I also cannot overlook the facts emerging from the records that
the minutes of the every sittings were served upon the opposite party but
despite receiving those minutes the opposite party chose not to appear
before the Learned Arbitrator nor took any steps as provided under
different sections of the Arbitration & Conciliation Act, 1996. They have
waited till the award was passed.34. It shocks the conscience of the Court that the Learned Court
below after entertaining the application for execution and passed
attachment order against the opposite party and further after rejecting
the application under Section 47 of the Civil Procedure Code filed by the
opposite party how could the Learned Court below allow the second
application filed under Section 47 of the Civil Procedure Code by the
opposite party thereby recalling the attachment order as well as holding
that the award was invalid and in-executable when admittedly the Court
below had no jurisdiction to entertain and decide any question as to the
legality and validity of the award in any manner whatsoever.
Submissions of Mr. Saha also do not impress this Court that the
filling of 2nd application under Section 47 of the Civil Procedure Code was
not hit by the principles of res judicata though under Civil Procedure
Code the opposite party has the right either to file an application before
this Learned Court if they felt that all the issues raised in the earlier
application under Section 47 of the Civil Procedure Code were not
decided by the Learned Judge vide the earlier Order they should have
the minutes of the every sittings were served upon the opposite party but
despite receiving those minutes the opposite party chose not to appear
before the Learned Arbitrator nor took any steps as provided under
different sections of the Arbitration & Conciliation Act, 1996. They have
waited till the award was passed.34. It shocks the conscience of the Court that the Learned Court
below after entertaining the application for execution and passed
attachment order against the opposite party and further after rejecting
the application under Section 47 of the Civil Procedure Code filed by the
opposite party how could the Learned Court below allow the second
application filed under Section 47 of the Civil Procedure Code by the
opposite party thereby recalling the attachment order as well as holding
that the award was invalid and in-executable when admittedly the Court
below had no jurisdiction to entertain and decide any question as to the
legality and validity of the award in any manner whatsoever.
Submissions of Mr. Saha also do not impress this Court that the
filling of 2nd application under Section 47 of the Civil Procedure Code was
not hit by the principles of res judicata though under Civil Procedure
Code the opposite party has the right either to file an application before
this Learned Court if they felt that all the issues raised in the earlier
application under Section 47 of the Civil Procedure Code were not
decided by the Learned Judge vide the earlier Order they should have
preferred appeal from the said order.
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL CIVIL JURISDICTION
APPELLATE SIDE
Present: Justice Samapti Chatterjee
C.O. 3955 of 2015
Fingertips Solutions Pvt. Ltd.
Vs
Dhanashree Electronics Limited
Judgment on : April 27, 2016.
Samapti Chatterjee, J.
Citation:2016(NOC)690 Cal
1. The petitioner/claimant/award holder filed the present
revisional application assailing order no.28 dated 29th September, 2015
passed by the Learned Civil Judge (Senior Division) 2nd Court at Barasatin Miscellaneous Case No.81 of 2015 arising out of Arbitration Execution
Case No.63 of 2013.
2. The key issue involved in this revisional application is whether
the Executing Court can entertain an application under Section 47 of the
Code of Civil Procedure raising objection as to the execution , discharge
and satisfaction of an award in the nature of a decree?
Further issue involved in the present revisional application is whether
such a decree is non-est or in other words is a nullity and whether the
Executing Court is empowered to make a declaration to that effect ?
FACT OF THE CASE
3. The brief case of the claimant/award holder/petitioner is that
the petitioner being a Private Limited Company entered into an
agreement with the opposite party on 26th September, 2003 whereby the
petitioner was provided with a commercial space with super built-up
area of 2900 sq.ft along with two car parking spaces and all other
facilities at Block-EP and GP, Salt Lake, Sector-V, Kolkata-91. In the
said agreement there was an arbitration clause. Since some disputes and
differences arose between the parties the petitioner as per the arbitration
clause contained in Clause 16 of the said agreement on 26th September,2003 sent a letter under registered post to the opposite party on 18th
September, 2007 thereby invoking the arbitration clause by nominating
the Arbitrator and requiring him to enter upon the reference.
The sole arbitrator issued notices to both the petitioner and the
opposite party requesting them to be present on 18th December, 2007 at
the venue mentioned therein for taking steps for arbitral proceeding. The
petitioner entered appearance and made their submission before the
Learned Arbitrator but none appeared on behalf of the opposite party
despite receipt of the notice issued by the Arbitrator. The petitioner filed
their statement of claim and served copy of the statement of claim upon
the opposite party but opposite party neither filed statement of defence
nor attended the arbitration proceeding.
Since the opposite party failed and neglected to enter appearance
in the reference despite notice and contested the claim the Learned
Arbitrator proceeded with the arbitration proceedings.
Ultimately Learned Arbitrator after considering all aspects of
matter and materials on record on 21st March, 2013 passed an award
directing the opposite party to pay a total sum of `4,91,09,700/- to the
claimant/petitioner within a period of 30 days from the date of receipt of
the copy of the award and in default the opposite party was to payinterest at the rate of 18 per cent per annum till recovery by holding that
the claimant/petitioner suffered loss and damages to the extent of
`4crores and is entitled to an interest of `85,00000/-.
It was also held by the Learned Arbitrator that the
claimant/petitioner is further entitled to legal expenses and the cost of
arbitration proceedings for 38 sittings assessed at `3,09,700/- and
`3,00000/- for incidental expenses.
The said award was duly communicated to the opposite party on
5th April, 2013 but the opposite party failed to comply with the award
passed by the Learned Arbitrator. Therefore, due to non-payment of the
awarded amount the petitioner filed an application on 12th September,
2013 for execution of the arbitration award under Section 36 of the
Arbitration & Conciliation Act, 1996 following the procedure prescribed
in Order 21 Rule 11 of the Code of Civil Procedure, 1908 before the
Learned Civil Judge (Senior Division) 2nd Court, Barasat which was
registered as Arbitration Execution Case No.63 of 2013.
The petitioner also moved an application under Article 227 of the
Constitution of India praying for expeditious disposal of the said
Arbitration Execution Case and this Hon’ble Court by Order dated 2nd
April, 2015 was pleased to dispose of the said revisional applicationdirecting the Learned Court below to dispose of the Arbitration Execution
Case within one month. Pursuant to the said direction the Learned
Court below took up the hearing of the Arbitration Execution case and
vide order dated 10th July, 2015 issued order of attachment of movable
and immovable property of the opposite party. Subsequently by order
dated 24th July, 2015 Learned Court below issued two warrants, one for
attachment of movable property and another for attachment of
immovable property of the opposite party.
On 21st July, 2015 the opposite party filed a Misc. Case being
No.67 of 2015 under Section 47 read with Section 151 of the Code of
Civil Procedure, 1908 before the Learned Civil Judge (Senior Division) 2nd
Court at Barasat questioning the jurisdiction of the sole Arbitrator to
pass the award and validity or the legality of the such award and prayed
for dismissal of the Execution case and/or rejection of the execution
application. The opposite party also prayed for recalling the orders of
attachment.
Learned Court below by order dated 17th August, 2015 rejected the
said application. The opposite party filed another application under
Section 47 of the Code of Civil Procedure, 1908 praying for declaration
that arbitral award dated 21st March, 2013 is non-est and the arbitration
execution proceeding arising out of such arbitral award is also invalidand also prayed for vacating all interlocutory orders including the orders
of attachments of movable and immovable property of the opposite party.
The petitioner/award holder/claimant filed a written objection
interalia contending that once the arbitration award was passed and
attained finality in the absence of any challenge to the said award the
Learned Trial Court has got no jurisdiction to go behind the decree vis a
vis the award.
It was also contended that the arbitration proceedings was duly
instituted and continued with due compliance of the provisions of the Act
with notice duly served upon the opposite party who chose not to contest
the claim and the proceeding, therefore, when Execution Case was being
proceeded with and the order of attachment have been passed, the
Executing Court has no jurisdiction to entertain and decide the question
of invalidity and illegality of the award.
The Learned Court below by order dated 29th September, 2015
allowed the second application under Section 47 of the Code of Civil
Procedure, 1908 and vacated all interlocutory orders and the writ of
attachment issued by the said Learned Court below was also recalled.
Learned Court below also held that the said order does not attract theprinciple of resjudicata even after dismissal of 1st application on merit
being Misc. Case No.67 of 2015.
It was also held by the Learned Court below that the arbitral award
suffers from inherent lack of jurisdiction and therefore, it was void ab
initio, a nullity and non-est and thus the said award dated 21st March,
2013 was also held to be not executable and/or not enforceable in the
law. Thus virtually the Learned Court acted as the appellate authority
of its own order dated 17th August, 2015.
SUBMISSIONS OF THE LEARNED ADVOCATES
4. Mr. Biswarup Bhattacharya, learned Senior Counsel appearing
for the petitioner contended that the second application under Section 47
of the Civil Procedure Code is barred.
