The Learned Single Judge has then observed that since the parties agreed to refer their disputes to a Arbitrator, the provisions of Section 89(2)(a) of the Code of Civil Procedure would apply-which provides that the provisions of Arbitration and Conciliation Act, 1996 would become applicable to such proceedings. The Learned Single Judge has then proceeded to observe that in that view of the matter, the Chamber Summons as filed by the Defendant No. 1 cannot be entertained and at best the Defendant No. 1 could take recourse to Section 34 of the Act of 1996 as and when occasion arises.On the earlier occasion it was the Plaintiff who had approached this Court for an identical relief which was not granted in view of the agreed order passed on 28/11/2007 on Notice of Motion No.3052/2007. Once the dispute between the parties has been taken before the said forum, namely, the sole Arbitrator, the proceedings would be governed by the Provisions of Act of 1996 by virtue of Section 89 of the Code of Civil Procedure. It necessarily follows that the proceedings before the Arbitral Tribunal can and ought to be terminated by the Arbitral Tribunal in the manner provided for by Section 32(2) of the Act of 1996.
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Bombay High Court
Mr. Rehmat Ali Baig vs Minocher M. Deboo on 17 September, 2009 CORAM:- SWATANTER KUMAR, C.J. AND A.M.KHANWILKAR, J
This Appeal has been filed against the decision of the Learned Single Judge dated November 20, 2008 in Chamber Summons No. 1375/2008 in Suit No. 857/2005. There is delay of seven days in filing the present Appeal.
For the reasons mentioned in the affidavit in support of the Notice of Motion being sufficient cause, in the interest of justice, Notice of Motion is made absolute in terms of prayer clause (a). The Appeal is heard forthwith by consent of Counsel appearing for the contesting parties namely the Appellant (original defendant no.1) and Respondent No.1 (original plaintiff).
2. Briefly stated, the Plaintiff filed Suit for declaration that he is entitled to 26% share in the suit property consisting of one room ad-measuring about 200 sq. feet situated on the first floor of the front side of the building known as Mazda Mansion situated at Trinity Street, S.S.Gaekwad Road, Dhobitalao, Mumbai 400 002. He further prayed for direction against Defendant No. 1 to pay sum of Rs. 4,05,600/- being the Plaintiff's proportionate share in the suit premises as per the Fair Market Value thereof. The Plaintiff also prayed for direction against Defendant No.1 to pay to the co-owner mesne profits at the rate of Rs. 50/- per sq. feet per month on 200 sq. feet or at such rate as the Court may deem fit from 15/1/2004 till the date of filing of the Suit amounting to Rs. 1,40,000/- and thereafter continue to deposit the amount of Rs. 10,000/- as mesne profit every month till the final disposal of the Suit.
In the said Suit Notice of Motion No. 894/2005 was filed by the Plaintiff, which came up for hearing on 13th October, 2006 when the Learned Single Judge of this Court passed the following order:-
"The Plaintiff and the Defendants are co-owners of the property. The property is in possession of the Defendant No. 1. Defendants Nos. 2 to 5, though co-owners of the property are not appearing in the suit. Plaintiff and the Defendant No. 1 are agreeable to have their dispute referred to arbitration. The substance of the dispute between the parties is as to how income from the property is to be apportioned amongst the co-owners of the property. There is definitely an element of settlement. In this view of the matter, therefore, in my opinion, this is an appropriate case where this court in exercise of power under Section 89 should refer the disputes between the parties in this suit to arbitration.
By consent of the Plaintiff and the Defendant No. 1, Hon'ble Smt. Justice K.K. Baam (Retd.) is appointed as arbitrator. The disputes between the parties in this suit are referred to Hon'ble Smt. Justice K.K. Baam (Retd.) for adjudication and decision in accordance with law. It is clarified that the plaint in this suit shall be treated as statement of claim by the learned arbitrator. If the Defendants have any claim against the Plaintiff or in relation to any other property, the Defendants shall be entitled to file a counter-claim before the learned arbitrator, which the learned arbitrator shall decide in accordance with law.
It is clarified that the disputes between the Plaintiff and all the Defendants are referred to arbitrator. The cost of the arbitration shall be born at the first instance by the Plaintiff, subject to suitable orders that the arbitrator may make.
