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



Jitf Water Infrastructure Limited v/s Aquafil Polymers Company Private Limited

    Special Civil Application No. 1107 of 2021

    Decided On, 12 March 2021

    At, High Court of Gujarat At Ahmedabad

    By, THE HONOURABLE MR. JUSTICE V.M. PANCHOLI

    For the Appearing Parties: R.S.Sanjanwala, Vijay Sinha, Hemang H.Parikh, Rasesh H.Parikh, Mitul Shelat, Rutul P. Desai, Advocates.



Judgment Text

1. This petition, which is filed under Articles 226 and 227 of the Constitution of India, is directed against the order dated 29.11.2020 passed by the learned Arbitrator in arbitration proceeding between the petitioner and the respondent pending before the Gujarat Chamber of Commerce Industries (hereinafter referred to as "GCCI" for short) bearing Reference No. GCCI/ADRC/A-042.

2. The factual matrix of the present case is as under.

2.1. It is the case of the petitioner that the petitioner is a Company incorporated under the provision of the Companies Act, 1956, which entered into an agreement with M/s. Aquafil - Wintech JV (hereinafter referred to as "JV" for short), a joint venture of Aquafil Polymers Co. Pvt. Ltd. It is stated that the work order was executed on 08.08.2014 on turnkey basis. The said work was related to procurement of Design, Supply, Installation and Commissioning of Intake Facilities, Transmission Mains, Water Treatment Plant and Reservoir for North Zone including 5 years of operation and maintenance of JICA funded Guwahati Water Supply Project. The said contract value was Rs. 79.47 crores. It is alleged that because of the lapse on the part of JV, entire work was delayed and the petitioner communicated to JV by sending various communications and pointed out shortcomings in their service being rendered for the project by JV.

2.2. It is stated that on 08.01.2018, the petitioner sent notice through email and thereby exercised its rights available under the contract to terminate the contract as envisaged under the contract vide Clause No. 19.2 and in pursuance to the termination, the petitioner exercised its right as per mandate of Clause No. 19 in order to safeguard its interest. Thereafter JV itself vide its letter dated 08.02.2018 invoked Arbitration Clause being Clause No. 20.3 of the contract and proposed the name of sole arbitrator to adjudicate the dispute. The petitioner, thereafter, sent communication on 14.02.2018 and refuted the contentions raised in the letter of JV and pointed out that the petitioner has the authority to appoint the Arbitrator and not the JV. The petitioner, therefore, nominated another learned sole Arbitrator to adjudicate the dispute. The said learned Arbitrator vide notice dated 12.03.2018 entered into the reference and directed the parties to appear before him on 30.03.2018 for preliminary hearing. Thereafter on 24.03.2018, the JV informed the petitioner that it would be approaching the MSME Commissionerate with its claims as per the mandate Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as "MSME Act"). The petitioner, therefore, refuted the contentions of JV on various grounds including the ground that the JV is not registered as Micro or Small or Medium enterprise and, therefore, same cannot invoke the provision of MSME Act.

2.3. It is stated that MSME Commissionerate issued notice dated 10.04.2018 intimating to the petitioner that the application from the respondent has been filed against the petitioner under Section 18(1) of the MSME Act and thereby seeking recovery of delayed payment of Rs. 12,34,11,703.68. The petitioner, thereafter, filed reply on 23.04.2018 and contested the maintainability of the said Reference under MSME Act. Inspite of that, MSME Commissionerate vide its notice dated 29.05.2018, intimated the petitioner to attend the preliminary meeting, which was scheduled on 31.05.2018 and in pursuance thereto, the petitioner attended the said meeting and requested for time to file reply of the application and the documents were provided to the petitioner. Thereafter, the Council terminated conciliation proceeding and passed an order dated 30.06.2018 and referred the matter to GCCI for arbitration.

2.4. The petitioner, therefore, filed writ petition being Special Civil Application No. 11169/2018 challenging the order dated 30.06.2018 before this Court. It is stated that this Court vide order dated 09.09.2019 dismissed the said petition and, therefore, the petitioner filed Letters Patent Appeal No. 1667/2019 before the Division Bench of this Court. The said LPA has been dismissed on 24.07.2020. It is stated that during the pendency of the said LPA, arbitration proceeding commenced inspite of the fact that GCCI, an institute facilitating arbitration, was party to the said LPA.

2.5. It is the case of the petitioner that GCCI vide order dated 14.09.2019 sought consent of the learned Arbitrator to act as Arbitrator in the disputes between the petitioner and the respondent and in pursuance thereto, the learned Arbitrator gave his consent on 19.09.2019 and same was informed to the petitioner. The GCCI, vide communication dated 30.09.2019, called upon the parties to appear before the learned Arbitrator on 11.10.2019. It is further stated that first meeting of arbitration proceeding was held on 11.10.2019, wherein the learned Arbitrator directed the petitioner and the respondent to complete pleadings within prescribed time limit. The respondent/claimant was asked to file its statement of claim (SOC) on or before 11.11.2019. The statement of defence (SOD) and counter claim (CC), if any, shall be filed by the petitioner on or before 10.12.2019 and the reply to CC, if any, shall be filed by the respondent/claimant on or before 24.12.2019 and the next date of hearing of the arbitration proceeding was scheduled on 22.01.2020.

2.6. It is stated that the respondent/claimant could not file SOC within prescribed date and, therefore, an application was filed for extension of time, which was allowed. Thereafter, the respondent/claimant filed SOC. The petitioner was directed to file SOD and CC within ten days' time and the said order was passed on 22.01.2020.

2.7. It is further stated that on 20.02.2020, the arbitration proceedings were conducted by the learned Arbitrator, wherein the petitioner filed an application seeking stay of arbitration proceeding by stating that LPA filed by the petitioner is pending before the Division Bench of this Court. The learned Arbitrator rejected the said application and closed the right of the petitioner to file its SOD. Thereafter, the matter was kept on 24.03.2020 and, thereafter, the proceedings were kept on 28.04.2020.

