TaxTMI 
TaxTMI 
2016 (10) TMI 1212
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....g power under Section 34 of the 1996 Act functions as a Civil Court or a Court other than a Civil Court? BACKGROUND FACTS 2. The brief facts, giving rise to present appeal, may be summed up as follows: (i) The appellant bank alleges that the State owes to it a sum of Rs. 570.79 crore under different heads. The bank approached this Court for appointment of an Arbitrator by filing Request Case No. 4 of 2013, which was allowed, on 07.03.2014, and Mr. Justice S.C. Jha (Retired) was appointed as the Arbitrator. (ii) The order, appointing the Arbitrator, was challenged by way of Special Leave Petition before the Supreme Court in S.L.P. (C) No. 15552 of 2014. By its order, dated 14.07.2014, the Supreme Court dismissed the Special Leave Petition aforementioned. (iii) After dismissal of the Special Leave Petition, the arbitration proceeding commenced. Though the State raised the issue of maintainability of the arbitration proceeding, the same was rejected by the Arbitrator by order, dated 24.05.2015, and this order, dated 24.05.2015, was not challenged. The proceeding, thus, continued and the award was passed on 06.01.2016. (iv) The State challenged....
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....ion Act, 1996 is not mandatory rather it is directory. It was inserted for the purpose of expeditious disposal of the arbitration matter, i.e., the period which was being consumed in issuing the notice is sought to be shortened by providing this provision by amendment but that does not mean that for noncompliance thereof the application is to be dismissed at the very threshold. The courts have the jurisdiction to entertain the application and by inserting sub-section (5) of Section 34, the power of the Court has not been taken away. This does not mean that always this provision should not be complied with. Further by the impugned order no prejudice is caused to the petitioner. Now the petitioner has got the knowledge, therefore, the petitioner may appear and file objection. Huge amount is involved and, therefore, the proceeding cannot be rejected at the very threshold on technical ground, particularly when I have held that the provision is not mandatory rather it is directory". 5. Aggrieved by the dismissal of the writ petition made under Article 226 of the Constitution of India, this Letters Patent Appeal has been preferred under Clause X of the Letters patent of High Court of ....
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.... Article 226 of the Constitution of India, is an original proceeding, while a proceeding, under Article 227 of the Constitution of India, is not an original proceeding." 11. Article 227 of the Constitution of India vests in every High Court the power of superintendence over all courts and tribunals throughout the territory in relation to which it exercises jurisdiction. This jurisdiction of superintendence, under Article 227 of the Constitution of India, is for both, administrative and judicial superintendence. 12. Therefore, the powers, conferred under Articles 226 and 227 of the Constitution of India, are separate and distinct and operate naturally in different fields. 13. Another distinction between Article 226 of the Constitution of India and Article 227 of the Constitution of India jurisdictions is that under Article 226 of the Constitution of India, the High Court normally annuls or quashes an order or proceeding; but in exercise of its jurisdiction under Article 227 of the Constitution of India, the High Court, apart from annulling a proceeding, in question, can also substitute the impugned order by the order, which the inferior Tribunal should have made. 14. Wit....
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....ts cannot, at the drop of a hat, interfere with the orders of tribunals or courts inferior to it. Nor can it, in exercise of this power, act as a court of appeal over the orders of the court or tribunal subordinate to it in exercise of its power of superintendence under Article 227 of the Constitution of India. In the cases, where an alternative statutory mode of redressal has been provided, such alternative remedy would also operate as a restrain on the exercise of this power by the High Court. (c) While laying down the principle, on the basis of which power of superintendence, embodied, under Article 227 of the Constitution of India, is exercised by the High Court, a Constitution Bench of the Supreme Court has pointed out, in Waryam Singh v. Amarnath (AIR 1954 SC 215), that a High Court, in exercise of its jurisdiction of superintendence, can interfere with an order only to keep the tribunals and courts subordinate to it--within the bounds of their authority. This power of superintendence cannot be equated with appellate jurisdiction. (d) Merely, therefore, the fact that an order is incorrect, the High Court may not exercise its power of superintendence under Ar....
