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Birat Chandra Dagara v/s Orissa Manganese & Minerals Ltd.

    Civil Miscellaneous Petition No. 1062 of 2019

    Decided On, 07 January 2020

    At, High Court of Orissa


    For the Appearing Parties: J. Patnaik, B. Mohanty, S. Patnaik, A. Patnaik, B.S. Rayaguru, S. Mohapatra, S.S. Pradhan, R.K. Rath, R.K. Mohanty, A.K. Kanungo, S.K. Sahu, Advocates.

Judgment Text

1. This Civil Miscellaneous Petition involves a challenge to the order passed by the District Judge, Mayurbhanj at Baripada rejecting an application at the instance of the judgment-debtor objecting the executability of a decree / Arbitration Award between the parties.

2. The dispute involves here has a long career. Main dispute involves mining lease over an area of 618 hcts. at Suleipat in Mayurbhanj District executed originally in favour of one Shri Bajranglal Padia for a term of 30 years. Subsequently, the lease hold was transferred by said Padia to the petitioner, the judgment-debtor. The judgment-debtor and the opposite party, the decreeholder, who in the process entered into an agreement for raising of iron ore in the petitioner's Suleipat lease area from April, 2010, constituting a Joint Venture Company, establishment of a manufacturing plant and undertaking the renewal of mining and all statutory clearances at its own cost, with further condition to set up a manufacturing unit in the name of Joint Venture Company in the State of Odisha. It is while the matter continuing as such, a dispute arose between the judgment-debtor and the decree-holder involving a notice dated 29.10.2015 to the petitioner for invoking Arbitration Clause under the Joint Venture agreement for settlement of the dispute. Parties landed in dispute which ended in filing of SLP(C) Nos.13599/2016, 13803/2016 and 13824/2016 disposed of on 1.7.2016. Finally under the direction of the Hon'ble apex Court, Hon'ble Justice (Retd.) Vikramjit Bose was appointed as the sole Arbitrator to arbitrate the dispute between the parties. Consequent upon appointment of the sole Arbitrator at the instance of the Hon'ble apex Court, the arbitration proceeding was ultimately concluded with a settlement award on consent of both the parties and the arbitration award was consequently passed in terms of the settlement therein on 20.1.2018. Consequent upon passing of the award on settlement, the decree-holder initiated an execution proceeding bearing Execution Petition No.1/2019 under Section 36 of the Arbitration & Conciliation Act, 1996. Order being passed involving an application under Section 151 of C.P.C. restraining the judgment-debtor from carrying out the mining operation, the judgment-debtor filed a petition to recall the same. Being aggrieved by the order of the District Judge, Mayurbhanj on the above application, the judgment-debtor carried a writ petition bearing W.P.(C) No.6353/2019 to this Court. This Court hearing the parties was pleased to set aside the order passed by the District Judge dated 7.3.2019 thereby remitting the matter this Court directed the District Judge, Mayurbhanj to re-dispose of the application dated 21.2.2019. This application was again disposed of by the order of the District Judge, Mayurbhanj. This time the decree-holder being aggrieved by the order of the District Judge filed W.P.(C) 7445/2019. The judgment-debtor also simultaneously being aggrieved by a portion of the same order filed W.P.(C) No.7537/2019 in this Court. In the meantime, one of the parties moved the Hon'ble apex Court in filing SLP, which was disposed of on 26.4.2019 requesting therein to the High Court to dispose of the pending writ petition as early as possible keeping in view the urgency involving the matter. Following the direction of the Hon'ble apex Court, this Court upon disposal of both the matters passed judgment on 9.7.2019 therein while setting aside the order dated 2.4.2019, this Court allowed revival of the order dated 7.2.2019. Involving the judgment dated 9.7.2019 in disposal of the above writ petitions, the judgment-debtor again filed S.L.P.(C) No.16647 of 2019 and the Hon'ble apex Court by order dated 2.8.2019 dismissed the SLP indicated herein above with direction to the District Judge to adjudicate and pass order in the execution proceeding. It is at this stage of the matter, the petitioner, judgment-debtor filed an application though having no nomenclature but appears to be an application in the guise of objection to the executability of the settlement award being passed by the sole Arbitrator. This application having been rejected by the District Judge, vide Annexure-1 gives rise to filing of the present C.M.P.

