Saturday, February 23, 2008

ARBITRAL TRIBUNAL – A HANDICAPPED SUBSTITUTE FOR COURTS OF LAW

Published in Chartered Secretary, Vol. XXXVIII, No. 2, Feb. 2008, pp. 176-178 (Monthly publication of ICSI, N. Delhi)

Arbitration is one of the alternative dispute resolution mechanism designed to solve the problem of mounting arrears of cases pending in regular courts of law. M.A. Sujan observes: “In popular parlance, arbitration may be defined as a private process set up by the parties as a substitute for court litigation to obtain a decision on their disputes.”[1] Arbitration is an ‘alternative’ or ‘substitute’ for the regular courts of law empowered to dispense justice.

Self-contained code in itself

The Arbitration and Conciliation Act, 1908 (hereinafter “the Act” for short) of India is a self-contained code in itself providing within it all the procedural and substantial aspects of Arbitration. Section 19 (1) of the Act provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.

Section 16 of the Act provides absolute power to the Arbitral Tribunal itself, to rule on its own jurisdiction, including ruling on any objections, with respect to the existence or validity of arbitration agreement.

Section 17 of the Act vests the Arbitral Tribunal with powers to order a party to take any interim measure of protection on the subject-matter of dispute and it may also require a party to provide an appropriate security in connection with a measure ordered by it.

The Act, under Section 34, read with Section 37, has also provided for appeal on limited question of fact and law against the decision of the arbitrators.

Section 16 and Section 34(2) (a) (ii) also reveal that the Act also envisages a revision of the decision and conduct of the Arbitral Tribunal by the civil courts.

Under Section 31, the provisions of Section 34 and Section 35 CPC has also been incorporated in the Act, as an integral part of it, in respect of award of interest and cost by the Arbitral Tribunal.

Under Section 27, the arbitrator is authorized to seek assistance of the court for recording of evidence under certain circumstances.

Under Section 26 of the Act, the Arbitral Tribunal may appoint commissioners and experts, wherever required, for proper adjudication of disputes referred to it. Thus, an Arbitral Tribunal does not necessarily need the wheels of most of the procedural laws which are sine-qua-non of a court of law to move on.

A Substitute for Court of Law

A new Section 89 has also been introduced in the Code of Civil Procedure through Code of Civil Procedure (Amendment) Act, 1999. This provides for settlement of disputes outside the Court. According to this provision where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat; or (d) mediation. Where a dispute has been referred for arbitration or conciliation, according to clause (a) of Sub-Section (2), the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act.

Thus, Section 89 of CPC trumpets that all the cases which are filed in court need not necessarily be decided by the court itself. It confirms the view that arbitration is an equally competent and effective way of resolving disputes inter parties which is evident from the section 5 of the Act also which allows judicial intervention only in particular circumstances which are specifically permitted by the Act itself.

Handicapped Arbitral Tribunal

Thus, it is evident that the Parliament has, in its best foresight, equipped and empowered the arbitral tribunal to deliver justice like a court of law but without getting infected by the germs of unending delay and unsolvable complexity of procedures.

But there are some circumstances or type of cases in which an arbitral tribunal finds itself disabled to dispense justice some of which are discussed as under:

Enforcement of Interim measures

Interim measures are ordered by courts of law to anticipate the final judgment on the merits for a certain period so as to ensure that it will be possible to enforce it. These are enforced only for a short period stretching upto the outcome of final judgment. Section 17 of the Act also provides for passing of interim measures. It reads as under:

“Interim measures ordered by arbitral Tribunal.
17.(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.

(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).”

Here, it is to be noted that the order to take any interim measure by the arbitral tribunal may be given to only a party to the arbitration agreement but not to a third person who may be in possession of the disputed subject matter.

Even when the arbitral tribunal orders a party to the arbitration agreement u/s 17, it may bring no fruit to the applicant if the other party defies the order or refuses to comply as the arbitral tribunal has got no tooth under the Act to force the party in defiance. The Act provides for enforcement of final and interim awards but completely forgets to talk about interim measures. As per Hofeld’s analysis power in one party must have its correlative liability in another party otherwise the said power is no power.

