Madras High Court
P.Krishnan vs M.Ramachandran on 15 July, 2021
CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON: 06.09.2021
PRONOUNCED ON : 13.09.2021
CORAM
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
P.Krishnan ... Petitioner
..Vs..
1.M.Ramachandran
2.Inbavijayan
Advocate ... Respondents
Prayer: Civil Revision Petition filed under Article 227 of the Constitution
of India against the arbitral award in ACP (MR & PK) 1 of 2019 dated
15.07.2021 on the file of the Sole Arbitrator, Mr.Inbavijayan, Advocate.
For Petitioner : Mr.V.Raghavachari,
for Mr.Abhinav Parthasarathy
For Respondent 1 : Mr.P.H.Arvindh Pandian, Senior counsel
for Mr.D.Srinivasaraghavan
JUDGMENT
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This civil revision petition has been filed under Article 227 of the
Constitution of India on the ground that without there being an arbitration
agreement, the second respondent Arbitrator has exercised jurisdiction
under a memorandum of understanding allegedly entered into between the
petitioner and the first respondent on 28.12.2017.
2. It is the case of the petitioner that there is no arbitration clause
under the aforementioned memorandum of understanding dated 28.12.2017
and despite the same, the second respondent has acted without authority as
an Arbitrator to adjudicate disputes under the memorandum of
understanding. This civil revision petition has been filed also aggrieved
by the impugned arbitral award dated 15.07.2021 passed by the second
respondent Arbitrator in favour of the first respondent against the petitioner
directing him to pay the following:
(a) The amount of excess amount drawn by Respondent beyond his
share (41.8%) = Rs.2,39,40,980/-;
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(b) Interest calculation from 01.01.2013 to 30.09.2020 (2830 days)
is Rs.4,45,49,860/-;
(c) The amount of Rs.54 Lakh borrowed amount to redeem the
Respondent Chettiyapatti Village Agricultural Land from Axis Bank =
Rs.54,00,000/-;
(d) Interest calculation from 01.11.2010 to 30.09.2020 (3622 days)
is Rs.1,28,58,100/-;
(e) Interest calculation for the total claim amount of Rs.8,9,21,856/-
from 01.10.2020 to 30.06.2021 at the rate of 12% (273 days) is
Rs.77,85,960/-;
(f) No award on the additional prayed dated 05.03.2021 sought by
the Claimant;
(g) Interest at the rate of 8% will be applicable post publishing the
award till the award is subjected for realisation.
3. Heard Mr.V.Raghavachari, learned counsel representing
Mr.Abhinav Parthasarathy, learned counsel for the petitioner and
Mr.P.H.Arvindh Pandian, learned Senior Counsel representing
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Mr.D.Srinivasaraghavan, learned counsel for the first respondent.
4. Mr.V.Raghavachari, learned counsel for the petitioner drew the
attention of this Court to the following documents which have been filed in
the typed set of documents filed along with this civil revision petition
namely:
(a) Memorandum of Understanding entered into between the
Petitioner and the first respondent dated 28.12.2017;
(b) Consent letter dated 08.08.2019 issued by the second respondent
giving his consent to act as an Arbitrator in respect of the disputes arising
out of the memorandum of understanding;
(c) Letter dated 20.08.2019 sent by the petitioner's counsel to the
second respondent denying the existence of any arbitration clause under
the memorandum of understanding and requesting the second respondent
to refrain from acting as an Arbitrator in respect of the alleged disputes
under the memorandum of understanding;
(d) Email dated 05.02.2020 sent by the petitioner's counsel to the
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second respondent Arbitrator requesting him to pass orders in the
application filed by the petitioner under section 16 of the arbitration and
conciliation act questioning his authority to act as an Arbitrator;
(e) Order dated 07.02.2020 passed by the second respondent
Arbitrator under section 16 of the Arbitration and Conciliation Act
rejecting the application filed by the petitioner under the said provision.
(f) Arbitral award dated 15.07.2021 passed by the second
respondent in the alleged dispute between the petitioner and the first
respondent under the memorandum of understanding dated 28.12.2017,
wherein the petitioner was directed to pay the aforesaid sum mentioned in
paragraph-2 supra.