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....nder Article 227 of the Constitution of India, intra-Court appeal will not be maintainable. It was, however, made clear in Lokmat Newspapers (P) Ltd. (supra), that if a single Judge of a High Court, while considering the petition under Article 226 or Article 227 of the Constitution of India, does not state under which provision he has decided the matter and where the facts justify filing of petition, both under Article 226 and Article 227 of the Constitution of India, and a petition so filed is dismissed by the Single Judge on merits, the matter may be considered in its proper perspective in an appeal. (See, Umaji Keshao Meshram v. Radhikabai, reported in 1986 Supp SCC 401, Ratnagiri Distt. Central Coop. Bank Ltd. v. Dinkar Kashinath Watve, reported in 1993 Supp (1) SCC 9, and Sushilabai Laxminarayan Mudliyar v. Nihalchand Waghajibhai Shaha, reported in 1993 Supp (1) SCC 11. See also, Kanhaiyalal Agrawal v. Factory Manager, Gwalior Sugar Co. Ltd., (2001) 9 SCC 609). 22. What nomenclature has been used by a party, while seeking intervention by Court is not so material as the contents of the order, which is challenged, as well as the contents of the order, which has been passed by....
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....in an arbitration case other than international commercial arbitration, and includes the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject matter of the arbitration, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes. 29. The definition of Court, as given in Section 2(e) of the 1996 Act, take us to decide as to whether a principal Civil Court, as mentioned in Section 34 of the 1996 Act, is a Civil Court of ordinary jurisdiction as is understood under the Bengal, Agra and Assam Civil Courts Act, 1887 (hereinafter referred to as 'the 1887 Act'), with plenary power and authority to decide suits of any nature under Section 9 of the Code of Civil Procedure. 30. We have considered the rival submissions. 31. Thus, the principal questions, which arise, in the present case, may be set out as follows; Whether, while exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, the principal civil Court is a Court or a tribunal? If the principal civil Court is a tribunal, wh....
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....dicature. They shared the exercise of the judicial power of the State, but were brought into existence to implement some administrative policy or to determine controversies arising out of some administrative law. They were very similar to courts, but were not courts. When the Constitution spoke of 'courts' in Articles 136, 227 and 228 and in Articles 233 to 237 and the Lists, it contemplated courts of civil judicature but not tribunals other than such courts. This was the reason for using both the expressions in Articles 136 and 227. By 'courts' was meant courts of civil judicature and by 'tribunals' those bodies of men who were appointed to decide controversies arising under certain special laws. Among the powers of the State was included the power to decide such controversies. This was undoubtedly one of the attributes of the State and was aptly called the judicial power of the State. In the exercise of this power, a clear division was noticeable. Broadly speaking, certain special matters went before tribunals and the residue went before the ordinary courts of civil judicature. What distinguished them had never been successfully established. A court in the....
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....n for a hearing and a decision on evidence, and that was indubitably a curial function. In its functions the Central Government often reached decisions but all its decisions could not be regarded as those of a tribunal. Resolutions of Government might affect rights of parties and yet they might not be in the exercise of judicial power. Resolutions of Government might be amenable to writs under Articles 32 and 226 in appropriate cases but might not be subject to a direct appeal under Article 136 as the decisions of a tribunal. The position, however, changed when Government embarked upon curial functions and proceeded to exercise judicial power and decide disputes. In these circumstances, it was legitimate to regard the officer who dealt with the matter and even Government itself as a tribunal. The word 'tribunal' was a word of wide import and the words 'court' and 'tribunal' embraced within them the exercise of judicial power in all its forms. The decision of the Central Government thus fell within the powers of the Supreme Court under Article 136. 35. In Kihoto Hollohan v. Zachillhu, reported in 1992 Supp (2) SCC 651, the observations, made in the case of....
