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M/S Sanwal Coal Carriers v/s Western Coalfields Limited & Others

    WRIT PETITION No. 2888 OF 2010

    Decided On, 26 August 2010

    At, In the High Court of Bombay at Nagpur


    For the Petitioner: G.C. Singh, Advocate. For the Respondents: S.C. Mehadia, Advocate.

Judgment Text

1. The challenge in this Writ Petition under Articles 226 and 227 of Constitution of India is to order styled as interim award dated 25/3/2010 by arbitrator in dispute between petition and respondent. Dispute arose out of contract for driving pay-loaders and tippers for loading coal into trucks/tippers from ground stock and its transportation. By consent of parties it has been referred to sole arbitrator Mr. B. R. Harne on 20/7/2009 under Arbitration and Conciliation Act, 1996 (hereinafter to as ?the Act? hereafter). It is not necessary to go into controversy leading to stoppage or termination of that contract. For present purposes, it is necessary only to note the case of petitioner that Chief General Manager of respondent on 20/3/2006 issued a notice to petitioner to resume work within 15 days and before that on 11/3/2006 work was given to another transporter who started it. It is the case of petitioner that report of committee constituted by respondent regarding imposition of penalty, forecloser/termination and other aspects having bearing on contract with petitioner indicating conclusions in his favour as another agency had resume work even before expiry of period of notice dated 20/03/2006 is being suppressed. It therefore filed an application before arbitrator on 5/12/2009 to direct respondents to place on record complete report of that committee. On 16/01/2010 petitioner pointed out that respondents have on 15/01/2010 refused to submit complete report by filing application and hence sought hearing on that application. On 03/02/2010 petitioner placed on record a note explaining relevance of report of committee and also on other issue of weighment of transported coal. On 20/02/2010 respondent also placed its brief note on record. In this background sole arbitrator has passed the impugned order on 25/03/2010 styling it as "interim report" on its cover page and as "interim order" at its commencement and also at i

