Judgment Text
Nitin Jamdar, J.1. The Central Railway has challenged the arbitral Award dated 4 February 2019 by way of this petition under Articles 226 and 227 of the Constitution of India.2. The Petitioner’s case is as follows. The Construction Department of the Central Railway awarded a contract to the Respondent on 31 December 2001 and 31 March 2002. The contract was for extension of the railway platform and foot short bridge between Dombivali and Thakurli railway stations in Kalyan District. On 2 January 2004 the foot short bridge collapsed during construction. The Railway authorities investigated the incident and prepared a report. The contract was terminated. The Respondent invoked arbitration clause on 8 April 2005 raising monetary claims. An Arbitral Tribunal was constituted on 23 May 2006. This Arbitration did not conclude. Second, three member, Arbitral Tribunal was constituted on 31 August 2018. This Tribunal held meetings on 17 December 2018, 29 December 2018 and 7 January 2019. The Arbitral Tribunal passed an award on 4 February 2019. The copy of the Award was sent by the presiding Arbitrator under letter dated 1 March 2019 to the Deputy Chief Engineer on 8 April 2019. No steps were taken to challenge the award during the limitation, and extendable period under Section 34 (3) of the Arbitration and Conciliation Act, 1996. After the period under the Act of 1996 was over, the Petitioner has filed present petition to challenge the arbitral award.3. We have heard Mr. Anil Singh, Additional Solicitor General for the Petitioner and Dr. Birendra Saraf, Senior Advocate for the Respondent.4. A preliminary objection is raised by the Respondent to the maintainability of the writ petition. We have heard the Counsel on the maintainability of the Petition.5. Mr. Anil Singh, the learned Additional Solicitor General argued as follows. The award being without jurisdiction and nullity, the writ petition is maintainable. Merely because the time limit under the Act of 1996 to challenge the award has lapsed, the jurisdiction of the High Court under article 226 and 227 of the Constitution of India to examine the correctness of the arbitral award is not taken away. The Arbitral Tribunal appointed its own surveyor and has not relied on the statutory inquiry under the Railways Act 1989. Evidence was not led nor the Arbitral Tribunal called for written notes circulated elaborating this contention. The Arbitral Tribunal has proceeded on presumption and there were errors in assessment of evidence. The Arbitral Tribunal has gone beyond the statutory investigation report. The Arbitral Tribunal has awarded interest not stated in the contract. For these reasons the award is nullity and without jurisdiction . The Petitioner is a public body and large sums of public funds are involved. A disciplinary inquiry is being initiated against those responsible for the delay. It cannot be that there is no remedy to the Petitioner. Reliance is placed on the on the decisions of Supreme Court in Punjab State Power Corporation Limited Vs. EMTA Coal Ltd., & Ors. (MANU/SCOR/38257/2020), State of Rajasthan & Ors. Vs. Ferro Concrete Construction Pvt. Ltd. & Ors. (MANU/SC/1067/2009), G. Ramegowda & Ors. Vs. Special Land Acquisition Officer, Bangalore (MANU/SC/0161/1988), and of this Court in Dowell Leasing and Finance Ltd. Vs. Radheshyam B. Khandelwal & Ors. (MANU/MH/0498/2007).6. Dr. Birendra Saraf, the learned Senior Advocate for the Respondent submitted as follows. The jurisdiction of the High Court under article 226 and 227 of the Constitution of India is not to be exercised to set aside an arbitral award. Even otherwise, there is no patent lack of jurisdiction in the Arbitral Tribunal. The arguments advanced are on the merits of the award. After the stipulated time limit, the arbitral Award cannot be questioned under the Act of 1996. The legislative policy of incorporating a bar of limitation cannot be defeated by exercising the writ jurisdiction. If writ petitions are entertained in this manner, every litigant would file a writ petition after being negligent in not approaching the Court in the stipulated time period. There is no special status accorded to the Petitioner- Union of India in the Act of 1996. If held otherwise, it will encourage the Government to ignore statutory time limits. The Petitioner is remediless because of its inaction. Reliance is placed on the decisions of the Supreme Court in: PAM Developments Pvt. Ltd. Vs. State of West Bengal (2019) 8 SCC 112); Union of India Vs. Popular Construction Co. 6; SBP & Co. Vs. Patel Engineering Ltd. & Anr.7 M/s. Deep Industries Limited 2 3 4 5 6 (2001) 8 SCC 470 7 (2005) 8 SCC 618 Vs. Oil and Natural Gas Corporation Ltd. & Anr. 87. Two main topics arise for consideration. First, the law on challenge to an arbitral award under Article 226 and 227 of the Constitution of India generally. Second, the law on the challenge to an arbitral award under article 226 and 227 of the Constitution of India after the limitation period under the Act is over.8. The Supreme Court in the case of M/s. Deep Industries Limited, considered the exercise of jurisdiction by the High Court under Article 227 of the Constitution of India in the context of the Act of 1996. This case arose from a contract between appellant therein and the respondent Oil and Natural Gas Corporation Limited. A sole arbitrator was appointed to decide disputes between the parties. After the claim petition was filed the appellant was black listed. An application was moved by the appellant to amend the petition and to challenge the order of black listing. The amendment was granted. The application under section 16 of the Act of 1996 was moved before the arbitrator stating that aspect of the black listing would be outside the arbitrator’s mandate. The application under Section 16 of the Act of 1996 was dismissed by the arbitrator. So also the application