Back
Gujarat High Court
Judgename :M.R.Shah
Saurashtra Chemicals - Appellant
Versus
K.Ramamoorthy - Respondent
S.C.A. 7528 of 2004
Decided On : 05/13/2005
Notification - Declaring SCL as relief undertaking - Stay of arbitration proceedings - Scope of - Finding as to.
Head Note :
(a) Bombay Relief Undertakings (Special Provisions) Act, 1958 - Sections 3, 4, 4(1)(a)(iv) and 34 - Arbitration and Conciliation Act, 1996 (Central Act 26 of 1999) - Section 16 - Notification - Declaring SCL as a relief undertaking - Stay of arbitration proceedings - Scope of - Finding as to - In view of provision under Section 4 of the Act declaration of SCL as relief undertaking any remedy for enforcement of any right is required to be stayed and not the arbitration proceedings for adjudication and ascertainment any amount due against SCL - This is the proper interpretation in consonance with the provisions of both the Acts - Therefore, under the circumstances the request on the part of petitioner SCL to stay arbitration proceedings before arbitral Tribunal during the operation of the notification issued under Section 4 of the Act of 1958 cannot be accepted and same is rightly rejected by Arbitral Tribunal in an application under Section 16 of Arbitration Act.
Held :
If statement and object of the Arbitration Act of 1996 and the B.R.U. Act are read conjointly, it will appear that the main statement and object of the Arbitration Act of 1996 is enacted for speedy resolution of disputes without intervention of the Courts. If the arbitration proceedings for ascertainment of the amount and the adjudication itself is stayed during the operation of the notification under Section 4 of the Act, in that case the same will be contrary to the statement and object and the legislative intent of enacting the Arbitration Act of 1996. On the other hand, if the adjudication is permitted to go on in an arbitration proceeding and the meaning of the words "remedy for enforcement of right" is given to the extent that the proceedings at the time of execution of the award, if any, is required to be stayed if the Notification under Section 4 of the Act is in operation, then in that case it is not likely to affect the undertaking which is declared as a Relief Undertaking under the B.R.U. Act as no prejudice will be caused to the such Undertaking, meaning thereby by allowing the arbitration proceedings to go on and adjudication and ascertainment of amount, if any, is permitted, it is not likely to render any unemployment and/or closure of the undertaking. Under the circumstances, the Arbitral Tribunal has rightly held that the provisions of Section 4 of the B.R.U. Act only helps the concerned Undertaking with reference to enforcement of liability and "right", privilege, obligation or liability, accrued or incurred can be adjudicated upon and the question of enforcement would arise only thereafter and the object of statute on a proper construction is that in respect of an Undertaking if those things are established the enforcement shall remain suspended.
[Para 13]
The arbitration proceeding for the adjudication and ascertainment of any amount may go on but the effect of Section 4 can be considered at the time of execution of the award which may be declared by the Arbitral Tribunal, and if such an interpretation would be there it will be in consonance with the provisions of the BRU Act as well as the Arbitration Act of 1996. Under the circumstances, the request on the part of the petitioner SCL to stay the arbitration proceedings before the Arbitral Tribunal during the operation of the notification under Section 4 of the B.R.U. Act, cannot be accepted and the same is rightly rejected by the Arbitral Tribunal in an application under Section 16 of the Act. [Para 14]
Head Note :
(b) Constitution of India, 1950 - Articles 12, 136 and 226- Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) - Sections 28(1)(a), 27(5), 36, 20(2), 34, 37, 2(1)(e) and 10-A - Order under - Order passed by sole Arbitrator - Jurisdiction - Maintainability - The question raised and requiring consideration is whether against an order passed by sole Arbitrator under the provisions of the Act, a writ petition is maintainable - Court observed that Arbitral Tribunal is required to adjudicate upon the civil rights between the parties and discharges judicial function - The award passed by Arbitrator is enforceable under the provisions of Civil Procedure Code, 1908 in the manner as if it were a decree of the Court - In the facts and circumstances and the Scheme of the Act of 1996 it cannot be said that against an order passed by Arbitral Tribunal under the Act petition under the writ jurisdiction is not maintainable.
Held :
It is required to be noted that an Arbitral Tribunal is required to adjudicate upon the civil rights between the parties which otherwise would be adjudicated upon by the Courts of India under the relevant statutes. An Arbitral Tribunal discharges judicial function and the award passed by the Tribunal is subject to challenge before the Civil Court. An Arbitral Tribunal owes a duty to the parties to determine whether the term is barred by limitation under the provisions of the Limitation Act or not. As per Section 36 of the Act, the award can be enforced under the provisions of Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court. Considering the aforesaid facts and circumstances and the scheme of the Arbitration Act of 1996 and the aforesaid judgments, it cannot be said that against an order passed by the Arbitral Tribunal under the provisions of the aforesaid Act of 1996 petition under Article 226 of the Constitution of India is not maintainable.
