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ARBITRATION LAW OF MADHYA PRADESH

ARBITRATION LAW OF MADHYA PRADESH

                A step towards Alternate dispute resolution

                       Arbitration Law of Madhya Pradesh: A Step towards ADR

     When will mankind be convinced and agree to settle their difficulties by arbitration?  

Abstract

In recent times, the Alternate dispute resolution (ADR) mechanisms have flourished and evolved to a greater extent. ADR provides for effective mechanisms to resolve disputes outside courts. Where courts take years and decades in resolving issues, with ADR, it is done in months since they are time bound. This is the reason why it is that tempting and favorable today. ADR includes within its arena, Arbitration, Mediation, Negotiation and Conciliation. These alternative mechanisms were evolved to reduce the burden of the Courts and to provide speedy access to justice. In this article, the author intends to shed light on Arbitration law and its application particularly in the State of Madhya Pradesh. The State Govt. passed M.P. Madhyastham Adhikaran Adhiniyam (M.P. Arbitration Tribunal Act) in 1983. It is amended 11 times since then, the recent one was in 2017. The law specifically provides for the establishment of a Tribunal within the state to arbitrate disputes falling under certain categories and lays down the procedure of arbitral proceedings before the Tribunal and award thereof.

Introduction

Arbitration has come up as a boon in the arena of Alternate Dispute Resolution (ADR).  Who is unknown to the cumbersome, rigid and time consuming litigation procedure in India. So a need was felt to bring in some effective, expeditious and time saving alternative method of dispute resolution. This gave rise to Arbitration as an alternative to the Court system whereby the parties to a dispute mutually agree to appoint a third party i.e. arbitrator(s) whose decision (award) is binding on the parties. The proceedings herein are similar to litigation but are faster, cheaper, confidential and more flexible in procedure and application of rules of evidence.

The arbitration law of Madhya Pradesh differs from the Arbitration and Conciliation Act of 1996 in its procedural aspects. The Madhya Pradesh Madhyastham Adhiniyam (M.P Arbitration Tribunal Act), 1983  is a special law of M.P. that provides for the establishment of an Arbitration Tribunal within the state. It came into force on 1-3-1985 and extends to the whole of M.P. The Act was enacted with an objective to provide for an effective mechanism of dispute resolution by setting up an arbitration Tribunal within the State specifically to arbitrate disputes to which the State Government or a Public Undertaking (wholly or substantially owned or controlled by the State Government) is a party and for matters incidental thereto and connected therewith. Only the claims valuing up to Rs. 50K or more relating to any difference arising out of the execution or non-execution of works contract[1] are entertained. The Act is divided into six chapters that cover different subjects ranging from the Constitution of Tribunal to the commencement of proceedings and awards thereof. The author intends to throw light on various procedural aspects of the Act including the regulations made thereunder by the Tribunal itself. The article also covers the jurisdiction and powers of Tribunal along with the revisionary powers of High Court in the matters so related.

Constitution of Tribunal

Madhya Pradesh Arbitration Tribunal is constituted by the State Government u/s 3 and includes a Bench thereof constituted u/s 9 of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 to resolve disputes of State Government, Public Undertakings and other parties, related to works contract of Rs. 50,000/- or valuation above it. The Tribunal is consisted of a chairman and other members appointed by the State Government. It is set up at Bhopal, M.P. and its current Chairman is Justice M.K. Mudgal.

The Tribunal constituted herein is more like a Court than a tribunal in terms of Arbitration and Conciliation Act. The arbitral proceedings therein differ from those under the Arbitration and Conciliation Act. The members of Tribunal are not nominated by the parties. The disputants do not have any control over their appointment. The award passed by the tribunal is considered to be a decree of civil court.[2]

Qualifications (sec. 4) – To be appointed as the Chairman, the person shall be an acting or retired Justice of the High Court. To be a Vice-President, he shall be a District level Judge who is Higher Judicial Service member for not less than seven years standing. A District level Judge of Higher Judicial service is eligible to be appointed as a Judicial Member. No other person shall be qualified to be appointed as the member of the Tribunal unless he is or has been a Revenue Commissioner or has held an equivalent post for 5 years or he is or has been a Chief Engineer in the service of State Govt. for 5 years. Besides this, there is also a post of Registrar, for which Higher Judicial Service officers are designated.[3]

Term- According to Sec 5 of the Act, the Chairman shall hold office for a term of five years or until he attains the age of 67 years whichever is earlier, while the member of the Tribunal shall hold office for five years or till the age of 65 years whichever is earlier.