5. After referring to the aforementioned documents,
Mr.V.Raghavachari, learned counsel for the petitioner would submit that
without the existence of any arbitration clause, the second respondent has
acted as an Arbitrator and has conducted a Kangaroo Court and has
brought down his position as a lawyer to abject ridicule. Hence according
to him, since the first respondent has circumvented the legal proceedings
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under the guise of conducting arbitration and the second respondent having
passed an illegal arbitral award against the petitioner, this civil revision
petition under Article 227 of the Constitution of India is maintainable.
6. Learned counsel for the petitioner also drew the attention of this
Court to section 7 of the Arbitration and Conciliation Act, 1996 and would
submit that since there is no arbitration clause under the memorandum of
understanding which satisfies the requirement of section 7 of the Act, the
initiation of arbitral proceedings by the second respondent is void as there
is no arbitration agreement. He would submit that despite the same, the
second respondent has gone ahead and passed a collusive and fraudulent
arbitral award dated 15.07.2021 against the petitioner for a huge sum of
Rs.9,45,34,900/-.
7. In support of his submission that a revision under Article 227 of
the Constitution of India is maintainable for the issue on hand, learned
counsel for the petitioner drew the attention of this Court to the following
authorities:
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(a) A Judgment of the Hon'ble Supreme Court in the case of SREI
Infrastructure Finance Limited vs. Tuff Drilling Private Limited
reported in (2018) 11 SCC 470;
(b) A Judgment of the Hon'ble Supreme Court in the case of
Punjab State Power Corporation Limited vs. Emta Coal Limited and
Another reported in 2020 SCC Online SC 1165;
(c) A single bench judgment of the Delhi High Court in the case of
Surender Kumar Singhal and Others vs. Arun Kumar Bhalotia and
Others reported in 2021 SCC Online Del 3708;
(d) An unreported judgment dated 21.06.2021 of the Madras High
Court in the case of T.S.Gowrama and another vs. Nithin K. Chariyan
in CRP.No.1603 of 2019; &
(e) An unreported judgment dated 27.02.2020 of the Madurai Bench
of Madras High Court in the case of T.P.Kathiresan (died) and seven
others vs. R.Ramadass (died) and five others in
CRP.(NPD)(MD).No.2275 of 2011 & CRP (PD) (MD).No.2368 of 2010.
8. Per contra Mr.P.H.Arvindh Pandian, learned Senior Counsel
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representing Mr.D.Srinivasaraghavan, learned counsel for the first
respondent would submit that a civil revision petition under Article 227 of
the Constitution of India filed by the petitioner for the subject issue is not
maintainable. According to him, there being an alternate remedy and an
inbuilt mechanism provided under section 16 of the Arbitration and
Conciliation Act with regard to the issues raised by the petitioner in this
civil revision petition, the present Civil revision under Article 227 of the
Constitution is not maintainable. According to him, the second respondent
Arbitrator having rejected the application filed by the petitioner under
section 16 of the Arbitration and Conciliation Act, wherein the petitioner
had questioned the jurisdiction of the Arbitral Tribunal to adjudicate the
dispute, the only remedy for the petitioner is to challenge the final arbitral
award passed against him in favour of the first respondent as per the
provisions of Section 34 of the Arbitration and Conciliation Act.
9. Mr.Arvindh Pandian, learned Senior Counsel also drew the
attention of this court to the arbitral award dated 15.07.2021 passed by the
second respondent Arbitrator in favour of the first respondent and would
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submit that even without challenging the said arbitral award by filing an
application under section 34 of the Arbitration and Conciliation Act, the
petitioner has now approached this Court under Article 227 of the
Constitution of India which according to him is not maintainable. In
support of his submissions, he drew the attention of this Court to the
following authorities namely:
(a) A Division Bench Judgment of the Hon'ble Supreme Court in
the case of Deep Industries Limited vs. Oil and Natural Gas
Corporation Limited and Another reported in (2020) 15 SCC 706; and
(b) A Division Bench Judgment of the Hon'ble Supreme Court in the
case of Bhaven Constructions vs. Executive Engineer, Sardar Sarovar
Narmada Nigam Ltd., and other reported in 2021 (1) CTC 450.
10. Relying upon the aforesaid decisions, Mr.Arvind Pandian,
learned Senior Counsel for the first respondent would submit that in both
the aforesaid decisions, the Hon'ble Supreme Court held that when
alternate statutory remedies are available under the Arbitration and
Conciliation Act, to challenge the orders passed by the Arbitral Tribunal,
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the inherent powers of the High Court under Article 227 of the
Constitution of India should not be exercised.
