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TMI Blog2006 (6) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... gs shall be made in that Court. It is submitted that an application made under Section 9 of the Act is an application made with respect to the arbitration agreement pursuant to which the Award which Page 2060 is challenged in the petition has been made under part I of the Act, and therefore, it is only the Court at Baroda which will have jurisdiction to entertain the application filed under Section 34 of the Act, subsequent to the filing of application under Section 9 of the Act. The present petition was filed by the petitioner in this Court on 29.6.2005 and therefore, the present petition is the subsequent application and therefore, this Court will not have jurisdiction to entertain this application. It is further submitted that the petition is not maintainable in the Court because for the purpose of this petition this Court is not the Court within the meaning of the Act. It is submitted that in view of the definition of the term Court found in the Act a petition under Section 34 of the Act can be filed only before the Court which could have had the jurisdiction to entertain a suit on the same subject matter had a suit been filed instead of taking out arbitral proceedings. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent before the Baroda Court was served on the petitioner after expiry of period of limitation fixed by Section 34 of the Act. According to the petitioner, in view of the fact that the Page 2061 provisions of Section 4 to 24 of the Limitation Act are not applicable to the petition filed under Section 34 of the Act, Section 42 of the Act may be so read as to oblige the respondent to intimate the petitioner about the filing of application under Section 9 of the Act after the Award is made, immediately on filing the application so that the petitioner can arrange his business accordingly and can file his petition before that Court where application under Section 9 of the Act has been filed or take an informed decision about the Court in which he wants to file petition under Section 34 of the Act. It is submitted that otherwise the petitioner would be rendered remedyless for no fault of his because if this Court does not have jurisdiction because of filing of application under Section 9 of the Act before the Baroda Court then the petitioner cannot go to the Baroda Court because the period of limitation is over and the provisions of the Limitation Act relating to exclusion of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator, filed a Civil suit, then this Court would have had the jurisdiction to entertain the suit under Order 12 of the Letters Patent because the petitioner who would have been defendant in the suit carries on business within the jurisdiction of this Court. 3. The petitioner is challenging the validity of the Award on merits. It is submitted by the petitioner that the learned Arbitrator who made the Award had no jurisdiction to make the Award. It is submitted that the appointment of the arbitrator is contrary to the agreement between the parties and the law. It is submitted that the Arbitration clause between the parties contemplates appointment of one arbitrator by each of the parties and the two arbitrators appointing an Umpire. The arbitration clause provides for the arbitrator appointed by one of the parties becoming sole arbitrator on failure of the other party to appoint his arbitrator. It is submitted that there is no time limit fixed by the arbitration clause for the other party to make appointment of the arbitrator after one party has appointed his arbitrator. It is submitted that at no point of time, the petitioner was informed by the respondent that if the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes; According to the respondent before this petition was filed in this Court the respondent had filed an application under Section 9 which is in part I of the Act. Hence, all subsequent applications can be filed before the Baroda Court where the first application under Section 9 of the Act was filed. According to the petitioner, the application made by them under Section 11 of the Act was filed even before the award was made and that application was made to this Court therefore, the application filed by the respondent before the Baroda Court after the award was made will not bar them from filing present petition before this Court. In support of the submission that Judicial authority to whom application under Section 11 of the Act is made is a Court within the meaning of Section 2(e) of the Act, the petitioner relies on the Judgment of the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not want to confer the power on the District Court, to entertain a request for appointing an arbitrator or for constituting an arbitral tribunal under Section 11 of the Act. It has to be noted that under Section 9 of the Act, the District Court or the High Court exercising original jurisdiction, has the power to make interim orders prior to, during or even post arbitration. It has also the power to entertain a challenge to the award that may ultimately be made. The framers of the statute must certainly be taken to have been conscious of the definition of 'court' in the Act. It is easily possible to contemplate that they did not want the power under Section 11 to be conferred on the District Court or the High Court