w w w . L a w y e r S e r v i c e s . i n



Bhiwandi Nizampur City Municipal Corporation Old Zakat Naka, Gokul Nagar, Bhiwandi, Dist. Thane v/s M/s. Antony Waste Handling Cell Pvt. Ltd.


Company & Directors' Information:- ANTONY WASTE HANDLING CELL PRIVATE LIMITED [Active] CIN = U90001MH2001PTC130485

Company & Directors' Information:- CITY CORPORATION LIMITED [Active] CIN = U45202PN2003PLC018435

Company & Directors' Information:- K. S. CITY PRIVATE LIMITED [Active] CIN = U45201MP2006PTC018691

Company & Directors' Information:- CELL CITY INDIA PRIVATE LIMITED [Active] CIN = U72900MH2021PTC358274

Company & Directors' Information:- H & D CITY PRIVATE LIMITED [Strike Off] CIN = U70102UP2015PTC068088

Company & Directors' Information:- NAGAR CORPORATION PRIVATE LIMITED [Active] CIN = U74900PN2013PTC148356

    Commercial Arbitration Appeal (L) No. 3634 of 2020

    Decided On, 05 March 2021

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE S.J. KATHAWALLA & THE HONOURABLE MR. JUSTICE R.I. CHAGLA

    For the Appellant: Ram S. Apte, Senior Advocate with N.R. Bubna, Advocates. For the Respondent: N.H. Seervai, Senior Advocate with Prateek Seksaria with Gulnar Mistry, Saket Mone, Vishesh Kalra, Subit Chakrabarty, Abhishek Salian, Shantam Mandhyan i/by Vidhii Partners, Advocates.