3. In advancing his argument, Sri A.Patnaik, learned counsel for the petitioner taking to the entire history involving the case in different rounds of litigation to this Court and also involving different rounds of litigation to the Hon'ble apex Court and also taking into some of the developments taken place in between in the matter of introduction of new provision, vide the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, further taking this Court to the objection so filed by the judgment-debtor before the District Judge, more particularly through the grounds 'A' to 'S' therein appearing in the additional affidavit dated 1.10.2019 filed in the present C.M.P., reiterated the stand taken in the court below and attempted to submit that there has been no consideration of the case of the petitioner by the District Judge in the disposal of such objection. Further referring to the provision through the new Rules being an obstruction to work out the settlement award, Sri Patnaik, learned counsel for the petitioner, judgment-debtor contended that the execution proceeding since invalid, the objection filed at their instance should have been allowed. It is in the circumstance, Sri Patnaik sought for intervention of this Court in the impugned order at Annexure-1. Sri Patnaik, learned senior counsel, however submitted that for the compromise arbitral award, the judgment-debtor has no scope for filing application for setting aside such award under Section 34 of the Act, 1996.

4. To the contrary, Sri R.K.Rath, learned Senior Advocate also along with Sri R.K. Mohanty, learned Senior Advocate appearing for the opposite party, decree-holder while seriously contesting the challenge of the petitioner on the ground that for the restrictions involving Section 36 of the Arbitration & Conciliation Act, 1996, there was no question of entertaining any objection to the execution proceeding more particularly keeping in view that there is in fact no challenge to the settlement award under Section 34 of the Arbitration & Conciliation Act, 1934. Sri Rath, learned senior counsel for the opposite party taking this Court to the background involving the case contended that the petitioner on the selfsame ground has opposed the interim application before the District Judge. It is also contended that the grounds raised herein were also raised in the proceeding before the District Judge and considering the same injunction order having been passed, the petitioner came to this Court on two occasions and on both occasions, the petitioner has failed. The petitioner's move involving grant of injunction also on the same plea being considered by the Hon'ble apex Court in disposal of the SLP against the petitioner, there should not have been any further obstruction in the matter of hearing of the Section 36 application. For this conduct of the petitioner, Sri Rath, learned senior counsel contended that the petitioner is not showing any interest in the working out of the compromise award and on the other hand, is making deliberate attempt to block the hearing of the Section 36 proceeding, the execution proceeding somehow or other resulting in serious financial loss to the decree-holder. Sri Rath, learned senior counsel further referring to the decisions in Special Deputy Collector (Land Acquisition), General, Hyderabad vrs. B. Chandra Reddy & others, (2007) 2 ArbLR 82 (SC), Krishna Kumar Mundhra vrs. Narendra Kumar Anchalia,2004 2 ArbLR 469, Sri Swaminathan Construction vrs. Thriunavukkarasu Dhanalakshmi Education & Charitable Trust & others,2007 Supp ArbLR 374 (Madras), Kanpur Jal Sansthan & another vrs. Bapu Construction, (2014) 1 ArbLR 134 (SC), Union of India vrs. M/s.Popular Construction Co., (2001) AIR SC 4010, Gaffar Khan vrs. Magma Shrachi Finance Ltd. Kolkata, (2012) AIR(Jhar) 53 & M/s. Subhas Projects & Marketing Ltd. vrs. Assam Urban Water Supply and Sewerage Board, (2003) AIR Gauhati 158 and taking this Court to the relevant paragraphs therein contended that for the clear decisions of the Courts including the Hon'ble apex Court, law has been settled thereby debarring entertaining any objection in the guise of Section 47 of C.P.C. being entertained in the pending execution proceeding. Sri Rath, learned senior counsel, therefore, prayed for dismissal of the C.M.P. in confirmation of the order passed by the District Judge impugned herein.