Discussion:
11. Section 16 of the Arbitration and Conciliation Act, 1996 reads
as follows:
16. Competence of Arbitral Tribunal to rule on
its jurisdiction.— (1) The Arbitral Tribunal may rule on
its own jurisdiction, including ruling on any objections
with respect to the existence or validity of the
arbitration agreement, and for that purpose,—
(a) an arbitration clause which forms part of a
contract shall be treated as an agreement independent
of the other terms of the contract; and
(b) a decision by the Arbitral Tribunal that the
contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.
(2) A plea that the Arbitral Tribunal does not have
jurisdiction shall be raised not later than the submission
of the statement of defence; however, a party shall not
be precluded from raising such a plea merely because
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that he has appointed, or participated in the
appointment of, an Arbitrator.
(3) A plea that the Arbitral Tribunal is exceeding
the scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is
raised during the arbitral proceedings.
(4) The Arbitral Tribunal may, in either of the
cases referred to in sub-section (2) or sub-section (3),
admit a later plea if it considers the delay justified.
(5) The Arbitral Tribunal shall decide on a plea
referred to in sub-section (2) or sub-section (3) and,
where the Arbitral Tribunal takes a decision rejecting
the plea, continue with the arbitral proceedings and
make an arbitral award.
(6) A party aggrieved by such an arbitral award
may make an application for setting aside such an
arbitral award in accordance with section 34.
12. By order dated 07.02.2019, the second respondent Arbitrator
has dismissed the application filed by the petitioner challenging the
jurisdiction of the Arbitral Tribunal on the ground that there exists an
arbitration agreement between the parties. Infact, as seen from the order
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dated 07.02.2019, the second respondent Arbitrator took the objection of
the petitioner with regard to the Arbitral Tribunal's jurisdiction on account
of non-existence of arbitration clause and treated the same as an
application under section 16 of the Arbitration and Conciliation Act, 1996
and by the aforesaid order, dismissed the said application. In the order
dated 07.02.2019, the Arbitral Tribunal has also observed that the Tribunal
initiated settlement talks invoking section 30 of the Arbitration and
Conciliation Act, 1996 based on the mutual consent of the parties and their
counsel. The receipt of the order dated 07.02.2019 passed by the second
respondent Arbitrator under section 16 of the Arbitration and Conciliation
Act, 1996 has also not been disputed by the petitioner as he himself has
filed the same in the typed set of documents filed along with this civil
revision petition under Article 227 of the Constitution of India.
13. As seen from Section 16(5) of the Act, where the Arbitral
Tribunal takes the decision rejecting the plea questioning its jurisdiction to
decide the dispute, the arbitral proceedings shall continue and there is no
prohibition for the Tribunal to pass an arbitral award.
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14. Section 16 of the Arbitration and Conciliation Act, 1996, is
based on the doctrine of kompetenz – kompetenz which indicates that an
Arbitral Tribunal is empowered and has the competence to rule on its own
jurisdiction, including determining all jurisdiction issues, and the existence
or validity of an arbitration agreement. The underlying object of this
doctrine is to minimize judicial intervention in order to ensure that the
arbitral process is not thwarted at the very threshold, merely because a
preliminary objection is raised by one of the parties.
15. Section 37 of the Arbitration and Conciliation Act, 1996 which
deals with appealable orders also does not permit any appeal rejecting an
application filed under section 16 of the Arbitration and Conciliation Act,
questioning the jurisdiction of the Arbitral Tribunal. The remedy for an
aggrieved party is only to challenge the arbitral award, in case it is passed
against him or her in the near future, as seen from section 16(6) of the
Arbitration and Conciliation Act, 1996.