2.8. At this stage, it is stated that the Hon'ble Supreme Court in exercise of jurisdiction under Articles 141 and 142 of the Constitution of India, vide its order dated 23.03.2020, passed in Suo Motu Writ Petition (C) No. 3/2020, whereby the Hon'ble Supreme Court was pleased to extend the limitation period under general law as well as specific law whether condonable or not w.e.f. 15.03.2020. Thus, it is the case of the petitioner that because of the order passed by the Hon'ble Supreme Court, limitation stopped running from 15.03.2020. Thereafter by another order dated 06.04.2020 passed in SMP (C) No. 5/2020, the Hon'ble Supreme Court in exercise of jurisdiction under Article 142 of the Constitution of India was pleased to observe that no evidence shall be recorded through video conferencing without the consent of both the parties. In the meantime, the Government of India declared lockdown w.e.f. 25.03.2020 and, therefore, GCCI adjourned the hearing of the arbitration proceeding indefinitely.

2.9. The petitioner has further stated that on 27.05.2020, the advocate for the respondent/claimant informed the petitioner that the date of hearing before the learned Arbitrator is scheduled on 30.05.2020 and the witness of the respondent/claimant would be examined on that day. The petitioner, therefore, filed civil application on 28.05.2020 in LPA, which was kept for orders, for stay of the arbitration proceedings. The petitioner also received communication from GCCI that hearing is scheduled on 30.05.2020 through video conferencing and thus, two days' time was given to the petitioner for cross-examination of witness of the respondent/claimant. The said application filed by the petitioner before the Division Bench of this Court could not be listed for hearing, therefore, the petitioner addressed a letter dated 29.05.2020 to GCCI and requested for adjournment on the grounds/reasons mentioned in the said communication. It is stated that the petitioner received communication through email on 01.06.2020, whereby the petitioner came to know that learned Arbitrator has framed the issue on 30.05.2020 and examined the sole witness of the respondent/claimant and even discharged the said witness without even affording an opportunity of cross-examination. The proceedings were adjourned to 18.06.2020 for arguments.

2.10. It is stated that one of the JV Partner of respondent viz., Wintech Engineering Pvt. Ltd. (Wintech) filed an application dated 18.06.2020 before the learned Arbitrator praying for impleadment in the proceeding as necessary party and requested that the claim of the claimant be dismissed. The respondent filed affidavit in reply on 25.06.2020 to the said application. The learned Arbitrator vide order dated 14.07.2020 dismissed the said application of Wintech as withdrawn. The learned Arbitrator recorded the compromise entered into between the said parties, which was beyond the scope of reference in the arbitration proceedings.

2.11. In the meantime, the Hon'ble Supreme Court passed further orders on 10.07.2020 clarifying the applicability of limitation in respect of completion of pleading in arbitration proceedings. It is stated that the said order was in context of Section 29A and 23(4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Arbitration Act").

2.12. It is stated that as the Division Bench dismissed LPA No. 1667/2019 filed by the petitioner vide order dated 24.07.2020, prior to that on 21.07.2020, when the arbitration proceedings were listed, the petitioner filed an application for permitting to file SOD, CC and also to cross-examine the witness of the respondent. It is stated that the learned Arbitrator vide impugned order dated 29.07.2020, after hearing the arguments of the parties, directed the petitioner to file additional affidavit. The same was filed on 04.08.2020. Thereafter, the learned Arbitrator vide impugned order dated 29.11.2020, dismissed the application filed by the petitioner with exemplary cost. The petitioner, therefore, filed the present petition.

3. Heard learned Senior advocate, Mr. R.S. Sanjanwala assisted by learned advocate, Mr. Vijay Sinh and learned advocate, Mr. Hemang Parikh for the petitioner and learned advocate, Mr. Mitul Shelat assisted by learned advocate, Mr. Rutul Desai appearing for the respondent.

4. SUBMISSIONS CANVASSED BY LEARNED SENIOR ADVOCATE, MR. R.S. SANJANWALA APPEARING FOR THE PETITIONER.

4.1. At the outset, it is pointed out about maintainability of the present petition as the respondent has raised the issue with regard to the maintainability of the present petition under Articles 226 and 227 of the Constitution of India. It is contended that this petition is maintainable against the impugned order in view of the law laid down by the Hon'ble Supreme Court in case of Bhaven Constructions Vs. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Anr., reported in. It is submitted that the Hon'ble Supreme Court, after considering the previous judgments, held that the High Court can interfere in case of exceptional circumstances or bad faith in exercise of jurisdiction under Articles 226 and 227 of the Constitution of India and the jurisdiction of this Court is broad and pervasive and, therefore, this petition is maintainable.

4.2. After addressing on merits of the case, it is contended that the learned Arbitrator while passing impugned order, held that the Arbitral Tribunal can exercise the power of procedural review, if sufficient cause is made out, but the application filed by the petitioner was dismissed on the ground that if the application filed by the petitioner is allowed, the learned Tribunal will have to permit the petitioner to file SOD and CC and, thereafter, the respondent/claimant would be permitted to file reply to the CC and, thereafter, the admission, denial would be carried out, issues will be framed and witnesses will have to be examined, which would delay the proceedings. It is submitted that in fact, the petitioner has given sufficient cause for not filing SOD before the learned Arbitrator. It was pointed out that the petitioner filed petition challenging the order of GCCI to relegate the petitioner through arbitration to be conducted by GCCI. It is submitted that thereafter, the petitioner immediately filed LPA No. 1667/2019, wherein the arguments were concluded on 08.01.2020 and the Division Bench of this Court kept the said matter for orders and, thereafter, the judgment was pronounced by the Division Bench on 24.07.2020. It is submitted that the petitioner had never anticipated that the pronouncement of the judgment will take such considerable time. It is submitted that due to exceptional circumstances and prevailing COVID-19 situation, it took time for passing judgment in LPA, which was dismissed only on 24.07.2020. It is submitted that therefore the petitioner was bonafidely pursuing the remedy before this Court and when the petitioner has challenged the jurisdiction of the learned Arbitrator by filing the aforesaid petition, request was made to the learned Arbitrator to adjourn the proceeding and thus, sufficient cause was shown by the petitioner before the learned Arbitrator.

4.3. It is further submitted that the time limit for filing SOC and SOD under Section 23(4) of the Arbitration Act has not expired till date. It is submitted that the learned Tribunal was constituted on 27.09.2019 and thus, time period of six months under Section 23(4) of the Arbitration Act would have expired on 27.03.2020, by which, the Hon'ble Supreme Court suspended all the period of limitation and the said order is also applicable to the provision of Section 23(4) of the Arbitration Act. It is, therefore, submitted that because of the extra ordinary situation, the period of six months has not yet expired and thus, the learned Arbitrator ought to have taken lenient view and ought to have permitted the petitioner to file SOD and CC and also permitted the petitioner to cross-examine the witness of the respondent/claimant.

