Krishna Kumar Mundhra v. Narendra Kumar Anchalia

D.K Seth, J.:— This application under Section 47 of the Code of Civil Procedure (CPC) has since been filed on the strength of Section 36 of the Arbitration and Conciliation Act, 1996 by the respondent/judgment debtor against whom an Award is sought to be executed. Learned counsel in support of the application has taken three grounds to point out that the Award is a nullity. The first ground is that before referring the dispute to the Arbitrators requesting them to enter into the Arbitration, no notice of dispute was given to the respondent, as contemplated under Section 21 of the 1996 Act. According to him, straightway the matter was referred to the Arbitrators as would be evident from Annexure B to the application at page 28 thereof. The second ground is that without the consent of the respondent or without taking recourse to law, the third Arbitrator was appointed by the two Arbitrators named in the agreement. Therefore, the Arbitral Tribunal was incompetent to arbitrate the matter. The third ground that was taken is that the Arbitral Award had been passed and the proceedings had been conducted by two of the Arbitrators or sometimes by one Arbitrator inasmuch as in paragraphs 10 and 11 of the application, it is pointed out that one of the Arbitrators, Parimal Sarkar, had withdrawn himself from the Arbitral proceedings and the other Arbitrator, S.K Poddar, had also withdrawn himself from the Arbitration proceedings. Therefore, the proceedings itself was invalid in view of Section 14(1)(a) of the 1996 Act. He has elaborated his submission on these grounds and pointed out to page 50, Annexure F, which appears to have been signed by Mr. Sarkar and Mr. Poddar, viz., two of the Arbitrators and he has also drawn my attention to Annexure G of the application which also appears to have been signed by only two of the Arbitrators and not by Mr. S.K Poddar.

Section 14(1)(a): Whether breached ?

2. So far as these two Annexures are concerned, it appears that the first one (Annexure F) was the resolution of the first sitting of the two Arbitrators whereby the third Arbitrator was appointed. Therefore, there was no question of signing the said resolution by the third Arbitrator when for the first time he was being appointed by the two Arbitrators. So far as the other document being Annexure G to the application is concerned, the same was signed by two of the Arbitrators other than Mr. S.K Poddar who did not participate in the proceedings, i.e in the hearing of the petition filed by the respondent No. 1. The learned counsel for the applicant/respondent admits that this was the petition in which allegation was made against Mr. Poddar. But then this is a minute of the proceedings where only the hearing was undertaken and this is not an order. Mr. Mitra pointed out that the applicant had made two petitions-one against Parimal Sarkar and the other against S.K Poddar and when these petitions were heard, Mr. Sarkar and Mr. Poddar respectively did not participate in the hearing in which allegations were made against one or the other of them. He further pointed out that the order rejecting the petitions were passed by three of the Arbitrators and was so signed by them. There is nothing to contradict the statement of Mr. Mitra. Learned counsel for the applicant-respondent has not drawn my attention to any other material from which it can be gathered that the proceedings was conducted by two of the Arbitrators or one or the other had withdrawn from the proceedings. Section 14(1)(a) provides that if the Arbitrator becomes unable to perform his function then the mandate shall terminate. In order to attract this provision, the facts disclosed from the material must show that the Arbitrator became unable to perform his function. In this case the Arbitrator, against whom allegation was made, abstained from hearing the application. But the order passed thereon appears to have been signed by all the three Arbitrators. Therefore, on facts, I am unable to hold that Section 14(1)(a) of the 1996 Act is attracted.

Objection as to Jurisdiction: Breach of Section 21: Limits of objection

3. So far as the question of appointment of the third Arbitrator or giving of notice under Section 21 of the 1996 Act is concerned, it appears that these are objections which can be taken in the Statement of Defence in view of Section 16(2) of the 1996 Act. But this prescribes a limit within which the objection is to be taken; it prescribes that objection shall be raised not later than the submission of the Statement of Defence. However, it makes an exception only to the extent that even though the applicant might have appointed or had participated in the appointment of the Arbitrators still then he could raise such objection in the Statement of Defence. This exception has been sought to be interpreted by the learned counsel for the applicant to mean that it keeps the same open forever and can be taken even through an application under Section 47 of the Code. I am afraid, such a proposition can be interpreted within Section 16(2) of the 1996 Act, even on the basis of principle of interpretation as sought to be relied upon by the learned counsel for the applicant viz. Interpretation of Statutes by Maxwell, 12th Edition, page 328.

