Hon'ble Om Prakash-VII,J.
The Stamp Reporter has reported on 24.03.2014 this First Appeal From Order (under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996) as defective for non-filing of certified copy of the formal order. Sri Kesari Nath Tripathi, learned Senior Counsel had raised a preliminary objection as to the maintainability of this appeal hence on 25.03.2014 this Court passed the following order:-
"We have heard Sri Shashi Nandan learned Senior Counsel assisted by Sri Manish Goyal who has filed his power today for the appellant and Sri Kesari Nath Tripathi learned Senior Counsel assisted by Sri Ajay Bhanot counsel for the respondent nos.3 to 5. Sri Rajeev Misra and Sri Ravi Anand Agarwal have also filed their power on behalf of the appellant today. Let the same be taken on record.
The submissions of learned counsel for the parties have been made on the preliminary objection raised by respondent nos. 3 to 5 regarding maintainability of this appeal under Section 37(1)(b) of the Arbitration and Conciliation Act 1996.
Let this appeal be listed on 02.04.2014 for delivery of orders on the preliminary objection."
This First Appeal From Order has been filed under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) against the order dated 06.07.2011 passed by the District Judge, Gautam Buddh Nagar in Misc. Case No.33 of 2010 (International Trade Expo Centre Ltd. Vs. Mukesh Sharma and others).
By the impugned order the preliminary objection (Paper No.23-C) of the Respondent No.3 has been sustained and the application under Section 34 of the Act made by the appellant has been returned back for want of jurisdiction with liberty to the appellant to file it before a Court of competent jurisdiction.
The Respondent Nos.3 to 5 have raised a preliminary objection as to the maintainability of this First Appeal From Order under Section 37(1)(b) of the Act and state that by the impugned order the District Judge has not refused to set aside the Award of the Arbitrator but has returned the application of the appellant made under Section 34 of the Act to be presented before the Competent Court. It is their submission that none of the conditions contemplated under Section 37(1)(b) of the Act are made out in the impugned order hence this appeal is not maintainable.
In support of their submission learned counsel has relied upon the decisions of the Supreme Court in P. Anand Gajapathi Raju and others Vs. P.V.G. Raju and others reported in (2000) 4 SCC 539 and in Hindustan Copper Limited Vs. NICCO Corporation Ltd. reported in (2009) 6 SCC 69.
Learned counsel for the appellant has submitted that this appeal is maintainable against the impugned order because when there is rejection of an application made under Section 34 of the Act, even if it is for want of jurisdiction, an Appeal can be filed under Section 37(1)(b) of the Act.
They have relied upon the decision of a Division Bench of this Court in the case of "U.P. Cooperative Sugar Factories Federation Ltd., and others Vs. P.S. Misra and another" reported in AIR 2003 Alld. 123.
Section 37(1)(b) of the Act is quoted hereunder:-
"37. Appealable orders. (1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:
(a) granting or refusing to grant any measure under section 9;
(b) setting aside or refusing to set aside an arbitral award under section 34."
Sub Clause (1)(b) deals with an order passed under Section 34 of the Act. In case such order under Section 34 of the Act has set aside an arbitral award then an Appeal under Section 37 of the Act would lie. In case the order under Section 34 of the Act has refused to set aside an arbitral award then also an Appeal would lie under Section 37 of the Act.
An order under Section 34 of the Act is made on an application to the Court against an arbitral award. This application can be considered by the Court and the Court can set aside an arbitral award only if any of the requirements contemplated in sub Section (2)(a) and 2(b) of Section 34 of the Act are satisfied and proved.
In the present case the operative part of the impugned order is quoted hereunder:-
"The application under sec.34 of the Act moved by the petitioner be returned back for want of jurisdiction with a liberty to the petitioner to file it before a court of competent jurisdiction."
It has therefore to be found out whether the impugned order has refused to set aside the arbitral award while considering the appellant's application made under Section 34 of the Act.
It is settled that an arbitral award can be set aside on any of the grounds mentioned in sub Section (2) of Section 34 of the Act. The order passed under Section 34 of the Act if it sets aside an arbitral award has to record a specific finding that any one of the conditions mentioned in Section 34(2) of the Act are found proved or are made out. In the absence of such a specific finding the order under Section 34 of the Act cannot be passed to set aside an arbitral award.
Section 34(2) of the Act is reproduced hereunder:-
"(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation. Without prejudice to the generality of sub- clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81."
The impugned order in the present appeal has directed return of the application under Section 34 of the Act to the appellant for the reason of want of jurisdiction. It has further given liberty to the appellant to file it before a Court of competent jurisdiction. Whether such an order would amount to a refusal to set aside an arbitral award has to be answered.