4.4. At this stage, it is further contended that the right to defence is a basic right and, therefore, the learned Arbitrator ought to have taken liberal view and when the petitioner has pointed out sufficient cause, the application filed by the petitioner was required to be allowed instead of dismissing the same with exemplary cost.

4.5. It is further submitted that the learned Arbitrator has recorded the evidence of the witnesses of respondent/claimant through video conferencing though the Hon'ble Supreme Court passed an order dated 06.04.2020, wherein the Hon'ble Supreme Court directed that in no case, evidence shall be recorded without mutual consent of both the parties by video conferencing and the said order was modified on 26.10.2020. It is, therefore, submitted that thus the learned Arbitrator has committed an error while examining the witness of the respondent/claimant through video conferencing without the consent of the petitioner. It is further submitted that closing of right of the petitioner to file CC has caused serious prejudice to the petitioner and on the other hand, if the petitioner is permitted to file CC and to cross-examine the witness of the respondent/claimant, no prejudice would be caused to the respondent/claimant and more particularly when the period of limitation is extended by the Hon'ble Supreme Court, therefore, the time line provided under Section 23(4) of the Arbitration Act will not be disturbed and the respondent/claimant can be easily compensated. It is further submitted that even this Court can fix the time limit for filing SOD and CC by the petitioner and to cross-examine the witness of the respondent/claimant and the petitioner will adhere to said time limit, therefore in the interest of justice, same be permitted by quashing and setting aside the impugned order.

4.6. It is contended that even in case of normal civil proceeding, where the right to file SOD and CC is closed by the concerned civil court, ordinarily this Court can exercise the powers under Article 227 of the Constitution of India directing the concerned civil court to reopen the said stage, however merely because here the time limit is prescribed under the Arbitration Act, this Court may not refuse to exercise the power under Article 227 of the Constitution of India and more particularly, when the petitioner was legitimately and under bonafide impression pursuing the remedy before this Court, there was no intention on the part of the petitioner to derail the arbitration proceeding. It is, therefore, submitted that the learned Arbitrator ought to have decided the application filed by the petitioner sympathetically and ought to have taken liberal view. It is also contended that the conduct of the petitioner is not such that right to defend can be closed by the learned Arbitrator.

4.7. Reliance has been placed upon various provision of MSME Act as well as Arbitration Act in support of the submissions made on behalf of the petitioner.

4.8. It is submitted that though the impugned order passed by the learned Arbitrator can be challenged after the award is passed under Section 34 of the Arbitration Act, there is provision of pre-deposit and, therefore, the said remedy is onerous and, therefore, this Court may interfere with the impugned order at this stage.

4.9. Reliance has been placed upon the judgment of the Hon'ble Supreme court in case of Kailash Vs. Nankhu Co., reported in (2005) 4 SCC 480.

4.10. Lastly, it is submitted that reliance placed by learned advocate for the respondent on the decisions which are supplied by way of separate compilation, are not applicable to the facts of the present case.

5. SUBMISSION S CANVASSED BY LEARNED COUNSEL, MR. MITUL SHELAT APPEARING FOR THE RESPONDENT.

5.1. The petition has been opposed on the ground that the same is not maintainable and this Court may not exercise the jurisdiction under Articles 226 and 227 of the Constitution of India. It is submitted that subject reference is under the provision of the MSME Act and under Section 19 of the MSME Act read with Section 34 of the Arbitration Act, the petitioner has statutory remedy of assailing any order passed by the learned Arbitrator while assailing the award. Reliance has been placed upon the decision rendered in case of Devi Enterprise Ltd. Vs. State Level Industry Facilitation Council, Through Member and Ors., reported in AIR 2015 GUJ 114.

5.2. It is further submitted that the scheme of the said Act has been considered by the Division Bench of this Court in LPA No. 1667/2019 and merely because Appellate Remedy requires pre-deposit, is no ground for entertaining a challenge under Articles 226 and 227 of the Constitution of India. In support of this submission, reliance has been placed upon the judgments in case of Pam Development (Pvt.) Ltd. Vs. State of West Bengal, reported in (2019) 8 SCC 112, in case of Snehadeep Structures Private Limited Vs. Maharashtra Small Scale Industries Development Corporation Limited, reported in (2010) 3 SCC 34 and in case of In Modern Industries Vs. Steel Authority of India Limited, reported in (2010) 5 SCC 44. At this stage, it is also submitted that the Arbitration Act is a self-contained code, which provides for remedies for various issues which may arise during the course of arbitral proceedings. Relying upon the provision contained in Section 5 of the Arbitration Act, it is contended that same prohibits judicial intervention except as provided by Part-I of the Arbitration Act, for which, Part-I of the Arbitration Act has been referred to. Thus it is contended that the parties cannot seek any remedy outside the provision of the Act including filing of the petition before this Court.

5.3. On the aforesaid point, it is further submitted that the intervention of the High Court under Articles 226 and 227 of the Constitution of India against the order passed by the Arbitral Tribunal is not permissible. It is submitted that the Arbitral Tribunal is not adjudicating any lis which is in the nature of public law remedy and the lis is in the nature of private contractual dispute and remedy is regulated under the Act itself. In support of the said contention, reliance has been placed upon following decisions,

(1) In case of M/s. S.B.P. and Co. Vs. M/s. Patel Engineering Ltd. and Anr., reported in 2006 (1) GLH 105;

(2) In case of Lalitkumar V. Sanghavi (dead) Through Lrs. Neeta Lalit Kumar Sanghavi and Anr. Vs. Dharamdas V. Sanghavi and Ors., reported in (2014) 7 SCC 255.

5.4. At this stage, reliance has been placed upon the judgment in case of GTPL Hathway Ltd. Vs. Strategic Marketing Pvt. Ltd., reported in 2020 (4) GLH 1 and after referring to the said judgment, it is submitted that the issue regarding the maintainability of a challenge to the order passed during the course of arbitral proceeding has been considered in this judgment and this Court has held that the order passed during the arbitration proceeding by the Arbitral Tribunal cannot be challenged under Articles 226 and 227 of the Constitution of India.

5.5. At this stage, it is pointed out that even in case of Bhaven Constructions (supra), upon which reliance has been placed by learned advocate for the petitioner, the Hon'ble Supreme Court has held that the petition under Articles226 and 227 of the Constitution of India is not maintainable challenging the orders passed by the Arbitral Tribunal except under exceptional circumstances inasmuch as the petitioner is not left remediless under the statute nor is there any bad faith by one of the parties.

