Case: Pradeep Anand Vs. I.T.C. Ltd.

of Court to pass interim orders—(1) Notwithstanding anything contained in Section 17 at any time after the filing of the award, whether notice of the filing has been served or not, upon being satisfied by affidavit or otherwise that a party has taken or is about to take steps to defeat, delay or obstruct the execution of any decree that may be passed upon the award, or that speedy execution of the award is just and necessary, the Court may pass such interim orders as it deems necessary.(2) Any person against whom such interim orders have been passed may show cause against such orders, and the Court, after hearing the parties, may pass such further orders as it deems necessary, and just.” These provisions, in our view show that the legislative policy is to ensure proper enforcement of an arbitration award and to assist a party who apprehends that he may face serious difficulties in execution of the award passed in his favour on account of the conduct of the other party. Be it noted here that different provisions of the Arbitration Act leaves little scope for doubt that an arbitration proceeding is to be conducted by the Arbitrator with reasonable dispatch and after the award is passed the Court should also dispose of the proceedings and decide the question whether the award should be made a Rule of Court expeditiously so that the party in whose favour the award has been passed gets the benefit of the arbitration clause. In the present case the order passed by the learned Single Judge gives rise to a converse situation. The Court has intervened to stay further proceedings in a proceeding which is continuing before the Arbitrator giving the reason inter alia that the petitioner applying for stay may be put to unnecessary expenses in defending the proceeding before the Arbitrator. As noted earlier, the respondent No. 1 herein, has initiated proceedings before the Court to direct the Arbitrator to file the Partial Award and has also filed an application under Sections 30 and 33 of the Act challenging the validity of the award and has also raised the question of validity of the agreement itself in the petition. The said proceedings are pending in the Court. The questions raised therein will be decided by the Court on merit after hearing the parties. In such circumstances, the view taken by the High Court that the Arbitrator should not proceed further in the arbitration proceeding is unnecessary, uncalled for and erroneous. The observation of the learned Single Judge that since the Arbitrator did not file the Partial Award in Court immediately on being directed by the Court the respondent No. 1 was made remediless and was ‘gagged’, is equally uncalled for and erroneous. It may be noted here that no party will be entitled to get any benefit in any final award passed by the Arbitrator until the same is made Rule of the Court and before this is done the Court is duty bound to give notice to the parties and consider objections if any raised by any of the parties against the award.11. On perusal of the judgment/order passed by the learned Single Judge, we are constrained to observe that the learned Judge travelled beyond the limited jurisdiction vested in him in deciding the question of stay and has discussed the merits of the case and made observations which may prejudice the parties of any of them in a proceeding before the Arbitrator and at subsequent stages in the proceeding before the Court.12. The judgment of the Division Bench, we are constrained to observe, suffers from similar error of approach as the learned Single Judge. Being aware of the position that the respondent No. 1 has challenged the partial award by filing objections under Sections 30, 31 and 33 of the Act and proceeding is pending before the Trial Court, the Division Bench thought it appropriate to make observations regarding the alleged misconduct of the Arbitrator in sending that draft award to the ICC International Court of Arbitration for advise and also in declining to send up the depositions and the documents to the Court on certain grounds the Division Bench appears to have lost sight of the fact that all these questions may come up for decision before the Trial Court in the proceeding under Sections 30 and 33 of the Act and parties will have opportunity to have their say in the matter. The Division Bench failed to appreciate that in the context of facts of the case it is in the interest of the parties that the arbitration proceedings should be concluded and the challenge against the draft award/final award should be decided as expeditiously as possible. The observations made by the Division Bench in the judgment are not only unnecessary but also uncalled for keeping in view the limited question that came up for consideration before it i.e. whether the further proceeding before the Arbitrator should be stayed or it should continue. Any observation touching upon the merits of the case particularly, the allegations relating to alleged misconduct of the Arbitrator at the stage of consideration of the application for interim order of stay does not commend us. It appears from the record that the respondent No. 1 has also filed an application before the Court for removal of the Arbitrator and the same is also pending. We are conscious of the position that grant of stay is a matter of discretion of the Court and if the Trial Court on consideration passes the order of stay the Appellate Court should be slow to interfere with the same. But that does not mean that if the order of stay passed by the Trial Court is based on non-judicial consideration such order is not liable to be interfered with by the Appellate Court. However, since the Division Bench held that the appeal was not maintainable we need say no further on merits of the observations/findings in the judgment.

