Partly allowed

G.C.Kanungo v. Rourkela Steel Plant

Orissa HC16 Aug 2019ARBP/64/2008

Case brief

AI extract

What is this about?

Chief Justice allowed substitution of a deceased petitioner. Adjudicating arbitration dispute, Court noted jurisdiction on merits previously. Having confirmed arbitration clause and parity with prior appointment, Court referred dispute to the same Arbitrator to adjudicate.

What did the court decide?

Eve substituted as petitioner no. 1(a). Jar presented to the same Arbitrator appointed in ARBP No. 65 of 2008 to adjudicate.

G.C.Kanungo Vs Rourkela Steel Plant — Arbitration | Orissa HC (2019)

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ARBP No.64 of 2008

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I.A. No.31 of 2019

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16.08.2019 Heard learned counsel for the parties.

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This application has been filed for substitution of deceased-petitioner namely G.C. Kanungo by his legal heir, as detailed in the schedule to the application.

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Considering the submissions made and keeping in view the averments stated in the application, the application for substitution is allowed.

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The legal heir of deceased petitioner, G.C. Kanungo, as detailed in the schedule to the application be substituted as petitioner no.1(a).

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Consolidated cause title incorporating the name of the newly substituted petitioner no.1(a) shall be filed. I.A. is accordingly disposed of.

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.…….......……………… ( K.S. Jhaveri ) Chief Justice

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ARBP No.64 of 2008

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16.08.2019 By way of this application under Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner had prayed for appointment of Arbitrator.

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The present case has a chequered history and the opposite parties have successfully managed to drag the proceeding upto 2019 for a contract entered into between the parties vide Agreement No.RMD/1 of 1991-92 and RMD/1 1993-94.

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The petitioner-contractor, who has expired in the meantime, had earlier approached this Court in MJC No.19 of

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2002, filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, for appointment of an Arbitrator. This Court while dismissing the said application on 01.10.2007 has observed as under:

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“ 1.10.2007. Heard learned counsel for the parties.

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This petition has been filed on 30.1.2002 for appointment of an Arbitrator under Section-11 of the Arbitration and Conciliation Act, 1996.

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Today when the matter is called on, learned counsel for the petitioner has not been able to point out the Arbitration Clause in the agreement. Apart from that, no application appears to have been filed invoking the Arbitration Clause. There is also no averment to that effect in the body of the petition.

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As such, this petition is dismissed.”

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Learned counsel for the petitioner contended that in another arbitration case i.e. ARBP No.65 of 2008, which is identically situated with the present arbitration petition for a contract entered into between the same parties vide Agreement No.RMD/1 1993-94, an order is passed today by this Court substituting the earlier Arbitrator. Therefore, the present matter may also be referred to the same Arbitrator to adjudicate the dispute between the parties.

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Learned counsel for the opposite parties-SAIL, Rourkela Steel Plant has produced a date chart with written note of submission on behalf of the opposite parties in Court today, which is taken on record. For ready reference, the said note of submission is reproduced hereunder:

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“ The agreement No.1 of 1991-1992 was executed between the petitioner and the opp. party SAIL, Rourkela Steel Plant, for handling of various type of raw material wagons at different stockyards in Rourkela Steel Plant by the claimant-petitioner.

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Initial contract value was Rs.4,62,84,000/ - . The period of contract was for a period of two years i.e. from 01.04.1991 to 31.03.1993.

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11.02.1999

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After completion of the work, the petitioner submitted the final bill and Rs.12,49,833.50 was paid towards the full and final dues outstanding against the opp. parties. After such payment there was no further claim from the claimant and the contract was closed on payment of such amount.

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30.01.2002-MJC No.19 of 2002

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The present petitioner filed the aforesaid MJC U/s.11(6) of the Arbitration and Conciliation Act, 1996 invoking the power of the Hon'ble Chief Justice seeking appointment of Arbitrator.

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01.10.2007

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The petitioner was dismissed with the following findings:

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I) The learned counsel for the petitioner could not able to point out the arbitration clause in the agreement.

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II) Apart from that, no application appears to have been filed invoking arbitration clause. There is no averment to that effect in the body of the petition.

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S.L.P.(Civil) No.24867 of 2007

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Petitioner by challenging the order of the Hon'ble Chief Justice filed the aforesaid SLP before the Hon'ble Supreme Court.

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10.01.2008

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S.L.P. was dismissed as withdrawn.