5.6. Reliance has also been placed upon the decision rendered by the Hon'ble Supreme Court in case of Punjab State Power Corporation Vs. Emta Coal Ltd. and Anr., delivered in Special Leave to Appeal (C) No. 8482/2020, wherein the decision rendered in case of Deep Industries Ltd. Vs. Oil and Natural Gas Corporation Ltd. and Anr., reported in has been explained again. It is held that the power under Article 227 of the Constitution of India can be exercised only in respect of the cases, which suffer from the patent lack of inherent jurisdiction, however in the facts of the present case, the petitioner has not demonstrated any ground suggesting any patent lack of inherent jurisdiction of the Arbitral Tribunal. It is also submitted that the standard of review applicable to challenge arising out of the exercise of powers under the Arbitration Act is circumscribed. In the proceeding under Article 226 of the Constitution of India, the Court would confine the review only to consider as to whether the exercise of power is within the jurisdiction of the Tribunal. It is not to correct error, which is apparent on the face of the record, much less an error of law and the Court could not act as an Appellate Court or Tribunal. The Court cannot review or reweigh the evidence upon which the order has been passed or correct errors of law in decision. In support of this contention, reliance has been placed upon the decision in case of Sadhana Lodh Vs. National Insurance Co. Ltd. and Anr., reported in (2003) 3 SCC 524.

5.7. It is further submitted that the scheme of Arbitration Act mitigates against the judicial intervention. The intention is to ensure certainty and expediency in conduct of arbitration proceeding. Thus, the petition under Articles 226 and 227 of the Constitution of India is not maintainable in law. Reliance has been placed upon the judgment in case of Uttarakhand Purv Sainik Kalyan Nigam Ltd. Vs. Northern Coal Field Ltd., reported in (2020) 2 SCC 455, in case of Bhaven Construction Vs. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Anr., reported in and in case of Sterling Industries Vs. Jayprakash Associates Ltd. and Ors., reported in .

5.8. It is also submitted that the petitioner is not pursuing the proceeding bonafidely as the joint venture is not impleaded in the memo of petition and the writ proceeding does not continue the cause title as is before the Arbitral Tribunal. It is also contended that the petitioner has suppressed material facts. It is pointed out that the petitioner has filed substantive application before the Arbitral Tribunal; one application is filed seeking waiver of order of costs imposed vide impugned order dated 29.11.2020, thereafter, another application is filed for stay of the proceeding. The petitioner has also challenged the mandate of the Arbitral Tribunal and prayed that the Arbitral Tribunal should not proceed further with the Reference. Thus on this ground also, this petition may not be entertained.

5.9. It is thereafter submitted that the petitioner has mislead this Court by asserting that the petitioner is willing to proceed with the arbitral proceeding before the Arbitral Tribunal in whatever time scheduled prescribed by the Court. In fact, the petitioner has challenged the mandate of the Arbitral Tribunal and prayed that the Arbitral Tribunal must not proceed with the Reference. Thus looking to the conduct of the petitioner also, this Court may not consider the case of the petitioner.

5.10. It is also pointed out from the record that the hearing of LPA was concluded on 08.01.2020 and at no point of time during hearing or thereafter, this Court has stayed the arbitral proceeding. Stage for filing written statement was closed vide order dated 20.02.2020 and at the said point of time, there was no pandemic nor there was any cause available with the petitioner not to file written statement. In fact, SOC was received by the petitioner on 20.11.2019 and SOD was not filed till 20.02.2020. The petitioner has even not made request for seeking extension of time. The only reason sought was pendency of the proceeding before this Court but there was no stay granted by this Court, therefore, the petitioner ought to have participated in the arbitral proceeding. It is further submitted that the lockdown was imposed by the Government on 23.03.2020 and, therefore, the same has no bearing on the validity of the order dated 20.02.2020. It is further submitted that the intention of the petitioner is to adopt dilatory tactics by initiating the proceeding by one after another. The proceeding before this Court was filed on the premise of jurisdiction, however thereafter, the said issue was expressly given up by the petitioner before the Arbitral Tribunal. Thus looking to the conduct of the petitioner, this Court may not entertain the present petition.

5.11. After referring to Section 23(4) of the Arbitration Act, it is submitted that the said provision does not confer any right upon the parties. In fact, it is a mandate upon the Arbitral Tribunal to ensure that the pleadings are completed within a period of six months. It circumscribes the jurisdiction of the Tribunal. It is further submitted that the order under Section 19 of the Arbitration Act would bind the parties and in the present case, such type of order passed by the Arbitral Tribunal fixing the time limit for filing pleadings is not challenged by the petitioner. Thus, it is not correct on the part of the petitioner to contend that Section 23(4) of the Arbitration Act confer right upon the petitioner to submit his defence within a period of six months. It is further submitted that the decision rendered in case of Kailash Vs. Nanhku (supra) upon which reliance has been placed by the petitioner would not render any assistance to the petitioner in the facts of the present case.

5.12. It is also contended that the petitioner has failed to point out sufficient cause before the learned Arbitrator for not filing SOD and CC within stipulated time. Merely LPA was pending before the Division Bench of this Court, which was kept for orders without any stay granted by this Court, cannot be treated as sufficient cause and does not operate as stay of the impugned order passed by the learned Single Judge assailed in the Appeal. At his stage, reliance has been placed upon following decisions,

(1) In case of State of Uttar Pradesh and Ors. Vs. Combined Chemicals Company Pvt. Ltd., reported in (2011) 2 SCC 151;

(2) In case of Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd., reported in (2005) 1 SCC 705;

(3) In case of Bharti Airtel Ltd. and Ors. Vs. Union of India, reported in 2016 SCC Online Delhi 2872 ;

(4) In case of Collector of Customs, Bombay Vs. M/s. Krishna Sales (P) Ltd., reported in AIR 1994 SC 1239 : 1994 Suppl. (3) SCC 73.