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....ng of an injunction, etc. The District Judge also enforces the award of the Arbitral Tribunal as a decree exercising, by virtue of the provisions of Section 36 of the 1996 Act, the powers conferred by Order 21 of the Code of Civil Procedure. 39. In Nahar Industrial Enterprises Limited (supra), the Supreme Court has pointed out the essentials of a civil court by indicating that the court must be able to pass a decree as also must be capable of undertaking a full-fledged trial in terms of the provisions of the Code of Civil Procedure and/or the Evidence Act. Only because a court is competent to adjudicate an issue of civil nature does not, according to the decision, in Nahar Industrial Enterprises Limited (supra), necessarily lead to the inference that the court, so dealing with a case, is a civil court. It is apposite to point out, in this regard, the relevant observations, made in Nahar Industrial Enterprises Limited (supra), which read as follows: "69. Civil court is a body established by law for administration of justice. Different kinds of law, however exist, constituting different kinds of courts. Which courts would come within the definition of the civil court has ....
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.... has consequences on the rights and liabilities of parties, it assumes the character of a Court, which is effectively, in the light of the decision, in Harinagar Sugar Mills Ltd. (supra), a tribunal. NATURE OF JURISDICTION UNDER ARTICLE 226 VIS-AVIS ARTICLE 227 41. The next question would be what is the nature of jurisdiction vested in High Court under Article 226 and 227 vis-a-vis. orders of Courts and Tribunals? This question assumes importance, because of the fact that if the application, preferred by the appellant before the learned single Judge, is, in effect, an application under Article 226, then, a letters patent appeal would lie. However, if the application, preferred by the appellant before the learned single Judge, is, in effect, an application under Article 227, this letters patent appeal would not lie. 42. As has been held in the case of Anil Kumar Shrivastava v. Shaurya Sunil (CWJC 718 of 2016), all the powers, which are given to the High Court under sub-Clauses (a), (b) and (c) of Clause 2 of Article 227, are in respect of courts and tribunals, which are subordinate to the territorial jurisdiction of a High Court. A single Judge or a single Bench of a High C....
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.... of the High Court, as conferred by Articles 226 and 227 of the Constitution of India, operate in two separate fields. Such exercise, on occasions, intermeddles and crosses each other. However, the two powers are different in nature. 47. The power of superintendence under Article 227, though wide, is supervisory in nature. The power under Article 227 cannot, therefore, be exercised to interfere with an order if the order, made by a subordinate court or tribunal, is within the bounds of, or in conformity with, law. What is, however, extremely important to note is that while exercising supervisory jurisdiction under Article 227, the High Court not only acts as a court of law, but also as a court of equity. 48. It is, therefore, not only the power, but also the duty of the court to ensure that the power of superintendence is exercised in order to advance the cause of justice and uproot injustice. This power cannot, however, be exercised to interfere with an order of a subordinate court or tribunal if the order, made by the subordinate court or the tribunal, is, otherwise, within the bounds of law. If, therefore, a subordinate court or tribunal does not have a particular power an....
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.... entitled to receive, merely on the ground that the relief, which the person is entitled to receive, has not been sought for or correct constitutional provisions have not been mentioned in the application. 51. In fact, in Ramesh Chandra Sankla and Ors. v. Vikram Cement Ltd., reported in (2008) 14 SCC 58, it has been held that a statement, made by a learned single Judge, that he has exercised power under Article 227, cannot take away the right of appeal against such an order if the power is, otherwise, found to have been exercised under, or traceable to, Article 226. The vital factor for determination of maintainability of an 'intra court' appeal, arising out of a writ proceeding, is the nature of jurisdiction invoked by the party, the true nature of order passed by a Single Judge and the nature of relief, which a party may be entitled to. 52. Let us, now, take into account as to the basics of the two powers. One of us had an occasion to deal with the powers of the High Court under Article 226 vis-`-vis. Article 227 of the Constitution of India, in Rana Sinha @ Sujit Sinha Vs. State of Tripura, reported in (2011) 2 GLT 610, and pointed out that the question of issuance....