In view of the order passed in the suit, Notice of Motion does not survive for consideration. Hence, both suit and Notice of Motion are disposed of." (emphasis supplied)
3. As a consequence, Smt. Justice K. K. Baam (retired) entered upon the Arbitration proceedings as the sole Arbitrator. Subsequently, the Plaintiff took out Notice of Motion No. 3052/2007 for the following reliefs:-
"a) That the above mentioned suit No. 857 of 2005 be restored/reinstated to file and be proceeded on merits.
b) That the Notice of Motion taken out in the above suit being Notice of Motion No. 894 of 2005 be reinstated on file and the reliefs sought for therein be granted.
c) In the alternative to prayers (a) and (b) above named, this Hon'ble Court be pleased to appoint a new arbitrator in place and stead of Justice Mrs. Keti Bamm (Retd.) and direct the defendant No. 1 to equally contribute in the payment of all the Arbitration expenses;
d) that pending the hearing and final disposal of the suit, this Hon'ble Court be pleased to direct the defendant No. 1 to pay to the co-ownership, Compensation/mesne profits @ Rs. 50/- per sq. ft per month on 200 sq. ft. or at such rate as this Hon'ble Court may deem fit, from 15th January 2004 till the date of the filing of the suit amounting to Rs. 1,40,000/- and thereafter to continue depositing the amount of Rs. 10,000/- as mesne profits every month;
e) that pending the hearing and final disposal of the suit, this Hon'ble Court be pleased to appoint Court Receiver, High Court Bombay as Receiver in respect of the suit premises with all powers under Order 40 rule 1 of the Civil Procedure Code, for the purposes of preserving and protecting the suit premises viz. one room admeasuring about 200 sq. ft. situated on the 1st floor on the front side of the building known as "Mazda Mansion" situated at Trinity Street, S.S.Gaekwad Road, Dhobitalao, Mumbai
-400 002;
f) that pending the hearing and final disposal of the suit, the defendant No. 1 his servants and/or agents be restrained by an order and injunction of this Hon'ble Court from dealing with and/or disposing off and/or creating any third party rights in the suit premises viz.
One room admeasuring about 200 sq. ft. situated on the 1st floor on the front side of the building known as "Mazda Mansion" situated at Trinity Street, S.S.Gaekwad Road, Dhobitalao, Mumbai- 400 002;
g) that ad-interim reliefs be granted to the Plaintiff in terms of prayers (d), (e) and (f) herein above;
h) that the costs of the notice of motion be granted to the Plaintiff;
i) that such further and other reliefs be granted to the plaintiff as this Hon'ble Court may in the nature and circumstances of the case deem just and necessary." (emphasis supplied)
4. The said Notice of Motion was disposed of on 28/11/2007 whereby Shri Justice H.H. Suresh (retired) was appointed as sole Arbitrator in place of the former sole Arbitrator. The said order reads thus:-
"Parties agree that the dispute between them may be arbitrated upon by the Retired Justice H. Suresh in view of the resignation of Retired Justice Baam as contemplated by the Order dated 13.10.2006.
Notice of Motion is disposed of."
5. Consequent to the said order the newly appointed Arbitrator entered upon the Arbitration proceedings as the sole Arbitrator. The first Arbitration meeting was held on 11/1/2008 in which the Defendant No. 1 was directed to file his counter claim on or before the next date of hearing i.e. 25/2/2008. On the subsequent dates, however, the proceedings were adjourned as parties were exploring possibility of settlement. Eventually, on 20/8/2008 it transpired that parties could not agree on the mode of settlement and Defendant No.1 wanted to file his counter claim. In the context of the stand taken by the Defendant No. 1, the Arbitrator opined that counter claim of the Defendant No. 1 would mean expansion of the scope of reference and would include additional disputes. Resultantly, the Arbitrator called upon the Defendant No. 1 to deposit his separate fees if he was interested in espousing his counter claim which would give rise to additional disputes. The Defendant No. 1, however, was reluctant to abide by the said direction. It appears that the objection of the Defendant No. 1 was two fold. Firstly, that the counter claim was the result of the defence taken by the Defendant No. 1 to resist the claim of the Plaintiff. In that sense, it did not raise any additional dispute. In any case, as per the order passed by the High Court on 13/10/2006, it is the Plaintiff who was liable to pay the cost of the arbitration proceedings at the first instance. These pleas of the Defendant No. 1 did not find favour with the Arbitrator. The Arbitrator, however, acceded to the request of the Defendant No. 1 to give him time to move the High Court for appropriate reliefs. It may be apposite to reproduce the relevant extract ofMinutes dated 20/8/2008 recorded by the Arbitrator in particular Paragraph 7 to 11 thereof which reads thus:-
"7. Today the parties could not agree on the mode of settlement and Mr. Shamim insisted that he would want to file his counter claim, and that he could not file counter claim so far because there was talk of settlement.
