2019 Supreme(Ori) 266

IN THE HIGH COURT OF ORISSA, CUTTACK
Biswanath Rath, J.
Indian Farmers Fertilizer Co-Operative Ltd - Appellant
Vs.
Bhadra Products - Respondent
Arbitration Application No. 47 of 2018
Decided On : 12-03-2019

The commencement of arbitration proceedings for the purpose of limitation or otherwise is of great significance. If a proceeding commences, the same becomes relevant for many purposes including that of limitation.

Headnote:

ARBITRATION - LIMITATION - COMMENCEMENT OF ARBITRATION PROCEEDINGS - SECTION 21 AND 43 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - INTERPRETATION - AWARD OF ARBITRATOR - JUDICIAL REVIEW - SCOPE - SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - PUBLIC POLICY OF INDIA - INTERPRETATION - AWARD AGAINST PUBLIC POLICY - GROUNDS - AWARD BASED ON PLAUSIBLE VIEW - INTERFERENCE BY COURT.

Fact of the Case:

The appellant, a Co-operative society limited under the provision of Multi State Co-operative Societies Act, was engaged in manufacture of different type of chemical fertilizer and having its factory at Musadia, Paradeep in the District of Jagatsinghpur. For arising of a dispute between the appellant and the respondent on supply of Defoamer, an arbitration proceeding was initiated before the learned Arbitrator Mr. Justice Deepak Verma (Retd.) registered as Arbitration Case No.DAC/665(D)/12-14. The learned Arbitrator prioritized the hearing on the issue no.2 as preliminary issue and by order dated 23.7.2015 passed the first partial award holding therein that the arbitration proceeding is not hit by limitation. Being aggrieved by this order of the Arbitrator the appellant preferred application U/s.34 of the Arbitration and Conciliation Act, 1996 in the Court of District Judge, Jagatsinghpur registered as ARBP No.21 of 2015. The proceeding U/s.34 of the Arbitration and Conciliation Act, 1996 was finally dismissed by the learned District Judge, Jagatsinghpur holding that, the proceeding U/s.34 of the Act, 1996 before it is not maintainable as the first partial award on the point of Lamination cannot be treated as an interim award. Being aggrieved by the order of the learned District Judge dismissing the proceeding U/s 34 of the Act, 1996 as not maintainable, the present appellant moved this Court U/s 37 of the Act, 1996, being registered as ARBA No.31 of 2015 and this appeal was dismissed by this Court on 30.6.2017 thereby confirming the above District Judge's order. Being aggrieved by the order dated 30.6.2017 involving Arbitration Appeal No.31 of 2015 the appellant moved Hon'ble Apex Court in Special Leave Petition vide SLP(C) no.19771/17 on admission subsequently registered as Civil Appeal No.824 of 2018. This Civil Appeal was allowed by the Hon'ble Apex Court by its judgment dated 23.01.2018 reported in 2018 SCC Online SC 38 holding that the first partial award of the Arbitrator falls in the trap of interim award and thus can be challenged U/s.34 of the Act, 1996 and thereby issuing a consequential direction to the District Judge for deciding the proceeding U/s.34 of the Act 1996 on merit involved therein. For no disposal of Section 34 proceeding even after direction of the Hon'ble Apex Court, present appellant filed W.P.(C) No.6352 of 2018 for issuing a direction to the District Judge for timely disposal of the Section 34 proceeding. On 18.4.2018 this Court passed an interim order involving W.P.(C) No.6352 of 2018 directing therein for stay of proceeding before the Arbitrator (DAC) Case no.DAC/665(D)/12-14 and at the same time also directed the District Judge for taking a decision on the stay application at the instance of the appellant, in the meantime while fixing the case to 2.05.2018 for final hearing but under fresh admission category. Being aggrieved by the order dated 18.04.2018 in W.P.(C) No.6352 of 2018 present respondent moved the Hon'ble Apex Court in Special Leave to Appeal (C) No.13264 of 2018. This Special Leave to Appeal (C) was taken up by the Hon'ble Apex Court on 9.07.2018 and on which date, after hearing the respective submissions the Hon'ble Apex Court by order dated 9.07.2018 directed the District Judge to decide the proceeding U/s.34 of the Act, 1996 involving a preliminary point within one month. Based on the above direction of the Hon'ble Apex Court, the District Judge, Jagatsinghpur heard the proceeding U/s34 of the Act, 1996 ARBP No.21/15 on merit finally and by his judgment dated 24.08.2018 was pleased to dismiss the application under Section 34 and thereby confirming the first partial award of the learned Arbitrator dated 23.07.2015. Being aggrieved by the judgment dated 24.08.2018 in the Arbitration Petition No.21 of 2015 the present appellant preferred this Arbitration Appeal U/s.37 of the Act, 1996 bearing ARBA 47 of 2018. Entertaining the appeal this Court by order dated 7.12.2018 while directing for notice to the respondent also directed for stay of further proceeding involving Arbitration Case No.DAC/665(D)/12-14. In the meantime, involving SLP(C) No.13264 of 2018 by order dated 18.02.2019 the Hon'ble Apex Court while directing for disposal of the proceeding U/s 37 of the Act, 1996 on merit at earliest and preferably within a period of four weeks from the date of order, directed this Court for time bound disposal of the ARBA No.47 of 2018.

Finding of the Court:

The Court held that the first partial award of the learned Arbitrator holding that the claim is not barred by limitation and the consequential judgment of the learned District Judge in Arbitration petition No.21/2015 are sustainable. The Court also held that the learned District Judge has answered the ground of challenge being raised by the appellant and as taken note by the learned District Judge in paragraph-4 of the impugned judgment.

Issues: 1. Whether the first partial award of the learned Arbitrator holding that the claim is not barred by limitation and the consequential judgment of the learned District Judge in Arbitration petition No.21/2015 are sustainable ? 2. Whether the learned District Judge has answered the ground of challenge being raised by the appellant and as taken note by the learned District Judge in paragraph-4 of the impugned judgment?

Ratio Decidendi: 1. The Court held that the arbitration commences on the date, on which a request for the dispute to be referred to arbitration is received by the respondent. There is no denial to the fact that the claimant vide notice dated 6.6.2011 made the claim for payment of balance sale price with interest as indicated therein, rather such claim was denied by the present appellant by its correspondence dated 27.9.2012 and finally the claimant-respondent issued a notice to opt for arbitration on 1.10.2014 and there appears no material in denial of any such notice by the appellant herein. Therefore, looking to the legal provision indicated herein above, this Court finds, even though there is no material/pleading as to when the notice dated 1.10.2014 by the claimant was received by the present appellant and further this Court not finding any dispute by the appellant on issuance of such notice, this Court finds, in the worse the cause of action in raising the arbitration proceeding at the minimum becomes 1.10.2014. 2. The Court held that the power of the District Judge dealing with matter under Section 34 of the Act, 1996 is very very restricted and as such, this Court approves the observation of the District Judge on its scope in deciding such matters. Coming to issue no.2 framed by this Court particularly on the allegation of Sri Parija, learned senior counsel that it was required for the learned District Judge to answer the question taken note of in paragraph-4 of the impugned judgment, on Perusal of the discussions in paragraphs-11 & 12, this Court finds, the question taken note of by the learned District in paragraph-4 of the impugned judgment has been taken care of. Thus this issue is also answered against the appellant.

Final Decision: The Arbitration Appeal was dismissed.