5. Mr. Bhattacharya further urged that the first application filed
by the opposite party questioning the jurisdiction of the Court was
turned down by the Learned Civil Judge (Senior Division), 2nd Court,
Barasat by holding that said Court had pecuniary jurisdiction and the
Learned Court also passed order of attachment on the execution
application filed by the petitioner/award holder. Therefore, byentertaining the 2nd application under Section 47 of the Civil Procedure
Code holding that the award passed by the sole Arbitrator is patently
wrong and illegal the Learned Court below was clearly wrong and acted
without jurisdiction. Once the Learned Judge disallowed the application
under Section 47 of the Civil Procedure Code holding that the Court had
the jurisdiction to entertain the execution proceedings then the Learned
Court had no authority to hold a totally contrary view that the Learned
Arbitrator has no jurisdiction to pass the award or the award was illegal.
Legality and validity of the award could not questioned in the execution
proceeding of the award nor the Court executing the award qua decree
had any jurisdiction to entertain and decide such question.
6. Mr. Bhattacharya further vehemently urged that in the
proceedings before the Learned Arbitrator time to time notices were
issued to the opposite party/award debtor who chose not to appear
before the Learned Arbitrator.
7. Mr. Bhattacarya also strongly submitted that if the opposite
party does not accept the appointment of the Learned Arbitrator then it
was the duty of the opposite party to file an application under Section 16
(5) of the Arbitration & Conciliation proceedings before the said
Arbitrator ventilating their grievances in that respect challenging the
competence of the arbitral tribunal which they failed to do.8. Mr. Bhattacharya further contended that the opposite party
also did not take recources to Section 34 of the Arbitration & Conciliation
Act 1996 challenging the award before the Court. He submitted that the
opposite party without participating in the arbitration proceedings and
also without taking out any application challenging the award as per
procedures provided under 1996 Act, only at the execution proceedings
took out the first application under Section 47 of the Civil Procedure
Code before the Learned Civil Judge (Senior Division) 2nd Court, Barasat
which was turned down and thereafter took out, the 2nd application also
under Section 47 of the Code which was barred by law and in any event
the Court below had no jurisdiction to entertain the same.
9. Mr. Bhattacharya further submitted that award passed by the
arbitral tribunal is not a decree but as per section 36 of the Act’ 1996 the
award could be enforced under the Civil Procedure Code in the same
manner and if it were a decree of Court. In support of his contention Mr.
Bhattacharya relied on a Supreme Court decision reported in 2006 (13)
SCC Page-322 (Paramjeet Singh Patheja vs ICDS Ltd) Paragraphs-
20,21,40,42 & 43.
10. Mr. Bhattacharya further contended that Section 47 of the
Civil Procedure Code cannot take away and/or override the rights andprivileges provided under Section 5, 16, 34, 36, 37 of the Arbitration Act,
1996.
11. Mr. Bhattacharya further vehemently argued that second
application under Section 47 of the Civil Procedure Code was barred
under Order II Rule 2 of the Civil Procedure Code as no previous leave
was obtained.
12. Mr. Bhattacharya further contended that on the facts of the
case also the second application filed under Section 47 of the Civil
Procedure Code was clearly barred and the Court below had no
jurisdiction to entertain the same.
13. Mr. Bhattacharya contended that it was the duty of the
opposite party to challenge the competence of the arbitral tribunal by
filing application under Section 16 of the 1996 Act or approach the Court
by filing application under Section 34 of the 1996 Act after the award.
But in the case in hand nothing was done. In support of his contention
Mr. Bhattacharya relied on a Supreme Court decision reported in 2005
(8) SCC Page-618 (SBP & Co. Vs Patel Engineering Ltd And Another)
Paragraphs-45, 46, 47 and Sub Paragraphs (iv),(v), (vi), (ix) of the
Paragraph-47 which are quoted below :-“Para-47-(iv)-The Chief Justice or the designated Judge will have the
right to decide the preliminary aspects as indicated in the earlier
part of this judgment. These will be his own jurisdiction to entertain
the request, the existence of a valid arbitration agreement, the
existence or otherwise of a live claim, the existence of the condition
for the exercise of his power and on the qualifications of the
arbitrator or arbitrators. The Chief Justice or the designated Judge
would be entitled to seek the opinion of an institution in the matter of
nominating an arbitrator qualified in terms of Section 11(8) of the Act
if the need arises but the order appointing the arbitrator could only
be that of the Chief Justice or the designated Judge.
(v) Designation of a District Judge as the authority under Section 11
(6) of the Act by the Chief Justice of the High Court is not warranted
on the scheme of the Act.
(vi) Once the matter reaches the Arbitral Tribunal or the sole
arbitrator, the High Court would not interfere with the orders passed
by the arbitrator or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could approach the Court
only in terms of Section 37 of the Act or in terms of Section 34 of the
Act.
(ix) In a case where an Arbitral Tribunal has been constituted by the
parties without having recourse to Section 11(6) of the Act, theArbitral Tribunal will have the jurisdiction to decide all matters as
contemplated by Section 16 of the Act.”
14. In support of his contention that a party who chooses not to
appear before the arbitral tribunal and the award is passed, then files an
application for setting aside award under Section 34 of the said Act of
1996 then the party has to make out an exceptional case for not
approaching the arbitral tribunal, Mr. Bhattacharya relied on a Supreme
Court decision reported in 2007 (5) SCC Page-38(Gas Authority of
India Ltd And Another vs Keti Construction (I) Ltd And Others)
Paragraphs-19 and 25. Some extract of the Paragrap-19 and Para-25
are quoted below:-
“Para-19-Respondent 1 did not at all appear before the arbitrator
appointed by Appellant 1. Respondent 1 neither filed any state of
claim nor raised any plea of jurisdiction before the arbitrator.
Section 16 of the Act says that the Arbitral Tribunal may rule on its
won jurisdiction, including ruling on any objections with respect to
the existence or validity of the arbitration agreement. In Konkan Rly
Corpn. Ltd v Rani Construction (P) Ltd in para 21 a Constitution
Bench of 5 Learned Judges has ruled that if the Arbitral Tribunal
has been improperly constituted, it would be open to the aggrieved
party to require the Arbitral Tribunal to rule on its own jurisdiction in
view of Section 16 of the Act. It was also observed that theexpression used in sub section (1) that the “Arbitral Tribunal may
rule on any objections with respect to the existence or validity of the
arbitration agreement” shows that the Arbitral Tribunal’s authority
under Section 16 is not confined to the width of its jurisdiction, but
goes to the very root of its jurisdiction and there is no impediment in
contending before the Arbitral Tribunal that it had been wrongly
constituted. This decision has been party overruled on another point
by a larger Bench of 7 Learned Judges in SBP & Co v Patel Engg.
Ltd but the aforesaid view has not been dissented from or reversed.
This will be evident from the conclusions arrived at by the larger
Bench which have been summarised in Para 47 of the Report and
sub-para (ix) thereof reads as under : (SCC p-664).
Para-25- Where a party has received notice and he does not raise a
plea of lack of jurisdiction before the Arbitral Tribunal, he must make
out a strong case why he did not do so if he chooses to move a
petition for setting aside the award under Section 34 (2) (a) (v) of the
Act on the ground that the composition of the Arbitral Tribunal was
not in accordance with the agreement of the parties. If plea of
jurisdiction is not taken before the arbitrator as provided in Section
16 of the Act, such a plea cannot be permitted to be raised in
proceedings under Section 34 of the Act for setting aside the award,
unless good reasons are shown.”15. Mr. Bhattacharya further vehemently urged that after
receiving notice from the Sole Arbitrator it was the duty of the opposite
party to inform the Sole Learned Arbitrator in writing that they have not
given any consent to the appointment of the Arbitrator but in the present
case the opposite party after receiving several notices from the Learned
Arbitrator regarding the proceedings chose not to appear before the
Learned Arbitrator nor filed any application under Section 16 of the Act’
1996 challenging the competence of the arbitral tribunal and thereby
allowed the Learned Arbitrator to proceed with the arbitration and pass
the award. Further even after passing of the award opposite party also
did not choose to challenge the award before the Hon’ble Court by filling
application under Section 34 but the opposite party chose to sit tight and
did nothing and only at the time of execution they filed one after another
applications under Section 47 of the Civil Procedure Code which such
the second application was barred by res judicata. In support of his
contention Mr. Bhattacharya relied on a Supreme Court decision
reported in 2013 (3) MhLJ ( Zenith Fire Services (India) Pvt. Ltd.
Mumbai vs Charmi Sales, Ahmedabad) Page-623.
16. Mr. Bhattacharya reiterated that since the opposite party
failed to avail any of those recourses then at the stage of execution they
have no right to challenge the jurisdiction of the Arbitrator by filingapplication under Section 47 of the Civil Procedure Code. In support of
his contention Mr. Bhattacharya relied on a Supreme Court decision
reported in 2014 (13) SCALE: Paragraphs 15 and 16 ( M/s MSP
Infrastructure Ltd vs M.P Road Devl. Corp. Ltd) Page-601.
17. Finally, Mr. Bhattacharya contended that in the Article 227,
the High Court has ample power to quash any order passed without
jurisdiction . In support of his contention Mr. Bhattacharya relied on a
Supreme Court decision reported in AIR 2003 (SC) Page-3044 ( Surya
Dev Rai vs Ram Chander Rai and Others). Therefore, in conclusion
Mr. Bhattacharya submitted that this Hon’ble Court should quash and
set aside the impugned order dated 29.02.2015 by allowing the present
revisional application.
