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2017 Supreme(Pat) 304
IN THE HIGH COURT OF JUDICATURE AT PATNA
Navaniti Prasad Singh, Vikash Jain, JJ.
The State of Bihar, through the Secretary, Road Construction Department (National Highway Wing) and Others – Petitioner
Versus
Surendra Singh, Son of Sri. Ram Sakal Singh – Respondent
CWJC No. 11026 of 2013
Decided On : 21-02-2017
For the Petitioners: Mr. K.P. Gupta, Binod Kumar
For the Respondent: M/s. N.K. Singh, Jitendra Kumar, Shashank Shekhar
Headnote:
Arbitration - Jurisdiction of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 16(1) - Section 34 - Section 47 read with Section 151 of the CPC
Fact of the Case:
The State challenged the jurisdiction of the Arbitral Tribunal at the stage of execution proceedings, after not challenging the award under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act). The State argued that the Arbitrator acted without jurisdiction and the award was void and not binding, hence it could not be executed.
Finding of the Court:
The Court held that the Act is a complete code in itself and Section 47 of the CPC does not apply to arbitral proceedings when the award is put to execution. The Court also emphasized that an arbitral award, though enforced as a decree, is not a decree for all purposes under all statutes. The Court rejected the State's objection under Section 47 read with Section 151 of the CPC, stating that the State had abandoned the remedies available under the Act and sought to resort to a remedy under the CPC, which was impermissible.
Issues: The main issue was whether the State could challenge the jurisdiction of the Arbitral Tribunal at the stage of execution proceedings after not challenging the award under Section 34 of the Act.
Ratio Decidendi: The Court held that objections to the jurisdiction of the Arbitrator must be raised at the stage of the submission of the statement of defence and must be dealt with under Section 16 of the Act. The Court also emphasized that the Act is a special law governing arbitration and common civil law principles would not apply to it.
Final Decision: The Court dismissed the writ petition, stating that the objection on behalf of the State must fail and that the impugned order cannot be interfered with. The ad interim stay granted was vacated, and the money deposited by the State in the High Court was permitted to be withdrawn by the respondent contractor.
Navaniti Prasad Singh, J.
This writ petition filed by the State under Article-227 of the Constitution assailing the order dated 22.09.2012, as passed by the learned Sub Judge-I, Patna in Execution Case No.01 of 2010/11 of Patna High Court CWJC No.11026 of 2013 dated 21-02-2017 2011, whereby the Executing Court rejected the petition of the State of Bihar filed under Section 47 read with Section 151 of the Code of Civil Procedure (hereinafter in short as "CPC") for dismissal of the execution case filed for enforcement of Arbitral Award, on the ground of lack of jurisdiction of the Arbitrator to decide the matter and pass an award.
2. The primal question to be decided in this writ petition is whether the State having challenged the jurisdiction of the Arbitral Tribunal before the Arbitral Tribunal itself at the stage of reference of dispute to the Arbitral Tribunal and the Arbitral Tribunal having ruled against the State and in favour of its jurisdiction, State not having then challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") could, later at the stage of execution proceedings, raise any objection under Section 47 read with Section 151 of the CPC?
3. The facts are not in dispute. On 13.01.2007, notice inviting tender was issued by the Road Construction Department, Government of Bihar, for repair of part of NH-84, having a length of 14 kilometers between Brahmpur and Dumraon. The sole-respondent tendered, and being lowest, was selected and approval was granted at estimated cost of work of about Rs.5,89,16,985.00/-. The work had to be completed within six months i.e. by 18.09.2007, but the agreement Patna High Court CWJC No.11026 of 2013 dated 21-02-2017 itself, being Agreement No.02 of 2007, was executed on 10.07.2007. Agreement is Annexure-3 to the writ petition. The said agreement contained an arbitration clause, which is quoted hereunder:
3. Arbitration (GCC Clause 25.3)
The procedure for arbitration will be as follows:
25.3 (a) In case of Dispute or difference arising between the employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The parties shall make efforts to agree on a sole arbitrator and only if such an attempt does not succeed and the Arbitral Tribunal consisting of 3 arbitrators one each to be appointed by the Employer and the Contractor and the third Arbitrator to be chosen by the two Arbitrators so appointed by the Parties to act as Presiding Arbitrator shall be considered. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the Council, Indian Roads Congress.
(b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties, and shall act as presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding arbitrator shall be appointed by the Council, Indian Roads Congress.
(c) If one of the parties fails to appoint its arbitrator in pursuance of sub-clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the Council, Indian Roads Congress shall appoint the arbitrator. A certified copy of the order of the Council, Indian Roads Congress, making such an appointment shall be furnished to each of the parties.
(d) Arbitration proceedings shall be held in India, and the language of the arbitration proceedings and that of all documents and communicatio