In our opinion there are two very relevant ways to address this issue. The first is simplicitor that the impugned award has no where recorded that it is refusing to set aside the award or that it is rejecting the appellant's application under Section 34 of the Act.
The second way is to test the findings and conclusion recorded in the impugned order on the touch-stone of Section 34 of the Act. In case the direction given in the impugned order for return of the application with liberty is solely based on any of the conditions contemplated under Section 34 of the Act then it could be possible to argue that such a direction is in effect a refusal to set aside the arbitral award. The reason being that an arbitral award can be set aside only on one or more grounds given in Section 34(2) of the Act and if no such ground is proved or made out the Court would be within its jurisdiction to refuse to set aside an arbitral award. Therefore, even in a case of refusal to set aside an arbitral award the Court has to be confined to the grounds set out in Section 34(2) of the Act if they are not proved or not made out.
Section 37(1)(b) of the Act contains the word 'refusing to set aside an arbitral award'. 'Refuse' is as a noun defined in The Law Lexicon as to decline positively, to express or show determination not to do something or that which is rejected or left as worthless. 'Refuse' as a verb is defined therein as to deny a request, demand or invitation, to decline to accept, to reject, as to refuse an offer.
The word 'refuse' as a noun or as a verb when used connotes positivity in expression of denial and an act of denial respectively.
Therefore when the word 'refusing' has been used in Section 37(1)(b) of the Act it has to be read either as a noun or as a verb. It would be more appropriate to consider it used as a verb in the Section which would require a specific denial by the Court to set aside the arbitral award. That has not been done under the impugned order.
On the other hand to address the submission made by learned counsel for the appellant (that the impugned order by implication has refused to set aside the arbitral award) the word 'refusing' appearing in the Section would have to be seen as a noun. Although such a submission appears to be misconceived none-the-less it can be tested by considering the word 'refuse' in place of 'refusing' as a noun. Even then it would mean to decline positively or to express or show determination not to do or to reject. Clearly the impugned order has not declined the application under Section 34 of the Act by rejecting it or declining it on its merits.
A perusal of the impugned order dated 06.07.2011 indicates that it has recited the facts of the arbitral proceedings, pendency of a Petition No.255 of 2010 before the Delhi High Court for enforcement of the award, the proceedings before the Civil Court and this Court. It has thereafter considered the objection Paper No.23-C in light of Section 42 of the Act and arrived at a conclusion that it has no jurisdiction to entertain the application under Section 34 of the Act. Clearly, there is no consideration of any fact relatable to the grounds set out under Section 34 of the Act. Since such is the content of the impugned order it is therefore not a decision on merits over the application under Section 34 of the Act.
In the decision of U.P. Cooperative Sugar Factories Federation Ltd. (Supra) a Division Bench of this Court was considering a case where the application under Section 34 of the Act had been rejected by the District Judge, Lucknow on 14.03.2002 for the reason that he had no territorial jurisdiction since the Court at Gorakhpur had the jurisdiction. Paragraph 20 of the judgment is quoted hereunder:-
"20. Sub-section 1(b) of Section 37 specifically makes such an order appealable, which either set aside or refuse to set aside the arbitration award under Section 34. The rejection of the application moved under Section 34 of the Act of the appellants would fall within the aforesaid clause and it would be immaterial as to whether the application under Section 34 has been rejected for want of jurisdiction or otherwise on merit. The said provision does not clarify anywhere that if an application under Section 34 is rejected on merits alone, only then the appeal would lie. The ground of rejection may be multifarious but it is only the rejection of application, which would give a right to the appellant to file an appeal. The argument of the learned counsel for respondent No.1 attempts to create artificial classification with respect to the orders passed on the application under Section 34 which classification is neither provided in the aforesaid provisions of the Act nor can be imported nor infused in the specific provisions. The application of the appellants having been rejected, the appellants have rightly filed an appeal under Section 37 of the Act."
The view clearly is that the rejection of an application under Section 34 of the Act would be appealable and it would be immaterial that it was rejected for want of jurisdiction. It was held that rejection on the ground of territorial jurisdiction also would make the order appealable and the Appeal under Section 37 of the Act was rightly filed.