18. Per contra, Mr. Jishnu Saha, learned senior Advocate
appearing for the opposite party submitted that on the question of
jurisdiction res judicata does not apply.
19. Mr. Saha strongly contended that second application under
Section 47 of the Civil Procedure Code cannot be assailed as res judicata
because in the first application Court decided that it had the jurisdiction
to entertain the execution application but in the second application
Court decided the question of the jurisdiction of the Sole Arbitrator topass the award though this issue was raised before the Court in the first
application but unfortunately that issue was not decided. Therefore, for
the decision on the issue of jurisdiction of Arbitrator the second
application under Section 47 of the Civil Procedure Code was filed which
cannot and should not be held to be barred by principles of res judicata.
20. Mr. Saha also vehemently urged that res judicata is a matter
of procedure. In support of his contention Mr. Saha relied on a Supreme
Court decision reported in 1990 (1) SCC Page-193 (Sushil Kumar
Mehta vs Gobind Ram Bohra (dead) Through His Lrs.) Paragraphs-26
& 27.
21. Mr. Saha also contended that in the agreement there is no
provision that other party is bound to appear before the Arbitrator of
whose appointment he has not given any consent. Mr. Saha also
referred to Section 11 Sub Section 5 of the Arbitration Act, 1996. He
relied on a Supreme Court decision reported in 2005 (9) SCC Page-689
(Dharma Prathishthanam vs Madhok Construction (P) Ltd)
Paragraphs-12, 13, 14, 15, 27 & 30.
22. Mr. Saha emphasized in his argument that Section 4 of 1996
Act gives a right of waiver. On the facts of the case Mr. Saha contended
that no notice was served upon the petitioner prior to passing ofattachment order which was passed ex parte. Mr. Saha also relied on
Section 11 of the Civil Procedure Code which is quoted below :-
“Section 11- Res judicata-No Court shall try any suit or issue in
which the matter directly and substantially in issue has been
directly and substantially in issue in a former suit between the same
parties, or between parties under whom they or any of them claim,
litigating under the same title, in a Court competent to try such
subsequent suit or the suit in which such issue has been
subsequently raised, and has been heard and finally decided by
such Court.”
23. Mr. Saha further contended that there is no bar to make
successive application as per Civil Procedure Code. In support of his
contention Mr. Saha relied on a Supreme Court decision reported in
2004 (1) SCC Page-497 (Ramnik Vallabhdas Madhvani And Others vs
Taraben Pravinlal Madhvani) Paragraph-55.
24. Mr. Saha further strongly urged that nomenclature is not
important, but substance is. Therefore, in the 2nd application though
filed under same Section 47 of Civil Procedure Code but substance was
different. In support of his contention Mr. Saha relied on a Supreme
Court decision reported in 1993 (2) SCC Page-507 (Chiranjilal Shrilal
Goenka vs Jasjit Singh And Others)25. Mr. Saha also contended that the opposite party’s case is not a
lack of jurisdiction but inherent lack of jurisdiction. Therefore, question
of taking recourse to Section16, 34, 36, and 37 of the Arbitration Act,
1996 does not arise since the jurisdiction of the Learned Arbitrator was
challenged in the petition.
26. Mr. Saha further contended that in case of execution of the
award Civil Procedure Code applies. In support of his contention Mr.
Saha relied on a Supreme Court decision reported in 2012 (1) SCC Page-
302 ( Leela Hotels Limited vs Housing And Urban Development
Corporation Limited)Paragraph-45. Therefore, Mr. Saha submitted that
Learned Civil Judge (Senior Division) 2nd Court, Barasat did not commit
any wrong by allowing the second application filed under Section 47 of
the Civil Procedure Code by deciding the issue of jurisdiction of the Sole
Arbitrator.
27. In distinguishing the citations relied on by Mr. Bhattacharya,
learned Advocate appearing for the petitioner Mr. Saha contended that
2007 (5) SCC 38 (supra) is not applicable in the case in hand. Actually
circumstance is totally different in the case in hand. In the cited case
already Section 34 was filed. Therefore, doctrine of estoppel applies. But
here in this case of the opposite party it is totally different. But the caseof the opposite party is not only on the point of lack of jurisdiction but
also on the point of inherent lack of jurisdiction of the Sole Arbitrator
appointed by the petitioner.
28. In case of 2014 (3) SCALE : Page-601 (supra) Mr. Saha relied
on Paragraphs 2 and 3 and submitted that there parties appeared before
the Arbitrator and thereafter challenged the jurisdiction but the opposite
party’s case is completely different. Therefore, 2014 (3) SCALE: Page-
601(supra) has no application in the case in hand.
DECISION WITH REASONS
29. After considering the submissions advanced by the learned
Advocates for the parties and after perusing the records and the citations
relied on by the learned Advocates I find that the Sole Arbitrator entered
upon the reference and from time to time issued notices of sittings to
both the parties. The petitioner appeared before the Learned Arbitrator
but the opposite party did not appear before the Arbitrator on the ground
that they have not given consent in the appointment of the Sole
Arbitrator.
30. It is also evident that the opposite party did not take out any
application before the Sole Arbitrator under Section 16 of the Arbitration& Conciliation Act, 1996 thereby challenging the competence of the
Arbitrator on the ground that appointment was without their consent,
nor they filed any application under Section 34 before the Hon’ble Court
for setting aside the award though, Arbitration and Conciliation Act,
1996 provided for such remedies.
31. I accept the submissions advanced by Mr.Bhattacharya that
award itself is not a decree and for its execution the award holder has to
take recourse to Civil Procedure Code.
32. I also cannot ignore the proposition of law that Section 47 of
the Civil Procedure Code cannot override the procedures provided under
Section 5, 16, 34 of the Arbitration and Conciliation Act, 1996 and
thereby entertain challenge to the award at execution stage.
33. I also cannot overlook the facts emerging from the records that
the minutes of the every sittings were served upon the opposite party but
despite receiving those minutes the opposite party chose not to appear
before the Learned Arbitrator nor took any steps as provided under
different sections of the Arbitration & Conciliation Act, 1996. They have
waited till the award was passed.34. It shocks the conscience of the Court that the Learned Court
below after entertaining the application for execution and passed
attachment order against the opposite party and further after rejecting
the application under Section 47 of the Civil Procedure Code filed by the
opposite party how could the Learned Court below allow the second
application filed under Section 47 of the Civil Procedure Code by the
opposite party thereby recalling the attachment order as well as holding
that the award was invalid and in-executable when admittedly the Court
below had no jurisdiction to entertain and decide any question as to the
legality and validity of the award in any manner whatsoever.
Submissions of Mr. Saha also do not impress this Court that the
filling of 2nd application under Section 47 of the Civil Procedure Code was
not hit by the principles of res judicata though under Civil Procedure
Code the opposite party has the right either to file an application before
this Learned Court if they felt that all the issues raised in the earlier
application under Section 47 of the Civil Procedure Code were not
decided by the Learned Judge vide the earlier Order they should have
preferred appeal from the said order.
35. This Court cannot also accept the argument advanced by Mr.
Saha that though the second application was filed under Section 47 of
the Civil Procedure Code but the substance of the matter was differentfrom the earlier application though nomenclature was same. In my
considered view if the substance of the 2nd application under the selfsame
section filed before the self-same Judge was different then what
prevented the opposite party to take appropriate step against the earlier
order passed by the Learned Court below in the first application under
Section 47. While it is correct that there is no bar to file successive
applications as per Civil Procedure Code before the self same Learned
Court below but from the nature of the prayer of the first Section 47
application and 2nd Section 47 application it is noticed that the prayers
in both the applications are almost same, therefore, when order was
passed rejecting the first application of the opposite party, the opposite
party ought to have challenged the said order in appeal instead of filing
another application under Section 47 before the self-same Court.
The rights under Order II Rule 2 of the Civil Procedure Code was
not secured but given up by the opposite party. In this regard Order II
Rule 2 of the Civil Procedure Code and Section 11 as well as the
Explanation (iv) of the Civil Procedure Code are quoted below :-
Order II Rule 2. Suit to include the whole claim-(1) Every suit shall
include the whole of the claim which the plaintiff is entitled to make
in respect of the cause of action; but a plaintiff may relinquish any
portion of his claim in order to bring the suit within the jurisdiction of
any Court.(2) Relinquishment of part of claim-Where a plaintiff omits to sue in
respect of, or intentionally relinquishes, any portion of his claim, he
shall not afterwards sue in respect of the portion so omitted or
relinquished.
(3) Omission to sue for once of several reliefs-A person entitled to
more than one relief in respect of the same cause of action may sue
for all or any of such reliefs; but if he omits, except with the leave of
the Court, to sue for all such reliefs, he shall not afterwards sue for
any relief so omitted.
“Section11 Explanation IV-Any matter which might and ought to
have been made ground of defence or attack in such former suit
shall be deemed to have been a matter directly and substantially in
issue in such suit.”
