Full Text
HIGH COURT OF DELHI
Date of order: 16th May, 2023
IFFCO TOKIO GENERAL INSURANCE COMPANY LIMITED..... Appellant
Through: Mr. Manish Kumar and Mr. Abhinav Singh, Advocates
Through: Mr. Achyuth Ajith Kumar & Mr. Shyam Gopal, Advocates.
CHANDRA DHARI SINGH, J (Oral)
Exemption allowed subject to just exceptions.
The application stands disposed of.
JUDGMENT
1. The present appeal under Section 37(2) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the Act") has been filed against the order dated 15th February, 2023 passed by the Arbitral Tribunal seeking the following reliefs: “a. Allow this present appeal and set-aside the impugned order dated 15.02.2023 passed by the Arbitral Tribunal; b. Grant interim custody of the documents/records of the Appellant currently in wrongful possession of the Respondent; c. Grant interim protection from destruction or alteration of any file/cartons of the Appellant currently in wrongful possession of the Respondent; and d. Pass such other and further order(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.”
2. The learned counsel appearing for the appellant submitted that the said order was passed on appellant's application under Section 17 of the Act seeking interim custody and protection of its records/ documents and that the present case has arisen out of “Records Services Management Agreement” (hereinafter referred to as “the agreement") dated 1st April, 2005 which was renewed biennially. It is further submitted that in furtherance of the said agreement, appellant has kept and stored 17,120 cartons containing sensitive and confidential files/records with the respondent for safe custody at different locations of the respondent.
3. It is submitted on behalf of the appellant that the appellant requested the respondent through email for return/ permanent retrieval of their records lying at various locations of the respondent as per the agreed rate per carton/box vide renewal letter dated 26th October 2017. However, the respondent did not return the records of the appellant. Subsequently, vide e-mail dated 7th February, 2019, the appellant terminated the agreement w.e.f. 28th February, 2019. It is further submitted that despite such termination, the respondent is in continued possession of its documents/ records which are urgently required by the appellant for several purposes.
4. It is submitted on behalf of the appellant that, the respondent initiated the arbitration proceedings in which the appellant duly participated. It is contended that during such proceedings, appellant filed an application under Section 17 of the Act seeking interim custody and protection of its documents/records. Vide order dated 1st April, 2022 the Arbitral Tribunal dismissed the said application on the ground that the parties were at consensus and that there was a great disparity as to the number of cartons of appellant in respondent’s custody. The said order of the Arbitral Tribunal was challenged by the appellant before this Court in Arb. A. (Comm.) No. 21/2022 and vide order dated 11th May, 2022, this Court allowed the appellant to pursue the alternative proposals to resolve the impasse between the parties.
5. It is submitted that the respondent filed its Evidence Affidavit and an application under Section 23(3) of the Act on 21st May, 2022, seeking amendment to the Statement of Claims whereby the respondent adhered to the facts stated by the appellant thus removing any incongruity. Subsequently, the appellant agreed to the terms of the respondent and filed another application under Section 17 of the Act dated 20th June, 2022 before the Arbitral Tribunal seeking the interim custody of its cartons during the pendency of the arbitral proceedings. The respondent vehemently opposed the said application. The Arbitral Tribunal vide order dated 15th February, 2023 dismissed the appellant's application under Section 17 of the Act.
6. It is contended that the appellant has approached this Court against the order dated 15th February, 2023. It is asserted that the Arbitral Tribunal has wrongly rejected the application under Section 17 of the Act filed by the appellant seeking interim custody and protection of its documents/ records in an arbitrary and perverse manner.
7. Per Contra, the learned counsel appearing on behalf of the respondent vehemently opposed the instant appeal, the averments made therein and the submissions made on behalf of the appellant.