under Section 17 was also disposed of staying the order of black listing. The appeal against the order under Section 17 was rejected by the City Civil Court under Section 37 of the Act of 1996. An application was filed under Article 227 of the Constitution of India in the High Court 8 Civil Appeal No. 9106 of 2019. of Gujarat. A preliminary objection was raised that the petition under Article 227 should be dismissed at threshold. The High Court, however, without answering this question went into the merits and allowed the petition. Supreme Court noted that the matter arose before High Court from the order of the subordinate court. The Supreme Court observed that the statutory policy of the Act is set down for time limits disposal of the arbitral proceedings and Section 34 references. The court observed that this being the case, if petitions were to be filed under Articles 226 and 227 of the Constitution against orders passed in appeals under Section 37, the arbitral process would not concluded for many years. The Supreme court also commented on the plenary nature of Article 227 which remains untouched by the non-obstante clause of Section 5 of the Act. The Supreme Court however cautioned that the High Court would be extremely circumspect in interfering under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act and ensure that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction. Having expounded the legislative policy thus, the appeal was allowed by the Supreme Court. In the case of Punjab State Power Corporation Pvt. Ltd., the applicant had directly challenged an order passed by the Arbitral Tribunal against under Section 16 of the Act of 1996 under Article 227 of the Constitution of India in the High Court. The Supreme Court observed that the reference in M/s. Deep Industries Ltd that Article 227 is a Constitutional provision does not mean that High Courts can indiscriminately exercise the power under Article 227 entertaining challenges to the judgments allowing or dismissing the appeals under Section 37 of the Act. Similar is the position the case of the decision of Division Bench of this Court in Dowell Leasing & Financing Ltd. Therefore these decisions do not assist the Petitioner. Petitioner has not challenged the order passed in appeal under Section 37 of the Act of 1996 by a Court subordinate to the High Court as was the case before the Supreme Court but is directly challenging the award by a Petition under Article 226 and 227 of the Constitution of India. The Supreme Court in SBP & Co. disapproved the stand adopted by some of the High Courts that any order passed by the arbitral tribunal can be corrected by the High Court under Article 226 or 227 of the Constitution. The decision in SBP & Co. is rendered by the bench of seven learned Judges and it lays down the position of law such an intervention by the High Courts is not permissible.9. The arguments of the Petitioner regarding an independent surveyor, statutory inquiry under the Railways Act 1989 and adequacy of evidence, errors in assessment of evidence, grant of interest; are on merits of the challenge to the Award. Contours of Section 34 of the Act of 1996 are now settled by various judicial pronouncements. The concept of inherent lack of jurisdiction and nullity of arbitral awards have acquired a distinct meaning such as non-existence of arbitration agreement and non-arbitrability of the disputes. It is not the Petitioners case that there was no arbitration agreement or that the dispute was not arbitrable. Therefore the contention that arbitral Award itself was nullity and the Arbitral tribunal lacked inherent jurisdiction, cannot be accepted, even assuming this aspect can be gone into.10. The Petitioner, having not applied under Section 34 of the Act in time, is seeking to challenge the award by filing a writ petition under Article 226 and 227 of the Constitution of India. Second issue therefore is whether the challenge to an Arbitral Award under article 226 and 227 of the Constitution of India could be entertained after the limitation period under the Act is over.11. The Act of 1996 is a self-contained machinery for dispute resolution. It lays down a simplified procedure. The arbitrator is appointed by consensus, if not, by the Court. The remedies for challenging the award under the Act 1996 are not limitless. Categories of challenge are limited. They are enumerated in Section 34 (2) of the Act. The legislative intent of speedy disposal of arbitral proceeding is woven through the entire scheme of the Act. A time limit is stipulated under Section 34 (3) of the Act. 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, had a request been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal. The Court may entertain the application within thirty days, if it is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it, butnot thereafter.12. Whether the Court could extend the period under section 34 (3) of the Act by recourse to Section 5 of the Limitation Act, 1963 was considered the Supreme Court in the case of Union of India Vs. Popular Construction Co. (2001) 8 SCC 470).The Supreme Court observed that the words 'but not thereafter' used in the proviso section 34 (3) are crucial which bar the application of Section 5 of the Limitation Act. Supreme Court laid down the law that Court cannot entertain an application to set aside the Award beyond the extended period under the proviso.13. Thus, had the Petitioner filed this petition as an application under Section 34 of the Act of 1996, admittedly it would have been beyond the permissible period and the Court under the Act would be powerless to entertain it. The Petitioner however contends that the powers of the High Court are not fettered by the limitation section 34 (3) of the Act and the High Court is not powerless to grant relief under its writ jurisdiction.14. The question therefore is whether the