Arbitrators like Courts, are legally bound to resolve the disputes in accordance with public policy of the law: Bombay High Court

 on 22 04 2021 on 23 04 bdpwpl 9105.21.docIN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTIONWRIT PETITIONNO. 9105 OF 2021Tirupati Shopping Centre PremisesCo op. Society Limited a society registered under the provisions of theMaharashtra Co operative Societies Act 1960having its registered Office at C.T.S. Nos. 308and 309 S. V. Road SantacruzMumbai 400 054. … PetitionerVersusShabayesha Construction Company Private Limiteda Company incorporated under the provisions of theCompanies Act 1956 and deemed to be incorporatedunder the Companies Act 2013 having its RegisteredOffice at A. N. House 1st Floor 31st Road TPS III BandraMumbai 400 050. … Respondent Dr. Veerendra Tulzapurkar Senior Advocate a w Mr. Sanjay Kadamand Mr. Rohan Kadam i by M s. Kadam & Company Advocates forthe Petitioner.Mr. Sanjay Jain a w Mr. Nishant Sasidharan Mr. Darshan Mehta Ms.Shrushtri Dalal and Ms. Apeksha Sharma Advocates for theRespondent. CORAM : R. D. DHANUKA & V. G. BISHT JJ.RESERVED DATE : 12th APRIL 2021PRONOUNCED DATE : 22nd APRIL 2021JUDGMENT: .By this Writ Petition filed under Articles 226 and 227 of theConstitution of India the petitioner has impugned the order dated 19th on 22 04 2021 on 23 04 bdp2wpl 9105.21.docJanuary 2021 passed by the learned Arbitrator dismissing theApplication filed by the petitioner under Section 16 of the Arbitrationand Conciliation Act 1996and holdingthat the Arbitral Tribunal has jurisdiction to entertain claims laid downby the respondent.Some of the relevant facts for the purpose of deciding this WritPetition are as under : 2.Mr. Sanjay Jain learned counsel for the respondent at thethreshold raised a preliminary objection that this writ petition filedunder Articles 226 and 227 of the Constitution of India impugning theorder passed by the Arbitral Tribunal rejecting the application filed bythe respondent in such arbitral proceedings raising a plea of jurisdictionraised by such respondent is not maintainable. The remedy if any ofthe petitionerwould be to challenge the saidorder passed by the Arbitral Tribunal along with final award if thepetitioner is aggrieved by the final order under Section 34 of theArbitration Act. Learned counsel invited our attention to variousparagraphs of the judgment of the Hon’ble Supreme Court in case ofDeep Industries Limited v s. Oil and Natural Gas Corporation andLimited and Anr. 15 SCC 706.3.Dr. Veerendra Tulzapurkar learned senior counsel for thepetitioner on the other hand would contend that the writ petition filedby his client under Articles 226 and 227 of the Constitution of India ismaintainable in view of the principles of law laid down by the Hon’bleSupreme Court in case of Deep Industries Limitedand othersubsequent judgments. In view of these rival submissions made by thelearned counsel for the parties we shall decide the issue of on 22 04 2021 on 23 04 bdp3wpl 9105.21.docmaintainability of this writ petition impugning the order passed by theArbitral Tribunal rejecting the application filed by the petitioner underSection 16 of the Arbitration Act and holding that the Arbitral Tribunalhas jurisdiction to adjudicate upon the claims made by the respondent(original claimant).4.It was the case of the petitioner society that the respondent hadexecuted agreements for sale with the unit purchasers in the year 1995and agreed to form a society within the timeline prescribed under Rule8 of the Maharashtra Ownership FlatsRules 1964in the year 2016 the petitioner filedan application bearing no. 516 before the Competent Authorityunder Section 11 of the Maharashtra Ownership Flats Act 1963for a unilateral Deemed Conveyance. The said on 22 04 2021 on 23 04 bdp4wpl 9105.21.docapplication was resisted by the respondent. The said application wasdismissed by the Competent Authority on 22nd February 2017 onaccount of the fact that there was no occupation certificate issued inrespect of the building. Liberty was however granted to the petitionerto file another application.6.On 3rd March 2018 the petitioner filed an application bearingno. 318 for a unilateral Deemed Conveyance against therespondent before the Competent Authority under Section 11 of theMOFA. On 10th August 2018 the Competent Authority passed anorder allowing the said application filed by the petitioner. In the saidorder the Competent Authority held that the respondent builder hadmade a claim in respect of two basements open parking unsoldpremises and balance FSI TDR in the said building. However as pervarious Courts citations developer does not get any rights besides onthe unsold flats and balance FSI TDR after prescribed period of fourmonths after registration of society. Therefore claim made by thebuilder in respect of common spaces and TDR was false. The builderhas rights in respect of unsold premises shops only in the said building.The objections raised by the builder in this regard are not legal. TheCompetent Authority directed the concerned Sub Registrar or any otherappropriate Registration Officer under the Registration Act 1908 toregister ex parte Deemed Conveyance Deed conveying right title andinterest of the developer in property described in Deemed ConveyanceCertificate in the name of the society after adjudication by Collector ofStamp.7.It was ordered by the Competent Authority that the said DeemedConveyance application