exercising original jurisdiction. The intention apparently was to confer the power on the highest judicial authority in the State and in the country, on Chief Justices of High Courts and on the Chief Justice of India. Such a provision is necessarily intended to add the greatest credibility to the arbitral process. The argument that the power thus conferred on the Chief Justice could not even be delegated to any other Judge of the High Court or of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the highest judicial authority in the country and in the State in their capacities as Chief Justices. They have been conferred the power of the right to pass an order contemplated by Section 11 of the Act. We have already seen that it is not possible to envisage that the power is conferred on the Chief Justice as persona designata. Therefore, the fact that the power is conferred on the Chief Justice, and not on the court presided over by him is not sufficient to hold that the power thus conferred is merely an administrative power and is not a judicial power. According to the provisions of Section 2(e) of the Act District Court is the principal Court of original civil jurisdiction in a district, but the Supreme Court by its judgment in the case of Patel Engineering Ltd. another totally excluded district Judge from the proceedings under Section 11 of the Act. In my opinion, the authority designated by Section 11 of the Act as competent to exercise power under this provision can not be termed as the court for the purpose of the Act though now the Supreme Court has held that the power exercised by that authority is a Judicial power. Therefore, the application made by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the parties to the arbitration have choice of moving any of those Courts, but if one of the parties moves one of those Courts, because of the provisions of Section 42 of the Act, the other parties lose their entitlement to move the other Court or Courts who otherwise have the jurisdiction. Thus, the provisions of Section 42 of the Act have drastic consequences. Considering that the provisions have drastic consequences, it will have to be so construed that it is not misused by a party to deny the remedies created by the Act to the other party. The object for which the provision has been incorporated is that once an application is filed in a particular Court that Court and no other Court will entertain the subsequent applications. The provisions is enacted to avoid conflict and scramble. 6. It is Section 34 of the Act which incorporates the provision for challenge to arbitral Award. Sub-section (3) of Section 34 of the Act lays down the period of limitation for making an application under Section 34 of the Act challenging the Award. Sub-section (3) of Section 34 of the Act reads as under:- (3) An application for setting aside may not be made after three months have elapse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.Mulchandani. We may also mention that though the decision in Popular Construction Company is rendered after the decision in Pushpa P.Mulchandani's case, the conclusions in Pushpa P.Mulchandani's case are fully supported by the decision in Popular Construction Company's case. It is impossible to subscribe to the view taken by the learned Single Judge that the law laid down in Pushpa P.Mulchandani's case is no longer a good law in view of the decision in the case of Popular Construction Company. 13. For all these reasons we have come to the conclusion that the provisions of Section 14 of the Limitation Act,1963 do not govern the filing of petition under Section 34 of the 1996 Act and in this view, it is unnecessary to deal with the other contentions raised in the appeal. Thus, as a result of this judgment of the Division Bench, now if a petition under Section 34 of the Act is not filed before the Court which is competent to entertain it within a period of three months then save and except the power of that Court to condone delay of a maximum period of 30 days for sufficient cause being shown, the remedy of filing petition under Section 34 of the Act is permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to the conclusion that the previous application on the basis of which jurisdiction of the Court is to be ousted is not a bonafide application then filing of that application will not operate to oust the jurisdiction of the Court. The provision of Section 42 of the Act can be misused by a litigant to deny remedy provided by the Law to the other party. Holding that the previous application contemplated by Section 42 of the Act should be a bonafide application would not amount to addition of any words to the provisions. If an application is filed under the provisions contained in Part I of the Act merely with the intention to gain unfair advantage over the other side, that application cannot be said to be a bonafide application. In other words in case a party shows that the other party had filed and prosecuted the application with malafide intention to deny the other side a remedy created by Statute, the Court would be justified in ignoring that application. It is a fundamental rule that if a person is to be deprived of a remedy available to him or his interest is to be adversely affected in any way then he should be told about it and he should be given a fair opportunity. