Section 2(1)(h) and 34 (3) - Meaning of delivery of award by the Tribunal to the 'party'

2005(1) RAJ 506 (SC)
Union of India Vs Tecco Trichy Engineers & Contractors
Decided on 16.3.2005

The Southern Railway entered into a contract with the Respondent and the contract was signed by the then Chief Project Manager, presently the Chief Engineer (CE). When disputes arose, in exercise of the power conferred by the arbitration clause in the contract, the General Manager (GM), Southern Railway, appointed an arbitrator as well as the presiding arbitrator. The tribunal so constituted gave its award, a copy of which was delivered on 12.3.2001 in the GM's office and receipt of the same was acknowledged by someone in the office. The CE received the award copy on 19.3.2001.

On 10.7.2001, the CE applied for setting aside the award and an application for condonation of delay of 27 days was filed under S.34(3), based on the assumption that the award was received on 19.3.2001. The Respondent contested this application saying that the award was delivered on 12.3.2001 and the High Court agreed with the Respondent.

It was held that according to Section 31(5), 'after the arbitral award is made, a signed copy shall be delivered to each party'. Section 2(1)(h) defines a "party" as meaning 'a party to an arbitration agreement'. The court examined the meaning assigned to the term "party" in the context of the State or a Government Department, esp. a large organization like the Railways.

It is well known that the Ministry of Railways has a very large area of operation covering several divisions with different division heads and departments with their own department heads. The GM, at the apex position, holds responsibility for strategic decisions, organizational policies, administrative instructions etc. The day to day management and operations of different departments rest with different department heads, who are directly connection with their department's functioning and is alone expected to know the progress of the matter pending before the arbitral tribunal.

Thus, in a large organization like the Railways, "party" as referred to in Section 2(1)(h) r/w Section 34(3) has to be construed to be a person directly connected and involved in the proceedings and who is in control of the proceedings before the arbitrator.

The delivery of an arbitral award, to be effective, has to be 'received' by the party and this delivery by the tribunal and receipt by the party sets in motion several periods of limitation, therefore it is an important stage in the arbitral proceedings.

The court held that in the present case, the CE had signed the agreement on behalf of the Railways. In the arbitral proceedings, he represented the organization and notices were served on him. Even the award clearly mentioned that the Railways is represented by DY. CE/Gauge Conversion, Chennai. The subject matter of arbitration related to the department of the CE. Therefore, the High Court had erred in its decision and the Claimant's application for setting aside the award is allowed.

1999(1) RAJ 385 (Del)
Kitechnology NV Vs Unicor GMBH Plastmaschinen

Both the parties to the agreement were foreigners and the agreement specifically agreed that the agreement was to be governed by German laws, the dispute was to be resolved by arbitration and the seat of arbitration was to be at Frankfurt.

It was held that this Act applies in cases where one or more parties is a foreigner but the place of arbitration is India. According to the arbitration agreement of the parties, the German court has exclusive and competent jurisdiction with respect to the dispute.

It follows that where the parties to the agreement were foreigners and the place of arbitration was not in India and a foreign law was applicable, then provisions of Part I of this Act are not applicable. In view of Section 2(2), this is not international commercial arbitration to which Part I will apply. Therefore an application under Section 9 is not maintainable.

1998(2) RAJ 141 (Cal)
ITC Classic Finance Ltd Vs. Grapco Mining & Co

The issue came up as the present application had annexed with it, Xerox copies of the lease agreement which also formed part of the plaint filed in the suit. The said lease agreements were relied upon by both the parties and it was not disputed that the said Xerox copies were indeed true copies of the original documents. It was held that the Xerox copies of the said lease agreement containing the arbitration clause were in sufficient compliance with Section 8(2) of the Act.

2000(3) RAJ 511 (P&H)
Punjab State Cooperative Supply and Marketing Federation Ltd Vs. Shiv Rice and General Mills

The question that arose before the court was about the permissibility of reference of disputes to an arbitrator during the pendency of a suit in the Civil Court.

It was held that the courts cannot restrain the arbitrator from proceeding in arbitration or restrain the defendants from proceeding with arbitration before the arbitrator.

The plea regarding jurisdiction of the arbitrator could be raised before the arbitrator and if the arbitrator did not agree to the plea and an award was passed against the plaintiff, then the plaintiff was competent to challenge the same u/s 34 of the 1996 Act and the Court was competent to set aside the award if it dealt with a dispute not contemplated by or not falling within the terms of the arbitration clause.