36. Now I deal with the judgments relied on by Mr. Saha. Dharma
Praishthanam (supra) has been considered in case of M/s Larsen &
Toubro Ltd vs M/s Maharaji Educational Trust and that Dharma
Prashtishanam was quoted in the context whether appeal was
maintainable or not and nothing else and the same does not fall within
Section 37 of the Arbtiration and Conciliation Act, 1996. In that context
some portion of the M/s Larsen & Toubro is quoted below : -
“It is, thus, clear that in order to invoke section 47 CPC, there
must be a decree. Section 2 (2) CPC defines the decree. For a
decision or determination to be a decree, it must necessarily fallwithin the fore-corners of the language used in the definition.
Section 2 (2) CPC defines decree to mean “formal expression of an
adjudication which, so far as regards the Court expressing it,
conclusively determines the rights of the parties with regard to all or
any of the matters incontroversy in the suit and may be either
preliminary or final. It shall be deemed to include the rejection of a
plaint and the determination of any question within Section 144, but
shall not include- (a) any adjudication from which an appeal lies as
an appeal from an order, or (b) any order of dismissal for default”.
Explanation: A decree is preliminary when further proceedings have
to be taken before the suit can be completely disposed of. It is final
when such adjudication completely disposes of the suit. It may be
partly preliminary ad partly final.
“57-Section 36 of the Arbitration and Conciliation Act of 1996 brings
back the same situation as it existed from 1899 to 1940. Only
under the Arbitration Act, 1940, the award was required to be made
a rule of Court i.e. required a judgment followed by a decree of court.
The issue that an award made in arbitral proceedings is not a
decree within the meaning of CPC having been settled by the
aforesaid pronouncement by the Hon’ble Apex Court, the provisions
of Section 47 CPC cannot be available to obstruct the execution of
the award.Much emphasis has been laid by the learned counsel for the
applicant on the decision of the Hon’ble Apex Court in the case of
Dharma Pratishthanam vs Madhok Constructions (2005) 9 SCC 686
wherein it has been held that in the event of appointment of an
arbitrator and reference of disputes to him being void ab initio as
totally incompetent or invalid the award shall be void and liable to
be set aside in any appropriate proceedings when sought to be
enforced or acted upon. However, the said case relied upon by the
learned counsel for the applicant is distinguishable and will have no
application in the facts of the present case. In the said case when
the award was filed in the court for making rule of the Court under
1940 Act, objections were filed by the judgment-debtor under
Section 30 of the said Act which were dismissed on the ground that
they were filed beyond the prescribed period of limitation.
The same can be inferred from the following observations made in
Paragraph 32 of the judgment :
“In the present case, we find that far from submitting to the
jurisdiction of the arbitrator and conceding to the appointment of and
reference to the arbitrator Shri Swami Dayal, the appellant did raise
an objection to the invalidity of the entire proceedings beginning from
the appointment till the giving of the award though the objection was
belated. In ordinary course, we would have after setting aside the
impugned judgements of the High Court remanded the matter backfor hearing and decision afresh by t he learned single Judge of the
High Court so as to record a finding if the award is a nullity and if
so then set aside the same without regard to the fact that the
objection petition under Section 30 of the Act filed by the appellant
was beyond the period of limitation prescribed by Article 119 (b) of
the Limitation Act, 1963. However, in the facts and circumstances of
the case, we consider such a course to follow as a futile exercise
resulting in needless waster of public time. On the admitted and
undisputed facts, we are satisfied, as already indicated
hereinabove, that the impugned award is a nullity and hence liable
to be set aside and that is what we declare and also do hereby,
obviating the need for remand”
Thus having regard to the provisions of Sections 5, 12, 13, 16, 34,
35 and 36 of the Act, the irresistible conclusion is only grounds
which can be pressed into service for challenge to an award is
within the ambit and scope of Section 34 of the Act. Once the stage
of Section 34 is over and the questions that were raised or could
have been raised at that stage cannot be allowed to be raised again
and again by pressing into service section 47 of the Code of Civil
Procedure at the time of execution of award under Section 36 of the
Act.
In view of the aforesaid facts and discussions, the applicant did not
have any right to challenge the enforceability of the award by takingrecourse to Section 47 CPC and the same were liable to be
dismissed. It is altogether different question that the objections
have been dismissed by the Court below on different grounds and
reasons but since they are liable to be dismissed, the impugned
order does not require any interference. The revision accordingly
stands dismissed.”
In case of 1993 (2) (SCC) 507 (supra) I find that decision was
rendered in the context of a Probate Suit and not under 1996 Act.
The case in 2004 (1) SCC Page-497 Para-55 dealt with the
question of inherent lack of jurisdiction and the Judgment was rendered
only in the context of Civil Procedure Code and there was no scope to
consider Arbitration & Conciliation Act, 1996. But I find law has been
settled when MSP Infrastructure (supra) came into force. 1991 SCC Page
193 (supra) also restricted in the context of Civil Procedure but not in
Arbitration Act, 1996. Zenith Fire Services (supra) , Leela Hotels (supra)
held that award should be enforced under Section 36 by following Civil
Procedure Code. Therefore, at the time of execution of the award there is
no scope to challenge the award itself by taking recource to Section 47 of
the Civil Procedure Code. Mr. Saha distinguishing the 2007 (5) SCC 38
(supra) submitted that Judgment was considered in Leela Hotel’s case.Analysing the decisions cited by Mr. Bhattacharyya, learned Senior
Advocate appearing for the petitioner, it appears that law is now well
settled that once an award is passed by the Arbitrator, any party
aggrieved by the award has to challenge the award in accordance with
the procedures provided under Arbitration & Conciliation Act, 1996
including the issue relating to the jurisdiction of the Arbitrator, which
such issue however, should be raised before the Arbitrator under Section
16 of the Act, 1996. Therefore, a party, aggrieved by the award, not
having taken any of the measures provided in the Act, 1996, is debarred
in law to challenge the validity or legality of the award at the execution
stage when such award is put into execution under Section 36 of the Act,
1996. Thus, the applications filed by the opposite party under Section
47 of the Code of Civil Procedure challenging the legality and/or validity
of the award on diverse grounds, were not maintainable, consequently
the Civil Judge (Senior Division) ought not to have entertained those
applications but should have rejected the same being not maintainable in
law. Thus, the submissions advanced by Mr. Saha, learned Senior
Advocate for the opposite party, supporting the order passed on the
application filed by the opposite party under Section 47 of the Code of
Civil Procedure, are devoid of any merit and contrary to law.
Admittedly the present proceeding relates to execution of an
arbitral award and not a decree of a civil Court. Subtle distinguishingfeatures are there between the execution of a decree of a Civil Court and
the execution of an award. In the instant case the award under
execution was not challenged in accordance with law before appropriate
forum, of course executability of an award can be challenged or assailed
in execution proceeding but not legality and invalidity of the award. In
this case admittedly an earlier application under section 47 of the Code
of Civil Procedure was dismissed. It does not appear from the records
available before me that such order of dismissal was challenged in
accordance with law before appropriate forum. Therefore, the issue
raised regarding executability of the award reached its finality and the
same cannot be reopened in a round about way. It has been held in the
case of Satyadhan vs Smt. Deoragin reported in A.I.R (1960) S.C Page
941, 943 that principle of resjudicata applies even when a case does not
fall under Section 11 of the Code of Civil Procedure.
The Principle of resjudicata shall apply to achieve finality in
litigation when Section 11 does not apply in terms. It has been held in
the case of Steel Authority of India, reported in A.I.R (1985) Orissa 224,
Principles of resjudicata are applicable in arbitration proceeding.
It has been held in the case of Arjun Singh vs Mahendra Kumar,
that Principle of resjudicata applies in two stages in the same
proceeding, a point once decided by the Court cannot be allowed to be reagitated.
Such point cannot even be collaterally attacked at a later stage.In case of Sulachana Amma vs Naraynan Nair reported in 1994
(2) SCC 14 it was held that Section 11 will apply to all judicial
proceedings whether civil or otherwise. Keeping in mind, the executing
court cannot go behind the decree but the executing court can consider
the pleading and the proceeding to find out the true effect of the decree
as held in the case of Bhavan Vaja and others vs Solanki Hanuji
Khodaji Mansang and another reported in AIR (1972) Page- 1371,
reference may also be made in the case of Topanmal Chhotamal vs M/s
Kundomal Gangaram and Others reported in AIR 1960 Page- 388
holding that the executing court must take the decree as it stands. It
has been held in the case of Bijali Bala Das vs Charu Bala Ash reported
in A.I.R 1969 Patna 21 that once an objection under Sec 47 of Code of
Civil Procedure is rejected by the executing Court, fresh objection on a
different plea is barred by constructive resjudicata. It is true that
Section 47 of CPC relates to all question as to the execution, discharge
and satisfaction of a decree and not by a separate suit but at the same
time it does not mean Section 47 permits denovo trial or adjudication.
In my considered view the impugned order passed in 2nd
application under Section 47 is without jurisdiction .
37. I have no hesitation to hold that impugned order in 2nd
Application filed under Section 47 of the Civil Procedure Code waspassed by the Learned Civil Judge (Senior Division), 2nd Court Barasat
bye passing the entire mechinaries of the Arbitration & Conciliation Act,
1996 provided under Section 4, 5, 13, 16, 34, 35 of the said Act and that
the impugned order was without jurisdiction.
