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

N.S. Atwal v/s Jindal Steel & Power Ltd.

Company & Directors' Information:- JINDAL POWER LIMITED [Active] CIN = U04010CT1995PLC008985

Company & Directors' Information:- JINDAL STEEL AND POWER LIMITED [Active] CIN = L27105HR1979PLC009913

Company & Directors' Information:- B D STEEL AND POWER PRIVATE LIMITED [Active] CIN = U27100WB2010PTC144767

Company & Directors' Information:- S. G. POWER AND STEEL PRIVATE LIMITED [Active] CIN = U14290DL2012PTC240718

Company & Directors' Information:- R. S. STEEL AND POWER PRIVATE LIMITED [Active] CIN = U70100CT2009PTC021362

Company & Directors' Information:- NS POWER PRIVATE LIMITED [Strike Off] CIN = U40100GJ2010PTC060398

    FAO (OS) No. 268 of 2010 & CM No. 7348 of 2010

    Decided On, 10 January 2011

    At, High Court of Delhi


    For the Appellant : Siddarth Aggarwal, Karan Lahri, Stuli Gujral, Advocates. For the Respondent : Sudhir Nandrajog, Senior Advocate with Ajay Bhargava, Atul Shanker Mathur, Rajiv Goyal and Shruti Verma, Advocates.

Judgment Text

1. This Appeal raises a neat legal nodus. The Application under Section 11 of the Arbitration and Conciliation Act, 1996 had earlier been dismissed vide Orders dated 03.12.2009. The contention was that the disputes pertained to a loan which was covered by a loan agreement entered into by the parties subsequent to the primary contract, which contained an arbitration clause. Apparently it had not been argued by the Respondent's counsel that the disputes between the parties were not restricted only to the loan agreement but also partially emanated from the primary contract itself. It is this argument that was pressed in the Review which has now been decided by the impugned Order dated 8th April, 2010. The argument canvassed before us is that the Judge is functus officio as soon as the Petition under Section 11 is decided/disposed of. The controversies raised in that Petition cannot be revisited by the same Judge inter alia because a Review has not been provided for by the Act. The question which immediately emerges is whether the impugned Order, firstly in the exercise of the powers of Review, and secondly, the granting of the Review, can be assailed by way of an Appeal before the Division Bench.

2. The salient provisions of the A and C Act for our purpose are Section 2(e) which defines 'Court' to mean the principle Civil Court of original jurisdiction in a district, which includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject-matter of a suit. Although the provisions of Section 9 are not relevant for the present purpose, we shall refer to it only to underscore the use of the word/term 'Court' in that Section and to highlight the absence of any reference to the word 'Court' in Section 11. Sub-section 5 of Section 11 bestows powers on a party to request the Chief Justice or any person or institution designated by him to appoint an Arbitrator where one of the parties disputes, delays or obstructs such an appointment. Sub-section 6 of Section 11 again makes no mention of a 'Court' but rather, as in the mould of the foregoing sub-section, refers to the Chief Justice or any other person or institution designated by him to take necessary measures for the appointment of the Arbitral Tribunal. Sub-section 7 thereafter declares that a decision rendered under the foregoing sections shall be final. Section 37(1) is to be found in Chapter IX which deals with Appeals. It states that an Appeal shall lie from orders granting or refusing to grant any measure under Section 9 or setting aside or refusing to set aside an arbitral award under Section 34.

3. Learned Counsel for the Appellant has emphasized upon the settled legal position that the power of Review has to be granted by statute. Since the AandC Act does not envisage the exercise of such powers, it is contended by him that the impugned Order tantamounts to 'usurpation of power' which calls for corrective action. The question that arises is whether, assuming that the impugned Order is not predicated on any known source of jurisdiction, an Appeal against such an Order is maintainable in view of Section 11 (7) read with Section 37 of the AandC Act. In response thereto learned Counsel for the Appellant has endeavoured to rely on Order 47 which is the fasciculus dealing with Review. He further argues that a reading of the Order 43 Rule 1 (w) of the CPC leaves no manner of doubt that the impugned Order, inasmuch as it grants the Application, is appealable by virtue of that provision.