16. Under section 16(6) of the Arbitration and Conciliation Act,
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1996, it is made clear that a party aggrieved by the rejection of application
filed under section 16 of the Arbitration and Conciliation Act questioning
the jurisdiction of the Arbitral Tribunal can only challenge the award which
may be passed against him or her in the near future under section 34 of the
Arbitration and Conciliation Act. Subsequent to the passing of the order
dated 07.02.2019 dismissing the application filed under section 16 of the
Arbitration and Conciliation Act, 1996, an Arbitral Award dated
15.07.2021 has also been passed in favour of the first respondent against
the petitioner by the Arbitral Tribunal. Admittedly, till date, no application
has been filed by the petitioner under section 34 of the Arbitration and
Conciliation Act to challenge the said award. Under the Arbitral Award
dated 15.07.2021, the Arbitral Tribunal has directed the petitioner to pay
the following amounts to the first respondent:
(a) The amount of excess amount drawn by Respondent beyond his
share (41.8%) = Rs.2,39,40,980/-;
(b) Interest calculation from 01.01.2013 to 30.09.2020 (2830 days)
is Rs.4,45,49,860/-;
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(c) The amount of Rs.54 Lakh borrowed amount to redeem the
Respondent Chettiyapatti Village Agricultural Land from Axis Bank =
Rs.54,00,000/-;
(d) Interest calculation from 01.11.2010 to 30.09.2020 (3622 days)
is Rs.1,28,58,100/-;
(e) Interest calculation for the total claim amount of Rs.8,9,21,856/-
from 01.10.2020 to 30.06.2021 at the rate of 12% (273 days) is
Rs.77,85,960/-;
(f) No award on the additional prayed dated 05.03.2021 sought by
the Claimant;
(g) Interest at the rate of 8% will be applicable post publishing the
award till the award is subjected for realisation.
17. Under section 34 of the Arbitration and Conciliation Act, 1996,
a party aggrieved by an arbitral award can challenge the same within three
months from the date of receipt of a copy of the said arbitral award and
one month grace period thereafter is alone permissible that too with
sufficient reasons which satisfies the competent court. In the case on hand,
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the procedure prescribed under section 16 as well as under section 34 of
the Arbitration and Conciliation Act, 1996 has admittedly not been
followed by the petitioner. But instead, he has circumvented the well
established procedure by filing this revision under Article 227 of the
Constitution of India challenging the arbitral proceedings on the ground
that there is no arbitration clause. Infact, under section 16(1) of the
Arbitration and Conciliation Act, the Arbitral Tribunal has got the power to
rule on its own jurisdiction and adjudicate on the existence or non-
existence of an arbitration agreement, which in the instant case it has been
done by the Arbitral Tribunal.
18. Section 7 of the Arbitration and Conciliation Act, 1996 defines
an arbitration agreement which reads as follows:
“7. Arbitration agreement.—(1) In this Part,
“arbitration agreement” means an agreement by the
parties to submit to arbitration all or certain disputes
which have arisen or which may arise between them in
respect of a defined legal relationship, whether
contractual or not.
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(2) An arbitration agreement may be in the form of
an arbitration clause in a contract or in the form of a
separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is
contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams
or other means of telecommunication 1 [including
communication through electronic means] which provide
a record of the agreement; or
(c) an exchange of statements of claim and
defence in which the existence of the agreement is alleged
by one party and not denied by the other.
(5) The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and the
reference is such as to make that arbitration clause part
of the contract.”
As seen from Section 7 of the Arbitration and Conciliation Act, 1996, even
though the arbitration agreement should be in writing, various
circumstances have been given under the said section for the purpose of
deciding as to whether there is an arbitration agreement between the
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parties or not. Infact, as seen from the order dated 07.02.2019 passed by
the Arbitrator under section 16 of the Arbitration and Conciliation Act, the
second respondent Arbitrator has observed that the Arbitral Tribunal
initiated settlement talks invoking section 30 of the Arbitration and
Conciliation Act, 1996, based on the mutual consent of the parties and
their counsels. Therefore, there is a possibility that the petitioner may have
acquiesced to the jurisdiction of the Arbitrator, even though there may not
be a separate arbitration clause under the memorandum of understanding
dated 28.12.2017 between the parties. The acquiescence to the
jurisdiction Arbitral Tribunal will also enable the second respondent
Arbitrator to adjudicate the arbitral dispute between the parties. Rightly or
wrongly, the second respondent Arbitrator may have passed the order
dated 07.02.2019 under section 16 of the Arbitration and Conciliation Act,
1996 rejecting the petitioner's application questioning the Arbitral
Tribunal's jurisdiction to decide the dispute between the parties.
Admittedly, the petitioner has not disputed the contractual relationship
between him and the first respondent, though he may dispute the existence
of an arbitration clause under the memorandum of understanding dated
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28.12.2017 and his liability to pay.
19. The Arbitral Award passed thereafter on 15.07.2021 in favour of
the first respondent against the petitioner has also not been challenged by
the petitioner under section 34 of the Arbitration and Conciliation Act
which is the settled and well established procedure contemplated under
the Act.
20. The Arbitration and Conciliation Act, 1996 is a special
enactment. The purpose of arbitration is to adjudicate the dispute between
the parties expeditiously. The scope for interference by courts is very
minimal and is restricted only to the extent provided under the provisions
of the Arbitration and Conciliation Act, 1996.
