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2016 Supreme(Online)(SC) 650

SUPREME COURT
Justices, J
Mahanagar Telephone Nigam Ltd. v. Applied Electronics Ltd. (M/s.)
Special Leave Petition (Civil) No. 18439 of 2014



Advocates:
For the Appellants/Petitioners: Mr. N. K. Kaul, learned Additional Solicitor General
For the Respondents: Mr. Arun Kumar Varma, learned senior counsel

The Arbitration and Conciliation Act, 1996 is a self-contained code, and the CPC does not apply; cross-objections under the CPC cannot be entertained.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 5, 34, 37 and 50 - Applicability of the Code of Civil Procedure, 1908 - The High Court ruled that CPC applies to arbitration proceedings under the 1996 Act, a stance challenged on grounds of legislative intent and code completeness; emphasis on minimizing judicial intervention during arbitration proceedings. (Paras 3, 28)

(B) Judicial Review - Cross-objections - The court ruled that while a cross-objection mimics an appeal, it cannot be entertained under the 1996 Act due to its self-contained nature and exclusion of CPC provisions, necessitating legislative reconsideration. (Paras 28, 29)

Facts of the case:
The appeal questions a High Court ruling on the applicability of CPC in arbitration matters, noting it contradicted legislative intent detailed in the 1996 Act designed to streamline arbitration processes and minimize judicial interference.

Findings of Court:
The Supreme Court determined that no explicit provision under the 1996 Act favors the applicability of CPC; therefore, cross-objections are not maintainable. Emphasized need for a larger bench to reconsider ITI Ltd.'s precedent on the matter.

Issues: The court addressed whether cross-objections are maintainable under the 1996 Act, focusing on legislative intent and judicial intervention limits.

Ratio Decidendi: The court found the 1996 Act to be a self-contained code and ruled that the CPC does not apply, establishing that judicial intervention should not obstruct arbitration proceedings unless legislatively sanctioned.

Result: Appeal dismissed, and papers to be placed before the Chief Justice for a larger bench consideration.

Table of Content
1. contested the legal application of cpc in arbitration. (Para 2 , 3)
2. responses supporting cpc's applicability in arbitration. (Para 4 , 5)
3. legislative intent supports minimal judicial intervention. (Para 6 , 10 , 12)
4. final ruling on the dismissal of the appeal. (Para 13)
5. cpc not applicable; cross-objections not maintainable. (Para 28 , 29)

1. Leave granted.

2. The present appeal, by special leave, calls in question the legal tenability of the order dated 28th July, 2014 passed by the High Court of Delhi wherein a Division Bench in CM No. 15530 of 2013 placing reliance on Satpal P. Malhotra And Others v. Puneet Malhotra And Others , Arbitration Appeal No. 12 of 2010 decided on 14th June, 2013 that has followed the decision ins MCD v. International Security & Intelligence Agency Ltd., 2004 (3) SCC 250 has expressed the view that the Code of Civil Procedure, 1908 (for short 'the CPC') would be applicable to the proceedings under the Arbitration and Conciliation Act, 1996 (for short 'the 1996 Act). Be it stated, while expressing the view that the CPC is applicable to an appeal preferred under S.37 of the Act, the High Court has in the impugned order opined that the cross - objection preferred by the respondent herein was maintainable and accordingly entertained the same after condoning the delay.

3. Assailing the said order, it is submitted by Mr. N. K. Kaul, learned Additional Solicitor General, appearing for the appellant, that the scheme of the 1996 Act does not grant any space or make any provision as regards the applicability of CPC unlike the Arbitration Act, 1940 (for short 'the 1940 Act' ) and in the absence of any express provision, the legislative intendment is not to make it applicable. It is his further submission that S.5, S.34, S.37 and S.50 of the 1996 Act constitute a complete code and it clearly provides the measures for adjudging or deciding the validity of an award or even to adjudge the defensibility of an interim order. It is urged by him that recourse to any other mode under the CPC to challenge an order or the award passed under the Act would create an anomalous situation and frustrate the intention of the Legislature.

4. Learned senior counsel would submit that the pronouncement in the ITI Ltd. v. Siemens Public Communications Network Ltd. , 2002 (5) SCC 510 holds that the applicability of CPC is not prohibited and, therefore, S.5 of the 1996 Act would not be attracted and the High Court can exercise the revisional power to rectify an order passed by the District Court, but the said verdict runs counter to the decision of the larger Bench rendered in SBP and Co. v. Patel Engineering Ltd. and Another, 2005 (8) SCC 618 and other decisions, namely, Pandey and Co. Builders (P) Ltd. v. State of Bihar and Another, 2007 (1) SCC 467 and Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. , 2011 KHC 4602 : 2011 (3) KLT SN 55 : AIR 2011 SC 2649 : 2011 (8) SCC 333 . According to Mr. Kaul, the aggrieved person can prefer an appeal under S.37 exercising his independent right but cannot be allowed to take recourse to file cross - objection to advance his right that has been denied to him by the Court in exercise of power under S.34 of the 1996 Act. For the said purpose he has drawn immense inspiration from the authority in Jamshed Hormusji Wadia v. Board of Trustees , Port of Mumbai and Another, 2004 (3) SCC 214 .

5. Mr. Arun Kumar Varma, learned senior counsel appearing for the respondent, per contra, would contend that the decision rendered in ITI Ltd. (supra) is absolutely unquestionable and a binding precedent on this Court. According to him, the principle stated in Jamshed Hormusji Wadia (supra) is not applicable, inasmuch as it deals with an appeal preferred after obtaining special leave under Art.136 of the Constitution. It is further propounded by him that the High Court of Bombay as well as the High Court of Delhi has correctly relied on the principle enunciated by the three - judge Bench in Inter

















































































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