1. This petition is filed to review the common order dated 12-12-2001 in AAO No. 1285 of 2001 and CRP No. 3497 of 2001.
2. For the sake of convenience we would hereinafter refer to the parties as they are arrayed in the appeal.
3. At the outset we express our regret for signing the common order, sought to be reviewed, without correcting the typographical errors and mistakes that crept therein, which are noticed by us during the hearing of this petition. Since as per Section 152 CPC, Court has power to correct such errors, we order the following corrections in the common order dated 12-12-2001 .
(i) In page 2 'para 3 line 9' delete the word 'and' after WELTOL PLUS' and before 'culminated'.
(ii) In para 4 at page 3 'lines 18 and 19' delete the sentence reading "whatever strong words they are made, are not sufficient to establish fraud or misrepresentation the allegation of fraud" and substitute the sentence "in however strong words they might have been made, are not sufficient to establish fraud or mispresentation and so the allegations relating to fraud".
(iii) In line 14 at page 4, para 4, delete the words 'and so' in between the words 'filing of the suit' and '1st'.
(iv) In line 14, para 6 at page 8, add the sentence reading 'in support of his contention' after 'Kotak and Company'.
(v) In line 19 at page 10, substitute the words "were to culminate" in place of the word 'only can terminate' in between the words 'even if and 'in award'; delete the word 'which' in between the words 'in an award' and 'would'. In line 20 of the same para substitute the word 'affect' in place of the word 'effect'. At the beginning of line 21 in the same para, add the sentence reading 'he did not enter into' before the words 'the agreement', and delete the words 'was not entered into' in between the words 'the agreement' and 'and since'; substitute the word 'in' in place of the word 'by' in between the words 'himself and 'an'.
(vi) In line 7 of para 8 at page 11, add the words 'an injunction' before the word 'restraining' and the word 'the' between the words 'restraining' and 'Kartha'. In line 21 of para 10 on the same page substitute the sentence 'or relating to the contract' in place of the sentence 'or related to the contracted'.
(vii) In line 13 at page 12, substitute the word 'with1 in place of 'and1 in between the words 'them' and 'a consequential'.
(viii) In line 3 at page 14, substitute the word 'sought' in place of 'and' and in line 9 on the same page substitute the words 'by observing' in place of the word 'after holding' and substitute the word 'has' in place of 'had' in between the words 'that it' and 'jurisdiction'.
(ix) In line 3 of para 11 at page 17, substitute the word 'express' in place of 'expressed'.
(x) In lines 12 and 13 of para 16 at page 21, delete the sentence 'For that reason and in view of the ratio in the said decision1 and in line 13 add the sentence reading 'since the said decision was' before the word 'rendered under'. In line 14 add the sentence 'in view of the ratio in' in between the words 'repealed' and ' Sundaram Finance'.
(xi) In line 6 at page 23, delete the word 'already' in between the words 'had' and 'sought1.
(xii) In line 1 at page 26, add the word 'jurisdiction' in between the words 'having' and 'to'. In lines 2 and 3 delete the sentence reading 'after dismissing the petition filed by 1st respondent to review the said order (LA. No.2390 of 2000)' and in its place substitute the sentence reading 'and after having dismissed IA No.2390 of 2000 filed by the 1st respondent to review the observation in the order in IA No. 1641 of 2000 directing the parties to approach the agreed forum'. In line 5 substitute the word 'erroneous' in place of the word 'incorrect'.
(xiii) In line 12 and 13 at page 27, delete the sentence reading 'and that considerable money has to be spent to participate in those proceedings would not' and in its place substitute the sentence reading 'and it involves spending of considerable amount of money for participation in those proceedings, is not and cannot'.
4. The point for consideration is whether there are grounds to review the common order dated 12-12-2001.
5. This application is filed mainly on the ground that distinction between the powers of the Court vis-a-vis the Arbitrator appointed under Domestic Arbitration as per Sections 8 and 16 of the Arbitration and Conciliation Act, 1996 (the Act) and the arbitration that takes place under New York Convention as per Sections 44 and 45 of the Act was not kept in view while passing the order dated 12-12-2001 sought to be reviewed. The basis for the said assumption of the 1st respondent is that, in para 26 of the common order it was observed that interference by civil Court should be minimal in view of Section 16 of the Act, when Section 16 of the Act applies only to domestic arbitrations but does not apply to international arbitrations covered by New York Convention, which are governed by Section 45 of the Act, corresponding to Section 3 of Foreign Awards (Recognition and Enforcement) Act, 1961 (1961 Act).