filed by the society in respect of Survey No. on 22 04 2021 on 23 04 bdp5wpl 9105.21.doc41 CTS No.308 309 S. V. Road SantacruzMumbai 400 054was allowed by granting ex parte Deemed Conveyance. Pursuant tothe said order dated 10th August 2018 the Competent Authority andDeputy District Registrar Co operative Society III Mumbai issued acertificate under Section 11(4) of the MOFA and certified that this casewas proper for ex parte execution of Conveyance Deed of the right title and interest of the promoters of the land of area 1718.2 sq. mtrs. ofdescription TPS No. 4 Santacruz CTS H 309 Division H Ward CitySurvey Officer Bandra limit Tal. Andheri Mumbai Suburban Districtin the name of the petitioner society. The respondent did not challengethe said order passed by the Competent Authority dated 10th August 2018 or the said Deemed Conveyance Certificate issued under Section11(4) of the MOFA.8.The dispute arose between the parties which was referred toArbitration under the Arbitration clause forming part of the Agreemententered into between the parties. On 21st August 2020 the petitionerfiled a statement of claim before the Arbitral Tribunal against thepetitioner inter alia praying for various reliefs. The petitioner filed anapplication in the month of September 2020 in the said Statement ofClaim before the Arbitral Tribunal under Section 16 of the ArbitrationAct inter alia praying for dismissal of the said claim for want ofjurisdiction. The said application under Section 16 was opposed by therespondent. The Arbitral Tribunal passed the impugned order dated19th January 2021 rejecting the said application filed by the petitionerand holding that the Arbitral Tribunal has jurisdiction to entertain andadjudicate upon the claims made by the respondent.9.Dr. Tulzapurkar learned Senior Counsel for the petitioner on 22 04 2021 on 23 04 bdp6wpl 9105.21.docinvited out attention to various provisions of the Agreement enteredinto between the parties the correspondence exchanged between theparties averments made in the statement of claim and in the pleadingsfiled by the parties in the application filed by his client under Section16 of the Arbitration Act before the Arbitral Tribunal. It is submittedby the learned senior counsel that the petitioner had filed an applicationunder Section 11 of the MOFA before the Competent Authority seekingan order for Deemed Conveyance in view of the respondent havingfailed to comply with its duties and obligations to execute a Deed ofConveyance in favour of the petitioner society within the timeprescribed. The Competent Authority has already passed a quasi judicial order granting Deemed Conveyance in favour of the petitioner.The Competent Authority has also issued a Deemed ConveyanceCertificate in favour of the petitioner society. The said order passed bythe Competent Authority under Section 11 was a quasi judicial orderwhich has attained finality. The respondent could not have claimed inthe arbitral proceedings effectively seeking a reversal of the said quasi judicial order granting Deemed Conveyance by reserving the FSI TDRin respect of the plot which was subject matter of the said order ofDeemed Conveyance in favour of the petitioner.10.It is submitted that the Arbitral Tribunal can never examine thevalidity or nullity of a quasi judicial order passed under a statute. Suchclaim for specific performance if any can only be maintained beforethe Courts and not before the Arbitral Forum. The CompetentAuthority has already decided the title in respect of the said property infavour of the petitioner. The said order passed by the said quasi judicial authority would operate in rem and thus no such arbitralproceedings as filed by the respondent in respect of such title certificate on 22 04 2021 on 23 04 bdp7wpl 9105.21.docwhich operated in rem were at all maintainable before the ArbitralTribunal. The Arbitral Tribunal has assumed jurisdiction on a perversefinding that the MOFA does not confer any adjudicatory function of theCompetent Authority. Since the Arbitral Tribunal has committed afundamental and patent error in the impugned order this writ petitionfiled by the petitioner under Article 226 read with Article 227 of theConstitution of India is thus maintainable. It is submitted that it was acase of lack of inherent jurisdiction of the Arbitral Tribunal in decidinga right in rem. This Court has thus ample power in such case toexercise powers under Article 226 or 227 of the Constitution of India.11.It is submitted that the Arbitral Tribunal itself had no jurisdictionto entertain any such claim which would nullify the effect of the saidquasi judicial order which has already attained finality. Learned seniorcounsel placed reliance on the judgment of Supreme Court in case ofBooz Allen and Hamilton Inc. v s. SBI Home Finance Limited andOrs. 