5.13. At this stage, it is also pointed out that additional affidavit dated 04.08.2020 filed by the petitioner before the Arbitral Tribunal also does not state any cause much less any sufficient cause. Same refers to "discussion with in-house counsel". It is submitted that the affidavit does not state the name of in-house counsel nor placed on record any opinion given by the counsel. Assertion that though it is on account of the advice of lawyer, cannot be accepted. Even otherwise, advice of the lawyer is not sufficient cause. In support of the said contention, reliance has been placed upon the decision of Delhi High Court as well as Calcutta High Court and, thereafter, submitted that defiance and non-compliance of procedural orders cannot be a cause, much less any sufficient cause. In fact, each of the cause set out by the petitioner is a consequence of conscious decision made by the petitioner contrary to express order passed by the Arbitral Tribunal.

5.14. It is further submitted that the petitioner has made reference to the order dated 06.04.2020 passed by the Hon'ble Supreme Court in Suo Motu Writ (C) No. 5/2020 in support of its case, however, the said order was never relied upon during the course of hearing before the learned Arbitrator. Even otherwise, the Hon'ble Supreme Court has subsequently passed an order on 26.10.2020. Upon combine reading of the said orders, it is contended that same has no application to arbitral procedural per se. The discretion was vested with the concerned Court to proceed with the cross-examination even without consent. At this stage, it is pointed out that the order dated 30.05.2020 passed by the Arbitral Tribunal closing the right of the petitioner to cross-examine the witness of the respondent/claimant is also not under challenge.

5.15. After referring to the reasoning recorded by the learned Arbitrator while passing impugned order, it is contended that no error is committed by the learned Arbitrator while rejecting the application filed by the petitioner and, therefore, this Court may not interfere with the said order. It is, therefore, urged that this petition be dismissed.

DISCUSSION AND FINDINGS:-

6. Having heard learned advocates appearing for the parties and having gone through the material placed on record, first of all, the issue with regard to maintainability of the present petition is required to be decided as learned advocate appearing for the respondent has raised preliminary issue with regard to maintainability of the present petition and placed reliance upon various decisions rendered by this Court as well as the Hon'ble Supreme Court.

7. In case of M/s. S.B.P. and Co. Vs. M/s. Patel Engineering Ltd. and Ors. (supra), the Hon'ble Supreme Court has observed in Para Nos. 44 and 45 as under,

"44. It is seen that some High Courts have proceeded on the basis 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. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. 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. This appears to be the scheme of the Act. The arbitral tribunal is after all, the creature of a contract between the parties, the arbitration agreement, even though if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible.

45. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be 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, it is 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."

8. In case of Lalitkumar V. Sanghavi (supra), the Hon'ble Supreme Court has once again referred to and relied upon the decision rendered in case of M/s. S.B.P. and Co. Vs. M/s. Patel Engineering Ltd. and Ors. (supra), more particularly, the observations made in Para No. 45 of the said decision.

9. In case of Deep Industries Ltd. (supra), the Hon'ble Supreme Court has observed in Para Nos. 2 and 16 as under,

"2) The present appeal raises important questions relating to the High Court's exercise of jurisdiction under Article 227 of the Constitution of India when it comes to matters that are decided under the Arbitration and Conciliation Act, 1996 ("the Act" for short).

16) This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."

10. Recently, the Hon'ble Supreme Court in case of Punjab State Power Corporation (supra) once again referred to and relied upon the decision rendered in case of Deep Industries Ltd. (supra) and made following observations,

"We are of the view that a foray to the writ Court from a section 16 application being dismissed by the Arbitrator SLP (C) No. 8482/2020 can only be if the order passed is so perverse that the only possible conclusion is that there is a patent lack in inherent jurisdiction. A patent lack of inherent jurisdiction requires no argument whatsoever - it must be the perversity of the order that must stare one in the face.

Unfortunately, parties are using this expression which is in our judgment in Deep Industries Ltd., to go to the 227 Court in matters which do not suffer from a patent lack of inherent jurisdiction. This is one of them. Instead of dismissing the writ petition on the ground stated, the High Court would have done well to have referred to our judgment in Deep Industries Ltd. and dismiss the 227 petition on the ground that there is no such perversity in the order which leads to a patent lack of inherent jurisdiction. The High Court ought to have discouraged similar litigation by imposing heavy costs. The High Court did not choose to do either of these two things. In any case, now that Shri Vishwanathan has argued this matter and it is clear that this is not a case which falls under the extremely exceptional category, we dismiss this special leave petition with costs of Rs. 50,000/- to be paid to the Supreme Court Legal Services Committee within two weeks."

11. In case of Sterling Industries (supra), the Hon'ble Supreme Court has once again referred to and relied upon Para No. 45 of the decision rendered in case of M/s. S.B.P. and Co. Vs. M/s. Patel Engineering Ltd. and Ors. (supra).

12. In case of Bhaven Construction (Supra), the Hon'ble Supreme Court has observed in Para Nos. 10 to 12 and 18 to 22 as under,

"10. Having heard both parties and perusing the material available on record, the question which needs to be answered is whether the arbitral process could be interfered under Article 226/227 of the Constitution, and under what circumstance?

11. We need to note that the Arbitration Act is a code in itself. This phrase is not merely perfunctory, but has definite legal consequences. One such consequence is spelled out under Section 5 of the Arbitration Act, which reads as under "Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." The non-obstante clause is provided to uphold the intention of the legislature as provided in the Preamble to adopt UNCITRAL Model Law and Rules, to reduce excessive judicial interference which is not contemplated under the Arbitration Act.

12. The Arbitration Act itself gives various procedures and forums to challenge the appointment of an arbitrator. The framework clearly portrays an intention to address most of the issues within the ambit of the Act itself, without there being scope for any extra statutory mechanism to provide just and fair solutions.

18. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient.

19. In this context we may observe M/s. Deep Industries Limited v. Oil and Natural Gas Corporation Limited, wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analyzed as under:

"15. Most significant of all is the non- obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act) 16. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."

20. In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or 'bad faith' on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending.

21. Viewed from a different perspective, the arbitral process is strictly conditioned upon time limitation and modeled on the 'principle of unbreakability'. This Court in P. Radha Bai v. P. Ashok Kumar, (2019) 13 SCC 445, observed:

36.3. Third, Section 34(3) reflects the principle of unbreakability. Dr Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd Edn., observed:

"An application for setting aside an award can only be made during the three months following the date on which the party making the application has received the award. Only if a party has made a request for correction or interpretation of the award under Article 33 does the time-limit of three months begin after the tribunal has disposed of the request. This exception from the three-month time-limit was subject to criticism in the working group due to fears that it could be used as a delaying tactics. However, although "an unbreakable time-limit for applications for setting aside" was sought as being desirable for the sake of "certainty and expediency" the prevailing view was that the words ought to be retained "since they presented the reasonable consequence of Article 33". According to this "unbreakability" of time-limit and true to the "certainty and expediency" of the arbitral awards, any grounds for setting aside the award that emerge after the three-month time-limit has expired cannot be raised.

