TaxTMI 
TaxTMI 
2022 (5) TMI 975
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....0/2021 & CM APPL. Nos. 21523-21525/2021, CM(M) 461/2021 & CM APPL. Nos. 21533-21535/2021, CM(M) 462/2021 & CM APPL. Nos. 21538-21540/2021, CM(M) 463/2021 & CM APPL. Nos. 21548-21550/2021, CM(M) 464/2021 & CM APPL. Nos. 21553-21555/2021, CM(M) 465/2021 & CM APPL. Nos. 21560-21562/2021, CM(M) 466/2021 & CM APPL. Nos. 21568-21570/2021, CM(M) 467/2021 & CM APPL. Nos. 21575-21577/2021 JUDGMENT These 24 petitions under Article 227 of the Constitution of India have been filed by the Union of India [hereinafter, "the Union"] in respect of identical orders dated 19.02.2021 passed by a sole Arbitrator in 24 different arbitration proceedings. The Union has, in the alternative, sought a direction upon the Arbitrator to consider the applications filed by it for recall of the impugned orders. 2. All the proceedings were filed by the Union against the respondent-Delhi State Consumers Co-operative Federation Limited [hereinafter, "DSCCFL"]. By the impugned orders, the Arbitrator has terminated the proceedings under Section 25(a) of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"]. A. Facts 3. The 24 arbitral proceedings arise in substantially similar circumstances. In respo....
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.... shall be lawful for the said Additional Secretary or the Joint Secretary, as the case may be, to appoint an arbitrator in the place of the outgoing arbitrator in the manner aforesaid and the person so appointed will proceed with the references from the stage at which it was left by his predecessor. It is also a term of this contract that no person, other than a person appointed by the Additional Secretary or the Joint Secretary of the Ministry or Department as aforesaid shall act as Arbitrator and if for any reason that is not possible the matter shall not be referred to arbitration at all. (c) Subject as aforesaid the Arbitration and conciliation Act, 1996 and the Rules thereunder and any statutory modification thereof for the time being in force shall apply to the arbitration proceedings under this clause. (d) Upon every and any reference as aforesaid the assessment of costs of the incidental to the reference and award respectively shall be in discretion of the sole arbitrator. (e) The venue of the arbitration proceedings will be the premises of the Government of India, Ministry of Defence, New Delhi or such other place as the sole arbitrator may decide. II. TIME LIM....
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....tor by a separate communication issued eight months thereafter, on 08.07.2019. She issued her first notice in these proceedings more than one year thereafter, on 16.10.2020. By the said notice, she directed the Union to file the Statement of Claims "on the next date of hearing", which was fixed on 02.11.2020. 8. The Statement of Claims was not filed, and a further order came to be passed on 02.11.2020, again directing the Union to "file the Statement of Claim, if any on the next date of hearing", which was fixed for 16.12.2020. 9. On 16.12.2020, the Union once again submitted that they have written a letter to the Ministry of Law and Justice for appointment of government counsel and that reply was still awaited. The Union was directed to pursue the matter with the Law Ministry for early appointment of counsel and to file the Statement of Claims on the next date of hearing. The order sheet dated 16.12.2020 reads as follows:- "Ld. Advocate for Respondent has filed her Vakalatnama, which is taken on record. The representative for Claimant has submitted that they have written a letter to Ministry of Law & Justice for appointment of Govt. Counsel and reply is still awaited. The Clai....
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....us non dormientibus jura subbeniunt", i.e. law does not help those who sleep over their rights as well as exercising the power conferred in the Section 25 of Arbitration and Conciliation Act, 1996 as amended up-to-date. 6. I did not see any reason to give any further Notice to the claimant. They have failed to show sufficient cause to communicate their statement of claim, in accordance with Section 23(1) of the Act. 7. In view of the above, I 'terminate' the 'proceedings', under Section 25(a) of the Act. 8. THE ORDER HAS BEEN MADE UNDER THE ARBITRATION AND CONCILIATION ACT, 1996. 9. IN WITNESS WHEREOF I HAVE SIGNED this ORDER ON THIS THE 19th FEBRUARY, 2021." 13. Upon receipt of these orders, the Union applied to the Arbitrator for recall thereof and, according to the Union, the applications were taken up for hearing on 08.03.2021. However, the Union claims that the learned Arbitrator returned the applications on 09.03.2021 without passing any orders thereupon [Paragraph 4 (xxvi) in all petitions]. B. Submissions 14. Assailing the impugned orders, Mr. Rakesh Kumar, learned Central Government Standing Counsel, submitted that the learned Arbitrator has, in ....
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....ubmitted that a reference to the chronology of events narrated above, displays the utterly lethargic attitude which beset the Union in prosecuting its claims. She submitted that, on each occasion, adjournments were taken because the Union was unable even to appoint counsel in good time. Ms. Bhattacharya urged the Court not to permit the Union to take advantage of its own gross delays in the facts and circumstances of these cases. 18. Mr. Kumar, in rejoinder, disputed Ms. Bhattacharya's submissions regarding maintainability of these petitions. He submitted, relying upon the very judgments cited by Ms. Bhattacharya, that the supervisory jurisdiction of this Court is available even in respect of arbitral proceedings, albeit in a narrow category of cases. Mr. Kumar submitted that the Arbitrator having failed to exercise a power vested in her, these cases fall squarely within the scope of Article 227. 19. Regarding the Union's delay, Mr. Kumar contended that no proceedings were held between 2018 and 2020 as the Directorate General of Supplies and Disposals was wound up. He also pointed out that in the applications filed before the Arbitrator for recall of the impugned orders, the Unio....
