded as if it was exercising jurisdiction in a regular first appeal from a decree in a civil suit. The jurisdiction in a first appeal arising out of a decree in a civil suit is distinct from the jurisdiction of the High Court under Section 37 of the 1996 Act arising from the disposal of a petition challenging an arbitral award under Section 34 of the 1996 Act."

21. Having referred to the aforementioned decisions of the

Hon'ble Apex Court, the grundnorm is that the power of the civil

court under Section 34 of the Arbitration Act is circumscribed

with provisions contained under Section 34(2) of the Arbitration

Act. Taking into consideration the arguments advanced by the

learned counsel appearing for the petitioners on IAs.10, 11 and

12, I have examined the award made by the Arbitral Tribunal

only for consideration of the points that raised in this Writ

Petition. The Arbitral Tribunal framed points 5, 7 and 15 for

determination, which are related to obligation on the part of the

petitioners herein under the JDA dated 01st November, 1994.

Perusal of the same would substantiate that the petitioners were