4. Obstacles before the Appellant, however, still remain insurmountable. The gravamen of the argument of learned Counsel for the Appellant is that a Review is impermissible and yet, in order to sustain the Appeal, reference and reliance is being placed by him on provisions of the CPC dealing with a Review. We see this as an inherently contradictory stand. The learned Single Judge has stated that inasmuch as he was seised with an application under Section 11, he was functioning as a Civil Court. As has already been mentioned, Section 11 does not employ the word 'Court' whereas Section 9 does. Moreover, as we shall discuss presently, the Constitution Bench has clarified in SBP and Co. v. Patel Engineering Ltd. (2005) 8 SCC 618 that the Judge deciding an application under Section 11 does so not as an administrative functionary but as a judicial one. It is a misnomer that every judicial decision partakes of a civil nature.

5. Countenancing this conundrum learned counsel for the Appellant has drawn our attention to the decision of the Three Judge Bench in Kapra Mazdoor Ekta Union v. Birla Cotton Spinning and Weaving Mills Ltd. (2005) 13 SCC 777. Their Lordships noted that the Industrial Disputes Act, 1947 does not grant any power of Review. Even so, a distinction was drawn between a Review on merits as against a procedural review. The Court had reiterated the legal principle that a Review on merits is permissible only if that power is vested by the statute, either expressly or by necessary implication; that there exists no inherent power for this exercise. In the opinion of the Court since it is not necessary to disclose an error apparent on the face of the record in the case of a procedural review, and the Applicant needs to allude to nothing beyond the record, such a procedural review is available to the Court. Their Lordships followed and applied the ratio in Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal, 1980 Supp. SCC 420; J.K. Synthetics Ltd. v. CCE, (1996) 6 SCC 92 and M.P. Electricity Board v. Hariram, (2004) 8 SCC 246. Applying these pronouncements, it is contended by learned Counsel for the Appellant that Review was available only for restricted purposes, and if that is so, the Appeal is maintainable under Order 43 Rule 1(w). The Appeal has also generated lengthy argument on the nature of an Order passed under Section 11, that is, whether it is a judicial or an administrative Order.

6. The Constitutional Bench in SBP and Co. after considerable, complete and comprehensive analysis had observed in paragraph 18 and then had digested its findings in paragraph 47, both of which are reproduced for facility of reference:-

"18. It is true that the power under Section 11(6) of the Act is not conferred on the Supreme Court or on the High Court, but it is conferred on the Chief Justice of India or the Chief Justice of the High Court. One possible reason for specifying the authority as the Chief Justice, could be that if it were merely the conferment of the power on the High Court, or the Supreme Court, the matter would be governed by the normal procedure of that Court, including the right of appeal and Parliament obviously wanted to avoid that situation, since one of the objects was to restrict the interference by courts in the arbitral process. Therefore, the power was conferred on the highest judicial authority in the country and in the State in their capacities as Chief Justices. They have been conferred the power or the right to pass an order contemplated by Section 11 of the Act. We have already seen that it is not possible to envisage that the power is conferred on the Chief Justice as persona designata. Therefore, the fact that the power is conferred on the Chief Justice, and not on the court presided over by him is not sufficient to hold that the power thus conferred is merely an administrative power and is not a judicial power."

47. We, therefore, sum up our conclusions as follows:-

(i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.

(ii) The power under Section 11 (6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of the Chief Justice as conferred by the statute.

(iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge.

(v) Designation of a District Judge as the authority under Section 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act.

(vi) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would not interfere with the orders passed by the arbitrator or the Arbitral Tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Section 37 of the Act or in terms of Section 34 of the Act.

(vii) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that Court is a judicial order, an appeal will lie against that order only under Article 136 of the Constitution to the Supreme Court.

(viii) There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under Section 11 (6) of the Act.

(ix) In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.

(x) Since all were guided by the decision of this Court in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11 (6) of the Act.

(xi) Where District Judges had been designated by the Chief Justice of the High Court under Section 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the High Court concerned or a Judge of that Court designated by the Chief Justice.

(xii) The decision in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. is overruled.