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RVWPET No.3 of 2008

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After dismissal of the SLP the aforesaid Review was filed to review the order dt.1.10.2007 dismissing the MJC No.19 of 2002. Though the then Acting Chief Justice dismissed the Review Petition, but by exceeding his jurisdiction made some observation in the order. Thus, the order dtd.10.7.2008 passed by the then Acting Chief

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Justice in the Review Petition are quoted hereunder:-

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“Though there is an Arbitration clause in the agreement, but it was not indicated anywhere that at any point of time, the petitioner approached the opposite parties to appoint Arbitrator and the opposite parties have disputed the amount which is to be paid to the petitioner. Therefore, I see no ground for review of the order except granting liberty to approach again to the Chief Justice invoking jurisdiction under Section 11 of the Arbitration and Conciliation Act.

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Therefore, the review petition was disposed of without interfering with the order dtd.01.10.2007 passed in MJC No.19 of 2002, with the observation that it will be open for the petitioner to approach the chief Justice again U/s. 11 of the Arbitration and Conciliation Act, in case there exists dispute as mentioned in the Arbitration Clause and if the opposite parties concerned failed to appoint Arbitrator provided in the agreement in question”.

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Sd/-I.M.Quddusi, A.C.J.

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ARBP No.64 of 2008

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Though the petition under 11(6) was not maintainable for the second time before the Hon'ble Chief Justice, by taking advantage of the erroneous observation made in the order dtd.10.7.2008, the petitioner again approached this Hon'ble Court by filing this petition.

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SUBMISSION

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In the background of aforesaid factual position, the following points arise for consideration of this Hon'ble Court:-

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i) Whether, the petition is barred by limitation?

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ii) Whether, after dismissal of the first petition under 11(6) of the Act bearing MJC No.19 of 2002 vide order dtd.10.7.2008, the second

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application under 11(6) is at all maintainable again?

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iii) Whether, the plea taken by the petitioner in the present petition that he had approached the M.D. by issuing the letter dtd.29.12.2001 and accordingly complied the appointment procedure provided under the Arbitration clause, is barred by the principle of constructive resjudicata?

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iv) Whether, while dismissing the review petition the observation made in the order dtd.10.7.2008, had conferred a right on the petitioner to again approach this Hon'ble Court by invoking the power under 11(6) of the Act seeking appointment of Arbitrator?

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LIMITATION

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In reply to point No.1 formulated above, it is humbly submitted that the agreement in question was entered into between the petitioner and the opposite parties vide RMD No.1 of 1991-92. As per the document under Annexure-A to the Counter Affidavit, the opposite parties have made final payment towards the claim of the petitioner amounting to Rs.12,49,833/- on dtd.11.02.1999.

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The position of law is well settled that any application is made either U/s.20 of the Arbitration Act, 1940 or U/s.11(6) of the Arbitration and Conciliation Act, 1996, the period of limitation for filing of such application is to be governed under Article 137 of the Limitation Act. Section 43 of the Arbitration and Conciliation Act, 1996 clearly provides that the Limitation Act, 1963 shall apply to Arbitrations as it apply to proceedings in Court. In view of the aforesaid legal position as settled by the Hon'ble Apex Court and in view of the statutory provision enacted U/s.43 of the Arbitration Act, the petition U/s. 11(6) of the Arbitration Act would be governed under Article 137 of the Limitation Act. Article 137 of the Limitation Act is a residuary Article to guide the limitation for filing of any suit/application/Civil proceedings in a Court or Tribunal where no limitation is specifically prescribed under any of the provisions of the Limitation Act. Under Article 137 of the Limitation

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Act, the period of three years for filing of the application is to be started from the date when right to sue accrues. In the present case the final payment with regard to the work under RMD No.1 of 91-92 was made to the petitioner on 10.02.1999. Therefore, the limitation for filing of the application before this Hon'ble Court U/s. 11(6) for appointment of Arbitrator was expired on 11.2.2002. This application having been filed on 10.9.2008 i.e. after expiry of more than six years, the same is grossly barred by limitation and as such the petition is liable to be dismissed on this ground alone.

