Over 2 lakh Indian cases. Search powered by Google!

Case Details

PUNJAB STATE ELECTRICITY BOARD versus RAILWAY BOARD & ORS

High Court of Punjab and Haryana, Chandigarh

Case Law Search

Indian Supreme Court Cases / Judgements / Legislation

Judgement


Punjab State Electricity Board v. Railway Board & Ors - CM-4716-CII-2004 [2006] RD-P&H 1665 (16 March 2006)

Civil Misc. No. 4716-CII of 2004 in [1]

Civil Writ Petition No. 2518 of 2002

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Civil Misc. No. 4716-CII of 2004 in

Civil Writ Petition No. 2518 of 2002

Date of Decision: March 22, 2006

Punjab State Electricity Board .........Petitioner Shri R.P. Bhatt, Senior Advocate with

Ms. Tanuja Sheel and

Shri Vishal Sodhi, Advocates.

versus

Railway Board and others ..........Respondents Shri P.P. Malhotra, Additional Solicitor General, with

Shri Puneet Gupta and Shri Shailender

Sharma, Advocates.

HEMANT GUPTA, J.

This order shall dispose of Civil Misc. No. 4716-CII of 2004 filed on behalf of the respondents in writ petition i.e., Railway Board and its functionaries (hereinafter to be referred as " the objectors") against the award dated 21.11.2003 passed by Hon'ble Mr. Justice P.K. Bahri (Retired).

The facts leading to the filing of said objections are that the Punjab State Electricity Board (hereinafter to be referred as "the Board") filed a writ petition before this Court for quashing of letter dated 16.08.2001, Annexure P-12, and order dated 15.05.2002, Annexure P-21, and to implement its decision of withdrawal of 15% surcharge levied and Civil Misc. No. 4716-CII of 2004 in [2]

Civil Writ Petition No. 2518 of 2002

forthwith refund the amount due as per the reconciled statements or in the alternative to adjust the same against the future freight payment.

The said relief was claimed on the basis that the Board has thermal power stations at Ropar, Lehra-Mohabhat and Bhatinda. The Board requires coal in huge quantities for running of these thermal plants and that such coal is transported by the objectors. Since the objectors have monopolistic right to run railways in the entire country, the Board has no option but to deal with the objectors for transportation of coal to its thermal plants since no other form of transportation is possible considering the quantum and frequency of the requirement. The usual terms of carriage by the objectors requires payment towards freight either at booking station/ loading point or at destination/ unloading site. Non payment of freight leads to coercive methods of recovery such as detention of goods, their sale and recovery from proceeds etc. An arrangement was arrived at between the Board and the objectors to meet the obligation of the Board to freight for smoother traffic of goods movement for public utility services. Under the said arrangement, the Board was required to deposit and keep with the Railways an advance payment towards freight for one month and settle the current freight of consignments periodically. The objectors levied surcharge of 15% on the freight charges on the ground that freight has not been paid regularly or settled periodically.

It was the case of the Board that 15% surcharge is not payable since advance towards freight was in deposit. It was their case that till such time any amount of freight is available, the surcharge could not be levied.

However, it is the case of the railways that non payment of freight Civil Misc. No. 4716-CII of 2004 in [3]

Civil Writ Petition No. 2518 of 2002

periodically in terms of the arrangement entitles to claim surcharge from the Board.

On 17.12.2002, the learned Single Judge of this Court records that the only dispute which remains to be settled in the writ petition is as to whether prior to 27.7.2002, any surcharge was leviable and, if so, what amount was to be levied. It was on 27.7.2002, it was found that the Board is in debit i.e., no amount is in deposit towards freight with the objectors. On the said date, the Court found that since the dispute is between a public sector undertaking and Union of India, the same may be resolved amicably by mutual consent by a High Powered committee in terms of decision of Hon'ble Supreme Court in case reported as Oil and Natural Gas Commission and another vs. Collector of Central Excise, 1995 Supp (4) Supreme Court Cases 541. On 28.3.2003, both the parties agreed that the matter be referred to an arbitrator to decide the dispute " whether Punjab State Electricity Board is liable to pay any surcharge or freight for the period prior to 27.7.2002 and, if so, what was the amount so payable".

While appointing the arbitrator, the High Court directed that one set of complete record of writ petition including the orders passed from time to time be forwarded to the arbitrator. The writ petition was disposed of in the above-said agreed terms.