37. Extending Section 17 of the Limitation Act would go contrary to the principle of "unbreakability" enshrined under Section 34(3) of the Arbitration Act.

(emphasis supplied)

22. If the Courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished.

13. In case of GTPL Hathway Ltd. (supra), this Court has observed in Para Nos. 3 and 14 as under,

"3. Short question which arises for consideration of this Court is whether the any order passed during pendency of arbitration proceedings under the Act, 1996 can be challenged by certiorari under Articles 226 and 227 of the Constitution of India or not.

14. In view of aforesaid conspectus of law, and considering the provisions of the Act, 1996, the order passed by the Arbitration Tribunal during the course of Arbitration cannot be challenged by the petitioner under Articles 226 and/or 227 of the Constitution of India when the constitution bench of the Apex Court in case of M/s. S.B.P. And Co. v. M/s. Patel Engineering Ltd. And Anr.(supra) has disapproved the stand that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Articles 226 and 227 of the Constitution of India and has categorically held that such intervention by the High Court is not permissible. The Apex Court in case of M/s. Deep Industries Limited v. Oil and Natural Gas Corporation (supra) has held that it is also important to notice that the seven Judge Bench has referred to the object of the Act being that of minimizing judicial intervention and that this important object should always be kept in the forefront when a 227 petition is being disposed of against proceedings that are decided under the Act, 1996 and that the policy of the Act is speedy disposal of arbitration cases as the Act, 1996 is 'selfcontained' Code and deals with all the cases."

14. Thus from the aforesaid decisions rendered by the Hon'ble Supreme Court as well as this Court, it can be said that the petition under Articles 226 and 227 of the Constitution of India is though maintainable, the scope of interference is very limited and the powers can be exercised when the orders passed by the Arbitral Tribunal are patently lacking inherent jurisdiction. The Arbitration Act is a code in itself and it gives very procedures and forums to challenge the appointment of the Arbitrator. The ambit of Article 227 of the Constitution of India is broad and pervasive and the High Court should not use its inherent power to interject the arbitral process at the interim stage. If the High Court is allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished.

15. At this stage, the conduct of the petitioner is also required to be considered by this Court while considering the case of the petitioner. From the facts of the present case, it is revealed that the arguments of LPA were over on 08.01.2020 and the Division Bench kept the matters for orders and, hence in absence of any stay in favour of the petitioner, the petitioner ought to have cooperated with the arbitration proceeding. It is required to be noted that as stated above, the hearing of LPA was concluded on 08.01.2020 and at no point of time during hearing or thereafter, this Court has stayed the arbitral proceeding. As can be seen from the record, the stage for filing written statement was closed vide order dated 20.02.2020 and at the relevant point of time, there was no pandemic nor there was any cause available with the petitioner not to file written statement. As per the direction issued by the learned Arbitrator, the respondent/claimant filed SOC, which was received by the petitioner on 20.11.2019, however till 20.02.2020, SOD was not filed by the petitioner nor even the petitioner has made any request for seeking extension of time. The only reason sought was pendency of the proceeding i.e. LPA filed by the petitioner before this Court but admittedly there was no stay granted by this Court, therefore, the petitioner ought to have participated in the arbitral proceeding. It is further submitted that the lockdown was imposed by the Government on 23.03.2020 and, therefore, the same has no bearing on the validity of the order dated 20.02.2020. Thus from the conduct of the petitioner, it is revealed that the petitioner has tried to adopt dilatory tactics by initiating the proceeding one after another. The proceeding before this Court was filed on the premise of jurisdiction, however thereafter, the said issue was expressly given up by the petitioner before the Arbitral Tribunal.

16. The contention of learned advocate appearing for the respondent with regard to suppression of material facts by the petitioner is also required to be considered. From the facts of the case and material produced on record, it is revealed that while pursuing proceeding by the petitioner, the joint venture is not impleaded in the memo of petition and the writ proceeding does not continue the cause title as is before the Arbitral Tribunal. It is also revealed that the petitioner has filed substantive application before the Arbitral Tribunal; one application is filed seeking waiver of order of costs imposed vide impugned order dated 29.11.2020, thereafter, another application is filed for stay of the proceeding. Even by filing appropriate application, the petitioner has challenged the mandate of the Arbitral Tribunal and prayed that the Arbitral Tribunal should not proceed further with the Reference. Thus, the petitioner has mislead this Court by asserting that the petitioner is willing to proceed with the arbitral proceeding before the Arbitral Tribunal in whatever time scheduled prescribed by the Court.

17. In view of the above, this court is of the view that learned counsel for the respondent is correct that the petitioner has not disclosed the relevant facts of filing of application before the Arbitral Tribunal in the present case, therefore, this conduct of the petitioner, is also required to be kept in view while entertaining the present petition.

18. At this stage, another contention raised by learned advocate appearing for the parties is also required to be decided by this Court. Learned advocate appearing for the respondent has contended that subject reference is under the provision of the MSME Act and under Section 19 of the MSME Act read with Section 34 of the Arbitration Act, the petitioner has statutory remedy of assailing any order passed by the learned Arbitrator at the time of assailing the award. On the other hand, learned advocate for the petitioner has contended that though the impugned order can be challenged at the time of assailing the award under Section 34 of the Arbitration Act, the condition to pre-deposit as per Section 19 of MSME Act is onerous and, therefore, the said remedy cannot be considered as efficacious remedy.

19. To consider the aforesaid submission canvassed by learned advocates for the parties, the decision rendered by this Court in case of Devi Enterprise Ltd. (supra), is required to be referred to. In the said case, the Division Bench has observed in Para Nos. 7, 8 and 9 as under,

"7. Having gone through the provision of the law, we are of the opinion that the condition of pre-deposit of 75% introduced by Section 19 of the Act is valid and does not suffer from the vice of unconstitutionality. The reasonable restrictions can always be imposed by the legislation by putting conditions. While enhancing condition of pre-deposit with the main section, the object sought to be achieved was that there shall be no dilatory tactics. Such an object of the legislature cannot be said to be arbitrary, unconstitutional or ultra vires. Therefore, we are of the considered opinion that the provisions of Section 19 of the Act are not ultra vires to any constitutional provision either Article 14 or Article 19(1)(g) of the Constitution of India.

