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TMI Blog2008 (11) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... e contained in the agreement, arbitrator entered upon the reference and made his Award dated 22.6.1999 granting partial relief to IRCON. IRCON filed an appeal in the appellate authority who by his award dated 8.10.99 directed refund of the entire advance of ₹ 15,93,00,000/- along with interest thereon @ 15 per cent per annum in case NBCC fails to make the payment of the awarded principal amount within two months. 4. On failure of NBCC to discharge their full liability IRCON approached the Committee on Disputes of the Cabinet Secretariat, which passed the order on 21.10.2003 to pursue the remedy before appropriate judicial forum. 5. IRCON filed the execution petition under Order 21 Rule 1 of CPC in this court for execution of the Award whereby they claimed a sum of ₹ 4,90,43,815/- as principal and ₹ 72,35,642/- as interest (total ₹ 5,62,79,457/-) as outstanding dues. 6. NBCC filed their objections under Section 47 of CPC stating that the execution application was not maintainable in view of ouster provision contained in the arbitration agreement to the effect that: The Arbitration and Conciliation Act, 1996 (for short the Act )shall not be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract out of statute nor there can be any estoppels against statute, e.g., parties cannot by agreement altogether rule out the applicability of, say, the Contract Act, the Transfer of Property Act and the like, to their jural relationship. Section 23 of the Contract Act states that an agreement which is of such a nature that if permitted would defeat the provisions of any law or which is opposed to public policy, is void. 10. The learned Single Judge dismissed the execution petition as not maintainable by order dated 27.7.2006 and held that in view of the ouster provision contained in the arbitration clause, it cannot be said, there was an award which had the force of a decree under Section 35 of the Act and could as such, be executed under Section 36 of the said Act. 11. The appellant relied upon Oil and Natural Gas Commission vs. Collector of Central Excise JT 1991 (4) SC 158 wherein the Supreme Court on the basis of the report of Cabinet Secretary directed the Government of India to set up a Committee for resolution of disputes to deal with dispute between public enterprises wherein, it will be obligatory to obtain a clearance from the committee for every court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder challenge shall be suspended till the High Power committee resolves the dispute or gives clearance to the litigation. If the High Power Committee is unable to resolve the matter for reasons to be record by it, it shall grant clearance for litigation. 12. Another judgment relied upon by him is 1994 (70) ELT 45 (SC) wherein it was held that public enterprises are not debarred from filing objections against the final appellate board under Section 34 of the Act. 13. The only question to be decided in the present case is what is the effect of ouster provision on the award as to whether it acquires force of a decree or not by virtue of Section 36 of the Act. 14. It was argued by the learned counsel for the appellant that the expression under this clause in the ouster provision of the arbitration agreement has to be given a harmonious interpretation. It should be interpreted to mean limited to arbitration proceedings before the dispute resolution machinery and not to proceedings before the courts. If it were not so, then the ouster provision would be hit by section 23 of the Contract Act, 1872 as being against public policy and also if permitted to operate it would d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to and finally resolved by arbitration. It clarifies that the rules of UNCITRAL would apply to such arbitration. It then directs that the arbitration shall be held in Delhi and will be in English language. It stipulates that the costs of arbitration shall be shared by the parties equally. The offending and objectionable part, no doubt, expressly makes the arbitrator s determination final and binding between the parties and declares that the parties have waived the rights of appeal or objection in any jurisdiction . The said objectionable part, in my opinion, however, is clearly severable as it is independent of the dispute being referred to and resolved by an arbitrator. Hence, even in the absence of any other clause, the part as to referring the dispute to arbitrator can be given effect to and enforced. By implementing that part, it cannot be said that the Court is doing something which is not contemplated by the parties or by interpretative process , the court is re-writing the contract which is in the nature of novatio . The intention of the parties is explicitly clear and they have agreed that the dispute, if any, would be referred to an arbitrator. To that extent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the necessity of having recourse to arbitration and this Clause cannot be the basis of an alternative remedy in the present case. The relevant portions of Section 28 of the Indian Contract Act run as follows: Section 28.Agreements in restraint of legal proceedings void .- Every agreement,- ( a ) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, or ( b ) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent. Exception 1. - Saving of contract to refer to arbitration dispute that may arise.- This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be translated as whatever award they might give, shall be acceptable to us in every way without objection . I wonder if it was present to the minds of the parties that this clause might be relied upon later as basis for the argument that, even if the arbitrators or the umpire who could be appointed in accordance with law were to be guilty of misconduct, the party against whom the award was given would be precluded from objecting to it. The clause seems to have been more or less of a formal nature implying the readiness of the parties to abide by the decision of the arbitrators. It is doubtful if it was intended to shut out all objections on whatever ground they may be based. Even learned counsel for the appellant concedes that if the award had been tainted with fraud, objection on that score could not be ruled out. 6. The above ruling was noticed in the Sind Judicial Commissioner s Court by Crouch A.J.C. in Naraindas v. Kewalram, 421,C,706: AIR 940 1917 Sind 38. In the Sind case the reference to arbitration included a clause which concluded with the words the arbitrators are authorized in all respects. The learned A.J.C. pointed out that the case of Tullis v. Jacson, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the arbitrator shall be accepted as final by the parties and that no appeal therefrom shall be made. It was held that the stipulation did not prevent the Court from setting aside the award on the ground of misconduct on the part of the arbitrator. The learned Judges observed in that case that the very filing of the agreement in Court gives it jurisdiction to set aside the award on the ground of the arbitrator s misconduct. The learned Commentators have added that the decision ought not to be different even if the agreement was not filed in Court, for, although, in that case, the provisions of the Code would not apply, the award may be set aside in a regular suit on that ground. A party undoubtedly has the right under the Arbitration Act, 1940, to have an award set aside on the ground of misconduct on the part of the arbitrator: (See Sections 30 and 25) I am inclined to agree with this view in preference to that expressed in Kahan Singh vs. Mohan Lal: (AIR (3) 1915 Lah. 80: 34 I.C. 177). 20. After considering the judgments relied upon by the appellant and discussed by us above, we are of the opinion that a person may waive his rights. Such waiver of rights is permissible even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made there under. ( 5 ) Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto. Section 7. Arbitration agreement .-(1) In this Part, arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Section 8. Power to refer parties to arbitration where there is an arbitration agreement .- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m established under it for a particular purpose/situation, civil courts remedy to administer justice cannot be said to be ousted to deal with even such cases. 28. So far as the part in the arbitration clause in the said agreement regarding the non-applicability of the Act of 1996 is concerned, we consider that it is void and the parties cannot by themselves exclude the statute itself which is being drafted by the Legislature to look after the arbitration matters. 29. On one hand the respondent has referred the dispute before Arbitrator under the arbitration agreement who has given an Award and on the other hand, in the minutes of the meeting held on 21st October, 2003, it was also decided that the appellant may pursue the matter further before an appropriate judicial forum for resolution of the dispute. And when the execution is filed for recovery on the basis of an Award passed, an objection is taken that the execution is not maintainable on account of ouster provision contained in the arbitration agreement. We consider that the said clause is irrational and is in violation of constitutional mandate. 30. In view of our above said discussion and the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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