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Thursday, July 25, 2024

Arbitration and Conciliation Act, 1996 – s.34 and s.37 – An award was passed by the Tribunal – Appellant filed a petition u/s. 34 of the Arbitration Act before the High Court to challenge the award – The Single Judge of the High Court allowed the petition u/s. 34 and proceeded to set aside the award on various grounds, such as perversity, patent illegality, etc. – Appeal by the respondent u/s. 37 of the Arbitration Act challenging the judgment of the single Judge of the High Court –The Division Bench of the High Court passed an order of remand to the single Judge on the ground that the single Judge of the High Court did not consider several issues – Correctness: Held: In the facts of the case in hand, while deciding the petition under Section 34 of the Arbitration Act, the Single Judge has made a very elaborate consideration of the submissions made across the Bar, the findings recorded by the Arbitral Tribunal and the issue of illegality or perversity of the award – Detailed reasons while dealing with the alleged patent illegalities associated with the directions issued under the arbitral award have been recorded – Considering the nature of the findings recorded by the Single Judge, the job of the Appellate Court was to scrutinise the said findings and to decide, one way or the other, on merits – In this case, the finding of the Appellate Bench that the impugned judgment of the Single Judge does not address several issues raised by the parties cannot be sustained at all – As far as the power of the Appellate Court under Section 37(1)(c) to pass an order of remand is concerned, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable – Some of the exceptional cases can be stated by way of illustration: a) Summary disposal of a petition under Section 34 of the Arbitration Act is made without consideration of merits; b) Without service of notice to the respondent in a petition under Section 34, interference is made with the award; and c) Decision in proceedings under Section 34 is rendered when one or more contesting parties are dead, and their legal representatives have not been brought on record – In the facts of the case, the remand was completely unwarranted – The reason is that the Single Judge has elaborately dealt with the merits of the challenge in the Section 34 petition – This Court should benefit from reasoned judgment rendered by the Court under Section 37 – In the instant case, this Court does not have the benefit of a decision of the Appellate Court dealing with all the issues dealt with by the Single Judge while deciding the petition under Section 34 of the Arbitration Act – Therefore, the impugned judgment of the Division Bench of the High Court is set aside and the Divison Bench of the High Court is directed to decide the appeal on merits after considering the arbitral award and the decision under section 34. [Paras 17, 18, 20 ] Arbitration and Conciliation Act, 1996 – s. 34 and s.37 – Jurisdiction of the Appellate Court dealing with an appeal u/s. 37 against the judgment in a petition u/s. 34: Held: The jurisdiction of the Appellate Court dealing with an appeal under Section 37 against the judgment in a petition under Section 34 is more constrained than the jurisdiction of the Court dealing with a petition under Section 34 – It is the duty of the Appellate Court to consider whether Section 34 Court has remained confined to the grounds of challenge that are available in a petition under Section 34 – The ultimate function of the Appellate Court under Section 37 is to decide whether the jurisdiction under Section 34 has been exercised rightly or wrongly – While doing so, the Appellate Court can exercise the same power and jurisdiction that Section 34 Court possesses with the same constraints. [Para 16] Arbitration and Conciliation Act, 1996 – s. 34, s.37 and s.19 – Code of Civil Procedure, 1908 – Applicability of the provisions of CPC to the proceedings before the Arbitrator and the Court under Sections 34 and 37 of the Arbitration Act: Held: The provisions of the CPC have not been made applicable to the proceedings before the learned Arbitrator and the Court under Sections 34 and 37 of the Arbitration Act – The legislature’s intention is reflected in Section 19(1) of the Arbitration Act, which provides that an Arbitral Tribunal is not bound by the provision of the CPC – That is why the provisions of the CPC have not been made applicable to the proceedings under Sections 34 and 37(1)(c). [Para 18] Arbitration and Conciliation Act, 1996 – Object of: Held: The object of the Arbitration Act is to provide an arbitral procedure that is fair, efficient, and capable of meeting the needs of specific arbitration – The object is to ensure that the arbitral proceedings and proceedings filed for challenging the award are concluded expeditiously – The proceedings have to be cost-effective – The supervisory role of the Courts is very restricted – Moreover, one cannot ignore that arbitration is one of the modes of Alternative Disputes Redressal Mechanism provided in Section 89 of the CPC. [Para 19] Arbitration and Conciliation Act, 1996 – s.37 – Consequences of passing routinely order of remand: Held: If the Courts dealing with appeals under Section 37 of the Arbitration Act start routinely passing the orders of remand, the arbitral procedure will cease to be efficient – It will cease to be cost-effective – Such orders will delay the conclusion of the proceedings, thereby defeating the very object of the Arbitration Act – Therefore, an order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable. [Para 19] Constitution of India – Art.136 – Arbitration and Conciliation Act, 1996 – s. 34 and s.37: Held: An order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable – The scope of interference in a petition under Section 34 is very narrow – The jurisdiction under Section 37 of the Arbitration Act is narrower – Looking to the objects of the Arbitration Act and the limited scope available to the Courts to interfere with the award of the Arbitral Tribunal, this Court, while dealing with the decisions under Sections 34 and 37 of the Arbitration Act, in its jurisdiction under Article 136 of the Constitution of India, has to be circumspect – By their own volition, the parties choose to go before the Arbitral Tribunal instead of availing remedy before the traditional civil courts – Therefore, the Courts must be very conservative when dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Arbitration Act. [Para 19] Arbitration and Conciliation Act, 1996 – Bulky pleadings – Time-consuming submissions, leading to very lengthy awards – Bar to show restraint: Held: The arbitral proceedings have become synonymous with very bulky pleadings and evidence and very long, time-consuming submissions, leading to very lengthy awards – Moreover, there is a tendency to rely upon a large number of precedents, relevant or irrelevant – The result of all this is that there are very long hearings before the Courts in Sections 34 and 37 proceedings – In many cases, the proceedings under Sections 34 and 37 are being treated as if the same are appeals under Section 96 of the CPC – When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court’s time – The members of the Bar should show restraint by incorporating only legally permissible grounds in petitions under Section 34 and the appeals under Section 37 – Brevity will make the arbitral proceedings and the proceedings under Sections 34 and 37 more effective – Arbitration must become a tool for expeditious, effective, and cost-effective dispute resolution. [Para 23]