21. Section 5 of the Arbitration and Conciliation Act, 1996 also
makes it clear that no judicial authority shall intervene except where so
provided in Part-I of the Act. Section 5 of the Arbitration and Conciliation
Act, 1996 reads as follows:
5. Extent of judicial intervention.—Notwithstanding
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anything contained in any other law for the time being in force,
in matters governed by this Part, no judicial authority shall
intervene except where so provided in this Part.
22. In the case on hand, the procedure as contemplated under
section 16(6) as well as under section 34 of the Arbitration and
Conciliation Act, 1996 is for the petitioner to challenge the arbitral award
dated 15.07.2021 passed against him by raising all the grounds including
the ground raised by him in this civil revision petition namely questioning
the jurisdiction of the Arbitral Tribunal, due to the alleged non-existence of
arbitration clause. Instead of following the settled and well established
procedure, the petitioner has chosen to file this revision under Article 227
of the Constitution of India.
23. The Hon'ble Supreme Court in the case of Shalini Shyam
Shetty & Another vs. Rajendra Shankar Patil reported in (2010) 8 SCC
329 has discussed at length, the scope and ambit of supervisory
jurisdiction of the High Courts under Article 227 of the Constitution of
India and they are as follows:
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(a) A petition under Article 226 of the Constitution is different from
a petition under Article 227. The mode of exercise of power by High Court
under these two Articles is also different.
(b) In any event, a petition under Article 227 cannot be called a writ
petition. The history of the conferment of writ jurisdiction on High Courts
is substantially different from the history of conferment of the power of
Superintendence on the High Courts under Article 227.
(c) High Courts cannot, on the drop of a hat, in exercise of its power
of superintendence under Article 227 of the Constitution, interfere with the
orders of tribunals or Courts inferior to it. Nor can it, in exercise of this
power, act as a Court of appeal over the orders of Court or tribunal
subordinate to it. In cases where an alternative statutory mode of redressal
has been provided, that would also operate as a restraint on the exercise of
this power by the High Court.
(d) The parameters of interference by High Courts in exercise of its
power of superintendence have been repeatedly laid down by this Court. In
this regard, the High Court must be guided by the principles laid down by
the Constitution Bench of the Hon'ble Supreme Court in Waryam Singh
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and Another vs. Amarnath and another reported in 1954 AIR 215 and
the principles in Waryam Singh's case referred to supra have been
repeatedly followed by subsequent Constitution Benches and various other
decisions of this Court.
(e) According to the ratio in Waryam Singh's case referred to supra,
followed in subsequent cases, the High Court in exercise of its jurisdiction
of superintendence can interfere only in order to keep the tribunals and
Courts subordinate to it, `within the bounds of their authority'.
(f) In order to ensure that law is followed by such tribunals and
Courts by exercising jurisdiction which is vested with them and by not
declining to exercise the jurisdiction which is vested with them.
(g) Apart from the situations pointed out in (e) and (f), High Court
can interfere in exercise of its power of superintendence, when there has
been a patent perversity in the orders of tribunals and Courts subordinate
to it or where there has been a gross and manifest failure of justice or the
basic principles of natural justice have been flouted.
(h) In exercise of its power of superintendence, High Court cannot
interfere to correct mere errors of law or fact or just because another view
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than the one taken by the tribunals or Courts subordinate to it, is a possible
view. In other words the jurisdiction has to be very sparingly exercised.
(i) High Court's power of superintendence under Article 227 cannot
be curtailed by any statute. It has been declared a part of the basic
structure of the Constitution by the Constitution Bench of the Hon'ble
Supreme Court in the case of L.Chandra Kumar vs. Union of India &
others, reported in (1997) 3 SCC 261 and therefore abridgement by a
Constitutional amendment is also very doubtful.
(j) It may be true that a statutory amendment of a rather cognate
provision, like Section 115 of the Civil Procedure Code (by the Civil
Procedure Code (Amendment) Act, 1999) does not and cannot cut down
the ambit of High Court's power under Article 227. At the same time, it
must be remembered that such statutory amendment does not
correspondingly expand the High Court's jurisdiction of superintendence
under Article 227.
(k) The power is discretionary and has to be exercised on equitable
principle. In an appropriate case, the power can be exercised suo motu.