Arbitral Proceedings Before Tribunal

i) Reference to Tribunal- Sec 7 of the Act provides for the Reference to Tribunal. Either party to a works contract can irrespective of the arbitration clause in the agreement, present a Reference (Petition for arbitration) in the prescribed form to the Registrar or an officer authorized by the Registrar in person or by his duly authorized agent or advocate, during the working hours of the Tribunal. The Act renders that the reference shall be accompanied by such fees and such documents or other evidence as may be prescribed. If the Tribunal is satisfied on receipt of the reference that it is a fit case for adjudication, it may admit the reference, otherwise it may summarily reject it after recording reasons therefor.

Limitation (sec. 7-B) The Act imposes certain limitations to admit a reference Petition. It provides that unless the dispute is first referred for the decision of final authority under the terms of the works contract and the Petition is made within one year from the date of communication of the decision of the final authority, the Tribunal shall not admit a reference Petition.

ii) Procedure on receipt of reference

  • Sec. 8 of the Act, provides that as soon as the reference u/s 7 is received in office of the Tribunal, the same along with affidavit and documents shall be scrutinized by such responsible official of the staff of the Tribunal as the Chairman may by general or specific order, authorize in that behalf.
  • In case of discovery of any defect or deficiency in the reference during the scrutiny, it shall be reported to the Registrar or an officer authorized by the Registrar in this behalf who shall direct the petitioner to remove it within a specified time fixed by him. If the petitioner fails to rectify the same within the time allowed, the Registrar may forward the reference to the Chairman for necessary orders.
  •  If the reference is found in order or the defect discovered is removed, the reference shall be registered, numbered and placed before the Chairman.
  •  After having regard to the nature of the dispute, the amount involved and other relevant factor, if any, the Chairman shall assign it to a Bench for giving the award.
  • Such Bench then shall issue a show cause notice to the opposite party specifying the date of appearance.
  • The Notice shall be sent by registered A.D. post with a copy of the reference Petition and it shall be treated as served, until the contrary is proved.
  •  The opposite party may file a reply on or before the date specified in the notice for appearance along with the affidavit, documents or other evidence to rely on.

iii) Hearing of the case- According to Regulation 23[H1]  of the Act,[4] after the written reply is filed by or on behalf of the defendant, a date will be fixed for settlement of points in dispute and for the evidence which the parties will adduce in support of their respective cases.

iv) Final Hearing- Regulation 24[5]implies that on settlement of points for determination and the evidence, the case shall be posted for final hearing.

v) Rejection of petition- The Tribunal shall reject the reference Petition,

  •  where it does not disclose a cause of action;
  • where the relief claimed is undervalued, and the petitioner, on being required by the Tribunal fails to correct the valuation within a time fixed by it;
  • where the relief claimed is properly valued, but the reference is insufficiently stamped and the petitioner on being required to pay requisite court-fee fails to do so within a time specified by the Tribunal;
  • where the reference is barred by any law.

vi) Withdrawal and adjustment of references – Where the Petitioner, at any time after the institution of a reference, abandons it or any part of his claim thereof against all or any of the respondents, he shall be liable for such costs as the Tribunal may award and shall be precluded from instituting any fresh reference in respect of such subject-matter or such part of the claim. Where the Tribunal is satisfied that a reference must fail by reason of some formal defect or that there are sufficient grounds for allowing the petitioner to institute a fresh reference for the subject-matter of such reference or part of a claim then it may, on such terms as it thinks fit, grant him the permission to withdraw from such reference and institute a fresh one.

vii) Place of sitting- The Tribunal shall ordinarily hold sittings at Bhopal and may whenever deemed necessary or convenient also hold sittings at any other place within the State as the Chairman may allow.

Powers of Tribunal

The Act confers many powers onto the Chairman and members thereof. These include-

1) Constitution of Benches by Chairman (sec. 9 )- The Chairman has the discretionary power to constitute one or more Benches consisting of two or more numbers of members as he thinks fit for the convenient transaction of Business. He may also change the composition of any Bench as he deems fit.

2) ‌Making regulations (sec. 10) – The Tribunal may make regulations for transaction of Business before it or before its Benches.

3) ‌Regulating own procedure (sec. 11) – Subject to any regulations that may be made u/s 10,  the Tribunal has power to regulate its own procedure as it thinks just and fair.

4) ‌Powers of Civil Court under C.P.C (sec. 12) – The Tribunal possesses the same powers as are vested in a Court under Code of Civil Procedure, 1908, when trying a suit. These include-

a) discovery and inspection of any property or thing concerning dispute.

b) enforcing attendance and examination a person on oath.

c) compelling the production of books of account and other documents.

d) issuing commissions for inspection or for examination of witness or accounts.

e) calling proof of facts by affidavit of the party or any witness etc.