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(1997) 9 SCC-97 AIR 1995 SC 1927 AIR 2001 Delhi 82 (2005) 8 SCC-618 AIR 1977 SC-282

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Applicability of Section 14 of the Limitation Act

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It is further submitted that the petitioner before expiry of the period of limitation as stated above had in fact approached the Hon'ble Chief Justice by filing MJC No.19 of 2002, U/s.11(6) of the Arbitration Act on 30.1.2002. The said MJC was dismissed on 01.10.2007. Thereafter the petitioner being aggrieved by the order dtd.01.10.2007 passed in MJC No.18 of 2002, had approached the Hon'ble Apex Court by filing S.L.P.(Civil) No.24867 of 2007. The SLP was dismissed as withdrawn on 10.01.2008. The present ARBP No.64 of 2008 was filed before this Hon'ble Court on the date as aforesaid. Therefore, the question would arise whether the period undergone for prosecuting the earlier proceedings would be excluded for the purpose of computing the period of limitation. In such a contingency, Section 14 of the Limitation Act is the only provision available to meet the situation.

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I) Section 14(I) provides for computation of the period of limitation in relation to suit which would be excluded, if the Plaintiff prosecuting another civil proceedings in any Court who had no jurisdiction to try the same.

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(II) Sub-section-2 of Section 14 is applicable to the applications relatable to a Civil Proceeding and is relevant for the purpose of this case. The provision under SubSection 2 of Section 14 is quoted hereunder for ready reference of this Hon'bel Court.

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“In computing the period of limitation for an application, the time during which the applicant was prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of appeal, revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in the Court which from defect of jurisdiction or any cause of like nature, is unable to entertain it”

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In view of the aforesaid expressed provision made under section 14 of the Limitation Act, the parties seeking its benefit must satisfy the Court that; (i) "the party as the petitioner/Plaintiff was prosecuting another Civil Proceeding with due diligence". (ii) "that the earlier proceeding and the later proceeding relate to the same mater in issue" and (iii) "the former proceeding was being prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature is unable to entertain it ".

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By interpreting Section 14 of the Limitation Act, the Hon'ble Supreme Court have thus laid down the law:-

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"When the expression of Section 14 as a whole reads "from defect of jurisdiction or other cause of a like nature is unable to entertain it" the expression "cause of a like nature" will have to be read ejusdem generis with the expression "defect of jurisdiction". So construed the expression "other cause of a like nature" must be so interpreted as to convey something analogous to the preceding words, "from defect of jurisdiction" prima facie, it appears that there must be some preliminary objection which if succeeds, the Court would be incompetent to entertain the proceeding into merits, such defect would be said to be "of the like nature" as defect of jurisdiction. Conversely, if the party seeking the benefit or the provision of

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Section 14 failed in the earlier proceeding on merits and not on defect of jurisdiction or other cause of like nature, it would not be entitle to the benefit of section 14.

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AIR 1985 (SC) 39

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In the present case, it cannot be said that the earlier proceeding bearing MJC No.19 of 2002 filed on behalf of the petitioner U/s.11(6) of the Arbitration Act was a proceeding over which, the Hon'ble Chief Justice had no jurisdiction to entertain such proceeding. As would be revealed from the order dtd.01.10.2007, the said order was passed on merit and was dismissed due to want of materials for appointment of an arbitrator. Against the said order, the Special leave Petition filed before this Hon'ble Supreme Court was also dismissed as the same was withdrawn by the petitioner. Therefore, the net result of dismissal of the earlier arbitration application was not on the ground of lack of jurisdiction or a cause of like nature. But the same was a dismissal on merit by the competent Court having jurisdiction over the matter. Therefore, the time spent from the date of filing of the MJC No.19 of 2002 till to the date of its dismissal cannot be excluded from the purpose of counting the period of limitation in filing the present application U/s.11(6) and therefore the application U/s.11(6) deserves to be dismissed being grossly barred by limitation.

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Maintainability of subsequent petition U/s. 11(6) of the Act

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In reply to point No.II formulated above, it is humbly submitted that the petitioner for the first time incorporated a document in the present petition stated to be issued on 29.12.2001 by him to the Managing Director of SAIL, Rourkela Steel Plant under certificate of posting approaching him for appointment of an arbitrator. In order to satisfy the requisite conditions provided U/s.11(5) and Section 11(6) of the Act, the petitioner had manufactured this purported letter and filed the same in this petition, though the said fact was not stated in the earlier petition. The authenticity of such latter has been strongly disputed by the opposite parties in paragraph-11 of their counter and have specifically stated that at no point of

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time such a letter was ever received by the Managing Director at any point of time. In view of such denial, the legal obligation of the Court to go into the authenticity of such letter and its communication in order to come to the conclusion that the petitioner has satisfied the condition as stipulated U/s.11 of the Act to approach the Hon'ble Chief Justice seeking his intervention for appointment of an Arbitrator U/s.11(6) of the Act.