8. It is submitted that the learned Arbitral Tribunal has passed the impugned order after due consideration and appreciation of the facts and circumstances. There is no error or illegality on the face of record in the impugned order dated 15th February 2023 which warrants the interference of this Court. Therefore, it is submitted by the learned counsel for the respondent that the instant appeal being devoid of merit is liable to be dismissed.
9. Heard the learned counsel appearing for the parties at length and perused the record, including the impugned order.
10. The sum and substance of the matter in the instant case, as per the case of the appellant, is that the appellant is challenging the order dated 15th February 2023 as per which the appellant’s application under Section 17 of the Act was rejected by the learned Arbitral Tribunal.
11. The appellant has sought a remedy under Section 37 of the Act. The said provision provides for orders that are arising out of arbitration proceedings and may be appealed against. Section 37 of the Act provides as under:- “37. Appealable orders (1) [Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:- [(a) refusing to refer the parties to arbitration under section 8; (b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under section 34.]
(2) Appeal shall also lie to a court from an order of the arbitral tribunal- (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or takeaway any right to appeal to the Supreme Court.”
12. In the instant matter, the appellant has invoked Section 37(2)(b) of the Act since the application preferred by the appellant under Section 17 of the Act before the learned Arbitral Tribunal was dismissed vide the impugned order dated 15th February 2023.
13. At this juncture, it is pertinent to examine the scope of powers which may be exercised by this Court while adjudicating upon a challenge under Section 37 of the Act to the impugned interim order.
14. The principle of limited intervention by the Court in arbitration proceedings has been time and again reiterated by this Court as well as by the Hon’ble Supreme Court. The law to that effect is no more res integra. The limited grounds available with the Court for intervention in an impugned award, interim or final, were discussed by the Hon’ble Supreme Court in Haryana Tourism Ltd. vs. Kandhari Beverages Ltd.,
15. There is no dispute to the position that a Court adjudicating a challenge under Section 37 of the Act shall not conduct a roving inquiry into the facts of the case on merits and re-examine evidence or other material before the Arbitral Tribunal.
16. A Division Bench of this Court in the judgment of Union of India vs. Sikka Engineering Company, 2019 SCC OnLine Del 8788 held as under:-
In the case of Steel Authority of India v. Gupta Brothers Steel Tubes Limited, (2009) 10 SCC 63, the Supreme Court has laid down that an error relatable to interpretations of the contract by an Arbitrator is an error within his jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award. The Supreme Court has further laid down that the Arbitrator having been made the final arbiter of resolution of disputes between the parties, the award is not open to challenge on he ground that the Arbitrator has reached a wrong conclusion. The courts do not interfere with the conclusion of the Arbitrator even with regard to the construction of contract, if it is a plausible view of the matter. The Apex Court in J.G. Engineers (P) Ltd. v. Union of India, reported at (2011) 5 SCC 758, demarcated the boundary while explaining the ambit of section 34(2) of the Act. The Court in the aforesaid judgement relied upon the pronouncement of ONGC Ltd. v. Saw Pipes, in paragraph 19, held as under:—
19. Thus, in view of the law under Section 37 of the Act, we find no ground to entertain this appeal.”
17. It is hence settled that the scope of interference in an appeal under Section 37 of the Act is narrow. The Courts shall neither enter into the merits of the facts and case of the parties nor enter into the merits of the findings made by the Arbitral Tribunal.
18. This Court has time and again reiterated the spirit of the Arbitration Act. There is no doubt on the fact that the Act was enacted for providing a mechanism to the public to resolve their disputes in a process less rigorous, technical and formal than that of a litigation. It has proven to be easier, more accessible, efficient and even cost effective for the parties involved, whether at an individual level or at the level of a business or corporation. The alternative dispute mechanism is not only advantageous for the people involved in disputes but has also been aiding the effective disposal and release of burden on the Courts of the Country. The parties have a more hands-on involvement in an Arbitration process and play an active role in the adjudication process. Therefore, expeditious and effective disposal of matters are most certainly considered the primary objectives of the enactment of the Arbitration Act. To fulfil the objective of introducing the Arbitration Act, it has been deemed necessary by the legislature as well as the Hon’ble Supreme Court to limit interference by the Courts in the process of arbitration, whether before, during or after the conclusion of the proceedings.
