VINDER ARORA v. RIVAJ INFRATECH PRIVATE LIMITED & ANR.

Judgment

#1. By an order dated 1 November 2019, a learned Sole Arbitrator, who was arbitrating on the disputes between the parties, terminated the arbitration on the ground of non-cooperation by the appellant, who was the claimant before the learned Arbitrator, in filing his statement of claim in time.

#2. An application was filed by the appellant for recalling of the said order, which was dismissed by the learned Sole Arbitrator by order dated 14 January 2023. FAO(OS) (COMM) 133/2023

#3. Against this order, the appellant preferred OMP (COMM) 154/2023 before a learned Single Judge of this Court under Section 34(1)1 of the Arbitration and Conciliation Act, 19962. The said OMP (COMM) stands dismissed by the learned Single Judge on 26 April

#4. Against the said decision, the present appeal has been preferred under Section 37(1)3 of the 1996 Act.

Mr. Ramesh Singh, learned Senior Counsel for the respondents has advanced a preliminary submission that OMP (COMM) 154/2023 was itself not maintainable, as the remedy, against an order passed by the Arbitrator refusing to recall the earlier order terminating the proceedings lay under Section 144 of the 1996 Act, in view of the judgment of the Supreme Court in Harshbir Singh Pannu v. Jaswinder Singh, particularly para 415(X), which reads thus: 1 34. Application for setting aside arbitral award.— (1) setting aside such award in accordance with sub-section (2) and sub-section (3). Recourse to a Court against an arbitral award may be made only by an application for 2 “the 1996 Act”, hereinafter 3 37. Appealable orders.— (1) [Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:— refusing to refer the parties to arbitration under Section 8; granting or refusing to grant any measure under Section 9; setting aside or refusing to set aside an arbitral award under Section 34.] (a) (b) (c) 4 14. Failure or impossibility to act.— (1) arbitrator, if]— [The mandate of an arbitrator shall terminate and he shall be substituted by another he becomes de jure or de facto unable to perform his functions or for other he withdraws from his office or the parties agree to the termination of his (a) reasons fails to act without undue delay; and (b) mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub- section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. If, under this section or sub-section (3) of Section 13, an arbitrator withdraws from his (3) office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of Section 12. FAO(OS) (COMM) 133/2023 If, however, the recall application is dismissed, the “415(X) party aggrieved therefrom, would be empowered to approach the court under Section 14(2) of the Act, 1996. The court would then in turn examine whether the mandate of the arbitrator stood legally the proceedings were not terminated or not. If it finds that terminated in accordance with the law, it would be empowered to either set-aside the order of termination of proceedings and remand the matter to the arbitral if the circumstances so tribunal, or, require, proceed to appoint a substitute arbitrator in terms of Section 15 of the Act, 1996.”

#6. Against an order under Section 14, Mr. Singh submits that no appeal under Section 37 of the 1996 Act lies. As such, Mr. Singh’s submission is that either the appellant’s OMP (COMM) 154/2023 was itself liable to be dismissed as not maintainable or in the alternative, even if the impugned order were to be treated as one passed under Section 14 of the 1996 Act, the present appeal would not lie.

#7. Relying on the judgment of the Supreme Court in Ram Kishan Fauji v. State of Haryana5, Mr. Ramesh Singh submits that though the impugned judgment of the learned Single Judge facially purports to have been passed under Section 34, it should be treated as one passed under Section 14.

#8. We are unable to agree.

#9. The petition of the petitioner having been filed under Section 34, and the order of the learned Single Judge having also been passed on the said petition, and in view of the fact that there is nothing in the impugned judgment which indicates that the learned Single Judge was 5 (2017) 5 SCC 533 FAO(OS) (COMM) 133/2023 exercising jurisdiction under Section 14 of the 1996 Act, it is not possible for us to read the impugned order as one passed under Section 14.

#10. The decision in Ram Kishan Fauji is clearly distinguishable.

#11. The issue before the supreme Court in that case was with respect to the maintainability of a Letters Patent Appeal6 against the decision of a learned Single Judge passed in proceedings under Article 226 of the Constitution. An LPA would lie only if the learned Single Judge was exercising civil jurisdiction, but would not lie if the learned Single Judge was exercising criminal jurisdiction. The Supreme Court was, therefore, concerned with the question of whether the jurisdiction exercised by the Single Judge under Article 226 partook of the character of civil or criminal jurisdiction. The Supreme Court held that, as the order under challenge before the Single Judge was passed by the Lokayukta, and the outcome of the order was initiation of criminal prosecution, the order was required to be treated as having been in exercise of criminal jurisdiction. Thus, it was held that an LPA would not lie.

#12. This decision cannot support Mr. Ramesh Singh’s argument that the impugned order of the learned Single Judge, under challenge in the present appeal, should be treated as an order passed under Section 14 of the 1996 Act even though it is, on the face of it, passed under Section 34 of the 1996 Act. FAO(OS) (COMM) 133/2023

#13. In Ram Kishan Fauji, the exercise of jurisdiction by the learned Single Judge, whether civil or criminal, was under Article 226 of the Constitution of India. The power of the learned Single Judge to exercise writ jurisdiction under Article 226 of the Constitution was not in question. It was only the nature of jurisdiction exercised by the learned Single Judge which had come up for consideration, as the decision on that issue would impact the maintainability of the LPA.

#14. There was no plea before the Supreme Court, therefore, in Ram Kishan Fauji, that an order passed under one provision should be treated as an order passed under another provision.

