M.P. Road Development Corporation Vs. The Ministry of Road, Transport and Highways (MORT & H) and another
Madhya Pradesh High Court (Division Bench (DB)- Two Judge)
WRIT PETITION, 11783 of 2021, Judgment Date: Sep 03, 2021
Law laid down:-
The M.P. Road Development Corporation challenged the order passed by the Arbitral Tribunal on a dispute arising out of a concession agreement executed between the Corporation and the respondent-Department, whereby the application filed by the petitioner-MPRDC under Section 16 of the Arbitration and conciliation Act, 1996 contending that the dispute falls within the definition of ‘works contract’ over which the Arbitral Tribunal constituted under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 would have exclusive jurisdiction and therefore, the learned Arbitral Tribunal has no jurisdiction to entertain the same, has been rejected.
Held:
The Arbitration and Conciliation Act, 1996 is a self-contained code dealing with every aspect of arbitration. The legislative policy of consolidating all the laws relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards is aimed at ensuring not only speedy disposal of arbitration cases but also timely execution of the awards.
Section 16(2) of the Act of 1996 stipulates that a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. Sub-section (5) of Section 16 provides that the arbitral tribunal shall decide on a plea referred to in subsection (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. The language employed by the Parliament in this sub-section thus makes its intention clear that once if the arbitral tribunal takes a decision to reject the plea, it shall continue with the arbitral proceedings and make an arbitral award. It cannot however be said that the aggrieved party has been left remediless against the rejection of its objection as to the jurisdiction of the arbitral tribunal. The only thing is that its remedy has been deferred till the stage of Section 34 of the Act of 1996 arises as is evident from sub-section (6) of Section 16 of the Act of 1996 which interalia provides that the parties aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.
Moreover, intention of the legislature in not providing the appeal against the rejection of the application under Section 16(2) is also evident from sub-section (2) of Section 37, which, vide its sub-clause (a), while providing for an appeal to a Court from an order of the arbitral tribunal accepting the plea referred to in sub-section (2) or sub-section (3) of Section 16, purposely does not provide for an appeal against an order of the arbitral tribunal rejecting the plea referred to in sub-section (2) or sub-section (3) of Section 16. Therefore, argument of the petitioner that the arbitral tribunal does not have the jurisdiction or for that matter, its argument that it was not given proper notice of appointment of the Arbitrator, may only be available to it as ground of challenge to the award if eventually the same were to be passed against it.
The argument of the learned Advocate General is that the present matter falls within the exceptions to the general rule that this Court under Article 226 and 227 of the Constitution of India can interfere with orders “patently lacking in inherent jurisdiction” and also if it suffers from ‘bad faith’ but neither of the arguments has been brought home inasmuch as, as has rightly been argued, the petitioner appears to have coined the argument of “patent lack of inherent jurisdiction” and the “bad faith” only during the course of arguments as none of them find mention either in the application under Section 16(2) filed before the Arbitral Tribunal or in the memorandum of writ petition challenging rejection thereof or even in the rejoinder to the reply of respondent No.2. As regard various orders of the Supreme Court and this Court cited by the learned Advocate General, transferring the proceedings pending before the Arbitrator to the arbitral tribunal under the Adhiniyam of 1983, suffice it to say that in none of these orders, Sections 16, 34 and 37 of the Act of 1996 were analyzed and the precedents referred to supra, were considered.
The contention that according to Clause 44.4 of the Agreement, in the event of situation of a statutory Regulatory Authority or Commission with powers to adjudicate upon disputes between the Concessionaire and the Authority, all Disputes arising after such constitution shall, instead of reference to arbitration under Clause 44.3, be adjudicated upon by such Regulatory Authority or Commission in accordance with the law, is noted to be rejected as undeniably, the very same agreement contains Clause 44.3.1 which provides that any dispute, which could not be resolved amicably by conciliation, as provided in Clause 44.2, shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 44.3.2, in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi, subject to the provisions of the Arbitration Act and that the venue of such arbitration shall be at Bhopal. If despite existence of the Arbitration Tribunal under the Adhiniyam of 1983, the parties have agreed for arbitration under the aegis of ICADR in accordance with the ICADR Rules and the Arbitration Act and consciously did not mention about existence of the arbitration tribunal established under the Adhiniyam of 1983, which then was already in existence, the petitioner cannot be permitted now to raise this plea. Clause 44.4 in any case, can be interpreted to cover a future situation as is evident from its wordings that “in the event of constitution of a statutory Regulatory Authority or Commission with powers to adjudicate upon disputes between the Concessionaire and the Authority, all Disputes arising after such constitution”. Had the parties while entering into the agreement wanted to refer their future disputes to the Arbitration Tribunal constituted under the Adhiniyam of 1983, they would have most certainly mentioned about the same in Clause 44.3 or Clause 44.4 rather than wording these clauses in the manner they have been formulated.
M.P. Road Development Corporation Vs. The Ministry of Road, Transport and Highways (MORT & H) and another