IMPORTANT POINTS
In absence of an arbitration agreement the Act 1996 will not apply.
Constitutional Courts have inherent powers to recall own judgments.

Headnote:Arbitration and Conciliation Act, 1996 – Section 7, 9, 11 – Agreement providing that ‘no arbitration is allowed’ and ‘competent courts in Mumbai shall have jurisdiction’ – Agreement then providing for a three tier in-house dispute resolution mechanism – Held, there is no arbitration clause – During proceedings u/s 9 official of appellant, not empowered to do so, agreeing to arbitration and suggesting name of the arbitrator – Nobody making application u/s 11 – Held, there being no arbitration agreement, Act will not apply. (Para 10, 15)
       Constitution of India – Article 215 – Recall of order – Power inherent to constitutional courts (Para 11)
       1953 SCR 1028; (1947) 74 I.A. 264; (1916) I.L.R. 39 Mad. 617; AIR 1963 SC 1909; (2000) 1 SCC 666 – Relied upon
       Facts of the case:
       The present appeal raises questions relatable to the High Court’s power of recall of its orders.
       An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed by the respondent before the High Court seeking an interim injunction restraining the encashment of the first and third bank guarantees that were given by the respondent in pursuance of the Tender, amounting to a sum of Rs. 16,23,400/-(Rupees Sixteen Lakhs, Twenty Three Thousand and Four Hundred only) and Rs. 6,23,00,000/-(Rupees Six Crores, Twenty Three Lakhs only) respectively.
       On 23.06.2017, this petition was allowed and the injunction as prayed for was granted.
       The single Judge recalled the order appointing Justice V.M. Kanade (retired) as a sole Arbitrator. An appeal was filed under Section 37 of the Act by the respondent herein, which succeeded before the Division Bench. According to the Division Bench, since Section 5 of the Act mandated that there would be no judicial intervention as provided for in Part I of the Act and since there is no provision in Part I for any court to review its own order, the review petition filed was not maintainable.
       Finding of the Court:
       Impugned judgments liable to be set aside.
       Result: Appeal disposed of.

JUDGMENT

R. F. Nariman, J.

1) Leave granted.

2) The present appeal raises questions relatable to the High Court’s power of recall of its orders.

3) By a Tender Notice dated 19.09.2008, supply, installation and maintenance of water meters of various sizes were called for. The Tender Notice contained Clause 22, which reads as under:-

“22. Jurisdiction of Courts:
In case of any claim, dispute or difference arising in respect of the contract, the cause of action thereof shall be deemed to have arisen in Mumbai and all legal proceedings in respect of any such claim, dispute or difference shall be instituted in a competent court in the city of Mumbai only.
If any dispute, difference or claim is raised by either party relating to any matter arising out of the contract, the aggrieved party may refer such dispute within a period of 7 (seven) days to the concerned Deputy Municipal Commissioner (DMC) of Municipal Corporation of Greater Mumbai, who shall constitute a committee comprising of 3 (three) MCGM Officers i.e., concerned DMC or Director (ES & P), Chief Engineer other than the Engineer of contract & concerned C.A. the committee shall give decision in writing within 60 (sixty) days.
Appeal from the order of the Committee may be referred to Municipal Commissioner (M.C.) of Municipal Corporation of Greater Mumbai within 7 (seven) days. Thereafter, M.C. shall constitute the committee comprising of 3 (three) DMC including DMC in charge of finance Department. The decision given by this Committee shall be final and binding upon the parties/bidders.”

4) However, when the Tender Notice was accepted and an agreement between the parties was entered into, Clause 13 of the General Conditions of Contract was applied. This clause stated as follows:-

“Disputes and Arbitration:
13.1 No Arbitration is allowed.
13.2 In case of disputes or difference of opinion arising between the Hydraulic Engineer and the bidder, the bidder can refer the matter to the Municipal Commissioner of Greater Mumbai with an advance copy to the Hydraulic Engineer and the decision of Commissioner will be final in such case.”

5) An application under Section 9 of the Arbitration and Conciliation Act, 1996 (in short ‘the Act’) was filed by the respondent before the High Court of Bombay, asking for an interim injunction restraining the encashment of the first and third bank guarantees that were given by the respondent in pursuance of the Tender, amounting to a sum of Rs. 16,23,400/-(Rupees Sixteen Lakhs, Twenty Three Thousand and Four Hundred only) and Rs. 6,23,00,000/-(Rupees Six Crores, Twenty Three Lakhs only) respectively.

On 23.06.2017, this petition was allowed and the injunction that was prayed for was granted. On the next date of hearing, i.e., on 27.06.2017, Justice K. R. Shriram recorded what transpired as follows:-
“1. Mr. Makhija, counsel for Petitioners, on instructions states that Petitioners are ready and willing to go for arbitration and suggest that Mr. Justice V.M. Kanade (retired) be appointed as the Sole Arbitrator. Mr. Bharucha, senior counsel for Respondent (MCGM), on instructions from Mr. Agashe, Assistant Engineer (Meter Work Shop) Cityrepresentative of Respondent, who is present in court, states that Respondents have no objection to the suggestion made by Mr. Makhija and Mr. Justice V.M. Kanade (retired) be appointed as the Sole Arbitrator.
2. In view of the above, Mr. Justice V. M. Kanade (retired) is appointed as the Sole Arbitrator to decide on all issues between parties arising out of or in connection with or with reference to the Tender dated 19.09.2008 along with Corrigendum issued by Respondent No. 1 for supply installation and maintenance of AMR water meters of various sizes in the City area of Mumbai consisting of wards A, B, C, D, E, F/North, F/South, G/North and G/South (the Project)…”

6) A Notice of Motion was filed by the appellant before us on 03.07.2017 to recall the aforesaid order appointing Justice V.M. Kanade (retired) as a Sole Arbitra

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2018 Supreme(SC) 1230

SUPREME COURT OF INDIAR.F. NARIMAN, M.R. SHAH, JJ.MUNICIPAL CORPORATION OF GREATER MUMBAI & ANR. – Appellant(s) Versus PRATIBHA INDUSTRIES LTD. & ORS. – Respondent(s) CIVIL APPEAL NO. 11822 OF 2018 (ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 10415 OF 2018) Decided On : 04-12-2018

IMPORTANT POINTSIn absence of an arbitration agreement the Act 1996 will not apply. Constitutional Courts have inherent powers to recall own judgments.

Cases Referred (3)

SUPREME COURT OF INDIA
R.F. NARIMAN, M.R. SHAH, JJ.
MUNICIPAL CORPORATION OF GREATER MUMBAI & ANR. – Appellant(s)
Versus
PRATIBHA INDUSTRIES LTD. & ORS. – Respondent(s)
CIVIL APPEAL NO. 11822 OF 2018 (ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 10415 OF 2018)
Decided On : 04-12-2018

IMPORTANT POINTS
In absence of an arbitration agreement the Act 1996 will not apply.
Constitutional Courts have inherent powers to recall own judgments.