5 SCC 532 in support of this submission. He invited ourattention to paragraphs 15 to 24 of the judgment of the Hon’bleSupreme Court in case of Deep Industries Limitedand wouldsubmit that since it was clear case of inherent lack of jurisdiction of theArbitral Tribunal to entertain the claims made by the respondent whichif awarded would nullify the effect of an order of Deemed Conveyanceof the property passed in favour of the petitioner this petition filedunder Articles 226 and 227 of the Constitution of India is maintainable.12.It is submitted by the learned senior counsel that the Hon’bleSupreme Court in the said judgment in case of Deep IndustriesLimitedhas distinguished its earlier judgment in case of SBPand Company v s. Patel Engineering Ltd. and Anr. 8 SCC on 22 04 2021 on 23 04 bdp8wpl 9105.21.doc618. He submits that the judgment of Hon’ble Supreme Court in caseof Deep Industries Limitedthus would apply to the facts of thiscase. Learned senior counsel also relied upon the judgment of Hon’bleSupreme Court in case of Vidya Drolia and Ors. v s. Durga TradingCorporation 2 SCC 1 in support of the aforesaid submission.13.Mr. Sanjay Jain learned counsel for the respondent on the otherhand invited our attention to various provisions of the MOU enteredinto between the petitioner and the respondent and various avermentsmade in the statement of claim filed by his client before the ArbitralTribunal. It is submitted by the learned counsel that the respondent hasnot challenged the impugned order passed by the Competent Authorityunder Section 11 of the MOFA before the Arbitral Tribunal. Therespondent has prayed for declaration that the agreement dated 6th June 2008 entered into between the parties is valid subsisting and bindingon the petitioner herein and has prayed for a specific performance ofthe said agreement. He invited out attention to the prayer clauses in thesaid statement of claim and would submit that his client has alsoprayed for a monetary reliefs in the sum of Rs.75 00 000 in prayerclausein the sum of Rs.529 99 25 925 in prayer clausewhichwas in alternate and without prejudice to prayer clausestoandalso has claimed an amount of Rs.584 36 19 879 in prayer clausein support of argument that theArbitral Tribunal has power to decide the subsidiary rights of a party.18.Learned counsel for the respondent invited our attention toparagraphs 4 5 16 to 22 45 and 46 of the judgment of the Hon’bleSupreme Court in case of Deep Industries Limitedand wouldsubmit that the Hon’ble Supreme Court has not considered in the saidjudgment that a writ petition was maintainable under Articles 226 and227 of the Constitution of India against an order passed by the ArbitralTribunal rejecting an application under Section 16 of the ArbitrationAct. He submits that in the said judgment the Hon’ble Supreme Courthas considered the facts where application under Section 16 filed bythe respondent in the arbitral proceedings was dismissed by the ArbitralTribunal. The claimant had also filed an application under Section 17of the Arbitration Act before the learned Arbitrator. The learnedArbitrator had stayed the operation of the order passed under Section17 of the Arbitration Act. on 22 04 2021 on 23 04 bdp11wpl 9105.21.doc19.The claimant had also applied for amendment to the statement ofclaim as well as the said application under Section 17 to challenge theorder dated 15th February 2018. The learned Arbitrator had allowedthe said application for amendment by order dated 10th March 2018.The said order dated 9th May 2018 disposing of the application filed bythe claimant under Section 17 was disposed of by the learned Arbitratorin which he had granted stay of the operation of the order dated 15thFebruary 2018 on the condition that two years ban black listing wouldonly operate if the claimant ultimately losses any final arbitrationproceedings was impugned before the City Civil Court Ahmedabad.The City Civil Court disposed of the said appeal against the orderpassed by the learned Arbitrator under Section 17 of the ArbitrationAct upholding the order passed by the learned Arbitrator anddismissed the said appeal.20.That order passed by the City Civil Court Ahmedabad in theappeal under Section 37 was challenged before the Gujarat High Courtby invoking Article 227 of the Constitution of India. The Gujarat HighCourt without deciding the jurisdictional issue allowed the said writpetition and set aside the order passed by the City Civil Court Ahmedabad.21.It is submitted by the learned counsel for the respondent that aseven Judge bench of the Hon’ble Supreme Court in case of SBP andCompanyhas held that a party aggrieved by an order ofArbitral Tribunal under Section 16 of the Arbitration Act unless has aright of appeal under Section 37 of the Act has to wait until the awardis passed by the Arbitral Tribunal. The object of minimizing judicialintervention while the matter is arbitrated upon will be defeated if the on 22 04 2021 on 23 04 bdp12wpl 9105.21.docHigh Court could be approached under Article 227 or under Article 226of the Constitution of India against every order made by the ArbitralTribunal. It is submitted that the facts before the Hon’ble SupremeCourt in the said judgment in case of Deep Industries Limitedand would submit that the Hon’bleSupreme Court in the said latest judgment has already held that theArbitral Tribunal has been given jurisdiction to decide on the subjectmatter of arbitrability. They are required to identify specific publicpolicy in order to determine the subject matter arbitrability. Merely because a matter verges on a prohibited territory should not by in itselfstop the Arbitrator from deciding the matter. He should be careful inconsidering the question of non arbitrability.23.It is submitted that it was not the case of the petitioner that theprayer for specific performance in the statement of claim filed by therespondent cannot be granted by the Arbitral Tribunal. The ArbitralTribunal has recorded finding that the reliefs claimed by the respondentare an action in personam and not right in rem. The