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....ermination of maintainability of an 'intra court' appeal, arising out of a writ proceeding, is the nature of jurisdiction invoked by the party, the true nature of order passed by a Single Judge and the nature of relief, which a party may be entitled to. 55. Thus, in the present case, as would be seen from the averments made in the original application, the appellant approached the Court stating that a mandatory provision of law, as contained in the Arbitration and Conciliation Act, 1996, has not been complied with by the principal Civil Court, which is in the context of the facts of the present case, is a tribunal or court, but not a civil court of ordinary jurisdiction. 56. The application, in the present case, was, thus, in essence, an application under Article 226 and not under Article 227. We, have, therefore no hesitation in holding that the present intra Court appeal is maintainable. WHETHER THE PROVISIONS OF SECTION 34(5) ARE MANDATORY OR DIRECTORY 57. Before proceeding to look into the rival arguments with regard to the correctness of the order passed by learned District Judge, it is apposite to refer to what has been observed by the Law Commissions of I....
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....ed upon the other party." 59. Both the above amendments came to be inserted, in the 1996 Act, by the Arbitration and Conciliation (Amendment) Act, 2015, with effect from 23.10.2015. The purpose, as is discernible, for bringing the above amendments, is to shorten the period of litigation post arbitral proceeding. The challenge to an award should not protract to an indefinite period of time. The life of such a challenge should be controlled and a definite time-frame has been formulated to bring closure to the challenge to an arbitral award. The 246th Report of the Law Commissions of India is explicit as to the objective behind the amendment. 60. As would be noticed the intendment, under Section 34(5), is to provide a life span to the adjudication of validity of an award made by the Arbitrator. In other words, the date of 1 (one) year period shall be computed from the date of service of notice. Hence, if there is a delay in service of notice, the period of 1 (one) year span automatically gets extended since such a period is to be computed from the date of service of notice under Section 34(5). 61. In order to ascertain whether the provisions of Section 34(5) are mandatory or ....
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....(3) of the U.P. Municipalities Act, was mandatory or directory. The facts were that Rampur Municipality, by a special resolution, proposed to levy property tax on persons or a class of persons. Section 131(3) required that the Board shall pass a resolution and have it published in the manner prescribed in Section 94 of such proposed tax. Section 135(3) declared that a notification of the imposition of the tax, under sub-Section (2) thereof, shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act. Under Section 94(3), every resolution, passed by the Board, shall be published in a local Hindi newspaper or in its absence by general or special order as may be directed by the State Government. The Municipality had contended that it had followed that procedure. The appellants contended that there was infraction in that behalf. While considering that question, per majority, the Supreme held, in Raza Buland Sugar Co. Ltd. (supra), as follows: "The question whether a particular provision of a statute was mandatory or directory cannot be resolved by laying down any general Rule and it should depend upon the facts of each case and for that....
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....nd for not faithfully implementing the mandate of the legislature. 5. xx xx xx 6. It must now be regarded as settled law that a suit against the Government or a public officer, to which the requirement of a prior notice under Section 80, C.P.C. is attracted cannot be validly instituted until the expiration of the period of two months next after the notice in writing has been delivered to the authorities concerned in the manner prescribed for in the section and if filed before the expiry of the said period, the suit has to be dismissed as not maintainable." 67. Before the impact of the decision, in Bihari Choudhary (supra), is considered, a reference to yet another decision of the Supreme Court, in Kailash v. Nanhku and Others, reported in (2005) 4 SCC 480, would not be out of place to mention herein. The learned single Judge has relied on the said judgment in support of his conclusion that the provisions of Section 34(5) of the 1996 Act are not mandatory, but a directory one. The Supreme Court had, in Kailash (supra), the occasion to consider and interpret the time period prescribed for submission of a written statement by the defendants, in a civil suit, under....
