Bombay High Court: Can An Order Of The Court Setting Aside An Arbitral Award Be Reviewed/Recalled Under Plenary Jurisdiction Of Such Court?

609231-hc-mumbai-040517

In Kalpataru Power Transmission Ltd. v. Maharashtra State Electricity Transmission Co. Ltd. Rev. Pet. (Lodging) No. 51 of 2019 decided on 21 Jan 2020, the question that arose for consideration of the Bombay High Court was whether a review petition seeking recall of its judgment and award thereby setting aside a majority award passed by the Arbitral Tribunal is maintainable under the provisions of the Arbitration and Conciliation Act, 1996 (Arbitration Act) or under any other provisions of law or not?

Pertinently, the Bombay High Court in case of Hindustan Construction Co. Ltd. vs. State of Maharashtra in Review Petition No. 2 of 2013 had inter alia held that merely because the “High Court” is not described as persona designata in Section 37 of the Arbitration Act would not mean that if any such appeal is entertained by the High Court under Section 37(1) of the Arbitration Act, it would not be the High Court exercising its power under Article 215 of the Constitution of India and would not be the Court of record.

In that case, the Bombay High Court negatived the contention that the High Court under Article 215 would not have plenary jurisdiction including procedural review relating to the errors apparent on the face of the record. It is held by the Court in the said judgment that the provisions of the Arbitration Act do not exclude the powers of High Court to exercise its plenary powers and to exercise procedural review in case of errors apparent on the face of the record causing miscarriage of justice or shows grave and palpable errors committed by it.

Accordingly, the Court has held that procedural review can be exercised by Court under plenary jurisdiction. The provisions of Code of Civil Procedure, 1908 can be applied to the proceedings in Court to the extent of the provisions thereof not inconsistent with the provisions of the Arbitration Act. None of the provisions of the Arbitration Act bars High Court for procedural review by exercising plenary jurisdiction. The Court accordingly recalled the judgment and order passed by it in so far as the claim nos. 1 and 2, in that matter which were held as time barred by the said judgment by exercising plenary jurisdiction.

In the case at hand, the review petitioner strongly placed reliance upon the judgment of another dictum of the Bombay High Court in case of Satpal P. Malhotra and others vs. Puneet Malhotra and others 2013 SCC OnLine Bom 689 in support of the submission that since none of the provisions of the Arbitration Act bars the remedy of review prescribed under Order XLVII Rule 1 of the Code of Civil Procedure, 1908, the High Court can exercise not only plenary jurisdiction but also can exercise power of review under Order XLVII Rule 1 of the Code of Civil Procedure, 1908 and can recall the entire judgment and order passed by this Court.

The review petitioner submitted that in the said judgment, the Bombay High Court had entertained the cross-objection filed in an appeal under Section 37 of the Arbitration Act on the ground that there was no bar under the provisions of the Arbitration Act to entertain cross-objection. Further, in the said judgment the Bombay High Court also had held that there was no inconsistency in the provisions of the Code of Civil Procedure, 1908 and the provisions of Arbitration Act, in so far as the filing of cross-objection in the appeal filed under Section 37 of the Arbitration Act is concerned.

In the similar vein, in case of ITI Ltd. vs. Siemens Public Communications Network Ltd., (2002) 5 SCC 510, the Supreme Court has inter alia held that under Section 37(1) of the Arbitration Act, appeal is not made to any designated person but to a Civil Court. The proceedings before such Court will have to be controlled by provisions of the Code of Civil Procedure, 1908 and therefore the remedy by way of the revision under Section 115 of the Code of Civil Procedure, 1908 will not amount to a judicial intervention not provided for by part I of the Arbitration Act. It is held by the Supreme Court in the said judgment that when the Arbitration Act under Section 37 provided for an appeal to the Civil Court and the application of the Code not having been expressly barred, the revisional jurisdiction of the High Court gets attracted. If that be so, the bar under Section 5 of the Arbitration Act will not be attracted because conferment of appellate power on the Civil Court in part I of the Arbitration Act attracts the provisions of the Code of Civil Procedure, 1908 also.