Judgment Text

S.J. Kathawalla, J.I In the present Appeal, the Appellant has purported to challenge the impugned Judgment and Order dated 3rd July, 2020 (‘the impugned Order’) passed by the learned Single Judge of this Court. The impugned order disposed of two Petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’) challenging an Award dated 16th September, 2020 (‘the impugned Award’). The impugned Judgment and Order was passed on an Interim Application made by the Respondent in the said Petitions under Section 34 of the Act on premises analogous to Order XXIII Rules 1 & 3 of the Code of Civil Procedure, 1908 (‘CPC, 1908’) to record the compromise/settlement arrived at between the parties. The learned Single Judge was pleased to allow the said Interim Application and disposed of the Petitions, being Commercial Arbitration Petition Nos.1600 of 2019 and (L) No.71 of 2020.II FACTUAL BACKGROUND :2. The facts which led to the passing of the impugned order are briefly set out hereunder :2.1 On 15th October, 2005, the parties entered into a contract for Collection and Transportation of Municipal Solid Waste from the City of Bhiwandi Nizampur. On 1st October, 2011, the Petitioner terminated the contract with the Respondent. The termination was challenged by the Respondent before this Court by way of Writ Petition No.8272 of 2011, where interim protection was granted. In the meantime, claims were also made by the Respondent for payment as per the Contract requirement. By an order dated 22nd July, 2014, this Court in its writ jurisdiction was pleased to refer all disputes to arbitration by the sole arbitrator.2.2 On 16th September, 2019, the proceedings culminated into the impugned Award. By the impugned Award, inter alia the Respondent’s claim for non-payment of bills was allowed along with interest. The Respondent challenged the Award partially, to the extent of the rejected claims. The Petitioner also challenged the award.2.3 In or around December, 2019, attempts were made to resolve the disputes inter se and finally settle the matter in the mutual interest of all the parties concerned. On 21st January, 2020, the Respondent also made a compromise proposal before the Appellant. Accordingly, the then Municipal Commissioner put up the proposal before the Standing Committee to consider settlement of all disputes with the Petitioner.2.4 On 18th February, 2020, the Standing Committee of the Appellant after considering all relevant factors as recorded therein (including the opinion of learned Senior Counsel) was pleased to pass the Standing Committee Resolution No.190 by which the compromise between the parties was accepted.2.5 The Standing Committee Resolution No.190 records as under :“1. The contractor M/s. Antony Waste Handling Cell Pvt. Ltd., accepts the said dispute amount of Rs.15,00,00,000/- as full and final settlement.2. Both parties will withdraw the Commercial Arbitration Petition filed in the Hon’ble High Court and in future, they will not make any Court claim or demand in this matter.3. In accordance to the compromise, the Agreement in this regard is being cancelled by mutual consent. It will not be treated as default of the contractor.4. Approval of the Hon’ble Court will be taken for these terms.”(Office Translation)2.6 The Resolution further records that the decision of the compromise would come into effect immediately, without waiting for confirmation of the minutes. Thus, the Standing Committee took a determinative decision on the compromise as per Section 481(h) of the Maharashtra Municipal Corporation Act, 1949 (“MMC Act”). The resolution was accepted by the Respondent on the same day.2.7 Pursuant thereto, in or around March, 2020, the parties exchanged Draft Consent Terms in the form of Consent Minutes of the Order that would form the record of this Court and place its imprimatur on the settlement arrived between the parties so as to put an end to the lis. The same were finalized in or around 2nd week of March, 2020. Though Consent Terms in the nature of Consent Minutes of Order were finalized between the parties, the same could not be filed before this Court as from 14th March, 2020, this Court only started taking up extremely urgent matters due to the sudden outbreak of the Covid-19 pandemic.2.8 On 1st June, 2020, the Respondent requested the Appellant to act on the final Consent Terms prepared in the nature of Consent Minutes. This request was made considering the fact that the Petitioner was running an essential service and was gravely affected by the lockdown and restricted cash flows.2.9 On or around 2nd June, 2020 this Court started taking up admission matters for the years 2019-2020. Thus, it was only after 2nd June, 2020 could the parties move this Court for filing the Consent Terms in terms of the Consent Minutes of the Order. Accordingly, on 11th June, 2020, a praecipe was filed before this Court stating the urgency and prayed that this Court be pleased to take up the matter on 12th June, 2020 for filing consent terms in nature of Consent Minutes of Order. The praecipe then filed had a draft of the Consent Minutes which the parties had agreed to sign and execute. However, the praecipe was rejected with a direction that the parties should move Court with signed consent terms.2.10 Accordingly, the Consent Minutes were signed and circulated by all concerned i.e. the Petitioner, the Respondent and their respective Advocates. On or around 16th / 17th June, 2020, the then Municipal Commissioner signed the Consent Minutes of Order and terms were thereafter, circulated for signatures of the Respondent and the respective Advocates for the parties. The Consent Minutes of Order bore the date of 23rd June, 2020 as that was the date the matter was proposed to be moved. It is only on 20th June, 2020, after the Consent Minutes were duly signed and only remained to be filed before this Court, that the present Municipal Commissioner took charge.2.11 On 21st June, 2020, the matter was again moved along with signed Consent Terms in the form of Consent Minutes of Order requesting that the matter be taken up for filing the same. The matter could not be taken on 23rd June, 2020 for want of time and accordingly, was listed on 26th June, 2020. The date on the Consent Terms was therefore, also changed to 26th June, 2020.2.12 On 26th June, 2020 the Appellant sought time to take fresh instructions from the newly appointed Municipal Commissioner. By way of indulgence, this Court granted time to the Respondent till 30th June, 2020 clearly observing that the new Commissioner could not resile from the settlement agreed upon.2.13 On 30th June, 2020, when the matter was listed, the matter was kept back for the Municipal Commissioner to appear. However, he could not appear, and a statement was made on instructions that the present Municipal Commissioner does not intend to proceed with the settlement. Since the Appellant stated that the Municipal Commissioner is not wanting to proceed with the settlement, leave was granted to the Respondent to make the Interim Application.2.14 Accordingly, on 1st July, 2020 the Respondent filed the Interim