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The law is fairly settled that when it is asserted by one of the party that a particular letter has been issued under certificate of posting and the acceptance of such letter has been denied by the adversary, in such a situation, the Court has to presume under law that there was no issuance of such letter to the party intended to receive such letter. The Hon'ble Supreme Court by interpreting section 28 of the post office act with Section 114 of the Evidence Act have categorically held thus:-

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" A certificate of posting obtained by a sender is not compatible to a receipt for sending a communication by registered post. When a letter is sent by registered post a receipt with serial number is issued and record is maintained by the Post Office. But when the mere certificate of posting is sought, no record is maintained by the post office either about the receipt of the letter of the certificate issued. The case with which such certificate can be produced by affecting antedated seal with the connivance of any employee of the post office is a matter of concern. The Department of Posts may have to evolve some procedure where by the record in regard to the issuance of certificates is regularly maintained showing a serial number, date, sender's name and address, such a record of certificate of posting may be of very little assistance, where the despatch of such communication is disputed or denied.

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AIR 2006 (SC) 825

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AIR 1979 ORISSA, 130 "

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In view of the aforesaid settled position, no legal presumption can be drawn with regard to the correctness of the alleged letter stated to be issued on 29.12.2001 approaching the Managing Director for appointment of arbitrator in terms of the procedure provided under the agreement. There is no other material available on record except such disputed letter to justify the claim of the petitioner that they had approached the Managing Director for appointment of Arbitrator in terms of Clause-15 of the Agreement. In absence of any other materials, no reliance can be placed on such alleged letter dtd.29.10.2001 to come to a definite conclusion that the petitioner before approaching this Court under 11(6) has satisfied the pre-condition as provided under the Act.

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In the decision reported in (2009) 8 SCC-520 the Hon'ble Supreme Court have clearly laid down the law that "if the arbitration agreement provides for arbitration by a named Arbitrator, the Courts should normally give effect to the provisions of arbitration agreement referring the dispute to the named arbitrator shall be the Rule. Ignoring the named arbitrator/arbitral tribunal and nominating an independent arbitrator shall be the exception to the Rule to be resorted for valid reason.

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(2009) VII SCC-520 "

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RESJUDICATA

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In reply to point No.III formulated above, it is humbly submitted that, it is the admitted position that in the earlier proceeding i.e. MJC No.19 of 2002, the petitioner had not taken the plea that he had approached the M.D., RSP by issuing letter dtd. 29.12.2001. The petitioner has taken such plea for the first time in the present proceeding by producing such letter which was legally presumed to be available with him at the time when the earlier proceeding was initiated U/s.11 (6) of the Act. The aforesaid letter is being produced from the custody of the petitioner, which could have been produced by him in the earlier proceeding. Section 11 explanation (iv) CPC clearly provides that any matter which might and ought to have been made a ground of defence or attack, in such former suit shall be deem

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to have been a matter directly and substantially in issue in such suit. The plea which might and ought to have been made a ground of attack or defence in the earlier suit, but was not taken by any of the parties, will also be deem to have been a matter directly and sustainably in issue in such suit and the rule of resjudicata will equally apply to it. Such a matter is regarded as have been constructively in issue and since the parties had an opportunity of putting it forward; it is considered as having been actually controverter and decided.

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AIR 1965 SC-1150 AIR 1977 SC 1980

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In view of the aforesaid principle, the petitioner having not produced the purported letter dtd.29.12.2001 in the earlier and taken the plea that he had approached the Managing Director of the RSP, which he could have taken there. Such plea in the present proceeding, is clearly barred by rule of resjudicata and the petition is liable to be dismissed on this ground.

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Maintainability of Review

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In reply to Point No.IV formulated above, it is humbly submitted that after dismissal of MJC No.19 of 2002 vide Order dtd.01.10.2007, the petitioner had approached the Hon’ble Supreme Court in SLP (Civil) No.24867 of 2007 and the same was dismissed on dtd.10.01.2008. The petitioner after dismissal of the SLP, filed review application No.3 of 2008 before the Hon’ble Acting Chief Justice, though, as would be seen from the order passed in the review petition, the Hon’ble ACJ was not inclined to interfere in the order passed in the MJC dismissing the same, but however, the review petition was disposed of with an observation that in case there exists dispute as mentioned in the arbitration clause and the opposite party failed to appoint arbitrator as provided in the agreement in question, the petitioner is at liberty to approach again to the Chief Justice invoking jurisdiction U/s.11 of the Arbitration Act.

