ATUL LIMITED Vs. B J DIWAN PRESIDING ARBITRATOR

JUDGEMENT

(1.) Rule. Learned Advocate Mr.Thakar for M/s.Trivedi and Gupta, Advocates waives service of notice of Rule. Upon request of the party-in-person and advocate for respondent, the matter is taken for its final hearing. The present writ petition is filed under Article 226 and 227 of the Constitution of India for setting aside the order dated 13th June,2005 passed by respondent no.1, who was Presiding Arbitrator in dispute between the present petitioner and the respondent no.2.

(2.) The question of law involved in present petition is that whether the award passed by the Arbitrator is enforceable during the pendency of an application under section 34 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as Act) filed by respondent no.2 before the District Court, Valsad. The main thrust of the argument of the party-in-person or petitioner is that the amount awarded in the arbitration award, is at Rs.3,78,30,197/-, out of which, amount at Rs.1,20,70,955/- is required to be paid by the Presiding Arbitrator from the Escrow amount to the present petitioner. It is submitted by party-in-person that though application under section 34 of the Act is pending, the amount at Rs.1,20,70,955/- ought to be paid by the respondent no.1 from escrow account to the petitioner, mainly for the reason that the respondent no.2 has waived his right to oppose the encashment of the bank guarantee and waived his right to oppose the amount to be paid by the Presiding Arbitrator from Escrow account to the petitioner upon final decision by the Arbitrators. It is also submitted by the party-in-person that in pursuance of the order passed by the Division Bench of this High Court in First Appeal No.2121/2002 to First Appeal No.2123/2002 with Civil Application No.7311 and 7312 of 2002 dated 25th November,2002, the aforesaid amount of Rs.1,20,70,955/- ought to be paid by the respondent no.1 from Escrow account to the present petitioner. The respondent no.2 was already directed to allow the petitioner to receive the said amount upon finalization of the dispute by passing the final award. Final award is now passed by Arbitrators. The amount retained in Escrow account ought to be disbursed by the respondent no.1 to the petitioner. The pendency of application under section 34 of the Act,1996 can never be treated as bar for enforceability of the order passed by the Arbitrator. An application was moved by the present petitioner to the respondent no.1 on 13th June,2005 for releasing the aforesaid amount but the respondent no.1 was pleased to pass the following order dated 13th June,2005.

(3.) I have heard the learned Senior Advocate Mr.Mihir Thakor appearing for the respondent no.2, who has mainly submitted that against the award dated 15th May,2005 passed by the arbitrators, an application under section 34 of the Act has already been preferred before the District Court, Valsad and the said application is pending even as on today and, therefore, in view of the provision of section 36 of the Act, the award passed by the arbitrator is not enforcible and what is not enforceable is not executable. The learned counsel appearing for the respondent no.2 has relied upon several judgments, which are referred hereinafter. The main contention of the learned Senior Advocate Mr.Mihir Thakore is that when an application under section 34 of the Act,1996 is pending, the amount lying in the Escrow account cannot be paid to the petitioner. It tantamounts to execution of the award. It tantamounts that the award has become enforceable but looking to the provision of the Section 36 of the Act,1996, under which the petitioner is seeking the relief of getting the amount from Escrow account, is not enforceable. It is also submitted by the learned senior advocate that the present writ petition under Article 226 of the constitution of India is not tenable at law, mainly for the reason that the petitioner can initiate execution proceedings if at all, the award is executable. Prima facie, remedy lies at somewhere else. The execution proceedings are available to the present petitioner, even if the case of the petitioner is accepted by this Court. A writ petition against the respondent no.1, who is an Escrow agent is not tenable at law. It is also submitted by the respondent no.2 that there is no exception to section 36 of the Act,1996. Once an application under section 34 of the Act,1996 is preferred, the award will become enforcable only when such application being refused and, therefore, present petition may not be entertained by this Court in exercise of an extra ordinary jurisdiction under article 226 and 227 of the Constitution of India.