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Mani Tirumala Projects Pvt. Ltd. v/s All Odisha State Bank Officers Housing Co-operative Society Limited & Another

    Writ Appeal No. 475 of 2021

    Decided On, 10 August 2021

    At, High Court of Orissa

    By, THE HONOURABLE CHIEF JUSTICE DR. S. MURALIDHAR & THE HONOURABLE JUSTICE B.P. ROUTRAY

    For the Appellant: P. Chidambaram, Senior Advocate, Kunal Vajani, A. Mishra, A. Kejriwal, A. Parija, S. Bose, Advocates. For the Respondents: Manas Mohapatra, Senior Advocate, P.C. Nayak, Advocate.



Judgment Text

Dr. S. Muralidhar, CJ.

1. This writ appeal is directed against the order dated 17th March, 2021 passed by the learned Single Judge disposing of the Appellant's Writ Petition (Civil) No.8533 of 2019.

2. The background facts are that, the Appellant is a Company engaged in the business of construction. It entered into an Agreement for Sale on dated 22nd August, 2008 with the Respondent No.1-Society, in terms of which it agreed to construct at its own cost and make over to the Respondent No.1 - Society and/or its members a total of 148 residential apartments along with common facilities, dedicated car parking spaces, etc. on an area of 2.03 acres out of a total area of 10.15 acres located in mouza Kalarahanga, P.S. - Chandrasekharpur, Nandan Kanan Road, Bhubaneswar.

3. A Deed of Conveyance dated 10th December, 2009 was registered, in terms of which the total area of land was conveyed by Respondent No.1 in favour of the Appellant. This was followed by a Deed of Rectification dated 18th October, 2014. In terms of these three documents, the Appellant had also agreed to pay a sum of Rs.18 crores to the Respondent No.1-Society. There were certain other conditions, which need not be examined in detail for the purpose of the present appeal.

4. The disputes between the parties were triggered by filing of the three Civil Suits by the relatives of the predecessors-in- interest of the Respondent No.1-Society. It is stated that Respondent No.1- Society itself filed Civil Suit No.187 of 2017 against the Appellant seeking a declaration that the deed of conveyance dated 10th December, 2009 was not a sale deed. In that suit an application was filed by the Appellant under Section 8 of the Arbitration and Conciliation Act, 1996 ('the Act') seeking a reference of the disputes to arbitration. By an order dated 25th March, 2017, the trial court allowed the said application and relegated the parties to arbitration. An interim status quo order earlier passed was vacated by the trial court.

5. Thereafter the Appellant filed an application under Section 11 (6) of the Act which was allowed by this Court by order dated 13th October, 2017 appointing Respondent No.2 as the sole arbitrator. The proceedings were to be conducted under the aegis of the Arbitration Centre of this Court.

6. The details of the proceedings before the learned Arbitrator, up to stage of completion of pleadings, need not be discussed in detail here. It is sufficient to note that a joint memorandum of terms of settlement dated 16th November, 2018 (hereafter 'the Settlement Deed') was entered into between the parties. On this basis, a joint application was filed before the learned Arbitrator, by both the parties seeking an interim award under Section 31 (6) of the Act. On 16th November, 2018 the learned Arbitrator, inter alia, noted the terms of the settlement in an order and then proceeded to direct as under:

"Passing of the Final Award in terms of the settlement on consent of the parties shall be subject to compliance of terms of conditions of the 'joint memo of terms of settlement dated 16.11.2018' by both the parties within the specified time.

Next date is fixed to 14.12.2018 at 4.15 p.m. Learned counsel for the parties shall inform the progress that takes place in the meantime. Copy of the joint memo of terms of settlement signed by parties be kept on record.

One year from the commencement of this proceeding shall expire on 6th of December, 2018. Since the next date is fixed to 14th of December, the learned counsel for the parties shall file a joint memo for extension of the period for completion of the proceeding by another six months. The prayer is allowed and time is extended by another six months with effect from 16.11.2018 for conclusion of the proceeding."

7. On the next date, i.e. on 14th December, 2018, learned Arbitrator dealt with an application filed by the Respondent No.1-Society praying for a direction to the Appellant, i.e. Claimant:

"...to complete the unfinished work in 148 flats within the schedule time, demarcate respondent's exclusive area of Ac.2.03 decs. and also direct the claimant to forward the draft conveyance deed immediately in terms of the settlement."