Principle of Res-judicata

The Act empowers a party to get protection of interim measures from a Court of law u/s 9 at any time before, during and even after the making of the arbitral award but before it is enforced. The Act also provides for seeking orders of interim measures through the arbitral tribunal itself during the arbitral proceedings u/s 17. One party may first of all request the arbitral tribunal for a particular interim measure and in case of dismissal of such request there, it may appeal to the court u/s 37(2) of the Act for its reversal or may also approach it afresh u/s 9 of the Act. In the later case, this may result into defiance of principle of res-judicata and ultimately into longer delays. The principle as provided in section 11 of the CPC would not be of any help to the opposite party as it bars a court of law not an arbitral tribunal from trying any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties. It may happen vice-versa also.

Necessary and proper parties

There is a concept of necessary party and proper party in civil suits. The distinction between the two is that a necessary party is one without whom no order can be made effectively; a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding.[2]. Rule 10(2) of Order 1 of the CPC also indicates as to who is to be termed as a necessary or a proper party. This provision empowers the court to add the name of any person, namely, (i) who ought to have been joined and (ii) whose presence before the court may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the issues involved in the suit.

Before an arbitral tribunal presided over by a sole arbitrator, the following situation emerged. There was a partnership firm holding certain properties in its partners’ names which were to be used for the firm’s business. One of the partners bought certain properties in the names of his family members out of the partnership funds. There was an arbitration agreement between partners to refer all the future disputes to arbitration. Disputes arose and, as per the arbitration agreement, were referred to the arbitral tribunal. While determining the scope of the dispute, it became necessary to fix the properties bought from the partnership funds so as to be divided among the partners eventually. One party referred to a certain property which was standing in the name of family members of another partner. But the question arose that if the arbitral tribunal held to bring that particular property within the purview of disputed properties what would be the recourse open to the arbitral tribunal if the owner of that property refuse to submit himself to the arbitral tribunal’s jurisdiction for trial. Like a Court of law, if the Tribunal proceeds ex-parte and decrees the suit against the said owner, he may again refuse to transfer the property in favour of awardee putting him at the beginning end of rope of litigation.

There is another situation where a suit is instituted in a court of law by A against B. During the proceedings, the Court makes C, a Government authority, as the proper party just to seek some information or clarification which are maintained by it. Subsequently, both A and B agree to refer the dispute to arbitral tribunal for final adjudication. In this situation also C, being not bound by the arbitration agreement, may refuse to appear before the arbitration tribunal in the capacity of proper party which may handicap the arbitral tribunal to decide the dispute.

Third party

Some High Courts have amended the CPC to provide for third party procedure. For example, the High Court of Bombay has added in Order 8, after the existing rule 10 rules 11 to 30 out of which rule 23 says that where in a suit a defendant claims against any person not already a party to the suit either that he is entitled to contribution or indemnity, or that he is entitled to any relief or remedy relating to or connected with the subject-matter of the suit and substantially the same as some relief or remedy claimed by the plaintiff, or that any question or issue relating to or connected with the subject-matter of the suit is substantially the same as some question or issue arising between the plaintiff and the defendant and should properly be determined not only as between the plaintiff and the defendant but as between the plaintiff and the defendant and the Third Party or between any or either of them, he may apply to the Court for leave to issue a notice to that effect.

But this is the limitation of the arbitral tribunal. Section 2(1)(h) of the Act defines “party” to mean a party to an arbitration agreement. An arbitrator or an Arbitral Tribunal under the scheme of the Act is not statutory. It is a forum chosen by the consent of the parties as an alternate to resolution of disputes by the ordinary forum of law courts. The essence of arbitration without assistance or intervention of the court is settlement of the dispute by a tribunal of the own choosing of the parties. Two things are, therefore, of essence in cases: firstly, the choice of the tribunal or the arbitrator; and secondly, the reference of the dispute to the arbitrator. Both should be based on consent given either at the time of choosing the arbitrator and making reference or else at the time of entering into the contract between the parties in anticipation of an occasion for settlement of disputes arising in future. The law of arbitration does not make the arbitration an adjudication by a statutory body but it only aids in implementation of the arbitration contract between the parties which remains a private adjudication by a forum consensually chosen by the parties and made on a consensual reference[3]. Thus a third party who was not a party to an agreement cannot be compelled to join the arbitration proceedings.