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(l) On a proper appreciation of the wide and unfettered power of the
High Court under Article 227, it transpires that the main object of this
Article is to keep strict administrative and judicial control by the High
Court on the administration of justice within its territory.
(m) The object of superintendence, both administrative and judicial,
is to maintain efficiency, smooth and orderly functioning of the entire
machinery of justice in such a way as it does not bring it into any
disrepute. The power of interference under this Article is to be kept to the
minimum to ensure that the wheel of justice does not come to a halt and
the fountain of justice remains pure and unpolluted in order to maintain
public confidence in the functioning of the tribunals and Courts
subordinate to High Court.
(n) This reserve and exceptional power of judicial intervention is not
to be exercised just for grant of relief in individual cases, but should be
directed for promotion of public confidence in the administration of justice
in the larger public interest. Whereas Article 226 is meant for protection of
individual grievance. Therefore, the power under Article 227 may be
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unfettered, but its exercise is subject to high degree of judicial discipline
pointed out above.
(o) An improper and a frequent exercise of this power will be
counter-productive and will divest this extraordinary power of its strength
and vitality.
24. The instant case does not fall under any of the aforementioned
parameters, wherein the power under Article 227 of the Constitution of
India can be exercised. When the Hon'ble Supreme Court while dealing
with civil suits has time and again said that power under Article 227 of the
Constitution of India has to be sparingly exercised only in exceptional
cases, the scope for interference under Article 227 in Arbitration matters
has to be naturally much more stringent as it is settled law that there should
be minimal interference by Courts in Arbitration matters. Admittedly, there
is an alternate statutory remedy available to the petitioner namely by filing
an application under section 34 of the Arbitration and Conciliation Act,
1996 challenging the arbitral award dated 15.07.2021 raising the very
same grounds that have been raised in this civil revision petition filed
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under Article 227 of the Constitution of India. The Arbitration and
Conciliation Act, 1996 is a special enactment which enables the Courts to
intervene only in the cases provided for under the said special statute. Only
in rarest of rare cases, where on the face of it there is patent illegality on
the part of the Artbitral tribunal or there is no alternate statutory remedy,
the High court can exercise power under Article 227 of the constitution of
India. The case on hand is not one such case which requires interference
under Article 227 of the Constitution.
25. Section 5 of the Arbitration and Conciliation Act, 1996 also
makes it clear that no judicial authority shall intervene except where so
provided in Part-I of the Act. The petitioner has chosen a jurisdiction
which has to be very sparingly exercised instead of availing the statutory
remedy as provided under the special enactment namely the Arbitration
and Conciliation Act, 1996.
26. The decisions relied upon by the learned counsel for the
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petitioner namely: (a) judgment of the Hon'ble Supreme Court in the case
of SREI Infrastructure Finance Limited vs. Tuff Drilling Private
Limited reported in (2018) 11 SCC 470; (b) Judgment of the Hon'ble
Supreme Court in the case of Punjab State Power Corporation Limited
vs. Emta Coal Limited and Another reported in 2020 SCC Online SC
1165; (c) A single bench judgment of the Delhi High Court in the case of
Surender Kumar Singhal and Others vs. Arun Kumar Bhalotia and
Others reported in 2021 SCC Online Del 3708; (d) An unreported
judgment dated 21.06.2021 of the Madras High Court in the case of
T.S.Gowrama and another vs. Nithin K. Chariyan in CRP.No.1603 of
2019; & (e) An unreported judgment dated 27.02.2020 of the Madurai
Bench of the Madras High Court in the case of T.P.Kathiresan (died) and
seven others vs. R.Ramadass (died) and five others in
CRP.(NPD)(MD).No.2275 of 2011 & CRP (PD) (MD).No.2368 of 2010
are all cases wherein the High Court exercised power under Article 227 of
the Constitution of India. However, exercise of such power depends on the
facts and circumstance of each case. Even as per the decisions relied upon
by the learned counsel for the petitioner referred to supra, it is clear that
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there will have to be exceptional circumstances for interference under
Article 227 of the Constitution of India and the lack of jurisdiction of the
Arbitral Tribunal must be absolutely certain. In the case on hand, the lack
of jurisdiction of the arbitral tribunal is not absolutely certain as seen from
the order dated 7.2.2019 as well as the Arbitral Award dated 15.07.2021.
Therefore, it can be tested only Section 34 of the Arbitration and
Conciliation Act and not otherwise.