Application and sought recording of compromise as per the Standing Committee Resolution No.190. The Interim Application was opposed by a Reply which sought to raise only a single substantive ground to the effect that “on 23rd June, viz. on date of consent minutes and/or on 26th June, 2020, when the matter was listed for settlement, Shri Ashtikar was not Commissioner (sic) of Respondent Corporation.”2.15 On 3rd July, 2020, the learned Single Judge passed the impugned order recording the compromise between the parties and disposing of the Section 34 Petitions in terms of the impugned order.2.16 Pursuant to the impugned order, vide letters dated 14th July, 2020, 12th August, 2020 and 20th August, 2020, the Respondent requested the Appellant to comply with the compromise and make payment of amounts thereunder. The Respondent has also invoked the provisions of the Interest Act in its letter dated 20th August, 2020 as the Appellant Corporation failed to comply with the Impugned Order.2.17 Accordingly, the present Appeal came to be filed by the Respondent Corporation.III. THE ORDER DATED 20TH OCTOBER, 2020 PASSED BY THIS BENCH : 3. At the time of hearing of the above Appeal on 20th October, 2020, the learned Senior Advocate appearing for the Corporation submitted that the Standing Committee had approved the Consent Terms which were to be filed before the High Court, subject to the further approval of the High Court and therefore, it cannot be said that upon the Standing Committee having approved the Consent Terms, the contents of the said terms constitute a concluded agreement. Since no mention of the above submission was found in the impugned order, we inquired from the Advocate whether the aforestated submission was made before the learned Single Judge of this Court. Advocate Bubna who had represented the Corporation before the learned Single Judge stated that the said submission was made before the learned Single Judge. Advocate Seksaria who had represented the Respondent before the learned Single Judge stated that though the submission is found in the Affidavit in Reply filed by the Corporation, the same was not advanced before the learned Single Judge. In the above circumstances, after recording what is stated above, this Bench passed an order dated 20th October, 2020, paragraph 4 of which is reproduced hereunder :“4. In view of the above, we allow Advocate Bubna and Advocate Seksaria to appear before the learned Single Judge and obtain necessary clarification/orders within a period of one week from today.”IV CLARIFICATORY ORDER PASSED BY THE LEARNED SINGLE JUDGE DATED 28th OCTOBER, 2020 :4. Pursuant to our order dated 20th October, 2020, the learned Single Judge passed an order dated 28th October, 2020, wherein it was clarified that the submission made before the Appellate Court namely that the Standing Committee’s approval to the Consent Terms was subject to the further approval of this Court and therefore, it could not be said that upon the Standing Committee approving the Consent Terms, a concluded contract was arrived at between the parties, was not made made before him. The learned Single Judge in his order dated 28th October, 2020 also held as under :“2. ……. In any event I fail to see how this has any significance, since any contract, incorporating the Consent Terms between the parties, would always have to be approved by the Court before it puts its imprimatur on it so as to conclude the pending lis in terms thereof. In the premises, no alteration is warranted in my order dated 3rd July, 2020.”V. SUBMISSIONS ADVANCED ON BEHALF OF THE APPELLANT :5. The learned Senior Advocate appearing on behalf of the Appellant Corporation submitted that the contention of the Senior Advocate appearing for the Respondent, at the outset, that the Appeal is not maintainable under Section 37 of the Act is incorrect. He submitted that the Appeal is certainly maintainable under Section 37 of the Act. He further submitted that there was no concluded contract between the parties and it was open to the Municipal Commissioner to withdraw his consent. Mere signing of consent terms could not prevent the Municipal Commissioner from withdrawing from any compromise before the same was accepted by this Court. In support of this submission, he relied on the decision of the Apex Court in the case of Union of India V/s. Bhim Sen Walaiti Ram (1969) 3 SCC 146).VI. SUBMISSIONS ADVANCED ON BEHALF OF THE RESPONDENT :6. Opposing the grant of any reliefs, appearing for the Respondent, learned Senior Advocate submitted firstly that the present Appeal is not maintainable under Section 37 of the Act since the impugned order was not one passed under Section 34 of the Act and/or any of the other provisions enlisted under Section 37 of the Act. In support of this submission, he placed reliance on the decision of the Apex Court in the case of BGS SGS Soma JV V/s. NHPC Ltd. (2020) 4 SCC 234).VII. FINDINGS WITH REGARD TO THE MAINTAINABILITY OF THE ABOVE APPEAL :7. Prior to dealing with the arguments on merits canvassed by the parties, we first propose to rule on the maintainability or otherwise of this Appeal.7.1 Firstly, it would be necessary to reproduce Section 37 of the Act, which reads thus :“37. Appealable orders – (1) An appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely –(a) refusing to refer the parties to arbitration under Section 8;(b) granting or refusing to grant any measure under Section 9;(c) setting aside or refusing to set aside an arbitral award under Section 34;”7.2 A perusal of the aforesaid provision demonstrates that an appeal shall lie only from the orders listed under Section 37 (1) and more importantly, “and from no others”. It is now trite law that an appeal is a creature of statute and must either be found within the four corners of the statute or not be there at all. It is for this reason that in a recent Delhi High Court judgment in the case of South Delhi Municipal Corpn. V/s. Tech Mahindra (2019 SCC Online Del. 11863), the Delhi High Court held that an order of the learned Single Judge, which directed the deposit of 50% of the awarded amount would not be appealable under Section 37 of the Act read with the Commercial Courts Act, 2015. We will therefore, limit our scope to Section 37 of the Act and on that basis, determine whether or not the above Appeal is maintainable.7.3 The thrust of the Respondent’s objection on maintainability of this Appeal was on the basis of the Apex Court’s decision in BGS SGS Soma JV (Supra). It would therefore, be necessary for us to reproduce the following extracts therefrom :“14. Interestingly, under the proviso to Section 13(1A) of the Commercial Courts Act, 2015, Order XLIII of the Code of Civil Procedure is also mentioned. Order XLIII Rule (1)(a) reads as follows: 1. Appeal from orders.