Mis-joinder or non-joinder of parties

Order 1 of the CPC provides for joinder of several persons as plaintiffs and/or defendants in the same cause of action. Where a son seeks to challenge several alienations of his father as not binding on the joint family, he can file one suit against all the alienees under this rule[4]. The law is settled that in a suit for partition even strangers might be made parties if their presence is necessary to effectively decide all the points in issue between the parties[5]. But this way of adjudication is not possible in case of arbitration as those strangers are not bound to appear before the arbitral tribunal being not the signatory to the arbitration agreement with son.

Ex-parte orders


Order 39 of the CPC empowers a litigant to seek ex-parte stays from court of law in those matter where informing the other side may frustrate the whole purpose of the suit. This is a discretionary power of the courts guided by the judicial principles. However, the Arbitral Tribunal has been kept handicapped to answer such a request from a party.

Automatic stay of execution of award

Section 36 of the Act provides that the award rendered by the arbitral tribunal shall be enforceable under the Code of Civil Procedure, 1908 (V of 1908) in the same manner as if it were a decree of the Court. But the conditions precedent are that the time for making an application to set aside the arbitral award under Section 34 should have expired, or such application having been made, should have been refused. Thus, it is clear that as soon as a party files an application u/s 34 of the Act to set aside the award, the execution of award gets stayed unconditionally and for uncertain time.

Preservation of record

An Arbitral Tribunal’s order attains finality if not appealed within the limitation period so provided in the Act. The record of such litigation may be required in future litigation between the same parties or with third party touching the same subject matter. Unlike a Court of Law, Arbitral Tribunal is not supposed to preserve the record of the litigation after its final adjudication by the Act. Another problem may arise about the disposal of original documents produced by the parties during the trial.

Declaration of the final judgment

On of the attributes of the arbitration is that parties’ private disputes do not become public as in a court of law, open and accessible to all. But, others’ future plans and policies may be affected by the final outcome of the arbitration proceedings. For example: a partnership firm is dissolved or awarded to one of the partners through an arbitral judgment. The public has all rights and interests to reformulate its future conduct or behavior with reference to the new firm. But, the Act shows light neither to the Tribunal to air and publish its award nor to the public to access the judgment. Others even cannot smell that any dispute arose, tribunal was formed and judgment was passed.

Conclusion

Becoming of Arbitral Tribunals a true substitute of courts of law requires further pondering over several critical issues, including a few discussed above. Globalization and commercialization have already tightly hugged India in their strong arms. It is high time when lawmen sit, diagnose and operate upon the crippled limbs of the newly born Arbitration and Conciliation Act, 1996.

© Praveen Kumar Jain, Advocate, Supreme Court of India, Email: jainclc@gmail.com; Mobile: 98914 87092
[1] M.A. Sujan: Law of Arbitraton, 1994 Ed., page 4.
[2] See Udit Narain Singh Malpaharia v. Additional Member, Board of Revenue, Bihar, AIR 1963 SC 786.
[3] Dharma Prathishthanam v. Madhok Construction (P) Ltd.,(2005) 9 SCC 686, at p. 693
[4] Udmiram v. Balramdas, 1955 ILR Nag 744, AIR 1956 Nag 76.
[5] Ranjit Kumar v. Murari Mohan, AIR 1958 Cal 710.

LET THE DOWRY BE EXECUTED!

(Published in Legal News & Views, Indian Social Institute, New Delhi, January 2007)

“Any young man who makes dowry a condition of marriage discredits his education and his country and dishonours womanhood.” …Mahatma Gandhi[1]

I. PROLOGUE

Marriages are made in heaven, is an adage. A bride leaves the parental home for the matrimonial home, leaving behind sweet memories there, with a hope that she will see a new world full of love in her groom's house. Alas! the alarming rise in the number of cases involving harassment to the newly wed girls for dowry shatters the dreams. In-laws are characterised to be outlaws for perpetrating terrorism which destroys the matrimonial home. The terrorist is dowry which is spreading tentacles in every possible direction.[2] An average of one dowry death is reported every 77 minutes according to the National Crime Record Bureau and victim support groups say complaints of dowry harassment are rising.