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were kept in complete darkness about the joint applications when they chose to file OA No. 1810 of 1971. Even the Land Tribunal was kept in the dark that another application for the same land was filed by the appellants and which was hotly contested by the contesting respondents. 7. Learned Single Judge had not disputed the proposition that when fraud is established the appellants have a right to institute a suit for a declaratory decree that the resultant order is vitiated and is therefore a nullity. At any rate the binding legal position on that score in the State of Kerala was based on the decision of the High Court in Velappan V. Thomas. Though a reference to the said decision was made by the learned Single Judge in the impugned judgment, its correctness has not been doubted. It is clear from the observations of the Supreme Court that institution of any proceedings is likely to be adversely affected the interest of a person then that person is entitled to inform about the institution of those proceedings before his interest gets permanently prejudiced. In my opinion, therefore, in order to examine whether the jurisdiction of this Court to entertain the present petition st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also urged on behalf of the respondent that though the petitioner had filed petition in this Court on 29.6.2005, he received notice from the Baroda Court on 14.7.2005, though by 14.7.2005 the period of three months provided by Subsection (3) of Section 34 of the Act for filing petition under Section 34 of the Act was over, the petitioner could have withdrawn his petition filed in this Court immediately and filed it before the Baroda Court and should have applied for condonation of delay, because the period of 30 days after the expiry of period of three months from the date of communication of the Award was not over. In my opinion, this submission has also no force, because by 14.7.2005 the period of limitation provided under Sub-section (3) of Section 34 of the Act was over and therefore, the petitioner could have filed his petition before the Baroda court only by seeking condonation of delay in filing the petition. The order of condonation of delay in filing the petition is in the discretion of the Court and therefore, in my opinion, it does not lie in the mouth of the respondent who created this situation to claim that the petitioner should have withdrawn his petition filed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement between the parties. It is submitted that the application under Section 9 of the Act has been filed by the petitioner not with respect to the arbitration agreement but for enforcement of the Award. Perusal of Section 9 of the Act shows that it lays down that a party can before or during the arbitral proceedings move the Court for interim measures. It further shows that a party can move the Court for interim measures even after the Award is made but before it has become enforceable. In support of the submission that the application made under Section 9 of the Act by the applicant is an application for enforcement of the Award and not in respect of the arbitration agreement, the petitioner has relied on the judgment of the Supreme Court in the case of Kamal Pushpa Enterprises referred to above. In that case the question that the Supreme Court was considering was whether the provisions of Section 69 of the Partnership Act would stand in the way of an unregistered firm from defending the proceedings against it or it precludes only initiation of proceedings by such an unregistered firm. In that case the proceedings under the Arbitration Act,1940 were initiated against an unreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful in this connection to refer to the decision of this Court in Satish Kumar v. Surinder Kumar, AIR 1970 SC 833 wherein it has been stated in unmistakable terms that an Award is not a mere waste paper but does create rights and has some legal effect besides being final and binding on the parties. It has also been held that the award is, in fact, a final adjudication of a Court of the parties' own choice and until impeached upon sufficient grounds in an appropriate proceedings, an award which is on the face of it regular, is conclusive upon the merits of the controversy submitted for arbitration. Consequently, the post-award proceedings cannot be considered by any means, to be a suit or other proceedings to enforce any rights arising under a contract. All the more so when, as in this case, at all stages the respondent was only on the defence and has not itself instituted any proceedings to enforce any rights of the nature prohibited under Section 69 of the Partnership Act, before any Court as such. We see no infirmity or error whatsoever in the decision of the Courts below to call for our interference in this appeal. The appeal fails and shall stand dismissed. Perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the question if instead of taking up arbitration proceedings a civil suit had been filed on the subject matter of the arbitration, whether that Civil suit could have been entertained by this Court. Before the Arbitrator, the respondent was the claimant, therefore, if the claimant instead of taking up arbitration proceedings had filed a civil suit on the subject matter of the arbitration proceedings the question to be considered is whether he could have filed the suit in this Court. Answer to that question would be in affirmative because