38. In the light of the above discussions I set aside and quash the
impugned order No.28 dated 29.09.2015 passed by the Learned Civil
Judge (Senior Division) 2nd Court Barasat and direct the Learned Court
below to proceed with the execution application expeditiously. Needless
to mention that by reason of this order attachment order earlier passed
stands revived.
39. Considering the facts of this case and the conduct of the
opposite party indulging in filing frivolous applications thereby stalling
the execution of a valid Award obtained by the petitioner, the petitioner
has been harassed by and at the behest of the opposite party in realising
the amounts under the award, the opposite party should pay the costs of
this application to the petitioner which is assessed at Rs.20,000/- within
a fortnight from date, failing which, the petitioner shall be entitled to
execute this order in accordance with law.
40. Accordingly the revisional application is allowed.40. Urgent photostat certified copy of this judgment, if applied for,
be supplied to the parties after fulfilling all the formalities.
(Samapti Chatterjee, J)
Later,
27.04.2016
41. After delivery of the Judgment Mr. Saha prayed for leave of
this Court to challenge the order passed on the first application under
Section 47. This Court is of opinion if the opposite party is entitled in
law to challenge the said order for that leave of this Court is not
necessary.
Mr. Saha also prayed for stay of operation of this order. The
prayer is entertained and refused.
(Samapti Chatterjee, J)
CONSTITUTIONAL CIVIL JURISDICTION
APPELLATE SIDE
Present: Justice Samapti Chatterjee
C.O. 3955 of 2015
Fingertips Solutions Pvt. Ltd.
Vs
Dhanashree Electronics Limited
Judgment on : April 27, 2016.
Samapti Chatterjee, J.
Citation:2016(NOC)690 Cal
1. The petitioner/claimant/award holder filed the present
revisional application assailing order no.28 dated 29th September, 2015
passed by the Learned Civil Judge (Senior Division) 2nd Court at Barasatin Miscellaneous Case No.81 of 2015 arising out of Arbitration Execution
Case No.63 of 2013.
2. The key issue involved in this revisional application is whether
the Executing Court can entertain an application under Section 47 of the
Code of Civil Procedure raising objection as to the execution , discharge
and satisfaction of an award in the nature of a decree?
Further issue involved in the present revisional application is whether
such a decree is non-est or in other words is a nullity and whether the
Executing Court is empowered to make a declaration to that effect ?
FACT OF THE CASE
3. The brief case of the claimant/award holder/petitioner is that
the petitioner being a Private Limited Company entered into an
agreement with the opposite party on 26th September, 2003 whereby the
petitioner was provided with a commercial space with super built-up
area of 2900 sq.ft along with two car parking spaces and all other
facilities at Block-EP and GP, Salt Lake, Sector-V, Kolkata-91. In the
said agreement there was an arbitration clause. Since some disputes and
differences arose between the parties the petitioner as per the arbitration
clause contained in Clause 16 of the said agreement on 26th September,2003 sent a letter under registered post to the opposite party on 18th
September, 2007 thereby invoking the arbitration clause by nominating
the Arbitrator and requiring him to enter upon the reference.
The sole arbitrator issued notices to both the petitioner and the
opposite party requesting them to be present on 18th December, 2007 at
the venue mentioned therein for taking steps for arbitral proceeding. The
petitioner entered appearance and made their submission before the
Learned Arbitrator but none appeared on behalf of the opposite party
despite receipt of the notice issued by the Arbitrator. The petitioner filed
their statement of claim and served copy of the statement of claim upon
the opposite party but opposite party neither filed statement of defence
nor attended the arbitration proceeding.
Since the opposite party failed and neglected to enter appearance
in the reference despite notice and contested the claim the Learned
Arbitrator proceeded with the arbitration proceedings.
Ultimately Learned Arbitrator after considering all aspects of
matter and materials on record on 21st March, 2013 passed an award
directing the opposite party to pay a total sum of `4,91,09,700/- to the
claimant/petitioner within a period of 30 days from the date of receipt of
the copy of the award and in default the opposite party was to payinterest at the rate of 18 per cent per annum till recovery by holding that
the claimant/petitioner suffered loss and damages to the extent of
`4crores and is entitled to an interest of `85,00000/-.
It was also held by the Learned Arbitrator that the
claimant/petitioner is further entitled to legal expenses and the cost of
arbitration proceedings for 38 sittings assessed at `3,09,700/- and
`3,00000/- for incidental expenses.
The said award was duly communicated to the opposite party on
5th April, 2013 but the opposite party failed to comply with the award
passed by the Learned Arbitrator. Therefore, due to non-payment of the
awarded amount the petitioner filed an application on 12th September,
2013 for execution of the arbitration award under Section 36 of the
Arbitration & Conciliation Act, 1996 following the procedure prescribed
in Order 21 Rule 11 of the Code of Civil Procedure, 1908 before the
Learned Civil Judge (Senior Division) 2nd Court, Barasat which was
registered as Arbitration Execution Case No.63 of 2013.
The petitioner also moved an application under Article 227 of the
Constitution of India praying for expeditious disposal of the said
Arbitration Execution Case and this Hon’ble Court by Order dated 2nd
April, 2015 was pleased to dispose of the said revisional applicationdirecting the Learned Court below to dispose of the Arbitration Execution
Case within one month. Pursuant to the said direction the Learned
Court below took up the hearing of the Arbitration Execution case and
vide order dated 10th July, 2015 issued order of attachment of movable
and immovable property of the opposite party. Subsequently by order
dated 24th July, 2015 Learned Court below issued two warrants, one for
attachment of movable property and another for attachment of
immovable property of the opposite party.
On 21st July, 2015 the opposite party filed a Misc. Case being
No.67 of 2015 under Section 47 read with Section 151 of the Code of
Civil Procedure, 1908 before the Learned Civil Judge (Senior Division) 2nd
Court at Barasat questioning the jurisdiction of the sole Arbitrator to
pass the award and validity or the legality of the such award and prayed
for dismissal of the Execution case and/or rejection of the execution
application. The opposite party also prayed for recalling the orders of
attachment.
Learned Court below by order dated 17th August, 2015 rejected the
said application. The opposite party filed another application under
Section 47 of the Code of Civil Procedure, 1908 praying for declaration
that arbitral award dated 21st March, 2013 is non-est and the arbitration
execution proceeding arising out of such arbitral award is also invalidand also prayed for vacating all interlocutory orders including the orders
of attachments of movable and immovable property of the opposite party.
The petitioner/award holder/claimant filed a written objection
interalia contending that once the arbitration award was passed and
attained finality in the absence of any challenge to the said award the
Learned Trial Court has got no jurisdiction to go behind the decree vis a
vis the award.
It was also contended that the arbitration proceedings was duly
instituted and continued with due compliance of the provisions of the Act
with notice duly served upon the opposite party who chose not to contest
the claim and the proceeding, therefore, when Execution Case was being
proceeded with and the order of attachment have been passed, the
Executing Court has no jurisdiction to entertain and decide the question
of invalidity and illegality of the award.
The Learned Court below by order dated 29th September, 2015
allowed the second application under Section 47 of the Code of Civil
Procedure, 1908 and vacated all interlocutory orders and the writ of
attachment issued by the said Learned Court below was also recalled.
Learned Court below also held that the said order does not attract theprinciple of resjudicata even after dismissal of 1st application on merit
being Misc. Case No.67 of 2015.
It was also held by the Learned Court below that the arbitral award
suffers from inherent lack of jurisdiction and therefore, it was void ab
initio, a nullity and non-est and thus the said award dated 21st March,
2013 was also held to be not executable and/or not enforceable in the
law. Thus virtually the Learned Court acted as the appellate authority
of its own order dated 17th August, 2015.
SUBMISSIONS OF THE LEARNED ADVOCATES
4. Mr. Biswarup Bhattacharya, learned Senior Counsel appearing
for the petitioner contended that the second application under Section 47
of the Civil Procedure Code is barred.
5. Mr. Bhattacharya further urged that the first application filed
by the opposite party questioning the jurisdiction of the Court was
turned down by the Learned Civil Judge (Senior Division), 2nd Court,
Barasat by holding that said Court had pecuniary jurisdiction and the
Learned Court also passed order of attachment on the execution
application filed by the petitioner/award holder. Therefore, byentertaining the 2nd application under Section 47 of the Civil Procedure
Code holding that the award passed by the sole Arbitrator is patently
wrong and illegal the Learned Court below was clearly wrong and acted
without jurisdiction. Once the Learned Judge disallowed the application
under Section 47 of the Civil Procedure Code holding that the Court had
the jurisdiction to entertain the execution proceedings then the Learned
Court had no authority to hold a totally contrary view that the Learned
Arbitrator has no jurisdiction to pass the award or the award was illegal.
Legality and validity of the award could not questioned in the execution
proceeding of the award nor the Court executing the award qua decree
had any jurisdiction to entertain and decide such question.
6. Mr. Bhattacharya further vehemently urged that in the
proceedings before the Learned Arbitrator time to time notices were
issued to the opposite party/award debtor who chose not to appear
before the Learned Arbitrator.