The contention of the learned Counsel for 1st respondent is that law relating to arbitration covered by New York Convention remained the same, as under 1961 Act, even after the coming into force of the Act, by relying on PWH Analgen v. Damodar Ropeways, 1996 (II) CHN 97, where it is held in para 34 at page 110 that despite repealing the 1961 Act, Chapter I Part II of the Arbitration and Conciliation Ordinance, 1996 (which is the same as Chapter I Part n of the Act) substantially re-enacted the provisions thereof with some modifications and that Section 44 of the Ordinance materially re-enacted Section 2 of 1961 Act, Section 45 replaced Section 4, Section 47 replaced Section 6, Section 48 replaced Section 7 and Section 57 replaced Section 9(a) of 1961 Act. Reliance is also placed on the observations in paras 36 to 38 of the said Judgment, which read as under:
"(i) Under the 1961 Act an application under Section 3 could be made to a Court before which a legal proceeding was pending at any time after appearance and before filing a written statement or taking any other step in the proceeding. Under Section 45 of the Ordinance there does not appear to be any such time limit placed on the making of an application.
(ii) The second major difference relates to the nature of the power to be exercised by the Court before which the application is made. Under Section 3 the power of the Court to make an order staying the legal proceedings pending before it. Under Section 45 of the Ordinance the Court is required to refer the parties to arbitration.
Apart from these two differences the substance of the two sections is similar: namely (i) an application may be made by one of the parties to an arbitration agreement or any person claiming through or under him; (ii) the arbitration agreement must be one to which- the New York Convention applies; (iii) a proceeding must be pending before a Court; (iv) the legal proceedings must be in respect of a matter agreed to be referred; and (v) unless the agreement is found null and void, inoperative or incapable of being performed, the Court is bound to exercise its powers under the section.
38. By including substantially similar provisions in Section 45 of the Ordinance it is clear that it was not the intention to destroy the right of a petitioner under Section 3 of the 1961 Act at all. If anything, the Ordinance has strengthened the right. There being no 'different intention' in the Ordinance within the meaning of Section 6 of the General Clauses Act, I hold that PWH's application under Section 3 of the 1961 Act is still maintainable."
It is further contended by the learned Counsel for the 1st respondent that the ratio in Renusagar Power Company Limited v. General Electric Company and Anr., , and Sunita Conductors Limited v. Euro Alloys Limited, 2001 (7) SCC 728, is that the validity of effect of arbitration agreement in respect of International Arbitration can be determined by the Court (1) before the commencement of arbitration proceedings, (2) during the pendency of arbitration proceedings, and (3) after the award is made and filed into Court, when civil Court in India is seisin of the issue relating to the validity of the arbitration agreement, even when arbitration proceedings are pending, it is incumbent upon the Court to decide the issue relating to the validity of the arbitration agreement in the first instance, because the decision of the Court would be binding on the Arbitrator. He further contended that question of prima facie case, balance of convenience, and irreparable loss arise when injunction is sought under Rules 1 and 2 of Order 39 CPC but not in cases where injunction is sought under Section 151 CPC and since injunction sought by the 1st respondent is not covered by Rules 1 and 2 of Order 39 CPC, the question would be whether 1st respondent is entitled to injunction under Section 151 CPC. He relied on Rajnibai (Smt) alias Mannubai v. Kamla Devi (Smt), , in support of his contention that Court has power to grant injunction under Section 151 CPC in cases not covered by Rules 1 and 2 of Order 39 CPC. His contention is that when an injunction is to be granted under Section 151 CPC, question of balance of convenience and prima facie case pale into insignificance, and in this type of cases, in the interests of injustice, injunction should automatically follow on the filing of the suit, as otherwise the purpose of filing the suit would be lost. He relied on Surjit Singh v. Union of India, , where it is held that when there is an error apparent on the face of the record, and when a law is not properly interpreted, the Court should review the judgment; 5, Nagarj v. State of Karnataka, 1993 (5) SLR 1, where it is held that the Court is not precluded from recalling or reviewing its own order if it is satisfied that it is necessary to do so for the sake of justice; CST v. Pine Chemicals Limited, (1995) SCC 58, where it is held that interpretation of law, inconsistent with the earlier decisions delivered by a co-ordinate Bench and Larger Bench, amounts to an error apparent on the face of the record and hence, can be reviewed; Natesa Naicker v. Sambanda Chettiar, (28) AIR 1941 Mad. 918, where it is held that omission to notice correct legal position amounts to an error apparent on the face of the record and in such cases the Court can view its earlier judgment; Thungbhadra Industries Limited v. Govt. of A.P., , where it is held that Supreme Court's refusal to entertain an application for special leave is not a bar to the High Court to review its Judgment, if there are grounds for such review; Murari Rao v. Balvanth Dikshit, AIR 1924 Mad 98, where it is held that the word 'error' need not necessarily be limited to "errors of fact" and 'error of law' also would come within the meaning of Rule 1 of Order 47 CPC; Oriental Insurance Company Limited v. Gokulprasad Maniklal Agarwal, , where it is held that wrong explanation of a Counsel relating to the rule position is a good ground for review and K.L. Nandakumaran Nair v. K.I. Philip, , where it is held that non-consideration of important documents is a ground for review. He contended that since CMP 21689 of 2001 filed under Rule 27 of Order 41 CPC to receive certain documents as additional evidence was not considered at the time of disposal of the CMA, it resulted in grave injustice to the 1st respondent and so the common order dated 12-12-2001 may be reviewed.