reliefs seekingspecific performance of the provisions of MOU are arbitrable. Suchfindings rendered by the Arbitral Tribunal being not perverse cannot beinterfered by this Court. The petitioner has remedy available underSection 34 of the Arbitration Act by impugning the impugned orderpassed by the Arbitral Tribunal under Section 16 of the Arbitration Actalong with final award if the petitioner is aggrieved by such finalaward by filing a petition under Section 34 of the Arbitration Act. on 22 04 2021 on 23 04 bdp13wpl 9105.21.doc24.The petitioner has been delaying the arbitral proceedings filed bythe respondent on one or the other ground. The petitioner has nowfiled a statement of defence and has also filed a counter claim beforethe Arbitral Tribunal for damages under the said MOU withoutprejudice to the contentions raised in the application filed underSection 16 of the Arbitration Act. The pleadings are now alreadycompleted in the arbitral proceedings before the Arbitral Tribunal. TheTrial is likely to start any moment.25.Dr. Tulzapurkar learned senior counsel for the petitioner in hisrejoinder argument clarified that it was not the case of the petitionerthat all the cases of specific performance are actions in rem. Since theCompetent Authority has already declared the petitioner as the ownerand a title is conferred upon the petitioner by the said order passedunder Section 11 of the MOFA the proceedings filed by the respondentbefore the Arbitral Tribunal are an action in rem and thus issue ofjurisdiction raised by the petitioner was rightly raised and ought tohave been decided in favour of the petitioner. The respondent haschallenged the said order of Deemed Conveyance directly or indirectlyin the statement of claim.26.Mr. Sanjay Jain learned counsel for the respondent placedreliance on the order passed by the Supreme Court on 5th March 2021in Civil Appeal No. 1098 10921 in Case of NavayugaEngineering Company v s. Bangalore Metro Rail CorporationLimited and the order dated 18th September 2020 in Special Leave toAppealNo. 84820 in case of Punjab State PowerCorporation Limited v s. Emta Coal Limited and Anr. and wouldsubmit that the case of the petitioner would not fall under the patent on 22 04 2021 on 23 04 bdp14wpl 9105.21.doclack of inherent jurisdiction of the Arbitral Tribunal. He submits thatthe Hon’ble Supreme Court in the said two orders have clearly heldthat the Court under Article 227 of the Constitution of India in a writpetition arising out an order passed by the Arbitral Tribunal canexercise powers only if the order passed is so perverse that the onlypossible conclusion is that there is a patent lack in inherent jurisdictionwhich requires no argument whatsoever. Perversity in the order mustbe such that must stare one in the face. The writ jurisdiction can beexercised only in case of exceptional rarity or cases which are stated tobe patently lacking in inherent jurisdiction and not otherwise.27.It is submitted that the petitioner has not made out any such casewithin such exception made by the Hon’ble Supreme Court even incase of Deep Industries Limitedin case of NavayugaEngineering Companyand in case of Punjab State PowerCorporation Limitedhas held that the Arbitral Tribunals are private forum chosenvoluntarily to adjudicate their dispute in place of Courts and Tribunalswhich are public fora constituted under the Laws of the Country.However Civil or Commercial dispute whether contractual or non contractual which can be decided by a Court are in principle capableof being adjudicated and resolved by Arbitral Tribunal unless thejurisdiction of the Arbitral Tribunals is excluded either expressly or bynecessary implication. Adjudication of certain categories ofproceedings are reserved by the legislature exclusively for publicforum as a matter of public policy. Certain other categories of cases either not expressly reserved for adjudication by public forummay by necessary implication have been executed fromthe purview of private forum.34.The Hon’ble Supreme Court in the said judgment also held that aright in rem is a right exercisable against the world at large ascontrasted from a right in personam which is an interest protectedsolely against specific individuals. Action in personam referred toactions determining the rights and interest of the parties themselves inthe subject matter of the case whereas actions in rem referred toactions determining the title to property and the rights of the parties not merely among themselves but also against persons of any timeclaiming an interest in that property. In paragraph 38 of the saidjudgment the Hon’ble Supreme Court clarified that disputes relating tosubordinate rights in personam arising from rights in rem always havebeen considered to be arbitrable.35.In the MOU entered into between the parties the respondentclaims various rights of development on the said property after on 22 04 2021 on 23 04 bdp18wpl 9105.21.doccompletion of the construction of the building for the petitioner. Allthese rights claimed by the respondent in the statement of claim aresubordinate rights in personam arising from rights claimed by thepetitioner in the said property. These principles laid down in thejudgment of the Hon’ble Supreme Court in case of Booz Allen andHamilton Inc.squarely apply to the facts of this case. Theclaims made by the respondent in the statement of claim are relating tosubordinate rights in personam under the