calcutta high court

Calcutta High Court: While deciding an appeal against the order of Single Judge granting an unconditional stay of the arbitral award, a Division bench comprising of I. P. Mukerji and Biswaroop Chowdhury, JJ., stayed the direction for the constitution of a “multi-member high-level enquiry committee” until the appeal’s disposal or until further orders, whichever came earlier.

Factual History

The instant matter involves an appeal from a judgment and order dated 08-08-2023, issued in response to an application by the Union of India under Section 36(2) of the Arbitration and Conciliation Act, 1996 (the Act). The Single Judge in the impugned order, issued an unconditional stay of the award.

The appellant conceded that the part of the judgment and order regarding the unconditional stay of the award was not appealable. The appellant argued that other parts of the judgment and order contained scurrilous remarks against the character, honesty, and integrity of railway officials, as well as the members of the arbitral Tribunal.

The appellant contended that the Court had no jurisdiction to inquire into these matters during Section 36 application, and the portion of the judgment and order dealing with these issues should be considered void and expunged.

Moot Point

Whether the Court under Section 36 of the Act has the jurisdiction to include scurrilous remarks against individuals’ character, honesty, and integrity in its judgment and order, and whether this part of the order is subject to appeal?

Court’s Assessment

The Court acknowledged that a High Court has the power to do justice between parties, including directing inquiries into alleged fraudulent or wrongful acts. However, for such an order to be valid, the delinquent party must have had a preliminary charge or case to answer, and after failing to do so, the order could be passed. In the present Section 36 application, the Court found that unilaterally issuing such orders, without affording a chance for the concerned parties to explain themselves, appeared prima facie without jurisdiction.

The Court stayed the direction in the impugned judgment and order, which called for the constitution of a “multi-member high-level enquiry committee” and required the completion of the inquiry within three months from the date of the order. This stay would remain in effect until the appeal’s disposal or until further orders, whichever occurred earlier.

Court’s Decision

The Court allowed Section 34 application of the railways to be heard. The Court directed that the Court hearing Section 34 application should not be guided by any remarks made by the Judge in the impugned judgment and order.

The Court clarified that all grounds available to the railways to challenge the award, including fraud and corruption as alleged in the Section 34 application, were open for consideration. The appeal was listed for hearing on 11-10-2023 and the stay application was disposed of.

The Court stated that the as affidavits were not invited, the allegations contained in the stay application were deemed not to have been admitted.

[Rashmi Metaliks Ltd. v. Union of India, 2023 SCC OnLine Cal 2979, order dated 18-09-2023]

Advocates who appeared in this case :

Mr. Abhrajit Mitra, Sr. Advocate Mr. Soumabho Ghose, Mr. Sarvapriya Mukherjee, Mr. Biswajit Kumar, Counsel for the Appellant

Mr. Siddhartha Lahiri and Mrs. Amrita Pandey, Counsel for the Respondent/State

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