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2010 Supreme(P&H) 2290

PUNJAB & HARYANA HIGH COURT
Permod Kohli, J.
Punjab Agro Industries Corporation Limited
Versus
Kewal Singh Dhillon
CWP. No. 9889 of 2002,
Decided On : AUGUST 11, 2010

Headnote:

Arbitration - Agreement Dispute - Indian Arbitration Act, 1940, or any modification or re-enactment thereof for the time being in force - The court discussed the application of Clause 36 of the agreement, the jurisdiction of the Chief Justice or designated Judge under Section 11(6) of the Act, and the delegation of power to appoint arbitrators. The court emphasized that the power under Section 11(6) could only be delegated to a Judge of the High Court and clarified the validity of orders for appointment of arbitrators or arbitral tribunals made by Subordinate Judges under Section 11(6) of the Act.

Fact of the Case:

The petitioner entered into an agreement for setting up a project through a jointly promoted company. Disputes arose, and the petitioner invoked an arbitration clause for settlement of the disputes. The application for appointment of arbitrators was rejected by the Civil Judge (Sr. Division), Chandigarh, and the petitioner filed a writ petition challenging the order.

Finding of the Court:

The court held that the order rejecting the application was without jurisdiction, in view of the Constitution Bench judgment of the Honble Supreme Court in the case of M/s. S.B.P. & Co. The impugned order was declared as nullity and without jurisdiction, and the petitioner's application under Section 11(4) of the Act was revived.

Issues: The main issue was the jurisdiction of the Civil Judge (Sr. Division) to reject the application under Section 11(4) of the Arbitration and Conciliation Act, 1996.

Ratio Decidendi: The power under Section 11(6) of the Act could only be delegated to a Judge of the High Court, and orders for appointment of arbitrators or arbitral tribunals made by Subordinate Judges under Section 11(6) were clarified to be valid.

Final Decision: The impugned order passed by the Civil Judge (Sr. Division) was declared as nullity and without jurisdiction, and the petitioner's application under Section 11(4) of the Act was revived and deemed to be pending before the Civil Judge.

Judgment

Permod Kohli, J.

1. The petitioner entered into an agreement dated 23.7.1986 (Annexure P-1) for setting up of a Project through a company to be jointly promoted by the parties. It appears that some disputes arose between the parties. The agreement contained an Arbitration Clause 36 for settlement of the disputes between the parties. Clause 36 reads as under:

"36. A11 differences anal disputes between the parties hereto on any clause or matter herein contained or their respective rights, claims or liabilities hereunder or otherwise however, in relation to or arising out of this agreement, shall be referred to arbitration by two arbitrators (one to be appointed by each party), who shall before proceeding with the reference, appoint an umpire and such arbitration shall be governed by the Indian Arbitration Act, 1940, or any modification or re-enactment thereof for the time being in force."

Since Clause 36 provides for settlement of disputes through the arbitral Tribunal comprising of two Arbitrators, one to be appointed by each party, the petitioner claims to have invoked the said Clause by issuing a notice to respondents appointing one Shri R.T. Jindal, IAS as its Arbitrator and vide another notice dated 19.3.1997, the petitioner called upon the respondent to appoint his Arbitrator in terms of Clause 36. It appears that respondent did not respond. The petitioner accordingly filed application under Section 11 (4) of the Arbitration and Conciliation Act, 1996 (hereinafter called as the Act) in the Court of Civil Judge (Sr. Division), Chandigarh for appointment of the Arbitrators. Civil Judge (Sr. Division), Chandigarh rejected the application of the petitioner vide order dated 16.2.2002 (Annexure P-5). It is this order which is under challenge in the present writ petition.

2. This petition came to be dismissed vide order dated 7.7.2006 passed by a Division Bench of this Court on the preliminary objections raised by the respondents regarding the maintainability of the writ petition. Judgment of the Honble Division Bench was challenged before the Honble Supreme court by the petitioner. Honble Supreme Court vide its order dated 25.8.2008 reported as "Punjab Agro Industries Corporation Limited v. Kewal Singh Dhillon, (2008) 10 SCC 128" set aside the judgment of the Division Bench dated 7.7.2006 holding that the writ petition under Article 226 of the Constitution of India is maintainable and remanded the case back to this Court for disposal, in accordance with law. It is under these circumstances this writ petition came up for consideration.

3. Mr. Amit Jhanji, learned counsel for the respondent has again questioned the maintainability of the writ petition, in view of the Constitution Bench judgment of the Honble Supreme in the case of M/s S.B.P. & Co. v. M/s. Patel Engineering Ltd. & Anr., 2005 (4) RCR (Civil) 747. In the aforesaid judgment, Honble Supreme Court held that order passed under Section 11 (6) by Honble the Chief Justice or his designate is a judicial order and writ is not maintainable. The order becomes appealable before the Honble Apex Court. The objection raised by Mr. Jhanji is to be rejected, in view of the clear and categorical dictum of the judgment in the Punjab Agro Industries Corporation Limited (supra) remanding the case to this Court. The relevant observations of the Honble Supreme Court may be noticed as under :-

"9. We have already noticed that though the order under Section 11(4) is a judicial order, having regard to Section 11(7) relating to finality of such orders and the absence of any provision for appeal, the order of the Civil Judge was open to challenge in a writ petition under Article 227 of the Constitution. The decision in SBP does not bar such a writ petition. The observations of this Court in SBP that against an order under Section 11 of the Act, only an appeal under Article 136 of the Constitution would lie, is with reference to the orders made by the Chief Justice of a High Court or by


















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