Letters Patent Appeal No. 23 of 2017 in Special Civil Application No. 15649 of 2015, Civil Application No. 730 of 2017 in Letters Patent Appeal No. 23 of 2017, Letters Patent Appeal No. 24 of 2017 in Special Civil Application No. 15650 of 2015 to Letters Patent Appeal No. 26 of 2017 in Special Civil Application No. 15647 of 2015 and Civil .... Case: Reliance Defence and Engineering Ltd. Vs Diakofto Shipping S.A. and Ors.. Gujarat High Court

Case Number:Letters Patent Appeal No. 23 of 2017 in Special Civil Application No. 15649 of 2015, Civil Application No. 730 of 2017 in Letters Patent Appeal No. 23 of 2017, Letters Patent Appeal No. 24 of 2017 in Special Civil Application No. 15650 of 2015 to Letters Patent Appeal No. 26 of 2017 in Special Civil Application No. 15647 of 2015 and Civil ...
Party Name:Reliance Defence and Engineering Ltd. Vs Diakofto Shipping S.A. and Ors.
Counsel:For Appellant: Tejas Karia, Nirag Pathak, Grishma Ahuja, Advocates for Shardol Amarchand Mangaldas & Co., Advocate and For Respondents: Hardik P. Modh, Advocate
Judges:R. Subhash Reddy, C.J. and V.M. Pancholi, J.
Issue:Arbitration and Conciliation Act, 1996 - Sections 14, 34, 41, 5; Code of Civil Procedure, 1908 (CPC) - Order VI Rule 17; Order VII Rule 10; Constitution of India - Articles 226, 227, 32
Judgement Date:March 29, 2017
Court:Gujarat High Court
 
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Judgment:

R. Subhash Reddy, C.J.

  1. All these Letters Patent Appeals under Clause-15 of the Letters Patent are filed by the original respondent in a group of Special Civil Applications, aggrieved by the common C.A.V. order dated 26th August, 2016, passed by learned single Judge, and therefore, they are heard together and disposed of by this common judgment.

  2. For the purpose of disposal, we refer to the facts and parties arrayed in Special Civil Application No. 15647 of 2015 in which Letters Patent Appeal No. 26 of 2017 is filed.

  3. By the aforesaid common order, the learned single Judge allowed draft amendments in each of the petitions and aggrieved by such order, these appeals are filed. As such, we confine to state the facts which are necessary for disposal of these appeals.

  4. The facts, in brief, giving rise to filing of these appeals, are that, the appellant herein, entered into ship building contract with the respondent No. 1 herein on 6th December, 2006. By the aforesaid contract, the appellant agreed to design, build, launch, equip, outfit, test and complete one 74,600 D.W. T Panamax Bulk Carrier (Hull No. P011) and the respondent No. 1 has agreed to purchase and accept the delivery thereof. The appellant, under the contract, has furnished refund bank guarantee against the payment made in terms of advances on signing the contract. The respondent No. 1-company, on the ground that there was delay in delivering the ship and thus, terms of the contract were violated, cancelled and terminated the contract on 10th December, 2011. In view of the termination of the contract, the appellant herein was left with no option but to invoke arbitration as per the contract. Accordingly, arbitration proceedings were commenced between the present appellant and respondent No. 1-company herein at Singapore as per the Singapore International Arbitration Centre Rules, being SIAC Arbitration No. 175 of 2011. In the arbitration proceedings, the 1st partial award was passed on 20th December, 2012, 2nd partial award was passed on 24th September 2013 and final award was passed on 5th May, 2014.

    4.1. The appellant herein challenged the arbitral award dated 24th September, 2013, passed in arbitration proceedings, by way of application under Section 34 of the Arbitration & Conciliation Act, 1996 ("the Act" for short) before the 2nd Additional District Judge, Amreli at Rajula. Along with the application under Section 34 of the Act, the appellant also filed an application vide exh. 6, seeking stay of operation, implementation, execution and/or enforcement of the arbitral award till the final disposal of the application under Section 34 of the Act. The learned 2nd Additional District Judge, Amreli, vide order dated 25th October, 2013, returned the application which was filed under Section 34 of the Act, under Order VII of Rule 10 of the Code of Civil Procedure, 1908. The said order was challenged by the present appellant before this Court by way of Appeal From Order No. 462 of 2013 and the learned single Judge of this Court, while issuing notice in the said Appeal From Order, granted status quo with regard to execution of the arbitral award till final disposal of the appeal.

