Dismissed

Prakash Askaram Jain v. the State of Maharashtra, Food and Urban Supply Department, Mantralaya, Mumbai and Other

Bombay HC23 Jul 2021ARB/9/2019

Case brief

AI extract

What is this about?

The High Court dismissed an application seeking appointment of a new arbitrator under Section 11 of the Arbitration and Conciliation Act. The Court held that a valid award had already been passed by the Additional Collector in 2010, making Section 11 inapplicable. Subsequent appeals to administrative authorities and a Section 34 suit were deemed without jurisdiction.

What did the court decide?

The application under Section 11(6) of the Arbitration and Conciliation Act, 1996 praying for appointment of an arbitrator was dismissed with costs.

Prakash Askaram Jain Vs the State of Maharashtra, Food and Urban… — Arbitration | Bombay HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

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ARBITRATION APPLICATION NO. 9 OF 2019

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Prakash Askram Jain, Age: 65 years, Occu: Business, R/o.: Shahada, Taluka Shahada, District : Nandurbar … APPLICANT Versus

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The State of Maharashtra, Food and Urban Supply Department, Mantralaya, Mumbai – 400 020

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The Divisional Commissioner, Nashik Division, Nashik.

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The District Collector, Dhule, District Dhule.

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The District Supply Ofcer, District Dhule

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… RESPONDENTS

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Mr. G. K. Naik Thigle, Advocate for the Petitioner Mr. S. W. Munde, AGP for Respondents

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CORAM : AVINASH G. GHAROTE, J.

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JUDGMENT RESERVED ON : 16/07/2021 JUDGMENT PRONOUNCED ON : 23/07/2021

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JUDGMENT :

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Heard Mr. Thigle, learned counsel for the applicant and Mr. Munde, learned AGP for the non-applicants.

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It is not in dispute, that on agreement for transport of food grains and other commodities come to be executed, between the applicant, and the Governor of Maharashtra, in pursuance to tenders, invited by the Collector, Dhule on 30/03/2001, which agreement, was for a period of 01/04/2001 to 31/05/2006, at the remuneration, as contained in term no.3

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of the agreement. Mr. Thigale, learned counsel for the applicant, submits, that the contract was extended by two years and was continued till 31/05/2008. The applicant claimed entitlement to rates over and above 5% per year, which claimed to have been was agreed in term no.3 and raised a claim, that he should be paid the diference in rate between what was agreed in agreement and the rates paid for transportation in the other districts due to general increase. As

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this request appears to have been turned down by the District Supply Ofcer, Dhule, the applicant invoked the arbitration

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clause 27, as contained in the agreement dated 30/03/2001.

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The Commissioner, nominated the Additional Collector, to be the Arbitrator vide his order dated 16/02/2010. The Additional Collector, Dhule, by his order dated 20/05/2010 (page 42), rejected the claim of the applicant. The applicant, being aggrieved from the same, approach the Commissioner, who by his order dated 16/06/2011, held, that since the issue regarding diference of rates, related, to the nine districts, therefore it was desirable, that the Government should take a decision, as the Government by the communication dated 08/05/2006, had already directed, that only 5% escalation should be given and nothing else. Mr. Thigale, learned counsel for the applicant submits that this order dated, 16/06/2011, cannot be termed as an award, as nothing was decided by the Commissioner therein, as a result of it, it did not satisfy the requirements of Section 31 of the Arbitration and Conciliation Act 1996 (A & C Act, for short hereinafter). He further submits, that the applicant was instructed to approach the civil court, as a result of which, the applicant fled RCS No. 374 of 2012

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(Prakash Askaran Jain vs. State of Maharashtra and others), which came to be dismissed, on 04/02/2019.

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It is in this background, that the application has been fled for appointment of an independent qualifed arbitrator to adjudicate the dispute in terms of clause 27 of the agreement dated 30/03/2001 within stipulated time.

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Learned counsel Mr. Thigale, contends that the judicial opinion, has always leaned in favour of referring a dispute to arbitration, and wherever, there is any doubt, the dispute should be referred to an arbitrator, for which he placed his reliance upon Vidya Droliya and others Vs. Durga Trading Corporation, 2021 (2) SCC 1 .

