MUNICIPAL CORPORATION OF GREATER MUMBAI & ANR.versusPRATIBHA INDUSTRIES LTD. & ORS.

                        [2018] 14 S.C.R. 1143                             1143


           MUNICIPAL CORPORATION OF GREATER                               A
                     MUMBAI & ANR.
                          v.
             PRATIBHA INDUSTRIES LTD. & ORS.
                  (Civil Appeal No. 11822 of 2018)                        B
                       DECEMBER 04, 2018
           [R. F. NARIMAN AND M. R. SHAH, JJ.]
       High Courts – Power to recall its order – Appellant issued
Tender Notice for supply, installation and maintenance of water
                                                                          C
meters – Tender Notice was accepted and parties entered into an
agreement, which included a clause (cl.13 of the General Conditions
of Contract) stating that “13.1 No Arbitration was allowed” –
Respondent filed an application u/s. 9 of the Arbitration and
Conciliation Act, 1996 seeking interim injunction, which was
allowed – Thereafter on the next date of hearing, a sole Arbitrator       D
was appointed with the consent of both the parties – Recall
application filed by the appellant stating that the concerned officer
of the appellant-Municipal Corporation was not empowered to take
decision regarding appointment of Arbitrator – Single Judge of the
High Court recalled the order observing that clause 13 of the
                                                                          E
General Conditions of Contract and clause 22 of the Tender Notice
were not arbitration clauses – Division Bench of High Court set
aside the order of Single Judge on ground that there was no provision
in Part-I of the Act for any Court to review its own order – On
appeal, held: High Courts are courts of record, set up u/Art.215 of
the Constitution – These constitutional courts, being courts of record,   F
the jurisdiction to recall their own orders is inherent by virtue of
the fact that they are superior courts of record – If any apparent
error is noticed by the High court in respect of any orders passed
by it the High Court has not only power, but a duty to correct it –
Impugned judgment of the Division Bench of the High Court set
                                                                          G
aside – Constitution of India – Art.215 – Arbitration and Conciliation
Act, 1996 – s.9.
      National Sewing Thread Co. Ltd. v. James Chadwick &
      Bros. Ltd. [1953] SCR 1028 ; Shivdev Singh & Ors. v.
      State of Punjab and Others AIR 1963 SC 1909 ; M.M.
                                                                          H
                                 1143
1144                SUPREME COURT REPORTS                       [2018] 14 S.C.R.


 A           Thomas v. State of Kerala and Another (2000) 1 SCC
             666 : [2000] 1 SCR 33 – relied on.
                               Case Law Reference
       [1953] SCR 1028                   relied on                  Para 12
 B     AIR 1963 SC 1909                  relied on                  Para 13
       [2000] 1 SCR 33                   relied on                  Para 14
             CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11822
       of 2018.
             From the Judgment and Order dated 07.02.2018 of the High Court
 C
       of Judicature at Bombay in Commercial Appeal No. 177 of 2017.
              Ranjit Kumar, Dhruv Mehta, S. Naphade, Sr. Advs., Ashish Wad,
       Ms. Priti Puramdare, Mrs. Jayashree Wad, Sidharth Mahajan,
       Ms. Sukriti Jaggi, M/s. J S Wad And Co, Ms. Tamana Goyal, Chandra
       Prakash, M/s. D.S.K. Legal, Vipin Kr. Jai, Vipul Jai, Ms. Shelly Dinkar,
 D
       Sanjay Kapur, Rajiv Kapur, Ms. Khushboo Kapur, C.M. Patel, Advs.
       for the appearing parties.
             The Judgment of the Court was delivered by
             R. F. NARIMAN, J.
 E           1. Leave granted.
            2. The present appeal raises questions relatable to the High Court’s
       power of recall of its orders.
             3. By a Tender Notice dated 19.09.2008, supply, installation and
 F     maintenance of water meters of various sizes were called for. The Tender
       Notice contained Clause 22, which reads as under:-
             “22. Jurisdiction of Courts:
             In case of any claim, dispute or difference arising in respect of
             the contract, the cause of action thereof shall be deemed to have
 G           arisen in Mumbai and all legal proceedings in respect of any such
             claim, dispute or difference shall be instituted in a competent court
             in the city of Mumbai only.
             If any dispute, difference or claim is raised by either party relating
             to any matter arising out of the contract, the aggrieved party may
 H           refer such dispute within a period of 7 (seven) days to the
   MUNICIPAL CORPORATION OF GREATER MUMBAI v.                                  1145
    PRATIBHA INDUSTRIES LTD. [R. F. NARIMAN, J.]

