2011 Supreme(Cal) 1530
High Court Of Calcutta
Sanjib Banerjee, J.
Visa Steel Ltd. : Appellant
Versus
Durgapur Projects Ltd. : Respondent
Decided On : AP No. 1056 of 2011
Decided On : Dec 21, 2011
Jayanta Kr.Mitra, Siddhartha Mitra, D.J.Sharma, Roopa Mitra, Anindya Kr.Mitra, Bhaskar Mitra
A challenge to the arbitrator's jurisdiction under section 16 of the Arbitration and Conciliation Act, 1996, can only be made after the final award is rendered.
Headnote:
ARBITRATION - JURISDICTION - CHALLENGE TO ARBITRAL TRIBUNAL'S AUTHORITY - INTERIM AWARD - SCOPE OF JUDICIAL REVIEW - COURT'S AUTHORITY TO RIGHT WRONGS.
Fact of the Case:
The petitioner challenged an order passed by an arbitrator, dated November 1, 2011, on the ground that it was an interim award and could be challenged directly under section 34 of the Arbitration and Conciliation Act, 1996. The petitioner contended that the arbitrator lacked the authority to adjudicate on a counter-claim that included matters pertaining to a separate agreement between the parties.
Finding of the Court:
The Court held that the petitioner's challenge was not maintainable under section 34 of the 1996 Act. The Court found that the arbitrator's order did not amount to an interim award as it did not have the element of finality and was not conclusive in respect of all matters covered by it. The Court further held that the petitioner's objection to the arbitrator's jurisdiction was covered by section 16 of the 1996 Act and could only be challenged after the final award was rendered.
Issues: 1. Whether the arbitrator's order dated November 1, 2011, was an interim award and could be challenged directly under section 34 of the Arbitration and Conciliation Act, 1996? 2. Whether the petitioner's objection to the arbitrator's jurisdiction was covered by section 16 of the 1996 Act and could only be challenged after the final award was rendered?
Ratio Decidendi: 1. An order passed by an arbitrator is not an interim award merely because it decides a procedural matter. It must also have the element of finality and be conclusive in respect of all matters covered by it. 2. A challenge to the arbitrator's jurisdiction under section 16 of the 1996 Act can only be made after the final award is rendered. If the challenge is upheld, the aggrieved party can appeal the award under section 37(2) of the Act. If the challenge is rejected, the party must wait until the final award is rendered before challenging the arbitrator's jurisdiction.
Final Decision: The Court dismissed the petitioner's challenge to the arbitrator's order dated November 1, 2011, with costs.
1. COURTS and tribunals in this country-and Judges and officers manning them-do not have omnibus authority to right any perceived wrong. The contours of their authority are defined either by the statute under which they operate or the business that is allocated.
2. THE present challenge is fashioned under section 34 of the Arbitration and Conciliation Act, 1996 and the petitioner insists that the order dated November 1, 2011 passed by the arbitrator is an arbitral award within the definition of section 2(2) of the Act of 1996. At any rate, the petitioner contends that it is ah interim award and as an interim award is included within the definition of an award in the Act, it is amenable to challenge directly under section 34 of the Act.
3. SOME of the essential facts need to be noticed before the question of the authority of the Court to entertain the challenge is assessed. Following a request by the petitioner herein under section 11(6) of the Act, the arbitration Judge of this Court found that there was a valid arbitration agreement and there were live disputes to go to a reference - only so much is trusted to the arbitration Judge of this Court, the task of naming of the arbitrator or arbitrators is assigned elsewhere. Following the adjudication of the matter by the arbitration Judge, to the extent the adjudication was necessary in the light of the Constitution Bench judgment rendered in SBP and Co. v. Patel Engineering Ltd. (2005)8 SCC 618, the matter went elsewhere for the naming of the arbitrator. It appears that an affidavit was used by the respondent at such stage, though the only question relevant then was as to the personnel of the arbitrator or the composition of the arbitral tribunal and nothing more.
4. THE arbitrator was appointed and the statement of claim filed by this petitioner in the reference. THE respondent herein lodged its counter statement where matters pertaining to an altogether different contract between the parties, containing a separate arbitration agreement, were made part of a counter-claim. THE petitioner herein objected to such matters pertaining to another agreement being carried to the reference by the respondent in course of its counter-claim. It does not appear that a written application in such regard was filed by the petitioner herein but the objection was squarely taken and it was on the objection that the arbitrator rendered a finding which has been assailed as an interim award in the present proceedings.
5. IT is also a matter of some relevance that the respondent herein has filed a suit in this Court on the basis of its perceived claim in the other agreement, matters pertaining to which were sought to be included by way of the counter-claim. The petitioner herein claims to have already filed its written statement in the suit.
6. THE arbitrator held that the counter-claim could be entertained in course of the reference only upon the respondent herein seeking and obtaining a stay of its suit filed in furtherance of the same claim in this Court. A letter has since been written by the respondent to the arbitrator seeking an adjournment in the reference on the ground that an application of such nature was being prepared by the respondent.
7. THE question that arises is as to whether the challenge that was made by the petitioner herein before the arbitrator can be renewed at this stage under section 34 of the 1996 Act. THEre is a short answer to the question. It is that in view of sections 16 and 37(2) of the 1996 Act no question arises of the arbitrator's decision rejecting the petitioner's objection being subjected to a challenge under section 34 of the 1996 Act at this stage as such decision cannot be deemed to be an award, whether interim or final, in the scheme of the 1996 Act.
8. BUT a more protracted answer is called for in the context of the body of judicial authorities that has been cited on behalf of the petitioner herein. The petitioner says that even decisions rendered by