5) ‌Inherent powers (sec 17-A) – The Tribunal is conferred with the inherent powers u/s 17-A of this Act. It provides that nothing in act shall limit or affect power of the Tribunal to make any such order as may be necessary for the ends of justice or to prevent abuse of the process of Tribunal, provided that no interim order by way of injunction, stay or attachment before award shall be granted. The validity of the proviso to this section was challenged inM/s. R.N. Tandon & sons v. Madhya Pradesh Electricity Board & ors. [6] It was submitted that if that power is taken away then what remains as the inherent power. The Court articulated that simply the grant of interim order by way of injunction, stay or attachment before the award does not exhaust the inherent powers. Simply because the aforesaid power is taken away, does not mean that all the inherent powers are exhausted. The Tribunal can invoke the rest. It doesn’t render sec. 17-A ultravires. Sec. 14 renders that no proceedings before the Tribunal or any Bench thereof, shall be called in question except when it affects the merits of case or the inherent jurisdiction of the Tribunal.

Award and Orders

Chapter IV of this Act deals with the passing of award and orders and their finality thereof. Sec. 16 [7]deals with the passing of an award by the Tribunal and/or its Benches and regulation 31 [8]deals with the procedure of making award. It provides that the Tribunal or the Bench as the case may be, after recording evidence and perusing the matter on record and on affording the opportunity to parties to submit their arguments, shall pronounce its award, either at once or as soon thereafter as practicable on some future date, of which due notice shall be given to the parties or their pleaders. The award shall be signed and dated by the member or members who hear the case. The Tribunal may also make an interim award. Sec. 16 renders that the award should be made within four months from the date of service of notice of reference on opposite party.

The Tribunal may also award costs and interest as it deem fit. The award shall be as per majority opinion but where the members are equally divided, the point(s) on which they differ shall be stated for reference for hearing on such point(s) by one or more members of the Tribunal or by the Chairman himself and then such points shall be decided by majority opinion of the Tribunal. The award so made according to sec. 16, shall clearly spell out the relief granted, the party in whose favour and against the relief is granted and by whom and in whose favour costs and interest, if any, are payable. The section mandates that all the parties shall be supplied with the certified copies of the award so made. Such award including an interim award shall be binding on the parties thereto (sec. 17)[9] and shall be deemed to be a decree within the meaning of Sec. 2(2) of the Code of Civil Procedure, 1908 (sec. 18).

High Court’s Power of Revision

Chapter V confers on the High Court, the power of revision of the award made under this Act by the Tribunal or Benches thereof. Sec. 19 of the Act provides that the High Court may suo motu or on an application for revision made to it within 3 months of the award, call for the record of such case by issuing a requisition to the Tribunal that shall on the receipt of same, send to the Court the concerned award and record thereof. If during the revision, the High Court finds that the Tribunal has exercised a jurisdiction not vested in it or has failed to exercise a jurisdiction so vested or has misconducted itself or the proceedings or has made an invalid award, then the High Court may make such order as it deems fit. The High Court in deciding any revision under this section exercises same revisionary powers as are vested in it under sec. 115 of C.P.C, 1908[10]. The Court shall after making the order in revision, cause a copy of it to be certified to the Tribunal.

Conclusion

Arbitration has crop up as a boon in the arena of dispute resolution. It has proved to be a game changer in bringing in more flexible, innovative and time effective alternative mechanism of dispute resolution outside the courts. The state govt. has taken a step towards arbitration in enacting the Madhya Pradesh Madhystham Adhikaran Adhiniyam. It is a special Act of M.P. It intends to set up an arbitral tribunal within the state to resolve the disputes relating to the works contract where the State Govt. or Public Undertaking (owned or managed by State Govt.) is a party thereto and valuation whereby is Rs. 50K or more. The aforesaid Act lays down the procedure of commencement of proceedings before the tribunal established at Bhopal, M.P. Sec 7-8 provides for the reference to arbitral tribunal. The tribunal may either reject or admit the reference Petition or may even  permit the party to withdraw the same and institute a fresh one. The proceedings herein are time bound and the award has to be made within 4 months from the date of service of notice of reference on the opposite party. The Tribunal has made several regulations under the act in exercise of the powers conferred to it u/s 10 for the transaction of its business. The Tribunal exercises all the powers of the civil court under C.P.C while trying a suit and enjoys certain inherent powers u/s 17-A. The High Court is also conferred with the revisionary Powers u/s 19 of the Act which is akin with sec. 115 of C.P.C.

By – Yukta Joshi

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