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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION No. 2888 OF 2010.
M/s. Sanwal Coal Carriers,
through its Proprietor,
Shri Rajveersingh Sanwal,
Allapalli Road, Ballarpur,
District - Chandrapur. (MS) ....PETITIONER.
VERSUS
1. Western Coalfields Limited,
through its Chairman cum
Managing Director, Civil Lines,
Nagpur.
2. Western Coalfields Limited,
through its General Manager
(CMC), Civil Lines,
Nagpur.
3. Western Coalfields Lmited,
through its Chief General
Manager, Wani North Area,
Wani, District Chandrapur. .....RESPONDENTS
.
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Mr. G.C. Singh, Advocate for Petitioner.
Mr. S.C. Mehadia, Advocate for Respondents.
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CORAM : B.P. DHARMADHIKARI, J.
Date of reserving the Judgment. - 11th August, 2010.
Date of Pronouncement. - 26th August, 2010.
JUDGEMENT.
1. The challenge in this Writ Petition under Articles 226 and 227
of Constitution of India is to order styled as interim award dated
25/3/2010 by arbitrator in dispute between petition and respondent.
Dispute arose out of contract for driving pay-loaders and tippers for
loading coal into trucks/tippers from ground stock and its transportation.
By consent of parties it has been referred to sole arbitrator Mr. B. R.
Harne on 20/7/2009 under Arbitration and Conciliation Act, 1996
(hereinafter to as “the Act” hereafter). It is not necessary to go into
controversy leading to stoppage or termination of that contract. For
present purposes, it is necessary only to note the case of petitioner that
Chief General Manager of respondent on 20/3/2006 issued a notice to
petitioner to resume work within 15 days and before that on 11/3/2006
work was given to another transporter who started it. It is the case of
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petitioner that report of committee constituted by respondent regarding
imposition of penalty, forecloser /termination and other aspects having
bearing on contract with petitioner indicating conclusions in his favour
as another agency had resume work even before expiry of period of
notice dated 20/03/2006 is being suppressed. It therefore filed an
application before arbitrator on 5/12/2009 to direct respondents to place
on record complete report of that committee. On 16/01/2010 petitioner
pointed out that respondents have on 15/01/2010 refused to submit
complete report by filing application and hence sought hearing on that
application. On 03/02/2010 petitioner placed on record a note
explaining relevance of report of committee and also on other issue of
weighment of transported coal. On 20/02/2010 respondent also placed
its brief note on record. In this background sole arbitrator has passed the
impugned order on 25/03/2010 styling it as “interim report” on its cover
page and as “interim order” at its commencement and also at its end. On
issue no. 1 before him regarding filing of committee’s report, arbitrator
found that that report has no legal standing and it cannot be treated as
relevant document. On issue no. 2 about weighment of transported
coal, he found that system of delivery, weighment and preparation of bill
was without any fault and was accepted by contractor all through the
contract. He also noted that respondents have to prove that coal
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delivered to other contractors was fully accounted for in total coal
transported by petitioner and was paid for. He therefore directed that
both parties should jointly reconcile dispatch data and arrive at correct
figures in this respect. Looking to the nature of controversy, writ petition
is heard finally by making Rule returnable forthwith, by consent.
2. Shri Singh, learned Counsel for Petitioner has contended that
no oral arguments were heard on issue no. 2 and thus findings delivered
thereon are unsustainable. Regarding issue no.1, the learned Counsel
states that grievance as made can be taken note of in writ jurisdiction
and appropriate writ in the nature of prohibition can be issued to
arbitrator. He has relied upon several judgments to drive home this
contention. He has further stated that respondent being public authority
cannot behave like a private individual and refuse to tender on record
relevant piece of evidence. The committee was constituted as per order
dated 10/07/2006 and that committee consisting of superior officers also
invited petitioner and thereafter has submitted a report. Report
considers material on record with evidence and finding therein is in
favour of petitioner. According to him arbitrator cannot be permitted to
proceed further without securing that report on record of Arbitration
proceedings. The finding that report has no legal sanctity or is not
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irrelevant document is also assailed by him in this background.
According to him, arbitrator has no jurisdiction to deliver any interim
award. He points out that no responsible officer of respondents has
passed any order prohibiting production of that report on record. I, find
it appropriate to consider his contention in this respect little latter along
with case law cited by him.
3.
