2017 (3) TMI 1776 - HC - Indian Laws

Arbitral Tribunal Cannot Appoint High Court Receiver

Shakti International Private Limited Versus Excel Metal Processors Private Limited

The Court held that an arbitral tribunal lacks the authority to appoint the Court Receiver, High Court, Bombay, as a Receiver under Section 17 of the ... Whether an arbitral tribunal has the power to appoint the Court Receiver, High Court, Bombay as a Receiver under Section 17 of the Amended Act? HELD THAT:- The Court Receiver, High Court, Bombay, is an employee or a Department of the Bombay High Court and that it is this Court that has the powers to direct its duties and responsibilities. Even where another Tribunal, such as the Debt Recovery Tribunal, was allowed to give directions to the Court Receiver, it was for a limited transitory period of one year and only in those cases where the Court Receiver had already been appointed by this Court. What is of much significance is that this was permitted to be done by an Order of this Court on its judicial side. This was necessitated by the fact that as this Court lost its jurisdiction over bank suits, it would have been anomalous for this Court to continue to issue directions to the Court Receiver. An arbitral tribunal cannot appoint the Court Receiver, High Court, Bombay, to act as a Receiver, under Section 17 of the Amended Act. This follows from the nature of the office and position of the Court Receiver, High Court, Bombay - also the language of Section 17 of the Amended Act does not alter this conclusion at all. The language appearing after Section 17(ii)(e) of the Amended Act, really concerns itself with the powers to make interim orders. It is for the making of such interim orders that the arbitral tribunal's powers are treated as the same as that of a court. One cannot read into this language a conclusion that an arbitral tribunal is itself a particular court, such as the High Court, Bombay, so as to be able to do everything that the High Court, Bombay could do, such as appoint its employee or officer to function as a Receiver in a given matter. The question is answered in negative. Issues Involved:1. Whether an arbitral tribunal has the power to appoint the Court Receiver, High Court, Bombay as a Receiver under Section 17 of the Amended Arbitration and Conciliation Act, 1996.Detailed Analysis:Issue 1: Power of Arbitral Tribunal to Appoint Court ReceiverThe primary legal issue addressed in this judgment is whether an arbitral tribunal can appoint the Court Receiver, High Court, Bombay, as a Receiver under Section 17 of the Amended Arbitration and Conciliation Act, 1996.Submissions and Arguments:- Mr. Jagtiani's Argument: The arbitral tribunal does not have the power to appoint the Court Receiver, High Court, Bombay, under Section 17 of the Amended Act. The Court Receiver is an employee of the High Court of Judicature at Bombay and is subject to the supervision of the Chief Justice of this Court. Hence, no arbitral tribunal can exercise any power of appointment, which amounts to supervision and control over the Court Receiver.- Supporting Judgments: Mr. Jagtiani referenced several decisions supporting his argument, including:- *I.C.I.C.I Ltd. v. Patheja Brothers Forgings and Stampings Ltd.*- *Bank of Tokyo-Mitsubishi Ltd. v. M/s. Chembra Estates*- *Girish M. Joshi v. Jagat Manubhai Parikh*- Mr. Khandekar's Argument: Similar to Mr. Jagtiani, Mr. Khandekar argued that the arbitral tribunal does not have the power under Section 17 of the Amended Act to appoint the Court Receiver, High Court, Bombay.- Mr. Sen's Argument: Contrarily, Mr. Sen argued that the question is a matter to be decided at an administrative or policy level by the High Court. He contended that Section 17 of the Amended Act allows an arbitrator to appoint any person deemed fit to act as a Receiver, including the Court Receiver, High Court, Bombay.Status of the Court Receiver:- The Court Receiver, High Court, Bombay, is an employee or a department of the Bombay High Court, functioning under the control and supervision of this Court. This status has been discussed in various judgments, particularly in the context of the transfer of bank suits to the Debt Recovery Tribunal.- *I.C.I.C.I Ltd. v. Patheja Brothers Forgings and Stampings Ltd.* provided a detailed history of the Court Receiver's office, emphasizing that it is a permanent department of the High Court, responsible for managing properties and assets custodia legis.- The Court Receiver's duties and responsibilities are directed by the High Court, and the Receiver has never worked for other courts or judicial forums like the Small Causes Court.Interpretation of Section 17 of the Amended Act:- Section 17 of the Amended Act confers broader powers on arbitral tribunals than before, including the power to make interim orders similar to those a court can make.- However, the language of Section 17 does not imply that an arbitral tribunal is itself a court or has the same supervisory powers as the High Court, Bombay.- The expression 'and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceeding before it' refers to the powers to make interim orders, not to the tribunal being the court itself.- The use of the word 'court' instead of 'Court' indicates that the legislature did not intend to equate the arbitral tribunal with a specific court like the High Court, Bombay.Practical Considerations:- The Office of the Court Receiver, High Court, Bombay, has a limited number of personnel and is already burdened with a large volume of matters. Allowing arbitral tribunals to appoint the Court Receiver would interfere with its functioning and create additional administrative challenges.Conclusion:- The Court concluded that an arbitral tribunal cannot appoint the Court Receiver, High Court, Bombay, to act as a Receiver under Section 17 of the Amended Act. This conclusion is based on the unique status of the Court Receiver as an employee and department of the High Court, the language of Section 17, and the practical implications of such appointments.Judgment:- The question framed in the Court Receiver's Report and the issue for consideration were both answered in the negative, affirming that an arbitral tribunal does not have the power to appoint the Court Receiver, High Court, Bombay, under Section 17 of the Amended Act.