      concerned Deputy Municipal Commissioner (DMC) of Municipal               A
      Corporation of Greater Mumbai, who shall constitute a committee
      comprising of 3 (three) MCGM Officers i.e., concerned DMC or
      Director (ES & P), Chief Engineer other than the Engineer of
      contract & concerned C.A. the committee shall give decision in
      writing within 60 (sixty) days.
                                                                               B
      Appeal from the order of the Committee may be referred to
      Municipal Commissioner (M.C.) of Municipal Corporation of
      Greater Mumbai within 7 (seven) days. Thereafter, M.C. shall
      constitute the committee comprising of 3 (three) DMC including
      DMC in charge of finance Department. The decision given by
      this Committee shall be final and binding upon the parties/bidders.”     C

      4. However, when the Tender Notice was accepted and an
agreement between the parties was entered into, Clause 13 of the General
Conditions of Contract was applied. This clause stated as follows:-
      “Disputes and Arbitration:                                               D
      13.1 No Arbitration is allowed.
      13.2 In case of disputes or difference of opinion arising between
      the Hydraulic Engineer and the bidder, the bidder can refer the
      matter to the Municipal Commissioner of Greater Mumbai with
      an advance copy to the Hydraulic Engineer and the decision of            E
      Commissioner will be final in such case.”
       5. An application under Section 9 of the Arbitration and Conciliation
Act, 1996 (in short ‘the Act’) was filed by the respondent before the
High Court of Bombay, asking for an interim injunction restraining the
encashment of the first and third bank guarantees that were given by           F
the respondent in pursuance of the Tender, amounting to a sum of Rs.
16,23,400/- (Rupees Sixteen Lakhs, Twenty Three Thousand and Four
Hundred only) and Rs. 6,23,00,000/- (Rupees Six Crores, Twenty Three
Lakhs only) respectively. On 23.06.2017, this petition was allowed and
the injunction that was prayed for was granted. On the next date of
                                                                               G
hearing, i.e., on 27.06.2017, Justice K. R. Shriram recorded what
transpired as follows:-
      “1. Mr. Makhija, counsel for Petitioners, on instructions states
      that Petitioners are ready and willing to go for arbitration and
      suggest that Mr. Justice V.M. Kanade (retired) be appointed as
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1146                SUPREME COURT REPORTS                     [2018] 14 S.C.R.


 A           the Sole Arbitrator. Mr. Bharucha, senior counsel for Respondent
             (MCGM), on instructions from Mr. Agashe, Assistant Engineer
             (Meter Work Shop) City-representative of Respondent, who is
             present in court, states that Respondents have no objection to the
             suggestion made by Mr. Makhija and Mr. Justice V.M. Kanade
             (retired) be appointed as the Sole Arbitrator.
 B
             2. In view of the above, Mr. Justice V. M. Kanade (retired) is
             appointed as the Sole Arbitrator to decide on all issues between
             parties arising out of or in connection with or with reference to
             the Tender dated 19.09.2008 along with Corrigendum issued by
             Respondent No. 1 for supply installation and maintenance of AMR
 C           water meters of various sizes in the City area of Mumbai consisting
             of wards A, B, C, D, E, F/North, F/South, G/North and G/South
             (the Project)…”
              6. A Notice of Motion was filed by the appellant before us on
       03.07.2017 to recall the aforesaid order appointing Justice V.M. Kanade
 D     (retired) as a Sole Arbitrator. It was clearly stated therein that:-
             “I say that the concerned officer Shri A.M. Agashe-Asst. Engineer
             (Meter Workshop) (City), who was present in the Court was not
             aware that contract has no arbitration clause which is as follows:-