6. The contention of the learned Counsel for the appellant is that there are no grounds for review, since all the pleas now raised were considered in the common order and so the remedy, if any, for the 1st respondent is to file an appeal, and that power to review can be exercised only for correction of a mistake, but not to substitute a decision already made, as a proceeding for review is not an appeal in disguise. He contended that in cases where there is a possibility of taking two views, the fact that the Court took one such view is not a ground for review, and so this petition for review is not maintainable. He relied on Lily Thomas v. Union of India, AIR 2000 SC 1650, and Northern India Caterers v. Lieutenant Governor, Delhi, , in support of his contentions.
7. We are not able to agree with the contention of the learned Counsel for the 1st respondent that non-consideration of CMP No. 21689 of 2001 at the time of disposal of the CMA resulted in either injustice or grave injustice to the 1st respondent. The documents sought to be introduced as additional evidence were the written statement filed by the appellant in the suit, the rejoinder filed by the 1st respondent in the suit and application filed by the 1st respondent to receive the rejoinder and a copy of the plaint in OS No.4 of 2001 filed by the Principal of the 1st respondent against the appellant. Written statement filed by the 1st respondent in the suit is 'pleading'. Rejoinder, if received, would also be 'pleading' within the meaning of Order 6 CPC. Since pleadings form part of the record, they need not be marked and can be taken into consideration even without their being marked. Therefore non-marking of the written statement filed by the appellant, the application to receive rejoinder and the rejoinder filed by the 1st respondent in the trial Court cannot be said to have caused any prejudice to the 1st respondent. The other document i.e., copy of the plaint in OS No.4 of 2001, filed by the Principal of the 1st respondent for a declaration that the agreement, (on the basis of which appellant invoked arbitration) and other allied agreements are null and void has no relevance for deciding IA No.1352 of 2000 because the petition for injunction filed by the petitioner cannot be decided on the basis of the pleadings in another suit. So the non-consideration of plaint in OS No.4 of 2001 cannot be said to have caused any prejudice to the 1st respondent. Therefore non-passing of an order either allowing or dismissing CMP No. 21689 of 2001 at the time of disposal of the appeal is not and cannot be a ground for seeking review.