Section 8(3) contemplates a situation where the matter may be pending before the Court and still the arbitration may be commenced or continued and an arbitral award made. The aggrieved party may challenge the award u/s 34 of the 1996 Act.

2005 (1) RAJ 225 (Raj)
Air Conditioning Corporation Ltd, Calcutta Vs. Rajasthan Agriculture University, Bikaner

According to the facts, a dispute arose between the parties which was referred to arbitration in 1999. While the proceedings were going on, the petitioner filed an application u/s 17 for interim measures which was allowed by the arbitrator in 2002. The Respondent appealed before the District Judge Bikaner u/s 37 and the order was set aside. Aggrieved by this decision, the petitioner filed the revision petition which was allowed.

The petitioner, in 2004, had filed another application u/s 151 CPC stating that since the arbitrator had passed the final award in 2003, which was published in 2004, the respondent should be directed to pay according to the terms of the award.

It was held that there is no dispute that if any final order is passed in the proceedings before any forum, the life of the interim order comes to an end with the passing of the final order in that proceeding. In the present case, the arbitrator had passed an interim award in 2002, which was set aside by the District Judge. However, with the passing of the award in 2003, the life of the interim order dt. 2002 passed away and therefore, this revision petition has become infructuous.

It was further held that this Court cannot given any directions for execution of terms of the final award because it will be the domain of the Executing Court before whom the execution petition for executing the award is filed.

AIR 1999 (SC) 565
Sundaram Finance Ltd Vs NEPC India Ltd

This case discussed the similarity between Section 9 of the 1996 Act and Article 9 of UNCITRAL Model Law which states that "It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure"

Article 9 seeks to clarify that merely because a party to an arbitration agreement requests the court for an interim measure "before or during arbitration proceedings", such recourse would not be regarded as being incompatible with an arbitration agreement. Arbitration may commence and continue notwithstanding a party having approached the court for interim protection.

The expression "before or during arbitration proceedings" used in Section 9 seems to have been inserted with a view to give it the same meaning as those words in Article 9 of UNCITRAL Model Law.

2001(3) RAJ 433 (Del)
Bharti Televentures Ltd Vs DSS Enterprises

In the instant case, DSS filed an injunction suit restraining CGL from selling or transferring its shares in Skycell.

It was held that although the provisions of Section 9 cannot be resorted to for interim measures where the parties have chosen a foreign forum for arbitration, the fact remains that such a step cannot constitute a waiver or abandonment of the arbitration clause.

In Sundaram Finance Ltd Vs NEPC Ltd [1999(1) RAJ 365], it has been held that when a party applies u/s 9, it is implicit that it accepts that there is a final and binding arbitration agreement in existence. When such an application is filled before the commencement of arbitration proceedings, there has to be manifest intention on the part of the applicant to take recourse to arbitral proceedings. Thus, the mere filing of application u/s 9 by any of the parties does not operate waiver or estoppel from invoking the arbitral proceedings.

Similarly, the suit filed by DSS does not operate as a waiver as it was a suit for injunction restraining CGL from transferring or selling its shares in Skycell and was not covered by Section 62 of the Indian Contract Act not was it a suit with regard to the provisions of the Joint Venture Agreement. It relates to the Articles of Association of the company.

2003(4) RAJ 661 (All)
Payal Enterprises Vs Union Of India

An application u/s 11 for appointment of arbitrator was pending before the Chief Justice. The question that arose was whether application u/s 9 was to be filed before the Chief Justice in view of Section 42 of the Act.

Held, it is true that Section 42, which defines jurisdiction, says that where with respect to an arbitration agreement, any application under this part has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court only. The word 'court' as defined in Section 2 (1)(e) means the principal civil court of original jurisdiction or the High Court exercising original civil jurisdiction.

It is settled view that the Chief Justice acting u/s 11 of the Act does not act judicially and therefore is not a court as defined in Section 2(1)(e). Therefore the application u/s 9 is not maintainable before the Chief Justice and it will lie before the Court as defined in Section 2(1)(e)., ie. The principal civil court of original jurisdiction ie. The District Judge

2000(4) RAJ 512 (Del)
Naval Gent Maritime Ltd Vs Shivnath Rai Harnarain

According to the facts, the Respondent is an Indian company whose assets are entirely located in India. The proceedings were initiated in England. The issue was whether interim injunction could be granted in India.