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s end. On issue no. 1 before him regarding filing of committee's report, arbitrator found that that report has no legal standing and it cannot be treated as relevant document. On issue no. 2 about weighment of transported coal, he found that system of delivery, weighment and preparation of bill was without any fault and was accepted by contractor all through the contract. He also noted that respondents have to prove that coal delivered to other contractors was fully accounted for in total coal transported by petitioner and was paid for. He therefore directed that both parties should jointly reconcile dispatch data and arrive at correct figures in this respect. Looking to the nature of controversy, writ petition is heard finally by making Rule returnable forthwith, by consent. 2. Shri Singh, learned Counsel for Petitioner has contended that no oral arguments were heard on issue no. 2 and thus findings delivered thereon are unsustainable. Regarding issue no.1, the learned Counsel states that grievance as made can be taken note of in writ jurisdiction and appropriate writ in the nature of prohibition can be issued to arbitrator. He has relied upon several judgments to drive home this contention. He has further stated that respondent being public authority cannot behave like a private individual and refuse to tender on record relevant piece of evidence. The committee was constituted as per order dated 10/07/2006 and that committee consisting of superior officers also invited petitioner and thereafter has submitted a report. Report considers material on record with evidence and finding therein is in favour of petitioner. According to him arbitrator cannot be permitted to proceed further without securing that report on record of Arbitration proceedings. The finding that report has no legal sanctity or is not irrelevant document is also assailed by him in this background. According to him, arbitrator has no jurisdiction to deliver any interim award. He points out that no responsible officer of respondents has passed any order prohibiting production of that report on record. I, find it appropriate to consider his contention in this respect little latter along with case law cited by him. 3. Shri Mehadia, learned Counsel for respondents has stated that Writ Petition is not maintainable and petitioner has to wait till arbitrator delivers final award which alone can thereafter be challenged as per legal procedure. According to him the constitution bench judgment of Hon'ble Apex Court in SBP &CO. Vs Patel Engineering Ltd and another reported at (2005) 8 SCC 618 AIR 2006 SC 450 concludes this controversy and subsequent judgments of Courts taking view to the contrary must yield to it. He states that there is nothing wrong with application of mind on legal status of report of committee by arbitrator and as there is no jurisdictional error, this Court cannot interfere at this stage. He further states that when written notes of argument were filed before arbitrator, grievance about denial of oral hearing is misconceived and deserves to be rejected. According to him, no writ can be issued against arbitrator which clearly is only a private administrative body. 4. Shri Singh, learned Counsel in his reply has contended that judgments of Hon'ble Apex Court and of Division Bench of this Court permit intervention in writ jurisdiction in appropriate circumstances to see that situation does not become irreversible and errors are corrected without causing any prejudice to the parties. He further invites attention to various judgments to show how only ratio operates as precedent and to demonstrate that Hon'ble Constitution Bench does not lay down any legal proposition binding under Article 141. According to him, en-route correction in present matter is the most vital need. 5. In SBP &CO. Vs Patel Engineering Ltd and another (supra) relied upon by respondents, the scheme of the Act is noted and it is laid down that the party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. Approach of High Courts in presuming that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution of India is held to be unwarranted. Arbitrator is found to be a forum chosen by the parties by agreement and intervention by the High Courts is declared not permissible as the object of minimizing judicial intervention will stand defeated if the High Court could be approached under Article 227 of the Constitution of India or under Article 226 of the Constitution of India against every order made by the Arbitral Tribunal. Therefore, Hon'ble Apex Court found it necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage. Its conclusions separately recorded also reiterate this principle as :"(vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with 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". AIR 1999 Bom. 219 (Anuptech Equipments Pvt. Ltd., M/s. v. M/s. Ganpati Coop Hsg. Socy. Ltd.) is the judgment of Learned Single Judge of this Court holding that if against decision by Arbitral Tribunal remedy is not provided in Act, writ can be issued as tribunal would be "person" to whom writ would go under Article 226 of the Constitution of India. 2008(1) Bom. C.R. 768 (Dowell Leasing and Finance Co. vs. Radheshyam B. Khandelwal) is the Division Bench judgment of this Court which considers Constitution Bench Judgment of Hon'ble Apex Court in paragraph no. 9 and observers that said judgment does not say that no writ can go to an Arbitral Tribunal or then such Tribunal is not a person to whom a writ cannot be issued. Discussion therein shows that such an intervention is held permissible when there is no other remedy under the Act. Division Bench of Calcutta High Court in Bharat Sanchar Nigam Ltd. vs. BMW Industries Ltd reported at A.I.R. 2007 (NOC) 1715 (CAL), has held that power of High Court under Articles 226 and 227 is a basic structure of Constitution and same cannot be curtailed by Section 5 of Act. In view of the Division Bench judgment of this Court, I do not find it necessary to refer to other judgment in case of (1997) 3 SCC 261AIR 1997 S.C. 1125 (L. Chandra Kumar v. Union of India) about the basic structure of Constitution. In (2006) 1 SCC 540 (Transmission Corporation vs Lanco Kondapalli Power), the appellant before Hon'ble Apex Court contended that jurisdiction of civil court was barred because of provisions of A.P. Electricity Reforms Act, 1998 and Electricity Act 2003. Hon'ble Apex Court noticed that it raised a tribale issue and hence it was left open for consideration by High Court in writ petition as well as in application filed by respondent under Section 11 of Act. In said writ petition, respondent before Hon'ble Apex Court had sought order restraining commission from adjudicating the dispute under 1998 Act from High Court. The High Court had already granted interim relief to respondent in said challenge to order of Civil Court under Section 9 of Act. The judgment therefore is of no help in present matter. 6. Petitioner has relied upon (1991) 4 SCC 139(State of U. P. and Another vs Synthetics & Chemicals Ltd and another) to point out how for the purposes of Article 141 "law declared" has been understood. Decision not express nor founded on the reasons nor proceeding on consideration of the issue cannot be deemed to be a precedent declaring law. For same purpose reliance is also placed on (2002) 8 SCC 481( T.M.A. Pai Foundation and others vs State of Karnataka and others) where it is explained that ratio decidendi of a judgment is to be found out only on reading of entire judgment and it cannot be read as a statute. A.I.R. 1979 SC 1384 (Dalbir Singh vs. State of Punjab), is also pressed into service by him to show 3 basic ingredients of a binding precedent. Dowell Leasing & Finance Co. vs. Radheshyam B. Khandelwal (supra) is the Division Bench judgment of this Court which considers Constitution Bench Judgment of Hon'ble Apex Court and hence it is not necessary for me to consider all these judgments of Hon'ble Apex Court. AIR 2007 S.C. 168 (Paramjeet Singh Patheja v. ICDS Ltd.) relied on by respondent does not show that a writ cannot be issued to arbitrator. It holds that no insolvency notice can be issued under Section 9 (2) of the