TaxTMI 
TaxTMI 
2026 (4) TMI 1651
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....uncil (hereinafter 'Municipal Council') and quashed and set aside the award as well as the judgment of the Civil Court [Judgement of the Joint Civil Judge, Senior Division, Kalyan, dated September 22, 2000, in Misc. Application No. 196/1996], making the award a rule of the Court and dismissing the objections of the Municipal Council. For the reasons to follow, we have held that there is neither an arbitration agreement between the parties nor an informed consent of the Municipal Council for resolution of the dispute through arbitration. We have therefore upheld the decision of the High Court and dismissed the special leave petition. 2. Facts relevant to the present special leave petition are that the Municipal Council is constituted under the provisions of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965. In March 1994, while exercising powers conferred under Section 143-A of the 1965 Act, the Municipal Council issued a tender for the collection of octroi for a period of one year, beginning on 1 April 1994 and ending on 31 March 1995. The tender notification provided for a reserve price with the term that any offer lower than Rs. 6,74,00,00....
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....an Division, as an Arbitrator to arbitrate the said dispute. This Government Resolution records that the same was issued by the State Government in pursuance of the powers conferred under Section 143-A(3) of the said Act and that the same was issued as a special case. Another significant aspect is that the Arbitrator so appointed was required to submit an arbitration report to the State Government within one month. It was also provided that the arbitration be conducted in accordance with the provisions of the Arbitration Act, 1940. 8. At the relevant time, the Municipal Council was functioning under an "Administrator" appointed by the State Government. After the appointment of the learned Arbitrator, immediately on 3 December 1994, an intimation came to be issued to the Municipal Council, calling upon to attend a hearing fixed by the Arbitrator on 9 December 1994. It was recorded that a reply be filed by 9 December 1994 and a hearing would be held before the Arbitrator on 14 December 1994 at 2.30 p.m. The Administrator of the Municipal Council submitted a reply vide his letter dated 8 December 1994, indicating the statutory and regulatory processes followed for granting the cont....
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....enue Commissioner has passed this Award on 26.12.1994 in the above proceedings. The Revenue Commissioner, Konkan Division Shri G.D. Pingulkar has passed the said Award. This Respondent has already filed its say and objection to the main Petition under Section 30 and 33 of the Arbitration Act, 1940 in the month of April, 1995 itself. This Respondent repeats and reiterates that they rely on the said objections as raised under Section 30 and 33 of Arbitration Act, 1940. The Petitioners are disentitled from getting and/or seeking any relief in this Petition either for the alleged decree in terms of Award or any other reliefs. lnfact the so called Award dated 26.12.1994 delivered by the Respondent No. 2 is nonest and is null and void and is unenforceable in law in any manner whatsoever, and on this count itself the said Award is liable to be ignored and discarded. 2. The Respondent No. 1 states that the State of Maharashtra had no jurisdiction of any nature whatsoever under any of the provisions of Arbitration Act and/or in any other clauses of contract under which such an arbitrator could have been appointed by the State of Maharashtra in relation to the alleged dispute betwee....
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....ting to estoppel, Mr. Suresh has submitted that the objections to the award were barred by limitation. He would conclude by submitting that the intention of the parties to refer the dispute to arbitration is evident, and therefore, even if the contract does not use the expression "arbitration", the court should not have interfered with the arbitral award that came into existence. 16. Mr. Vinay Navare, learned senior counsel appearing for the Municipal Council, on the other hand, supported the reasoning in the judgment and order passed by the High Court and reiterated the submission that there exists no arbitration agreement between the parties and that the Municipal Council has raised jurisdictional questions challenging the award at the appropriate stage. 17. We have given our anxious consideration, particularly in view of the fact that the award has already been delivered and the same was upheld by the Civil Court. It is in this context that the exercise of jurisdiction of the High Court in appeals under Section 39 of the Arbitration Act, 1940 requires close scrutiny. 18. At the outset, we note that the parties to the contract are the petitioner and the Municipal Council....
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....he power is to be exercised. Under no circumstances can such a power be extended to appoint an arbitrator unilaterally, notwithstanding the statutory or contractual relationship that may exist between the Municipal Council and its agent. 20. In view of the above, we have no hesitation in affirming the following findings arrived at by the Division Bench of the High Court. "22.... Moreover, as noted above the Government Resolution specifies that the same has been issued in pursuance of the power under Section 143-A(3) (supra) of the Municipal Council Act and that the arbitrator is being appointed as a special case. On a perusal of the said provision as we have noted above, we do not find that any such power is vested in the State Government under subsection(3) of Section143-A, to foist arbitration on parties who are governed by a concluded contract between them. What is significant is that in this entire process of appointing an arbitrator it is solely at the instance of Respondent No.1, there is not a slightest role played by the Appellant. There is nothing on record to show that the Government had taken concurrence of the Appellant or to stretch it little further, that ....
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....for Respondent No.1 to approach the State Government directly and make a unilateral request to make an appointment of an arbitrator. In taking all these steps, Respondent No.2 (Arbitrator) was not oblivious of the fact that the Appellant-Municipal Council was working under the Administrator appointed by the Government of Maharashtra and that certainly the Administrator was the officer subordinate firstly to the State Government as also to the Revenue Commissioner, Konkan Division who came to be appointed as Arbitrator. Interestingly the facts relating to the conduct of the arbitration proceedings are writ large. The learned Arbitrator called upon the Appellant to submit a reply by 9 December 1994 and to appear before the learned Arbitrator on 14 December 1994 at 2.30 p.m. Accordingly, on 14 December 1994 the learned Arbitrator heard the parties and closed the matter for an award to be passed and soon thereafter on 26 December 1994 delivered his award holding that the minimum reserve price was required to be fixed at Rs. 6,20,89,843/- which was surprisingly lesser than the demand of Respondent No. 1 which was Rs. 6,33,21,483/- (i.e. Rs. 6,74,50,000 minus Rs. 40,78,517/0). Admittedly....
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....sdiction to enter the arbitration and conduct the arbitration proceedings in question." 25. We are in agreement with the findings of the High Court as regards the interpretation of clause 22, as well as the unsatisfactory circumstances in which the Municipal Council was compelled to participate in the arbitral proceedings. The High Court also considered the decision relied on by the petitioner for the reason that there is no acquiescence or estoppel in the facts and circumstances of the case. 26. In view of the above analysis, we are of the opinion that the High Court has arrived at the right conclusion on the basis of law and fact. While reiterating the decision of the High Court, we are of the opinion that there is no merit in the special leave petition for the following reasons: a) Absence of a Valid Arbitration Agreement: There is no written agreement between the parties to submit differences to arbitration as required by Section 2(a) of the Arbitration Act, 1940. Specifically, Clause 20 relates to the position that the parties are to maintain pending the disposal of a dispute resolution. In other words, clause 20 prescribes a measure that the parties would maint....