8. Mr. Saurabh G. Amin, learned advocate for respondent No. 3-Union of India has placed reliance on the decision of the Karnataka High Court in the case of Karnataka Power Transmission Corporation Limited and another Vs. Union of India and others, reported in (2013)1 Karnataka LJ 497 : (2012)0 Supreme (Karnataka) 500 [Writ Petition Nos. 22370-371/2010, C/W. 22374-375/2010, 22377-378/2010, 40138, 40140 and 40141/2011 (GM-Res), decided on 13th September, 2012] and he has also submitted that paragraphs 24 to 27 be treated as a part of his argument. Paragraphs 24 to 27 of the said decision of the Karnataka High Court is reproduced below:

"24. This takes us to the vires of Section 19 of the Act. Mr. Naganand, learned Senior counsel appearing for the respondent submits that having regard to the decision rendered by the Apex Court in Mardia Chemical's case, the appeal or the remedy should not be illusory. He submitted that the condition imposed under Section 19 of the Micro Act is onerous.

25. Indeed provisions of the Securitization Act fell for consideration before the Apex Court in the case of Mardia Chemicals Ltd., etc. etc. V/s Union of India and other etc. reported in AIR 2004 SC 2371. The condition of pre-deposit under the Act was held to be illusory on the grounds that:-

(i) It is imposed while approaching the adjudicating authority for the first instance, not in appeal;

(ii) There is no determination of the amount due as yet;

(iii) The secured assets or its management with transferable interest is already taken over and under control of the secured creditor;

(iv) no special reason for double security in respect of an amount yet to be determined and settled.

(v) 75% of the amount claimed by no means would be a meagre amount;

(vi) it will leave the borrower in a position where it would not be possible for him to raise any funds to make deposit of 75% of the undetermined demand.

9. The Apex Court has further observed that such conditions are not only onerous and oppressive but also unreasonable and arbitrary. Therefore, sub-section (2) of Section 17 of the Securitization Act was found to be unreasonable, arbitrary and violative of Article 14 of the Constitution.

26. The observations made by the Apex Court in Mardia Chemical's case are with reference to a situation, where there is no adjudication of the amount payable and that the secured assets or its management with transferred interest are already taken over under the control of the secured creditor. The Apex Court has observed that there is no determination of the amount due as yet. In those circumstances, the Apex Court was of the view that said condition regarding pre-deposit of 75% without any prior determination by competent authority is unreasonable, arbitrary and violative of Article 14 of the Constitution.

27. In the case on hand, it is not so. There is already adjudication of the quantum by the Competent Authority, which is designated under the Act, which is the Facilitation Council. The Facilitation Council had issued notice to the respondents and an enquiry was conducted and an award is passed. The provisions of Arbitration Act so far as it relates to holding of an enquiry have been followed. Thus, there is an adjudication of quantum. Thus, it is not a case where without an adjudication, the amount is determined. In fact it is a full-fledged trial and on an enquiry the amount is determined. Thus, I am of the view that the provisions relating to deposit of 75% of the amount cannot be said to be unreasonable, arbitrary and violative of Article 14 of the Constitution. It is not a case where the property or the asset of respondent No. 2 is taken over without adjudication which would make it difficult or impossible for them to comply with the provisions of Section 19 of the Act."

20. At this stage, this Court would like to refer to the provisions contained in Sections 5, 16 and 34 of the Arbitration Act, which read as under,

"5. Extent of judicial intervention:-

Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."

"16. Competence of arbitral Tribunal to rule on its jurisdiction:-

(1) The arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral Tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral Tribunal shall decide on a plea referred to in sub-section (2) or subsection (3) and, where the arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34."

34. Application for setting aside arbitral award.

(1) 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).

(2) An arbitral award may be set aside by the Court only if-

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

"Explanation 1. - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,

(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2. - For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.";

(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.";

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral Tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.

(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party."

21. This Court would also like to refer to the provision contained in Section 19 of the MSME Act, which reads as under,

"19. Application for setting aside decree, award or order:-

No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court:

Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose."

22. Thus from the aforesaid provision of law, it can be said that the petitioner can challenge the impugned order at the time of challenging the order under Section 34 of the Arbitration Act. Further, the condition of pre-deposit cannot be said to be onerous as contended by learned advocate for the petitioner. In case of Devi Enterprise Ltd. (supra), the Division Bench of this Court has considered the said provision contained in Section 19 of the MSME Act, wherein the Division Bench has upheld the constitutional validity and the aforesaid provision and observed that the provisions contained in Section 19 of the MSME Act are not ultra vires to any constitutional provision either under Article 14 or under Article 19(1)(g) of the Constitution of India. In view of the above facts, the petitioner has remedy to challenge the order passed by the Arbitral Tribunal under Section 34 of the Arbitration Act at the time of challenging the award.

23. In the aforesaid legal position, if the facts of the present case, are carefully examined, it would emerge that when the Reference was made under Section 18 of the MSME Act to the Arbitral Tribunal, the petitioner challenged the same by filing writ petition being Special Civil Application No. 11169/2018 before this Court and this Court, vide order dated 09.09.2018, dismissed the said petition. Against the dismissal of said writ petition, the petitioner filed Letters Patent Appeal No. 1667/2019 before the Division Bench of this Court. The Division Bench of this Court heard the matter and kept the same for orders on 08.01.2020. In the meantime, as there was no stay granted by this Court, GCCI vide communication dated 30.09.2019, called upon the parties before the learned Arbitrator on 11.10.2019 and first meeting was held on 11.10.2019, wherein the learned Arbitrator directed the parties to complete the pleadings within prescribed time limit. The respondent/claimant was asked to file its SOC on or before 11.11.2019 and the SOD and CC, if any, were required to be filed by the petitioner on or before 10.12.2019 and the next date of hearing of arbitration proceeding was scheduled on 22.01.2020. The respondent/claimant filed SOC during the extended time granted by the learned Arbitrator and the petitioner was directed to file SOD and CC within a period of 10 days. The said order was passed on 22.01.2020, thereafter, the matter was kept on 20.02.2020. The petitioner submitted an application for stay of the arbitration proceeding by stating that LPA filed by the petitioner is pending before the Division Bench, however, the said application was rejected and the right of the petitioner to file SOD was closed and, thereafter, the matter was kept on 24.03.2020.

