TaxTMI 
TaxTMI 
2002 (1) TMI 1226
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....nclusion that the Chief Justice or any person or institution designated by him, acting under section 11 of the Arbitration and Conciliation Act, 1996 ('the Act'), acted in an administrative capacity and such order did not attract the provisions of article 136 of the Constitution of India. A Bench of two learned Judges referred for re-consideration the decision in Ador Samia (P.) Ltd.'s case (supra) to a Bench of three learned Judges. The decision of the Bench of the three learned Judges Konkan Railway Corpn. Ltd. v. Mehul Construction Co. [2000] 28 SCL 300 (SC) affirmed the view taken in Ador Samia (P.) Ltd.'s case (supra), namely, that the order of the Chief Justice or his designate in exercise of the power under section 11 was an administrative order and that such order was not amenable to the jurisdiction of this Court under article 136. Thereafter, in Konkan Railway Corpn. Ltd. v. Rani Construction (P.) Ltd. [2000] 28 SCL 357 (SC), a Bench of two learned Judges referred to a larger Bench the decision of the three learned Judges for reconsideration (a practice which a Constitution Bench has frowned upon). This is how the matter comes to be placed before a Constitution Bench. ....
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....uch principal Civil Court, or any Court of Small Causes;" Section 5 reads thus : "Extent of judicial intervention.-Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." Section 8, so far as is relevant, reads thus : "8 Power to refer parties to arbitration where there is an arbitration agreement.-(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration." Section 10 states that the parties to an arbitration agreement are free to determine the number of arbitrators, provided that such number shall not be an even number; failing such determination, the arbitral tribunal shall consist of a sole arbitrator. Section 11 reads thus : "Appointment of arbitrators.-(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a proc....
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....ted by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him. (11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. (12)(a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration the reference to 'Chief Justice' in those sub-sections shall be construed as a reference to the 'Chief Justice of India'. (b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to 'Chief Justice' in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the pri....
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....tral award.-(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the court only if- (a )the party making the application furnishes proof that- (i )a party was under some incapacity; or (ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii)the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral procee-dings or was otherwise unable to present his case; or (iv)the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration : Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v)the compositio....
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....reement of the parties; (f)a brief written statement describing the general nature of the dispute and the points at issue; (g)the relief or remedy sought; and (h)an affidavit, supported by the relevant document, to the effect that the condition to be satisfied under sub-section (4) or sub-section (5) or sub-section (6) of section 11, as the case may be, before making the request to the Chief Justice, has been satisfied. 3. Authority to deal with the request. - Upon receipt of a request under paragraph 2, the Chief Justice may either deal with the matter entrusted to him or designate any other person or institution for that purpose. 4. Forwarding of request to designated person or institution. - Where the Chief Justice designates any person or institution under paragraph 3, he shall have the request along with the documents mentioned in paragraph 2 forwarded forthwith to such person or institution and also have a notice sent to the parties to the arbitration agreement. 5. Seeking further information. - The Chief Justice or the person or the institution designated by him under paragraph 3 may seek further information or clarification from the party making the reques....
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....unications received or sent under this Scheme. 12. Costs for processing requests. - The party making a request under this Scheme shall, on receipt of notice of demand from- (a )the Registry of the court where the Chief Justice makes the appointment of an arbitrator or takes the necessary measure, or (b)the designated person or the institution as the case may be, where such person or institution makes appointment or arbitrator or takes the necessary measure, pay an amount of Rs. 15,000 in accordance with the terms of such notice towards to costs involved in processing the request. 13. Interpretation. - If any question arises with reference to the interpretation of any of the provisions of this Scheme, the question shall be referred to the Chief Justice, whose decision shall be final. 14. Power to amend the Scheme. - The Chief Justice may, from time to time, amend by way of addition or variation any provision of this Scheme." 8. The three Judge Bench whose judgment is to be reconsidered framed the following two questions for consideration: "(1) What is the nature of the order that is passed by the Chief Justice or his nominee in exercise of power under sub-sec....
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....have used the expression 'court' or 'judicial authority'. It was, therefore, held that an order under section 11 refusing to appoint an arbitrator was not amenable to the jurisdiction of this Court under article 136 of the Constitution. 10. In the referring judgment the Bench of two learned Judges noted the material relied upon by the learned counsel for the appellant before them, which related to the Model Law, and the learned counsel's argument. It then stated, 'In the light of the above contentions and material, which in our opinion have a substantial bearing on the matter, and further inasmuch as this question is one arising almost constantly in a large number of cases in the various High Courts, it is desirable that this Court re-examines the matter.' 11. It is convenient at this stage itself to deal with the argument based on the Model Law. The Statement of Objects and Reasons of the Act States, 'Though the said UNCITRAL Model Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consoli....