Since he indicated that he wanted to file counter claim which was not in the original proceedings before the High Court, it would naturally mean expansion of the scope of reference and would include additional disputes.
In this connection I must point out that the High Court in its order dated 13th October, 2006 directed that the costs of the arbitration proceedings shall be borne at first instance by the Plaintiff subject to suitable orders that may be passed by the Arbitrator.
8. In view of this order I had not directed Defendant No. 1 to pay any fees in these arbitration proceedings. However, since Defendant No. 1 now wants to file counter claim which would mean additional disputes, I indicated that I would, in that case, direct him deposit my fees.
9. Mr. Shamim states that his client is not willing to pay the fees and submits that the question of fees be decided at the time of final Award. I find that this attitude of the Respondent No. 1 is not fair and just, as he wants his claim to be considered, without paying any fees, neither the Court Fees, nor the Arbitrator's fees.
10. Mr. Shamim says that in these circumstances, he would move the High Court, and make an application within three weeks from today.
11. Mr. Mirza has opposed all the submissions of Mr. Shamim. However, since Mr. Shamim wants to move the High Court for seeking directions, I will keep the matter pending. If for any reason Mr. Shamim does not make any such application as stated herein above, Mr. Mirza is at liberty to move this Arbitral Tribunal for further suitable order."
6. Pursuant to the liberty given by the Arbitrator, the Defendant No. 1 filed Chamber Summons No. 1375/2008 before this Court praying for following reliefs:-
"(a) That this Honourable Court may be pleased to withdraw the proceedings pending before the Learned Arbitrator Justice H. Suresh (Retd). Senior Advocate and proceed with the Notice of Motion and suit before this Honourable Court;
(b) for such other and further reliefs as the nature and circumstances of the case may require and this Honourable Court deems just and proper:"
7. The said Chamber Summons has been rejected by the Learned Single Judge of this Court by the impugned decision on November 20, 2008. The Learned Single Judge has noted that the thrust of the grievance of Defendant No.1 was based on the interpretation of the order passed by his pre-decessor dated 13/10/2006. The argument advanced by the Counsel for the Defendant No. 1 was that the Arbitrator could not have directed the Defendant No. 1 to make payment at the first instance and at best could do so only after the adjudication of the dispute when the final Award was made. This argument has been dealt with by the Learned Single Judge on the finding that such interpretation of the order dated 13/10/2006 was misdirected; whereas according to the Learned Single Judge, the said order makes it clear that the Arbitrator could call upon the parties to make payment of his fees. On this finding, the Court proceeded to hold that no fault can be found with the direction issued by the Arbitrator as recorded in Minutes dated 20/8/2008.
The Learned Single Judge has then observed that since the parties agreed to refer their disputes to a Arbitrator, the provisions of Section 89(2)(a) of the Code of Civil Procedure would apply-which provides that the provisions of Arbitration and Conciliation Act, 1996 would become applicable to such proceedings. The Learned Single Judge has then proceeded to observe that in that view of the matter, the Chamber Summons as filed by the Defendant No. 1 cannot be entertained and at best the Defendant No. 1 could take recourse to Section 34 of the Act of 1996 as and when occasion arises. The Learned Single Judge, however, then proceeded to observe that the impugned directions given by the Arbitrator could be sustained on the basis of Section 38 of the Act of 1996 which postulates that the Arbitral Tribunal has power to fix the amount of the deposit or supplementary deposit as the case may be, as an advance for the cost and the Arbitral Tribunal may fix separate amount for the claim and counter claim. On these basis, the Chamber Summons filed by the Defendant No. 1 has been rejected. It is this decision which has been made subject matter of the present Appeal before us.