The learned Arbitrator announced his award on 21.11.2003 whereby the parties were found bound to act in terms of the order of the General Manager, Northern Railways. Aggrieved against the said award, the Railway Board filed objections under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as "the Act") before this Civil Misc. No. 4716-CII of 2004 in [4]

Civil Writ Petition No. 2518 of 2002

Court vide Civil Misc. No. 4716-CII of 2004. The Railway Board filed reply to the objections. During the course of arguments on 25.01.2006, a question arose whether the objections against such award would be maintainable before this Court or they are required to be filed before the Principal Civil Court of original jurisdiction in a District.

At this stage, it would be advantageous to reproduce the relevant provisions of the Arbitration Act, 1940 (hereinafter to be referred as "1940 Act") and that of the Act.

Arbitration Act, 1940.

" 2. Definitions:- In this Act, unless there is anything repugnant in the subject or context, -

(a) and (b) xx xx xx xx xx xx

(c ) "Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court" "31. Jurisdiction: - (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates

(2) xx xx xx xx xx

(3) xx xx xx xx xx

(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force where in any reference any application under this Act has been made Civil Misc. No. 4716-CII of 2004 in [5]

Civil Writ Petition No. 2518 of 2002

in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of the reference and the arbitration proceedings shall be made in that Court and in no other Court".

Arbitration and Conciliation Act, 1996

" 2. Definitions:- (1) In this Part, unless the context otherwise requires,-

(a) to (d) xx xx xx xx xx xx

(e) "Court" means the principal Civil Court of original jurisdiction in a district, 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 if the same had been the subject- matter of a suit, but does not include any civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes".

"42. Jurisdiction:- Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court".

Learned counsel for the objectors has vehemently argued that Civil Misc. No. 4716-CII of 2004 in [6]

Civil Writ Petition No. 2518 of 2002

since the Board has claimed ad interim measures in the writ petition which would be analogous to an exercise of the jurisdiction conferred under section 9 of the Act. An arbitrator was appointed by this Court, therefore, in terms of section 42 of the Act, the objections are maintainable before this Court alone. It is contended that section 42 of the Act gives overriding effect to all other provisions of Part I of the Act including sections 2(e), 8, 9 and 11 of the Act and, therefore, objections have been rightly filed before this Court. Reference was made to the decisions of the Hon'ble Supreme Court in Kumbha Mawji vs. Union of India, 1953 Supreme Court 878, M/s Guru Nanak Foundation vs. M/s Rattan Singh and Sons, (1981) 4 Supreme Court Cases, 634, and Neycer India Limited vs. GMB Ceramics Limited, (2002) 9 Supreme Court Cases 489.

In Kumbha Mawji's case (supra), a dispute arose whether Calcutta High Court or Gauhati High Court will have the jurisdiction to entertain the objections. The question of territorial jurisdiction of the Court arose as an application for filing of the award has been first made under section 14 of the Act. It was found that sub-section (4) was not meant to be confined to applications made during the pendency of an arbitration. It was interpreted that the phrase "in any reference" in sub-section (4) is to be taken as meaning "in the course of a reference". It was held to the following effect:-

" In the context of section 31, sub-section (4), it is reasonable to think that the phrase "in any reference" means "in the matter of a reference". The word "reference having been defined in the Act as "reference to arbitration", the phrase "in a reference" Civil Misc. No. 4716-CII of 2004 in [7]

Civil Writ Petition No. 2518 of 2002

would mean "in the matter of a reference to arbitration". The phrase "in a reference" is, therefore, comprehensive enough to cover also an application first made after the arbitration is completed and a final award is made, and in our opinion that is the correct construction thereof in the context. We are, therefore, of the opinion that section 31(4) would vest exclusive jurisdiction in the court in which an application for the filing of an award has been first made under section 14 of the Act."

In M/s Guru Nanak Foundation vs. M/s Rattan Singh and Sons, (1981) 4 Supreme Court Cases, 634, Hon'ble Supreme Court while hearing a civil appeal, removed Shri M.L. Nanda as an arbitrator and appointed Shri C.P. Malik, retired Chief Engineer, CPWD, the sole arbitrator to settle the dispute between the parties. The objections against the award were filed before the Delhi High Court which were resisted on the ground that the objections would be maintainable only before the Supreme Court. Hon'ble Supreme Court considering the definition of sections 2(c) and 31(4) of 1940 Act held that the non-obstante clause excludes anything anywhere contained in the whole Act or in any other law for the time being in force if it is contrary to or inconsistent with the substantive provision contained in sub-section (4). It was, thus, held that sub-section (4) invests exclusive jurisdiction in the Court, and all subsequent applications arising out of reference and the arbitration proceedings shall have to be made in that Court and in no other Court. The Court held to the following effect:- Civil Misc. No. 4716-CII of 2004 in [8]

Civil Writ Petition No. 2518 of 2002

" On a pure grammatical construction as well as taking harmonious and overall view of the various provisions contained in the Act it is crystal clear that ordinarily the Court will have jurisdiction to deal with the question arising under the Act, except the one in Chapter IV, in which a suit with regard to the dispute involved in the arbitration would be required to be filed under the provisions of the Code of Civil Procedure.