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He further submits, placing reliance upon Shailesh Dhairyawan Vs. Mohan Balkrishna Lulla, 2016 (3) SCC

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619 that a purposive construction needs to be adopted, in respect of arbitration maters. Further relying upon Mayavati Trading Private Limited Vs. Pradyuat Deb Burban, 2019

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(8) SCC 714, h e submits that the role of the Court under Section 11, is limited to examination of the existence of an arbitration clause and once its existence is not disputed, there is no other option to the Court, than to appoint the arbitrator.

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He further submits, that considering the nature of the order dated 16/06/2011, passed by the Commissioner, which did not satisfy the requirement of Section 31 of the A & C Act, 1996, the provisions of Section 34 of the A & C Act, 1996 were not available and therefore the order could not be challenged, before the District Judge. He submits, that the absence of challenge, for the above reason, would not come in the way of the applicant, in approaching this Court under Section 11(6) of A & C Act, 1996. He further submits that the order dated 16/06/2011, indicated, that the Commissioner who was acting as an arbitrator, had recused himself, by refusing to adjudicate upon the dispute submitted to him and therefore, had withdrawn from the arbitration, as a result of which, the provisions of Section 15 (1)(a) of the A & C Act,1996 came into play, terminating the mandate of the arbitrator, due to which

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the the requirement of fling of the present application had arisen and in view of the arbitration clause 27 in the agreement between the parties an arbitrator is required to be appointed.

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He further submits, that it is not open for the court, to decide the issue of arbitrability, which has to be decided by the arbitrator.

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He further submits, that the dispute between the parties as raised by the applicant, has not been decided as yet, and since the grievance of the applicant has not been addressed and redressed, the matter requires to be referred to arbitration by appointment of an arbitrator.

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He further submits, that even otherwise, relying on

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TRF Ltd., Vs. Energo Engineering Projects Limited, 2017(8) SCC 377 , that the Commissioner was ineligible to appointed as an arbitrator, therefore, a fresh arbitrator, was required to be appointed. He submits, that the dictum in TRF

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Ltd. (supra), was equally applicable to arbitration prior to the 2015 amendment, which came into force on 28/12/2015.

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He further submits, that even the issue of not approaching, this court under Section 11 (6)(c) of the A & C Act,1996 within a reasonable time of the order dated 16/06/2011, would fall within the four-corners of arbitrability, which can only be decided by the arbitrator and not by this Court under Section 11 (6) of A & C Act, 1996. He further lays emphasis on the language of clause (c) of Section 11 (6) of A &

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C Act, 1996 to contend that the Commissioner, had failed to perform the function entrusted to him, of deciding the dispute and therefore, a contingency was created, whereby the appointment of an arbitrator, became necessary.

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Mr. Munde, the learned AGP, appearing for the nonapplicants, refutes all the contentions raised by Mr. Thigle, learned counsel for the applicant. Mr. Munde submits, that the order dated 16/06/2011, passed by the Commissioner, in pursuance to a reference made to him by invoking clause 27 of

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the agreement dated 30/03/2001, was in fact an award and the only remedy available to the applicant, was to have challenged the same by preferring proceedings under Section 34 of the A & C Act. He invites my attention to the communication dated 20/01/2012, addressed to the applicant, in response to an appeal fled by the applicant on 13/10/2019, against the award dated 16/06/2011 before the Minister for Food and Civil Supplies , wherein it was specifcally brought to the notice of the applicant that the remedy under Section 34 of the A & C Act of 1996 was available to him in respect of the award 16/06/2011 and he should approach the Civil Court for the same. He contends that it was therefore, necessary, for the applicant, to have preferred an objection under Section 34 of the A & C Act of 1996 to the Court competent to entertain it. He submits, that the Civil Judge Senior Division, Dhule, to whom the applicant approach by way of RCS No. 374 of 2012, was not the Court as contemplated by Section 34 of the A & C Act of 1996 and therefore, the decree of dismissal passed therein on 04/02/2019, in RCS No. 374 of 2012 was nonest in the eyes of law.

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He submits that even otherwise, if at all any such application was presumed to be maintainable, considering the contention of the learned counsel for the applicant that the award dated 16/06/2011 was in fact not an award or for that matter, the Commissioner had recused to act or had recused himself and or had withdrawn from the proceedings, it ought to have been fled within a reasonable period of the award dated 16/06/2011 and the present application under Section 11, which has been fled on 11/03/2019, after a period of more than 8 years, was clearly not entertainable in law. Learned AGP, therefore, submits that the application needs to be dismissed.