8. According to the Appellant-defendant No. 1, the parties had agreed before this Court as is recorded in the order dated 13th October, 2006, which permits the Defendant No. 1 to file counter claim before the Arbitrator and that the Plaintiff was obliged to bear the cost of arbitration charges therefor at the first instance. For that reason, the Appellant cannot be made liable to pay the Arbitration fees right at the beginning of the proceedings. It is also contended on behalf of the Appellant that the counter claim was founded on the defence of the Defendant No. 1 who has opposed and resisted the claim of the Respondent No.1-Plaintiff and cannot be said to be raising any additional disputes. It is the case of the Appellant that after the order was passed on 13/10/2006, the Plaintiff had taken out praecipe before this Court for clarification that in the event the Defendant No. 1 were to file counter claim, he(Plaintiff) should not be made liable for payment of Arbitration fees thereof which praecipe was answered against the Respondent No. 1-Plaintiff. It was, therefore, not open to call upon the Defendant No. 1 to pay the arbitration fees in relation to the counter claim filed by him and more so when the understanding reached between the parties was that the Plaintiff would pay the entire arbitration fees at the first instance. It is also the case of the Appellant that the Appellant is a senior citizen aged about 78 years and that the counter claim amount was very nominal as compared to the exorbitant Arbitration fees of Rs. 20,000/- per sitting. It is asserted by the Appellant that if at all this Court were to continue the Arbitration proceedings, may consider of appointing some other Arbitrator who would charge about Rs.
5,000/- per sitting which would be reasonable to both the parties. The Respondent No. 1 on the other hand has supported the view taken by the Arbitrator as well as the Learned Single Judge of this Court and submits that the Appeal be dismissed being devoid of merits.
9. After having considered the rival submissions, we have no hesitation in observing that the scope of controversy in the present Appeal will have to be examined in the context of the relief claimed in the Chamber Summons. In that, the Appellant (Defendant No. 1) has prayed for withdrawal of the proceedings pending before the Arbitrator and thence to proceed with the Notice of Motion and Suit before this Court. The question is: whether such relief can be entertained ? Having regard to the fact that the Suit as well as Notice of Motion has already been disposed of on 13/10/2006 by a speaking order, this Court has become functous officio. Besides, the order dated 13/10/2006 and even the subsequent order dated 28/11/2007 was the outcome of an agreed arrangement between the parties whereby the parties agreed to take their dispute before the named Arbitrator which is a private forum of their choice in preference to the Suit filed in this Court before a public forum.
On the earlier occasion it was the Plaintiff who had approached this Court for an identical relief which was not granted in view of the agreed order passed on 28/11/2007 on Notice of Motion No.3052/2007. Once the dispute between the parties has been taken before the said forum, namely, the sole Arbitrator, the proceedings would be governed by the Provisions of Act of 1996 by virtue of Section 89 of the Code of Civil Procedure. It necessarily follows that the proceedings before the Arbitral Tribunal can and ought to be terminated by the Arbitral Tribunal in the manner provided for by Section 32(2) of the Act of 1996. However, that is not the remedy adopted by the Appellant.
10. Ordinarily, the parties having consciously agreed for resolution of their dispute before the private forum in furtherance of which the suit was disposed off, the Court would be loath to once again allow the parties to switch over to suit proceedings before the Court unless it becomes imperative to do so.
Indeed, the Appellant-Defendant No. 1 may justify the institution of the Chamber Summons/Application with reference to the jurisdiction of this Court under Section 151 of the Code of Civil Procedure. However, in our opinion, the Defendant No. 1 has not made out sufficient ground so as to persuade us to exercise inherent jurisdiction. In that, the grievance is essentially with regard to the direction issued by the sole Arbitrator calling upon the Defendant No. 1 to deposit arbitration fees in relation to the counter claim filed by him. Indubitably, the Arbitral Tribunal is competent to fix the separate amount of deposit as an advance for the costs which it expects will be incurred in respect of the counter claim filed by the Defendant No. 1.
