Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5226 OF 2008 (Arising out of SLP [C] No.1569 of 2007)

Punjab Agro Industries Corpn. Ltd. … Appellant

Vs.

Kewal Singh Dhillon … Respondent

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted. Heard the learned counsel for parties.  

2. The appellant entered into a collaboration agreement dated 23.7.1986

with the respondent  for setting up of a project  through a company to be

jointly  promoted  by  them.  Clause  36  of  the  agreement  provided  for

reference of all disputes and differences arising out of or in relation to the

said agreement to an arbitral tribunal consisting of three members that is one

to be appointed by each party and an umpire to be appointed by the two

arbitrators.

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3. Certain disputes arose between the parties and the appellant by notice

dated 19.3.1997 appointed its arbitrator and called upon the respondent to

appoint his arbitrator. As respondent failed to comply, the appellant filed a

petition  under  section  11(4)  of  the  Arbitration  & Conciliation  Act,  1996

(‘Act’  for  short)  on  13.6.1997  in  the  court  of  the  Principal  Civil  Judge,

Senior Division, Chandigarh (a designate of the Chief Justice of Punjab &

Haryana High Court and hereinafter referred to as the ‘Designate’).

4. The said Designate by order dated 16.2.2002 dismissed the petition

holding that appointment of arbitrator was not called for as the matter had

already  been  decided  by  the  Board  for  Industrial  and  Financial

Reconstruction  (for  short  ‘BIFR’).  Being  aggrieved,  the  appellant

approached the High Court in C.W.P. No. 9889 of 2002, for quashing the

order of the Designate and for appointment of an arbitrator in terms of the

agreement  dated  23.7.1986.  A Division  Bench  of  the  High  Court  by its

order  dated  7.7.2006 disposed  of  the  said  writ  petition  by the following

short order:

“The Petitioner is aggrieved by rejection of application for appointment of arbitrator under Section 11(4) of Arbitration and Conciliation Act, 1996.

Learned Counsel for the Respondent raises a preliminary objection that Writ Petition is not maintainable in view of judgment of Seven Judges of the Hon’ble Supreme Court in  S.B.P. & Co. Vs. Patel Engineering Ltd. - 2005 (8) SCC 618 wherein it  has been held that power of deciding an

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application for appointment of an arbitrator is judicial power and is not amenable to writ jurisdiction.

After hearing learned counsel for the parties, we uphold the preliminary objection and dismiss the Writ Petition. It is made clear that this will not debar the Petitioner from taking such other remedy as may be available under the law.”

The  said  decision  is  challenged  in  this  appeal  by  special  leave,  on  the

following grounds:

(a) The order of the High Court is a non speaking order and it upholds the  preliminary  objection  of  the  respondent  without  assigning  any reason.  

(b) A writ petition under Article 227 was maintainable against the order of the Civil  Judge, Senior Division (designate of the Chief Justice) and the High Court was wrong in assuming that the writ petition was not maintainable in view of the decision of this Court in SBP.  

5. Before considering the contentions raised, we may usefully  refer to

the following relevant provisions of section 11  of  the said Act :

“(4) If the appointment procedure in sub-section (3) applies and–

(a) a party fails  to appoint  an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail  to agree on the third arbitrator within thirty days from the date of their appointment,

the  appointment  shall  be  made,  upon request  of  a  party,  by the  Chief justice or any person or institution designated by him.

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x x x x

(7) A  decision  on  a  matter  entrusted  by  sub-section  (4)  or  sub- section  (5)  or  sub-section  (6)  to  the  Chief  Justice  or  the  person  or institution designated by him is final.

x x x x

(10) The  Chief  justice  may  make  such  scheme  as  he  may  deem appropriate for dealing with matters entrusted by sub-section (4) or sub- section (5) or sub-section (6) to him.”

