2003 (7) TMI 588 - SC - Companies Law

Whether the contract between the parties was executed before the Act came into force, hence, the Act does not apply? Whether dispute is a stale one having arisen nearly 20 years ago? Whether Clause 23 of the agreement contemplates the adjudication of a dispute by a company arbitrator? Whrther no person other than an arbitrator nominated in clause 23 of the argument has any jurisdiction to entertain the disputes? Held that - All these grounds of attack can very well be raised before the Arbitrator appointed by the Designated Judge, hence, on the facts of the case, we find the writ petition of the appellant was liable to be dismissed by the High Court. For this reason, we do not think it appropriate to remand the matter back to the High Court. Therefore, we dismiss this appeal permitting the appellant to raise all its contentions before the Arbitrator appointed by the Designated Judge.

Summary

Issues:
Challenge to the validity of an order appointing an arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996.
Maintainability of a writ petition under Article 226 against an order made by the Designated Judge under section 11(6) of the Act.
Grounds for challenging the order of the Designated Judge in the writ petition.
Applicability of the Act to a contract executed before its enforcement.
Adjudication of disputes by a company arbitrator as per the agreement clause.

Analysis:

1. The State of Orissa appealed against the High Court's order challenging the appointment of an arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996. The High Court, referring to a previous judgment, concluded that a writ petition under Article 226 is not maintainable against the Designated Judge's order. However, the Supreme Court disagreed, stating that an administrative order like the one made by the Designated Judge is amenable to writ jurisdiction under Article 226. The Court clarified the difference between the High Court's original power under Article 226 and the Supreme Court's appellate power under Article 136.

2. The Supreme Court highlighted that an order made by the Designated Judge under section 11(6) is not an adjudicatory order and falls under administrative decisions. While an appeal under Article 136 does not lie against such orders, they can be challenged under Article 226. The Court emphasized that the High Court erred in deeming such orders non-amenable to writ jurisdiction.

3. Despite the availability of an alternative remedy before the Arbitrator appointed by the Designated Judge, the Supreme Court acknowledged the limited grounds for challenging the Designated Judge's order under Article 226. The Court noted that almost all disputes can be resolved by the Arbitrator, limiting the scope of challenges in a writ petition. The Court dismissed the appeal, allowing the appellant to present contentions before the Arbitrator.

4. In a related appeal, the Court found the issues similar to the previous case and dismissed the appeal for the same reasons stated in the earlier civil appeal. The Court emphasized the identical nature of the issues involved in both appeals and decided to dismiss the second appeal accordingly.

Overall, the Supreme Court clarified the maintainability of a writ petition under Article 226 against orders made by the Designated Judge under section 11(6) of the Arbitration and Conciliation Act, emphasizing the distinction between administrative and adjudicatory orders and the limited grounds for challenging such orders.