    4.2. It is the case of the appellant that in spite of the fact that respondent No. 1 was aware of the proceedings initiated before the Indian court, respondent No. 1 purposefully and in complete disrespect and disregard to the Indian courts, has not appeared in the said proceedings and ultimately, vide judgment dated 8th May, 2014, the Appeal From Order filed by the appellant came to be allowed by the learned single Judge of this Court by setting aside the order dated 25th October, 2013 passed by the learned Additional District Judge, Amreli at Rajula. By the said order, it is held by the learned single Judge of this Court that the learned Additional District Judge, Amreli at Rajula has jurisdiction to hear and adjudicate the application filed under Section 34 of the Arbitration & Conciliation Act, 1996.

    4.3. It is the further case of the appellant that after the C.A.V judgment dated 8th May, 2014 passed in the Appeal From Order, the learned Additional District Judge, vide order dated 28th May, 2014 issued notice to the respondent No. 1 calling upon it to appear on 6th June, 2014 and to show cause as to why reliefs as sought in the application filed under Section 34 of the Act should not be granted. It appears that thereafter, the appellant sent the complete set of application filed under Section 34 of the Act along with stay application to respondent No. 1, through courier service and proof of such intimation was placed on record before the Additional District Judge by way of affidavit of service dated 6th June, 2014. It is stated that respondent No. 1 has not chosen to appear before the Additional District Judge and the learned Additional District Judge proceeded ex parte and passed ad interim order dated 16th June, 2014, granting stay of operation, implementation, execution and/or enforcement of the arbitral award. It is the case of the appellant that even after issuance of notice, though respondent No. 1 was aware of the proceedings initiated before the Additional District Judge, Amreli at Rajula, it has not deliberately appeared before the learned Additional District Judge and thereafter, has indirectly enforced the arbitral award under challenge by encashing the money secured under the refund bank guarantees on 17th October, 2014, 20th October, 2014 and 22nd October, 2014. It is the further case of the appellant that thereafter, instead of filing reply to the application filed by the present appellant under section 34 of the Act, respondent No. 1 filed an application vide exh. 19 (Application for Dismissal) on 24th December, 2014 before the Additional District Judge, Amreli at Rajula, raising the contention with regard to maintainability of the application under Section 34 of the Act. The appellant herein filed its reply vide exh. 23 to the application for dismissal on 27th February, 2015, mainly highlighting the mala fide conduct of the respondent No. 1 company. Apropos to filing of the application for dismissal by the respondent, the appellant herein filed an application vide exh. 26 before the Additional District Judge, Amreli at Rajula on 17th April, 2015, challenging the maintainability of the application for dismissal filed by the respondent No. 1 company, mainly on the ground that the Act itself is a self-contained code and the Act does not contain any provision for filing of the application in the nature of application for dismissal. The respondent herein chose not to file reply to the said application. Accordingly, the Additional District Judge, Amreli at Rajula, after bipartite hearing, by a reasoned order dated 28th August, 2015, dismissed the application of respondent No. 1 for dismissal of the application filed by the appellant under section 34 of the Act, and granted the application, exh. 26, filed by the appellant herein.

    4.4. Challenging the said order dated 28th August, 2015, Special Civil Application No. 15647 of 2015 was filed by the respondent-original petitioner with the prayers which read as under:

    28(a). that the Hon'ble Court be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction calling for records of the case and after going into the legality and validity thereof, direct the learned Civil Judge at Rajula, Amreli District, Gujarat, not to exercise its jurisdiction in the matter and to dismiss the application filed by the respondent under S.34 of the Arbitration & Conciliation Act, 1996;

    (b) that this Hon'ble Court may be pleased to set aside the order of the learned District Judge at Rajula, Amreli District dated 28 August 2015 allowing the respondents application dated 17 April 2015 filed under Exh. 26 and rejecting the application challenging jurisdiction (Filed under Exh. 19);

    (c) that this Hon'ble Court may be pleased to set aside the interim order of the learned District Judge at Rajula, Amreli District staying the operation, implementation, execution and/or enforcement of the Award pending hearing and final...

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