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2004 Supreme(Del) 230

High Court Of Delhi
FLORENTINE ESTATES OF INDIA LIMITED - Appellant
Versus
CREF FINANCE LIMITED - Respondent
C.R. 1120 of 2000
Decided On : 03/24/2004

Advocates Appeared:
ARVIND NIGAM, B.K.BEHAR, M.R.SHAMSHAD, Manmohan, PADMINI KUMARI, PALLAVI BARUA, PUNIT BHARDVAJ, RANJAN NARAIN

An order of the arbitrator determining necessary or proper parties to arbitration proceedings is not an award within the meaning of the Arbitration and Conciliation Act and cannot be enforced under section 36. The court also clarified the limitations of the court's jurisdiction under section 36 of the Act.

Headnote:

Arbitration and Conciliation Act - Necessary and Proper Parties - 36

Fact of the Case:

Dispute arose between Puri Construction Ltd. and CREF Finance Ltd. Arbitration proceedings initiated. CREF Finance Ltd. sought to implead five more parties as confirming parties in the arbitration agreement. Arbitrator held the five parties are not necessary or proper parties to the arbitration proceedings. Petition filed for enforcement of the arbitrator's order.

Finding of the Court:

The court held that the petitioners' claim for enforcement of the arbitrator's order was misconceived. The order was not an award within the meaning of the Act. The court also stated that the reliefs sought by the petitioners, including a declaration and permanent injunction, could not be granted by the court under section 36 of the Act.

Issues: Whether the petitioners were necessary or proper parties to the arbitration proceedings. Whether the petition for enforcement of the arbitrator's order was valid.

Ratio Decidendi: The court determined that the order of the arbitrator was not an award within the meaning of the Act and could not be enforced under section 36. The court also clarified that the reliefs sought by the petitioners could not be granted by the court under section 36 of the Act.

Final Decision: The court held that the petition was misconceived and dismissed it.

Mukundakam Sharma, J

( 1 ) BY this judgment and order I propose to dispose of the petition filed by the petitioners under section 36 of the Arbitration and Conciliation Act, 1996 (for short `the Act ) praying for execution of the alleged award dated January 12, 2001 passed by Hon ble Mr. Justice S. Ranganathan, the learned Sole Arbitrator, in I. A. No. 8 of 2000 in the arbitration proceedings pending before him upon reference from this Court by order dated April 12, 1999 in A. A. No. 362 of 1998. Disputes having arisen between Puri Construction Ltd. and CREF Finance Ltd. , the same were referred for adjudication through the process of arbitration of Hon ble Mr. Justice S. Ranganathan by order of this Court dated April 12, 1999. The said reference was made on the basis of an agreement between the aforesaid two parties dated July 30, 1997 which contained an arbitration clause. Pursuant to the aforesaid reference, the learned Arbitrator entered into the reference and when the said arbitration proceedings were continuing, an application was filed by the respondent herein, namely, CREF Finance Ltd. praying for impleading five more parties as parties to the aforesaid arbitration proceedings on the ground that the said five parties were confirming parties in the agreement dated July 30, 1997. The said five parties are the present petitioners before this Court who have described themselves in the present petition as decree-holders.

( 2 ) HOWEVER, it is required to give a little background about the status of the five parties so as to appreciate the contentions of the parties. Shri Mohinder Puri is the Managing Director and his son Shri Arjun Puri is a Director of Puri Construction Ltd. , whereas Shri Sunil Manchanda is the son-in-law of Shri Mohinder Puri. Florentine Estates of India Limited, petitioner No. 1, and Mad Entertainment Network Ltd, petitioner No. 2, are two wholly owned subsidiaries of Puri Construction Ltd. The respondent s case in the said application which was filed by it on July 25, 2000 before the learned Arbitrator was that not only the Puri Construction Ltd. but all the aforesaid five persons are parties to the arbitration agreement as they are confirming parties in the said agreement and, therefore, they are proper and necessary parties to the arbitration and they should be formally impleaded in the proceedings. The stand of the present petitioners in this case before the learned Arbitrator was that they were not parties to any arbitration agreement with the respondent and that the scope of the reference to the Arbitrator was confined only to the disputes between Puri Construction Ltd. and CREF Finance Ltd. as would be crystal clear from the terms of reference of the High Court. The learned Arbitrator considered the rival submissions and the statements and other connected records, and on appreciation thereof held that Puri Construction Ltd. s five associates are not parties to the arbitration agreement of July 30, 1997 or February 24, 1998/march 25, 1998 within the meaning of the Act who could invoke or against whom could be invoked, the provisions of the Act. The learned Arbitrator further held that the disputes of Puri Construction Ltd. were only with CREF Finance Ltd. which are the two parties to the agreement and, therefore, the said five parties are neither necessary nor proper parties to the arbitration proceedings. After coming to the aforesaid conclusion, the learned Arbitrator by his order dated January 12, 2001 dismissed the application filed by CREF Finance Ltd. for impleadment of the aforesaid five parties to the arbitration proceedings holding the said application to be misconceived. After passing of the said order the present petition is filed praying for enforcement of the said order passed by the learned Arbitrator. However, the reliefs which are sought for by filing this petition require specific mention and, therefore, they are extracted here-in-below :-

A. BY permanently and mandatorily injunctin







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