19. It is, thus, clear that in the instant appeal under Section 37(2)(b) of the Act, the impugned order passed by the learned Arbitral Tribunal dated 15th February, 2023 and the findings therein are in consideration before this Court.
20. As per the order dated 15th February 2023, the Arbitral Tribunal while deciding the application under Section 17 of the Act has held as follows: “11. We are not inclined to agree to the said reasoning and conclusion sought to be arrived at as suggested by the Respondents. The question as to whether the Respondents are entitled to pay for the storage on file basis or carton basis is the subject matter of the main dispute and merely going on the reasoning put forward by the Respondents would be incorrect.
12. In fact, it has always been the case of the Claimants that the contract between the parties envisaged storage on file basis and carton basis and that the files were in fact, for the sake of convenience of storage, put in cartons and stored. This is not a new fact that has come into light now as suggested by the Respondents. Thus, relying solely on this and seeking an interim relief on such basis, in our opinion is unjustifiable.
13. Further, it was also put to the counsel for the Respondents as to whether there was any event subsequent to the passing of the earlier order under the 1st Application whereby any document sought for by the Respondents was arbitrarily refused by the Claimants. In response thereto, it was submitted that no such event occurred to that effect as no request was made by the Respondents to the Claimants for any document whatsoever.
14. We now proceed to deal with the Respondents' contention that they are agreeable to three out of the four proposals which had been suggested by the Claimants in their reply to the 1st Application. While perusing the said proposals, it can be seen that the Claimants whilst agreeing to return the cartons/ documents had sought a protection of their claim. The Respondents now appear to be adopting a pick and choose method while stating that they agree to the three proposals but disagree with the fourth one. The proposals of the Claimants, in the opinion of the Tribunal, have to be contiguously read and not severed. Any direction to bifurcate the same and pass an order to that effect would not be interest of justice.
15. The reliefs sought for in the 2nd Application are in the nature of final reliefs. It is found that no prima facie case for grant of interim measures under S. 17 of the Act has been satisfied by the Respondents. Neither have they shown any balance of convenience in their favour. Accordingly, we do not find any cogent reason for grant of interim relief as sought for by the Respondents and dismiss this 2nd Application.”
21. It has been rightly held by the Arbitral Tribunal that under Section 17 of the Act, the Tribunal cannot grant the interim reliefs which are final in nature. The Tribunal has correctly held that such reliefs could be granted only after adjudication of the disputes by the Tribunal and that the appellant has not shown any balance of convenience in its favour.
22. In view of the aforesaid circumstances, the submissions and averments on behalf of the parties as recorded, the observations of the learned Arbitral Tribunal, and the discussion and analysis thereto, this Court is of the considered view that the instant matter does not warrant interference of this Court. This Court is of the view that the Arbitral Tribunal has rightly held that under Section 17 of the Act the applicant cannot seek final relief in the garb of interim relief. Hence, the learned Arbitral Tribunal has rightly dismissed the application under Section 17 of the Act of the appellant.
23. The appellant has failed to substantiate his allegations that the findings of the learned Arbitral Tribunal were patently illegal, erroneous based on no evidence or reached any conclusion which a rational person could not arrive at. The appellant has further failed to show any illegality on the face of record to shock the conscience of the Court. The limited and narrow scope of Section 37 of the Act does attract any interference in the facts and circumstances of the instant case. This Court finds that the learned Arbitral Tribunal considered all relevant material before it and only after consideration and appreciation of the same, passed the impugned order.
24. Accordingly, in view of the aforesaid, the instant appeal stands dismissed.
25. Pending applications, if any, also stand dismissed.
26. The order be uploaded on the website forthwith.