Writ Petition No.1130 of 2002

1st July, 2005

Petitioner Counsel: Mr. R. S. PARSODKAR
Respondent Counsel: Mr. S. V. MANOHAR,Mr. C. P. SEN

Cases Cited:
United India Insurance Co. Ltd. Vs. Rajendra Singh, (2000)3 SCC 581 [Para 2,6]
M/s. Anuptech Equipments Private Ltd. Vs. M/s. Ganpati Co-operative Housing Society Ltd., Mumbai, 1999(3) ALL MR 580=AIR 1999 Bom. 219 [Para 2,3,4]
Harbanslal Sahnia Vs. Indian Oil Corporation Ltd., 2003 AIR SCW 126 [Para 2,4]
Asea Stal AB Vs. M/s. Indian Charge Chrome Ltd., (1994)2 SCC 156 [Para 2]
Ramkaran Vs. Shrikishan, AIR 1976 Raj. 130 [Para 2]
Doki Adinarayan Subudhi and Brothers Vs. Doki Surya Prakash Rao, AIR 1980 Orissa 110 [Para 2]
Babar Ali Vs. Union of India, (2000)2 SCC 178 [Para 3]
BASF Styrenics Pvt. Ltd. Vs. Offshore Industrial Construction Pvt. Ltd., 2002(2) ALL MR 910=2002(2) Mh.L.J. 873 [Para 3]
Hindustan Petroleum Corporation Ltd. Vs. Pinkaty Miday Petroleum, (2003)6 SCC 503 [Para 4]
Engineering Mazdoor Sabha Vs. Hind Cycles Ltd., AIR 1963 SC 879 [Para 4]
Province of Bombay Vs. Khushaldas S. Advani, AIR 1950 SC 222 [Para 4]
Rohtas Industries Vs. Rohtas Industries Staff Union, AIR 1976 SC 425 [Para 4]
Grindlays Bank Vs. Central Government Industrial Tribunal, 1981 Lab.I.C. 155 [Para 5]
Indian Bank Vs. Satyam Fibres (India)(P) Ltd., (1996)5 SCC 550 [Para 6]

JUDGMENT

F. I. REBELLO, J. :- The petitioner has approached this Court in the exercise of its extra ordinary jurisdiction under Article 226 of the Constitution of India to set aside the order dated 9th December, 2001 passed by the learned Arbitrator appointed under the provisions of the Indian Arbitration & Conciliation Act, 1996, hereinafter referred to as the Act. It is the case of the petitioner that she is a Partner of the Partnership firm known as Vidarbha Distillers in which she has 25% share holding. The partnership was registered on 28th February, 1982. The petitioner's contention is that another partner Aspi Bapuna, the respondent No.3 herein, played a fraud on her stating that the financial position of the firm is not good and that there are Sales Tax outstanding in a few crores and if the petitioner co-operates the firm can be saved and the personal properties of the petitioner could be liquidated. The petitioner is a divorcee. The respondent No.3 under influence obtained signature of the petitioner on blank papers, stamp papers vakalatnamas and got signature on MoU under duress and handed over cheque of Rs.4,92,023.65 and assured the petitioner that she is 25% shareholder in the firm. In February/March, 1997 the respondent No.3 again approached the petitioner and got her signature on renewal form for renewal of the liquor licence and accordingly the licence was renewed with effect from 1st April, 1997 to 31st March, 2002. The petitioner was informed that she will be paid her profit after settlement of dispute between Sahus, another holder in the partnership and the Bapunas. Thereafter the petitioner was not informed of any other act or thing. The petitioner's son Mohan contacted the Respondent No.3 in April, 2002 and enquired about the dispute and about payment of profit in the share of petitioner. The respondent No.3 refused to give any information to the petitioner's son informing that as the petitioner has retired petitioner has no concern with the firm. The petitioner made enquiries from the Excise Department and came to know about arbitration proceedings going on. It is the case of the petitioner that she is Partner and is so shown in all Government records of Vidarbha Distilleries. On enquiries from Mr. Sahu the petitioner was informed that she is being represented in arbitration proceedings and on her behalf a reply was filed by Advocate R. K. Deshpande. The petitioner on noticing the fraud practised on her by respondent No.3 filed an application before the learned Arbitrator in her own hand without assistance of Advocate for permission to withdraw the purported reply filed on her behalf dated 21st March, 1998 by Application of 9th June, 2001 and to permit her to file her claim statement before the Sole Arbitrator. On 16th July, 2001 the petitioner filed an affidavit in support of the application dated 9th June, 2001. It is the case of the petitioner that Advocate Deshpande filed the purported reply dated 21st March, 1998 without Vakalatnama and authority from the petitioner. A reply to the application was filed by Respondent No.3 on 25th June, 2001. In so far as engaging Lawyer the case as pleaded is that the petitioner herself as she had retired from the partnership informed the respondent No.3 that it could not be expected that she should expend money on litigation for defending her retirement and transfer and as such requested the respondent No.3 to engage Lawyer for her. The respondent No.3 suggested the name of Advocate R. K. Deshpande to which the petitioner agreed. The Vakalatnama was signed by the petitioner appointing Shri. R. K. Deshpande as Lawyer. The reply prepared was also signed by the petitioner after reading its contents. She informed the respondent No.3 to arrange to file the said reply through her lawyer R. K. Deshpande. Evidence was led both by petitioner and Respondent No.3. The Sole Arbitrator dismissed the application by his order dated 9th December, 2001. The learned Arbitrator whilst passing the order observed that the issue of validity of the MoU is in issue the requires to be decided on merits later. It may be mentioned that the application moved by the petitioner before the learned Arbitrator was to withdraw the statement of counter claim dated 21st March, 1998, deed of Understanding dated 3rd July, 1996 and reply, if any, purported to have been signed on her behalf in view of the fraud played by Mr. Aspi Bapuna on the Claimant.