[Para 10.1]
Head Note :
(c) Constitution of India, 1950 - Article 226 - Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) - Sections 16, 20 and 21 - Application with regard arbitration and refusal to stay proceedings and venue of arbitral proceedings - Dismissal of - Petition to challenge order - Jurisdiction - Finding as to - The Courts have only supervisory role in arbitral process - Under provisions of Section 16 of the Act there is an adequate and proper remedy provided to have the arbitral award set aside under Section 34 of the Act - If the Arbitral Tribunal holds that it has jurisdiction such as order cannot be said to be illegal and without jurisdiction at that stage and such an order can be challenged only in the manner laid down in Sub-section (5) and (6) of Section 16 i.e. after the proceedings are over and the award is made - Under the circumstances against the order of dismissal of applications made by SCL and Birla VXL by Arbitrator the only remedy is to wait till the Arbitral Tribunal makes an arbitral award and thereafter to make an appropriate application under Section 34 of the Act for setting aside such an award - Therefore, inspite of holding that against the order passed by the Arbitral Tribunal under Section 16 of the Act writ petition is maintainable - Court at the same time held petition is not required to be maintained.
Held :
Considering the statement and object and in particular Sub-section (5) of Section 16 and Sub-section (6) of Section 16 of the Arbitration Act of 1996, the aforesaid decisions of the Honble Supreme Court and of the other High Courts, when the Arbitral Tribunal, in the present case, has dismissed the application submitted by the SCL and Birla VXL with regard to the arbitration and refused to stay the proceedings and the application under Section 20 with regard to the venue of the arbitral proceedings, and it has been decided to proceed further with the arbitration proceedings, the only remedy available to the petitioners is to wait till the Arbitral Tribunal makes an arbitral award to move an application for setting aside the same in accordance with Section 34 of the Act. Under the circumstances, while holding question No.1 in affirmative to the effect that against the order passed by the Arbitral Tribunal under Section 16 of the Act, writ petition under Article 226/227 of the Constitution of India is maintainable, at the same time, considering the scope and ambit of Section 16 of the Act read with the statement of object of the Arbitration Act, a petition under Article 226 of the Constitution of India is not required to be entertained, and the only remedy is to wait till the Arbitral Tribunal makes an arbitral award and thereafter to make an appropriate application under Section 34 of the Act for setting aside such an arbitral award. [Para 11.9]
Law Laid Down :
The effect of declaration of SCL as relief undertaking may be considered at the time of execution of award declared by Arbitral Tribunal and not during arbitration proceedings for adjudication and ascertainment of any amount due against SCL.
Point in Issue :
Notification - Declaring SCL as relief undertaking - Stay of arbitration proceedings - Scope of - Finding as to.
Head Note :
(a) Bombay Relief Undertakings (Special Provisions) Act, 1958 - Sections 3, 4, 4(1)(a)(iv) and 34 - Arbitration and Conciliation Act, 1996 (Central Act 26 of 1999) - Section 16 - Notification - Declaring SCL as a relief undertaking - Stay of arbitration proceedings - Scope of - Finding as to - In view of provision under Section 4 of the Act declaration of SCL as relief undertaking any remedy for enforcement of any right is required to be stayed and not the arbitration proceedings for adjudication and ascertainment any amount due against SCL - This is the proper interpretation in consonance with the provisions of both the Acts - Therefore, under the circumstances the request on the part of petitioner SCL to stay arbitration proceedings before arbitral Tribunal during the operation of the notification issued under Section 4 of the Act of 1958 cannot be accepted and same is rightly rejected by Arbitral Tribunal in an application under Section 16 of Arbitration Act.