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....e respondent could be taken on record beyond the period of 45 days. The provision is more by way of procedure to achieve the object of speedy disposal of such disputes. It is an expression of "desirability" in strong terms. But it falls short of creating of any kind of substantive right in favour of the complainant by reason of which the respondent may be debarred from placing his version in defence in any circumstances whatsoever. It is for the Forum or the Commission to consider all facts and circumstances along with the provisions of the Act providing time frame to file reply, as a guideline, and then to exercise its discretion as best it may serve the ends of justice and achieve the object of speedy disposal of such cases-keeping in mind principles of natural justice as well. The Forum may refuse to extend time beyond 15 days, in view of Section 13(2)(a) of the Act but exceeding the period of 15 days of extension, would not cause any fatal illegality in the order. 10. xx xx xx 11. xx xx xx 12. xx xx xx 13. We have already noticed that the provisions as contained under Clause (a) of Sub-section (2) of Section 13 is procedural in nature. It is,....
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....39;, in legislation, reflects exclusiveness is a judicially recognized fact. 72. One may, with regard to the above, readily refer to Hari Ram v. Babu Gokul Prasad (AIR 1991 SC 427), wherein Section 166 of Madhya Pradesh Land Revenue Code, 1954, came up for interpretation. Section 166 of the Code of Madhya Pradesh Land Revenue Code read, "166. Any person who holds land for agricultural purposes from a tenure holder and who is not an occupancy tenant under Section 169 or as protected lessee under the Berar Regulation of Agricultural Leases Act, 1951, shall be ordinary tenant of such land. Explanation section - For the purposes of this (i) any person who pays lease money in respect of any land in the form of crop share shall be deemed to hold such land; (ii) any person who cultivates land in partnership with the tenure holder shall not be deemed to hold such land; (iii) any person to whom only the right to cut grass or to graze cattle or to grow Singhara (Trapa bispinosa) or to propagate or collect lac is granted in any land shall not be deemed to hold such land for agricultural purposes." 73. In Hari Ram (supra), Section 166 showed t....
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....) of the Arbitration and Conciliation Act, 1996, the word 'only' stands omitted. It was contended, in Bhatia International (supra), that India had purposely not adopted Article 1(2), as a whole, of Article 1(2) of UNCITRAL Model Law and, hence, Section 9 would not apply to arbitral proceedings, which took place outside India. Reacting to the submissions so made, the Supreme Court observed and held, "Thus Article 1(2) of the UNCITRAL Model Law uses the word "only" to emphasize that the provisions of that law are to apply if the place of Arbitration is in the territory of that State. Significantly, in Section 2(2) the word 'only' has been omitted. The omission of this word changes the whole complexion of the sentence. The omission of the word "only" in Section 2(2) indicates that this sub-section is only an inclusive and clarificatory provision. As stated above, it is not providing that provisions of Part I do not apply to arbitrations which take place outside India. Thus there was no necessity of separately providing that Section 9 would apply. 77. The observations made above, in Bhatia International (supra), clearly show that the omission of the word 'only....
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....capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office. 81. The Privy Council has held, in Bhagchand Dagadusa v. Secretary of State, reported in (1927) LR 54 IA 338, that that the terms of Section 80 should be strictly complied with. The ratio of Bhagchand Dagadusa (supra) has been approved by the Supreme Court in the case of Dhian Singh Sobha Singh v. Union of India (AIR 1958 SC 274) 82. The right to file an application in Sub-Section (5) of Section 34 of the 1996 Act (since after the 2015 amendment), arises only when a notice has preceded and an affidavit is filed in support of issuance of such notice. The notice ought to have been issued prior to filing of the application and the issuance of notice by the learned District Judge cannot obviate the initial error. The right to proceed with an application, under Section 34 of the 1996 Act, presupposes the sending of a notice under Section 34 of the 1996 Act and, unless the same is issued, there cannot be an inherent right to file the application and, if so filed, to entertain the same by the Court before whom the same has been filed. The present notice, correctly ....