However, where an application is made in any reference to a court competent to entertain it, that court alone will have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall have to be made in that court alone and in no other court".

Since the arbitrator was appointed by the Hon'ble Supreme Court and directions were given to the arbitrator to decide the dispute expeditiously and taking into consideration other factors, it was concluded that the Supreme Court has complete control over the proceedings of the arbitrator. Learned counsel for the objectors has strongly placed reliance on the said judgment to contend that this Court has not only appointed the arbitrator but directed the arbitrator to decide the dispute expeditiously and also forwarded the record of the Court including the interim orders, therefore, this Court would be deemed to be seized of the dispute and, thus, competent to entertain the objections.

Civil Misc. No. 4716-CII of 2004 in [9]

Civil Writ Petition No. 2518 of 2002

Learned counsel for the objector has also relied upon Neycer India Limited's case (supra) to contend that the Board is estopped to raise the objection regarding the jurisdiction of this Court as such objection was not raised at any point of time. The objections raised in reply to the objection petition are in generic terms and not specifically in respect of the maintainability of the objections before this Court in terms of Section 2(e) of the Act. Reference is also made to the decision of the Supreme Court reported as Union of India and others vs. Aradhana Trading Company and others, (2002) 4 Supreme Court Cases 447, to contend that since the Board has submitted to the jurisdiction of this Court, it is not open to the Board to turn around and contend that this Court cannot entertain the objections against the award.

On the other hand, learned counsel for the Board has submitted that the Board has invoked extra-ordinary writ jurisdiction of this Court under Article 226 of the Constitution of India and not the jurisdiction of the Court in terms of the Act. There is no agreement between the parties containing arbitration clause and, therefore, the appointment of an arbitrator by this Court is not in terms of any of the provisions of the Act. The order passed by this Court directing the arbitrator to decide the dispute is on account of an agreement between the parties. The objections to an award announced by such an arbitrator are to be filed before the Court as defined under section 2(e) of the Act which, undoubtedly, does not include the High Court.

Learned counsel for the Board has relied upon the decision of the Supreme Court reported as Tamil Nadu Electricity Board vs.

Civil Misc. No. 4716-CII of 2004 in [10] Civil Writ Petition No. 2518 of 2002

Sumathi and others, (2000) 4 Supreme Court Cases 543, to contend that there was no arbitration agreement within the meaning of section 7 of the Act prior to the filing of writ petition. Since the parties had agreed to refer their dispute to an arbitrator during the course of pendency of writ petition, the High Court is not competent to pass a decree in terms of the award.

Reference is also made to P. Anand Gajapathi Raju and others vs.

P.V.G. Raju (dead) and others, (2000) 4 Supreme Court Cases 539 to contend that if there is arbitration agreement satisfying the requirements of Section 7 of the Act, it is obligatory for the Court to refer the parties to arbitration. Nothing remains to be decided in the original action or the appeal arising therefrom. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the award. It was held to the following effect:- "....The Court to which the party shall have recourse to challenge the award would be the court as defined in clause (e) of Section 2 of the new Act and not the court to which an application under Section 8 of the new Act is made. An application before a court under Section 8 merely brings to the Court's notice that the subject-matter of the action before it is the subject-matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent court within the meaning of Section 2(e) of the new Act." Learned counsel for the Board has also relied upon M/s Civil Misc. No. 4716-CII of 2004 in [11] Civil Writ Petition No. 2518 of 2002

Godara Construction Company vs. The State of Rajasthan and others, AIR 2004 Rajasthan 66 to contend that in similar circumstances the High Court of Rajasthan has examined the provisions of Section 2(e) of the Act and held that the objections are not maintainable before this Court.

It was held to be following effect:-

" 10. Moreover, Section 42 refers to any application made to a Court under Part I of the Act. In the context, this clause can be invoked only on fulfilment of condition referred to therein.