The contention of the learned Counsel for the 1st respondent that question of prima facie case, balance of convenience and irreparable injury need be considered only in applications for injunction filed under Rules 1 and 2 of Order 39 CPC, but not in cases where injunction is sought under Section 151 CPC has no force. Issuance of injunctions is governed by Section 37 of the Specific Relief Act, which lays down that injunctions can be either temporary or perpetual, and temporary injunctions are such as to continue until a specified time or until further orders of the Court and can be granted at any stage of a suit and are regulated by CPC and perpetual injunctions can be granted only by decree upon merits of the suit. IA No.1352 of 2000, out of which the CMA arose, was filed for a temporary injunction, which can be granted either under Order 39 Rules 1 and 2 CPC or Section 151 CPC. An injunction under Section 151 CPC can be granted only in situations not covered either by Rule 1 or Rule 2 of Order 39 CPC, as held by the Supreme Court in Manohar Lal Chopra v. Rai Bhahadur Raja Seth Hiralal, , and Rajni Bai 's case (supra). Therefore it goes without saying that principles for granting temporary injunction either under Rules 1 and 2 of Order 39 CPC or under Section 151 CPC are, and should be, the same. We feel it relevant to mention that in IA No.1352 of 2000, 1st respondent did not seek injunction under Section 151 CPC but filed that petition under Order 39 Rule 1 CPC only even without quoting Section 151 CPC. That fact, by itself, may not be a ground for dismissing the petition for injunction, if 1st respondent is otherwise entitled to the relief of injunction under Section 151 CPC, because not quoting the correct provision of law is not a ground to refuse the relief if the party is entitled to such relief under some other provisions which is not quoted. It is now admitted by the learned Counsel for 1st respondent that Rule 1 of Order 39 CPC does no apply to the facts of this case. So if at all 1st respondent has to seek injunction under Section 151 CPC. If we may say so the contention of the learned Counsel for the 1st respondent that prima facie case need not be considered when injunction is sought under Section 151 CPC stands negatived, in a way, by the fourth contention raised before the Supreme Court by the Counsel for Renu Sagar in Renu Sagar case (supra), relied on by the learned Counsel for 1st respondent by urging that Renu Sagar had made out a prima facie case by raising serious triable issues in the suit and that that fact would enable Renu Sagar to claim injunction restraining arbitration proceedings (see para 11 at page 1165 of Remtsagar case - (supra). The well settled principles for granting a temporary injunction, either under Order 39 Rules 1 and 2 CPC or under Section 151 CPC in favour of a party, are (i) prima facie case, (ii) balance of convenience and (iii) irreparable loss. In the Union of India represented by the G.M. Telephones, Hyderabad v. Jeelal Jaiswal, 1988 (2) LS 46 (SC) (which arose under Order 39, Rule 1 CPC) the Supreme Court held that apart from prima faice case, the partly seeking injunction has to establish balance of convenience and irreparable injury also. That principle would apply when temporary injunction is to be granted under Section 151 CPC also. Since granting or refusing injunction, which is an equitable relief, is in the judicial discretion of the Court, in appropriate cases i.e., cases where the person seeking injunction did not come to Court with clean hands, or is guilty of laches and negligence, even if the three ingredients of prima facie case, balance of convenience and irreparable loss are established by him, the Court can refuse to exercise its judicial discretion in his favour, and can refuse to grant an injunction in his favour.
9. We feel it relevant to extract Section 45 of the Act, which reads as under:
"Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer, the parties to arbitration. unless it finds that the said agreement is null and void, inoperative or incapable of being performed".
It is thus clear that what Section mandates is the Court referring the parties to arbitration, when there is a valid agreement between them, and does not speak anything about the Court granting an injunction restraining the arbitration proceedings already initiated before the filing of the suit. Power to issue injunction should not be confused with the power to grant stay under Section 45 of the Act. If the contention of the learned Counsel for the 1st respondent that when a suit questioning the validity of an arbitration agreement is filed (during the pendency of proceedings for arbitration already commenced by the other party on the basis of such agreement) injunction from proceeding with arbitration should automatically follow were to be accepted, it can lead to anomalous situations. Firstly it means that the Court is not governed by any guidelines for issuing an injunction. Secondly the intendment of the Act would get frustrated. Thirdly a situation may arise when the Court may, on a petition filed by the opposite party under Section 45 of the Act, stay the proceedings in the suit. If injunction were to automatically follow at the behest of the party filing the suit, the result would be neither arbitration proceedings would go on because of the injunction, nor can there be a progress in the suit because of the stay granted under Section 45 of the Act. Such position could never have been contemplated by the Legislature, i.e., Parliament. Therefore the contention of the learned Counsel for 1st respondent that injunction should automatically follow when a suit questioning the validity of the arbitration agreement is filed has no force.
10. In Renu Sagar case (supra) and Sunita Conductors case (supra) the Supreme Court, no doubt, held that the power to stay proceeding in the suit can be exercised cither before or during the pendency of the arbitration proceedings, in a petition filed under Section 3 of 1961 Act, corresponding to Section 45 of the Act. In Renu Sagar case (supra) the Supreme Court was considering the application for injunction filed by Renu Sagar restraining arbitration proceedings and the application filed by GEC for stay of the suit filed by Renu Sagar together, and was considering the issue of stay and injunction together and did not separately consider the issues relating to power of the Court to grant injunction and the power of the Court to grant stay under Section 3 of 1961 Act. IA No.I352 of 2000, out of which the CMA arose, was not filed under Section 45 of the Act. In fact IA No. 1640 of 2000 was filed by the appellant under Section 45 of the Act to stay the suit pending arbitration. By separate orders the learned trial Judge allowed IA No. 1352 of 2000 and dismissed IA No. 1640 of 2000. So appellant filed CMA and CRP questioning the orders of the trial Court in those I.As. Since both the CMA and CRP were heard together, and since we decided to remit IA No.1640 of 2000 to the trial Court, we did not feel it proper or appropriate to deal with the question relating to the enforceability or otherwise of the agreement between the parties for disposal of the CMA., because any finding given by us on that point might cause prejudice to the affected party during the hearing of IA No. 1640 of 2000 before the learned trial Judge, and so we refrained from deciding the question of validity and enforceability of the agreement and confined ourselves to the three ingredients required for granting temporary injunction.