After the petition was filed and admitted an order was passed by this Court on 28th March, 2002 requiring Advocate R. K. Deshpande to file a short affidavit placing on record the facts and circumstances under which he was engaged and represented the petitioner before the Arbitrator. Advocate Ravi Krishna Deshpande has filed an affidavit before this Court. It is set out in the said affidavit that he is appearing for the petitioner herein who is defendant No.3 in R.C.S. No.1343 of 1996 pending in the court of 7th Joint Civil Judge, Junior Division, Nagpur, where he is holding power/Vakalatnama of the petitioner filed on 15th July, 1997. He has also filed Civil Revision Application No.907 of 1997 on behalf of the petitioner to challenge the order dated 15th July, 1997 passed by the trial Court in RCS No.1343 of 1996. Apart from that he was holding Vakalatnama on behalf of the petitioner in Civil Revision Application No.907 of 1997 which was disposed of on 20th March, 1998. The affiant Advocate Deshpande then sets out that on 28th February, 1998 Shri. S. P. Dharmadhikari, Advocate and Respondent No.3 came to his office accompanied by one Asudani. The respondent No.3 in the presence of Advocate S. P. Dharmadhikari represented to him that Dr. Vimal Wasnik had agreed to his appearing for her before the Arbitrator and that Asudani would be hence forth co-ordinating with the Advocate. Accordingly on 28th February, 1998 he attended the arbitral proceedings along with Shri. S. P. Dharmadhikari, Advocate and represented the petitioner. On 21st March, 1998 when the mater was fixed he went there and met Advocate Deshpande and Shri. Asudani. A reply was given to him as signed by the petitioner. It appeared to have been signed by the petitioner. He was also shown the Deed of Understanding signed by the petitioner. He found the reply in tune with the stand of the petitioner in the aforesaid Deed. He had no doubt about the correctness of the reply nor any doubt about the authenticity of the said reply and filed the reply at the request of S. P. Dharmadhikari, Advocate. The reply was filed by him before the Arbitrator not for any monetary consideration, but only on the request so made by Advocate S. P. Dharmadhikari whom he trusted and respected as a Senior colleague. He set out that he was barely knowing the respondent No.3 and Shri. Asudani and he was not having any professional relations with them. He has neither claimed any fees nor received any amount from Shri. Aspi Bapuna or Shri. Asudani or from Shri. S. P. Dharmadhikari either by way of fees or otherwise for appearing and filing the said reply before the Arbitrator.

