Citation: CRP No. 11 of 2022.
Court: Meghalaya High Court
Coram: H.S. Thangkhiew, J.
Date: 9th May 2022.
Keywords: Section 33, Section 16, Functus Officio, Reconsideration of Award, Maintainability of Petition, Challenge to Interim Award, Arbitration and Conciliation Act.
This case concerns a petition filed by the Petitioner and Respondent, who were aggrieved with the order passed by the Arbitral Tribunal constituted for adjudication of the disputes in relation to an agreement for a two-laning Project for Nongstoin-Shillong Section of NH-44. The main issue was whether the order of the Arbitral Tribunal could be vitiated on the ground of lack of jurisdiction. The Court held that the Arbitral Tribunal patently lacked inherent jurisdiction in framing issue No. 1, relating to which an interim Award had already been pronounced and accordingly quashed the issue. It further allowed the Arbitral Tribunal to proceed on other issues and claims.
The Petitioner and Respondent entered into an agreement dated 21st February 2011 relating to the two-laning Project for the Nongstoin-Shillong Section of NH-44 under the SARDP-NE. However, a dispute arose with regards to the terms of the agreement, upon which the parties were referred to arbitration. The Arbitrator allowed the Respondent’s claim partly and awarded an amount of Rs. 75 Crores under Section 31(6) of the Arbitration and Conciliation Act, 1996 (“Act”). The Respondent, however, sought a modification of the Award and prayed for an additional Award of Rs. 117 crores, and consequently filed an Application under Section 33 of the Act, which was rejected by the Tribunal. The Tribunal proceeded to frame an issue with regards to the amount already awarded to the Respondent in the interim Award.
Both the parties were aggrieved by the Tribunal’s decision and approached the High Court of Meghalaya to challenge the impugned order.
i) Whether the Writ petition is maintainable if the Petitioner has the right to claim the modification of the interim award under Sections 16 and 34 of the Act?
ii) Whether the Arbitral Tribunal have the inherent jurisdiction to reconsider the Respondent’s claim, given that it has already been decided in the interim award, in light of the doctrine of Functus Officio?
I. The Writ Petition is Maintainable
The Court held that the Writ Petition is maintainable against an order put forth by the Arbitral Tribunal. This was because: (a) the order had framed an issue with respect to a claim that had been addressed in the interim Award, and (b) it would be necessary to examine the operative portions of the award granted to ascertain whether the Tribunal was correct in framing the issue regarding the interim Award. The Court held that when a tribunal frames an issue, it is expected that such an issue must be framed clearly and concisely so as to allow the parties to make submissions and tender evidence on the same. This will assist in maintaining the conduct in the proceedings.
Further, the Court held that the Petitioner has no remedy under Section 37 and granting the remedy under Section 16 would not be in the interest of justice since the order rejecting the Petitioner’s objection would be available for the challenge only after the final Award is passed.
II. The Tribunal Reconsidering the Claim Would Violate the Principle of Functus Officio
The Court held that the Tribunal’s fresh reconsideration of the claim subsequent to the Section 34 application filed by the Petitioner would result in a conflicting situation. This meant that the Petitioner’s potential success in challenging the award could disadvantage the Respondent since their request for an additional arbitral award would have to be re-hashed under Section 33(4) of the Act. The Court observed that this is an undesirable situation in light of the fact that the Respondents were also in favour of re-drafting this issue. Thus, such reconsideration would be considered functus officio.
The Court, therefore, upheld the maintainability of a writ petition challenging an Arbitral Tribunal’s framing of an issue regarding a claim that has already been decided in the interim Award.
[This case note has been authored by Harshitha Swarna, who is a Senior Editor at Mapping ADR.]