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1998 (2) TMI 566 - SC - Companies LawWhether Clause 9 of the Memorandum of Understanding dated 24th of January, 1989 constitutes an arbitration agreement; and whether the decision of the Chairman, IFCI dated 8th December, 1995 constituted an award? Whether Suit No. 1394/1996 is an abuse of the process of court? Held that - The Chairman, IFCI has framed issues before answering them in his decision. These issues have been framed by himself for the purpose of enabling him to pinpoint those issues which require his decision. There is no agreed reference in respect of any specific disputes by the parties to him.The finality of the decision is also indicative of it being an expert s decision though of course, this would not be conclusive. But looking at the nature of the functions expected to be performed by the Chairman, IFCI, in our view, the decision is not an arbitration award. The learned Single Judge was, therefor, right in coming to the conclusion that the proceedings before the Chairman, IFCI, were not arbitration proceedings. Nor was his decision an award. In a proceeding under the Arbitration Act, the appellants could not have raised an alternative plea that in case the impugned decision is treated not as an award. but as a decision, the same is bad in law. This plea could only have been raised by filing a separate suit. Similarly in the suit, the appellants could not h ave raised an alternative plea that in case the impugned decision is considered as an award, the same should be set aside. For this purpose an arbitration petition was required to be filed. Therefor, the suit, if and to the extent that it challenges in accordance with law, the impugned decision as a decision, cannot be treated as an abuse of the process of the court.
Issues Involved:
1. Whether Clause 9 of the Memorandum of Understanding dated 24th January 1989 constitutes an arbitration agreement and whether the decision of the Chairman, IFCI dated 8th December 1995 constituted an award. 2. Whether Suit No. 1394/1996 is an abuse of the process of court. Issue-wise Detailed Analysis: Issue 1: Arbitration Agreement and Award The court examined whether Clause 9 of the Memorandum of Understanding (MoU) constituted an arbitration agreement and whether the decision of the Chairman, IFCI, constituted an award. The court referred to established legal principles and precedents to determine the nature of the agreement and the decision. 1. Attributes of Arbitration Agreement: - The decision of the tribunal must be binding. - Jurisdiction must derive from consent, court order, or statute. - The tribunal must determine substantive rights impartially and judicially. - The decision should be enforceable in law. - The tribunal must decide on a pre-existing dispute. 2. Relevant Legal Precedents: - Rukmanibai Gupta v. Collector, Jabalpur: Emphasized the finality of the decision in arbitration. - State of U.P. v. Tipper Chand: Differentiated between administrative control and arbitration. - Cursetji Jamshedji Ardaseer Wadia v. Dr. R.D. Shiralee: Distinguished between avoiding disputes and resolving disputes. - State of Orissa v. Damodar Das: Discussed the finality and binding nature of decisions in arbitration. 3. Court's Analysis: - Clause 9 aimed to prevent disputes rather than resolve them judicially. - The Chairman, IFCI, was to provide clarifications and decisions for implementation, not judicial determinations. - The decision was not intended to be an arbitration award but an expert's decision. - The Chairman, IFCI, was free to make inquiries and consult experts. 4. Conclusion: - The court concluded that Clause 9 did not constitute an arbitration agreement, and the decision of the Chairman, IFCI, was not an arbitration award. - Appeal arising from Special Leave Petition No. 14905 of 1997 was dismissed with costs. Issue 2: Abuse of Process of Court The court examined whether Suit No. 1394/1996 constituted an abuse of the process of court. 1. Comparison of Pleadings: - The prayers in the arbitration petition and the suit were substantially identical. - The suit was filed as an alternative to challenge the decision of the Chairman, IFCI, if it was not considered an award. 2. Legal Principles on Abuse of Process: - Abuse of process includes re-litigation of the same issue, frivolous or vexatious proceedings, and using court machinery for improper purposes. - Greenhalgh v. Mallard: Re-litigation of the same cause of action is an abuse of process. - Mcllkenny v. Chief Constable of West Midlands Police Force: Re-litigating a decided issue is an abuse of process. 3. Court's Analysis: - The suit was seen as an attempt to litigate the same issue in a different forum. - The suit was considered an abuse of process to the extent it challenged the decision as an award. - However, the suit was maintainable to the extent it independently challenged the decision as a decision, not as an award. 4. Conclusion: - The appeal was partly allowed. The suit could proceed to the extent it challenged the decision as a decision. - The court directed necessary amendments to the suit and imposed conditions regarding the sale of shares in Godfrey Phillips India Ltd. Final Orders: - The appeal arising from Special Leave Petition No. 14905/1997 was dismissed. - The appeal from the judgment striking out the plaint was partly allowed. - The suit was maintainable to the extent it challenged the decision as a decision. - Conditions were imposed regarding the sale of shares and the holding of meetings of the Modipon Board. - Appeals arising from Special Leave Petition Nos. 14905/97, 18711/97, and Transfer Case No. 13/97 were disposed of accordingly.
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