said MOU and thus arearbitrable. No case is made out by the petitioner in this case to showthat the reliefs sought by the respondent in the statement of claim couldbe exclusively tried only by a Civil Court and not by the ArbitralTribunal and are barred from being tried by the Arbitral Tribunal byany express or necessary implication.36.Supreme Court in case of Vidya Drolia and Ors.has heldthat as per the mandate of sub Section 5 of Section 16 of theArbitration Act when objection to the jurisdiction under sub Sections 2and 3 are rejected the Arbitral Tribunal can continue with theproceedings and make the arbitration award. A party aggrieved is atliberty to file application for setting aside such arbitral award underSection 34 of the Arbitration Act after completion of proceedings. It isheld that the Arbitration and Conciliation Act 1996 does not in specificterms exclude any category of dispute Civil or Commercial fromArbitrability.37.It is held that under Section 16 of the Arbitration Act theArbitral Tribunal is empowered to rule on its own jurisdiction including ruling on any objections with respect to the existing orvalidity of the Arbitration Agreement. It is held that the arbitrators on 22 04 2021 on 23 04 bdp19wpl 9105.21.doclike Courts are legally bound to resolve the disputes in accordancewith public policy of the law.38.Hon’ble Supreme Court in case of Deep Industries Limited(supra) has dealt with an appeal arising out of the order passed by theHigh Court in a Writ Petition under Article 227 of the Constitution ofIndia. The appellant before the Hon’ble Supreme Court had filed aclaim petition before the learned Arbitrator challenging the terminationof the contract show cause notice and also claiming damages. Duringthe pendency of the said arbitral proceedings the appellant wasblacklisted by the ONGC for a period of two years. The appellant hadfiled an application under Section 17 before the learned Arbitrator. Theappellant had also filed an application to amend the arbitration claim.The said application for amendment was allowed by the learnedArbitrator.39.The respondent in the meanwhile filed an application underSection 16 before the learned Arbitrator on the ground that thearbitration notice was confined only to termination of the agreementand blacklisting outside the arbitrator’s ken. The said applicationunder Section 16 was dismissed by the learned Arbitrator holding thatthe notice was not merely confined to termination of contract but wasalso in respect of two years ban blacklisting that was sought to beimposed at that time. The learned Arbitrator by a separate orderdisposed of the application filed by the appellant under Section 17thereby staying the operation of the order dated 15th February 2018thereby black listing the appellant by the ONGC. An appeal was filedbefore the City Civil Court Ahmedabad under Section 37 of theArbitration Act. The City Civil Court passed an order in the said on 22 04 2021 on 23 04 bdp20wpl 9105.21.docappeal under Section 37 in the Arbitration Act dismissing the saidappeal.40.The aggrieved party filed an application under Article 227 of theConstitution of India before the High Court of Gujarat impugning theorder passed by the City Civil Court Ahmedabad. The High Court ofGujarat referred to the two preliminary contentions raised on behalf ofthe petitioner that the petition under Article 227 of the Constitution ofIndia should be dismissed at a threshold as it did not raise anyjurisdictional issue. The High Court however without answering thesaid question then went on to state that the ban order had in fact beenpassed under a General Contract Manual mainly and not under theprovisions of the agreement and as a result of which serious disputesarose as to the jurisdiction of the arbitrator to deal with the same.41.The Gujarat High Court also held that on reading of a notice forarbitration that the notice did not raise the issue of the ban for twoyears and was confined only to illegal termination. The Gujarat HighCourt held that no stay could be possibly granted under Section 17 ofthe ban order as an injunction cannot be granted in the cases where theparty can be compensated later in damages. The Gujarat High Courtaccordingly allowed the said writ petition and was pleased to set asidethe order passed by the City Civil Court Ahmedabad.42.The said order passed by the Gujarat High Court was challengedbefore the Hon’ble Supreme Court in the said judgment in case ofDeep Industries Limitedholding that under Section 34 theaggrieved party has an avenue for ventilating its grievances against theaward including any in between orders that might have been passed bythe Arbitral Tribunal acting under Section 16 of the Act. The partyaggrieved by any order of the Arbitral Tribunal unless has a right ofappeal under Section 37 of the Act has to wait until the award ispassed by the Arbitral Tribunal. This appears to be scheme of the Act.The Hon’ble Supreme Court in the said judgment in case of SBP andCompanyalso held that the object of minimising judicialintervention while the matter is in process of being arbitrated upon will certainly be defeated if the High Court could be approached underArticle 227 or under Article 226 of the Constitution of India againstevery order made by the Arbitral Tribunal. Therefore it is necessary toindicate that once the arbitration has commenced in the Arbitral on 22 04 2021 on 23 04 bdp22wpl 9105.21.docTribunal parties