The facts of the present case are different. The appellant's application under Section 34 of the Act has not been rejected under the impugned order. It has been returned to the appellant. The application under Section 34 of the Act was returned by the Court not for the reason of territorial jurisdiction. It was returned for the reason that it is not the Court as defined in Section 2(1)(e) of the Act since proceedings for enforcement of the award were pending in the Delhi High Court and in view of Section 42 of the Act that would be the Court. While returning the application none of the grounds contemplated under Section 34 of the Act have even been mentioned so as to say that they are not proved or not made out. In the Division Bench judgment of this Court referred to above the application under Section 34 of the Act had actually been rejected for want of territorial jurisdiction hence the remedy there was held to be that of an Appeal since the rejection was itself a refusal to set aside the arbitral award.
The vital difference in the facts of the present case and the decision in the case of U.P. Cooperative Sugar Factories Federation Ltd. (Supra) is that in the present case the application has not been rejected and the appellant has liberty to file it before a Competent Court whereas in the case cited the application was rejected for want of jurisdiction. However since the maintainability of this appeal only is being considered the issue as to which would be the court under Section 2(1)(e) of the Act is not being gone into under this order.
There is a difference in proceedings conducted under the Arbitration and Conciliation Act, 1996 from the proceedings governed by the Code of Civil Procedure. A plaint can be returned for want of jurisdiction by a Court under Order VII Rule 10 CPC. Against such an order an Appeal is provided under Order XLIII Rule 1(a) CPC.
The Arbitration and Conciliation Act, 1996 is a specific Code dealing with arbitration matters and Section 37 therein is a special provision indicating the orders which alone are appealable. A right to Appeal is a creature of the statute and it cannot be extended by implication. Section 37 uses the words 'and from no others' therefore the Courts cannot confer a right of Appeal by inference. Unless there is a refusal by the Court to set aside an arbitral award the Appeal contemplated in Section 37(1)(b) of the Act cannot be maintained against an order returning the application under Section 34 of the Act for being presented before the competent court of jurisdiction.
The other decision of the Supreme Court cited by learned counsel is the case of P. Anand Gajapathi Raju (supra). This decision relates to the Court as defined under Section 2(i)(e) of the Act where the arbitral award may be challenged. Since at this stage this Court is deciding only the maintainability of this appeal filed under Section 37(1)(b) of the Act as a preliminary issue it is not necessary to delve into the contention as to which would be the Court under Section 2(1)(e) of the Act to entertain the application under Section 34 of the Act at this stage.
In the case of Hindustan Copper Limited (supra) the Supreme Court considered the fact that a petition under Section 34 of the Act was filed before a learned Single Judge of the Jharkhand High Court challenging the legality of the award dated 28.09.2006 passed by the sole arbitrator. The learned Single Judge held the petition to be not maintainable. On appeal it was held that the appeal was also not maintainable before the High Court. The Supreme Court repelled the contentions against the said orders. The relevant paragraphs No.11 & 12 of the judgment are quoted hereunder:-
"11. Section 37 of the Act on which emphasis was given by counsel for the appellant applies only when the pre-conditions mentioned therein are satisfied. The submission of the learned counsel appearing for the appellant is that since the learned Single Judge refused to set aside the arbitration award, therefore an appeal could be preferred by the appellant as envisaged under Section 37 (1)(b) of the Arbitration and Conciliation Act, 1996.
12. We are again unable to persuade ourselves to accept the aforesaid contention of the counsel appearing for the appellant for petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, was dismissed on the ground of maintainability of the petition and not on the ground by refusing to set aside the arbitration award."
Clearly the learned Single Jude had dismissed the petition on the ground of maintainability which cannot be held to be a ground of refusal to set aside the award as contemplated under Section 37 of the Act. Therefore an appeal against an order dealing with the maintainability of an application made under Section 34 of the Act was held to be not maintainable.
In the present case also the impugned order has returned the application under Section 34 of the Act to be presented before a Competent Court having jurisdiction in light of Section 42 of the Act. An appeal against such an order is not contemplated in Section 37 of the Act.
It has to be made clear that this order is confined to the maintainability of this appeal under Section 37(1)(b) of the Act and no decision has been taken on the issue of the jurisdictional aspect of the impugned order. Whether the pleas that District Judge has no jurisdiction to entertain an application under Section 34 of the Act or that he has jurisdiction if assailed is open for consideration in an appropriate proceeding maintainable in accordance with law since such plea has not been adjudicated in this appeal.
For the aforesaid reasons, it is held that by the impugned order the District Judge has not refused to set aside the arbitral award nor the impugned order amounts to a refusal to set aside the arbitral award.
For the aforementioned reasons this First Appeal From Order under Section 37(1)(b) of the Act is not maintainable against the impugned order dated 06.07.2011 passed by the District Judge.
This appeal is therefore dismissed as not maintainable.
No order as to costs.
Order Date :- 02.04.2014 pks