4. The expression used in Section 16(2) of the 1996 Act is clear and unambiguous. It permits that objection as to the jurisdiction of the Arbitral Tribunal can be raised in the statement of defence even though the objector might have appointed or participated in the appointment. The exception does not indicate anything else than the right to raise the objection despite acquiescence in the appointment. This exception does not relate to the time limit prescribed therein. In as much as such objection cannot be raised after the submission of the statement of defence. This interpretation seems to be apposite in view of the scheme of the Act. A provision cannot be interpreted independent of the scheme of the Act. If the Act contains some other provision, which might have some nexus with the other provision then both the provisions are to be reconciled after reading them in conjunction.

5. The provisions contained in Section 16(2) of the Act are to be read in conjunction with Section 4 of the Act, which prescribes waiver of right to object. It is contended that this objection was unknown to the applicant. Therefore, when he had the information he could raise the objection in the Statement of Defence. Admittedly, such objection has not been taken in the Statement of Defence. Therefore, by reason of Section 4 of the 1996 Act, such objection cannot be taken unless it is taken within the time prescribed in the Act and if it is not taken, it would be deemed to have been waived. Section 4 creates a fiction, which precludes a person from raising objection after the period prescribed in different parts of the Act expires. This is further supported by the express provisions provided in Sections 34 and 35 read with Sections 12, 13 and 16 of the 1996 Act. Section 34 makes it clear that an Award can be set-aside only on the grounds enumerated therein. When the section emphatically uses a particular expression with the use of the word ‘only’ then it limits the scope as provided in the section itself and it cannot be stretched beyond that. Section 35 prescribes a finality of the Award. Section 36 makes it enforceable as if it were a decree. Whereas Section 12 prescribes justifiable doubts as to independence or impartiality or disqualification of the Arbitrator as grounds of challenge and Section 13 prescribes mode of challenge to the procedure and while Section 16 deals with the challenge relating to jurisdiction. The scope of the grounds has been specified. The grounds of challenge have been restricted by various provisions. The whole scheme indicates the intention of the Legislature to confine the grounds of challenge within the limits prescribed by various provisions. The Legislature did not intend to open up the grounds of challenge. On the other hand, through express provision, it has attempted to restrict the grounds. Intention of the Legislature is a guiding factor for interpreting the provision of a statute. This has to be gathered from the express words used in various provisions and the scheme of the statute.

6. Thus, it appears that the invalidity of an Award can be found out from Sections 12, 13, 16 and ultimately under Section 34 of the 1996 Act and not beyond. Therefore, even if this notice under Section 21 was not served upon the respondent before requesting the Arbitrators to enter into the Arbitration, still then this ground will no more be available in view of Section 4 read with Sections 16(2) and 35 of the Act. Thus, the applicant-respondent cannot take advantage of the first and second grounds as contended by the learned counsel for the applicant.

Limit of Judicial Intervention

7. That apart, it appears from the decision dated 17th May, 2000 on the application under Section 34 of the Arbitration and Conciliation Act, 1996 that the question that only two Arbitrators had conducted the Arbitration proceedings and that it was violative of Section 14(1)(a) of the Act were raised before the Court and were negatived. It also transpires from the decision dated 14th August, 2002 of the Division Bench in appeal preferred against the decision on the application under Section 34, that these questions were also gone into. The Special Leave Petition against the said decision of the Appeal Court also stood dismissed and the review thereafter was also rejected. Thus, it appears that these questions, which are now being sought to be raised, were already raised and decided in the Section 34 proceedings. That apart, the extent of judicial intervention has been circumscribed by Section 5 of the Act to the extent as provided in the Act itself. In other words, judicial intervention is prohibited except as provided for in the Act. Thus, the judicial intervention having been limited, the Court cannot interfere at any and every stage or on a ground other than those available in the Act itself. The Act of 1996 has been enacted in order to reduce the time and avoid the procedural hazards of an ordinary litigation before a Court. If we accept such a contention, in that event, the very purpose and object to replacing the 1940 Act by the 1996 Act would be infructuous or ineffective.

Section 47 CPC: Whether attracted ?