2. At the hearing of this petition on behalf of the petitioner it is contended that it is open to this Court to exercise its extra ordinary jurisdiction, more so after the affidavit filed by Advocate Deshpande which would show that he was not engaged by the petitioner nor had he prepared the reply on the instructions of the petitioner and both the Vakalatnama and reply were given to him by Respondent No.3 to be filed before the learned Arbitrator. It is submitted that fraud has been practised on the petitioner before the Arbitrator in the arbitral proceedings and the learned Arbitrator considering that ought to have permitted the petitioner to withdraw the earlier reply and file a counter claim. The learned Arbitrator was not bound by the procedure as set out in the Code of Civil Procedure. At any rate it is submitted that it is open to this Court to interfere in the exercise of its extra ordinary jurisdiction under Article 226 of the Constitution, considering that the counter-claim filed on behalf of the petitioner was by playing fraud on the Arbitral Tribunal. Reliance is placed on the judgment of United India Insurance Co. Ltd. Vs. Rajendra Singh & Co., (2000)3 Supreme Court Cases 581 to show that a Tribunal or Court has power in case of a fraud played on it, to recall its earlier order secured by fraud or misrepresentation. Reliance is placed on the judgment of M/s. Anuptech Equipments Private Ltd. Vs. M/s. Ganpati Co-operative Housing Society Ltd., Mumbai and Others, A.I.R. 1999 Bombay 219 : [1999(3) ALL MR 580] to hold that it is open to this Court in proceeding before Arbitrator, specially where the party had no remedy to resort to the extra ordinary jurisdiction under Article 226 of the Constitution of India. Reliance is placed in the judgment in Harbanslal Sahnia & Anr. Vs. India Oil Corporation Ltd. & Ors., 2003 AIR SCW 126 to contend that mere existence of alternative remedy is no bar to the Court to exercise its extra ordinary jurisdiction and it is always open to the Court in cases (i) where the writ petition seeks enforcement of any of the Fundamental Rights, (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of Act is challenged, to exercise its extra ordinary jurisdiction notwithstanding the alternative remedy available. Reliance is also placed in the judgment of Asea Stal AB and Ors. Vs. M/s. Indian Charge Chrome Ltd. & Ors., (1994)2 SCC 156 to contend that appearance must be by the party and a party cannot be bound by acts of a Counsel, who has taken steps on behalf of the party by any unauthorised action of the Advocate contrary to express instructions. Reliance is placed on the judgment in the case of Ramkaran Vs. Shrikishan & Ors., AIR 1976 Raj 130 as to when a Advocate is not entitled to plead or act on behalf of a party. Reliance is also placed in the judgment in the case of Doki Adinarayana Subudhi and Brothers Vs. Doki Surya Prakash Rao, AIR 1980 Orissa 110 wherein the Court held that undertaking by Senior Advocate, appearing on behalf of another Advocate engaged by the party, in the absence of party is not binding on her.

3. On the other hand on behalf of the Respondents their learned Counsel submits that it is open to the party to raise all such challenges against the award finally passed if the petitioner was aggrieved and in these circumstances this Court ought not to exercise its extra ordinary jurisdiction. Reliance for that is placed on the judgment of this Court in Babar Ali Vs. Union of India, (2000)2 SCC 178. Reliance is also placed in the judgment of a learned Division Bench of Court in BASF Styrenics Pvt. Ltd. Vs. Offshore Industrial Construction Pvt. Ltd. & Anr., 2002(2) Mh.L.J. 873 : [2002(2) ALL MR 910] to point out that this Court also has followed the view expressed in Babar Ali (supra).

It is pointed out that the judgment in M/s. Anuptech Equipments, 1999(3) ALL MR 580 (supra) at the highest can be restricted to those cases where there is no challenge to an award and not to interim orders bearing in mind Section 5 of the Arbitration & Conciliation Act, 1996.

4. We may first consider whether in respect of a challenge to an order of the learned Arbitrator the extra ordinary jurisdiction of this Court can be invoked. The judgment in M/s. Anuptech Equipments, 1999(3) ALL MR 580 (supra) to which one of us (Rebello, J.) was a party, did consider that issue and observed as under -

"To my mind on consideration of those provisions even if it be held that the Tribunal is not a Tribunal within the meaning of Article 226 of the Constitution, it would nevertheless be a person to whom a writ could go under Article 226 of the Constitution. I am, therefore, clearly of the opinion that where a remedy is not available to an aggrieved person and considering Section 5 of the Arbitration Act of 1966 this Court can exercise its extraordinary jurisdiction under Article 226 of the Constitution. In passing I may mention that this exercise had to be undergone in view of non-availability of remedy to aggrieved parties. It is true also that one of the objective of the Act of 1996 is to minimise the supervisory role of Courts. On the other hand proceedings in arbitration involve the Civil rights of the parties. It is a cardinal principle of our jurisprudence that no man should be left without a remedy. Judicial review cannot be made dependent on men who pass orders. Hierarchy of Courts is an answer to that."

