High Court As Court Of Record Can Recall Or Review Orders Passed U/S 11 Of Arbitration Act: Bombay High Court

Brief Facts

By this petition, the petitioners seek review of order dated 19.12.2023 passed by this Court, dismissing application filed by the applicants for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'Arbitration Act').

The original application under Section 11 of the Arbitration Act bearing Commercial Arbitration Application (L) No.38198 of 2022 was filed on the basis of an arbitration clause contained in an investment agreement dated 02.02.2018 executed between the said R-Cube Energy and the contesting respondent No.1 - Windsor Machines Limited.

Since disputes arose concerning the said agreement, the petitioners herein, concerned with R-Cube Energy, issued notice on 20.08.2022 invoking arbitration. The respondent No.1 sent reply on 19.09.2022 and since an arbitrator could not be appointed as per the arbitration clause, the petitioners invoked Section 11(6) of the Arbitration Act.

One of the objections raised on behalf of the respondent No.1 to the said application was that, since applicants and respondent No.2 were partners of the said R-Cube Energy and respondent No.2, as a partner, had not joined the other partners i.e. the applicants in invoking arbitration, the said notice to invoke arbitration was defective and consequently, the application under Section 11 of the Arbitration Act deserved to be dismissed.

By order dated 19.12.2023, this Court accepted the said objection based on Section 19(2)(a) of the Indian Partnership Act, 1932 (Partnership Act) and consequently, it was held that the application deserved to be dismissed and accordingly, it was dismissed.

Contentions

The petitioners submitted that in the aforesaid order, there is an error apparent on the face of the record, for the reason that an objection taken by the respondent No.1 in the said application and upheld by this Court, while dismissing the application, is based on a factual error.

• That while the Court proceeded on the basis that the petitioners and respondent No.2 were partners of a partnership firm R-Cube Energy Storage Systems LLP (R-Cube Energy), as a matter of fact, the said RCube Energy was earlier a limited liability partnership, but it stood registered as a private limited company in June 2019.This takes away the very basis of the order passed by this Court, dismissing the application filed under Section 11 of the Arbitration Act.
• That once the position post 2015 amendment is appreciated in the correct perspective, the High Court being a Court of record under Article 215 of the Constitution of India assumes significance. being a Court of record, the High Court is required to ensure that its record is always correct and if there is any error, it is to be corrected forthwith by exercising power of review.

Per contra, the respondent submitted that since the Arbitration Act does not provide for a statutory remedy of review, the Court is denuded of the power to even entertain such a petition for review.

• That the ground for review is not tenable because arguments were advanced on behalf of the applicants when the application under Section 11 of the Arbitration Act was decided, on the basis that the aforesaid R-Cube Energy was indeed a partnership firm.

Court's Analysis

The court agreed with the contention of the petitioners and noted that the petitioners have successfully pointed out the basic distinction between the position of law as it existed prior to the amendment of Section 11 of the Arbitration Act and post its amendment, with effect from 23.10.2015.

The court further noted that it is crucial that the words 'the Chief Justice or the person or institution designated by him' in Section 11(6) of the Arbitration Act have been replaced with the words 'the Supreme Court or as the case may be, the High Court or any person or institution designated by such Court'. The petitioners are justified in contending that the change in law brought about by the aforesaid amendment takes away the basis of the objection raised on behalf of the contesting respondent No.1.

In the case of Mohd. Anwar and others Vs. Pushpalata Jain and others (2021), the Supreme Court has held that the High Court was justified in exercising its power of review of the order passed on an application under Section 11 of the Arbitration Act, the court noted.

The court further noted that in the case of Municipal Corporation of Greater Mumbai and another Vs. Pratibha Industries Limited and others (2019), the Supreme Court referred to the inherent powers of the High Court under Article 215 of the Constitution of India as a Court of record and in that context, the High Court being justified in exercising power of review in the context of orders passed under the Arbitration Act.

Based on the above law, the court observed that the moment it becomes clear that the power under Section 11(6) of the Arbitration Act is being exercised by the “High Court” and not by an authority in the form of the “Chief Justice or any person or institution designated by him”, there can be no confusion about the fact that as a constitutional court and court of record, this Court can exercise power of review even in the context of order passed under Section 11 of the Arbitration Act.

The position of law with regard to the review power being exercised, only if it is so provided by the statute, is certainly applicable to authorities and bodies that are creations of the very statute.However, the court noted that in the present case, this Court, as a High Court, exercised its power while disposing of the application filed by the petitioners under Section 11 of the Arbitration Act.

The court further noted that If an error apparent on the face of the record is indeed pointed out by the review petitioners, as a court of record enjoined with the inherent power to correct its own record.

The court further assessed whether the concerned entity was indeed a partnership firm or private limited company because if it was a private limited company, the entire reasoning of the earlier order dismissing the section 11 application would fall flat. Impugned order was indeed passed on the basis that the entity was a partnership firm.

The court after perusing the relevant documents noted that the entity was a private limited company which was not taken into consideration while passing the impugned order therefore it is an error apparent on the face of the record which can be corrected by the High Court.

Accordingly, the impugned order was recalled and the application under section 11 of the Arbitration Act was revived.

Case Title: Shailesh Ranka and others Vs. Windsor Machines Limited and another

Citation: 2024 LiveLaw (Bom) 585

Case Reference: Review Petition (l) No. 12665 of 2024 In Commercial Arbitration Application No. 1 of 2024

Judgment Date: 12/11/2024

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