Partly allowed

Subhransu Ku.Das v. M/S.L and T Finance Lt

Orissa HC17 Jul 2019WP(C)/81/2012

Case brief

AI extract

What is this about?

The High Court set aside an order of the Sole Arbitrator under Section 17 of the Arbitration and Conciliation Act, 1996, holding that the Tribunal must first decide the petitioner's objection regarding its competence before proceeding with ancillary relief applications.

What did the court decide?

The impugned order under Section 17 of the Arbitration and Conciliation Act, 1996 is set aside. The Arbitral Tribunal is directed to first decide the competency objection before deciding the applicati

Subhransu Ku.Das Vs M/S.L and T Finance Lt — Arbitration | Orissa HC (2019)

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W.P.(C) No.81 of 2012

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6. 17.07.2019

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Heard Shri S. Mohanty, learned counsel for the petitioner and learned counsel for the opposite parties.

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This Writ Petition involves the following prayer:

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“In the light of above stated circumstances, it is therefore humbly prayed before this Hon’ble Court that it may graciously be pleased to admit this Writ application, issue notice to opp. Parties and after hearing the parties be pleased to issue writ in the nature of certiorari to quash the order dated 28.11.2011 passed by Learned Arbitrator in Arbitration Case No.531/2011 under Section 17 of Arbitration and Conciliation Act, 1996, in the interest of justice,

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And may further be pleased to quash the arbitration proceedings in Arbitration case No.531 of 2011 pending in the file of Sole Arbitrator Bharat B Jain, Mumbai, in the interest of justice.”

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Looking to the pleadings and considering the statement made herein by Shri Mohanty, learned counsel for the petitioner this Court finds, the impugned order herein has been challenged on the sole core that while not adjudicating the question of competency of the authority undertaking the arbitration proceeding specifically indicated in the response to the arbitration claim, the Arbitral Tribunal should not have entered into the matter taking a decision on the application U/s.17 of the Arbitration and Conciliation Act, 1996. Further, taking this Court to the prayer involving the application U/s.17 of the Act, 1996, Shri Mohanty, learned counsel for the petitioner submitted that for the multiple prayers therein the Arbitral Tribunal went wrong in permitting the claimant to take possession of the property therein and even permitting him to sale the same. Taking this

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Court to the observation part in the impugned order, learned counsel for the petitioner also submitted that for the dispute the Tribunal should not have taken a decision involving the application under Section 17 of the Act, 1996.

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Ayas

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Considering the submission of Shri Mohanty, learned counsel for the petitioner and going through the preliminary objection filed on behalf of the respondent therein and the petitioner herein, this Court from paragraph no.5 at page 44 of the brief finds, there is a clear objection with regard to the competency of the Arbitral Tribunal and even an objection is also raised in that regard. This Court finds, despite filing objection in the year 2011 there is no asking by the respondent to the Arbitral Tribunal to first adjudicate the matter involving the competency of the Arbitral Tribunal. Therefore, this Court observes, there appears, there is no serious dispute on this objection as of now. Now coming to the dispute involving the application U/s.17 of the Act, 1996, this Court finds, there is a clear provision in the Act, 1996 for ensuring the protection of the interest of the claimant involving the Arbitration proceeding till a decision is taken by the Arbitral Tribunal. Admittedly, the Arbitration proceeding is pending and the parties are participating in the main proceeding. Therefore, there is no difficulty in filing an application U/s.17 of the Act, 1996.

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Be that as it may, for the objection raised herein and as the Arbitration proceeding remains to be adjudicated involving a question, to find out whether the

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claim is sustainable or not, it becomes incumbent on the part of the Arbitral Tribunal to first decide his competency and then to proceed with the matter provided he find himself competent to deal with such matter, this Court reading the application U/s.17 of the Act, 1996 finds, the claimant therein had sought for the following reliefs:

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(a) Pending the hearing of the arbitration proceedings, this Hon’ble Tribunal be pleased to pass an order giving permission to the claimant to take the possession of the said asset being 1 No.AL 2214 Super having Chassis No.LNA091762 & Engine No.MNH521638, more particularly described in Exhibit “G” to the Petition hereto, from wherever it may be situated with the liberty to the claimant to sale the same by way of private treaty and the claimant be allowed to appropriate the sale proceeds of the said Asset towards the outstanding loan amount of the Respondent s as per the terms of the said Agreement.