Held :
If statement and object of the Arbitration Act of 1996 and the B.R.U. Act are read conjointly, it will appear that the main statement and object of the Arbitration Act of 1996 is enacted for speedy resolution of disputes without intervention of the Courts. If the arbitration proceedings for ascertainment of the amount and the adjudication itself is stayed during the operation of the notification under Section 4 of the Act, in that case the same will be contrary to the statement and object and the legislative intent of enacting the Arbitration Act of 1996. On the other hand, if the adjudication is permitted to go on in an arbitration proceeding and the meaning of the words "remedy for enforcement of right" is given to the extent that the proceedings at the time of execution of the award, if any, is required to be stayed if the Notification under Section 4 of the Act is in operation, then in that case it is not likely to affect the undertaking which is declared as a Relief Undertaking under the B.R.U. Act as no prejudice will be caused to the such Undertaking, meaning thereby by allowing the arbitration proceedings to go on and adjudication and ascertainment of amount, if any, is permitted, it is not likely to render any unemployment and/or closure of the undertaking. Under the circumstances, the Arbitral Tribunal has rightly held that the provisions of Section 4 of the B.R.U. Act only helps the concerned Undertaking with reference to enforcement of liability and "right", privilege, obligation or liability, accrued or incurred can be adjudicated upon and the question of enforcement would arise only thereafter and the object of statute on a proper construction is that in respect of an Undertaking if those things are established the enforcement shall remain suspended.
[Para 13]
The arbitration proceeding for the adjudication and ascertainment of any amount may go on but the effect of Section 4 can be considered at the time of execution of the award which may be declared by the Arbitral Tribunal, and if such an interpretation would be there it will be in consonance with the provisions of the BRU Act as well as the Arbitration Act of 1996. Under the circumstances, the request on the part of the petitioner SCL to stay the arbitration proceedings before the Arbitral Tribunal during the operation of the notification under Section 4 of the B.R.U. Act, cannot be accepted and the same is rightly rejected by the Arbitral Tribunal in an application under Section 16 of the Act. [Para 14]
Head Note :
(b) Constitution of India, 1950 - Articles 12, 136 and 226- Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) - Sections 28(1)(a), 27(5), 36, 20(2), 34, 37, 2(1)(e) and 10-A - Order under - Order passed by sole Arbitrator - Jurisdiction - Maintainability - The question raised and requiring consideration is whether against an order passed by sole Arbitrator under the provisions of the Act, a writ petition is maintainable - Court observed that Arbitral Tribunal is required to adjudicate upon the civil rights between the parties and discharges judicial function - The award passed by Arbitrator is enforceable under the provisions of Civil Procedure Code, 1908 in the manner as if it were a decree of the Court - In the facts and circumstances and the Scheme of the Act of 1996 it cannot be said that against an order passed by Arbitral Tribunal under the Act petition under the writ jurisdiction is not maintainable.
Held :
It is required to be noted that an Arbitral Tribunal is required to adjudicate upon the civil rights between the parties which otherwise would be adjudicated upon by the Courts of India under the relevant statutes. An Arbitral Tribunal discharges judicial function and the award passed by the Tribunal is subject to challenge before the Civil Court. An Arbitral Tribunal owes a duty to the parties to determine whether the term is barred by limitation under the provisions of the Limitation Act or not. As per Section 36 of the Act, the award can be enforced under the provisions of Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court. Considering the aforesaid facts and circumstances and the scheme of the Arbitration Act of 1996 and the aforesaid judgments, it cannot be said that against an order passed by the Arbitral Tribunal under the provisions of the aforesaid Act of 1996 petition under Article 226 of the Constitution of India is not maintainable.
[Para 10.1]
Head Note :
(c) Constitution of India, 1950 - Article 226 - Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) - Sections 16, 20 and 21 - Application with regard arbitration and refusal to stay proceedings and venue of arbitral proceedings - Dismissal of - Petition to challenge order - Jurisdiction - Finding as to - The Courts have only supervisory role in arbitral process - Under provisions of Section 16 of the Act there is an adequate and proper remedy provided to have the arbitral award set aside under Section 34 of the Act - If the Arbitral Tribunal holds that it has jurisdiction such as order cannot be said to be illegal and without jurisdiction at that stage and such an order can be challenged only in the manner laid down in Sub-section (5) and (6) of Section 16 i.e. after the proceedings are over and the award is made - Under the circumstances against the order of dismissal of applications made by SCL and Birla VXL by Arbitrator the only remedy is to wait till the Arbitral Tribunal makes an arbitral award and thereafter to make an appropriate application under Section 34 of the Act for setting aside such an award - Therefore, inspite of holding that against the order passed by the Arbitral Tribunal under Section 16 of the Act writ petition is maintainable - Court at the same time held petition is not required to be maintained.