8. Be that as it may, the learned counsel has sought to bring in these questions within the scope and ambit of Section 47, CPC and he has contended, if the decree itself is a nullity or without jurisdiction, in that event, the Executing Court can go behind the decree. He relied on the decision of Bhavan Vaja v. Solanki Hanuji Khodaji Mansang, (1973) 2 SCC 40 : AIR 1972 SC 1371 and Kiran Singh v. Chaman Paswan, AIR 1954 SC 340. The principles laid down therein are accepted proposition with which there is no scope of any doubt. If the decree is a nullity or without jurisdiction, the said question can also be raised in the execution and the Executing Court can go behind the decree. This is a principle which is an exception to the principle that executing Court cannot go beind the decree. This proposition has not been disputed by Mr. Mitra. But the question remains whether these questions can be raised in a proceeding under Section 47 CPC in an execution of an Award in terms of Section 36 of the Act. In fact, the provisions contained in Section 34 of the Act of 1996 are somewhat similar to Section 47, CPC. Section 47 CPC renders the scope very wide and includes any and every dispute between the parties to be settled or resolved in the same proceedings and not by separate proceedings in the execution of the decree itself. Whereas Section 34 while providing for similar provision has restricted the grounds of challenge enumerated therein. It has not made the same open to any and every dispute between the parties. Section 34 also prescribes the grounds under which it can be challenged and after the question is decided, the Award becomes final in terms of Section 35. If no application under Section 34 is made, then after the expiration of the period limited the Award becomes enforceable in terms of Section 36, which also does not provide that the provisions of the Code as such would become applicable. Section 36 creates a fiction that it would be enforceable as if it were a decree of the Court within the scope of Order 21, CPC. This enforcement of the Award under Order 21, CPC would not attract the application of Section 47 CPC simply by reason of the expression used in Section 36. Section 36 cannot be read independent of the other provisions contained in the Act itself. All the provisions are to be reconciled with the other provisions of the Act. Section 36 cannot be read out of context and independent of the scheme of the Act. Reference to another statute does not attract application of such other statute to the referring statute unless expressly provided for. A reference in a statute to another statute does not invite inconsistency in the referring statute. Any such reference, if made, has to be intepreted in the context in which the reference is made and not inconsistent with the provisions of the referring statute itself. If it brings inconsistency, then the same is to be avoided. If Section 47, CPC is to be attracted, then the restrictions provided in Section 34 of the Act would be redundant. It cannot be interpreted in the manner inconsistent with the provisions contained in the other part of the Act. That apart the finality of the decree under the Code is reached after the decision under Section 47, CPC, if raised. But the Legislature in its wisdom thought it fit to incorporate the scope similar to Section 47 CPC in Section 34 of the Act in order to bring finality before the decree becomes executable. Same procedure cannot be expected to be incorporated in a statute twice over. Legislature never intends repetition. At the same time, the object of the Act is directed towards speedy and hazard-free finality with a view to avoid long drawn procedure based on technicalities. Therefore, having regard to the provisions of Sections 4, 5, 12, 13, 16, 34 and 35, Section 36 cannot be interpreted in a manner inconsistent with any of those provisions to attract the provisions contained in the Code in its entirety. Therefore, in the application filed under the provisions of CPC for the purpose of execution of an Award, the Court cannot overlook the scope and ambit within which the Court is to execute the Award taking aid of the provisions for execution contained in the CPC not inconsistent with the provisions contained in the 1996 Act. Therefore, in my view, Section 47, CPC cannot be attracted despite the provisions contained in Section 36 in respect of an Award when the Award is sought to be executed thereunder. The learned counsel for the applicant has relied on a passage from Maxwell on The Interpretation of Statutes at page 328, which runs as follows:

“Where the act or thing required by the statute is a condition precedent to the jurisdiction of a tribunal, compliance cannot be dispensed with and, if it be impossible, the jurisdiction fails. It would not be competent to a Court to dispense with what the Legislature has made the indispensable foundation of its jurisdiction.”

9. This principle has to be applied in the present case having regard to the provisions contained in the Act itself, which restricts the raising of the question of jurisdiction to the extent except as provided in the Act. Unless it is provided in the Act, no judicial intervention can be invited beyond the scope as provided in the Act itself. Therefore, learned counsel for the applicant cannot take advantage of this principle as quoted above. On the other hand, having regard to the scheme of the 1996 Act, this principle stares on the contention of the counsel for the applicant and supports the view we have taken. Mr. Mitra has relied on para 18 of the decision in Narayan Prasad Lohia v. Nikunj Kumar Lohia, (2002) 3 SCC 572 : 2002 (1) Arb. LR 493 (SC), where the Apex Court had observed that the grounds of challenge to an Arbitral Award are very limited. An Award can be set aside only on a ground of challenge under Sections 12, 13 and 16 provided such a challenge is first raised before the Arbitral Tribunal and has been rejected by the Arbitral Tribunal. The only other provision is Section 34 of the said Act. The only grounds, which can be pressed into service, are eunumerated therein. This could be raised within the scope of Section 34 application subject to Section 4 of the 1996 Act. In this case, so far as the questions that were raised in the Section 34 application the same were decided in the proceedings as well as in the appeal arising thereout. Therefore, these questions having been already decided cannot be raised again and that too, through a proceeding under Section 47 of the Code.

10. For all these reasons, the application under Section 47, CPC filed by the applicant stands rejected. There will be no order as to costs.