11. In view of the above, the point for consideration in the appeal was whether 1st respondent is entitled to the temporary injunction sought for which purpose it has to establish prima facie case, balance of convenience and irreparable loss. We feel it relevant to extract the observations in para 55 of Renu Sagar (supra).
"As explained earlier the scheme that emerges on a combined reading of Sections 3 and 7 of the Foreign Awards Act (1961 Act) clearly contemplates that questions of existence.
validity or effect (scope) of the arbitration agreement itself, in cases where such agreement is wide enough to include within its ambit such questions, may be decided by the arbitration initially but their determination is subject to the decision of the Court and such decision of the Court can be had either before the arbitration proceedings commence or during their pendency, if the matter is decided in a Section 3 petition or can be had under Section 7 after the award is made and filed in the Court and is sought to be enforced by a party thereto. In the face of such scheme envisaged by the Foreign Awards Act which governs this case it will be difficult to accept the contention that the arbitrators will have no jurisdiction to decide questions regarding the existence, validity or effect (scope) of the arbitration agreement. In fact the scheme makes _for avoidance of dilatory tactics on the part of any party to such agreement by merely raising a plea of lack of arbitrator's competence - and a frivolous plea at that -and enable the arbitrator to determine the plea one way or the other and if negatived to proceed to make his award with the further safeguard that the Court would be in a position to entertain and decide the same plea finally when the award is sought to be enforced. All that condition (iii) of Section 3 requires is that the legal proceedings must be in respect of a matter "agreed to be referred to the arbitration" and there is no warrant to add further words namely, "agree to by referred to the arbitration for final determination". Obviously if the occasion to decide the question of arbitrator's jurisdiction arises at an earlier stage namely in a Section 3 petition the Court has to decide it before granting stay of the legal proceedings and such decision of the Court on that question will be conclusive and binding on the arbitrator and the question before him will then become academic. It is thus clear that under the scheme questions of existence, validity or effect (scope) of the arbitration agreement itself, in cases where the arbitration clause embraces within its scope such question, (unless decided by the Court in a Section 3 petition) could be initially determined by the arbitrators, which would be subject to the final decision of the Court................In other words, there is nothing in the general law of arbitration either English or Indian which prevents the arbitrators or an umpire from deciding questions of their own jurisdiction provisionally or tentatively and to proceed to make their awards on that, basis, though it is clear that their provisional or tentative decision on questions of their own jurisdiction would be subject to the final determination by the Court and if the Court takes a contrary view their award will not be given effect to and in our view this is exactly the scheme of the Foreign Awards Act." (Underliningmine) Keeping the above observations in view, and also in view of the fact that the CMA arose out of an order granting injunction, by the trial Court which earlier by an order dated 31-10-2000 in IA No. 1640 of 2000 directed the parties to approach the agreed forum, and raise all the pleas before it and observed that the Tribunal itself can decided the plea relating to its jurisdiction, and in view of the decision of the Supreme Court in Sundaram Finance Limited v. NEPC India Limited, , we observed, in the common order dated 12-12-2001, that interference by civil Court (by granting injunction) should be minimal. In the facts and circumstances of the case it was held that the 1st respondent did not establish a prima facie case that balance of convenience is not in its favour and that it would not suffer any loss its much less irreparable loss, if injunction is not granted in its favour.
12. For the above reasons the decision relied on by the learned Counsel for the 1st respondent have no application for deciding this review petition and we do not find any error apparent on the face of the record or misconstruction of ruling of any Court.
13. So we do not find any grounds for reviewing the common order dated 12-12-2000. The point is answered accordingly.
14. In the result, the petition is dismissed with costs. Advocate's fee is fixed at Rs. 1,000/-. The typographical and other accidental errors in the common order dated 12-12-2001 pointed out in para 3 above be carried out.