Held :
Considering the statement and object and in particular Sub-section (5) of Section 16 and Sub-section (6) of Section 16 of the Arbitration Act of 1996, the aforesaid decisions of the Honble Supreme Court and of the other High Courts, when the Arbitral Tribunal, in the present case, has dismissed the application submitted by the SCL and Birla VXL with regard to the arbitration and refused to stay the proceedings and the application under Section 20 with regard to the venue of the arbitral proceedings, and it has been decided to proceed further with the arbitration proceedings, the only remedy available to the petitioners is to wait till the Arbitral Tribunal makes an arbitral award to move an application for setting aside the same in accordance with Section 34 of the Act. Under the circumstances, while holding question No.1 in affirmative to the effect that against the order passed by the Arbitral Tribunal under Section 16 of the Act, writ petition under Article 226/227 of the Constitution of India is maintainable, at the same time, considering the scope and ambit of Section 16 of the Act read with the statement of object of the Arbitration Act, a petition under Article 226 of the Constitution of India is not required to be entertained, and the only remedy is to wait till the Arbitral Tribunal makes an arbitral award and thereafter to make an appropriate application under Section 34 of the Act for setting aside such an arbitral award. [Para 11.9]
Law Laid Down :
The effect of declaration of SCL as relief undertaking may be considered at the time of execution of award declared by Arbitral Tribunal and not during arbitration proceedings for adjudication and ascertainment of any amount due against SCL.
Cases Law Analysis :
Andi Mukta Sadguru Shree Muktajeevandas Swami Suvarna Jayanti Mahotsav Smarak Trust & Ors. vs. V.R. Rudani & Ors., 1989 (2) SCC 691 [Para 8];; O.N.G.C. Ltd. vs. Saw Pipes Ltd, 2000 (5) SCC 705 [Para 8];; Anuptech Equipments Private Ltd. (M/s.) vs. M/s. Ganpati Co-op. Housing Society Ltd., Mumbai & Ors., AIR 1999 Bombay 219 [Para 8];; Rohtas Industries Ltd. vs. Rohtas Industries Staff Union, AIR 1976 SC 425 [Para 8.1];; Engineering Mazdoor Sabha vs. Hind Cycles Ltd. AIR 1963 SC 874 [Para 8.1].-Relied on
Case Referred :
Indian Oil Corporation Ltd. vs. A.T.V. Projects India Ltd. & Anr., 2004 (2) ALR 432;; Subash Singh & Co. vs. Girnar Fibres Ltd., 2000 (1) ALR 430;; Raipur Development Authority vs. M/s. Chokhamal Contractors, AIR 1990 SC 1426;; Rukmanibai Gupta (Smt.) vs. Collector, Jabalpur, 1980 (4) SCC 556 = AIR 1981 SC 479;; Balkishen Gulzari Lal vs. Panna Lal Sud & Ors., AIR 1973 Del. 108;; State of Orissa vs. Lakshminarayan Samantaray & Anr., AIR 1982 Ori. 93;; M. Moideen Kutty vs. Divisional Forest Officer, Nilambur & Ors., 1988 (2) ALR 37;; R. vs. Dispute Committee of the National Joint Council & Ors., 1953 (1) All ER. (QBD) 327;; Executive Committe of Vaish Degree College, Shamli & Ors. vs. Lakshmi Narain & Ors., 1976 (2) SCC 58;; General Manager J&K Cooperative Supply and Marketing Federation vs. Rama Rice & General Mills, 1994 (1) ALR 259;; Dharma Prathisthanan vs. Madhok Construction Pvt. Ltd., 2004 (3) ALR 432 (SC);; Veena Ojha vs. U.P. Stock Exchange Association Ltd. & Ors., 2000 (1) ALR Page 19 (All.);; State of U.P. & Ors. vs. Bridge and Roof Co. (India) Ltd., 1996 (6) SCC 22;; Khardah Company Ltd. vs. Raymon & Co. (India) Private Ltd., AIR 1962 SC 1810;; Konkan Railway Corporation Ltd., vs. Mehul Construction Co., 2000 (7) SCC 201;; New India Assurance Co. Ltd. vs. Hanjer Fibres Ltd., AIR 2003 Guj. 311 (FB);; B.A.S.F. Styrenics Pvt.Ltd. vs. Offshore Industrial Construction Pvt. Ltd. & Anr., 2003 (3) ArbLR 14 (Bom.) (D.B.) (Para 6, 10,11);; Assam Urban Water Supply & Sewage Board vs. Subhas Project & Marketing Ltd. & Anr., 2003 (2) ArbLR 301 (Gau.) (Para 9 to 13);; Babar Ali vs. Union of India, 2000 (2) SCC 178;; BHEL vs. C.N. Garg, 2000 (3) ArbLR 674 (D.B.) (Delhi);; National Buildings Construction Corporation Ltd. vs. Antia Electricals Pvt. Ltd. & Ors., 2003 (2) ArbLR 91;; M. Mohan Reddy vs. Union of India & Ors., 2000(1) ArbLR 39 (A.P.);; Mangayarasi Apparels Pvt. Ltd. vs. Sundram Finance Ltd., Madras; 2002 (3) ArbLR 210 (Madras).;; Kvaerner Cementation India Ltd. vs. Bajrang Lal Aggarwal & Anr., 2001 (6) SCC Page 265;; Nirma Ltd. vs. Lurgi Energie Und Entsorgung GMBH, Germany & Ors., AIR 2003 Guj. 145;; D.S. Patel & Co. (M/s.) vs. The Gujarat State Textile Corporation Limited And Ors., 1972 GLR Page 33 = 1971 (41) CC Page 1098;; Jaysynth Dyechem etc.etc. (M/s.) vs. Mewar Textile Mills Ltd., AIR 1988 Raj. 17;; Eagle Flask Industries Ltd. vs. Talegaon Dabhade Municipal Council & Ors., 2004 (8) SCC 640.