It is not necessary to reproduce the reasoning set out in the judgment as to why in proceedings before the Arbitral Tribunal as constituted under the Act of 1996 it will be open to challenge an order terminating proceedings under the extra ordinary jurisdiction of this Court. However a few observations. Under Article 226 a writ can go not only to a Tribunal, but also to person. Tribunal is supposed to exercise the sovereign judicial power of the State. We may also note that subsequent to the Act of 1996 the Code of Civil Procedure has been amended by the Act of 2002. Section 89 as brought into force w.e.f. July 1, 2002 has conferred power on the Courts to refer a pending suit for disposal amongst others to an Arbitral Tribunal as constituted under the provisions of the Act of 1996. Similarly, Section 8 of the Act of 1996 provides that in a case where a suit is filed and the defendant invokes the arbitral clause, the Court has no discretion, but to refer the parties to arbitration in terms of the Arbitral Clause. (See Hindustan Petroleum Corporation Ltd. Vs. Pinkaty Miday Petroleum, (2003)6 SCC 503). Apart from that, under Section 16 of the Act of 1996 the Act has conferred powers on the Arbitral Tribunal to rule on its own jurisdiction, considering the provisions of Section 27(5) of the Arbitration & Conciliation Act, 1996, if a person is guilty of any contempt of the Arbitral Tribunal during the conduct of arbitral proceedings such person shall be subject to the like disadvantage, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. We may point out that this Court in M/s. Anuptech Equipments, 1999(3) ALL MR 580 (supra) did not note that for a similar provision to punish for contempt of the Tribunal is also conferred under the Arbitration Act, 1940 under Section 43(2). These are some additional reasons as to why it would be clear that the extra ordinary jurisdiction of this Court can be exercised in proceedings before the Arbitral Tribunal under Article 226 of the Constitution of India. We may also refer to some judgments of the Apex Court. In Engineering Mazdoor Sabha Vs. Hind Cycles Ltd., AIR 1963 SC 879 placing reliance in the case of Province of Bombay Vs. Khushaldas S. Advani, AIR 1950 SC 222, the Court in ascertaining as to whether a body is exercising quasi judicial powers observed as under :-

"Where an authority is required to act juridically either by an express provision of the statute under which it acts or by necessary implication of the said statute, the decision of such an authority generally amount to quasi-judicial decisions. Where, however, the executive or administrative bodies are not required to act judicially and are competent to deal with issues referred to them administratively, their conclusion cannot be treated as quasi-judicial conclusion. No doubt, even while acting administratively, the authorities must act bonafide; but that is different from saying that they must act judicially."

The following observations also be noted :-

"Even if some of the trappings of a Court are present in his case, he lacks the basic, the essential and the fundamental requisite in that behalf because he is not invested with the State's inherent judicial power."

In Rohtas Industries Vs. Rohtas Industries Staff Union and Ors., AIR 1976 SC 425 the Apex Court observed as under :-

"The expansive and extraordinary power of the High Courts under Article 226 is as wide as the amplitude of the language used indicate and so can affected any person - even a private individual and be available for any (other) purpose, even one for which another remedy may exist. The amendment to Art.226 in 1963 inserting Art.226(1-A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to 'the residence of such person'. But it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in china shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and potent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the peoples' sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights. We hold that the award here is not beyond the legal reach of Article 226 although this power must be kept in severely judicious leash."