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For a proper appreciation of the rival contentions, it

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is necessary to note a few dates and events:

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Sr.	ARBIT Date	RATION APPLICATION NO. 9 OF 2019 Event
No.
1.	30/03/2001	Agreement for transportation of grain
		entertained into between the applicant and the
		non-applicant no.1, which was for a period
		from 01/04/2001 to 31/05/2006, which came to

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		be extended for 2 years and therefore, should expired on 31/05/2008. The agreement contained as arbitration clause 27 (page no.23)
2.	20/05/2010	Dispute arose between the parties, due to demand made by the applicant for payment of difference between the rate given to him and average rise in the rate of transportation, in other districts, which demand, was rejected. (page 42)
3.	16/02/2010	The applicant appears to have invoked the arbitration clause, as a result of which, Arbitration Proceedings 2 of 2009 were initiated in which an order was passed on 16/02/2010 (page 110) by the Divisional
		Commissioner, Nashik, authorizing the Additional Collector, Dhule to entertain and decide the arbitration proceedings and further directing the applicant to submit his statement of claim before the Additional Collector, Dhule, within a period of one month, whereupon the Additional Collector, Dhule was directed to hear the applicant and pass an order. (This is reflected from para 1 of the award dated 20/05/2010- page 42) and the proceedings
		appear to have been transmitted to the Additional Collector, Dhule.

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4.	20/05/2010	Arbitration Proceedings No.1 of 2009 were decided by the Additional Collector, Dhule, who
		by an award, rejected the claim of the applicant.(page 42 & 43)
5.	09/12/2010	Being aggrieved by the award by the Additional Collector, Dhule, the applicant filed
		proceedings before the Divisional Commissioner, Nashik, which was again (for the second time) registered as Arbitration Proceedings No. 1 of 2010.
6.	16/06/2011	The Divisional Commissioner, Nashik, passed an order, directing the applicant, to approach the Government in respect of his claim for an increase.(page 36 to 41)
7.	13/10/2019	The applicant filed an appeal before the Hon’ble Minister, for Food and Civil Supplies
		against the order of the Divisional
		Commissioner dated 16/06/2011.
8.	20/01/2012	The applicant was issued a communication by the office of Hon’ble Minister, stating, that the remedy against the order passed by the Divisional Commissioner dated 16/06/2011, was available to the applicant, under Section 34 or 37(1)(6) of the A & C Act of 1996 before the Civil court and therefore, the appeal was not maintainable. (page 44)

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9.	31/03/2012	The applicant, filed RCS No. 374 of 2012 before the CJSD, Dhule, styling it as an application under Section 34 of the A & C Act of 1996.
10.	04/02/2019	The CJSD, Dhule dismissed RCS No.374 of 2012,
11.		No appeal is filed.
12.	11/03/2019	Application invoking Section 11 (6) of the A & C Act, 1996 was filed invoking the arbitration clause 27, praying for an appointment of an arbitrator.

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The arbitration clause 27 reads as under :

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Clause 27 : Any dispute arising under this agreement or in relation thereto including the interpretation of this Agreement either during the continuance thereof or thereafter shall be referred to the arbitration of the Commissioner of the Division where the transport work is to be carried out or any other ofcer authorized by him in that behalf in writing within six moonths of the expiry of the agreement and every such reference will be governed by the provisions of the Arbitration Act, 1940 or any modifcation thereof for the time being in force. The decision of such arbitrator

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shall be fnal and binding on the parties to this agreement.

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(emphasis supplied)

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The prayer in the application, reads as under :

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“(A) The application may kindly be allowed.

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(B) Respondent authority may kindly be directed to make appropriate appointment of independent arbitrator in view of clause 27 of the agreement dated 30/03/2001 (Exh.B).

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be passed in favour of the applicant as the facts and circumstances of the case may warrant.”