It was held that so long as the territorial jurisdiction of the court is present, relief should not be declined on technicalities which are not representative of any equities in favour of the Respondents. Since the Respondent's properties are located in India, the umbilical cord of territoriality is clearly visible.

In the case 'The Channel Tunnel Group Vs Balfour Beatty Construction Ltd & Ors [1993(1) All ER 64], it was held that the English courts possessed inherent powers to grant interim relief even where the seat of arbitration was not in England. This view has now obtained statutory sanction in terms of the English Arbitration Act. This is the ubiquitous view internationally. There is no reason to adopt a pedantic approach, thereby rendering the legal regime in India dissimilar to that prevailing in other parts of the world.

The globe is now becoming a village and persons will have increasing power to choose between several available courts, so long as the choice is not capricious, relief should not be denied.

2001(1) RAJ 93 (Del)
Marriott International Inc Vs Ansal Hotels Ltd

The parties had agreed to have their disputes referred to the arbitration of the Kuala Lumpur Regional Centre for Arbitration (KLRCA) in accordance with their rules. Under Rule 1, the disputes were to be settled in accordance with the UNCITRAL Arbitration rules subject to modification as set forth in the KLRCA Rules. However, the KLRCA Rules made a departure from the UNCITRAL Model Laws and had made no provisions like our Article 9 in Part II of the Act.

The counsel for one of the parties argued that in case the provisions of the India Act did not apply, the Court had inherent powers u/s 151 CPC to pass an interim order.

The Court agreeing on otherwise, held that in case this Court, in view of S.2(2), does not have any jurisdiction to pass an interim order contemplated by S.9, then the Court cannot exercise inherent powers and thereby confer upon itself a jurisdiction not conferred by law. To exercise any inherent power, the Court must have jurisdiction over the proceedings over it.

However, a party is not left remedyless n as much as it can approach the Arbitral Tribunal for passing appropriate orders to take interim measures as it may deem necessary in respect of the subject matter of the dispute. The Tribunal may pass such interim measure in the form of an interim award, which may be enforced as an arbitral award.

2000(2) RAJ 112 (All)
Deepak Mitra Vs District Judge, Allahbad

The permissibility of application for interim measures, independent of substantive proceedings was discussed in this case. This Court chose to disagree with another recent decision of Delhi High Court [Ashok Chawla Vs Rakesh Gupta: 1996(37) DRJ 566] which had taken the view that a petition u/s 9 is not entertainable except in the course of proceedings for substantive relief under the Act.

This Court, on the other hand, held that the letter and spirit of Section 9 indicate that it is a self contained provision contemplating that a party may make independent and substantive application under this provision. The party need not have made an application for substantive relief in relation to arbitration matters and in such proceedings, only should have made an application for interim relief u/s 9.

It was further held that the only source of powers of the Court to make orders by way of interim measures is Section 9 and there is not independent power dehors that provision. The Court is aware that the case law on this point is exiguous which may, however, grow only with the passage of time but the interpretation that the Court may make interim measures independent of any substantive proceedings appears to be consistent with the changes brought about by the 1996 Act.

2002(1) RAJ 285 (Del)
Arun Kapoor Vs Vikram Kapoor

According to the facts, the parties had referred their dispute to a sole arbitrator and terms of settlement of interim arrangement was reached before the Tribunal. The petitioner had moved twice before the arbitrator to obtain injunction and had failed in the attempt. Thereafter, he filed an application for an identical injunction in this court, during the pendency of arbitral proceedings.

It was held that it is a cardinal rule that if the party invokes preliminary alternative remedy before the Arbitral Tribunal, it is debarred from invoking the jurisdiction of the Court u/s 9. Ordinarily, if the arbitrator is seized of the matter the interim relief should not be entertained and the parties should be advised to approach the arbitrator unless and until the nature of relief intended to be sought falls outside the jurisdiction of the arbitrator or beyond the terms of the agreement or reference of disputes. Otherwise the very object of adjudication of disputes by arbitration would stand frustrated. A party should be discouraged to knock on the door of the Court, particularly when the arbitrator is seized of all the relevant or even ancillary disputes.

2002(1) RAJ 40 (Mad)
Kamala Solvent Vs Manipal Finance Corporation Ltd, Manipal

The applicant herein had invoked the provisions of Section 9 (ii)(e) and had filed the present application seeking an injunction restraining the 3rd respondent (who is the sole arbitrator) from proceeding further with the proposed arbitration.