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The aforesaid observation of the Hon’ble Acting Chief Justice was against the fundamental principle of law due to following reasons;

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(i) A provision for review is not normally procedural at all.

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(ii) Review is in the nature of a remedy and is a substantive part. Therefore, when the legislature has consciously given U/s 11(7) of the Arbitration Act finality to a decision of the Chief Justice or his designate U/s.11(6) of the Arbitration Act and has not provided for review, then to read a right of review in such provision by an interpretation process would amount to amending the statute by reading something to which is clearly not there. Such an interpretation would fall foul of Section 5 of the Arbitration Act”.

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This Hon’ble Court by interpreting the position law in the decision reported in 2007 (supply) OLR 545 has come to the conclusion that against an order passed under Section 11 (6) of the Arbitration Act, the Chief Justice had no jurisdiction to entertain a review application and therefore, the filing of the review petition against the order of the Chief Justice is not maintainable in the eye of law.

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2007 (supply-II) OLR-545

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The principle is also well settled that if a Court or the Tribunal has passed an order in a proceeding, having no jurisdiction to pass such an order, the said order will be regarded as a nullity in the eye of law and cannot be accepted for any purpose.

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43 (1977) CLT-681

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In view of this legal position, as the review petition was not maintainable before the ACJ from its very inception, the order granting liberty to file a fresh application U/s.11(6) of the Arbitration Act was totally without jurisdiction. The order passed on such review petition cannot confer a right on the petitioner to approach the Hon’ble Chief Justice again by invoking the jurisdiction U/s 11(6) of the Arbitration Act, particularly when the earlier application was dismissed on merit. Therefore, the present petition by invoking the jurisdiction of the Hon’ble Chief justice U/s.11 (6) of the Act is clearly not maintainable and deserves to be dismissed.

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This Hon’ble Court has further held in the decision reported in 2007 (Sup-2) OLR 545 that against an order passed U/s.11(6) of the Act, the only remedy is available to the party to approach the Hon’ble Supreme Court under Article 136 of the Constitution of India.

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The petitioner having approached the Hon’ble Court by filing SLP (Civil) No.24867 of 2007 and the said SLP having been dismissed as withdrawn, the fresh petition under 11 (6) of the Act for the second time is clearly an abuse the process of the Court and as such deserves to be dismissed.

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In view of the position of law as stated above, the petition filed by the petitioner seeking appointment of arbitrator by invoking the power U/s.11(6) of the Act is liable to be dismissed being devoid of any merit.”

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Perused the aforesaid notes submitted by the opposite parties in detail. In my considered opinion, when an arbitrator was already been appointed between the same parties for the same contract, which has achieved finality, on the principle of parity, this Court is of the opinion that since there is an arbitration clause in the contract and there are certain disputes and differences between the parties, this matter is also required to be adjudicated by the Arbitrator.

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Further, this Court while deciding the issue of appointment of Arbitrator has to decide whether there is arbitration clause or not. On perusal of the earlier orders, it appears that there was no arbitration clause and now it is admitted by learned counsel for the opposite parties that there is an arbitration clause in the Agreement and, therefore, the matter is referred to the Arbitrator. This Court is not supposed to decide all the issues which have been raised by learned counsel for the opposite parties.

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In that view of the matter, this matter is also referred to Shri Justice J.P. Das, a former Judge of this Court, whom this Court has already appointed today in the other matter i.e. ARBP No.65 of 2008 to adjudicate the dispute between the parties. The venue of the arbitration shall be at High Court of Orissa Arbitration & Mediation Centre, Cuttack. The parties are directed to appear before the Arbitrator and the learned Arbitrator shall conclude the proceeding in accordance with law. It will be open for the opposite parties to raise all such contentions as are available to them in law before the Arbitrator.

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It is needless to say that the fees of the Arbitrator shall be as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015.

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ARBP is accordingly disposed of.

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Issue urgent certified copy as per rules.

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This order be communicated to Shri Justice J.P. Das, forthwith.

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.…….......………………

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( K.S. Jhaveri ) Chief Justice