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A bare perusal of the arbitration clause 27 in the agreement dated 30/03/2001, would indicate that it was permissible for the arbitrator i.e. Commissioner, to authorize any other ofcer, in writing, to conduct the arbitration. The order dated 16/02/2010 by the Divisional Commissioner, in this regard assumes signifcance, inasmuch as, it authorizes, the Additional Collector, Dhule to conduct the arbitration, which is refected, from para 1 of the award dated 20/05/2010 (page

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42). The order complies with requirement of clause 27 of authorizing any other ofcer in that behalf in writing to conduct the arbitration, as it is in writing and is signed by the Divisional Commissioner, which is addressed to the applicant . This order dated 16/02/2010 is not disputed by the applicant. It is not disputed, that in pursuance to this order dated 16/02/2010, authorizing the Additional Collector, Dhule, to enter into arbitration in terms of clause 27, the applicant, had approached the Additional Collector and had fled his claim before him which were registered as Arbitration Proceedings No. 01 of 2009. It cannot be disputed, that in these proceedings, on 20/05/2010, the Additional Collector, Dhule, passed an award, rejecting the claim fled by the applicant. This award, is in writing and contains the reasons for rejecting the claim of the applicant. This award dated 20/05/2010 therefore satisfes all the requirements of an award as enumerated as in Section 31 of the A & C Act, 1996. It was thus, necessary, for the applicant, to initiate proceedings, under Section 34 of the A & C Act, 1996, before the appropriate authority, in this regard, for challenging the award

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dated 20/05/2010. This however, has not been done, as a result of which the award dated 20/05/2010 passed by the Additional Collector, became fnal. The contention of Mr. Thigle, learned Counsel for the applicant, that this is not an award but merely is an order, cannot be accepted for the reason that the same has been passed in Arbitration Proceeding No. 1/2010 which were registered consequent to the applicant having invoked the arbitration clause no. 27, in pursuance to which the Divisional Commissioner, had authorized the Additional Collector to hear and decide the arbitration proceedings, due to which the applicant went before the Additional Collector, fled his claim and took the award dated 20.05.2010.

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The challenge, to this award dated 20/05/2010, passed by the Additional Collector, Dhule, before the Divisional Commissioner, Nashik by way of an appeal and its consequent registration, as Arbitration Proceedings No. 01/2010 and the further order thereupon on 16/06/2011 by the Divisional Commissioner, are all without jurisdiction whatsoever. The

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perusal of the order dated 16/06/2011 passed by the Divisional Commissioner, indicates in para 1 thereof, that the proceedings before the Divisional Commissioner, had been fled being aggrieved by the award dated 20/05/2010, passed by the Additional Collector, Dhule, in Arbitration Proceedings initiated before him and thus would be proceedings ini appeal. By no stretch of imagination, the award of the Additional Collector, could have been challenged before the Divisional Commissioner, Nashik, for the reason as indicated above, any challenge was permissible only by invoking Section 34 of the A & C Act, 1996, which would lie before a Court as defned in Section 2 (1)(e) of the A & C Act, 1996. The Divisional Commissioner, Nashik, was thus not the authority before whom any challenge to the award by the Additional Collector Dhule, dated 10/05/2010 could have been maintained.

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Even otherwise, once the arbitration clause 27 stood invoked by the applicant and in terms of clause 27 the Divisional Commissioner, nominated the Additional Collector, Dhule to entertain and decide the arbitration proceedings by

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his order dated 16/02/2010, clause 27 could not have been invoked again before the Divisional Commissioner, by fling arbitration proceedings. Thus, the order dated 16/06/2011, passed by the Divisional Commissioner, construed in any manner, was clearly without jurisdiction altogether as the Divisional Commissioner could not have entertained either an appeal against the award of the Additional Collector, dated 20/05/2010, nor could have entertained any independent arbitration proceedings by virtue of clause 27.

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The matter does not rest here, but foundered vagrantly and aimlessly which is indicated from the fact, that against the order of the Divisional Commissioner dated 16/06/2011, an appeal came to be fled before the concerned Minister, which was not entertained by intimating to the applicant, that the proper recourse, would be the invocation of the provisions under Section 34 or 37 (1)(6) of the A & C Act, 1996, which is indicated by the communication dated 20/01/2012.