Presidency Towns Insolvency Act, 1909 on the basis of an Arbitration Award as it does not satisfy any of the requirements of a decree. Hon'ble Apex Court has pointed out that issuance of a notice under the Insolvency Act is fraught with serious consequences: It is intended to bring about a drastic change in the status of the person against whom a notice is issued viz. to declare him an insolvent with all the attendant disabilities. Therefore, the Hon'ble Apex Court states that firstly, such a notice is intended to be issued only after a regularly constituted Court, a component of judicial organ established for the dispensation of justice, has passed a decree or order for the payment of money. Secondly, a notice under the Insolvency Act is not a mode of enforcing a debt; enforcement is done by taking steps for execution available under the C. P. C. for realizing moneys. The words "as if" are held to demonstrate that award and decree or order are two different things. The legal fiction created is declared for the limited purpose of enforcement as a decree. The fiction is not intended to make it a decree for all purposes under all statutes, whether State or Central. Observations in this judgment in paragraph 46 and 47 need to be understood in this background and it does not in any way militate with the view of Division Bench of this Court in Dowell Leasing & Finance Co. vs. Radheshyam B. Khandelwal (supra). 7. In AIR 1993 S.C. 352 (R. N. Gosain v. Yashpal Dhir), Hon'ble Apex Court states that "approbate and reprobate" is not permissible and said principle, is based on doctrine of election. Law does not permit a person to both approbate and reprobate. No party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage." Thus Apex Court holds that the tenant having given an undertaking in pursuance to the directions given by the High Court and having availed the protection from eviction on the basis of the said undertaking, cannot be permitted to invoke the jurisdiction of this Court under Article 136 of the Constitution and assail the said judgment of the High Court. This principle is not applicable in present matter as respondents have not chosen to rely upon the report of committee of which production is sought by present petitioner. If hereafter respondents take shelter of that report, the petitioner may be justified in invoking this doctrine. AIR 1966 S.C. 875 (Board of High School and Intermediate Education, U. P. Allahabad v. Bagleshwar Prasad) shows that an order passed by a Tribunal holding a quasi-judicial enquiry which is not supported by any evidence, is an order which is erroneous on the face of it and as such, is liable to be quashed by the High Court in exercise of its high prerogative jurisdiction to issue a writ under Article 226. The Hon'ble Apex Court states that inquiries held by such domestic Tribunals in such cases must, no doubt, be fair and students against whom charges are framed must be given adequate opportunities to defend themselves, and in holding such inquiries, the Tribunals must scrupulously follow rules of natural justice, but it would not be reasonable to import into these inquiries all considerations which govern criminal trials in ordinary Courts of law. AIR 1965 S.C. 111 (T. Prem Sagar v. M/s Standard Vacuum Oil Company, Madras) shows that a writ of Certiorari can be issued and decision of Labour Commissioner about question of status though made final can be quashed by writ if there is error apparent on face of record. As already noted above, argument is of not granting hearing before passing orders on issue number 2 about the weighment of transported coal. Consideration of said issue by arbitrator shows reference to brief note filed by petitioner before him. Note was in addition to application i.e. pleadings of petitioner. Petitioner has specifically urged on affidavit before this Court that said issue was never argued and under directions of arbitrator, reconciliation was being tried to reconcile the quantity of transported coal. Affidavit also discloses some CBI inquiry into unauthorized sale of coal and oral intimation to arbitrator that original measurement books and records are with CBI and inability to supply photocopies. These assertions have remained unchallenged in this Court. I do not find it necessary to conclude any of these facts and findings here are only on aspect of ?hearing?. Grievance of denial of opportunity to argue with above submission about reconciliation is also made before arbitrator immediately on 05.04.2010. A brief note is also placed on record before arbitrator by respondents. Neither "note" filed by petitioner nor "brief note" filed by respondents mention the same as written note of argument. Why and whether arbitrator treated it as written note of arguments is itself not clear. Perusal of other part of order on report of committee shows consideration of precedents not forming part of said note of petitioner. It is therefore obvious that finding about no fault in system of coal delivery weighment and preparation of bill or acquiescence therein by petitioner has been recorded without giving opportunity to the parties. The finding is on important aspect of controversy and cannot be reopened at least during pendency of proceedings before arbitrator. If said error is corrected right now it will save the situation for everybody. Hence interim award/order on issue no. 2 cannot be sustained. Same is accordingly quashed and set aside with direction to re-decide the same after giving parties opportunity of hearing in accordance with law. 8. Issue no. 1 about report of committee has been decided after oral arguments and also in the light of precedents cited. Committee is constituted on 10/7/2006 to examine case of foreclosure/termination of contract and to submit report to managing director of the respondents. It is obvious that said committee therefore has to look into material like correspondence, measurement books and other evidence and arrive at its conclusions and submit the same to Managing Director. The report therefore is nothing but appreciation of part of controversy by committee members and said appreciation is not binding on anybody. It appears that the committee had also obtained legal opinion and made some observations about the liability of Petitioner in the matter. These findings and report of committee at this stage is not even a secondary piece which can be used for collateral purposes. The report of committee therefore at the most may be a document to be used in future indicating evidence looked into or not looked into by it. The arbitrator cannot act upon such report either in favour of petitioner or against him. He has to independently record his findings on disputed issues on the strength of material brought before him by parties. Said report has not been obtained in pursuance of contract agreement between parties and hence, is not a piece of evidence at all. Respondents are not under any obligation to produce it and, it is apparent that no such direction can be issued to it. There is no requirement of respondents producing any order withholding its production and its status as an instrumentality or state has no bearing here at all. Findings recorded on issue no. 1 by arbitrator in the light of arguments advanced cannot be said to be without jurisdiction or perverse. Merely because he labels his findings as "interim report" or "interim order", application of mind by him does not get vitiated. It is petitioner who filed application and invited arbitrator to pass orders on his prayers therein. Such orders passed by arbitrator on said application cannot be challenged by him on such technical grounds. No interference is therefore warranted in writ jurisdiction insofar as order of arbitrator on issue no. 1 is concerned. 9. With the result, Writ Petition is partly allowed and "interim report" or "interim order" passed by arbitrator on 25/03/2010 insofar as it relates to issue no. 2 is only quashed and set aside. Its remaining part relating to issue no. 1 is upheld. Arbitrator shall hear both parties before him on issue no. 2 and thereafter pass fresh orders on it. Rule is made absolute accordingly with no orders as to costs.

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