Supreme Court: The Division Bench of M. R. Shah* and B.V. Nagarathna, JJ., held that where the Arbitrator appointed by the High Court had already declared the award, it is not open for parties to file a reference before M.P. Arbitration Tribunal with respect to the very claim/claims which were subject matter of arbitration. Noticing that the award had attained finality, the Bench while rejecting the respondent’s claim of award being void, stated that,
“Even the award or a nullity order has to be challenged before the appropriate forum/higher forum.”
Factual Matrix
An agreement was executed between the appellants and the respondent for construction of houses, with regard to which some disputes arose between the parties. The appellants contended that the respondent was supposed to complete the work within 18 months but, despite granting repeated extensions, the contractor failed to complete the work, on account of which, appellants rescinded the contract.
Aggrieved by the order rescinding the contract, the respondent-contractor filed a writ petition before the High Court seeking direction to permit him to complete the work; which was disposed of on a joint consensus of the parties that the dispute shall be decided by the arbitrator i.e., Housing Commissioner, M.P. Housing Board.
Forum Shopping
The Arbitrator rejected the claim of the respondent-contractor and granted relief in favour of the appellants. Instead of challenging the said award by way of an application under Section 34 of the Arbitration and Conciliation Act, 1996, the respondent filed a fresh Reference Petition before the M.P. Arbitration Tribunal under Section 7 of the M.P. Madhyastham Adhikaran, Vindhyachal, Bhopal, Act, 1983.
The Tribunal dismissed the reference as not maintainable since claim made by the respondent had already been decided by the Arbitrator and the award had achieved finality. Later on, as an afterthought, the respondent-contractor filed a review petition before the High Court seeking clarification of the earlier order to the extent that by directing the adjudication of the dispute by the Housing Commissioner, it did not take away the jurisdiction of Arbitral Tribunal, which was dismissed by the Court.
Once again, the contractor approached the High Court with revision petition under Section 19 of the 1983 Act challenging the order passed by the learned Tribunal, by the impugned judgment the High Court allowed the said revision and quashed the order passed by the Tribunal while directing it to decide the reference/claim on merits and in accordance with law.
Findings
The Bench rejected the argument of the respondent–contractor that the earlier order passed by the High Court referring the dispute between the parties for adjudication to the Arbitrator and thereafter the award declared by the Arbitrator were non-est and void as Section 7B of the 1983 Act provides that no dispute can be referred to the Arbitration Tribunal unless the dispute is first referred for decision of the final authority under the scope of the term ‘works contract, on the basis of following findings:
(i) It was the respondent–contractor who approached the High Court submitting that he has invoked the arbitration clause;
(ii) The order of the High Court referring the dispute to the Arbitrator was a consent order; hence the claim was binding on the parties on the ground of ‘issue estoppel’.
(iii) The award of the Arbitrator had attained finality;
(iv) The review petition filed by the respondent-contractor for clarification of the earlier High Court order was rejected and the same also attained finality;
(v) The claims submitted before the Arbitrator; before the High Court and the claim submitted in Reference Petition before the Arbitral Tribunal under the 1983 Act were the same without any change;
(vi) In the subsequent reference petition before the Arbitral Tribunal there was no reference to the earlier order passed by the High Court referring the dispute to Arbitrator and the award passed by the Arbitrator. Thus, there was suppression of facts on the part of the respondent–contractor;
Decision
Holding that the award of the Arbitrator had attained finality and was binding on the parties, the Bench stated that there could not be any subsequent fresh proceeding with respect to the same claims. As no objections were raised by the respondent–contractor at the appropriate stage, the award could not be annulled subsequently.
Hence, the appeal was allowed. The impugned judgment and order of the High Court quashing and setting aside the order passed by the Arbitral Tribunal was quashed and set aside and the order of the Tribunal was restored.
[M.P. Housing and Infrastructure Development Board v. K.P. Dwivedi, 2021 SCC OnLine SC 1171, decided on 03-12-2021]
Kamini Sharma, Editorial Assistant has put this report together
Appearance by:
For the Appellants: Bharat Singh, AAG
For Respondent: Kavin Gulati, Senior Advocate
*Judgment by: Justice M. R. Shah