That power can be traced to Section 38(1) of the Act of 1996. The Arbitral Tribunal in the first place may call upon the party who has filed the counter claim to pay the deposit amount so specified. Further, in terms of Section 38(2) of the Act, on failure of that party, the Arbitral Tribunal is free to call upon the other party to pay the specified amount and proceed with the proceedings and on failure of both parties to pay the deposit, can even terminate the proceedings in respect of the claim or counter claim as the case may be. All these matters can be addressed in appropriate proceedings, but certainly cannot be made basis to pray before the Court for withdrawal of the proceedings pending before the Arbitrator and to revive the disposed of Suit and Notice of Motion to be then proceeded on merits before this Court.
11. Significantly, the opinion recorded by the Arbitrator in the Minutes dated 20/8/2008 and the direction issued on that basis against the Defendant No. 1 has not been challenged by the Defendant No. 1 by way of appropriate proceedings which are and may be available to the Defendant No. 1 in law. It will be inappropriate to examine the correctness of the grievance regarding the legality of the view so taken by the Arbitrator in the present Appeal which emanates from the order passed on Chamber Summons praying for specific relief of withdrawal of the Arbitration proceedings and of revival of the Suit before this Court. In other words, the opinion recorded by the sole Arbitrator in the Minutes dated 20/8/2008 cannot be allowed to be assailed in the present Chamber Summons filed in a disposed of Suit.
12. The question whether the direction given by the Arbitrator is in excess of power under Section 38 of the Act of 1996 cannot be considered in the context of relief claimed in the Chamber Summons under consideration.
Equally, it is not open for us to delve upon the question whether even after non-compliance of the direction by the Defendant No. 1, should the Arbitration proceedings continue further by asking the Plaintiff to deposit the amount or it should be terminated? Those are matters which will have to be considered at the appropriate stage. In our opinion, the question whether the direction issued by the sole Arbitrator calling upon the Defendant No.1 to deposit the arbitration fees in the context of the counter claim filed by the Defendant No. 1 is contrary to the scope of arrangement recorded by this Court in its order dated 13/10/2006 is also a matter to be considered if and when the Defendant No. 1 questions the correctness of the view expressed by the sole Arbitrator in the Minutes dated 20/8/2008 by way of appropriate proceedings. We express no opinion on the said controversy having regard to the extent of relief that may be considered in the present Chamber Summons.
13. We are conscious of the fact that the direction issued by the sole Arbitrator which is ascribable to order under Section 38 of the Act of 1996 may not be an appealable order within the meaning of Section 37 of the said Act. However, that does not mean that the Appellant-Defendant No.1 has no other remedy against the said direction. Indeed, the Learned Single Judge has observed that the Defendant No. 1 could take recourse to Section 34 of the Act of 1996 as and when occasion arises to question the correctness of the direction issued by the sole Arbitrator. That is one of the option available to the Defendant No. 1. The Defendant No. 1 if so advised, is free to challenge the direction/order issued by the Arbitral Tribunal dated 20/8/2008 calling upon him to deposit arbitration fees in advance in relation to the counter claim by way of appropriate remedy available in law. We make it clear that we are also not expressing any opinion on the argument that since the counter claim is the outcome of the defence of the Defendant No. 1 to resist the claim of the Plaintiff, it does not amount to raising any additional issues-for which reason was not susceptible to separate arbitration fees as it is also a matter which will have to be examined in the appropriate proceedings to be resorted to by the Defendant No. 1 to question the correctness of the opinion recorded by the Arbitral Tribunal in its order dated 20/8/2008. We also do not think it appropriate to express any opinion with regard to the plea of the Defendant No. 1 that the Arbitrator's fees in the sum of Rs. 20,000/- per sitting is exorbitant and unacceptable having regard to the trivial claim arising out of the counter claim filed by him or to appoint some other Arbitrator who would charge only about Rs. 5,000/- per sitting as arbitration fees. All these aspects are left open to be considered in appropriate proceedings.
14. Suffice it to observe that the relief as claimed in the present Chamber Summons of withdrawing the proceedings pending before the Arbitrator and then to proceed with the Notice of Motion and Suit before this Court cannot be countenanced. The Appeal would fail. We accordingly uphold the conclusion reached by the Learned Single Judge in rejecting the Chamber Summons for the aforesaid reasons though.
15. Accordingly, the Appeal is dismissed with no order as to costs.
CHIEF JUSTICE
ig A.M.KHANWILKAR, J
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