27. As laid down by the Hon'ble Supreme Court in Shalini Shyam
Shetty & Another vs. Rajendra Shankar Patil reported in (2010) 8 SCC
329, the High Courts cannot, on the drop of the hat, exercise its power
under Article 227 of the Constitution of India in cases where an alternate
statutory mode of redressal is provided.
28. In the case on hand, the petitioner has appeared before the
second respondent Arbitrator and has also filled a written objection
questioning his jurisdiction to decide the dispute between the parties which
has also been rejected by the Arbitrator in his order dated 07.02.2019 and
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thereafter the Arbitrator has also passed the arbitral award against the
petitioner on 15.07.2021. The petitioner has also not challenged till date
the said arbitral award dated 15.07.2021 under section 34 of the
Arbitration and Conciliation Act, 1996. Therefore, this Court is of the
considered view that this is not a fit case for interference under Article 227
of the Constitution of India.
29. In the case of Deep Industries Limited vs. Oil and Natural
Gas Corporation Limited and Another reported in (2020) 15 SCC 706;
and (b) In the case of Bhaven Constructions vs. Executive Engineer,
Sardar Sarovar Narmada Nigam Ltd., and other reported in 2021 (1)
CTC 450, referred to supra , the Hon'ble Supreme Court has held that
when an application under section 16 of the Arbitration and Conciliation
Act, challenging the jurisdiction of the Arbitral Tribunal has been
dismissed by the Arbitral Tribunal, the only remedy for the aggrieved
party is to challenge the Arbitral award as and when passed under section
34 of the Arbitration and Conciliation Act.
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CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
30. The relevant paragraph of Deep Industries Limited case
referred to supra are as follows:
22. One other feature of this case is of some importance. As
stated hereinabove, on 09.05.2018, a section 16 application had
been dismissed by the learned Arbitrator in which substantially the
same contention which found favour with the High Court was taken
up. The drill of Section 16 of the Act is that where a Section 16
application is dismissed, no appeal is provided and the challenge
to the Section 16 application being dismissed must await the
passing of a final award at which stage it may be raised under
Section 34. What the High Court has done in the present case is to
invert this statutory scheme by going into exactly the same matter
as was gone into by the Arbitrator in the Section 16 application,
and then decided that the two year ban was no part of the notice
for arbitration issued on 02.11.2017, a finding which is directly
contrary to the finding of the learned Arbitrator dismissing the
Section 16 application. For this reason alone, the judgment under
appeal needs to be set aside. Even otherwise, as has been correctly
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pointed out by Mr. Rohatgi, the judgment under appeal goes into
the merits of the case and states that the action of putting the
Contractor and his Directors “on holiday” is not a consequence of
the termination of the agreement. This is wholly incorrect as it is
only because of the termination that the show cause notice dated
18.10.2017 proposing to impose a two year ban/blacklisting was
sent. Even otherwise, entering into the general thicket of disputes
between the parties does not behove a court exercising jurisdiction
under Article 227, where only jurisdictional errors can be
corrected. Therefore to state that the ban order was passed under
a General Contract Manual and not Clause 18 of the Agreement,
besides being incorrect, would also be incorrect for the reason that
the General Contract Manual does not mean that such order was
issued as an administrative order invoking the executive power, but
was only as an order which emanated from the contract itself.
Further to state that “serious disputes” as to jurisdiction seem to
have cropped up is not the same thing as saying that the Arbitral
Tribunal lacked inherent jurisdiction in going into and deciding the
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Section 17 application. In point of fact, the Arbitral Tribunal was
well within its jurisdiction in referring to the contract and the ban
order and then applying the law and finally issuing the stay order.
Even if it be accepted that the principle laid down by Section 41(e)
of the Specific Relief Act was infracted, in that damages could have
been granted, as a result of which an injunction ought not to have
been issued, is a mere error of law and not an error of jurisdiction,
much less an error of inherent jurisdiction going to the root of the
matter. Therefore, even otherwise, the High Court judgment cannot
be sustained and is set aside.
