2002 Supreme(SC) 729

2002(5) Supreme 264
SUPREME COURT OF INDIA
(From Delhi High Court)
D.P. Mohapatra & Brijesh Kumar, JJ.
Pradeep Anand -Appellant
versus
I.T.C. Ltd. & Ors. -Respondents
Civil Appeal No. 4356 of 2002
(Arising out of SLP (C) No. 11886 of 2000)
With
C.A.No. 4357 of 2002
(@ SLP (C) No. 10501 of 2000)
Decided on 29-7-2002
Counsel for the Parties :
For the Appearing Parties : K.K. Venugopal, Harish Chander, Anil B. Diwan, Sr. Advocates, Jaideep Gupta, Ms. B. Vijayalakshimi Menon, Sohail Dutt, Ms. Ekta Kapil, S. Ganesh, Ms. Punita Singh, Ms. Deepa Das, Ms. Bhawna, Ahuja, Rajiv Mehta and Sanjay Kapur, M.B. Singh, Ranvir Singh, Alok Yadav, Advocates.

IMPORTANT POINT
The order granting stay under Section 34 of the Arbitration Act, 1940 of further proceedings before the Arbitrator by the High Court is based on non judicial consideration and is, therefore, not maintainable.

Headnote:Arbitration Act, 1940-Sections 18, 30 and 34-Co-operation agreement between parties containing arbitration clause-Dispute arising-Referred to arbitrator-Arbitrator gave award which was partial-Filed to make rule of Court-Objections filed-Petition to stay further proceedings under Section 34-Granted by Single Judge-Affirmed in appeal by DB-Appeal against to Supreme Court-Whether High Court was right to stay further proceedings before Arbitrator? (No)-Case law referred-Appeal allowed-(C.P.C. 1908-Order 23 Rule 1).

       Held (referring to Sections 34 and 18 of Arbitration Act, 1940) : These provisions, in our view show that the legislative policy is to ensure proper enforcement of an arbitration award and to assist a party who apprehends that he may face serious difficulties in execution of the award passed in his favour on account of the conduct of the other party. Be it noted here that different provisions of the arbitration Act leaves little scope for doubt that an arbitration proceeding is to be conducted by the arbitrator with reasonable dispatch and after the award is passed the Court should also dispose of the proceedings and decide the question whether the award should be made a rule of Court expeditiously so that the party in whose favour the award has been passed gets the benefit of the arbitration clause. In the present case the order passed by the learned single Judge gives rise to a converse situation. The Court has intervened to stay further proceedings in a proceeding which is continuing before the arbitrator giving the reason inter alia that the petitioner applying for stay may be put to unnecessary expenses in defending the proceeding before the arbitrator. As noted earlier, the respondent No.1 herein, has initiated proceedings before the Court to direct the arbitrator to file the Partial Award and has also filed an application under Sections 30 and 33 of the Act challenging the validity of the award and has also raised the question of validity of the agreement itself in the petition. The said proceedings are pending in the Court. The questions raised therein will be decided by the Court on merit after hearing the parties. In such circumstances, the view taken by the High Court that the arbitrator should not proceed further in the arbitration proceeding is unnecessary, uncalled for and erroneous. The observation of the learned single Judge that since the arbitrator did not file the Partial Award in Court immediately on being directed by the Court the respondent

       No.1 was made remediless and was gagged , is equally uncalled for and erroneous. It may be noted here that no party will be entitled to get any benefit in any final award passed by the arbitrator until the same is made rule of the Court and before this is done the Court is duty-bound to give notice to the parties and consider objections if any raised by any of the parties against the award. On perusal of the judgment/order passed by the learned single Judge, we are constrained to observe that the learned Judge travelled beyond the limited jurisdiction vested in him in deciding the question of stay and has discussed the merits of the case and made observations which may prejudice the parties of any of them in a proceeding before the arbitrator and at subsequent stages in the proceeding before the Court. The judgment of the Division Bench, we are constrained to observe, suffers from similar error of approach as the learned Single Judge. Being aware of the position that the respondent no.1 has challenged the partial Award by filing objections under Sections 30, 31 and 33 of the Act and proceeding is pending before the trial Court, the Division Bench thought it appropriate to make observations regarding the alleged misconduct of the Arbitrator in sending the draft Award to the ICC International Court of Arbitration for advise and also in declining to send up the depositions and the documents to the Court on certain grounds the Division Bench appears to have lost sight of the fact that all these questions may come up for decision before the trial Court in the proceeding under Sections 30 and 33 of the Act and parties will have opportunity to have their say in the matter. The Division Bench failed to appreciate that in the context of facts of the case it is in the interest of the parties that the Arbitration proceeding should be concluded and the challenge against the draft Award/final Award should be decided as expeditiously as possible. The observations made by the Division Bench in the judgment are not only unnecessary but also uncalled for keeping in view the limited question that came up for consideration before it i.e. whether the further proceeding before the Arbitrator should be stayed or it should continue. Any observation touching upon the merits of the case particularly, the allegations relating to alleged misconduct of the Arbitrator at the stage of consideration of the application for interim order of stay does not commend us. It appears from the record that the respondent No.1 has also filed an application before the Court for removal of the Arbitrator and the same is also pending. We are conscious of the position that grant of stay is a matter of discretion of the Court and if the Trial Court on consideration passes the order of stay the Appellate Court should be slow to interfere with the same. But that does not mean that if the order of stay passed by the Trial Court is based on non-judicial consideration such order is not liable to be interfered with by the Appellate Court. However, since the Division Bench held that the appeal was not maintainable we need say no further on merits of the observations/findings in the judgment. On consideration of the entire matter, we are not persuaded to maintain the order granting stay of further proceedings before the arbitrator passed by the learned single Judge, which was confirmed in appeal by the Division Bench. The judgment/order dated 22.4.1999 passed by the learned single Judge which was confirmed by the Division Bench in the judgment/order dated 13th March, 2000 in FAO (OS) No.134 of 1999 are set aside and accordingly, the appeals are allowed with costs. Hearing fee is assessed at Rs. 25,000/-. (Paras 17, 18, 19 and 20)