7. Mr. Bhattacarya also strongly submitted that if the opposite
party does not accept the appointment of the Learned Arbitrator then it
was the duty of the opposite party to file an application under Section 16
(5) of the Arbitration & Conciliation proceedings before the said
Arbitrator ventilating their grievances in that respect challenging the
competence of the arbitral tribunal which they failed to do.8. Mr. Bhattacharya further contended that the opposite party
also did not take recources to Section 34 of the Arbitration & Conciliation
Act 1996 challenging the award before the Court. He submitted that the
opposite party without participating in the arbitration proceedings and
also without taking out any application challenging the award as per
procedures provided under 1996 Act, only at the execution proceedings
took out the first application under Section 47 of the Civil Procedure
Code before the Learned Civil Judge (Senior Division) 2nd Court, Barasat
which was turned down and thereafter took out, the 2nd application also
under Section 47 of the Code which was barred by law and in any event
the Court below had no jurisdiction to entertain the same.
9. Mr. Bhattacharya further submitted that award passed by the
arbitral tribunal is not a decree but as per section 36 of the Act’ 1996 the
award could be enforced under the Civil Procedure Code in the same
manner and if it were a decree of Court. In support of his contention Mr.
Bhattacharya relied on a Supreme Court decision reported in 2006 (13)
SCC Page-322 (Paramjeet Singh Patheja vs ICDS Ltd) Paragraphs-
20,21,40,42 & 43.
10. Mr. Bhattacharya further contended that Section 47 of the
Civil Procedure Code cannot take away and/or override the rights andprivileges provided under Section 5, 16, 34, 36, 37 of the Arbitration Act,
1996.
11. Mr. Bhattacharya further vehemently argued that second
application under Section 47 of the Civil Procedure Code was barred
under Order II Rule 2 of the Civil Procedure Code as no previous leave
was obtained.
12. Mr. Bhattacharya further contended that on the facts of the
case also the second application filed under Section 47 of the Civil
Procedure Code was clearly barred and the Court below had no
jurisdiction to entertain the same.
13. Mr. Bhattacharya contended that it was the duty of the
opposite party to challenge the competence of the arbitral tribunal by
filing application under Section 16 of the 1996 Act or approach the Court
by filing application under Section 34 of the 1996 Act after the award.
But in the case in hand nothing was done. In support of his contention
Mr. Bhattacharya relied on a Supreme Court decision reported in 2005
(8) SCC Page-618 (SBP & Co. Vs Patel Engineering Ltd And Another)
Paragraphs-45, 46, 47 and Sub Paragraphs (iv),(v), (vi), (ix) of the
Paragraph-47 which are quoted below :-“Para-47-(iv)-The Chief Justice or the designated Judge will have the
right to decide the preliminary aspects as indicated in the earlier
part of this judgment. These will be his own jurisdiction to entertain
the request, the existence of a valid arbitration agreement, the
existence or otherwise of a live claim, the existence of the condition
for the exercise of his power and on the qualifications of the
arbitrator or arbitrators. The Chief Justice or the designated Judge
would be entitled to seek the opinion of an institution in the matter of
nominating an arbitrator qualified in terms of Section 11(8) of the Act
if the need arises but the order appointing the arbitrator could only
be that of the Chief Justice or the designated Judge.
(v) Designation of a District Judge as the authority under Section 11
(6) of the Act by the Chief Justice of the High Court is not warranted
on the scheme of the Act.
(vi) Once the matter reaches the Arbitral Tribunal or the sole
arbitrator, the High Court would not interfere with the orders passed
by the arbitrator or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could approach the Court
only in terms of Section 37 of the Act or in terms of Section 34 of the
Act.
(ix) In a case where an Arbitral Tribunal has been constituted by the
parties without having recourse to Section 11(6) of the Act, theArbitral Tribunal will have the jurisdiction to decide all matters as
contemplated by Section 16 of the Act.”
14. In support of his contention that a party who chooses not to
appear before the arbitral tribunal and the award is passed, then files an
application for setting aside award under Section 34 of the said Act of
1996 then the party has to make out an exceptional case for not
approaching the arbitral tribunal, Mr. Bhattacharya relied on a Supreme
Court decision reported in 2007 (5) SCC Page-38(Gas Authority of
India Ltd And Another vs Keti Construction (I) Ltd And Others)
Paragraphs-19 and 25. Some extract of the Paragrap-19 and Para-25
are quoted below:-
“Para-19-Respondent 1 did not at all appear before the arbitrator
appointed by Appellant 1. Respondent 1 neither filed any state of
claim nor raised any plea of jurisdiction before the arbitrator.
Section 16 of the Act says that the Arbitral Tribunal may rule on its
won jurisdiction, including ruling on any objections with respect to
the existence or validity of the arbitration agreement. In Konkan Rly
Corpn. Ltd v Rani Construction (P) Ltd in para 21 a Constitution
Bench of 5 Learned Judges has ruled that if the Arbitral Tribunal
has been improperly constituted, it would be open to the aggrieved
party to require the Arbitral Tribunal to rule on its own jurisdiction in
view of Section 16 of the Act. It was also observed that theexpression used in sub section (1) that the “Arbitral Tribunal may
rule on any objections with respect to the existence or validity of the
arbitration agreement” shows that the Arbitral Tribunal’s authority
under Section 16 is not confined to the width of its jurisdiction, but
goes to the very root of its jurisdiction and there is no impediment in
contending before the Arbitral Tribunal that it had been wrongly
constituted. This decision has been party overruled on another point
by a larger Bench of 7 Learned Judges in SBP & Co v Patel Engg.
Ltd but the aforesaid view has not been dissented from or reversed.
This will be evident from the conclusions arrived at by the larger
Bench which have been summarised in Para 47 of the Report and
sub-para (ix) thereof reads as under : (SCC p-664).
Para-25- Where a party has received notice and he does not raise a
plea of lack of jurisdiction before the Arbitral Tribunal, he must make
out a strong case why he did not do so if he chooses to move a
petition for setting aside the award under Section 34 (2) (a) (v) of the
Act on the ground that the composition of the Arbitral Tribunal was
not in accordance with the agreement of the parties. If plea of
jurisdiction is not taken before the arbitrator as provided in Section
16 of the Act, such a plea cannot be permitted to be raised in
proceedings under Section 34 of the Act for setting aside the award,
unless good reasons are shown.”15. Mr. Bhattacharya further vehemently urged that after
receiving notice from the Sole Arbitrator it was the duty of the opposite
party to inform the Sole Learned Arbitrator in writing that they have not
given any consent to the appointment of the Arbitrator but in the present
case the opposite party after receiving several notices from the Learned
Arbitrator regarding the proceedings chose not to appear before the
Learned Arbitrator nor filed any application under Section 16 of the Act’
1996 challenging the competence of the arbitral tribunal and thereby
allowed the Learned Arbitrator to proceed with the arbitration and pass
the award. Further even after passing of the award opposite party also
did not choose to challenge the award before the Hon’ble Court by filling
application under Section 34 but the opposite party chose to sit tight and
did nothing and only at the time of execution they filed one after another
applications under Section 47 of the Civil Procedure Code which such
the second application was barred by res judicata. In support of his
contention Mr. Bhattacharya relied on a Supreme Court decision
reported in 2013 (3) MhLJ ( Zenith Fire Services (India) Pvt. Ltd.
Mumbai vs Charmi Sales, Ahmedabad) Page-623.
16. Mr. Bhattacharya reiterated that since the opposite party
failed to avail any of those recourses then at the stage of execution they
have no right to challenge the jurisdiction of the Arbitrator by filingapplication under Section 47 of the Civil Procedure Code. In support of
his contention Mr. Bhattacharya relied on a Supreme Court decision
reported in 2014 (13) SCALE: Paragraphs 15 and 16 ( M/s MSP
Infrastructure Ltd vs M.P Road Devl. Corp. Ltd) Page-601.
17. Finally, Mr. Bhattacharya contended that in the Article 227,
the High Court has ample power to quash any order passed without
jurisdiction . In support of his contention Mr. Bhattacharya relied on a
Supreme Court decision reported in AIR 2003 (SC) Page-3044 ( Surya
Dev Rai vs Ram Chander Rai and Others). Therefore, in conclusion
Mr. Bhattacharya submitted that this Hon’ble Court should quash and
set aside the impugned order dated 29.02.2015 by allowing the present
revisional application.
18. Per contra, Mr. Jishnu Saha, learned senior Advocate
appearing for the opposite party submitted that on the question of
jurisdiction res judicata does not apply.
19. Mr. Saha strongly contended that second application under
Section 47 of the Civil Procedure Code cannot be assailed as res judicata
because in the first application Court decided that it had the jurisdiction
to entertain the execution application but in the second application
Court decided the question of the jurisdiction of the Sole Arbitrator topass the award though this issue was raised before the Court in the first
application but unfortunately that issue was not decided. Therefore, for
the decision on the issue of jurisdiction of Arbitrator the second
application under Section 47 of the Civil Procedure Code was filed which
cannot and should not be held to be barred by principles of res judicata.
20. Mr. Saha also vehemently urged that res judicata is a matter
of procedure. In support of his contention Mr. Saha relied on a Supreme
Court decision reported in 1990 (1) SCC Page-193 (Sushil Kumar
Mehta vs Gobind Ram Bohra (dead) Through His Lrs.) Paragraphs-26
& 27.