The Chief  Justice of High Court of Punjab & Haryana in exercise of his

power under sub-section (10) of section 11 of the Act made a scheme under

which the Civil Judge, Senior Division, Chandigarh, was designated to deal

with applications under sub-sections (4) to (6) of section 11 of the Act.  

6. The Act does not provide for an appeal against the order of the Chief

Justice or his designate made under sub section (4) or sub-sections (5) and

(6) of section 11. On the other hand, sub-section (7) of section 11 makes it

clear that a decision of the designate under sub-section (4), (5) or (6) of

section 11 is final. As no appeal was maintainable against the order of the

designate and as his order was made final, the only course available to the

appellant was to challenge the order, even if it is a judicial order, by a writ

petition under Article 227 of the Constitution of India.  

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7. The respondent contended that having regard to the decision in SBP,

the remedy of the appellant was to file an appeal by seeking special leave of

this Court under Article 136 of the Constitution and not by way of a writ

petition under Article 227 of the Constitution of India, and the High Court

was therefore justified in rejecting the writ petition as not maintainable. In

SBP,  decided on 26.10.2005,  this  Court  while  dealing  with  the  scope  of

section 11, inter alia, held :  

“(a) The power exercised by the Chief Justice of the High Court under section 11(6) of the Act is not administrative power but judicial power.  

(b) The power under section 11(6) of the Act, in its entirety, could be delegated by the Chief Justice of a High Court only to another Judge of that High Court.  

(c) As the order passed by the Chief Justice of the High Court or the designated  Judge  of  the  High  Court  under  section  11  of  the  Act  is  a judicial order, an appeal will lie against such order only under Article 136 of the Constitution of India, to the Supreme Court of India.

(d) Designation of a District Judge as the authority under section 11(6) of the Act by the Chief Justice of the High Court is not warranted under the scheme of the Act. Where a District Judges had been designated by the Chief Justice of the High Court under section 11(6) of the Act, the  orders made by them till 26.10.2005 will be treated as valid; but applications, if any, pending before them as on that date will stand transferred, to be dealt with by the Chief Justice of the High Court concerned or a Judge of that High Court designated by the Chief Justice.

It is evident from the said decision that reference to section 11(6) of the Act

includes reference to section 11(4) of the Act and reference to a District

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Judge  as  designate,  will  also  include  reference  to  Civil  Judge,  Senior

Division, as designate.

8. We have already noticed that though the order under section 11(4) is

a judicial order, having regard to section 11(7) relating to  finality of such

orders, and the absence of any provision for appeal, the order of the Civil

Judge  was  open to  challenge  in  a writ  petition  under  Article  227 of  the

Constitution.  The decision in  SBP does not  bar such a writ  petition.  The

observations of this Court in SBP  that against an order under section 11 of

the Act, only an appeal under Article 136 of the Constitution would lie, is

with reference to orders made by the Chief Justice of a High Court or by the

designate Judge of that High Court. The said observations do not apply to a

subordinate court functioning as Designate of the Chief Justice. This Court

has  repeatedly  stressed  that  Article  136  is  not  intended  to  permit  direct

access to this Court where other equally efficacious remedy is available and

the question involved is not of any public importance; and that this Court

will  not  ordinarily  exercise  its  jurisdiction  under  Article  136,  unless  the

appellant  has  exhausted   all  other  remedies  open  to  him.  Therefore  the

contention that the order of the Civil Judge, Sr. Division rejecting a petition

under section 11 of the Act could only be challenged, by recourse to Article

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136 is untenable. The decision in  SBP did not affect the maintainability of

the writ petition filed by Appellant before the High Court.  

9. We therefore allow this appeal and set aside the order of the High

Court. As a consequence, Civil Writ Petition No.9889 of 2002 shall stand

restored  to  the  file,  and  the  High  Court  is  requested  to  dispose  it  of  in

accordance with law.

………………………….J. (R V Raveendran)

New Delhi; ………………………….J.

August 25, 2008. (P Sathasivam)                        

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