Firstly, an application must have been made under Part I of the Act of 1996. Secondly, such application must have been made to a Court. Obviously, in the context, 'the Court' to which reference is made under S. 42 ought to be a Court as defined in S. 2(e) of the Act. High Court exercising extraordinary jurisdiction under Articles 226 and 227 of the Constitution does not come within its purview...."

A comparison of the provisions of section 31(4) of 1940 Act and that of section 42 of the Act shows that such provisions are substantially the same. However, it is the definition of the Court contained in section 2(c) of 1940 Act which is materially different from clause 2(e) of the Act. Under 1940 Act, the "Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit. While interpreting the said provision, it has been found that even the appointment of an arbitrator by the Supreme Court will confer exclusive jurisdiction upon that Court alone to entertain the objections against the said award.

Civil Misc. No. 4716-CII of 2004 in [12] Civil Writ Petition No. 2518 of 2002

The Chief Justice or his delegatee is to appoint an arbitrator if a party fails to act as required under the procedure to seek appointment of an arbitrator etc., under the Act. The Act contemplates different and distinct procedure for the appointment of arbitrator and another distinct procedure for challenge to the award. A Constitution Bench of Hon'ble Supreme Court in State Bank of Patiala vs. Patel Engineering, 2005(8) Supreme Court Cases 618 has held that the power to appoint an arbitrator has to be exercised by the Chief Justice or his delegatee who can be only a Judge of the High Court alone. If the interpretation suggested by the objector is to be accepted, it would necessarily mean that the objections against the award rendered by the arbitrator in terms of the appointment order under section 11(6) of the Act has to be filed before the High Court alone. The said interpretation would, in fact, amount to rewriting of section 2(e) of the Act which defines the "Court" as contained in section 34 contemplating procedure for challenge to an award. Still further, when this Court appointed an arbitrator there was no prior agreement containing the arbitration clause.

The Board has sought prerogative writ in exercise of extra-ordinary writ jurisdiction of this Court against the decision of the Railway Board. The interim relief claimed was in exercise of the plenary jurisdiction exercised by this Court under Article 226 of the Constitution of India and not in terms of section 9 of the Act as there was no agreement containing the arbitration clause in terms of which the Board could approach this Court for interim relief. The Court contemplated under section 9 of the Act is again a Court as defined under section 2(e) of Act and the writ Court obviously does not come within the ambit of such definition.

Civil Misc. No. 4716-CII of 2004 in [13] Civil Writ Petition No. 2518 of 2002

It was concluded that the phrase "in any reference" would mean in the matter of reference as well. The principle laid down in the said judgment cannot have any application in the facts of the present case where reference to an arbitrator was not contained in any arbitration agreement between the parties. It was during the course of hearing before this Court, the parties decided to submit to the jurisdiction of an arbitrator. In terms of Section 42 of the Act, that Court alone shall have the jurisdiction where any application has been made with respect to the arbitration agreement.

In P. Anand Gajapathi Raju's case (supra), Hon'ble Supreme Court has held that application under section 8 of the Act is not an application contemplated under section 42 of the Act as the Court trying action may or may not have the jurisdiction to try the suit or competent Court within the meaning of section 2(e) of the Act. Therefore, the direction to the arbitrator to decide the dispute on an agreement between the parties was not an order passed by this Court in terms of any provisions of the Act which may entitle the objectors to file objections before this Court.

A Division Bench of Andhra Pradesh High Court in a judgment reported as Rashtriya Ispat Nigam Limited, Visakhapatnam Steel Plant, Visakhapatnam vs. Kaveri Engineering Industries Limited, Madras and another, 2002(2) Arbitration Law Reporter, 484, has considered the question of filing of objections against the award of arbitrator appointed in exercise of the writ jurisdiction under 1948 Act. While considering the judgment of Hon'ble Supreme Court rendered in M/s Guru Nanak Foundation's case (supra), the Division Bench has concluded that the writ court is not a civil court within the meaning of the provisions of 1948 Act Civil Misc. No. 4716-CII of 2004 in [14] Civil Writ Petition No. 2518 of 2002

and, therefore, objections cannot be filed before the High Court. The said judgment also refers to another judgment titled GM, SC Railway, Secunderabad vs. Sri Rama Engineering Constructions, 2001(6) ALD 191, wherein it has been held that the provisions of 1948 Act contemplating the objections before the same Court will not be applicable in view of the fact that the arbitrator is now appointed by the Chief Justice or by the person or a body nominated by him. The relevant extract from the said judgment reads as under:-

" 16. In our view, aforesaid decisions have no application to the facts of the present case. In the instant case, the Arbitrator was appointed in a writ proceeding. A writ Court is not a Civil Court within the meaning of the provisions of the Arbitration Act. There is also nothing to show that this Court has retained with it the overall control over the arbitration proceedings. The award has already been transmitted to the Court of I Additional Senior Civil Judge, Visakhapatnam.