7. When the Chief Justice or his delegate exercises judicial power is it akin to that of a Civil Judge, or does he act in a specialized and distinct jurisdiction under the AandC Act. Section 5 of the Act prescribes that "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." Regretfully, the phrase judicial authority has not been defined under the statute. Logically, however, it cannot be synonymous to the word "Court" as defined in Section 2(i) (e). The confusion has been confounded because of hasty drafting by the Legislature. We must be mindful that ITI Ltd. v. Siemens Public Communications Network Ltd., AIR 2002 SC 2308 holds that in the context of Section 37 it would not be logical to hold that CPC does not apply. Their Lordships had noted that there is no express prohibition against the application of the CPC by the Act. This provision provides for an appeal against decisions under Section 9 and Section 34 which necessarily has trappings similar to that of a Civil Court. This reasoning does not hold good for Section11.There can be no cavil that the power of review has to be specifically granted by the statute.The AandC Act as well as Industrial Disputes Act, Motor Vehicles Act etc. do not bestow Review powers on the Court, whilst the AandC Act does so for the Arbitral Tribunal. The position so far as Appeals are concerned is altogether different and invariably every statute clarifies whether or not Appeals are available. Even in the case of a Review the Hon'ble Supreme Court has in numerous pronouncements held that no power of Review is exercisable by an Authority unless the statute specifically provides so. In Kashinath G. Jalmi (Dr.) v. The Speaker, (1993) 2 SCC 703 Their Lordships held in context of Schedule X of Constitution of India that the Speaker, while functioning as a statutory authority under the Tenth Schedule, has no power to review his decision on the question as to disqualification of a member of a House on grounds of defection. In Kuntesh Gupta Dr.(Smt.) v. Management of Hindu Kanya Mahavidyalaya, Sitapur (UP), (1987) 4 SCC 525 Their Lordships in case of the Vice-Chancellor acting in a quasi judicial capacity under U.P. State University Act, 1973 held that, in absence of any statutory provision, Vice- Chancellor was not competent to review his or her order under UP Universities Act. In Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, 1971 (3) SCC 844, while analyzing the provisions of Saurashtra Land Reforms Act, 1951 the Supreme Court held that -

"It must be remembered that Mr Mankodi was functioning as the delegate of the State Government. The order passed by Mr Mankodi, in law amounted to a review of the order made by Saurashtra Government. It is well settled that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. No provision in the Act was brought to notice from which it could be gathered that the Government had power to review its own order. If the Government had no power to review its own order, it is obvious that its delegate could not have reviewed its order. The question whether the Government's order is correct or valid in law does not arise for consideration in these proceedings so long as that order is not set aside or declared void by a competent authority. Hence the same cannot be ignored. The Subordinate Tribunals have to carry out that order. "

8. A Learned Single Judge of this Court in Shivraj Gupta v. Deshraj Gupta, R.P.No.445/2007 has opined in the Judgment dated 22.2.2008 that Orders under Section 11(6) of the Act are not passed by a "Court". It was noted that in SBP and Co. the Supreme Court was quick to clarify that the provisions of the CPC was intentionally ordained not to be available in the context of Section 11 of the AandC Act. This was because the Legislature deliberately departed from the use of the word "Court" in Section 11 since it was desirous of eradicating dilatory litigation in the shape of Appeals. The Judgment of the learned Single Judge was taken in Appeal by way of Special Leave to Appeal (Civil) No.7082/2008 but this analysis of the law was not disturbed.

9. A similar conclusion has also been arrived at by a Single Bench of the Karnataka High Court in RP 8/2010, Future Metal Private Limited v. STCL Ltd., viz that a Review Petition is not maintainable in respect of an Order passed under Section 11(6) of the AandC Act. A Single Bench of the Kerala High Court in R.P.No.1162/2008 titled Sanjay Gupta v. Kerala State Industrial Development Corporation Ltd. has observed that the Chief Justice or Judge of the High Court merely acts as a statutory authority in terms of Section 11 and not as the High Court Judge; hence, since the power of Review has not been expressly conferred, a Review Petition is not maintainable. In M/s Manish Engineering Enterprises v. Managing Director, IFCO, AIR 2008 All.56, the Hon'ble Chief Justice H.L.Gokhale, (as his Lordship then was) dismissed the Application for Review holding that an Order can be reviewed only in the event that there is a procedural irregularity; that a substantive review would not be available.

10. There are two chamber decisions of the Hon'ble Supreme Court which must also be considered. In Jain Studios Ltd. v. Shin Satellite Public Co.Ltd. , (2006) 5 SCC 501 a Review was held to be maintainable by drawing up Article 137 of the Constitution which preserves this power, but obviously only to the Supreme Court of India. This decision, therefore, is not an authority for the proposition that a Review is maintainable before the High Court.