31. In the aforesaid decision also, the Hon'ble Supreme Court after
taking note of the observations made in the decision relied upon by the
learned counsel for the petitioner in Punjab State Power Corporation
Limited's case referred to supra where the power under Article 227 of the
Constitution of India was exercised by the High Court in respect of orders
passed under section 11 of the Arbitration and Conciliation Act, 1996
distinguished the said decision by holding that the observations were made
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CRP(NPD).No.1441 of 2021 &
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in Punjab State Power Corporation Limited's case referred to supra for
the reason that no provision for appeal had been given by the statute
against the orders passed under section 11 of the Arbitration and
Conciliation Act, which is why the High Court's supervisory jurisdiction
should first be invoked before going to the Supreme Court under Article
136. In Deep Industries Limited's case referred to supra, the Hon'ble
Supreme Court has made it clear that the facts involved in that case is
distinguishable for the reason that in Punjab State Power Corporation
Limited case , Article 227 of the Constitution of India was exercised by the
High Court only after the first appeal was dismissed under Section 37 of
the Arbitration and Conciliation Act, 1996. The relevant portion of the said
judgment is extracted hereunder:
“What is important to note is that the observations of this
Court in this judgment were for the reason that no provision for
appeal had been given by statute against the orders passed under
Section 11, which is why the High Court’s supervisory
jurisdiction should first be invoked before coming to this Court
under Article 136. Given the facts of the present case, this case
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CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
is equally distinguishable for the reason that in this case the 227
jurisdiction has been exercised by the High Court only after a
first appeal was dismissed under Section 37 of the Act.
32. In Bhaven Constructions vs. Executive Engineer, Sardar
Sarovar Narmada Nigam Ltd., and other reported in 2021 (1) CTC 450,
the Hon'ble Supreme Court following the decision rendered in Deep
Industries Limited's case referred to supra has also held that when there is
a mechanism provided for challenging the arbitral award under section 34
of the Arbitration and Conciliation Act, no exceptional circumstance has
been established to invoke remedy under Article 227 of the Constitution of
India for the alleged unilateral appointment of Arbitrator. The relevant
paragraph of the aforesaid judgment reads as follows:
“25. It must be noted that Section 16 of the
Arbitration Act, necessarily mandates that the issue of
jurisdiction must be dealt first by the tribunal, before the
Court examines the same under Section 34. Respondent No.
1 is therefore not left remediless, and has statutorily been
provided a chance of appeal. In Deep Industries case
(supra), this Court observed as follows:
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“22. One other feature of this case is of
some importance. As stated herein above, on
09.05.2018, a Section 16 application had been
dismissed by the learned Arbitrator in which
substantially the same contention which found
favour with the High Court was taken up. The
drill of Section 16 of the Act is that where a
Section 16 application is dismissed, no appeal is
provided and the challenge to the Section 16
application being dismissed must await the
passing of a final award at which stage it may be
raised under Section 34.”
26. In view of the above reasoning, we are of the
considered opinion that the High Court erred in utilizing its
discretionary power available under Articles 226 and 227 of
the Constitution herein. Thus, the appeal is allowed and the
impugned Order of the High Court is set aside. There shall
be no order as to costs. Before we part, we make it clear
that Respondent No. 1 herein is at liberty to raise any
legally permissible objections regarding the jurisdictional
question in the pending Section 34 proceedings.”
33. In the aforementioned case also, an interpretation of section 16
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of the Arbitration and Conciliation Act, 1996 was involved and in that case
also, the Hon'ble Supreme Court has categorically held that challenge to
an order dismissing the application filed under section 16 of the Arbitration
and Conciliation Act, 1996 questioning the jurisdiction of the Arbitral
Tribunal can be raised only in an application under section 34 of the
Arbitration and Conciliation Act and exercising the extraordinary power of
the High Court under Article 227 of the Constitution of India is not
permissible.
34. For the foregoing reasons, this court is of the considered view
that there is no merit in this civil revision petition filed under Article 227 of
the Constitution of India. Accordingly, this Civil Revision Petition is
dismissed. No costs. Consequently connected miscellaneous petition is
closed.
13.09.2021
Note: Learned counsel for the petitioner after pronouncing of this order
seeks for return of the original arbitral award from the Registry, since the
petitioner intends to challenge the arbitral award by filing an application
under section 34 of the Arbitration and Conciliation Act. Registry is
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CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
directed to return the Original Arbitral Award immediately to enable the
petitioner to challenge the same under section 34 of the Arbitration and
Conciliation Act.
Note: Issue order copy today
nl
Index:Yes/No
Internet:Yes/No
Speaking/Non-speaking order
ABDUL QUDDHOSE, J.
nl
Pre-Delivery Judgment
CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
https://www.mhc.tn.gov.in/judis/
CRP(NPD).No.1441 of 2021 &
CMP.No.11291 of 2021
13.09.2021
https://www.mhc.tn.gov.in/judis/