in the suit that could have been filed by the respondent/claimant, the present petitioner would have been the defendant and the defendant/ the petitioner carries on business within the jurisdiction of this Court and therefore, in terms of Clause 12 of the Letters Patent the suit filed by the claimant on the subject matter of the arbitration in this Court against the petitioner was maintainable in this Court. It was submitted on behalf of the respondent that the question that this Court will have to consider is had the petitioner filed a civil suit whether that suit would have been maintainable before Page 2074 this Court or not According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that letter no time was fixed by the respondent within which the petitioner had to nominate their arbitrator. Thereafter, the respondent by letter dated 17.5.2002 claimed that as the petitioner had not yet appointed its arbitrator Shri.Sanat V. Pandya appointed by it as Arbitrator would act as sole arbitrator in terms of the arbitration clause. The said arbitrator Shri.Sanat V. Pandya by letter dated 21.5.2002 fixed the hearing of the matter on 20.6.2002. The petitioner by letter dated 15.6.2002 requested the arbitrator that the petitioner was in the process of appointing its nominee on the Arbitral Tribunal and therefore, the meeting fixed on 20.6.2002 should be postponed. The petitioner, thereafter, filed an arbitration application bearing No. 124 of 2002 under Section 11 of the Act before this Court claiming therein that after the respondent had appointed Mr.Sanat V.Pandya as its nominee on the Arbitral Tribunal by letter dated 17.6.2002 the petitioner had Page 2075 appointed its nominee on the Arbitral Tribunal and therefore, now the Court has to appoint third arbitrator. The Court decided the arbitration application No. 124 of 2002. The Court did not pass any order on the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal will have to indicate to the other party what period of time it considers as reasonable time for the other party to appoint its nominee on the Arbitral Tribunal. In my opinion, this will be the primary requirement. In case the first party does not indicate any time which it considers to be a reasonable time for the other party to appoint its nominee, it will be open to the other party to take its own time in appointing its nominee and till the other party appoints its nominee, the Arbitrator appointed by the first party will not become the sole Arbitrator. In the present case, admittedly, the respondent did not indicate any time which it considers to be reasonable time for the petitioner to appoint its nominee on the Arbitral Tribunal, therefore, it cannot be said that the respondent had given due notice as contemplated by the arbitration clause to the petitioner to appoint its nominee on the Arbitral Tribunal failing which the nominee of the respondent would become the sole Arbitrator. It was submitted that in view of the provisions of Section 11 of the Act, there was obligation on the petitioner to nominate its representative on the Arbitral Page 2076 Tribunal within a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importance and effect to it. When the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the said clause. It is thus, clear that Mr.Sanat Pandya was not justified in assuming the jurisdiction merely because within 30 days the petitioner did not appoint its nominee on the Arbitral Tribunal. Thus, I do not see any force in the contention that because the petitioner failed to nominate its nominee on the Arbitral Tribunal within thirty days, the nominee of the respondent becomes the sole Arbitrator. The assumption of jurisdiction by the Sole Arbitrator, in my opinion, is not only in contravention of the provisions of the arbitration clause, but it is also contrary to the provisions of Section 11 of the Act. It is Sub-section (1) Page 2077 to Sub-section (6) of Section 11 of the Act which are relevant for the present purpose. They read as under:- 11. Appointment of arbitrators (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to Sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties is under an obligation to appoint its nominee on the Arbitral Tribunal but fails to do so then under Section 11 of the Act, the Chief Justice gets jurisdiction to appoint an Arbitrator. Perusal Page 2078 of the provisions of Sub-section (3) of Section 11 of the Act shows that Sub-section (3) of Section 11 of the Act applies where the parties have not agreed to a procedure for appointment of Arbitrator, and Sub-section (4) of Section 11 of the Act applies in case where Sub-section (3) of Section 11 of the Act applies and even under those provisions on failure of a party to appoint its nominee on the Arbitral Tribunal it is the Chief Justice who gets jurisdiction to make appointment and in no case the Arbitrator appointed by one party can assume jurisdiction as sole Arbitrator. To my mind, thus, it is clear that in no case in the facts and circumstances of this case Mr.Sanat Pandya could have assumed jurisdiction as sole Arbitrator. The act of Mr.Pandya of assuming jurisdiction as sole arbitrator was patently illegal, it was not only contrary to the arbitration clause but was also contrary to the provisions of Section 11 of the Act. Mr.Pandya therefore, had no jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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