Shri Mehadia, learned Counsel for respondents has stated that
Writ Petition is not maintainable and petitioner has to wait till arbitrator
delivers final award which alone can thereafter be challenged as per
legal procedure. According to him the constitution bench judgment of
Hon’ble Apex Court in SBP &CO. Vs Patel Engineering Ltd and another
reported at (2005) 8 SCC 618 – AIR 2006 SC 450 concludes this
controversy and subsequent judgments of Courts taking view to the
contrary must yield to it. He states that there is nothing wrong with
application of mind on legal status of report of committee by arbitrator
and as there is no jurisdictional error, this Court cannot interfere at this
stage. He further states that when written notes of argument were filed
before arbitrator, grievance about denial of oral hearing is misconceived
and deserves to be rejected. According to him, no writ can be issued
against arbitrator which clearly is only a private administrative body.
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4. Shri Singh, learned Counsel in his reply has contended that
judgments of Hon’ble Apex Court and of Division Bench of this Court
permit intervention in writ jurisdiction in appropriate circumstances to
see that situation does not become irreversible and errors are corrected
without causing any prejudice to the parties. He further invites attention
to various judgments to show how only ratio operates as precedent and
to demonstrate that Hon’ble Constitution Bench does not lay down any
legal proposition binding under Article 141. According to him, en-route
correction in present matter is the most vital need.
5. In SBP &CO. Vs Patel Engineering Ltd and another (supra)
relied upon by respondents, the scheme of the Act is noted and it is laid
down that the party aggrieved by any order of the Arbitral Tribunal,
unless has a right of appeal under Section 37 of the Act, has to wait until
the award is passed by the Tribunal. Approach of High Courts in
presuming that any order passed by an Arbitral Tribunal during
arbitration, would be capable of being challenged under Article 226 or
227 of the Constitution of India is held to be unwarranted. Arbitrator is
found to be a forum chosen by the parties by agreement and intervention
by the High Courts is declared not permissible as the object of
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minimizing judicial intervention will stand defeated if the High Court
could be approached under Article 227 of the Constitution of India or
under Article 226 of the Constitution of India against every order made
by the Arbitral Tribunal. Therefore, Hon’ble Apex Court found it
necessary to indicate that once the arbitration has commenced in the
Arbitral Tribunal, parties have to wait until the award is pronounced
unless, of course, a right of appeal is available to them under Section 37
of the Act even at an earlier stage. Its conclusions separately recorded
also reiterate this principle as :-
“(vi) Once the matter reaches the arbitral tribunal
or the sole arbitrator, the High Court would not
interfere with orders passed by the arbitrator or the
arbitral tribunal during the course of thearbitration proceedings and the parties could
approach the court only in terms of Section 37 of
the Act or in terms of Section 34 of the Act”.
AIR 1999 Bom. 219 (Anuptech Equipments Pvt. Ltd., M/s. v.
M/s. Ganpati Co-op Hsg. Socy. Ltd.) is the judgment of Learned Single
Judge of this Court holding that if against decision by Arbitral Tribunal
remedy is not provided in Act, writ can be issued as tribunal would be
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“person” to whom writ would go under Article 226 of the Constitution of
India.
2008(1) Bom. C.R. 768 — (Dowell Leasing and Finance Co.
vs. Radheshyam B. Khandelwal) is the Division Bench judgment of this
Court which considers Constitution Bench Judgment of Hon’ble Apex
Court in paragraph no. 9 and observers that said judgment does not say
that no writ can go to an Arbitral Tribunal or then such Tribunal is not a
person to whom a writ cannot be issued. Discussion therein shows that
such an intervention is held permissible when there is no other remedy
under the Act. Division Bench of Calcutta High Court in Bharat Sanchar
Nigam Ltd. vs. BMW Industries Ltd reported at A.I.R. 2007 (NOC) 1715
(CAL), has held that power of High Court under Articles 226 and 227 is
a basic structure of Constitution and same cannot be curtailed by Section
5 of Act. In view of the Division Bench judgment of this Court, I do not
find it necessary to refer to other judgment in case of (1997) 3 SCC 261–
AIR 1997 S.C. 1125 (L. Chandra Kumar v. Union of India) about the
basic structure of Constitution.
In (2006) 1 SCC 540 (Transmission Corporation vs Lanco
Kondapalli Power), the appellant before Hon’ble Apex Court contended
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that jurisdiction of civil court was barred because of provisions of A.P.