17. In GM, SC Railway, Secunderabad vs. Sri Rama Engineering Constructions, 2001(6) ALD 191, it was held:- The decision of the apex Court in M/s Guru Nanak Foundation (supra) was under the old Act. Section 31 (4) of 1940 Act in the said decision was construed holding that where Arbitrator has been appointed by the Supreme Court, it would have jurisdiction to entertain the award and it could not be filed before the High Court. Having regard to the fact that the Arbitrator is Civil Misc. No. 4716-CII of 2004 in [15] Civil Writ Petition No. 2518 of 2002

not appointed by the Chief Justice or by the person or body nominated by him in an administrative capacity and not in a judicial capacity, the said decision cannot be said to have any application whatsoever".

The judgments in Kumbha Mawji's case (supra), Neycer India Limited's case (supra) and Aradhana Trading Company's case (supra) do not deal with the question arising in the present proceedings.

There cannot be any question of estoppel against the Board for two reasons.

Firstly, there cannot be any estoppel against the statute and secondly an objection has been raised by the Board in the reply that the objections are not maintainable before this Court. The judgment in M/s Guru Nanak Foundation's case (supra) is clearly distinguishable for the reason that the said judgment arises out of the proceedings initiated before the civil Court but taken to the Supreme Court in Special Leave Petition. Therefore, Hon'ble Supreme Court can be said to be a civil Court within the meaning of section 2(e) of 1948 Act. However, the objections under the Act in terms of Section 34 are required to be filed before the Court which is defined in section 2(e) of the Act. In the present case, the parties have decided to resolve their dispute through an arbitrator consented in proceedings under the writ proceedings pending before this Court under Article 226 of the Constitution of India. Such consent is not in terms of the provisions of the Act. There were no proceedings initiated between the parties under the Act before the filing of objections by the objectors under section 34 of the Act before this Court. Therefore, the objections had to be filed by the objectors before the principal civil court of original jurisdiction in terms of section 2 Civil Misc. No. 4716-CII of 2004 in [16] Civil Writ Petition No. 2518 of 2002

(e) of the Act and not before the writ court. Under the new Act, the procedure for appointment of an arbitrator is contemplated to be separate and distinct from the procedure of challenge to the award of the Arbitral Tribunal. The interpretation sought to be raised will, in fact, negate the challenge procedure to the award of the Arbitral Tribunal in Part I of the Act. Such interpretation cannot be accepted.

Even in National Aluminium Co. Ltd. Versus Pressteel & Fabrications (P) Ltd. And another, (2004)1 Supreme Court Cases 540, an arbitrator was appointed by the Supreme Court. The arbitrator was also requested to conclude the proceedings within four months from the day he enters upon the arbitration. In the said case, the parties by consent agreed before the arbitrator that the proceedings should go on under the provisions of 1996 Act. In respect of the question of forum before which an application for modification or setting aside of the award could be entertained, the Court held to the following effect:-

"......In regard to the forum before which the application for modification or setting aside the award is concerned, we find no difficulty in coming to the conclusion that in view of the provisions of Section 34 read with Section 2(e) of the 1996 Act it is not this Court which has the jurisdiction to entertain an application for notification of the award and it could only be the principal civil court of original jurisdiction as contemplated under Section 2(e) of the Act, therefore, in our opinion, this application is not maintainable before this Court".

Thus, I conclude that the objections filed before this Court are Civil Misc. No. 4716-CII of 2004 in [17] Civil Writ Petition No. 2518 of 2002

not maintainable. Therefore, such objections are ordered to be returned to the objectors to file the same before the competent Court within 30 days from today.

The civil miscellaneous stands disposed of accordingly.

March 22, 2006 ( HEMANT GUPTA )

ks JUDGE


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

Advertisement

dwi Attorney | dui attorney | dwi | dui | austin attorney | san diego attorney | houston attorney | california attorney | washington attorney | minnesota attorney | dallas attorney | alaska attorney | los angeles attorney | dwi | dui | colorado attorney | new york attorney | new jersey attorney | san francisco attorney | seattle attorney | florida attorney | attorney | london lawyer | lawyer michigan | law firm |

Tip:
Double Click on any word for its dictionary meaning or to get reference material on it.