 E              “17. Disputes and Arbitration:
                13.1 No Arbitration is allowed.
                13.2 In case of disputes or difference of opinion arising between
                the Hydraulic Engineer and the bidder, the bidder can refer the
                matter to the Municipal Commissioner of Greater Mumbai with
 F              an advance copy to the Hydraulic Engineer and the decision
                of Commissioner will be final in such case.”
             I say that Shri A.M. Agashe-Asst. Engineer (Meter Workshop)
             (City) is not empowered to take decision regarding appointment
             of the Arbitrator in the above Petition.”
 G            7. By an order dated 12.09.2017, the learned single Judge referred
       to the recall application and the affidavit of the Commissioner, and also
       referred to Clause 13 of the General Conditions of Contract and Clause
       22 of the Tender Notice and observed that they were not arbitration
       clauses at all, but in-house proceedings, which could be taken at the
 H     behest of the aggrieved party. This being so, the learned single Judge
   MUNICIPAL CORPORATION OF GREATER MUMBAI v.                                 1147
    PRATIBHA INDUSTRIES LTD. [R. F. NARIMAN, J.]

recalled the order appointing Justice V.M. Kanade (retired) as a sole         A
Arbitrator. An appeal was filed under Section 37 of the Act by the
respondent herein, which succeeded before the Division Bench.
According to the Division Bench, since Section 5 of the Act mandated
that there would be no judicial intervention as provided for in Part I of
the Act and since there is no provision in Part I for any court to review
                                                                              B
its own order, the review petition filed was not maintainable. The impugned
order would, therefore, have to be set aside. The appeal filed by the
respondent under Section 37 was allowed.
       8. Shri Ranjit Kumar, leaned senior counsel for the appellant, has
argued before us that it is obvious that on a perusal of Clause 13 and
Clause 22, no arbitration is provided for and that these are only in-house    C
procedures. He went on to state that it is always inherent in a High
Court, being a court of record, to recall its own orders, and has cited
certain judgments together with the High Court (Original Side) Rules.
According to him, the appeal under Section 37 itself was not maintainable
and for all these reasons, the impugned order should be set aside.            D
       9. On the other hand, Shri Shekhar Naphade, learned senior counsel
argued on behalf of the respondent, stating that the Arbitration Act is a
self-contained Code, and, this being so, it is not possible to look outside
the four corners of the Act to find a review power. This may apply even
to Article 215 of the Constitution of India. He argued that Clause 13 and     E
Clause 22 are clearly arbitration clauses inasmuch as a dispute has to be
referred for decision to a Committee and thereafter to an Appellate
Committee, after which, the decision rendered by the Appellate
Committee is final and binding. According to Shri Naphade, the correct
course could only have been to apply to Justice V.M. Kanade (retired)
under Section 16 of the Act on whether an arbitration clause does or          F
does not exist. He added that since the Code of Civil Procedure (in short
‘the Code’) will not apply, therefore, there is no question of inherent
power contained in Section 151 of the Code applying either.
       10. The clauses which Shri Naphade has referred to as arbitration
clauses cannot, prima facie, be regarded as such. Sub-clause 13.1             G
clearly states, “No Arbitration is allowed”. Sub-clause 13.2 cannot then
be read as an arbitration clause. Also, on the assumption that Clause 22
would be the applicable clause, it is clear that the said clause has a
marginal note which reads: Jurisdiction of Courts. The first paragraph of
Clause 22 specifically deals with competent courts in the city of Mumbai      H
1148                 SUPREME COURT REPORTS                       [2018] 14 S.C.R.