Electricity Reforms Act, 1998 and Electricity Act 2003. Hon’ble Apex
Court noticed that it raised a tribale issue and hence it was left open for
consideration by High Court in writ petition as well as in application filed
by respondent under Section 11 of Act. In said writ petition, respondent
before Hon’ble Apex Court had sought order restraining commission from
adjudicating the dispute under 1998 Act from High Court. The High
Court had already granted interim relief to respondent in said challenge
to order of Civil Court under Section 9 of Act. The judgment therefore is
of no help in present matter.
6. Petitioner has relied upon (1991) 4 SCC 139– (State of U. P.
and Another vs Synthetics & Chemicals Ltd and another) to point out
how for the purposes of Article 141 “law declared” has been understood.
Decision not express nor founded on the reasons nor proceeding on
consideration of the issue cannot be deemed to be a precedent declaring
law. For same purpose reliance is also placed on (2002) 8 SCC 481-
(T.M.A. Pai Foundation and others vs State of Karnataka and others)
where it is explained that ratio decidendi of a judgment is to be found out
only on reading of entire judgment and it cannot be read as a statute.
A.I.R. 1979 SC 1384 – (Dalbir Singh vs. State of Punjab), is also pressed
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into service by him to show 3 basic ingredients of a binding precedent.
Dowell Leasing & Finance Co. vs. Radheshyam B. Khandelwal
(supra) is the Division Bench judgment of this Court which considers
Constitution Bench Judgment of Hon’ble Apex Court and hence it is not
necessary for me to consider all these judgments of Hon’ble Apex Court.
AIR 2007 S.C. 168 (Paramjeet Singh Patheja v. ICDS Ltd.)
relied on by respondent does not show that a writ cannot be issued to
arbitrator. It holds that no insolvency notice can be issued under Section
9 (2) of the Presidency Towns Insolvency Act, 1909 on the basis of an
Arbitration Award as it does not satisfy any of the requirements of a
decree. Hon’ble Apex Court has pointed out that issuance of a notice
under the Insolvency Act is fraught with serious consequences: it is
intended to bring about a drastic change in the status of the person
against whom a notice is issued viz. to declare him an insolvent with all
the attendant disabilities. Therefore, the Hon’ble Apex Court states that
firstly, such a notice is intended to be issued only after a regularly
constituted Court, a component of judicial organ established for the
dispensation of justice, has passed a decree or order for the payment of
money. Secondly, a notice under the Insolvency Act is not a mode of
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enforcing a debt; enforcement is done by taking steps for execution
available under the C. P. C. for realizing moneys. The words “as if” are
held to demonstrate that award and decree or order are two different
things. The legal fiction created is declared for the limited purpose of
enforcement as a decree. The fiction is not intended to make it a decree
for all purposes under all statutes, whether State or Central.
Observations in this judgment in paragraph 46 and 47 need to be
understood in this background and it does not in any way militate with
the view of Division Bench of this Court in Dowell Leasing & Finance Co.
vs. Radheshyam B. Khandelwal (supra).
7. In AIR 1993 S.C. 352 (R. N. Gosain v. Yashpal Dhir), Hon’ble
Apex Court states that “approbate and reprobate” is not permissible and
said principle, is based on doctrine of election. Law does not permit a
person to both approbate and reprobate. No party can accept and reject
the same instrument and that “a person cannot say at one time that a
transaction is valid and thereby obtain some advantage, to which he could
only be entitled on the footing that it is valid, and then turn round and say it
is void for the purpose of securing some other advantage.” Thus Apex Court
holds that the tenant having given an undertaking in pursuance to the
directions given by the High Court and having availed the protection
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from eviction on the basis of the said undertaking, cannot be permitted
to invoke the jurisdiction of this Court under Article 136 of the
Constitution and assail the said judgment of the High Court. This
principle is not applicable in present matter as respondents have not
chosen to rely upon the report of committee of which production is
sought by present petitioner. If hereafter respondents take shelter of that
report, the petitioner may be justified in invoking this doctrine. AIR
1966 S.C. 875 (Board of High School and Intermediate Education, U. P.
Allahabad v. Bagleshwar Prasad) shows that an order passed by a
Tribunal holding a quasi-judicial enquiry which is not supported by any
evidence, is an order which is erroneous on the face of it and as such, is
liable to be quashed by the High Court in exercise of its high prerogative
jurisdiction to issue a writ under Article 226. The Hon’ble Apex Court
states that inquiries held by such domestic Tribunals in such cases must,
no doubt, be fair and students against whom charges are framed must be
given adequate opportunities to defend themselves, and in holding such
inquiries, the Tribunals must scrupulously follow rules of natural justice,
but it would not be reasonable to import into these inquiries all
considerations which govern criminal trials in ordinary Courts of law.