8. The Arbitrator in the order dated 14th December, 2018 also noted the submission of the counsel for the Appellant that:

"...the deficiencies have already been pointed out and as per terms of the settlement by mid of January, 2019 all the 148 flats will be complete in every respect for handing over possession. So far as other two prayers are concerned, he prays for time to obtain instruction."

9. The Arbitrator directed the Appellant to hand over the draft conveyance deed to the Society on or before 22nd December, 2018 for final approval in terms of the settlement dated 16th November, 2018. According to the Appellant, in compliance with the said direction, the draft sale deed was sent to the Respondent No.1-Society on 22nd December, 2018. On 11th January, 2019 the Arbitrator was informed that the final deed of settlement was in the process and some more time was sought for that purpose. The learned Arbitrator fixed the next sitting on 25th January, 2019 and directed that "no further adjournments for the above purpose shall be granted". It was further ordered that, in case the parties fail to arrive at a final settlement, the claimant may adduce evidence in its support.

10. On the next date, i.e. on 25th January, 2019 the following order was passed by the learned Arbitrator:

"Sri Tanmay Mishra, learned counsel for the Claimant is present. The representatives of the Respondent Association are also present along with Sri Prabodh Chandra Nayak, learned counsel appearing for them.

A memo is filed by learned counsel for claimant praying for an adjournment on the ground that only on one issue the compromise has not been finalized and a meeting has been fixed on 29th January to resolve the said issue. Adjournment is granted till next date for resolving the issue. The next sitting is fixed to 5th of February, 2019 at 4.00 p.m. The parties may either file the deed of settlement or the claimant may come ready with evidence, if any, failing which it will be deemed that the claimant has no oral evidence to adduce.

Copy of the order be granted to the learned counsel for the parties."

11. When again on 5th February, 2019 the final deed of settlement was not placed on record, learned Arbitrator directed as under:

"Today neither the final deed of settlement has been filed nor the claimant has filed any list of witnesses to be examined or affidavit evidence of any witness. Therefore, it is deemed that the claimant has no oral evidence to adduce. The learned counsel for the respondent submits that the respondent has no oral evidence to adduce. Since the process of settlement was going on, neither issues have been framed nor documents have been marked.

The next date is fixed to 13.02.2019 at 4.00 p.m. for filing of draft issues and marking of documents.

Copy of the order be granted to the learned counsel for the parties."

12. On 1st March, 2019 the following order was passed by the Arbitrator:

"The parties said for negotiation again today and finalized the rest of the disputes. The parties undertake to file the final deed of settlement on the next date. The memo with today's settlement signed by the parties is kept on record.

The next date is fixed to 05.04.2019 at 4.15 p.m. for filing the final deed of settlement.

Copy of the order be granted to the learned counsel for the parties."

Accompanying the said order was a memo of a settlement partly written in hand which indicated inter alia that the Society would pay the Appellant a sum of Rs.2,43,88,000/-

13. It appears that, sometime after 11th April, 2019 the Appellant filed Execution Case No.132 of 2019 in the Court of the learned District Judge, Khurda under Section 36 of the Act claiming that since there was no further dispute between the parties, the interim award itself should be treated as final award and should be put to execution. The Appellant also prayed for an interim order staying further arbitration proceedings.

14. An application was filed before the learned Arbitrator by the Appellant on 15th April, 2019 under Section 30 and 32 of the Act praying that the arbitration should be terminated. In the said application it was disclosed by the Appellant that it had already filed an Execution Petition in the Court of the District Judge, Khurda. In the application it was claimed that all the disputes should be held to have been settled in terms of the memo of settlement signed by the parties on 1st March, 2019, as recorded by the Arbitrator in the order passed by him on that date.

15. The aforementioned application was dealt by the learned Arbitrator and was rejected by a detailed order dated 15th April, 2019. It was held as under:

"In view of the above, the parties never entered into a final compromise and the interim award dated 16.11.2018 which was subject submission of final deed of settlement, was never honoured by either party. The parties having agreed to adjudication of the dispute on merit and the claimant having participated in the proceeding of the framing of issue, I find no merit in the petition filed by the claimant today and reject the same.

In spite of the last order dated 11.04.2019, the claimant has not filed the list of admission and denial of documents filed by the respondent. Under section 19 subsection (4) of the Act, the arbitral tribunal has the power to determine the admissibility, relevance of documents filed by parties. Therefore, in absence of any list on behalf of the claimant, denying or admitting documents filed by the respondent, the Tribunal can look into the admissibility of those documents for the purpose of passing an award. The documents filed on behalf of the claimant are marked in the following manner.

