The State of Jharkhand and Ors.
Hindustan Construction Co. Ltd.
As disputes had arisen between the parties, the matter was referred to an Arbitrator for adjudication of the disputes and during the said period, the Respondent had filed suit in the High Court seeking an interim injunction restraining the Appellant from encashing the bank guarantee. As the time for making the award and the period of extension had expired, the proceeding for arbitration was abandoned. The Appellant filed a money suit before Trial Court for realization of certain sum with interest. The Respondent after appearing in the suit filed an application under Section 34 of Act for stay of the suit which was allowed by Trial Court. Trial Court held that it was desirable that the parties should settle their disputes in an arbitration proceeding. Against the said order, an appeal was preferred under Section 39 of Act before High Court which was dismissed. Appellant filed appeal which was disposed off by holding that Arbitrator was requested to decide the claim on merits. Two-Judge Bench perceived the difference of opinion with regard to the entertain ability of application and directed the matter to be placed before Present Court for appropriate orders. Hence, present appeal by Appellant.
- A two-Judge Bench while hearing the present appeal found that there is difference of opinion in relation to the entertain ability of an application by this Court for making an award passed by the arbitral tribunal, when it retains seizing over arbitral proceeding, as Rule of the Court and, therefore, referred the matter to the larger Bench for decision on the following question:
Whether this Court can entertain an application for making the award as Rule of the Court, even if it retains seizing over arbitral proceedings?
- The narration of the facts in detail is not necessary to answer the reference. Suffice it to state that as disputes had arisen between the parties, the matter was referred to an arbitrator for adjudication of the disputes and during the said period, the Respondent had filed a suit in the High Court of Bombay seeking an interim injunction restraining the State from encashing the bank guarantee. As the time for making the award and the period of extension had expired, the proceeding for arbitration was abandoned. The State filed a money suit before the learned Sub-Judge I, Saraikella for realization of certain sum with interest. The Respondent after appearing in the suit filed an application Under Section 34 of the Arbitration Act, 1940 (for short, "the Act") for stay of the suit. The said prayer was contested and the learned Sub-Judge allowed the application filed by the Respondent. However, regard being had to the quantum of the claim, the Sub-Judge expressed the view that it was desirable that the parties should settle their disputes in an arbitration proceeding. Against the said order, an appeal was preferred Under Section 39 of the Act before the High Court which dismissed the appeal vide order dated 06.08.2002.
- Being aggrieved, the State of Jharkhand preferred the appeal which was disposed of by this Court vide order dated 10.01.2013. It is worthy to mention here that the learned Counsel appearing for the parties agreed for the following order:
(i) The claim made by the Respondent on January 7, 1994 pursuant to the contract dated April 25, 1989 between the parties which was earlier referred to the Arbitral Tribunal which commenced proceedings on February 15, 1995 and which had remained inconclusive is referred for adjudication to Hon'ble Mr. Justice S.B. Sinha, retired Judge of this Court.
(ii) The claim made by the Appellant against the Respondent in Money Suit No. 4 of 1996 - State of Jharkhand and Ors. v. M/s. Hindustan Construction Company Limited filed by the Appellant on April 10, 1996 in the court of Sub-Judge, Saraikella, Jharkhand is also referred for adjudication to Hon'ble Mr. Justice S.B. Sinha, retired Judge of this Court.
(iii) The terms and conditions shall be settled by the learned Arbitrator in consultation with the parties.
(iv) The parties shall appear before the learned Arbitrator on February 5, 2013. We request the learned Arbitrator to conclude the aforesaid arbitration proceedings expeditiously and further observe that the award shall be filed before this Court.
- After reproducing settlement, the Court recorded thus:
We record and accept the statement of the learned senior Counsel for the parties that learned Arbitrator may be requested to decide the claim on merits. We observe accordingly.
- The Appellants challenged the said award by filing its objections before the Civil Court. Per contra, the Respondent filed an affidavit requesting this Court to pronounce the judgment in terms of the award.
- It was contended before the two-Judge Bench that when this Court had directed to file the award in this Court, an application for making the award Rule of the Court is to be filed in this Court, for this Court alone has the jurisdiction to pronounce the judgment in terms of the award.
Held, while disposing off the appeals:
(i) Court opined that there was no difficulty in holding that if the suit was pending in the Trial Court and a final judgment had not been pronounced by it, it was the Trial Court which was competent to make the order of reference. Similarly, if a suit had been decided, a final judgment had been delivered and a decree had been drawn up by the Trial Court and no appeal had been preferred against it, the matter was concluded and there was no scope for applying Section 21 at all. Proceeding further, the Court stated that if a decree determining the suit had been drawn up by the Trial Court and it was taken to the Appellate Court, during the pendency of the appeal, it was the Appellate Court that was competent to act under Section 21. Proceedings which would have to be taken between the parties in pursuance of and consequent upon, the preliminary decree were pending before the Trial Court whereas matters in difference between the parties which were covered by the preliminary judgment and decree were pending before Appellate Court.
(ii) Analogy taken from case and applying to the superior courts attaching condition precedent that should the superior court retain control over the arbitral proceedings, it would have exclusive jurisdiction was neither correct nor acceptable. There was nothing that could be remotely connected to confer power on the superior courts to deal with the award directly. The analogy, if any, had to stop at a particular level. To explicate, in a given case, the parties might agree for arbitration and the court might think it appropriate to send it for arbitration. But to expand the theory that the court had issued directions after the appointment of arbitrator and was in control of it and, therefore, the award could only be filed before the superior court for the purpose of making it a Rule of Court did not flow from the correct understanding of the principle stated that case.
The appeal is disposed off.