21. Mr. Saha also contended that in the agreement there is no
provision that other party is bound to appear before the Arbitrator of
whose appointment he has not given any consent. Mr. Saha also
referred to Section 11 Sub Section 5 of the Arbitration Act, 1996. He
relied on a Supreme Court decision reported in 2005 (9) SCC Page-689
(Dharma Prathishthanam vs Madhok Construction (P) Ltd)
Paragraphs-12, 13, 14, 15, 27 & 30.
22. Mr. Saha emphasized in his argument that Section 4 of 1996
Act gives a right of waiver. On the facts of the case Mr. Saha contended
that no notice was served upon the petitioner prior to passing ofattachment order which was passed ex parte. Mr. Saha also relied on
Section 11 of the Civil Procedure Code which is quoted below :-
“Section 11- Res judicata-No Court shall try any suit or issue in
which the matter directly and substantially in issue has been
directly and substantially in issue in a former suit between the same
parties, or between parties under whom they or any of them claim,
litigating under the same title, in a Court competent to try such
subsequent suit or the suit in which such issue has been
subsequently raised, and has been heard and finally decided by
such Court.”
23. Mr. Saha further contended that there is no bar to make
successive application as per Civil Procedure Code. In support of his
contention Mr. Saha relied on a Supreme Court decision reported in
2004 (1) SCC Page-497 (Ramnik Vallabhdas Madhvani And Others vs
Taraben Pravinlal Madhvani) Paragraph-55.
24. Mr. Saha further strongly urged that nomenclature is not
important, but substance is. Therefore, in the 2nd application though
filed under same Section 47 of Civil Procedure Code but substance was
different. In support of his contention Mr. Saha relied on a Supreme
Court decision reported in 1993 (2) SCC Page-507 (Chiranjilal Shrilal
Goenka vs Jasjit Singh And Others)25. Mr. Saha also contended that the opposite party’s case is not a
lack of jurisdiction but inherent lack of jurisdiction. Therefore, question
of taking recourse to Section16, 34, 36, and 37 of the Arbitration Act,
1996 does not arise since the jurisdiction of the Learned Arbitrator was
challenged in the petition.
26. Mr. Saha further contended that in case of execution of the
award Civil Procedure Code applies. In support of his contention Mr.
Saha relied on a Supreme Court decision reported in 2012 (1) SCC Page-
302 ( Leela Hotels Limited vs Housing And Urban Development
Corporation Limited)Paragraph-45. Therefore, Mr. Saha submitted that
Learned Civil Judge (Senior Division) 2nd Court, Barasat did not commit
any wrong by allowing the second application filed under Section 47 of
the Civil Procedure Code by deciding the issue of jurisdiction of the Sole
Arbitrator.
27. In distinguishing the citations relied on by Mr. Bhattacharya,
learned Advocate appearing for the petitioner Mr. Saha contended that
2007 (5) SCC 38 (supra) is not applicable in the case in hand. Actually
circumstance is totally different in the case in hand. In the cited case
already Section 34 was filed. Therefore, doctrine of estoppel applies. But
here in this case of the opposite party it is totally different. But the caseof the opposite party is not only on the point of lack of jurisdiction but
also on the point of inherent lack of jurisdiction of the Sole Arbitrator
appointed by the petitioner.
28. In case of 2014 (3) SCALE : Page-601 (supra) Mr. Saha relied
on Paragraphs 2 and 3 and submitted that there parties appeared before
the Arbitrator and thereafter challenged the jurisdiction but the opposite
party’s case is completely different. Therefore, 2014 (3) SCALE: Page-
601(supra) has no application in the case in hand.
DECISION WITH REASONS
29. After considering the submissions advanced by the learned
Advocates for the parties and after perusing the records and the citations
relied on by the learned Advocates I find that the Sole Arbitrator entered
upon the reference and from time to time issued notices of sittings to
both the parties. The petitioner appeared before the Learned Arbitrator
but the opposite party did not appear before the Arbitrator on the ground
that they have not given consent in the appointment of the Sole
Arbitrator.
30. It is also evident that the opposite party did not take out any
application before the Sole Arbitrator under Section 16 of the Arbitration& Conciliation Act, 1996 thereby challenging the competence of the
Arbitrator on the ground that appointment was without their consent,
nor they filed any application under Section 34 before the Hon’ble Court
for setting aside the award though, Arbitration and Conciliation Act,
1996 provided for such remedies.
31. I accept the submissions advanced by Mr.Bhattacharya that
award itself is not a decree and for its execution the award holder has to
take recourse to Civil Procedure Code.
32. I also cannot ignore the proposition of law that Section 47 of
the Civil Procedure Code cannot override the procedures provided under
Section 5, 16, 34 of the Arbitration and Conciliation Act, 1996 and
thereby entertain challenge to the award at execution stage.
33. I also cannot overlook the facts emerging from the records that
the minutes of the every sittings were served upon the opposite party but
despite receiving those minutes the opposite party chose not to appear
before the Learned Arbitrator nor took any steps as provided under
different sections of the Arbitration & Conciliation Act, 1996. They have
waited till the award was passed.34. It shocks the conscience of the Court that the Learned Court
below after entertaining the application for execution and passed
attachment order against the opposite party and further after rejecting
the application under Section 47 of the Civil Procedure Code filed by the
opposite party how could the Learned Court below allow the second
application filed under Section 47 of the Civil Procedure Code by the
opposite party thereby recalling the attachment order as well as holding
that the award was invalid and in-executable when admittedly the Court
below had no jurisdiction to entertain and decide any question as to the
legality and validity of the award in any manner whatsoever.
Submissions of Mr. Saha also do not impress this Court that the
filling of 2nd application under Section 47 of the Civil Procedure Code was
not hit by the principles of res judicata though under Civil Procedure
Code the opposite party has the right either to file an application before
this Learned Court if they felt that all the issues raised in the earlier
application under Section 47 of the Civil Procedure Code were not
decided by the Learned Judge vide the earlier Order they should have
preferred appeal from the said order.
35. This Court cannot also accept the argument advanced by Mr.
Saha that though the second application was filed under Section 47 of
the Civil Procedure Code but the substance of the matter was differentfrom the earlier application though nomenclature was same. In my
considered view if the substance of the 2nd application under the selfsame
section filed before the self-same Judge was different then what
prevented the opposite party to take appropriate step against the earlier
order passed by the Learned Court below in the first application under
Section 47. While it is correct that there is no bar to file successive
applications as per Civil Procedure Code before the self same Learned
Court below but from the nature of the prayer of the first Section 47
application and 2nd Section 47 application it is noticed that the prayers
in both the applications are almost same, therefore, when order was
passed rejecting the first application of the opposite party, the opposite
party ought to have challenged the said order in appeal instead of filing
another application under Section 47 before the self-same Court.
The rights under Order II Rule 2 of the Civil Procedure Code was
not secured but given up by the opposite party. In this regard Order II
Rule 2 of the Civil Procedure Code and Section 11 as well as the
Explanation (iv) of the Civil Procedure Code are quoted below :-
Order II Rule 2. Suit to include the whole claim-(1) Every suit shall
include the whole of the claim which the plaintiff is entitled to make
in respect of the cause of action; but a plaintiff may relinquish any
portion of his claim in order to bring the suit within the jurisdiction of
any Court.(2) Relinquishment of part of claim-Where a plaintiff omits to sue in
respect of, or intentionally relinquishes, any portion of his claim, he
shall not afterwards sue in respect of the portion so omitted or
relinquished.
(3) Omission to sue for once of several reliefs-A person entitled to
more than one relief in respect of the same cause of action may sue
for all or any of such reliefs; but if he omits, except with the leave of
the Court, to sue for all such reliefs, he shall not afterwards sue for
any relief so omitted.
“Section11 Explanation IV-Any matter which might and ought to
have been made ground of defence or attack in such former suit
shall be deemed to have been a matter directly and substantially in
issue in such suit.”
36. Now I deal with the judgments relied on by Mr. Saha. Dharma
Praishthanam (supra) has been considered in case of M/s Larsen &
Toubro Ltd vs M/s Maharaji Educational Trust and that Dharma
Prashtishanam was quoted in the context whether appeal was
maintainable or not and nothing else and the same does not fall within
Section 37 of the Arbtiration and Conciliation Act, 1996. In that context
some portion of the M/s Larsen & Toubro is quoted below : -
“It is, thus, clear that in order to invoke section 47 CPC, there
must be a decree. Section 2 (2) CPC defines the decree. For a
decision or determination to be a decree, it must necessarily fallwithin the fore-corners of the language used in the definition.
Section 2 (2) CPC defines decree to mean “formal expression of an
adjudication which, so far as regards the Court expressing it,
conclusively determines the rights of the parties with regard to all or
any of the matters incontroversy in the suit and may be either
preliminary or final. It shall be deemed to include the rejection of a
plaint and the determination of any question within Section 144, but
shall not include- (a) any adjudication from which an appeal lies as
an appeal from an order, or (b) any order of dismissal for default”.
Explanation: A decree is preliminary when further proceedings have
to be taken before the suit can be completely disposed of. It is final
when such adjudication completely disposes of the suit. It may be
partly preliminary ad partly final.
“57-Section 36 of the Arbitration and Conciliation Act of 1996 brings
back the same situation as it existed from 1899 to 1940. Only
under the Arbitration Act, 1940, the award was required to be made
a rule of Court i.e. required a judgment followed by a decree of court.