The list of documents filed by the claimant which are admitted and denied by the respondent are exhibited in the manner it is indicated in a separate sheet. The Centre shall mark the documents accordingly.

Since the parties do not intend to adduce any oral evidence, the date of argument is fixed to 24th, 25th and 26th of April at 4.15 p.m. on each date. The sitting is fixed on the above dates."

16. Within four days thereafter, on 19th April, 2019 a letter was addressed by the Appellant to the learned Arbitrator claiming this time that, in the light of the facts and circumstances as alleged in that letter which related to the "de jure inability" of Respondent No.2 to act an Arbitrator, the mandate of Respondent No.2 "has automatically been terminated." The Appellant placed reliance on the judgment of the Supreme Court in Bharat Broadband Network Limited. v. United Telecoms Limited, (2019) 5 SCC 755. Another letter to the same effect was addressed by the Appellant to the learned Arbitrator on 24th April, 2019 this time drawing his attention to the decision of the Supreme Court in HRD Corporation v. Gail (India) Ltd. (2018) 12 SCC 471.

17. At the hearing held on 25th April, 2019 the Appellant did not appear. By a detailed order passed on that date, the learned Arbitrator rejected the above prayers of the Appellant and observed that the Appellant had "not produced any evidence in support of such false and fabricated allegations". The arguments on behalf of the Society were heard and the next sitting was fixed for 26th April, 2019.

18. Meanwhile, the Appellant on 26th April, 2019 filed a writ petition, i.e. W.P. (C) No.8533 of 2019 in this Court praying inter alia that the order dated 25th April, 2019 of the Arbitrator rejecting the petitioner's prayer for termination of the mandate should be quashed, and a declaration to that effect should be made.

19. On that very date the learned Arbitrator held proceedings at which admittedly the Appellant did not appear. Since the Society's counsel concluded arguments and the Appellant was not appearing, counsel for the Society was asked to submit the required stamp papers for preparation of the Award. The next sitting was fixed for 2nd May, 2019 for passing the Award.

20. On 1st May, 2019 the learned Single Judge passed an interim order in the writ petition with a view to "settle the matter finally between the parties" and "keeping the question of maintainability of the writ application open". A series of directions were issued including appointing a Committee of Advocates to visit the spot, undertake demarcation of the land, etc. It was directed that in the meanwhile the arbitration proceedings shall not continue.

21. On 2nd May, 2019 the following order was passed by the learned Arbitrator:

"None appears for the Claimant. Sri Nayak, the learned counsel for the Respondent Association produces a copy of the order dtd. 01.05.2019 passed in WP(C) No. 8533 of 2019. The High Court has directed the writ petition to be listed on 25th June, 2019 and has further directed that in the mean time the Arbitration proceeding before me shall not proceed. The order of the High Court be kept in the record.

Today was fixed for pronouncement of the Award. In view of the above order the Award is kept in a sealed cover. The award kept in the sealed cover be kept by the Arbitration Centre.

Depending on the ultimate result of the writ petition the Arbitration Centre may intimate me as to whether it is required to have any further sitting or not.

Copy of the order be granted to the learned counsel for the parties."

22. This interim stay order continued till 17th March, 2021, when the following impugned order was passed by the learned Single Judge:

"Due to pandemic situation for COVID-19, this case is taken up through Hybrid Mode (Video Conferencing as well as Physical Mode).

Learned counsels for the parties are present. It is submitted that, since appropriate proceeding for execution of the interim award has been initiated, this writ petition has become infructuous. Accordingly, the writ petition is dismissed as infructuous.

The order of status quo passed earlier stands vacated forthwith. The final award passed in the meantime be delivered with immediate effect. Parties, if so advised, may take recourse to law as available.

The writ petition is accordingly disposed of.

Due to pandemic situation for COVID-19, authenticated copy of this order downloaded from the website of the Orissa High Court, in the manner prescribed vide this Court's Notice No. 4587, dated 25.03.2020, shall be treated at par with the certified copy of this order."

23. Soon thereafter the Arbitration Centre issued an order dated 19th March, 2021 noting that the writ petition has been disposed of with a direction to the Arbitrator to deliver the final Award and it was indicated in the said order as under:

"The matter has been intimated to the Hon'ble Arbitrator. On consent of the Hon'ble Arbitrator, the proceeding is fixed to 22.03.2021 at 11.30 a.m. for pronouncement and delivery of Award.