24. In the aforesaid facts, the case of the petitioner is that after the matter was kept on 24.03.2020, same was adjourned on 28.04.2020 and in the meantime, because of the lockdown imposed by the Central Government and because of COVID-19, the Hon'ble Supreme Court has extended the limitation period under general law as well as special law whether condonable or not w.e.f. 15.03.2020 and, therefore, time prescribed for filing SOD by the petitioner was automatically extended. Learned advocate has also placed reliance upon the provision contained in Section 23(4) of the Arbitration Act and contended that the petitioner can file SOD within a period of six months.

25. With a view to consider the said submission, this Court would like to refer to the provision contained in Section 23 of the Arbitration Act, which reads as under,

"23. Statements of claim and defence:-

(1) Within the period of time agreed upon by the parties or determined by the arbitral Tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.

(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

"(2-A) The respondent, in support of his case, may also submit a counter claim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counter-claim or set-off falls within the scope of the arbitration agreement.".

(3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral Tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.

(4) The statement of claim and defe

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nce under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment." 26. At this stage, the provision contained in Section 19 of the Arbitration Act is also required to be referred to, "19. Determination of rules of procedure (1) The arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral Tribunal in conducting its proceedings. (3) Failing any agreement referred to in subsection (2), the arbitral Tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (4) The power of the arbitral Tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence." 27. From the aforesaid provision, it is clear that the Arbitral Tribunal is not bound by the provision of the Code of Civil Procedure, 1908 and the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceeding failing in agreement between the parties. The Arbitral Tribunal conduct the proceeding in the manner it consider appropriate. It is pertinent to note at this stage that in the proceeding dated 11.10.2019, the learned Arbitrator directed the parties to complete the pleadings within prescribed time limit as observed hereinabove and the said order is not challenged by the petitioner and the petitioner has also not requested for extension of time for filing SOD or CC before the learned Arbitrator. It is further required to be noted that the petitioner was required to file SOD within a period of 10 days from 22.01.2020 and the matter was kept on 20.02.2020. Thus in the facts of the present case, the learned Arbitrator has prescribed the time limit for filing all the pleadings and the said order was not challenged, therefore, this Court is of the view that the petitioner was required to file SOD and CC within that time limit. The order of the Hon'ble Supreme Court, upon which reliance is placed by the petitioner for extension of limitation period, would not be helpful to the petitioner in the facts of the present case. 28. Learned advocate for the petitioner also contended that the petitioner was not given reasonable opportunity to examine the witness of the respondent/claimant. It was pointed out that on 27.05.2020, the advocate for the respondent/claimant informed the petitioner about the date of hearing before the learned Arbitrator, which was scheduled on 30.05.2020 and it was also stated that the witness of the respondent/claimant would be examined on that day. The petitioner also received communication from the GCCI that hearing is scheduled on 30.05.2020 through video conferencing and, therefore, 2 days' time was given to the petitioner for cross-examination of the witnesses of the respondent/claimant. It is stated that the learned Arbitrator has recorded the evidence of the witness of the respondent/claimant through video conferencing though the order dated 06.04.2020 was passed by the Hon'ble Supreme Court directing that in no case, evidence can be recorded by video conferencing, however, the said order is modified on 26.10.2020. 29. With regard to said contention, it is required to be noted that the petitioner has not challenged the aforesaid order passed by learned Arbitrator, whereby the evidence of the respondent/claimant has been RECORDED through video conferencing nor the order dated 06.04.2020 was pointed out to learned Arbitrator during the course of arguments. Even otherwise, as per the subsequent order dated 26.10.2020 passed by the Hon'ble Supreme Court in SMC (C) No. 5/2020, this Court is of the view that the said order would not be applicable to the arbitral procedure per se. The discretion was vested with the concerned Court to proceed with the cross-examination even without consent. Thus, when the order dated 30.05.2020 passed by the learned Arbitrator closing the right of the petitioner to cross-examine the witness is not challenged, on this ground also, this Court is not inclined to interfere with the impugned order. 30. Learned advocate for the petitioner has tried to point out that there was sufficient cause for the petitioner for not filing SOC and CC within prescribed time limit as they were under the bonafide impression that the Division Bench will decide in their favour as LPA was pending and, therefore, because of "discussion with in-house counsel", the petitioner did not file SOD and CC within time limit. Further, now when the Division Bench has passed an order against the petitioner on 24.07.2020, the petitioner has filed an application for reopening stage of filing SOD and CC and also requested that the petitioner be permitted to cross-examine the witness of the respondent/claimant. 31. It is also pertinent to note that in the additional affidavit filed by the petitioner on 04.08.2020 before the Arbitral Tribunal and even in the application filed before the Arbitral Tribunal, the petitioner has failed to point out sufficient cause. In the additional affidavit, there is reference with regard to "discussion with in-house counsel", however, the said affidavit does not state the name of "in-house counsel" nor placed on record opinion given by any "in-house counsel" though it is asserted that it is on account of the advice of the lawyer but details are not given in the said affidavit. Even otherwise, the advice of the lawyer is not sufficient cause for considering the case of the petitioner in the facts of the present case. From the facts of the present case, this Court is of the view that each of the cause set out by the petitioner is a consequence of conscious decision taken by the petitioner, which is contrary to the express order passed by the Arbitral Tribunal. At this stage, it is required to be noted that in the impugned order, the learned Arbitrator has discussed in detail on this aspect. CONCLUSION:- 32. This Court has also considered the reasoning recorded by learned Arbitrator while passing impugned order and this Court is of the view that no error is committed by the learned Arbitrator while rejecting the application filed by the petitioner, which requires any interference while exercising power under Article 227 of the Constitution of India. Even, the petitioner has failed to point out any patent lack of jurisdiction on the part of the learned Arbitrator while passing impugned order, which requires any interference under Article 227 of the Constitution of India. 33. Thus in view of the above discussions, the petitioner is not entitled for any relief as prayed for in the present petition. Hence, the present petition deserves to be dismissed and accordingly stands dismissed. 34. However, the observations made and the findings recorded by this Court in the present order are only for the purpose of deciding the issue prima facie. Therefore, as and when the petitioner files appropriate application before the appropriate Forum, the said application and/or issue shall be decided in accordance with law without being influenced by the observations made in the present order.
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