11. In Rodemadan India Ltd. v. International Trade Expo Centre Ltd., (2006) 11 SCC 651 one of the interesting question which had been raised was whether exercise of power under Section 11 should be undertaken by a Bench of at least two Judges of the Supreme Court. The decision reiterates the position articulated in SBP and Co., namely, that power under Section 11(6) is the power of a designate referred to under the section and not that of the Supreme Court, albeit that it has now been held to have judicial characteristics. Since this is the power of the Chief Justice and not the power of the Supreme Court, the specification in Order 7 Rule 1 of the Supreme Court Rules, 1966 prescribing the minimum number of Judges, would have no application thereto. It necessarily follows that a chamber decision does not have the trappings of a binding precedent for this very same reason.

12. In Kapada Mazdoor as well as in Grindlays Bank Their Lordships had once again enunciated the difference between a procedural review and a substantive review and had in fact found that the intent of the application was to achieve a substantive review; since the statute did not postulate such a Review, the Court dismissed the Application. In those cases the maintainability of an Appeal against such an Order was not topical, as it is before us.

13. In the case in hand, through the avenue of an application under Order 47 Rule 1 read with Section 151 of CPC, a Review of the Order dated 3.12.2009 had avowedly been embarked upon. As we have mentioned at the outset, the contention was that the disputes between the parties emanated from the principal/primary contract and not merely the subsequent loan agreement. We think that it is impossible for such a plea to fall in the genre of a procedural review. However, we are not called upon to rule on this question. This is for the reason that if the nature of the Application was one of a substantive review then it was not maintainable because of the absence of a provision in the AandC Act investing the powers of Review. This is all the more evident when it is kept in mind that a decision under Section 11 of the Act is not taken by a "Court". Therefore, Order 47 can obviously not be resorted to. Alternatively, if the purpose of the subject application was to carry out a procedural Review, such a power being foreign to the CPC and probably drawing upon "general principles of law" for its existence, Order 43 Rule 1 (w) would not be available to the Appellant. In this event, the Appeal would not be sustainable by invoking Order 43 of the CPC.

14. We have already adverted to an argument of the learned Counsel for the Appellant to the effect that the Learned Single Judge had usurped powers in allowing the Review. We may also reiterate

Please Login To View The Full Judgment!

that what the Learned Single Judge has ordered was in the nature of a substantive review, which exercise appears to us to be without jurisdiction. Will then the decision of the Privy Council in Hurrish Chunder Chowdhry v. Kalisundery, (1883) ILR 9 P.C.482 come to the Appellant's succour? It is true that the Privy Council had opined that if jurisdiction has been usurped it would constitute a valid ground of appeal; that if a Judge of a High Court makes an Order under misapprehension of the extent of his jurisdiction, the High Court has power for setting right such a miscarriage of justice. The distinguishing feature so far as we are concerned is that we are not dealing with a decision of a "Court". The correction can uncontrovertedly be carried out by the Supreme Court if powers under Article 136 of the Constitution are invoked. Arguably the same result may be achieved by filing a curative petition under Article 226 of the Constitution, but this avenue has till date not been traversed by anyone, if our memory serves us correctly. Curative petitions have till now been the preserve of the Apex Court. 15. SBP and Co. clarifies that a decision under Section 11 is of a judicial nature. Section 5 of the Act places an embargo on a judicial authority from intervening in any dispute except where so provided by the statute. Section 11(7), we may reiterate, takes pains to state that decision under Sections 11 (4)to(6) are final. Once they attain finality the person passing the Order is rendered functus officio. This conclusion is arrived at de hors Section 37 of the Act which in terms invalidates the competence of the present Appeal. SBP and Co. itself clarifies that an Order passed under Section11 can be assailed under Article 136 of the Constitution. That is the remedy which the Appellant before us could have elected to. Despite our view that the impugned Order is not sustainable in law as it runs counter to the precedents on the point we abjure from setting it aside. This is for the reason that we hold that the Appeal is not maintainable. Keeping in perspective the industry and yet the brevity of counsel for the Appellant, we desist from imposing Costs. Order accordingly.