have to wait until the award is pronounced unless ofcourse a right of appeal is available to them under Section 37 of theAct even at a particular stage.44.In paragraph 20 of the said judgment the Hon’ble SupremeCourt however held that the statement of law in the said judgment incase of SBP and Companydoes not directly apply on the factsof the case in hand before the Hon’ble Supreme Court in the saidjudgment. The Hon’ble Supreme Court also distinguished the judgmentof Punjab Agro Industries Corporation Limited v s. Kewal SinghDhillon 10 SCC 128 on the ground that in the case in hand incase of Deep Industries Limitedthe jurisdiction had beenexercised by the High Court only after the first appeal provided underSection 37 of the Arbitration Act was dismissed.45.In paragraph 22 of the said judgment the Hon’ble SupremeCourt held that the drill of Section 16 of the Arbitration Act is thatwhere a Section 16 application is dismissed no appeal is provided andthe challenge under Section 16 application being dismissed must awaitthe passing of a final award at which stage it may be raised underSection 34. It is held that for that reason alone the judgment of theGujarat High Court under appeal needs to be set aside. It is held thateven otherwise entering into the general thicket of the disputesbetween the parties does not behove a Court exercising jurisdictionunder Article 227 where only jurisdictional errors can be corrected. Itis held that the Arbitral Tribunal was well within its jurisdiction inreferring to the contract and the ban order and than applying the lawand finally issuing the stay order. The High Court judgment thus couldnot be sustained and came to be set aside. on 22 04 2021 on 23 04 bdp23wpl 9105.21.doc46.In paragraph 23 of the said judgment the Hon’ble SupremeCourt held that what becomes clear is that had the High Court itselfdisposed of the first appeal in that case no petition under Article 227could possibly lie and all that could perhaps have been done was to filean LPA before a Division Bench of the same High Court. The Hon’bleSupreme Court allowed the said Civil Appeal by setting aside the orderpassed by the High Court exercising writ jurisdiction under Article 227of the Constitution of India. In our view the said judgment of theHon’ble Supreme Court is clearly distinguishable in the facts of thiscase. In this case petitioner has challenged the order passed by theArbitral Tribunal rejecting an application under Section 16 of the Act.47.Be that as it may in paragraph 22 of the said judgment theHon’ble Supreme Court has held that the drill of Section 16 of the Actis that where a Section 16 application is dismissed no appeal isprovided and the challenge to the Section 16 application beingdismissed must await the passing of the final award at which stage itmay be raised under Section 34. In our view the said judgment of theHon’ble Supreme Court holding that the party whose applicationunder Section 16 of the Arbitration Act is rejected must await thepassing of a final award at which stage it may be raised under Section34 would assist the case of the respondent and not the petitioner.48.The Hon’ble Supreme Court in the order dated 5th March 2021in case of Navayuga Engineering Companyhad considered thefacts where arbitral award was already made in favour of the appellantallowing some of the claims. The Arbitration petitions filed underSection 34 of the opponent was pending before the City Civil andSession’s Judge Bengaluru. The execution of the said award was on 22 04 2021 on 23 04 bdp24wpl 9105.21.docstayed on certain conditions. Both the parties filed writ petition againstthe said order staying execution of award on certain conditions. Thewrit petition filed by the appellant was dismissed whereas the writpetition filed by the respondent was allowed in which the deposit of50% of the amount was ordered. The said order was impugned beforethe Hon’ble Supreme Court in that matter.49.The Hon’ble Supreme Court in paragraph 4 of the said orderobserved that despite the Supreme Court repeatedly referring to Section5 of the Arbitration Act in particular and the Arbitration Act in generaland despite the Supreme Court having laid down in case of DeepIndustries Limitedthat the High Court under Articles 226 and227 should be extremely circumspect in interference with orders passedunder Arbitration Act such interfering being only in cases ofexceptional rarity or cases which are stated to be patently lacking ininherent jurisdiction the Supreme Court found that High Courts areinterfering with deposit orders that have been made. That was not acase of exceptional rarity or any patent lack in inherent jurisdiction.The Hon’ble Supreme Court accordingly set aside the order passed bythe High Court exercising writ jurisdiction in such a situation.50.The Hon’ble Supreme Court in an order dated 18th September 2020 in case of Punjab State Power Corporation Limitedthe Hon’ble on 22 04 2021 on 23 04 bdp25wpl 9105.21.docSupreme Court held that a foray to the Writ Court from a Section 16application being dismissed by the arbitrator can only be if the orderpassed was so perverse that the only possible conclusion is that there isa patent lack of inherent jurisdiction requires no arguments whatsoeverit must be the perversity of the order that must stare one in the face.The Hon’ble Supreme Court observed that unfortunately parties areusing this expression in the judgment in case of Deep