#15. We, therefore, are unable to accept Mr. Ramesh Singh’s submission that the impugned order should be treated as one passed under Section 14 of the 1996 Act.

#16. Per consequence, therefore, we are also not able to sustain Mr. Singh’s argument that the present appeal would not be maintainable, as an appeal under Section 37 does lie against an order passed under Section 34 of the 1996 Act. We, therefore, hold that the present appeal is maintainable.

#17. That would, then, take us to the question of whether the impugned judgment of the learned Single Judge is sustainable in law. This would throw open, for consideration, the issue of whether the learned Single Judge could have exercised jurisdiction under Section 34 and whether the Section 34 proceeding was at all maintainable 6 “LPA” hereinafter FAO(OS) (COMM) 133/2023 before the learned Single Judge against an order passed by the learned Arbitral Tribunal refusing to recall an order terminating the proceedings under Section 25 of the 1996 Act.

#18. This issue, to our mind, is no longer res integra, in view of para 415(x) of Harshbir Singh Pannu, which is clear and categorical. It holds, in unequivocal terms, that a dismissal of a recall application, by the Arbitrator, has to be challenged under Section 14(2) of the 1996 Act. Clearly, therefore, the petition of the petitioner before the learned Single Judge, having been preferred under Section 34 of the 1996 Act, was not maintainable and the order of the learned Single Judge, having been passed under Section 34 of the 1996 Act, is equally unsustainable in law on that ground alone.

#19. Mr. Gandhi, learned Counsel for the appellant, has addressed us at length, seeking to escape the rigour of para 415 (X) of the decision in Harshbir Singh Pannu. He submits that the decision in Harshbir Singh Pannu itself notes that there was earlier a cleavage of opinion with respect to the remedies which would be available against an order terminating arbitral proceedings. That, to our mind, is irrelevant, as the order which was under challenge before the learned Single Judge was not an order terminating the proceedings but an order refusing to recall the order terminating the proceedings.

#20. In fact, the order terminating the proceedings had been passed on 1 November 2019 under Section 25 of the 1996 Act, as none appeared on behalf of the claimant. The order dated 1 November 2019 was never challenged by the petitioner by any means known to law. FAO(OS) (COMM) 133/2023 Rather, the petitioner moved an application for recall of the order dated 1 November 2019. It is that application which was rejected by the order dated 14 January 2023, which forms subject matter of challenge before the learned Single Judge.

#21. Though Mr. Gandhi sought emphatically to contend that, as the effect of the order dated 14 January 2023 was to terminate the arbitral proceedings, that order should also be treated as an order passed under Section 25 terminating the proceedings, it is obviously impossible to agree with this contention. Arbitral proceedings can be terminated only once and once terminated they cannot again be terminated a second time. The dismissal of the recall application could not, therefore, be treated as a second order terminating the arbitral proceedings again relatable to Section 25 of the 1996 Act. It was clearly an order which was refusing to recall the order terminating the arbitral proceedings.

#22. We, therefore, are of the clear opinion that the only order terminating the arbitral proceedings was the order dated 1 November 2019, which was never challenged. The order dated 14 January 2023 cannot be treated as an order terminating the proceedings, but was, as it clearly expresses itself to be, an order refusing to recall the order dated 1 November 2019.

#23. Para 415 (X) of the decision in Harshbir Singh Pannu holds in clear terms that such an order, rejecting a recall application, would be amenable to challenge under Section 14(2) of the 1996 Act. Ipso facto, therefore, the order would not be amenable to challenge under Section

#34. FAO(OS) (COMM) 133/2023

#24. Mr. Gandhi also sought to advance detailed arguments on the aspect of prospective overruling. He drew our attention to the judgment of the Supreme Court in DRI v. Raj Kumar Arora7, from which he cited paras 141, 142 143 and 147, which also stand extracted in Harshbir Singh Pannu, and may be reproduced, to advantage, as under: to the exception that law. In Ramesh Kumar Soni v. State of M.P.8, “141. The applicability or discussion relating to the doctrine of prospective overruling can be noticed in a few other matters under the criminal arena, though prominently on matters pertaining to procedural Court was concerned with an amendment changing the triability of certain offences i.e. from the Judicial Magistrate, First Class to the Court of Session and its effect on the cases pending trial or pending investigation. This Court had held that any amendment shifting the forum of the trial had to be, on principle, retrospective in nature in the absence of any indication to the contrary in the Amendment Act. This retrospective operation of amendments relating to the earlier procedure would be subject procedure which was correctly adopted and which led to the proceedings being concluded under the old law cannot be reopened for the purpose of applying the new procedure. Furthermore, it was also reiterated that an accused does not possess a “vested right of forum” for his trial. However, the decision of a Full Bench of the Madhya Pradesh High Court in Amendment of First Schedule of Criminal Procedure Code by Criminal Procedure Code (M.P. Amendment) Act, 2007 In re9, had opined that all the cases which were pending before the Judicial Magistrate as on 22-2-2008 i.e. the date of the amendment, would remain unaffected by the Amendment. Therefore, the Full Bench of the High Court directed that all the cases which were pending before the Judicial Magistrate and had already been committed to the Court of Session due to the coming into force of the amendment, to be sent back to the Judicial Magistrate. This Court in Ramesh Kumar Soni v. State of M.P.10, 142. disagreed and overruled the decision of the Full Bench but only prospectively. This was done because the trial of the cases that were sent back from the Sessions Court to the Judicial Magistrate