Bom HC | A party seeking rectification cannot sleep over its rights; Rs 5 lakhs costs imposed on Adani Enterprise

Bombay High Court: A Division Bench of Pradeep Nandrajog, CJ and Bharati Dangre, J. while allowing the present appeals with regard to failure in showing sufficient cause to seeking review with a delay of 2680 days, stated that,

“It needs no rocket science for anyone to infer that probably the respondent got a premonition that it might lose.”

Facts pertinent to the issue

An agreement was entered between the appellants and respondent, wherein the respondent was to supply bunker fuel to the appellant’s vessel M.T. Antikeros at Mudra Port.  After the respondent supplied the same, 12 days later a dispute arose between the parties regarding the quantity and quality of the fuel. After about a month, the appellant claimed for damages. Respondent denied the liability and raised a counter-claim.

Appellant on 19-03-2009, invoked the arbitration clause, with a view to save arbitration costs, proposed a sole arbitrator. Appellant appointed R.S. Cooper as its arbitrator and called upon the respondent to do likewise. Respondent failed to respond to appoint an Arbitrator. Later Single Judge of the Bombay High Court pursuant to an application filed by the appellant for appointment of an arbitrator on behalf of respondent disposed of the same by appointing J.K. Bhatt as an Arbitrator on 21-04-2011.

The above-stated arbitrator’s appointed T.V. Shanbhag as the Presiding Arbitrator.

On 19-09-2013, Arbitral Tribunal settled the issues which arose for determination.

Respondents challenged the Jurisdiction of the tribunal. Later on 03-08-2018, respondents while filing an application seeking to recall the order passed by the tribunal on 03-07-2013, as also the order dated 19-09-2013, by which order issues were settled.

Though, the tribunal rejected the above application. Further, the respondents challenged the order passed by Single Judge of the Bombay High Court regarding the appointment of J.K. Bhatt as an Arbitrator.

On 30-8-2018 the respondent filed a petition seeking review of the order dated 21-04-2011 passed by this Court. It also sought 7 years delay in filing the Review Application to be condoned.

On 22-03-2018, the impugned order was passed condoning delay of 7 years in seeking review of the order dated 21-04-2011 and simultaneously recalling the said order of appointment of J.K. Bhatt as an Arbitrator on behalf of the respondent.

“Torpedo shot by the respondent on 30-08-2018 hit its target. The Arbitral Tribunal came to be hit, in that, its constitution was blasted by the torpedo fired by the respondent.”

On noting the stated facts, Single Judge noted that the subject matter of the application being an international commercial arbitration the appropriate fora was the Supreme Court of India and thus, the order dated 21-04-2011 was a nullity and is non-est.

Where a Court acts under an appealable provision of law and passes an order, a party is not deprived of the right of appeal, though on the facts the order should not have been passed under that provision

High Court noted that the impugned order being passed in exercise of the review jurisdiction by the Single Judge both the appeals are maintainable.

Court observed that

prior to the amendment of the Act by the Arbitration & Conciliation (Amendment) Act 2015 brought into force with effect from 01-01-2016 when in sub-section 4, 5 & 6 of Section 11 of the Act the words ‘the Chief Justice or any person or institution designated by him’ wherever they occur were replaced by the words ‘the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court’, the position was that under the Act the procedure for appointment in case of sub-section 3 being applicable was to file an application before the Chief Justice of a High Court or any person or institution designated by him, in a case of domestic arbitration and before the Chief Justice of India or any person or institution designated by him in International Commercial Arbitration.

Section 11 of the Arbitration Act was a Judicial Power was held in 7-Judge Bench decision of the Supreme Court S.B.P. & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618.

Thus, on perusal of the above-stated analysis and facts, Bench held that Single Judge had no jurisdiction to entertain the petition seeking review of the order dated 21-04-2011.

Further, Court stated that, the impugned order is vitiated when it proceeds to condone the delay by not considering whether the sufficient cause was shown to condone the delay of 2680 days in seeking review of the above-stated order.

“Whilst it may be true that an order passed in a lis or an issue which cannot be taken cognizance of by a Court or an authority is void and non-est, but that does not mean that a party can sleep over its rights and participate in further proceedings and one fine day approach the Court or the authority to rectify the error.”

Hence, respondents failed to show sufficient cause entitling it to 2680 days delay in seeking review of the order dated 21-04-2011 to be condoned.

The torpedo fired by the respondent is declared to be a dude and it sinks without hitting its target.

Appellant would be entitled to costs incurred before the Single Judge as also in the instant appeals which bench quantified at Rs 5 lakhs. [Antikeros Shipping Corpn. v.  Adani Enterprises Ltd., 2020 SCC OnLine Bom 277, decided on 18-02-2020]