It was held that such an application is unsustainable since under the agreement, the applicant had admittedly given consent for the appointment of the 3rd respondent as sole arbitrator and also for the venue of the arbitration proceedings. This being the case, it is not open for the applicant now to challenge the appointment of the arbitrator.

1998(1) RAJ 540 (Del)
National Building Construction Corpn Ltd (NBCC) Vs IRCON International Ltd.

The petitioner had moved the court u/s 9 for interim relief, however, the matter was neither referred to arbitration not was anything done to move for reference.

It was held that Section 9 provides that a party may, before or during arbitral proceedings or at any time after making of the arbitral award but before it is enforced in accordance with Section 36, may apply to the court for interim injunction. In this case, the matter has neither been referred to arbitration nor has anything been done so far to move for reference. Since no steps for substantive relief on it had been taken, the petitioner's application was dismissed.

2003(2) RAJ 582 (Mad)
Hairtha Finance Ltd Vs ATV Projects India Ltd

The applicant had filed an application u/s 9(ii) for interim protection and the Counsel for the respondent objected that since there is a dispute regarding appointment of the arbitrator, which itself pending, the applicant cannot sustain the application filed u/s 9 (ii) (a), (b), (c) or (e).

It was held that such a submission cannot be countenanced. Section 9 can be invoked even without referring the dispute to the arbitrators as the requirement is that there should be a dispute which is referable to the arbitral tribunal. It was not disputed that such a requirement was in existence in this case.

2003(2) RAJ 163 (Bom)
Maharashtra State Electricity Board Vs Datar Switchgear Ltd

This case discussed the scope of power of the court u/s 9 vis a vis the powers granted to the arbitrator u/s 17. The court held that if the power that has been conferred upon the court u/s9 is compared with the power conferred on the arbitral tribunal u/s17, it is immediately noticeable that the court can exercise its power either before or during arbitral proceedings or even thereafter upon making of the award but before it is enforced. The Act does not contemplate interference of courts at the interim stage in matters of jurisdiction of the Tribunal or n challenges to the existence or validity of the arbitration agreement.

u/s 9(ii)(e), the court is conferred with residuary power which is sufficiently wide to provide an avenue of redressal to ensure and protect a party against abuse of the arbitral process and grant such interim protection as it may appear to the court to be just and fair. Unlike the power of the arbitral tribunal u/s17, which is co-extensive with the continuation of arbitral proceedings, the power of the court u/s 9 arises both before and during arbitral proceedings and even thereafter. The court must be bound by the general discipline of the Act, which constitutes a code in itself, that discipline being of limited judicial intervention. Therefore, in consonance with the norm of restricted judicial intervention, the court has to assess whether a strong prima facie case has been made out for the exercise of its jurisdiction u/s 9(ii)(e).

A prayer for relief u/s 9(ii)(e) is not a substitute for enforcing the order of the tribunal. A willful disregard of the tribunal's order must be shown to exist. The court has to exercise its powers u/s 9 with caution and circumspection. A default in effecting payment cannot be a ground in itself to justify exercise of power by the court u/s 9.

2003(3) RAJ 554 (Mad)
Sivananda Steels Ltd Vs India Cements Capital Finance Ltd

There was a hire-purchase agreement b/w the parties in respect of machineries. The appellant company was declared sick u/s 3(1)(o) of SICA Act. An arbitrator was appointed to adjudicate the claim. When the appellant committed a default, the respondent invoked section 9 of the Act, as the machineries in question were owned by the respondent. The question that arose was whether proceedings u/s 9 were barred by Section 22(1) and 32(1) of SICA.

It was held that the action initiated by the respondent u/s 9 of the Act was not inconsistent to the SICA Act, Rules or Schemes, both on the score of general overriding provisions in Section 32(1) as also the specific overriding provisions in sub sections 16(5), 22(1), 22(2),22(3), 22(4) and 23(1). Nothing is indicated that they prevail over the Arbitration Act, ie. Section 32(1) has overriding effect only in respect of those laws which are inconsistent with the said Act on the same subject. The Arbitration Act and SICA Act occupy 2 separate and distinct fields, hence there arises no question of repugnancy between the two.

Here, allowing the appellant company to continue in possession of the machineries belonging to the respondent would cause further liability for the respondent who would continue to suffer loss till the disposal of the case by BIFR or AIFR. Section 22 of SICA was not enacted to aggravate the financial difficulties of a sick company. Therefore sections 22(1) and 32(1) do not bar proceedings u/s 9 of the Arbitration Act.

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