The issue that an award made in arbitral proceedings is not a
decree within the meaning of CPC having been settled by the
aforesaid pronouncement by the Hon’ble Apex Court, the provisions
of Section 47 CPC cannot be available to obstruct the execution of
the award.Much emphasis has been laid by the learned counsel for the
applicant on the decision of the Hon’ble Apex Court in the case of
Dharma Pratishthanam vs Madhok Constructions (2005) 9 SCC 686
wherein it has been held that in the event of appointment of an
arbitrator and reference of disputes to him being void ab initio as
totally incompetent or invalid the award shall be void and liable to
be set aside in any appropriate proceedings when sought to be
enforced or acted upon. However, the said case relied upon by the
learned counsel for the applicant is distinguishable and will have no
application in the facts of the present case. In the said case when
the award was filed in the court for making rule of the Court under
1940 Act, objections were filed by the judgment-debtor under
Section 30 of the said Act which were dismissed on the ground that
they were filed beyond the prescribed period of limitation.
The same can be inferred from the following observations made in
Paragraph 32 of the judgment :
“In the present case, we find that far from submitting to the
jurisdiction of the arbitrator and conceding to the appointment of and
reference to the arbitrator Shri Swami Dayal, the appellant did raise
an objection to the invalidity of the entire proceedings beginning from
the appointment till the giving of the award though the objection was
belated. In ordinary course, we would have after setting aside the
impugned judgements of the High Court remanded the matter backfor hearing and decision afresh by t he learned single Judge of the
High Court so as to record a finding if the award is a nullity and if
so then set aside the same without regard to the fact that the
objection petition under Section 30 of the Act filed by the appellant
was beyond the period of limitation prescribed by Article 119 (b) of
the Limitation Act, 1963. However, in the facts and circumstances of
the case, we consider such a course to follow as a futile exercise
resulting in needless waster of public time. On the admitted and
undisputed facts, we are satisfied, as already indicated
hereinabove, that the impugned award is a nullity and hence liable
to be set aside and that is what we declare and also do hereby,
obviating the need for remand”
Thus having regard to the provisions of Sections 5, 12, 13, 16, 34,
35 and 36 of the Act, the irresistible conclusion is only grounds
which can be pressed into service for challenge to an award is
within the ambit and scope of Section 34 of the Act. Once the stage
of Section 34 is over and the questions that were raised or could
have been raised at that stage cannot be allowed to be raised again
and again by pressing into service section 47 of the Code of Civil
Procedure at the time of execution of award under Section 36 of the
Act.
In view of the aforesaid facts and discussions, the applicant did not
have any right to challenge the enforceability of the award by takingrecourse to Section 47 CPC and the same were liable to be
dismissed. It is altogether different question that the objections
have been dismissed by the Court below on different grounds and
reasons but since they are liable to be dismissed, the impugned
order does not require any interference. The revision accordingly
stands dismissed.”
In case of 1993 (2) (SCC) 507 (supra) I find that decision was
rendered in the context of a Probate Suit and not under 1996 Act.
The case in 2004 (1) SCC Page-497 Para-55 dealt with the
question of inherent lack of jurisdiction and the Judgment was rendered
only in the context of Civil Procedure Code and there was no scope to
consider Arbitration & Conciliation Act, 1996. But I find law has been
settled when MSP Infrastructure (supra) came into force. 1991 SCC Page
193 (supra) also restricted in the context of Civil Procedure but not in
Arbitration Act, 1996. Zenith Fire Services (supra) , Leela Hotels (supra)
held that award should be enforced under Section 36 by following Civil
Procedure Code. Therefore, at the time of execution of the award there is
no scope to challenge the award itself by taking recource to Section 47 of
the Civil Procedure Code. Mr. Saha distinguishing the 2007 (5) SCC 38
(supra) submitted that Judgment was considered in Leela Hotel’s case.Analysing the decisions cited by Mr. Bhattacharyya, learned Senior
Advocate appearing for the petitioner, it appears that law is now well
settled that once an award is passed by the Arbitrator, any party
aggrieved by the award has to challenge the award in accordance with
the procedures provided under Arbitration & Conciliation Act, 1996
including the issue relating to the jurisdiction of the Arbitrator, which
such issue however, should be raised before the Arbitrator under Section
16 of the Act, 1996. Therefore, a party, aggrieved by the award, not
having taken any of the measures provided in the Act, 1996, is debarred
in law to challenge the validity or legality of the award at the execution
stage when such award is put into execution under Section 36 of the Act,
1996. Thus, the applications filed by the opposite party under Section
47 of the Code of Civil Procedure challenging the legality and/or validity
of the award on diverse grounds, were not maintainable, consequently
the Civil Judge (Senior Division) ought not to have entertained those
applications but should have rejected the same being not maintainable in
law. Thus, the submissions advanced by Mr. Saha, learned Senior
Advocate for the opposite party, supporting the order passed on the
application filed by the opposite party under Section 47 of the Code of
Civil Procedure, are devoid of any merit and contrary to law.
Admittedly the present proceeding relates to execution of an
arbitral award and not a decree of a civil Court. Subtle distinguishingfeatures are there between the execution of a decree of a Civil Court and
the execution of an award. In the instant case the award under
execution was not challenged in accordance with law before appropriate
forum, of course executability of an award can be challenged or assailed
in execution proceeding but not legality and invalidity of the award. In
this case admittedly an earlier application under section 47 of the Code
of Civil Procedure was dismissed. It does not appear from the records
available before me that such order of dismissal was challenged in
accordance with law before appropriate forum. Therefore, the issue
raised regarding executability of the award reached its finality and the
same cannot be reopened in a round about way. It has been held in the
case of Satyadhan vs Smt. Deoragin reported in A.I.R (1960) S.C Page
941, 943 that principle of resjudicata applies even when a case does not
fall under Section 11 of the Code of Civil Procedure.
The Principle of resjudicata shall apply to achieve finality in
litigation when Section 11 does not apply in terms. It has been held in
the case of Steel Authority of India, reported in A.I.R (1985) Orissa 224,
Principles of resjudicata are applicable in arbitration proceeding.
It has been held in the case of Arjun Singh vs Mahendra Kumar,
that Principle of resjudicata applies in two stages in the same
proceeding, a point once decided by the Court cannot be allowed to be reagitated.
Such point cannot even be collaterally attacked at a later stage.In case of Sulachana Amma vs Naraynan Nair reported in 1994
(2) SCC 14 it was held that Section 11 will apply to all judicial
proceedings whether civil or otherwise. Keeping in mind, the executing
court cannot go behind the decree but the executing court can consider
the pleading and the proceeding to find out the true effect of the decree
as held in the case of Bhavan Vaja and others vs Solanki Hanuji
Khodaji Mansang and another reported in AIR (1972) Page- 1371,
reference may also be made in the case of Topanmal Chhotamal vs M/s
Kundomal Gangaram and Others reported in AIR 1960 Page- 388
holding that the executing court must take the decree as it stands. It
has been held in the case of Bijali Bala Das vs Charu Bala Ash reported
in A.I.R 1969 Patna 21 that once an objection under Sec 47 of Code of
Civil Procedure is rejected by the executing Court, fresh objection on a
different plea is barred by constructive resjudicata. It is true that
Section 47 of CPC relates to all question as to the execution, discharge
and satisfaction of a decree and not by a separate suit but at the same
time it does not mean Section 47 permits denovo trial or adjudication.
In my considered view the impugned order passed in 2nd
application under Section 47 is without jurisdiction .
37. I have no hesitation to hold that impugned order in 2nd
Application filed under Section 47 of the Civil Procedure Code waspassed by the Learned Civil Judge (Senior Division), 2nd Court Barasat
bye passing the entire mechinaries of the Arbitration & Conciliation Act,
1996 provided under Section 4, 5, 13, 16, 34, 35 of the said Act and that
the impugned order was without jurisdiction.
38. In the light of the above discussions I set aside and quash the
impugned order No.28 dated 29.09.2015 passed by the Learned Civil
Judge (Senior Division) 2nd Court Barasat and direct the Learned Court
below to proceed with the execution application expeditiously. Needless
to mention that by reason of this order attachment order earlier passed
stands revived.
39. Considering the facts of this case and the conduct of the
opposite party indulging in filing frivolous applications thereby stalling
the execution of a valid Award obtained by the petitioner, the petitioner
has been harassed by and at the behest of the opposite party in realising
the amounts under the award, the opposite party should pay the costs of
this application to the petitioner which is assessed at Rs.20,000/- within
a fortnight from date, failing which, the petitioner shall be entitled to
execute this order in accordance with law.
40. Accordingly the revisional application is allowed.40. Urgent photostat certified copy of this judgment, if applied for,
be supplied to the parties after fulfilling all the formalities.
(Samapti Chatterjee, J)
Later,
27.04.2016
41. After delivery of the Judgment Mr. Saha prayed for leave of
this Court to challenge the order passed on the first application under
Section 47. This Court is of opinion if the opposite party is entitled in
law to challenge the said order for that leave of this Court is not
necessary.
Mr. Saha also prayed for stay of operation of this order. The
prayer is entertained and refused.
(Samapti Chatterjee, J)
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