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2016 (10) TMI 1212 - HC - Indian LawsWhether issuance of a notice under sub-Section (5) of Section 34 of the Arbitration and Conciliation Act 1996 is mandatory or directory? Whether an order entertaining an application which is made contrary to the provisions of Section 34(5) of the 1996 Act by omitting to serve advance notice on the opposite party by the application would be amenable to Article 227 or 226 of the Constitution of India? Whether a District Judge while exercising power under Section 34 of the 1996 Act functions as a Civil Court or a Court other than a Civil Court? Held that - A party may be prevented for divergent reasons from filing its written statement in time. The reasoning once put forwarded and the court finds the same as exceptional there is ground for accepting the written statement even when the same is found to have been filed beyond the time prescribed under the law. Here the same analogy does not fit in or can be applied. The State has not cited any exceptional reasons. In fact no reason has been cited at all for not having issued the notice prior to challenging the award under Section 34 of the 1996 Act. Issuance of a previous notice and filing of an affidavit cannot be claimed to be prevented under any situation. The requirement is simple and can always be followed. Whether the present appeal is maintainable and whether the original petition was under Article 227 or 226 of the Constitution of India? - Held that - Since the filing of the proceeding under Section 34 of the 1996 Act before the learned District Judge is against the statute the subsequent order dated 18.07.2016 cannot cure the initial illegality - Patent appeal not maintainable. Appeal allowed.
Issues Involved:
1. Whether issuance of a notice under Section 34(5) of the Arbitration and Conciliation Act, 1996, is mandatory or directory. 2. Whether an order made contrary to the provisions of Section 34(5) of the Act is amenable to Article 227 or 226 of the Constitution of India. 3. Whether a District Judge, while exercising power under Section 34 of the Act, functions as a Civil Court or a tribunal. Issue-wise Detailed Analysis: 1. Issuance of Notice under Section 34(5) of the Arbitration and Conciliation Act, 1996: The core issue is whether the issuance of a notice under Section 34(5) of the Arbitration and Conciliation Act, 1996, is mandatory or directory. The High Court analyzed the legislative intent behind the amendment introduced by the Arbitration and Conciliation (Amendment) Act, 2015, which aimed at expediting the disposal of arbitration matters. The court observed that the language of Section 34(5), which uses the words "shall" and "only," indicates a mandatory requirement. The court emphasized that the purpose of the amendment was to ensure that applications challenging arbitration awards are disposed of within a stipulated time frame, and non-compliance with the notice requirement would defeat this objective. The court concluded that the issuance of a prior notice is a condition precedent for filing an application under Section 34 and is mandatory in nature. 2. Amenability of Orders to Article 227 or 226 of the Constitution of India: The court discussed the distinction between Articles 226 and 227 of the Constitution of India. Article 226 confers original jurisdiction on High Courts to issue writs, while Article 227 grants supervisory jurisdiction over subordinate courts and tribunals. The court noted that the nature of the jurisdiction invoked and the relief sought determine whether an order falls under Article 226 or 227. In this case, the appellant challenged the order of the District Judge under Article 227, but the court found that the application was essentially under Article 226, as it involved a question of law regarding the mandatory nature of the notice requirement under Section 34(5). Therefore, the court held that the present intra-court appeal was maintainable under Article 226. 3. Jurisdiction of District Judge under Section 34 of the Act: The court examined whether a District Judge, while exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, functions as a Civil Court or a tribunal. The court referred to the definition of "Court" under Section 2(e) of the Act, which includes the principal Civil Court of original jurisdiction. However, the court distinguished between a civil court of ordinary jurisdiction and a tribunal. The court observed that while the principal civil court exercises judicial functions under Section 34, it does so with limited jurisdiction, akin to a tribunal. The court concluded that the District Judge, in this context, functions as a tribunal with the trappings of a court. Conclusion: The High Court allowed the appeal, holding that the issuance of a prior notice under Section 34(5) of the Arbitration and Conciliation Act, 1996, is mandatory. The court also held that the present intra-court appeal was maintainable under Article 226 of the Constitution of India, as the original application involved a question of law. The court further clarified that the District Judge, while exercising jurisdiction under Section 34, functions as a tribunal with the trappings of a court.
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