Parties be intimated accordingly through e-mail.

Free copy of this order be provided to the learned counsel for the parties."

24. Admittedly the Appellant thereafter did not participate in the proceedings, but applied for and received the certified copy of the final Award which appears to have been pronounced by the learned Arbitrator on 22nd March, 2019. The photo copy of the final Award enclosed with the writ appeal shows that it was "signed and sealed" on 2nd May, 2021. The stamp on the reverse of the Award reveals that an application for a certified copy of the Award was made on 6th April, 2021. It was kept ready for delivery on 9th April, 2021.

25. Despite the final Award having rejected its claims, the Appellant did not choose to file a petition under Section 34 of the Act to challenge it. Instead, it waited for three months and on 21st June 2021 filed the present appeal challenging the order dated 17th March, 2021 of the learned Single Judge.

26. Incidentally there is a delay of 66 days in filing the present appeal. The explanation offered in I.A. No.1168 of 2021 for the delay is unconvincing. Except saying that the Appellant was seeking legal advice, there appears to be no justifiable reason for the delay of 66 days in filing the present appeal. Be that as it may, this Court has heard at length the submissions of Mr. P. Chidambaram, learned Senior Counsel appearing for the Appellant, on merits.

27. The central ground of challenge to the impugned order of the learned Single Judge is that there was no justification for the learned Single Judge to have decided to dismiss the writ petition "as infructuous" since in relation to the prayer in the writ petition viz., that the Arbitrator ought to have terminated the mandate, the writ petition had not been rendered infructuous. Mr. Chidambaram submitted that the reasons for the conclusion, as can be seen from the impugned order of the learned Single Judge, is the filing of a petition by the Appellant for executing the interim award dated 16th November 2018 which fact was already disclosed when the writ petition was initially filed. Mr. Chidambaram submitted that having issued detailed directions appointing a Committee of Advocates to carry out the exercise of demarcation and take other measures by the order dated 1st May 2019, the learned Single Judge was not justified in suddenly abandoning the entire exercise particularly after the said Committee of Advocates had submitted a report to the learned Single Judge largely supporting the case of the Appellant.

28. In support of his plea that the exercise undertaken by the Arbitrator was wholly without jurisdiction and that notwithstanding the Arbitrator having proceeded to pronounce the final Award it would not affect the right of the Appellant to question not only the order dated 25th April, 2019 of the Arbitrator but also the impugned order of the learned Single Judge, Mr. Chidambaram placed reliance on the decision of the Calcutta Discount Company v. Commissioner of Income Tax AIR 1961 SC 1239. In support of the plea that the Arbitrator had de jure become unable to perform his function and therefore his mandate stood terminated in terms of Section 14(1)(a) of the Act, Mr. Chidambaram placed reliance on the decisions in Bharat Broadband Network Limited (supra) and HRD Corporation v. Gail (India) Ltd. (supra). As regards the jurisdiction of the learned Single Judge to entertain the writ petition against the order of the learned Arbitrator rejecting the Appellant's prayer for termination of the mandate, reliance is placed on the decisions in Deep Industries v. Oil and Natural Gas Corporation (ONGC) (2020) 15 SCC 706, Tayabbhai M. Bagasarwalla v. Hind Rubber Industries Pvt. Ltd. (1997) 3 SCC 443 and a recent decision of a three-Judge Bench of the Supreme Court of India in Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. (2021) SCC Online 8.

29. Mr. Chidambaram urged that the Appellant would not be required to challenge the final Award under Section 34 of the Act, if it succeeded in demonstrating that the Arbitrator's mandate stood terminated after 1st March, 2019 when the final settlement was entered into between the parties. According to him, all steps taken thereafter in the arbitral proceedings by the learned Arbitrator were entirely without jurisdiction. He submitted that it was erroneous on the part of the learned Single Judge to direct the Arbitrator to proceed to pronounce the final Award when no such prayer was made before the learned Single Judge and this was entirely outside the scope of the writ petition.

30. Mr. Chidambaram learned Senior Counsel repeatedly urged that the learned Arbitrator ought not to have held any sitting on 2nd May, 2019 when he was communicated the order dated 1st May, 2019 of the learned Single Judge. He submitted that a copy of the final Award showed that the Arbitrator had signed the Award on 2nd May, 2019 when in fact the order dated 1st May, 2019 of the learned Single Judge had stayed all the proceedings before the learned Arbitrator. Accordingly, he submitted that the act of signing the Award was in violation of the learned Single Judge's order and therefore, such an Award was non-est in the eye of law even though it may have been pronounced on 22nd March, 2021 after the interim order was vacated by the learned Single Judge by the impugned order dated 17th March, 2021.