We may further add a caveat. The judgment in M/s. Anuptech Equipments, 1999(3) ALL MR 580 (supra) is not for the proposition that every interim order or decision for which the Act has not provided a remedy would be subject to the extra ordinary jurisdiction of this Court. The issue which was being considered was closure of proceedings before the Arbitral Tribunal against which there was no remedy provided under the Act. This Court noted the provisions of Section 5 of the Act. The judgment in M/s.Anuptech Equipments, 1999(3) ALL MR 580 (supra) arose out of proceedings before the Arbitral Tribunal which was commenced and closed on the ground that the Claimant therein had failed to communicate written statement/claim statement within a reasonable time. The ratio in Anuptech, 1999(3) ALL MR 580 (supra) is, therefore, only in respect of an order closing the proceedings and for which there is no remedy under Section 37 or Section 34 of the Act of 1996 in which case only will the extra ordinary jurisdiction of this Court be invoked. It is true that the learned Counsel had relied on the judgment of the Apex Court in the case of Harbanslal Sahnia (supra) to contend that mere existence of remedy is no ground for this Court not to invoke its extra ordinary jurisdiction. Though the bar of Section 5 would not apply to this Court while invoking its extra ordinary jurisdiction nevertheless this Court must note the purpose and intent of a provision like Section 5. The objective is to minimise intervention in the on going arbitral process so that arbitral proceedings are completed at the earliest. Wherenever the Act thought it fit that Court should intervene it has provided. An award procured by fraud would be against the public policy of India. A party unable to present his case before the Arbitral Tribunal would be able to assail the award under Section 34(2)(a)(iii). There is thus a remedy available to a party before the Arbitral Tribunal to challenge the award under Section 34 of the Act of 1996. To our mind, therefore, it is clear that this would not be a fit case for this Court to exercise its extra ordinary jurisdiction.

5. The learned Counsel for the parties, however, sought to contend that we should issue a direction to the Arbitral Tribunal to consider the application by the petitioner in view of the affidavit filed by Advocate Deshpande before this Court for recalling his order. For that purpose we may point out the provisions of Section 19 of the Act. Section 19(1) sets out that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. It does not mean that the Tribunal cannot follow the said provisions. All that it means is that the Tribunal need not be bound to follow the Code of Civil Procedure or the Indian Evidence Act. Under Section 19(2) if the parties do not agree to a procedure to be followed by the arbitral tribunal in conducting its proceedings by virtue of sub-section 19(3), it is open to the Tribunal to conduct the proceedings in the manner it considers appropriate. In other words in the matter of procedure it is the Arbitral Tribunal which will determine the procedure as long as it is fair and just to both the parities and is capable of complying with the principles of natural justice. In the absence of the parties agreeing to the procedure, it will be open to the Tribunal to consider the provisions of Section 19 and to lay down a procedure for the Tribunal to be followed while deciding the arbitral proceedings. It is, therefore, falling within the jurisdiction of the Arbitral Tribunal to lay down the procedure. In our opinion, therefore, in the matter within the exclusive jurisdiction of the Tribunal this Court would not exercise its extra ordinary jurisdiction to issue a mandamus or a direction to the Tribunal to follow a particular procedure or to do any act. It is for the Tribunal to follow the procedure which it thinks just and proper. If the party is aggrieved by the procedure followed and the procedure followed has denied to the party a fair opportunity of participating in the Arbitral proceedings or unable to present her case the award can be challenged under Section 34 of the Act. There is always a power of procedural review inherent in every Court and Tribunal to do justice. Procedural review is distinct from substantive review which has to be conferred by statute. This was so expressed in Grindlays Bank Vs. Central Government Industrial Tribunal, 1981 Lab.I.C. 155 in the following words :-

"The expression 'review' is used in two distinct senses, namely, (1) a procedural review which is either inherent or implied in a court of Tribunal to set aside a palpably erroneous order passed under a mis-apprehension by it, and (2) a review on merits when the error sought to be corrected is one of law and is apparent on the face of the record. It is in the latter sense that the Court in Narshi Thakershi's case held that no review lies on merits unless a statute specifically provides for it, obviously when a review is sought due to a procedural defect, the inadvertent error committed by the Tribunal must be corrected ex debilo justitiae to prevent the abuse of its process, and such power inheres in every Court or Tribunal."

Even if the Arbitral Tribunal is held not to be a Tribunal subject to Articles 226 or 227, yet considering the provisions of Section 19 of the Act it is not bound by any procedural impediment in its exercise of jurisdiction.

6. Before parting, we may only advert to the judgment relied upon by the petitioner in the case of United India Insurance Co. Ltd. (supra). The Apex Court quoted with approval its judgment in Indian Bank Vs. Satyam Fibres (India)(P) Ltd., (1996)5 SCC 550 by setting out the following legal position :-

"Since fraud affects the solemnity, regularity and orderliness of the proceedings of the court and also amounts to an abuse of the process of court, the courts have been held to have inherent power to set aside an order obtained by fraud practised upon that Court. Similarly, where the court is misled by a party or the court itself commits a mistake which prejudice a party, the court has the inherent power to recall its order."

7. We, therefore, find no reason to exercise the extraordinary jurisdiction on the facts of the case. Petition dismissed. Rule is discharged. There shall be no order as to costs.

Petition dismissed.