II. MEANING OF DOWRY

Section 2 of the Dowry Prohibition Act, 1961 defines the meaning of dowry as under:

“In this Act, "dowry" means any property or valuable security given or agreed to be given either directly or indirectly-

(a) By one party to a marriage to the other party to the marriage; or(b) By the parents of either party to a marriage or by any other person, to either party to the marriage or to any other person,
At or before or any time after the marriage in connection with the marriage of the said parties but does not include dower or mahr in the case of persons to whom the Muslim Personal Law (Shariat) applies.

Thus, there are three occasions related to dowry. One is before the marriage, second is at the time of marriage and the third is at any time after the marriage. The words any time before the expression after the marriage clearly shows that even if the demand is long after the marriage the same could constitute dowry, if other requirements of the section are satisfied[3]. Again, the crucial words are in connection with the marriage of the said parties. This means that giving or agreeing to give any property or valuable security on any of the above three stages should have been in connection with, need not be as a consideration of, the marriage of the parties. However, there can be many other instances for payment of money or giving property as between the spouses e.g. some customary payments in connection with birth of a child or other ceremonies are prevalent in different societies. Such payments are not enveloped within the ambit of dowry.[4] Under the Act, dowry as a quid pro quo for marriage is prohibited and not the giving of traditional presents to the bride or the bridegroom by friends and relatives. Thus, voluntary presents given at or before or after the marriage to the bride or the bridegroom, as the case may be, of a traditional nature, which are given not as a consideration for marriage but out of love, affection or regard, would not fall within the mischief of the expression dowry made punishable under the Act[5].

III. OTHER FORMS

Though law does not recognize but dowry may be extracted in many other forms rather be in cash, jewellery or gifts. Inspired from Mittals, Chatwals and Lalus, the groom’s parents may demand to arrange grand and extravagant functions of marriage to make them memorable for years in the community. After marriage, religious ceremonies and the birth of children often become the occasions for further demands for money or goods. Routes may be different but all lead to same end i.e. financial and physical oppression of the brides and their parents in the hands of grooms’ side.

IV. FROM ‘GIFTS’ TO ‘GROOM’S PRICE’

It is unclear when the practice began but dowry system was applicable in all civilizations and religions that did not permit inheritance right for property of parents to daughter and son equally. Ancient Indian Scriptures direct and witness the practice of gifting utensils, cows and lands during ‘Kanyadan’. However, the practice, inaugurated to help the newly wedded couple or just to show the natural affection by the parents, got twisted into a compulsion by the passage of time. In modern India, though, the Hindu Women Right to Property Act, 1937 followed by the Hindu Succession Act, 1956 has theoretically provided a dual protection but in reality the words written in these Acts hardly have ever breathed the air as the societal norms still dictate that good girls do not ask for share. And practically, in most cases only sons inherit parental property and family businesses. And it is only in the form of dowry that daughters get a share- albeit an unequal one- in parental property. That is why even most women consider dowry as their legitimate due. They feel that a dowry-less wedding does not work in their interest because it only means their brothers end up with an even bigger share of family resources.

V. NOURISHMENT TO THE VIRUS

Almost all parents leave no stone unturned in searching higher economical and social status grooms in the belief that their daughters will be more comfortable and happy in such families forgetting that the marital chariot runs on the four wheels of mutual love, understanding, trust and cooperation; though wealth may be like the colourful flag fluttering on its top. They hope to enhance their social status and reap the benefits in long run by forging alliance with a well connected kinship network. The demand for such upwardly mobile men is far in excess of supply. Thus, the catch is, a commensurate consideration has to be paid in the form of dowry. Hence, magnitude of dowry commanded by a groom corresponds with his education, economical-social standing and earning potential than with the perceived share of a daughter in her parental property.

The system of marrying in the same cast, religion or region has considerably fostered the malady. Limited choice of prospective grooms brings the brides’ parents to their knees. In today’s globalized society, ruled by technology and economics, these meaningless bars have to be broken.

The old dictated doctrine of definitely getting married for the women adds wound to the injury. The parents have no alternative except getting their daughters married off even to a family of dowry lusty beasts knowing she may be butchered there since they have been taught that their souls would not be given place even in the hell if they do not perform their this God dictated pious and mandatory duty. This command might have hold water in earlier era when women used to be physically unsecured and economically dependent housewives only. Clock and calendar both have been replaced now. It is high time when the society has to acknowledge the right of being unmarried integrated in the freedom of getting married. Father of Nation also suggested[6], “The parents should so educate their daughters that they would refuse to marry a young man who wanted a price for marrying, and would rather remain spinsters than be party to the degrading terms. The only honourable terms in marriage are mutual love and mutual consent”.