High Court can exercise powers under article 226 and 227 of the Constitution of India overriding the time limit placed on the challenge to arbitral awards under the Act of 1996. An identical question arose before the Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada & Ors. Vs. M/s. Glaxo Smith Kline Consumer Health Care Ltd. (Civil Appeal No.2431 of 2020, dated 6 May 2020)under the Andhra Pradesh Value Added Tax Act, 2005 Act as to whether the High Court in exercise of its writ jurisdiction could entertain the challenge because statutory remedy of appeal against the order stood foreclosed by law of limitation. Here, the respondent, a trader, filed an appeal against the order passed by the Commissioner of Commercial Taxes which was dismissed as barred by limitation by the Appellate Authority because of expiry of the maximum limitation period of 60 days prescribed under the Andhra Pradesh Value Added Tax Act, 2005 Act. The respondent filed a writ petition to challenge the assessment order. The writ petition was entertained by the High Court and the order passed by the Assistant Commissioner was quashed and set aside. The Revenue filed appeal in the Supreme Court contending that once the respondent failed to avail statutory remedy within time, the High Court ought not have entertained the writ petition. The respondent urged that the High Court had ample power to grant relief under Article 226 of the Constitution of India. The Supreme Court rejected the contention and laid down the following position of law. The powers of the High Court under Article 226 of the Constitution are no doubt wide, but not wider than the powers under Article 142 of the Constitution. There is a distinction between the powers of the High Court under Article 226 and of the power of the Supreme Court under Article 142 of the Constitution of India to do complete justice between the parties. If the Supreme Court may not issue certain directions in exercise of powers under Article 142 of the Constitution, it cannot be that the High Court can take a different approach under Article 226 of the Constitution. The High Court cannot not disregard the statutory period. The High Court should not issue a writ inconsistent with the legislative intent. Doing so would frustrate the legislative scheme and intention behind the statutory provisions. The law laid down Assistant Commissioner (CT) LTU, Kakinada squarely applies to the present case. If the legislative intent is to close the challenge to an arbitral Award after a particular period of time, then it must be adhered to. Therefore this writ petition filed under Article 226 and 227 of the Constitution of India challenging arbitral award after the stipulated time limit under the section 34 of the Act is over, cannot be entertained.15. There is no merit in the submission of the Petitioner that it is rendered remediless which contrary to the Rule of Law. There is a distinction between nonexistence of remedies in law and not availing the remedy within limitation period. The Petitioner falls in the second category. Petitioner is remediless by its own conduct.16. Assuming that reasons for delay could be looked into, no cogent explanation is given as to why the Petitioner could not approach the Court under Section 34 during the time limit permissible under the Act. The averments in paragraph No.8 of the petition only narrate movement of the file from one department to another. It is stated that competent authority has already directed to initiate disciplinary action against the erring officer for delay. Two stands are taken, that the department was clueless as to the legal remedy and there was an administrative delay. None of the reasons are cogent to merit any special consideration.17. Petitioner contends that a public body merits a different approach in the matters of delay. Petitioner places reliance on the observations by the Supreme Court in the case of G.Ramegowda & Ors. where the Supreme Court has laid down the reasons why public bodies need different consideration in the m
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atters of delay condonation. This decision will not assist the Petitioner. This case arose from condonation of delay in a first appeal arising from Land Acquisition Act .The Supreme Court had made the observations in the context of Section 5 of the Limitation Act 1963 which is not applicable to the proceedings under section 34 of the Act of 1996. The decision of the Supreme court in the case of Pam Developers Pvt. Ltd relied upon by the Respondent is on the issue. A question arose before the Supreme Court in this case whether there can be an unconditional stay in the application filed by Government under the amended Section 36(3) of the Act of 1996 in proceeding under Section 34 of the Act of 1996. The State Government argued that it must be treated differently because the Civil Procedure Code 1908 exempts the State Government from furnishing security and making deposit of decretal amount. Special status of the State Government was asserted. The Supreme Court rejected the contention. Court observed that this concept of special status, a relic of colonial era, had no relevance in the scheme of the Arbitration Act. The Arbitration Act is a special Act which provides for quick resolution of disputes between the parties. Section 18 of the Act clarifies that the parties shall be treated with equality. Section 36 of the Arbitration Act also does not provide for any special treatment to the Government while dealing with grant of stay in an application under proceedings of Section 34 of the Arbitration Act. Thus it is laid down that under the scheme of the Arbitration Act, no distinction is made nor any differential treatment is to be given to the Government.18. In view of the above discussion, we conclude that the Writ Petition cannot be entertained.19. Writ petition is rejected. No costs.