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....eipt of the request to do so had not elapsed; this was an issue which had to be decided by the Chief Justice or his designate. Reliance was placed upon clause 7 of the Appointment of Arbitrators by the Chief Justice of India Scheme; it was submitted that the affected parties had to be given notice by reason of that clause to show cause, which implied that, on their showing cause, the issues they raised would be decided by the Chief Justice or his designate. Reliance was placed upon Associated Cement Companies Ltd. v. P.N. Sharma [1965] 2 SCR 366, to contend that the Chief Justice or his designate functioned as a tribunal so as to attract article 136 to the order naming an arbitrator. It was submitted that the four essential requirements in this behalf were satisfied, namely, the appointment of the Chief Justice was an appointment by the State; the Chief Justice or his designate were independent of the executive; there was a duty cast upon them to decide judicially; and they had the power to enforce their decision. The learned Attorney General, on notice, made submissions that were adopted by learned counsel for the respondents. The Attorney General drew our attention to section ....
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....(1) SCR 625 and Jaswant Sugar Mills Ltd. v. Lakshmichand 1963 Supp. (1) SCR 242 to submit that a tribunal was a body that exercised an adjudicatory function. The Chief Justice or his designate under section 11 performed neither an adjudicatory function nor they were exercising the power of the State. They were not, therefore, tribunals and their orders under section 11 could not be made the subject of petitions for leave to appeal under article 136. 14. Article 136 empowers this Court to grant special leave to appeal from any judgment, decree, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. For the nomination of an arbitrator by the Chief Justice or his designate under section 11 to be subject to article 136 such nomination must be (a) a judgment, decree, determination, sentence or order (b) passed or made by any court or tribunal in the territory of India. The question is whether such nomination is a determination or order and whether it is made by a tribunal, as contended by the learned counsel for the appellants. There is in the line of authority of this Court on the subject a recurring theme. 15. In the judgment ....
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....rties obligations affecting their civil rights; and (3)that the investigation is subject to certain procedural attributes contemplating an opportunity of presenting its case to a party, ascertainment of facts by means of evidence if a dispute be on questions of fact, and if the dispute be on question of law on the presentation of legal argument, and a decision resulting in the disposal of the matter on findings based upon those questions of law and fact." 17. The Court added, 'But every decision or order by an authority under a duty to act judicially is not subject to appeal to this Court. Under article 136, an appeal lies to this Court from adjudications of courts and tribunals only. Adjudication of a court or a tribunal must doubtless be judicial but every authority which by its constitution or authority specially conferred upon it is required to act judicially is not necessary a tribunal for the purpose of Article 136'. 18. In the case of The Engineering Mazdoor Sabha, RepresentingWorkmen Employed under the Hind Cycles Ltd. (supra) a Constitution Bench said : "For invoking Art. 136(1), two conditions must be satisfied. The proposed appeal must be from any judgment, d....
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....e request to do so by the other party or the two arbitrators appointed by the parties fail to agree on a third arbitrator within thirty days of their appointment, a party may request the Chief Justice to nominate an arbitrator and the nomination shall be made by the Chief Justice or any person or institution designated by him. If the parties have not agreed on a procedure for appointing an arbitrator in an arbitration with a sole arbitrator and the parties fail to agree on an arbitrator within thirty days from receipt of a request to one party by the other party, the nomination shall be made on the request of a party by the Chief Justice or his designate. Where an appointment procedure has been agreed upon by the parties but a party fails to act as required by that procedure or the parties, or the two arbitrators appointed by them, fail to reach the agreement expected of them under that procedure or a person or institution fails to perform the function entrusted to him or it under that procedure, a party may request the Chief Justice or his designate to nominate an arbitrator, unless the appointment procedure provides other means in this behalf. The decision of the Chief Justice or....
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....nated. 23. It might be that though the Chief Justice or his designate might have taken all due care to nominate an independent and impartial arbitrator, a party in a given case may have justifiable doubts about that arbitrator's independence or impartiality. In that event it would be open to that party to challenge the arbitrator under section 12, adopting the procedure under section 13. There is no reason whatever to conclude that the grounds for challenge under section 13 are not available only because the arbitrator has been nominated by the Chief Justice or his designate under section 11. 24. It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. If so, the arbitral tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the arbitral tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the arbitral tribunal may rule on its own jurisdiction. That the arbitral tribunal may rule 'on any objections with respect to the existence or validity of the arbitration agreement' ....