IndustriesLimitedto go to the Writ Court under Article 227 in matterwhich did not suffer from a patent lack of inherent jurisdiction. This isone of them.51.It is held by the Hon’ble Supreme Court that instead ofdismissing the writ petition on the ground stated the High Court couldhave done well to have referred to the judgment in case of DeepIndustries Limitedand to dismiss the petition under Article 227on the ground that there was no such perversity in the order which needto be a patent lack of inherent jurisdiction. High Court ought to havediscouraged similar litigation by imposing heavy cost. The High Courtdid not choose to do either of these two things. The Hon’ble SupremeCourt dismissed the said Spl. Leave Petition with costs of Rs.50 000 to be paid to the Supreme Court Legal Service Committee.52.In this back drop we shall decide whether the petitioner hasmade out a case of patent lack of inherent jurisdiction which requiresno arguments whatsoever and demonstrates the perversity in the orderwhich stare on in the face and whether this case would fall in cases ofexceptional rarity or not. The Arbitral Tribunal in this case hasrecorded a finding that the dispute between the parties arising out ofMOU dated 6th June 2008 is an action in personam alone and not an on 22 04 2021 on 23 04 bdp26wpl 9105.21.docaction in rem. The Arbitral Tribunal has also considered large numberof judgments of this Court in paragraph 15 of the impugned orderholding that mere issuance of certificate does not bar the aggrievedparty to adopt such legal appropriate proceedings to establish its claimunder the contract.53.This Court in case of Zainul Abedin Yusufali Massawala andOrs. v s. Competent Authority and in case of Shree ChitanmaniBuilders v s. State of Maharashtra in case of Tushar JivramChauhan v s. State of Maharashtra 4 Mh.L.J. and in case ofMazda Construction Company v s. Sultanabad Darshan CHS Ltd. 2012 SCC OnLine Bom 1266 has held that jurisdiction of the CivilCourt is not barred despite a document of Deemed Conveyance isplaced on record and relied upon before the Civil Court dealing withthe right title and interest of the petitioner in the larger property byindependently applying its mind and on a total appraisal of the oral anddocumentary evidence before it.54.In our view the Arbitral Tribunal has rightly held that parties areneither stopped nor there is bar under the provisions of law to establishits right title or interest independent of such Deemed ConveyanceCertificate. Such certificate will have no bar in the matter where theright title and interest of any party is adjudicated before a forum whichis conferred with such jurisdiction to adjudicate and deal with afterperusing the oral and documentary evidence and decide the disputebetween the parties. Such adjudication is clearly independent of theAct performed under Section 11 of the MOFA. The aforesaidjudgments relied upon by the Arbitral Tribunal on this issue applies tothe facts of this case. on 22 04 2021 on 23 04 bdp27wpl 9105.21.doc55.In our view the proceedings under Section 11 of the MOFA arefiled in view of the default committed by the promoter to execute aDeed of Conveyance in favour of the society by complying with itsapplication under the provisions of the MOFA by executing a Deed ofConveyance. The Competent Authority is thus empowered to pass anorder of Deemed Conveyance ex parte. Such order passed by theCompetent Authority does not create title in respect of such propertyconclusively in favour of the society. Such an order of DeemedConveyance is subject to the final adjudication of title in theappropriate Civil proceedings either before the Civil Court or byArbitral Tribunal in case of their being an Arbitration Agreementbetween the parties. There is no such provision under MOFA that theorder passed by the Competent Authority under Section 11 of theMOFA is final in all respect including on the issue of title in theproperty and bars the Civil Court or the Arbitral Tribunal from decidingthe issue of title independently.56.In our view there was thus no question of any inherent lack ofjurisdiction of the Arbitral Tribunal in considering a claim for specificperformance of the MOU and various monetary claims including claimfor damages which was for enforcement of subordinate rights in thenature of an action in personam. The Arbitral Tribunal has jurisdictionthus to entertain try and adjudicate upon such claims arising out of notin action in rem. In our view such claims as made by the respondentcould be adjudicated upon only by the Arbitral Tribunal in view ofthere being an Arbitration Agreement and not barred expressly or bynecessary implication. There was thus no question of inherent lack ofjurisdiction in the Arbitral Tribunal to decide those claims. on 22 04 2021 on 23 04 bdp28wpl 9105.21.doc57.The petitioner has also not made out a case under an exceptioncarved out by the Hon’ble Supreme Court in case of NavayugaEngineering Companyfor interfering with the orders passedunder the Arbitration Act by a Writ Court under Articles 226 and 227i.e. interference being only in cases of exceptional rarity. In our view this was a clear case of exclusive jurisdiction of the Arbitral Tribunal todecide such claims as made by the respondent and thus the impugnedorder passed by the Arbitral Tribunal cannot be impugned in a writpetition under Articles 226 and 227 of the Constitution of India.58.The Hon’ble Supreme Court in the