AIR 1965 S.C. 111 (T. Prem Sagar v. M/s Standard Vacuum Oil
Company, Madras) shows that a writ of Certiorari can be issued and
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decision of Labour Commissioner about question of status though made
final can be quashed by writ if there is error apparent on face of record.
As already noted above, argument is of not granting hearing before
passing orders on issue number 2 about the weighment of transported
coal. Consideration of said issue by arbitrator shows reference to brief
note filed by petitioner before him. Note was in addition to application
i.e. pleadings of petitioner. Petitioner has specifically urged on affidavit
before this Court that said issue was never argued and under directions
of arbitrator, reconciliation was being tried to reconcile the quantity of
transported coal. Affidavit also discloses some CBI inquiry into
unauthorized sale of coal and oral intimation to arbitrator that original
measurement books and records are with CBI and inability to supply
photocopies. These assertions have remained unchallenged in this Court.
I do not find it necessary to conclude any of these facts and findings here
are only on aspect of “hearing”. Grievance of denial of opportunity to
argue with above submission about reconciliation is also made before
arbitrator immediately on 05.04.2010. A brief note is also placed on
record before arbitrator by respondents. Neither “note” filed by
petitioner nor “brief note” filed by respondents mention the same as
written note of argument. Why and whether arbitrator treated it as
written note of arguments is itself not clear. Perusal of other part of
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order on report of committee shows consideration of precedents not
forming part of said note of petitioner. It is therefore obvious that
finding about no fault in system of coal delivery weighment and
preparation of bill or acquiescence therein by petitioner has been
recorded without giving opportunity to the parties. The finding is on
important aspect of controversy and cannot be reopened at least during
pendency of proceedings before arbitrator. If said error is corrected right
now it will save the situation for everybody. Hence interim award/order
on issue no. 2 cannot be sustained. Same is accordingly quashed and set
aside with direction to re-decide the same after giving parties
opportunity of hearing in accordance with law.
8. Issue no. 1 about report of committee has been decided after
oral arguments and also in the light of precedents cited. Committee is
constituted on 10/7/2006 to examine case of foreclosure/termination of
contract and to submit report to managing director of the respondents.
It is obvious that said committee therefore has to look into material like
correspondence, measurement books and other evidence and arrive at its
conclusions and submit the same to Managing Director. The report
therefore is nothing but appreciation of part of controversy by committee
members and said appreciation is not binding on anybody. It appears
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that the committee had also obtained legal opinion and made some
observations about the liability of Petitioner in the matter. These findings
and report of committee at this stage is not even a secondary piece
which can be used for co-lateral purposes. The report of committee
therefore at the most may be a document to be used in future indicating
evidence looked into or not looked into by it. The arbitrator cannot act
upon such report either in favour of petitioner or against him. He has to
independently record his findings on disputed issues on the strength of
material brought before him by parties. Said report has not been
obtained in pursuance of contract agreement between parties and hence,
is not a piece of evidence at all. Respondents are not under any
obligation to produce it and, it is apparent that no such direction can be
issued to it. There is no requirement of respondents producing any
order with-holding its production and its status as an instrumentality or
state has no bearing here at all. Findings recorded on issue no. 1 by
arbitrator in the light of arguments advanced cannot be said to be
without jurisdiction or perverse. Merely because he labels his findings as
“interim report” or “interim order”, application of mind by him does not
get vitiated. It is petitioner who filed application and invited arbitrator
to pass orders on his prayers therein. Such orders passed by arbitrator on
said application cannot be challenged by him on such technical grounds.
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No interference is therefore warranted in writ jurisdiction insofar as
order of arbitrator on issue no. 1 is concerned.
9. With the result, Writ Petition is partly allowed and “interim
report” or “interim order” passed by arbitrator on 25/03/2010 insofar as
it relates to issue no. 2 is only quashed and set aside. Its remaining part
relating to issue no. 1 is upheld. Arbitrator shall hear both parties before
him on issue no. 2 and thereafter pass fresh orders on it. Rule is made
absolute accordingly with no orders as to costs.
JUDGE
Rgd.
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