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....ing has not been started. The most important words contained in Section 25 are "where without showing sufficient cause-the claimant fails to communicate his statement of claim". Under Section 23(1), the claimant is to state the facts supporting his claim within the period of time agreed upon by the parties or determined by the Arbitral Tribunal. The question of termination of proceedings thus arises only after the time agreed upon between the parties or determined by the Arbitral Tribunal comes to an end. When the time as contemplated under Section 23(1) expires and no sufficient cause is shown by the claimant the Arbitral Tribunal shall terminate the proceedings. The question of showing sufficient cause will arise only when the claimant is asked to show cause as to why he failed to submit his claim within the time as envisaged under Section 23(1) or the claimant, on his own, before the order is passed under Section 25(a) to terminate the proceedings comes before the Arbitral Tribunal showing sufficient cause for not being able to submit his claim within the time. In both the circumstances i.e. when a show-cause notice is issued to the claimant as observed above or the claimant of ....
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...., the Madras High Court and this Court, to the effect that arbitral proceedings can be recommenced after they are terminated under Section 25(a) of the Act, provided sufficient cause is shown to recall the termination order. The Tribunal's order holding that it cannot recommence arbitration proceedings was, therefore, held to be erroneous and the judgment of the High Court exercising jurisdiction under Article 227 of the Constitution was affirmed. 24. As far as issue Nos. (ii) and (iii) are concerned, the Supreme Court did not consider it necessary to enter into those issues, in view of its finding that the Arbitral Tribunal had jurisdiction to consider the application for recall of the order terminating proceedings under Section 25(a) of the Act. 25. Although the Supreme Court, in Srei Infrastructure (Supra), declined to enter into the jurisdictional question posed in paragraph 12.2 (ii) extracted above, its affirmation of the exercise of Article 227 jurisdiction by the High Court provides a context to consider the issue of maintainability of these petitions in greater detail. II. Maintainability of the petitions 26. The question of exercise of the supervisory jurisdiction of ....
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....ted by us hereinabove so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction." xxxx xxxx xxxx 21. Viewed from a different perspective, the arbitral process is strictly conditioned upon time limitation and modelled on the "principle of unbreakability". xxxx xxxx xxxx If the courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished. 22. The High Court did not appreciate the limitations under Articles 226 and 227 of the Constitution and reasoned that the appellant had undertaken to appoint an arbitrator unilaterally, thereby rendering Respondent 1 remediless. However, a plain reading of the arbitration agreement points to the fact that the appellant herein had actually acted in accordance with the procedure laid down without any mala fides. 23. Respondent 1 did not take legal recourse against the appointment of the sole arbitrator, and rather submitted themselves before the tribunal to adjudicate on the jurisdiction issue as well as on the merits. In this situation, Respondent 1 has to endure the natural consequences of submitt....
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....t, while also guarding against excessive intervention of the writ court in matters of arbitration. The observations in these judgments are in the context of cases where the courts were called upon to re-examine issues determined under the Act. The present cases are different, inasmuch as the Union's grievance is not just against a substantive decision made by the Arbitrator, but also against her failure to decide the review applications. The grievance therefore is that the Arbitrator has neglected to exercise jurisdiction vested in her. To ensure that a tribunal does perform the duty entrusted to it is a core aspect of the supervisory function of this Court, just as much as to ensure that it does not exceed its jurisdiction. Reference in this connection may be made to judgments of the Supreme Court in Hari Vishnu Kamath vs. Syed Ahmad Ishaque and Others [(1955) 1 SCR 1104 : AIR 1955 SC 233 [paragraph 21], Estralla Rubber vs. Dass Estate (P) Ltd. [(2001) 8 SCC 97 [paragraph 6]] and Ouseph Mathai and Others vs. M. Abdul Khadir [(2002) 1 SCC 319 [paragraph 4]]. I therefore hold that, to this extent, at least, the grievance raised in the present cases fall within the narrow band of cas....
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....roach. As noted above, prior to the impugned orders, the last order of the Arbitrator was passed on 06.01.2021. By that order, the case was fixed for hearing on 22.01.2021 and the Union was given time to file the Statement of Claims "on the next date of hearing". It is the admitted position that no hearing was, in fact, held on 22.01.2021, and none was fixed thereafter. The Arbitrator, in the impugned orders, has lost sight of this position and has referred only to the earlier order passed by her on 16.10.2020. The abrupt issuance of the impugned orders without holding any hearing as contemplated by the order dated 06.01.2021 and without issuing show cause notice to the Union, as required by Srei Infrastructure (Supra), is also unsustainable. 34. In these circumstances, I am of the view that it would be appropriate to allow the Union's alternative prayer for a direction upon the Arbitrator to consider the applications presented by it for recall of the impugned orders dated 19.02.2021. It may be noted that, whether or not the Union is able to show sufficient cause for its delay in submitting the Settlement of Claims, is a matter for the Arbitrator to consider. IV. Judgment in Awas....