said order in case of PunjabState Power Corporation Limitedhas noticed the misuse of thesaid expression ‘patent lack of inherent jurisdiction’ expressed by theHon’ble Supreme Court in case of Deep Industries Limitedbythe parties invoking writ jurisdiction under Article 227 in the matterswhere there is no lack of inherent jurisdiction and has stronglyobserved that though there was no patent lack of inherent jurisdiction the High Court who ought to have dismissed the writ petition on suchground the High Court dismissed the writ petition directly againstorder under Section 16 without following the drill of Section 16 of theArbitration Act. The Hon’ble Supreme Court has set aside thejudgment of the Punjab and Harayana High Court with cost quantifiedat Rs.50 000 . In our view the writ petition filed by the petitionerunder Articles 226 and 227 of the Constitution of India in the facts ofthis case is a gross abuse of process of law and has been filed with aview to delay the outcome of the arbitral proceedings which have to bedisposed of expeditiously. The writ petition thus deserves to bedismissed with exemplary cost. on 22 04 2021 on 23 04 bdp29wpl 9105.21.doc59.We accordingly pass the following order :(R.D. DHANUKA J.) 

Summary: There is no inherent lack of jurisdiction of the Arbitral Tribunal in considering a claim for specific performance of the MOU. The Arbitral Tribunal has jurisdiction to entertain, try and adjudicate upon such claims arising out of not in action in rem. In the case of Arbitration Agreement, claims could only be adjudicated upon by Arbitral Tribunal and not barred expressly or by necessary implication. Thus, no question of inherent lack of jurisdiction in the Arbitral Tribunal to decide those claims will arise. This remarkable judgment was passed by the Bombay High Court in the matter of TIRUPATI SHOPPING CENTRE PREMISES V SHABAYESHA CONSTRUCTION COMPANY PRIVATE LIMITED [WRIT PETITION (STAMP) NO. 9105 OF 2021] by Honourable Justice R. D. Dhanuka and Honourable Justice V. G. Bisht. By this Writ Petition filed under Articles 226, the petitioner has challenged the order dated 19 January 2021 which was passed by the learned Arbitrator wherein the Application filed by the petitioner under Section 16 of the Arbitration and Conciliation Act, 1996 was dismissed. The respondent had executed agreements for sale with the unit purchasers in the year 1995 and agreed to form a society within the timeline prescribed under Rule 8 of the Maharashtra Ownership Flats. The respondent had also covenanted that it would execute a conveyance of the property within four months of the registration of the society. The petitioner submitted that the respondent did not disclose any further construction that was proposed to be carried out on the said property at the time of entering into the agreements for sale with various unit purchasers, though, under Clause 6 of the agreement for sale, the respondent had expressly covenanted that the residential FSI from the property would be available only to the society after its registration. Since the respondent failed to execute a Deed of Conveyance in favour of the petitioner society in spite of receiving full consideration from the flat purchasers even after expiry of eight years after the execution of the MOU.  The petitioner filed an application before the Competent Authority under Section 11 of the Maharashtra Ownership Flats Act, 1963 for a unilateral Deemed Conveyance. The dispute was then referred to Arbitration under the Arbitration clause forming part of the Agreement entered into between the parties.  The HC observed that “the Arbitral Tribunal has jurisdiction to decide all the claims which can be decided by a Civil Court unless the same is specifically barred either expressly or by necessary implication. The Arbitral Tribunal has rightly held that parties are neither stopped nor there is a bar under the provisions of law to establish its right, title, or interest, independent of such Deemed Conveyance Certificate. Such certificate will have no bar in the matter where the right, title, and interest of any party is adjudicated before a forum which is conferred with such jurisdiction to adjudicate and deal with after perusing the oral and documentary evidence and decide the dispute between the parties. Such adjudication is clearly independent of the Act performed under Section 11 of the MOFA.” Also, the proceedings under Section 11 of the MOFA are filed in view of the default committed by the promoter to execute a Deed of Conveyance in favour of the society by complying with its application under the provisions of the MOFA by executing a Deed of Conveyance. The Competent Authority is thus empowered to pass an order of Deemed Conveyance ex-parte. Thus, the Court stated, “Such order passed by the Competent Authority does not create a title in respect of such property conclusively in favour of the society. Such an order of Deemed Conveyance is subject to the final adjudication of title in the appropriate Civil proceedings either before the Civil Court or by Arbitral Tribunal in case of their being an Arbitration Agreement between the parties. There is no such provision under MOFA that the order passed by the Competent Authority under Section 11 of the MOFA is final in all respect including on the issue of title in the property and bars the Civil Court or the Arbitral Tribunal from deciding the issue of title independently.”