- An appeal shall lie from the following orders under the provisions of Section 104, namely-(a) an order Under Rule 10 of Order VII returning a plaint to be presented to the proper Court except where the procedure specified in Rule 10A of Order VII has been followed ;This provision is conspicuous by its absence in Section 37 of the Arbitration Act, 1996, which alone can be looked at for the purpose of filing appeals against orders setting aside, or refusing to set aside awards Under Section 34. Also, what is missed by the impugned judgment is the words "Under Section 34". Thus, the refusal to set aside an arbitral award must be Under Section 34, i.e., after the grounds set out in Section 34 have been applied to the arbitral award in question, and after the Court has turned down such grounds. Admittedly, on the facts of these cases, there was no adjudication Under Section 34 of the Arbitration Act, 1996 - all that was done was that the Special Commercial Court at Gurugram allowed an application filed Under Section 151 read with Order VII Rule 10 Code of Civil Procedure, determining that the Special Commercial Court at Gurugram had no jurisdiction to proceed further with the Section 34 application, and therefore, such application would have to be returned to the competent court situate at New Delhi.17. The reasoning in this judgment commends itself to us, as a distinction is made between judgments which either set aside, or refuse to set aside, an arbitral award after the court applies its mind to Section 34 of the Arbitration Act, 1996, as against preliminary orders of condonation of delay, which do not in any way impact the arbitral award that has been assailed.”7.4 Whilst the Appellant has sought to argue before us that by passing the impugned order, the learned Single Judge has exercised jurisdiction under Section 34 of the Act by substituting the arbitral award with the Consent Minutes, however, a mere perusal of the impugned order would demonstrate otherwise. Whilst passing the impugned order, the learned Single Judge applied his mind to and considered the legality and validity of the Consent Terms and not the arbitral award (as he otherwise would have under Section 34 of the Act). Considering that the impugned order came to be passed in Interim Application LD-VC-IA-1-2020 (which was an Application under Order XXIII), the learned Single Judge had no occasion whatsoever to deal with the merits and/or demerits of the arbitral award. Clearly therefore, the learned Single Judge has not exercised jurisdiction under Section 34 of the Act and as a result, an Appeal under Section 37 of the Act would not be maintainable.7.5 We are fortified in our view by the decision of the Apex Court in BGS SGS Soma JV (Supra), wherein the Apex Court has held that a distinction is made between judgments which either set-aside, or refuse to set aside, an arbitral award after the court applies its mind to Section 34 of the Arbitration Act, 1996, as against preliminary orders such as condonation of delay etc. In the present case, the impugned order fails to fall under the judicially recognized categories provided under Section 34 of the Act.7.6. For the reasons aforesaid, we hold that this Appeal filed under Section 37 of the Act is not maintainable.VIII FINDINGS ON MERITS : 8. In any event, notwithstanding that we have held the Appeal to be not maintainable, we also deem it fit to in any event reject the Appellant’s contentions on merits even if we were to have held the Appeal as maintainable for the following reasons :8.1 It has been firstly argued by the Appellant that there was no concluded contract between the parties and it was open to the new Municipal Commissioner to withdraw his consent. The mere signing of Consent Terms could not prevent the Municipal Commissioner from withdrawing from any compromise before the same was accepted by this Court. At the outset, we regret to note that such conduct on the part of the Appellant, being an instrumentally of the State is ex-facie arbitrary. The record reflects that admittedly a proposal for entering into the Consent Terms was in fact recommended by the Appellant’s Standing Committee; a Resolution being Resolution No.190 came to be passed on 18th February, 2020; the Consent Minutes were signed by the Respondent and the Commissioner of the Appellant Corporation on 16th/17th June, 2020. On 20th June, 2020, the Consent Minutes were signed by the Advocates. Despite the said events having transpired, when the matter was placed before the learned Single Judge on 26th June, 2020, the Appellant now sought for time to take instructions from the new Commissioner of the Appellant Corporation. As remarked in the impugned Order, this request by the Appellant was “highly curious”. Though the learned Single Judge was prima facie of the view that the new Commissioner cannot wriggle out of a binding contract between the parties, in view of the fact that the Appellant’s Counsel was unable to get in touch with the new Commissioner, purely by way of indulgence, the matter was stood over. On the following date, the Appellant now contended that the new Commissioner did not intend to proceed with the Consent Minutes. In the backdrop of these facts, we are unable to accept the Appellant’s contention that there was no binding contract between the parties. The reasoning provided by the learned Single Judge whilst construing Order XXIII Rules 1 and 3 is sound and acceptable to us. Considering the facts of this matter, we agree that there was a concluded, binding and valid contract. We also agree with the learned Single Judge’s reliance on the decisions in Dattatraya s/o Anand Giri V/s. The Aurangabad Municipal Corporation (2015 (4) Mh.LJ 905) and Y. Sleebachen V/s. State of Tamil Nadu (2015) 5 SCC 747), to support the propositions that the Standing Committee held a higher hierarchy as compared to the Commissioner and that in the absence of proving lack of authority by the signatory, Consent Terms would be binding on parties. We also find no merit in Mr. Apte’s reliance on Haridwar Singh V/s. Bagun Sumbrui and Ors. (1973) 3 SCC 889) and Rajendra Singh V/s. Union of India (1969) 3 SCC 150) for these are authorities dealing with conditional acceptance of contracts which is not the case in the present matter. So also we do not find any relevance of the decision in Union of India V/s. Bhim Sen Walaiti Ram (Supra). We therefore, reject the first submission of Mr. Apte.8.2 It was thereafter argued that the Standing Committee’s resolution was subject to approval of this Court and therefore, till such approval was not granted, the Consent Minutes could not be treated as a concluded contract and resultantly, the new Municipal Commissioner is now free to resile therefrom. When this argument was first canvassed before us, as stated hereinabove, the Respondent opposed such submission stating that this argument was never raised before the learned Single Judge. In order to prevent any ambiguity and in order to save another round of litigation, we thought it fit to direct the parties to approach the learned Single Judge to clarify the position in this regard viz. whether or not the said argument was canvassed before the learned Single Judge. As reproduced hereinabove, the learned Single Judge has categorically clarified the position and remarked that the said submission was never made before him. This by itself would be a sufficient ground for us no

