Arbitral Tribunal Framing An Issue Which Was Already Decided During Interim Award, Writ Maintainable :Meghalaya High Court

The Single Bench of Justice H.S. Thangkhiew has held that an arbitrator would be acting without jurisdiction if it frames an issue qua a claim that has already been decided in the interim award.

The Court observed that the arbitral tribunal becomes functus officio in respect of a claim which is finally decided at the interim stage under Section 31(6) of the A&C Act, therefore, lacks inherent jurisdiction to decide the same issue again.

Facts

The parties entered into an agreement dated 21.02.2011 for the 2-laning Project for Nongstoin-Shillong Section of NH-44 under the Special Accelerated Road Development Programme (SARDP-NE) of the Ministry of Road Transport and Highways.

A dispute arose between the parties which were referred to arbitration. The arbitrator passed an interim award on the application filed by the respondent/claimant under Section 31(6) of the A&C Act. The arbitrator partly allowed the claim of the respondent and awarded a sum of Rs. 75 crores. The arbitral tribunal also rejected the application filed by the respondent under Section 33 of the Act seeking to modify the award and praying for an additional award.

However, vide the impugned order the arbitral tribunal proceeded to frame an issue qua the claim already decided in the interim award.

The Contention of the Parties

The petitioner challenged the order on the following grounds:

• The arbitral tribunal patently lacks inherent jurisdiction to reconsider the claim, since, the same has already been decided in the interim award.
• By dismissing the application of the respondent seeking modification of the award or an additional award, the arbitral tribunal has affirmed that the award is final qua the dispute decided therein.
• The arbitral tribunal has become functus officio qua the claim which is sought to be reagitated.
• An interim award is not subject to a final award but is a final award on matters covered thereby.
• The arbitral tribunal has allowed the respondents to re-litigate the decided claims.
• The re-hearing on the matters already decided is also barred the principle of Res Judicata.
• The writ petition is maintainable as no efficacious alternative remedy is available to the petitioner. Moreover, this is a case where there is a patent lack of inherent jurisdiction, therefore, the petition under Article 227 of the Indian Constitution is maintainable.

The respondent objected to the maintainability of the writ petition on the following grounds:

• The petition is without any cause of action as the mere framing of the issue does not result in the determination of right.
• The petitioner has a remedy under Sections 16 and 34 of the A&C Act.
• The arbitral tribunal has not finally decided the claim of the petitioner, the interim award was only a partial determination of the claim of the respondent and the arbitrator had left the issue to be finally decided based on the certified calculations.
• The tribunal has not become functus officio qua the claim as the arbitrator had only allowed a part of the claim and left the final award to be made qua the claim only after certified calculations are filed, therefore, the remaining portion of the claim is open for adjudication.

Analysis by the Court

The High Court held that a writ petition is maintainable against an order of the arbitral tribunal framing issue in respect of a claim that has finally been decided in the interim award.

The Court observed that the tribunal in the interim award had indeed left the issue open-ended and awarded the amount subject to the certified calculations, however, the tribunal while rejecting the application for modification of the award and also for an additional award had held the interim award to be final in respect of the issues decided thereunder. Moreover, the respondent had also prayed for an additional award which indicated that the award was final, therefore, the interim award to the tune of 75 crores was final as against the claim of Rs. 117 crores raised by the respondent.

The Court observed that if the tribunal is allowed to decide the same issue afresh, it would result in an anomalous situation where the petitioner might succeed in its challenge against the award, but the respondent may have another award on the same issue in its favour.

The Court also observed that the argument of the petitioner is fortified in view of the fact that the respondent itself had preferred an application for re-casting and re-drafting of the issue.

The Court held that the framing of issues is not mandatory, once an Arbitral Tribunal has resorted to the same, it is expected that the issues framed should be clear and concise as to the claims, to allow the parties to tender evidence and make submissions on the said issues which will be of useful assistance in the conduct of the proceedings

The Court held that the tribunal has completely disregarded the conclusion reached in the proceedings under Section 31(6) and 33 of the A&C Act while framing the issue qua the claim adjudicated in these proceedings.

The Court held that the writ petition is maintainable as the petitioner has no remedy under Section 37 of the Act and the remedy under 16(5) would not be in the interest of justice as the order rejecting the objection would only be available to challenge once the final award is passed.

Accordingly, the Court set aside the order of the tribunal framing issue in respect of the claim decided in the interim award.

Case Title: The Chief Engineer (PWD) (National Highways) Government of Meghalaya, Shillong v. M/s. BSC – C&C JV, CRP No. 11 of 2022

Citation: 2022 LiveLaw (Meg) 14

Date: 09.05.2022

Counsel for the petitioner: Mr. S. Sahay, Adv.

Counsel for the Respondent: Mr. U. Hazarika, Sr. Adv. with Mr. L. Khyriem, Adv., and Ms. G. Mohan, Adv.

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