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Quashing – Code of Criminal Procedure, 1973 – s.362 – When not applicable – Suit for specific performance of the agreements for sale filed against the appellants by the second respondent and his brother was later withdrawn in view of the out-of-court settlement – Effect on complaint filed by the second respondent – Writ petition filed by the appellants for quashing the complaint was dismissed by the High Court on the ground that there was a bar u/s.362 as the contentions raised were rejected in an earlier criminal revision application, which cannot be re-agitated – Correctness: Held: High Court lost sight of the fact that it was a substantive petition under Article 226 of the Constitution of India for quashing the complaint on the ground that the continuation of the same was an abuse of the process of law – The second prayer in the writ petition could have been hit by s.362, as the prayer was to quash the order on the application for discharge – But the first prayer was for quashing the complaint itself – Therefore, dismissing the first prayer in the writ petition on the ground of the bar of Section 362 of the Cr.PC was erroneous – Furthermore, the second respondent filed application in the pending suit seeking withdrawal thereof categorically stating that in view of the out-of-court settlement with the appellants, he would not lay any claim in any manner whatsoever over the suit properties – He never disputed the correctness of what was stated in the said application, and the order passed permitting the withdrawal of the suit – Thus, he gave up his claim under the agreements and therefore, continuing the complaint would be nothing but an abuse of the process of law – A case was made out to quash the complaint – High Court fell in error in refusing to do so – Complaint quashed. [Paras 15, 16]

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Central Excise Act, 1944 – s.4A – Valuation of excisable goods with reference to retail sale price – When not applicable – Standards of Weight & Measures (Packaged Commodity) Rules, 1977 – rr.2 (q), (g), (x)(iii), 34 – HDPE (High-Density Polyethylene Bag) bags containing 100 poly packs containing 33 plus one smaller pack of chewing tobacco sold by the respondent, if was meant for retail sale and therefore be treated as a group package or it was a wholesale package not meant for retail sale: Held: In view of sub-section (1) of s.4A of the Excise Act, the question is whether there was any requirement in the 1977 Rules to declare the retail sale price of the commodity on the package – What is relevant is whether the package is of such nature that attracts any of the provisions of the 1977 Rules, which mandatorily require the mention of retail price on the package – In case of a package that does not attract provisions of the 1977 Rules regarding mentioning the retail price, even if the retail price is mentioned on the package, that itself will not attract sub-section (1) of s.4A – However, on facts, there is no requirement to deal with the issue of whether a poly pack containing 33 plus one small package was intended for retail sale as the specific case made out by the respondent in reply to the show cause notices that it was selling HDPE bags containing 100 poly packs containing 33 plus one smaller pack was not rejected by the Commissioner – Therefore, the respondent was selling HDPE bags containing 100 poly packs each to the distributors and dealers – The 1977 Rules do not require the display of price on such HDPE bags – Even assuming that 100 poly packs were retail packages, HDPE bags would be covered by the definition of ‘wholesale package’ as defined in clause (iii) of r.2(x) of the 1977 Rules – Thus, the HDPE bags are not group packages within the meaning of r.2(g) – s.4A(1) of the Excise Act was not applicable to the goods subject matter of the show cause notices – Impugned judgment of the Tribunal not interfered with. [Paras 15-18]

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