Case: Malik Brothers Vs. Narendra Dadhich

law on the subject, came to the conclusion that there has been a gross violation of the aforesaid provision of the Arbitration Act and it is not known why respondent No. 1 (Indore Development Authority) elected to appoint the arbitrator. The High Court also came to the further conclusion that the land would not have been disposed of even on lease basis through arbitration and the Indore Development Authority committed an error of law and consequent public injury by revival of a close issue by appointment of an arbitration and by its attempt benefited the present appellant at the cost of public revenue. With the aforesaid conclusion, the High Court quashed the resolution of the Indore Development Authority, referring the dispute to the arbitrator as well as the award of the arbitrator and passed certain consequential directions. The question that arises for consideration therefore, it whether in the facts and circumstances of the case, the High Court was justified in entertaining a writ petition in the garb of a public interest litigation and was justified even in setting aside the award of a competent arbitrator which was not assailed under the provisions of the Arbitration Act but by filing a petition under Article 226 on the ground that the very decision of the Improvement Trust, referring the matter to the arbitrator was illegal and has caused public injury. 4. At the outset it may be stated that the land in question was admittedly put to public auction and the appellant was the highest bidder and this fact has not been disputed at any stage. The further admitted position is that the appellant had deposited some amount but could not deposit the balance amount even though the bid of the appellant was accepted by the competent authority and for non-deposit of the balance amount, the earlier amount deposited stood forfeited which however was challenged by the appellant. It is at that stage the Indore Development Authority took into consideration all the relevant factors and thought it appropriate to refer all disputes pertaining to the land, which was subject matter of the auction for arbitration. Not an iota of material has been placed before us to indicate that the said decision of the Improvement Trust was either for extraneous consideration or had not been taken bona fide. In course of hearing of this appeal, not an iota of material was produced before us by respondent No. 1 at whose instance the High Court had entertained the public interest litigation petition to indicate that there was any infirmity in the auction that was held on 15.4.81 and that the highest bid obtained was not genuine and the price obtained thereon is grossly low. Though a bald ascertain had been made by respondent No. 1 that the normal price of the land would be much higher than the highest auction price which the appellant had offered but no substantive material had been produced in the High Court and nothing has been brought to the notice of this court also. In this view of the matter we fail to understand as to how the High Court could come to the conclusion that there has been gross public injury by referring the matter to the arbitrator and the Improvement Trust has acted beyond its jurisdiction by referring the dispute pertaining to the land in question to the arbitrator. In our considered opinion the very act of entertaining the application as a public interest litigation of the behest of respondent No. 1, who has absolutely no interest in the transaction was improper and the High Court had in fact not adverted to the parameters for entertaining a petition as a public interest litigation. It may not be out of place to mention at this stage that two other auctions, similarly held were not assailed but it is the auction where the appellant was the highest bidder was only assailed for the reasons known to respondent No. 1. When the appellant had challenged the legality of the action of the competent authority in the matter of forfeiture of the deposit made, the competent authority thought it appropriate to refer the entire dispute pertaining to the land in question for arbitration and we see no infirmity with that decision nor that decision can be said to have been taken on some extraneous consideration. We also fail to appreciate the conclusion of the High Court on Section 21 of the Arbitration Act inasmuch as there is no bar for parties to a dispute to refer the dispute for arbitration instead of litigating in common law courts. In our view, Section 21 of the Arbitration Act does not debar the parties to refer a dispute between them to an arbitrator, particularly when the litigation in normal course has become not only expensive but also continues for years together. If any informal forum is chosen by the parties for expeditious decision of their disputes, it would not be safe for a court of law to come to a conclusion that such decision has been taken for any extraneous consideration without any supporting material in that regard. In the case in hand, the High Court of Madhya Pradesh committed serious error of law by invoking its discretionary jurisdiction under Article 226 of the Constitution of India at the behest of a person who has no interest in the litigation in question and in quashing the decision of the Indore Development Authority of referring the dispute to the arbitrator as well as the award of the competent arbitrator, by entering into an arena of conjecture and by assuming that the price of land must have gone up without having before them any materials in that respect. We have no hesitation, therefore to set aside the impugned judgment of the High Court and we accordingly do so. Necessarily, therefore, the award of the competent arbitrator remains operative and the rights of the parties flowing therefrom have to be worked out in accordance with law. 5.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our view, Section 21 of the Arbitration Act does not debar the parties to refer a dispute between them to an arbitrator, particularly when the litigation in normal course has become not only expensive but also continues for years together. If any informal forum is chosen by the parties for expeditious decision of their disputes, it would not be safe for a court of law to come to a conclusion that such decision has been taken for any extraneous consideration without any supporting material in that regard. In the case in hand, the High Court of Madhya Pradesh committed serious error of law by invoking its discretionary jurisdiction under Article 226 of the Constitution of India at the behest of a person who has no interest in the litigation in question and in quashing the decision of the Indore Development Authority of referring the dispute to the arbitrator as well as the award of the competent arbitrator, by entering into an arena of conjecture and by assuming that the price of land must have gone up without having before them any materials in that respect. We have no hesitation, therefore to set aside the impugned judgment of the High Court and we accordingly do so. Necessarily, therefore, the award of the competent arbitrator remains operative and the rights of the parties flowing therefrom have to be worked out in accordance with law.