ION EXCHANGE INDIA LTD Vs. PARAMOUNT LTD

JUDGEMENT

(1.) By this petition, the petitioner challenges the Award made by the Arbitrator directing the petitioner to pay certain amounts to the respondent. An objection to the maintainability of the petition before this Court is raised by the respondent. The objection raised by the respondent is that after the Award was made on 5.5.2005, an application under Section 9 of the Arbitration & Conciliation Act was filed by the respondent in a Court at Baroda and therefore, in view of the provisions of Section 42 of the Arbitration and Conciliation Act,1996, this petition will not be maintainable before this Court. It is submitted that Section 42 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) lays down that with respect to the arbitration agreement if any application under partI of the Act has been made in the Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the Arbitral proceedings shall be made in that Court. It is submitted that an application made under Section 9 of the Act is an application made with respect to the arbitration agreement pursuant to which the Award which is challenged in the petition has been made under part I of the Act, and therefore, it is only the Court at Baroda which will have jurisdiction to entertain the application filed under Section 34 of the Act, subsequent to the filing of application under Section 9 of the Act. The present petition was filed by the petitioner in this Court on 29.6.2005 and therefore, the present petition is the subsequent application and therefore, this Court will not have jurisdiction to entertain this application. It is further submitted that the petition is not maintainable in the Court because for the purpose of this petition this Court is not the Court within the meaning of the Act. It is submitted that in view of the definition of the term "Court" found in the Act a petition under Section 34 of the Act can be filed only before the Court which could have had the jurisdiction to entertain a suit on the same subject matter had a suit been filed instead of taking out arbitral proceedings. In the present case no part of cause of action in relation to the subject matter of the dispute between the parties has arisen within the jurisdiction of this Court. Therefore, had the petitioner filed Civil suit instead of taking out arbitral proceedings, the suit could not have been entertained by this Court.

(2.) In reply, it is submitted on behalf of the petitioner that the provisions of Section 42 of the Act will not operate to oust the jurisdiction of this Court to entertain this petition because of the filing of the application under Section 9 of the Act by the respondent before the Baroda Court, firstly because the application made under Section 9 of the Act before the Baroda Court by the respondent was not a bonafide application and the application contemplated by Section 42 of the Act is a bonafide application. It is submitted that as a result of the decision of the Division Bench of this Court in the case of "HMP Engineers Ltd. & others Vs. Ralies India Ltd. and others, 2003 4 MhLJ 931" the provisions of Section 4 to 24 of the Limitation Act do not have application to an application under section 34 of the Act. Therefore, if an application is not filed within the period of limitation provided by section 34 of the Act, the remedy of filing an application under Section 34 of the Act challenging the Award is permanently denied to the person who feels aggrieved by the Award. In the submission of the petitioner, therefore, an application to be termed as bonafide application for the purpose of Section 42 of the Act would be an application of which the petitioner has received notice before the expiry of the period of limitation fixed by Section 34 of the Act. It is submitted that in the present case, the Award was made on 31.3.2005. It was communicated on 6.4.2005. An application under Section 9 of the Act was filed by the respondent before the Baroda Court on 5.5.2005. The last date of limitation according to Section 34 of the Act for filing petition under Section 34 of the Act was 7.7.2005. But according to the petitioner, the notice of having filed petition under section 9 before the Baroda Court was served on the petitioner on 20.7.2005. Though, according to the respondent, the date of service of notice is not 20.7.2005 but 14.7.2005, but it is an admitted position that the service of notice about the filing of application under section 9 of the Act by the respondent before the Baroda Court was served on the petitioner after expiry of period of limitation fixed by Section 34 of the Act. According to the petitioner, in view of the fact that the provisions of Section 4 to 24 of the Limitation Act are not applicable to the petition filed under Section 34 of the Act, Section 42 of the Act may be so read as to oblige the respondent to intimate the petitioner about the filing of application under Section 9 of the Act after the Award is made, immediately on filing the application so that the petitioner can arrange his business accordingly and can file his petition before that Court where application under Section 9 of the Act has been filed or take an informed decision about the Court in which he wants to file petition under Section 34 of the Act. It is submitted that otherwise the petitioner would be rendered remedyless for no fault of his because if this Court does not have jurisdiction because of filing of application under Section 9 of the Act before the Baroda Court then the petitioner cannot go to the Baroda Court because the period of limitation is over and the provisions of the Limitation Act relating to exclusion of time are not applicable. It is further submitted that the application made by the respondent before the Baroda Court is not a previous application contemplated by section 42 of the Act. Even before the Award was made, the petitioner had moved an application under Section 11 of the Act before this court in relation to the constitution of Arbitral Tribunal. Relying on a judgment of the Constitution Bench of the Supreme Court in the case of "M/s.S.B.P. & Co. Vs. M/s.Patel Engineering Ltd. and anr, 2005 9 Scale 1" it is submitted that the Chief Justice before whom the application under Section 11 of the Act is made is a Court for the purpose of Section 42 of the Act and therefore, as the application under Section 11 of the Act was filed before the Chief Justice of this Court, it is this Court which will have jurisdiction to entertain the petition filed under Section 34 of the Act. It is further submitted on behalf of the petitioner that the application filed by the respondent under Section 9 of the Act at Baroda cannot be taken as the previous application for the purpose of Section 42 of the Act because the application filed under Section 9 of the Act by the respondent was an application filed after the Award was made and therefore, it cannot be termed as an application made with respect to the arbitration agreement. Relying on the judgment of the Supreme Court in the case of "Kamal Pushpa Enterprises Vs. D.R.Construction Company, 2000 AIR(SC) 2676" it is submitted that an application made for enforcement of the Award is an application made not for enforcement of the Contract but it is for enforcement of the Award and therefore, the application made by the respondent under Section 9 of the Act before the Baroda Court seeking direction from the Court to the petitioner to deposit the amount in relation to which the Award is made is an application for enforcement of the Award and it is not an application with respect to the arbitration agreement. It is further submitted that it is clear from the definition of the term "Court" found in the Act that the Court which could have entertained a suit on the subject matter of arbitration is the Court which can entertain a petition under Section 34 of the Act. It is submitted that the petitioner carries on business within the jurisdiction of this Court therefore, had the respondent instead of making reference to arbitrator, filed a Civil suit, then this Court would have had the jurisdiction to entertain the suit under Order 12 of the Letters Patent because the petitioner who would have been defendant in the suit carries on business within the jurisdiction of this Court.

(3.) The petitioner is challenging the validity of the Award on merits. It is submitted by the petitioner that the learned Arbitrator who made the Award had no jurisdiction to make the Award. It is submitted that the appointment of the arbitrator is contrary to the agreement between the parties and the law. It is submitted that the Arbitration clause between the parties contemplates appointment of one arbitrator by each of the parties and the two arbitrators appointing an Umpire. The arbitration clause provides for the arbitrator appointed by one of the parties becoming sole arbitrator on failure of the other party to appoint his arbitrator. It is submitted that there is no time limit fixed by the arbitration clause for the other party to make appointment of the arbitrator after one party has appointed his arbitrator. It is submitted that at no point of time, the petitioner was informed by the respondent that if the petitioner does not make appointment of his arbitrator within the time stipulated in the notice, the arbitrator appointed by the respondent would become the sole arbitrator.