REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11822 OF 2018 (ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 10415 OF 2018)

MUNICIPAL CORPORATION OF GREATER  MUMBAI & ANR.        …  Appellant(s)

Versus

PRATIBHA INDUSTRIES LTD. & ORS.       …   Respondent(s)

J U D G M E N T

R. F. Nariman, J.

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

maintenance of water meters of various sizes were called for. The Tender

Notice contained Clause 22, which reads as under:-

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“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 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 refer such dispute within a period of 7 (seven) days to the concerned Deputy Municipal Commissioner (DMC) of Municipal 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.

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.”

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:-

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“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 an advance  copy  to  the  Hydraulic  Engineer  and  the decision of 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 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 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 the Sole  Arbitrator.  Mr.  Bharucha,  senior  counsel  for Respondent  (MCGM),  on  instructions  from  Mr. Agashe, Assistant Engineer (Meter Work Shop) City-

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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.  

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 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 (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:-

“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 an advance copy to the Hydraulic  Engineer  and  the  decision  of Commissioner will be final in such case.”

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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.”

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 behest of the

aggrieved party. This being so, the learned single Judge recalled the order

appointing Justice V.M. Kanade (retired) as a sole 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 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

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Clause 22, no arbitration is provided for and that these are only in-house

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.

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 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 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.

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10) The  clauses  which  Shri  Naphade  has  referred  to  as  arbitration

clauses cannot, prima facie, be regarded as such.  Sub-clause 13.1 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 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  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 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

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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 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 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:-

“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,  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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12) In  National Sewing Thread Co. Ltd. v. James Chadwick & 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 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  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:-

“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.”

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  the country are seized of such dispute the Courts are governed by the

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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.”

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:-

“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  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 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 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.”

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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  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:-

“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 High Court, as a court of record, has a duty to itself  to  keep  all  its  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, AIR 1967 SC 1 : [1966] 3 SCR 744, a nine-Judge Bench of this Court has recognised the aforesaid superior status of the High

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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 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 for a period of

four weeks from today. The appeal is disposed of accordingly.  

………………………….J. (R.F. NARIMAN)

………………………….J. (M.R. SHAH)

New Delhi,  Dated: December 4, 2018.    

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