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2023 Supreme(Online)(KER) 22197
HIGH COURT OF KERALA
C.S. DIAS, J
THE KOTTAYAM MUNICIPALITY – Appellant
Versus
M/S RAMKY ENERGY AND ENVIRONMENT LIMITED, – Respondent
OP(C) 81 2023
AJIT JOY
Judicial intervention in arbitration must be restrictively applied, preserving the arbitral process' integrity and adhering to statutory procedural mandates.
Headnote:
Arbitration - Jurisdiction - Arbitration and Conciliation Act, 1996 - Sections 16, 37 - The court emphasizes the arbitration process as a self-contained code, asserting the necessity to resolve jurisdictional issues firstly within the tribunal, limiting court intervention.
Fact of the Case:
The petitioner municipal body sought to overturn Arbitral Tribunal orders which deferred consideration of a limitation plea in arbitration proceedings regarding a waste disposal project with a respondent company. The petitioner claimed the process violated the Act.
Finding of the Court:
The court found that the Arbitral Tribunal's deferral of the limitation plea to the final hearing stage did not constitute an exceptional circumstance warranting judicial intervention under Article 227. The court emphasized the statutory framework of the Arbitration and Conciliation Act.
Issues: Whether the High Court could intervene in the Arbitral Tribunal's deferral of a plea regarding limitation until the final stages of arbitration.
Ratio Decidendi: The court stressed that jurisdictional challenges must be resolved by the arbitration tribunal in the first instance as per Section 16 of the Act, reinforcing the principle of minimal intervention by courts in arbitration matters.
Final Decision: The original petition was dismissed, reaffirming the Arbitral Tribunal's authority to manage its processes.
JUDGMENT
The original petition is filed to set aside Exts.P9 and P11 orders passed by the Arbitral Tribunal in Arbitration Proceedings No.2/2017.
2. The thumbnail sketch of the facts leading to Exts.P9 and P11 are:
2.1. The petitioner municipality had entered into Ext.P1 concession agreement with the respondent company for the erection of a waste disposal project.
2.2. Disputes arose between the parties, and the respondent invoked the arbitration clause in Ext.P1 agreement. Ultimately, the Honourable Supreme Court appointed the Arbitral Tribunal by Ext.P2 order.
2.3. The petitioner has filed Ext.P3 preliminary objection, inter alia, contending that the claim statement filed by the respondent is hopelessly barred by limitation.
2.4. The petitioner has also filed Ext.P4 application under Section 16 (3) of the Arbitration and Conciliation Act, 1996 (in short, ‘Act’) to treat the preliminary objection as a challenge to the jurisdiction of the Arbitral Tribunal. The respondent filed Ext.P5 reply to Ext.P3 preliminary objection.
2.5. The petitioner repeatedly requested before the Arbitral Tribunal to hear the preliminary objection.
2.6. By Ext.P6 minutes dated 24.05.2022, the Arbitral Tribunal recorded that the preliminary objection would be heard on 28.06.2022.
2.7. The preliminary objection was heard on
06.08.2022, and the Arbitral Tribunal, by Ext.P7 minutes, held that an opportunity would be given to both sides to argue on the plea of limitation. However, by Ext.P9 minutes, the Arbitral Tribunal held that the plea of limitation would be heard as a preliminary issue at the time of final arguments.
2.8. Ext.P9 is not in line with Exts.P6 and P7 decisions. Hence, the petitioner filed Ext.P10 application requesting the Arbitral Tribunal to hear and decide the preliminary objection.
2.9. The Presiding Arbitrator, by Ext.P11 e-mail, has informed the petitioner that Ext.P9 order would stand and the present application could not be entertained.
2.10. The course adopted by the Arbitral Tribunal is against the scheme and provisions of the Act. Therefore, Exts.P9 and P11 may be set aside, and the Arbitral Tribunal may be directed to decide on Ext.P3 preliminary objection. Hence, the original petition.
3. Heard; Sri.Ajit Joy, the learned Counsel appearing for the petitioner on admission.
4. The petitioner’s contention in Exts.P3 and P4 objections is that the claim petition filed by the respondent is hopelessly barred in view of the provisions of the Limitation Act, 1963. Hence, the petitioner wants the said objection to be considered as a preliminary issue.
5. The Arbitral Tribunal, taking into account that the parties have no oral evidence, by Ext.P9 order, held that the issue of limitation can be considered as a preliminary issue at the time of final arguments.
6. Although the petitioner filed Ext.P10 application reiterating its request, the Principal Arbitrator rejected the request by Ext.P11 order. The net result of Exts.P9 and P11 is that the petitioner’s request to consider its preliminary objection has been deferred for consideration to the final hearing stage.
7. This Court has its reservations on whether a plea of limitation ― a mixed question of law and fact ― would fall within the fold of Section 16 of the Act. Nevertheless, as the Arbitral Tribunal is seisin of the matter, this Court refrains from delving further on the said question.
8. If at all the deferment of Exts.P3 and P4 objection to the final stage of the proceeding is to be treated as a rejection of the petitioner’s request, then the petitioner has no other option but to wait till the award is passed as stipulated under Section 16 (6) of the Act. Furthermore, only an order accepting a plea under Sections 16 (2) or (3)
of the Act is appealable under Section 37 (2) of the Act. 9. The above question is no longer res integra in the light of the declaration of law inDeep Industries Ltd. v. Oil and Natural Gas Corporation Ltd. [ (2020) 15 SCC 706 ], wherein the Honourable Supreme Court he