5. Considering the rival contentions of the parties, this Court finds, the real controversy required to be considered here is for clear restriction in Section 36 of the Arbitration & Conciliation Act, 1996, if there is any scope for consideration of objection to the execution proceeding under Section 36 of the Act that too in absence of challenge to the award under Section 34 of the Act, 1996 ? Looking to the scope of objection to the party in opposition in the proceeding involving arbitration proceeding and for the restrictions imposed in Section 36 proceedings under the Arbitration and Conciliation Act, 1996, the only scope available to a party aggrieved to undertake the exercise of Section 34 and there is absolutely no scope to raise objection to the executability of the Arbitration Award, failure of which this Court finds, there will be no end to the Arbitration Proceeding ultimately bringing such an Act will be frustrated. Besides this Court also finds, the question raised by the petitioner being involved in the hearing of the injunction petition order involving which being confined by the Hon'ble apex Court, such question is no more available to be considered in the petition involved therein.

6. Considering the catena of decisions cited by the learned counsel for the opposite party, vide AIR 2001 SC 4010, AIR 2003 GAU 158, 2004(2) Arb.LR 469, 2007 (2) Arb.LR 82(SC), 2007 (Suppl.) Arb.LR 374, AIR 2012 Jharkhand 53 & 2014(1) Arb.LR 134 (SC) referred to herein above, this Court in 2004(2) Arb.LR 469 (Calcutta) finds, Hon'ble Calcutta High Court in paragraph nos.8 & 9 came to observe as follows :-

"8. 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 ?

9. 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, (1954) AIR 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 behind 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 interpreted 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."

In paragraphs-15 & 16 of 2007 (Suppl.) Arb.LR 374 (Madras) (DB), Hon'ble Madras High Court in its Madurai Bench observed as follows :-

"15. As regards the appointment of a person as an arbitrator, any challenge to his appointment can be made under Section 12 mainly on the ground of justifiable doubts as to his independence and impartiality. Section 13 provides the procedure of challenge to be made under Section 12. Section 16 of the Act prescribes the competence of the arbitral tribunal to rule on its own jurisdiction, such as the one in the case on hand, the very existence of the arbitration clause and the name of the arbitrator was raised as a preliminary issue by the 1st respondent herein. Under Section 21, unless and otherwise agreed to by the parties, the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent. The arbitral proceedings would terminate on the passing of the award or in the circumstances specified under sub-section (2) of Section 32 of the Act. Under Section 34, a party to an arbitral proceedings has got a right to move the Court against an arbitral award and for setting aside such an award in accordance with sub-sections (2) and (3) of the said Section 34. Under Section 35 of the Act, an arbitral award would become final and binding on the parties and the same becomes enforceable after the expiry of the period specified under Section 34 for making an application to set aside the arbitral award. Thereafter, it can be enforced under the provisions of the Civil Procedure Code as if the award is a decree of the court. The only other mode by which a challenge can be made to the award is by filing an appeal as against an order declining to interfere with the award or to set aside the award by approaching the appellate forum as prescribed under Section 37 of the Act.

16. A conspectus reading of the above provisions makes it amply clear that having regard to the prohibition contained in Section 5, unless a party to an arbitral award challenges the award challenges the award in the manner set out in Section 34 of the Act or in the event of not getting a favourable order in such an application under Section 34 by filing an appeal under Section 37 of the Act, under no other mode it is permissible for a party to the arbitration award to seek for setting aside the same.

In paragraphs-16 of AIR 2001 SC 4010, Hon'ble apex Court observed as follows :-

16. Furthermore, Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award "in accordance with" sub-section (2) and sub-section (3). Sub-section (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application "in accordance with" that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that "where the time for making an application to set aside the arbitral award under Section 34 has expired the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court". This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was required to "proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow" (Section 17). Now the consequence of the time expiring under Section 34 of the 1996 Act is that the award becomes immediately enforceable without any further act of the court. If there were any residual doubt on the interpretation of the language used in Section 34, the scheme of the 1996 Act would resolve the issue in favour of curtailment of the court's powers by the exclusion of the operation of Section 5 of the Limitation Act."