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The aimless wandering did not stop there, but surprisingly, RCS No. 374 of 2012, came to be fled before the Civil Judge Senior Division, Dhule, invoking Section 34 of the A & C Act, 1996. The title of the suit and the prayer made therein, for the sake of ready reference are reproduced as under:

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“nkok % & :i;s 1]000@& rkdhnh eukbZ gqdweklkBh vkchZVª s’ku o fjdUlhfy,’ku vWDV 1996 dye 34 vUos-

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Prayer : 17- rjh oknhph fouarh dh] v½ izfroknhauh izkeq[;kus izfroknh u- 2 ;ksuh oknhus dsysY;k vUUk /kkU; okgrwdhps ljkljh Qjdkph njok< jDde fuf’pr dj.;kpk fu.kZ; o oknhl vnk dj.;kpk rkdhnh eukbZ gqdwe oknhps ykHkkar izfroknhafo:/n Ogkok]

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c½ nkO;kpk oknhpk [kpZ izfroknh ua-1 o 3 dMwu nsookokd½ brj U;k;kps gqdwe oknhps ykHkkar Ogkosr“

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The Civil Judge Senior Judge Senior Division, Dhule, dismissed the suit.

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It is beyond comprehension as to how proceedings under Section 34 of the A & C Act, 1996, were fled before the CJSD, Dhule, were registered as RCS No. 374 of 2012 or for

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that matter went to trial and resulted in the passing of a judgment and decree on 04/02/2019, may be of dismissal. Needless to say, that the institution, consideration and decision of RCS No. 374 of 2012, all is absolutely without jurisdiction altogether, as the CJSD, Dhule, cannot be considered to be a Court under Section 2(1)(e) of the A & C Act, 1996, so as to entertain and decide proceedings under Section 34 of the A & C Act, 1996.

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It is, thus evident, that all the proceedings right from the one fled before the Divisional Commissioner, Nashik, the appeal before the Minister, and the institution and decision of RCS No. 374 of 2012 are all without jurisdiction whatsoever.

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It is thus, apparent that what was indeed an award and was required to be challenged by invoking Section 34 of the A & C Act, 1996, was the award passed by the Additional Collector, Dhule on 20/05/2010, which has not been done and thus has now attained fnality.

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The contention of Mr. Thigle, learned counsel for the applicant, that the provisions of Section 11 (6) are now invocable by the aid of clause (c) of Section 11(6) or Section 15 (1)(a) of the A & C Act, 1996, is absolutely without any substance whatsoever, as the arbitration clause has already been invoked and an award has been passed consequent to such invocation, by the Additional Collector, Dhule, in Arbitration Proceeding No. 1 of 2010, on 20/05/2010, as a result of which, the arbitration clause, stands worked out fully, and now cannot be invoked again.

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26. The reliance on Vidya Droliya (supra), Mayavati Trading

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(supra), Shailash (supra) and TRF Ltd.,(supra) is clearly misplaced, as in none of the above judgments, situation arose where the arbitration clause was invoked and an award was already passed. Any change of arbitrator, due to the mandate of Section 12 of A & C Act,1996 by introduction of the Sixth Schedule w.e.f. 23/10/2015, even if it is held to be applicable retrospectively,would only apply to pending arbitration proceedings and not to proceedings which already stood

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concluded by passing of an award. Similarly, the contention that arbitrability is to be decided by the arbitrator, does not in

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any way assist the learned counsel in view of the fact, that Section 11 (6) of the A & C Act, 1996, is not open to be invoked as the award already stands passed by the Additional Collector on 20/05/2010. The application, purely appears to have been fled, upon a misconception, that the arbitration clause is still alive and is not worked out, which is not the case at all in view of what has been said above.

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Even presuming the contention, of Mr. Thigle, learned Counsel for the applicant that the order dated 16/06/2011 by the Commissioner was not an award and the Commissioner, had recused / withdrawn himself from the proceedings or had refused himself from the proceedings or had refused to act as per the mandate conferred upon him, thereby attracting section 15 (1) (a) of the A & C Act, 1996, any application if at all the same could have been said to have been permissibly (which has already been held not to be so) ought to have been fled within a reasonable time and the

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delay of more than 8 years is clearly fatal. The entire purport of an arbitration clause and its invocation and institution of consequent proceedings after expeditious decision of disputes, which stands totally frustrated by any delay. On this count also, the application could not be tenable.

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The application, therefore, is clearly misconceived and is not maintainable in law also. Thus, for the reasons stated above, the application is dismissed.

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(AVINASH G. GHAROTE, J.)

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VSM/

Prakash Askaram Jain v. the State of Maharashtra, Food and Urban Supply Department, Mantralaya, Mumbai and Other

Case brief

What is this about?

What did the court decide?

Prakash Askaram Jain v. the State of Maharashtra, Food and Urban Supply Department, Mantralaya, Mumbai and Other

Case brief

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What did the court decide?

What the court decided

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