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

Explanation:
1[ds]10. From the discussions made in the foregoing paragraphs, it is manifest that the disputes raised in the proceeding arises from and relates to thet dated 11.9.1990entered into between the parties. In the said agreement it was agreed by the parties under Article 12 that ‘any unresolvedarising in connection with this Agreement shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more Arbitrators appointed in accordance with those rules and the arbitration shall be held at Bombay, India. The arbitration proceeding was initiated in pursuance of the express provision made in the agreement and the Arbitrator was appointed by the ICC under the stipulation in the agreement. On the materials on record the position has to be accepted, prima facie, that the Indian law is applicable to the proceeding. The proceeding is to be conducted and decided in accordance with the provisions of the Arbitration Act, 1940. We make it clear that our observation in this regard will not prevent any of the parties to raise the question, at the appropriate stage of the proceedings before the Court and if such contention is raised the Court will decide the same in accordance with law. The Arbitration Act, 1940 is fairly comprehensive and contains provisions from the stage of appointment of Arbitrator till the award being made Rule of the Court where after it becomes a decree of the Court and executable as such. In Section 34 of the Act power is vested in the Court to order stay of legal proceedings, where there is an arbitration agreementthe provision in the section it is clear that in case there is an arbitration agreement entered between the parties, they should ordinarily be held by their agreement and should not be permitted to initiate any legal proceeding other than arbitration proceeding relating to any dispute coming within the arbitrationprovisions, in our view show that the legislative policy is to ensure proper enforcement of an arbitration award and to assist a party who apprehends that he may face serious difficulties in execution of the award passed in his favour on account of the conduct of the other party. Be it noted here that different provisions of the Arbitration Act leaves little scope for doubt that an arbitration proceeding is to be conducted by the Arbitrator with reasonable dispatch and after the award is passed the Court should also dispose of the proceedings and decide the question whether the award should be made a Rule of Court expeditiously so that the party in whose favour the award has been passed gets the benefit of the arbitration clause. In the present case the order passed by the learned Single Judge gives rise to a converse situation. The Court has intervened to stay further proceedings in a proceeding which is continuing before the Arbitrator giving the reason inter alia that the petitioner applying for stay may be put to unnecessary expenses in defending the proceeding before the Arbitrator. As noted earlier, the respondent No. 1 herein, has initiated proceedings before the Court to direct the Arbitrator to file the Partial Award and has also filed an application under Sections 30 and 33 of the Act challenging the validity of the award and has also raised the question of validity of the agreement itself in the petition. The said proceedings are pending in the Court. The questions raised therein will be decided by the Court on merit after hearing the parties. In such circumstances, the view taken by the High Court that the Arbitrator should not proceed further in the arbitration proceeding is unnecessary, uncalled for and erroneous. The observation of the learned Single Judge that since the Arbitrator did not file the Partial Award in Court immediately on being directed by the Court the respondent No. 1 was made remediless and wasis equally uncalled for and erroneous. It may be noted here that no party will be entitled to get any benefit in any final award passed by the Arbitrator until the same is made Rule of the Court and before this is done the Court is duty bound to give notice to the parties and consider objections if any raised by any of the parties against the award.11. On perusal of the judgment/order passed by the learned Single Judge, we are constrained to observe that the learned Judge travelled beyond the limited jurisdiction vested in him in deciding the question of stay and has discussed the merits of the case and made observations which may prejudice the parties of any of them in a proceeding before the Arbitrator and at subsequent stages in the proceeding before the Court.12. The judgment of the Division Bench, we are constrained to observe, suffers from similar error of approach as the learned Single Judge. Being aware of the position that the respondent No. 1 has challenged the partial award by filing objections under Sections 30, 31 and 33 of the Act and proceeding is pending before the Trial Court, the Division Bench thought it appropriate to make observations regarding the alleged misconduct of the Arbitrator in sending that draft award to the ICC International Court of Arbitration for advise and also in declining to send up the depositions and the documents to the Court on certain grounds the Division Bench appears to have lost sight of the fact that all these questions may come up for decision before the Trial Court in the proceeding under Sections 30 and 33 of the Act and parties will have opportunity to have their say in the matter. The Division Bench failed to appreciate that in the context of facts of the case it is in the interest of the parties that the arbitration proceedings should be concluded and the challenge against the draft award/final award should be decided as expeditiously as possible. The observations made by the Division Bench in the judgment are not only unnecessary but also uncalled for keeping in view the limited question that came up for consideration before it i.e. whether the further proceeding before the Arbitrator should be stayed or it should continue. Any observation touching upon the merits of the case particularly, the allegations relating to alleged misconduct of the Arbitrator at the stage of consideration of the application for interim order of stay does not commend us. It appears from the record that the respondent No. 1 has also filed an application before the Court for removal of the Arbitrator and the same is also pending. We are conscious of the position that grant of stay is a matter of discretion of the Court and if the Trial Court on consideration passes the order of stay the Appellate Court should be slow to interfere with the same. But that does not mean that if the order of stay passed by the Trial Court is based onconsideration such order is not liable to be interfered with by the Appellate Court. However, since the Division Bench held that the appeal was not maintainable we need say no further on merits of the observations/findings in the judgment.