In paragraph-8 of 2014(1) Arb.LR 134 (SC), Hon'ble apex Court observed as follows :-

"8. To appreciate the rivalised submissions raised at the bar we think it apt to refer to the scheme of the Act. Under the Act, after the award is passed by the arbitrator, an application for setting aside the arbitral award is permissible under Chapter VII relating to arbitration under Part I. Chapter VIII occurring in Part I provides about the finality and enforcement of arbitral awards. Sections 35 and 36 which occur in this chapter are reproduced below:

"35. Finality of arbitral awards- Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

36. Enforcement- Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (V of 1908) in the same manner as if it were a decree of the court."

In paragraph-7 of AIR 2012 Jharkhand 53, Hon'ble Jharkhand High Court observed as follows :-

"7. Section 34 of the Act provides for setting aside the arbitral Award. A detail procedure is provided giving opportunity to the aggrieved party to challenge the Award. The said Act is a special Act and learned Court below ahs rightly held that in view of the said provision in the Special Act and the provisions for setting aside the Award under Section 34 of the said Act, an objection under Section 47 of C.P.C. on the ground covered by the provisions under Section 34 of the Arbitration and Conciliation Act, 1996, is not maintainable."

In paragraph-8 of AIR 2003 GAU 158, Hon'ble Gauhati High Court observed as follows :-

"8. The law relating to the power of an executing court under the provisions of section 47 of the Code of Civil Procedure is well settled. The difficulty is not with regard to the principles of law, but with regard to the application of such principles. In view of the clear language of section 47 of the Code of Civil Procedure, it has always been understood that while the executing court cannot go behind the decree to determine its legality, objections regarding the validity of the decree has to be decided in an execution proceeding. However, such objections must appear on the face of the record and cannot be left to be determined by a long drawn process either of evidence or reasoning. The same principles of law would undoubtedly apply to the execution of an award under section 36 of the Act. It is also our considered view that the inhibitions that would operate upon the court while executing an award would be somewhat more in view of the provisions of section 34 of the Act. As section 34 of the Act has enumerated specific grounds on which an application for setting aside of an award may be filed, any such objection to the award on the grounds enumerated in section 34 cannot be allowed to be agitated or re-agitated while resisting the execution of the award. To that extent, the argu

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ment advanced by Mr. Markanda appearing on behalf of the revision petitioner is well founded, in the instant case no objection under section 34 of the Act was filed on behalf of the respondent Board. In such a situation to permit the respondent Board to raise the question of jurisdiction of the arbitral Tribunal to pass the interim award in question in its objections resisting the execution of the award, cannot be understood to be permissible in law. Such a course of action would render the provisions of section 34 virtually redundant. As evident from the subsequent facts of the case on which there is no dispute at the Bar, it appeals that the arbitral proceeding has now to recommence. The question or jurisdiction of the arbitral Tribunal which has not yet been decided, therefore, must be decided by the Tribunal itself and we are confident that this question if agitated by any party, would be brought to its logical conclusion by the Tribunal. However, entertainment of said question by the learned District Judge in an execution proceeding and in treating the conclusion reached by it as the foundation for its decision cannot be said to be corrective law." 7. From the above decisions, this Court finds, law has been fairly well settled in restricting objection to the execution proceeding in the trap of Section 47 of the C.P.C. This Court, therefore, answers the question framed herein above in favour of the decree-holder thereby holding that there is no scope for entertaining such objection involving the execution proceeding particularly in absence of challenge to the award under Section 34 of the Act. From the submission of both sides and the records produced herein, this Court finds, there is admittedly a settlement award in the involvement of the sole Arbitrator being appointed by the Hon'ble apex Court. Further admittedly, there is also no appeal involving the arbitral award and the scope of the executing court being very very limited, it has also no scope to go behind the arbitral award. From the series of litigations, it appears, there is somehow or other attempt to block the execution proceeding from being concluded. 8. In the circumstance, this Court finds, there is no infirmity in the impugned order at Annexure-1, for which this Court while dismissing the Civil Misc. Petition directs the District Judge, Mayurbhanj to conclude the execution proceeding involved herein within a period of six weeks from the date of receipt of a copy of this order from either of the parties involved. Both parties are also directed to appear in the execution proceeding on 14th January, 2020. No cost.