9 Jun 2023 11:30 AM GMT
The Gujarat High Court recently allowed the writ petition filed by Gujarat Mineral Development Corporation Limited praying for quashing and setting aside the mandate, constitution and authority of Morris Samuel Christian (respondent no.1) in relation to an Arbitration Case, with a further request to quash and set aside the ‘Final Awarding’ passed by the respondent. The bench of...
The Gujarat High Court recently allowed the writ petition filed by Gujarat Mineral Development Corporation Limited praying for quashing and setting aside the mandate, constitution and authority of Morris Samuel Christian (respondent no.1) in relation to an Arbitration Case, with a further request to quash and set aside the ‘Final Awarding’ passed by the respondent.
The bench of Justice Sangeeta K Vishen while allowing the petition observed:
“the conduct on the part of the respondent no.1, is required to be deprecated. Let the respondent no.1, not befool the innocent people, invite them for conducting the arbitration proceedings and require parties to participate without any agreement between the parties appointing him as an arbitrator, and pass award without any authority. While concluding, let me place on record a word of caution to the respondent no.1 that, he shall not further indulge into the act of impersonating himself as an arbitrator and conduct arbitration proceedings at his whims and fancies.”
The case originated from the issuance of work orders by the petitioner to Besto Tradelink Limited (respondent no.2) in the year 2006-07. These work orders were for the sale of non-plant grade Bauxite from the Meswana mines, which were operated by the petitioner. The contractual relationship between the petitioner and respondent no.2 ended in 2008.
After a gap of more than seven years, in 2015, the petitioner received a communication requiring their presence on a specified date. The petitioner responded to this communication, expressing their reservation about the appointment of respondent no.1 as an arbitrator, stating that there was no arbitration clause in their contract.
Subsequently, an "Interim Measure Award" was issued, awarding the petitioner an amount of Rs. 5,00,97,343/- along with interest. Upon receiving this award, the petitioner immediately approached the court by filing a Special Civil Application. The court issued a notice and stayed the interim order in the Arbitration Case. Later, another order was passed, confirming the stay on the proceedings before respondent no.1.
However, disregarding these proceedings and in a high-handed manner, respondent no.1 issued a "Final Award," ruling in favor of respondent no.2 and against the petitioner. The petitioner was directed to pay Rs. 11,25,29,524/- to respondent no.2 within 10 days, which led to the filing of the current writ petition.
Gursharan H. Virk, the advocate representing the petitioner, argued that respondent no.1, lacking jurisdiction under the Arbitration and Conciliation Act of 1996, unilaterally influenced and conducted these arbitration proceedings. Furthermore, despite lacking jurisdiction and the restraining orders issued by the court, respondent no.1 commenced and completed the arbitration proceedings unilaterally.
It was pointed out that not only does the award lack jurisdiction, but it also violates the principles of natural justice. The proceedings were initiated without any prior notice, and the procedure outlined in Section 11 of the Arbitration and Conciliation Act of 1996 was not followed.
It was further pointed out that the respondent no.1, was a habitual impersonator, who concocted the arbitration agreements when existed none and took up the arbitration proceedings at the instance of the parties with an obvious intent of deceiving the parties, who got frightened on receipt of the notices and making pay a huge arbitral fees.
On the other hand, Advocate Girish Das, appearing for respondent no.1 while opposing the writ petition, submitted that the arbitration clause which forms part of a contract, shall be treated as an agreement independent of other terms of the contract.
He further submitted that the petition was not maintainable as the respondent no.1, was arraigned in private capacity and not as an arbitrator and therefore.
He pointed out that for the stay, separate application together with the petition challenging arbitral award is sine qua non. In absence of any such separate application, the stay granted, may not be continued inasmuch as, the same would be and against the mandate of sub-section (2) of Section 36.
He asserted that either for grant or for the extension there has to be a separate application together with the reasons for staying the award. While reiterating, it is submitted that in the present case, in absence of any separate application, the stay ought not to have been granted and so also the extension.
Advocate Shailesh V. Raval, appearing for the respondent no.2 submitted that the final award was passed and the petitioner had been directed to make the payment. It was further submitted that there was a delay of 14 years in making the payment, which is a huge delay, and under these circumstances, the petition was not maintainable and should be dismissed.