31. The Court is not persuaded by the above submissions made on behalf of the Appellant. One development that has taken place since the impugned order of the learned Single Judge is the pronouncement of the final Award by the learned Arbitrator. The final Award appears to have been pronounced on 22nd March, 2021. Whether the learned Arbitrator in fact signed the Award on 2nd May, 2019 itself and whether this was done before or after he was shown the copy of the interim order dated 1st May, 2019 of the learned Single Judge, is a disputed question of fact which would obviously require evidence to be led. Therefore, the Court does not propose to examine that issue here. However, what is beyond controversy is the fact that after being shown the interim order dated 1st May, 2019 of the learned Single Judge, the Arbitrator did not proceed further and directed that the Award which was ready for pronouncement be kept in a sealed cover with the Arbitration Centre.

32. This development was within the knowledge of the learned Single Judge and is explained by the fact that in the impugned order the learned Single Judge has directed that the "final award passed be in the meantime be delivered with immediate effect."

33. The Appellant could not have been unaware of the implications of the pronouncement of the final Award. It received a notice on 19th March, 2021 from the Arbitration Centre that the proceedings were fixed for 22nd March 2021. Yet the Appellant did not choose to participate in the arbitration proceedings on that date. More importantly, it did not immediately file the present appeal seeking stay of the further proceedings in continuation of the stay order passed by the learned Single Judge on 1st May, 2019.

34. No reasonable explanation is offered by the Appellant for not challenging the final Award till date under Section 34 of the Act, except saying that it would not be necessary for it to do so if it succeeded in demonstrating that the arbitral proceedings after 1st March 2019 were without jurisdiction. This appears to be a conscious choice made by the Appellant and not merely an oversight. This aspect is significant since the decisions of the Supreme Court in Deep Industries Limited (supra, HRD Corporation (supra) and Bhaven Construction (supra) consistently hold that it is only when the High Court is satisfied that a party is remediless that in the rarest of the rare cases it will exercise jurisdiction under Article 226 of the Constitution and interfere with the order of the Arbitrator. In the last-mentioned decision it was observed as under:

"In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337, this Court referred to several judgments and held:

"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation L. Chandra Kumar v. Union of India, (1997) 3 SCC 261.

However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/ instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation." (emphasis supplied) 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, wh

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erein 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." (emphasis supplied) 35. In the instant case, the Appellant could not have been unaware of the implications of not challenging the final Award under Section 34 of the Act, from the point of view of limitation as well. It was therefore not remediless when it chose to file the writ petition. Also, there is no allegation in the writ petition that the Society acted in bad faith. 36. Every ground that the Appellant has urged in the writ petition as well as in this appeal to assail the arbitration proceedings and the conduct of the learned Arbitrator could very well form part of the grounds of challenge to the Award which it is yet to make. The Court expresses no opinion on whether such challenge can hereafter be maintained by the Appellant either from the point of view of limitation or on merits for that would have to be decided as and when the Appellant chooses to adopt that course. 37. The same holds good for the grounds of challenge to the order passed by the Arbitrator on 25th April, 2019 or any of the orders thereafter. The decisions in Bharat Broadband Network Limited (supra) and HRD Corporation v. Gail (India) Ltd. (supra) cited by Mr. P. Chidambaram in support of his plea that the learned Arbitrator had become de jure unable to act as such and his mandate stood automatically terminated, appear to have been delivered in the context of a situation contemplated under Section 12 (5) of the Act, which does not appear to exist as far as the present case is concerned. In any event, nothing more need be said on this aspect as that too could be urged as a ground to challenge the Award if the Appellant chooses to do so and if it is permissible in law. 38. Consequently, the Court is unable to find any error in the impugned order of the learned Single Judge permitting the parties, after pronouncement of the final Award, and "if so advised to take recourse to law as available". 39. For all the aforementioned reasons, the Court dismisses the appeal and disposes of the pending applications but with the observation that irrespective of any observation on merits in the present order, it will be open to the Appellant to urge all the grounds raised in the writ petition as well as in the present appeal while assailing the final Award of the Arbitrator in accordance with law. The Court once again clarifies that it has not expressed any opinion on the maintainability of such challenge in law both on merits as well as limitation. 40. An urgent certified copy of this order be issued as per rules.
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