1. Admit.
2. Respondents waive service. By consent, heard forthwith.
3. By the present petition, the petitioners have sought a declaration that no disputes exist between the petitioner and Respondent No. 1 arising out of the Fire Policy No. 24373/94 issued by the Petitioners in favour of Respondent No. 1 on account of State Bank of India. Another declaration is also prayed for as well a prayer for injunction to restrain Respondent No. 2 to proceed with the arbitration proceedings.
It is the case of the petitioners that though there is an arbitration clause viz. Clause No. 11 in the agreement between the parties, the petitioners have fully satisfied the claim of the Respondent No. 1 and as such there is no arbitral dispute which could have been referred to arbitration. In other words what is contended is that as no disputes exist Respondent No. 1 could not have invoked clause 13 of the agreement and as such the declarations as prayed for.
The question that has to be decided is whether the petition along with the prayers as sought is maintainable.
4. On behalf of the petitioners it is contended that this Court has jurisdiction even though there is no arbitral dispute. It is pointed out that under the Arbitration Act, 1940 Courts have granted such declarations under S. 20 of the Arbitration Act, 1940. Reference for that has been made to judgment of the Apex Court in the State of Maharashtra v. Navbharat Builders. (1994) Supp 3 SCC 83. The Apex Court therein observed that when there is full and final settlement of the claim there would be no arbitral dispute. In these circumstances, when an application is made under S. 20, the Court will have to decide whether an arbitral dispute arose under the contract for reference to arbitration. It is therefore, contended that considering the language of S. 20 of the old Act, this Court also is entitled to look and find out whether in fact there is an arbitral dispute to be referred to arbitration.
Let us proceed to examine whether that will also be the position under the Act of 1996. Section 5 of the Arbitration and Conciliation Act, 1996 reads as under:
“Notwithstanding anything contained in any of the law for time being in force in matters governed by this part no judicial authority shall intervene except where so provided in this part.”
It is therefore clear that a Court can intervene only in the event a remedy is provided under the Act. The Arbitration and Conciliation Act, 1996 which hereinafter shall be referred to as the Act of 1996, has repealed as Arbitration Act, 1940 and the Foreign Award Act, 1961 as also another legislation. One of the main objects of the Act is to minimise the supervisory role of Courts in the Arbitral process. The question which has arisen therefore will have to be decided by considering S. 5 and the object for which the Act of 1996 has been enacted.
5. Under the Act of 1996 there are three Sections which basically confer power on the Court to intervene in the matter. The main Section is S. 34 of Act of 1996. In terms of sub-section (1) of S. 34 recourse to a Court against the arbitral award can be made by an application for setting aside such an Award in accordance with the sub-sec. (2) and sub-sec. (3) of S. 34. In other words a Court can interfere in setting aside the Award. An award in terms of S. 2(c) includes an interim award. Section 31(6) of the Act of 1996 provides that an arbitral tribunal in respect of a claim where it can pass an Award can also make an interim award in respect of that claim. The next section which confers a power on the Court to judicially intervene is S. 37(2). Section 37(2) of the Act of 1996 makes appealable an order of the Arbitral Tribunal under sub-sec. (2) or sub-sec. (3) of S. 16 or granting or refusing to grant interim measure under S. 17. The court can intervene also on an application under S. 14(2) of the Act of 1996. In other words, a conjoint reading of S. 5. Section 34, S. 37 and S. 14(2) of the Act of 1996 will show that the Court can intervene only in cases covered by S. 14. Section 34 and S. 37.
6. The present Application is not an application to set aside an award under S. 34. The application is not an application to set aside an order under sub-sec. (2) of S. 37 or for that matter an application under S. 14(2) that the mandate of the arbitration has been terminated. In these circumstances, will this application be maintainable. It is true that the Act also contains some other provisions like sub-sec. (1) of S. 25 and sub-sec. (2) of S. 32 which provides for closure of arbitral proceedings otherwise than by an Award. The orders passed therein ex facie are not appealable under sub-sec. (2) of S. 37. Such orders prima facie also cannot be said to be an award considering the clear language of S. 32 which speaks of culmination of proceedings by an award or by an order. Parliament itself has therefore recognised that there are certain decisions which culminate in an order and there are certain decision which will constitute an award. As pointed out earlier, Award includes an interim award. Under sub-sec. (6) of S. 31 of Act of 1996 there is a provision whereby the arbitral tribunal at any time during the arbitral proceedings can make an interim arbitral award on any matters with respect to which it may make a final arbitral award. It is thus clear that the expression arbitral award must mean a final decision on merits of any of the claim which are before the Arbitrator. Orders whereby proceedings are terminated unless it is an award would not and cannot be construed to mean an award. It is a cardinal rule of interpretation that no Section or provision can be rendered otiose or language said to be surplusage. In the Act of 1996 the expression order and award has been specifically used apart from the expression decision. It is, therefore, clear that there is a difference between the expression order and award. There is also prima facie no provision in the Act providing a remedy against such orders. However, I am not called upon to decide that question in the present petition. Therefore the present petition cannot be treated as an application under any of those Sections.
At the highest what the petitioners may contend considering the analogy or interpretation given to S. 20 of the Arbitration Act of 1940 is S. 11 of the act of 1996. When a person or a party seeks to invoke the Court intervention of the Court to appoint an Arbitrator such objection perhaps if available can be raised. I am also not addressing myself on this issue as the said issue is not required to be considered in the present petition as no party has moved this Court under S. 11.
7. The grievance of the petitioners is that they will be rendered without a remedy in a case like the present one where according to them there is no dispute to be referred to arbitration. Section 42 of the Act of 1996 confers jurisdiction on the Court where the application was originally moved to entertain all further proceedings. There is no other express provision in the Act excluding jurisdiction of the civil Court. It perhaps could be contended that by the very fact that the parties had agreed to an alternative procedure and on account of the provisions of the Act of 1996 the jurisdiction of the civil Court may be impliedly barred and in these circumstances the remedy available under S. 34 of the Specific Relief Act may not be available. I need not also decide the said question in the present petition as the present petition is for a declaration that there is no arbitral dispute. Considering the express language of S. 5 of the act of 1996 and in the absence of the present case falling under S. 14(2) or S. 34 or S. 37(2), this Court will have no jurisdiction to entertain petition as presently constituted.
8. In the light of that petition is dismissed. There shall be no order as to costs.
9. Counsel for the Respondent No. 1 makes a statement that proceedings before the Tribunal will be adjourned by a fortnight from today.
Petition dismissed.