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2022 Supreme(Megh) 279

HIGH COURT OF MEGHALAYA AT SHILLONG
H.S. Thangkhiew, J.
Chief Engineer (Pwd) (National Highways) Government of Meghalaya, Shillong - Appellant
Versus
BSC - C&C JV - Respondent
CRP No. 11 of 2022
Decided On : 09-05-2022

Advocates appeared:
Mr. S. Sahay, Adv, Ms. R. Colney, GA, for the Petitioner; Mr. U. Hazarika, Sr. Adv. with Mr. L. Khyriem, Adv, Ms. G. Mohan, Advocate, for the Respondent

IMPORTANT POINT
The main legal point established in the judgment is that an Arbitral Tribunal lacks inherent jurisdiction to reconsider a claim that has already been considered and an award has been passed on it.

Headnote:

Arbitration - Jurisdiction - Arbitration and Conciliation Act, 1996 - Section 31(6), Section 33, Section 34 - The court held that the Arbitral Tribunal lacked inherent jurisdiction in framing issue No.1 on the entire Claim No.1 on which an interim award had already been pronounced on 27.07.2021. The issue was set aside and quashed, directing the Arbitral Tribunal to proceed on the other issues and claims as indicated in the order dated 14.02.2022.

Fact of the Case:

The petitioner challenged the impugned order passed by the Arbitral Tribunal, contending that the Tribunal lacked inherent jurisdiction to reconsider Claim No. 1, as it had already been considered and an award had been passed on it. The petitioner argued that the impugned order was passed without jurisdiction, against the provisions of the Arbitration Act, and in violation of the doctrine of functus officio and res judicata.

Finding of the Court:

The court found that the Arbitral Tribunal lacked inherent jurisdiction in framing issue No.1 on the entire Claim No.1, as an interim award had already been pronounced on 27.07.2021. The issue was set aside and quashed, directing the Arbitral Tribunal to proceed on the other issues and claims as indicated in the order dated 14.02.2022.

Issues: The main issue was whether the Arbitral Tribunal had jurisdiction to reconsider Claim No. 1, which had already been considered and an award had been passed on it.

Ratio Decidendi: The court held that the Arbitral Tribunal lacked inherent jurisdiction in framing issue No.1 on the entire Claim No.1, as an interim award had already been pronounced on 27.07.2021. The court also noted that the proceedings had become locked in a procedural wrangle between the parties, resulting in delayed arbitration proceedings.

Final Decision: The petition was allowed, and the issue No.1 as appearing in the impugned order dated 14.02.2022 was set aside and quashed. The Arbitral Tribunal was directed to proceed on the other issues and claims as indicated in the order dated 14.02.2022.

JUDGMENT

1. The instant petition under Article 227 is a second round of litigation that is before this Court between the same parties, though in the present proceedings the erstwhile respondent in the earlier round (CRP No. 2 of 2022) is now the petitioner. The petitioner is aggrieved with the impugned order dated 14.02.2022 passed by the Arbitral Tribunal constituted for adjudication of disputes in relation to Agreement dated 21.02.2011 for the 2-laning Project for Nongstoin-Shillong Section of NH-44 under the Special Accelerated Road Development Programme (SARDP-NE) of the Ministry of Road Transport and Highways.

2. The brief facts are that the Arbitral Tribunal vide an interim award dated 27.07.2021 was pleased to award an amount of Rs. 75 Crores to the respondent by partly allowing an application of the respondent under Section 31(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') which was made, seeking an interim award in respect of Claim No. 1 in the Arbitral proceedings. An application under Section 33 of the Act was then filed by the respondents before the Arbitral Tribunal seeking certain modifications in the award which however, came to be rejected by an order dated 21.12.2021. By order dated 14.02.2022 the Arbitral Tribunal then framed issues for its determination in the said Arbitration proceedings and the first issue framed was with regard to the amounts claimed by the respondents under Claim No. 1.

3. The grievance of the petitioner centres around the contention that the Arbitral Tribunal patently lacks inherent jurisdiction to reconsider Claim No. 1, inasmuch as, the same had already been considered and an award had been passed thereon, dated 27.07.2021. The Arbitral Tribunal by a subsequent order dated 21.12.2021 passed under a Section 33 application, had also rejected prayers for modification of the award in respect of Claim No. 1 which the petitioner asserts had finally decided the Claim No. 1, but by framing issue No. 1 on Claim No.1, vide the impugned order, the Arbitral Tribunal had conferred authority on itself to award further amounts on a claim which it had already decided. The impugned order is assailed on the grounds that the same had been passed without jurisdiction, against the provisions of the Arbitration Act and in violation of the doctrine of functus officio and res-judicata.

4. Mr. S. Sahay, learned counsel for the petitioner submits that Claim No. 1 had been finally determined by the award dated 27.07.2021 passed by the learned Arbitral Tribunal and as per Section 35, is enforceable as a decree under the Act, and as such Claim No. 1 being decreed by the award, the Arbitral Tribunal is therefore functus officio in respect of Claim No. 1. Learned counsel has referred to IFFCO Ltd. v. Bhadra Products, (2018) 2 SCC 534 and McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 to emphasize the point that an interim award is not subject to a final award but is a final award on matters covered thereby, which he submits is the position in the instant case, as the award dated 27.07.2021 covers Claim No. 1 and therefore, is final as far as Claim No. 1 is concerned.

5. It is also argued that the respondent's application under Section 33 before the Arbitral Tribunal is a clear admission of the fact that Claim No. 1 has been finally decided, since an additional award as per Section 33 (4) can be sought only in respect of Claims already presented in the arbitral proceedings but omitted from the award; and the rejection of the same by order 21.12.2021, he contends, clearly reflects that no additional award or clarification as sought by the claimant, was made out. He submits that the only remedy against rejection of a Section 33 application is by preferring a Section 34 petition under the Act. The framing of the first issue by the Arbitral Tribunal as to the entitlement of the respondent over amounts claimed by it under Claim No. 1, he submits has given a n

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