 A     only having exclusive jurisdiction in respect of claims, disputes etc. arising
       in respect of the contract. The second paragraph and the third paragraph,
       according to Shri Naphade, would amount to an arbitration clause as the
       Committee mentioned therein is to give a decision, which is appealed
       again before another Committee which gives a decision which shall be
       final and binding upon both the parties. We are of the view that Clause
 B
       22 deals with disputes that may arise under the agreement which can
       either be dealt with by an in-house procedure or by courts, as the case
       may be. By no stretch of imagination could this in-house procedure be
       stated to be an agreement to arbitrate between the parties. In any case,
       what is important on the facts of this case, is that neither of these clauses
 C     has been invoked. The Court’s order dated 27.06.2017, clearly shows
       that Justice Kanade was appointed as Sole Arbitrator thanks to Mr.
       Agashe, Assistant Engineer, having no objection to the same. As has
       been stated in the recall application and the affidavit of the Commissioner,
       Mr. Agashe was not empowered to take any decision regarding
       appointment of an Arbitrator. This being the undisputed position before
 D
       the Court, it is clear that an oral agreement between the parties de hors
       Clause 13 and Clause 22 could not have been arrived at. We must also
       remind ourselves that this agreement was arrived at during the course
       of hearing of a Section 9 petition. In the present case, nobody has applied
       under Section 11 to appoint an Arbitrator in accordance with either Clause
 E     13 or Clause 22.
              11. Insofar as the High Courts’ jurisdiction to recall its own order
       is concerned, High Courts are courts of record, set up under Article 215
       of the Constitution of India. Article 215 of the Constitution of India reads
       as under:-
 F            “Article 215. High Courts to be courts of record.— Every
              High Court shall be a court of record and shall have all the powers
              of such a court including the power to punish for contempt of
              itself.”
              It is clear that these constitutional courts, being courts of record,
 G     the jurisdiction to recall their own orders is inherent by virtue of the fact
       that they are superior courts of record. This has been recognized in
       several of our judgments.



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   MUNICIPAL CORPORATION OF GREATER MUMBAI v.                                 1149
    PRATIBHA INDUSTRIES LTD. [R. F. NARIMAN, J.]

     12. In National Sewing Thread Co. Ltd. v. James Chadwick                 A
& Bros. Ltd., 1953 SCR 1028, this Court has held as under:-
     “……The Trade Marks Act does not provide or lay down any
     procedure for the future conduct or career of that appeal in the
     High Court, indeed Section 77 of the Act provides that the High
     Court can if it likes make rules in the matter. Obviously after the      B
     appeal had reached the High Court it has to be determined
     according to the rules of practice and procedure of that Court and
     in accordance with the provisions of the charter under which that
     Court is constituted and which confers on it power in respect to
     the method and manner of exercising that jurisdiction. The rule is
     well settled that when a statute directs that an appeal shall lie to a   C
     Court already established, then that appeal must be regulated by
     the practice and procedure of that Court. This rule was very
     succinctly stated by Viscount Haldane L.C. in National
     Telephone Co. Ltd. v. Postmaster-General, [1913] A.C. 546 in
     these terms:-                                                            D
        “When a question is stated to be referred to an established
        Court without more, it, in my opinion, imports that the ordinary
        incidents of the procedure of that Court are to attach, and also
        that any general right of appeal from its decision likewise
        attaches.”                                                            E
     The same view was expressed by their Lordships of the Privy
     Council in R.M.A.R.A. Adaikappa Chettiar v. Ra.
     Chandrasekhara Thevar, (1947) 74 I.A. 264, wherein it was
     said:-
        “Where a legal right is in dispute and the ordinary Courts of         F
        the country are seized of such dispute the Courts are governed
        by the ordinary rules of procedure, applicable thereto and an
        appeal lies if authorised by such rules, notwithstanding that the
        legal right claimed arises under a special statute which does
        not, in terms confer a right of appeal.”                              G
     Again in Secretary of State for India v. Chellikani Rama Rao,
     (1916) I.L.R. 39 Mad. 617, when dealing with the case under the
     Madras Forest Act their Lordships observed as follows:-

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1150                SUPREME COURT REPORTS                       [2018] 14 S.C.R.