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(b) In the alternative to prayer (a) herein above; the Respondents may be ordered and directed to deposit a sum of Rs.460479/- being an amount of the Claimants claim under the above Arbitration proceedings for any other amount as may be deemed fit and proper by this Hon’ble Tribunal to secure the Claimant’s claim as more particularly set out in Claimant’s particulars of claim being Exhibit “E” to the statement of claim;

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(c) In the alternative to prayer 1) and b) herein above; pending the hearing and final disposal of the Arbitration proceedings or at any time after the making of the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act, 1996, the Respondents be directed to furnish the Solvent security of whatsoever nature to the sum of Rs.460479/- (Rupees Four Lacs Sixty Thousand Four Hundred & Seventy Nine Only), towards the claim of the Claimant as of 04/08/2011 with further compensation @36% per annum from 05/08/2011, till payment and/or realization, in order to protect and/or secure the said amount as per particulars of claim being Exhibit “E” to

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the statement of claim, within the stipulated period as this Hon’ble Tribunal deem fit and proper;

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(d) Pending the hearing and final disposal of the arbitration proceedi9ngs or at any time after the making of the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act, 1996, the Respondent/s, their respective servant/s, agent/s, representative/s and/or any person or persons be restrained by an order and injunction of this Hon’ble Tribunal in any manner dealing with an/or disposing of and/or creating third party rights and/or alienating and/or encumbering and/or interfering with the possession of the Asset described in Exhibit “G” to the Petition;

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(e) Pending the hearing and final disposal of the Arbitration Proceedings or at any time after the making of the Arbitral Award but before it is enforced in accordance with Section 36 of the Arbitration and Conciliation Act, 1996, the Respondents be directed to disclose the unencumbered properties of the Respondents including the personal assets of the Respondents both movable and immovable on oath within the stipulated period as this Hon’ble Tribunal deem fit and proper, in order to secure and/to protect the claim of the Claimant;

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(f) For costs of this Petition be provided for;

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(g) This Hon’ble Tribunal be pleased to grant such further and other reliefs favor of the Claimant considering the facts and circumstances of the case;”

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Considering the rival contentions of the parties, for the pendency of the arbitration proceeding and since the entitlement on the claim by the claimant is yet to be adjudicated, in the interest of justice, in an attempt to protect the interest of the claimant and also while protecting interest of the respondent therein, the respondent should have been at least directed to furnish the bank gurantee therein or a portion involved therein. It

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is, at this stage of the matter, Shri Mohanty, learned counsel for the petitioner submitted that there is even no claim up to the level of Rs.4,60,479/-. In such view of the matter and as a question of competency of the Arbitral Tribunal is already involved by way of objection to the main claim, this Court finds, the Arbitral Tribunal should not have entered into considering the application U/s.17 of the Act, 1996 ahead of taking a decision on the objection of the petitioner regarding competency of the Arbitral Tribunal. In such view of the matter, this Court interfering in the impugned order, sets aside the same but as a fresh adjudication of the proceeding U/s.17 of the Act, 1996 is required, this Court directs the Arbitral Tribunal to first take a decision on the competency issue and thereafter, if permissible and the Arbitral Tribunal gets competency to adjudicate the matter, then will decide the application U/s.17 of the Act, 1996, but however involving the parties involved herein.

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The Writ Petition stands disposed of with the above direction.

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Issue urgent certified copy as per rules.

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…….………………… (Biswanath Rath, J.)

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Subhransu Ku.Das v. M/S.L and T Finance Lt

Case brief

What is this about?

What did the court decide?

Subhransu Ku.Das v. M/S.L and T Finance Lt

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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