Decided in Favour of :
Respondent
Applications Dismissed
( 1 ) AS common questions of law and facts arise in all the three petitions, they are being disposed of by this common judgment and Order.
( 2 ) IN Special Civil Application No. 7528 of 2004, the petitioner, Saurashtra chemicals Ltd. , [hereinafter be referred to as "scl") has challenged the legality and validity of the order passed by the Sole arbitrator, Justice K. Ramamoorthy (Retd.) dated 20th May 2004 by which the learned sole Arbitrator had dismissed the application submitted by the petitioner under Section 16 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act" ). It is also further prayed for a declaration that the proceedings before the respondent no. 1, i. e. , learned Sole Arbitrator are a nullity in the eye of law and that the Sole arbitrator has no jurisdiction to adjudicate upon the alleged disputes between the parties.
( 3 ) IN Special Civil Application No. 9710 of 2004, the petitioner, Birla VXL limited [hereinafter referred to as "birla vxl"] also challenged the order passed by the respondent No. 1, Sole Arbitrator, Justice k. Ramamoorthy (Retd.) dated 20th May 2004 by which the Sole Arbitrator has also dismissed the application submitted by the petitioner under Section 16 of the Act. It is also further prayed for an appropriate, writ, direction or order declaring that the Sole arbitrator, respondent No. 1 has no jurisdiction to adjudicate upon respondent no. 2 D. L. F. Universal Limiteds claim as against the petitioner Birla VXL Ltd. , and that the proceedings before him qua the petitioner are a nullity.
( 4 ) SO far as Special Civil Application no. 16075 of 2003 is concerned, the same is filed by SCL challenging the order passed by the Sole Arbitrator late Justice N. J. Pandya (Retd.) dated 23rd September 2003 in dismissing the application submitted by the petitioner under Section 16 of the Act not staying the proceedings pending before it during the notification, under the provisions of the Bombay Relief Undertaking act ("bru Act" for short ). It is also further prayed for an appropriate writ, direction or order directing the respondent No. 1 Sole arbitrator to stay the proceedings pending before him at the stage where the said notification under BRU Act was received till the date of expiry of the said notification or till such date to which the said notification is extended. It is also further prayed for directing the respondent No. 1 Sole Arbitrator not to proceed with the pronouncement of the award till said notification remains in force till the date of expiry of the said notification or till such date to which the said notification is extended.
( 5 ) IN the present group of. petitions, the following questions arise for consideration; (i) Whether against the interlocutory order and/or order passed by the Sole arbitrator passed under the provisions of the act a writ petition under Article 226 of the constitution of India is maintainable; (ii) If against the interlocutory order/ order passed by the Sole Arbitrator passed under the provisions of the Act, more particularly order passed under Sec. 16 of the Act, a petition under Article 226 of the constitution of India is maintainable in that case whether the petition is required to be entertained or not; (iii) In view of the Notification issued by the State Government under the provisions of BRU Act declaring the company as relief Undertaking whether the arbitration proceedings against the said company can be proceeded further or is required to be stayed till the validity of the said Notification.
( 6 ) FEW facts are necessary for the purpose of determination of the present group of petitions. The respondent No. 2, DLF universal Limited (hereinafter referred to as "dlf") entered into a contract with the petitioner of Special Civil Application No. 9710 of 2004, Birla VXL and the said Birla vxl placed 3 purchase orders upon DLF in the month of December 1994 for its Chemical division. It appears that during perform
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