 A              “It was contended on behalf of the appellant that all further
                proceedings in Courts in India or by way of appeal were
                incompetent, these being excluded by the terms of the statute
                just quoted. In their Lordships’ opinion this objection is not well-
                founded. Their view is that when proceedings of this character
                reach the District Court, that Court is appealed to as one of
 B
                the ordinary Courts of the country, with regard to whose
                procedure, orders, and decrees the ordinary rules of the Civil
                Procedure Code apply.”
             Though the facts of the cases laying down the above rule were
             not exactly similar to the facts of the present case, the principle
 C           enunciated therein is one of general application and has an apposite
             application to the facts and circumstances of the present case.
             Section 76 of the Trade Marks Act confers a right of appeal to
             the High Court and says nothing more about it. That being so, the
             High Court being seized as such of the appellate jurisdiction
 D           conferred by section 76 it has to exercise that jurisdiction in the
             same manner as it exercises its other appellate jurisdiction and
             when such jurisdiction is exercised by a single Judge, his judgment
             becomes subject to appeal under Clause 15 of the Letters Patent
             there being nothing to the contrary in the Trade Marks Act.”
 E            13. To similar effect is our judgment in Shivdev Singh & Ors. v.
       State of Punjab and Others, AIR 1963 SC 1909, wherein this Court
       has stated as under:
             “10. … It is sufficient to say that there is nothing in Article 226 of
             the Constitution to preclude a High Court from exercising the
 F           power of review which inheres in every Court of plenary
             jurisdiction to prevent miscarriage of justice or to correct grave
             and palpable errors committed by it…”
             14. Also, in M.M. Thomas v. State of Kerala and Another,
       (2000) 1 SCC 666, this Court has held as follows:-
 G           “14. The High Court as a court of record, as envisaged in Article
             215 of the Constitution, must have inherent powers to correct the
             records. A court of record envelops all such powers whose acts
             and proceedings are to be enrolled in a perpetual memorial and
             testimony. A court of record is undoubtedly a superior court which
             is itself competent to determine the scope of its jurisdiction. The
 H
    MUNICIPAL CORPORATION OF GREATER MUMBAI v.                                     1151
     PRATIBHA INDUSTRIES LTD. [R. F. NARIMAN, J.]

       High Court, as a court of record, has a duty to itself to keep all its      A
       records correctly and in accordance with law. Hence, if any
       apparent error is noticed by the High Court in respect of any
       orders passed by it the High Court has not only power, but a duty
       to correct it. The High Court’s power in that regard is plenary. In
       Naresh Shridhar Mirajkar & Ors. v. State of Maharashtra,
                                                                                   B
       AIR 1967 SC 1 : [1966] 3 SCR 744, a nine-Judge Bench of this
       Court has recognised the aforesaid superior status of the High
       Court as a court of plenary jurisdiction being a court of record.”
      15. Insofar as Shri Naphade’s arguments that the Act is a self-
contained Code, Section 5 of which interdicts a review or recall
application, suffice it to state that having held that there is no arbitration     C
agreement pursuant to the order dated 27.06.2017, the Act will not apply.
       16. This being the case, the impugned judgment of the Division
Bench of the High Court is set aside. Shri Naphade urges us to continue
the order dated 23.06.2017 for a period of four weeks from today so
that he may approach the appropriate forum. We continue the said order             D
for a period of four weeks from today. The appeal is disposed of
accordingly.

Ankit Gyan                                                   Appeal disposed of.
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