The court, after considering the documents and previous orders, characterized the current proceedings as a clear case of perversity and arbitrary exercise of powers by Respondent no.1.
The court noted that respondent no.1 presented himself as an arbitrator, conducted arbitration proceedings without proper authorization, and issued awards purportedly under the provisions of the Arbitration and Conciliation Act of 1996. The court found it unclear how, when, and by what procedure respondent no.1 appointed himself as an arbitrator.
Furthermore, the court expressed its view that Respondent no.1, in collaboration with private parties, appointed himself as an arbiter, fabricated arbitration applications to create the appearance of arbitration proceedings, and issued the so-called awards. The court strongly criticized Respondent no.1's conduct, stating that he made a mockery of the tribunal proceedings.
Despite the existence of stay orders and other previous rulings, respondent no.1 audaciously issued another ‘Final Awarding’. The court held this award to be an abuse of the court process, arbitrary, and legally invalid.
The court pointed out that respondent no.1 failed to provide any authority supporting his right to conduct the arbitration proceedings, despite various orders castigating his conduct.
“Nothing has been placed on record to buttress the appointment of the respondent no.1 under the provisions of the Act of 1996 or otherwise for resolution of the disputes between the parties. In absence of any authority, conduct of the respondent no.1, to say the least, is nothing, but making mockery of legal system,” the court stated.
While referring to a warning issued by the International Centre for Alternative Dispute Resolution (ICADR), which clarified that no individual can pose as a sole arbitrator or conduct arbitration proceedings without the consent of both parties, the court noted that respondent no.1 engaged in malpractices by misrepresenting the institutions that had enrolled him as a member and assuming the role of an arbitrator without authorization.
“Therefore, the respondent no.1, appears to be in habit of impersonating himself as an arbitrator without there being any order of the competent Court or agreement by both the parties appointing him as an arbitrator for conduct of the arbitration proceedings. Perceptibly, the respondent portrays himself as an arbitrator, calls the parties and conducts the arbitration proceedings as if he is a duly appointed arbitrator under the provisions of the Act of 1996,” the court observed.
“It is surprising to note that though he claims to be an arbitrator, it is difficult to fathom the authority under which the respondent no.1 is capable of acting as an arbitrator. Besides, the tone and tenor of the orders passed by the arbitrator, in the language, which contains not only grammatical mistakes but even spelling mistakes,” the court added.
The court clarified that such mistakes would not make the order illegal, however, that the mode of appointment, conduct of the arbitration proceedings and the nature of the orders passed, were not in conformity with the proceedings envisaged under the law, and clearly, mala fide.
The court pointed that various proceedings were initiated against the respondent no.1 and various orders were passed, deprecating the conduct of the respondent no.1; however, the respondent no.1, was unable to put any self restraint and continued passing further awards, conducting arbitration proceedings without any authority of law.
“Such a conduct on the part of the respondent no.1, is malicious attempt befooling the public at large and fraud on society,” the court held.
While Citing Surendra Kumar Singhal vs. Arun Kumar Bhalotia rendered in CM(M) 1272/2019 & CM APPLs 38560/2019, 38561/2019, 41024/2019, the court held, “In view of the above discussion, the petition would be very much maintainable. In the present case, perversity is writ large so also lack of inherent jurisdiction in the respondent no.1. Therefore, on all counts, the ‘Interim Measure Awarding’ dated 13.04.2015 so also ‘Final Awarding’ dated 23.10.2020, deserve to be quashed and set aside and are hereby quashed and set aside.”
While allowing the petition, the court deprecated respondent no.1's conduct and cautioned him against impersonating himself as an arbitrator and conducting arbitration proceedings at his whims and fancies.
Case Title: Gujarat Mineral Development Corporation Limited Versus Morris Samuel Christian R/Special Civil Application No. 3352 Of 2021
Case Citation: 2023 Livelaw (Guj) 97
Appearance: G H Virk(7392) For The Petitioner(S) No. 1; Mr Girish M Das(2323) For The Respondent(S) No. 1 Mr Shailesh V Raval(2953) For The Respondent(S) No. 2
Click Here To Read/Download Order