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t to even entertain this submission. Be that as it may, even if we were to, the said submission is also misconceived. The conduct of the parties and the Standing Committee resolution are explicit. It cannot be reasonably construed that in the absence of the approval of the learned Single Judge thereon, there was no concluded contract between the parties. The parties had admittedly entered into a concluded contract prior in time. The Consent Minutes were only thereafter, required to be placed before the learned Single Judge so as to enable him to dispose of the Commercial Arbitration Petitions in terms of the said concluded contract. The independent, concluded, anterior and binding legal contract was not conditional and/or contingent upon the approval of the learned Single Judge. It is ridiculous for the Appellant to now contend that the learned Single Judge ought to have considered the merits or otherwise of the Consent Minutes. As stated hereinabove, the reasoning provided by the learned Single Judge whilst construing Order XXIII Rules 1 and 3 is sound and acceptable to us. We therefore, reject this submission of the Appellant.8.3 Mr. Apte next argued that the compromise is not in the interest of the Appellant Corporation. We cannot accept this submission. Mr. Apte’s submission runs contrary to the Appellant’s own conduct and actions. On the one hand, the Appellant now contends before us that the Consent Minutes are not in the interest of the Appellant and on the other, the Appellant’s own Standing Committee and erstwhile Municipal Commissioner both approved these very Consent Minutes and asked that the same be placed before the learned Single Judge. It was incumbent upon the Appellant Corporation to have discussed the interest or otherwise of the Corporation before the Standing Committee and the erstwhile Municipal Commissioner prior to having them enter into a concluded contract with the Respondent. Once again, the deplorable conduct of the Appellant Corporation is writ large. In our opinion, no party and even more so an instrumentality of the State can approbate and reprobate in such a manner. If we were to allow parties to turn back on concluded contracts in such a manner, no sanctity would be left in contracts with instrumentalities of the State. For these reasons, we also reject this argument of the Appellant. The above Appeal is accordingly dismissed.
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