VI. THE EVIL OUTCOME

It would not be an exaggeration to submit that even today there are families which see the housewife as a servant, or if she works, a source of income. She is considered to have neither capacity nor any right to express her belief or view on a family problem or planning. On the top, the custom of dowry is the most venomous sickening evil embedded in the present society which has turned the designed to be a heavenly abode into a death cell, a rope to the golden dreams into a deadly noose, an instituted safety net into a web of torment. Often, the parents, though aware of the tortures and harassments, force their daughters to go to their matrimonial homes dictated by the aged axiom: A girl’s litter is carried from her father’s home and bier from her husband’s home only. It has to be noted that most of the bride killers never had any antisocial past. However, the lust for holdings perverted them into criminals in the eyes of law. It is submitted that sometimes they themselves are victims as the horrifying fact is that many societies have crafted demand of dowry by the groom side a claim, the correlative duty of which has been imposed on the bride side. The enormity of dowry often determines the class and potentials of both the families in the community.

VII. EPILOGUE

It is distressing that dowry or bride price should mar married felicity with feudal cruelty in India, largely because the anti-dowry laws sleep in the statute book and social consciousness is not mobilised to ban effectually its vicious survival.[7] Today none wants to beget a girl child. Sex tests during the pregnancy followed by abortion of female foetus, though illegal, has become a social norm. Census of India 2001 reveals that there are 933 girls for 1000 boys in India which is really an alarming difference[8]. Earlier this year a report in The Lancet, a British medical journal, indicated that as many as 10 million female fetuses may have been aborted in India over the past 20 years by families trying to avoid the expense of having a daughter and hoping to secure themselves a male heir. The greed for dowry, and indeed the dowry system as an institution, calls for the severest condemnation. It is evident that legislative measures such as the Dowry Prohibition Act have not met with the success for which they were designed. Perhaps, legislation in itself cannot succeed in stamping out such an evil and the solution must ultimately be found in the conscience and will of the social community and in its active expression through legal and constitutional methods.[9] It would not do to plead that individuals cannot make the commencement and that they must wait till the whole society is ripe for the change. No reform has ever been brought about except through intrepid individuals breaking down inhuman customs or usages.[10] Though the preys of this beast are generally the have-nots but the haves have to lead them by dipping their extravagant marriages and saying firm no to dowry. Let the marriage be a sacrament rather an opportunity to show off the wealth and heighten the standing in the league. Media, the supposed fourth pillar of the society, has yet to play its the most important part. To get the independence from the shackles of dowry, another freedom fight is to be fought by the young generation. This deep-rooted evil shall not die a natural death, it has to be executed.

“Swaraj is not meant for cowards,” concluded Mahatma Gandhi, “but for those who would mount smilingly to the gallows and refuse even to allow their eyes to be bandaged. Promise that you will wipe off the stain of deti-leti[11], that you will die to restore your sisters and wives to their full dignity and freedom. Then I shall understand that you are ready for the freedom of your country.”[12]


[1] Young India, 21-06-1928.
[2] See Kamesh Panjiyar Alias Kamlesh Panjiyar v. State of Bihar, (2005) 2 SCC 388.
[3] See State of H.P. v. Nikku Ram and others, (1995) 6 SCC 219.
[4] See Satvir Singh and others v. State of Punjab and another, (2001) 8 SCC 633.
[5] See S. Gopal Reddy v. State of A.P, (1996) 4 SCC 596.
[6] Young India, 27-12-1928.
[7] See Narotam Singh v. State of Punjab, (1979) 4 SCC 505
[8] http://www.censusindia.net/charts/fig12.html (visited on November 22, 2006).
[9] See Bhagwant Singh v. Commissioner of Police, Delhi, (1983) 3 SCC 344
[10] Harijan, 25-07-1936.
[11] The word used for giving and taking of dowry in Sindh.
[12] Young India, 14-02-1929.

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© Praveen Kumar Jain
Advocate, Supreme Court of India
Mobile: +91 98712 78525
Email: pkj@lawyer.com