However, in another judgment of Supreme Court in case of Mahanagar Telephone Nigam Limited vs. Applied Electronics Limited (2017) 2 SCC 37, the Supreme Court had expressed a view that the Arbitration Act is a complete Code and Section 5 in categorical terms along with other provisions, lead to a definite conclusion that no other provisions can be attracted. The application of Code of Civil Procedure, 1908 is not conceived of and therefore as a natural corollary, the cross-objection cannot be entertained. The Supreme Court however clarified that though the said view was expressed in that matter, the judgment it had rendered in ITI Ltd. is a binding precedent. The Supreme Court accordingly directed that the earlier decision in case of ITI Ltd. deserves to be reconsidered by a larger bench. The said issue has not been decided by the larger bench of the Supreme Court till date.

After analysing the above authorities and applying them on the case at hand, the Bombay High Court formed a view that since the issue before the Supreme Court in the said judgment was whether a revision application under Section 115 of the Code of Civil Procedure, 1908 was maintainable or not in spite of provisions under Section 5 of the Arbitration Act is now referred to the larger bench by a two Judge bench of the Supreme Court in case of Mahanagar Telephone Nigam Limited, it does not propose to decide the larger issue whether a Court can exercise powers of review under Order XLVII Rule 1 of the Code of Civil Procedure, 1908 seeking review of the orders passed by the Court under the provisions of Arbitration Act or not.

However, the Court observed that there is a difference between procedural review and review on merits. Therefore, the primary issue needs to be tested on the touchstone of whether the review petitioner in the present case is seeking a procedural review or review on merits.

The Court noticed that while deciding a similar issue in case of Kapra Mazdoor Ekta Union v/s. Birla Cotton Spinning and Weaving Mills Ltd. and Another, (2005) 13 SCC 777, the Supreme Court had considered the issue of whether Industrial Tribunal/Labour Court has power to exercise procedural review under the provisions of Industrial Disputes Act, 1947 or not and decided the difference between review on merits and procedural review.

The Supreme Court in the said judgment held that power of review is not an inherent power and must be conferred by law either expressly or by necessary implication where a Court or quasi-judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the Court or quasi-judicial authority is vested with power of review by express provision or by necessary implication. Procedural review however belongs to a different category. In such a review, the Court or quasi-judicial authority having jurisdiction to adjudicate, proceeds to do so, but in doing so ascertains whether it has committed a procedural illegality that went to the root of the matter and invalidates the proceedings itself, and consequently the order passed therein. The Supreme Court in the said judgment adverted to the earlier judgment in case of Grindlays Bank Ltd v/s. Central Government Industrial Tribunal, 1980 Supp SCC 420, in which it was held that when a review is sought due to a procedural difficulty, the inadvertent error committed by the Tribunal must be corrected ex-debito justitiae to prevent the abuse of its process and such power inheres in every Court or Tribunal. Thus in that case, the Supreme Court held that the order passed was liable to be recalled and reviewed not because it was found to be erroneous, but because it was passed in a proceeding which was itself vitiated by an error of procedure or mistake which went to the root of the matter and invalidated the entire proceedings.

In view thereof, the Bombay High Court reached to a conclusion that the Court has inherent or implied powers to set aside a palpably wrong order passed under a misapprehension by it and if found erroneous and vitiated by an error of procedure or mistake which went to the root of the matter and invalidate the entire proceedings.

Now the secondary question before the Bombay High Court was whether the review petitioners have applied for procedural review or seeks review of the judgment and order passed by Court on merit. Thus, the Court proceeded to decide whether review petitioner has demonstrated any such error of procedure or mistake which went to the root of the matter and whether in the facts of this case, Court shall exercise powers of procedural review under plenary jurisdiction or not.

The Court found that certain observations made by the Court in the judgment and order under review were not part of the pleadings either of the petitioner or the respondent. As a corollary, the Court held that there is a procedural error to that effect and applying the dictum of its earlier case in Hindustan Construction Co. Ltd it can be corrected by the Court by exercise procedural review under plenary jurisdiction. However, the Court refrained from recalling the other observations made in the judgment and order which were based on the principles of law laid down by the Supreme Court in several judgments and are independent to the reasons recorded in the parts of paragraphs which were corrected by the Court.

The Court further observed that there is difference between power of Court to exercise procedural review by exercising plenary jurisdiction and power of review by exercising powers under Order XLVII Order 1 of the Code of Civil Procedure, 1908 on the grounds set out therein. Thus, it was held the observations/findings which disclose procedural error can be corrected by the Court in exercise of its powers of procedural review under plenary jurisdiction.

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