CJI can smoke the conciliatory peace pipe

Updated: Nov 15 2005, 05:30am hrs
The bomb blasts eclipsed the Supreme Courts (SC) pre-Diwali landmark constitutional bench verdict on the powers of the Chief Justice of India (CJI) under section 11 of the Arbitration and Conciliation Act, 1996. In holding that such exercise of power is a judicial function, the court overrules the 2002 decision in the Konkan Railway case, which interpreted the power under section 11 to be purely administrative and that the CJI or any person designated by him for this purpose could not perform any judicial function thereunder.

To understand what this hyper legality translates into in plain English, one needs to view the relevant section, which provides that in case the appointment procedure in the arbitration agreement fails in international arbitrations, the CJI may be requested to take necessary measures. This being a slight deviation from the corresponding provisions in the UNCITRAL Model Law, on which the Act is based, required judicial interpretation. Konkan Railway, relying on the statement of objects and reasons of the Act, had concluded that the CJIs power were restricted to setting the arbitral process in motion forthwith, and it would be inappropriate for him or his nominee to entertain or decide any contentious issues.

It is interesting to examine what the courts have held to be an administrative order. Essentially, it would be an act or decision that is regulatory or supervisory in nature, as opposed to adjudicatory. Konkan Rails view that no notice had to be issued to the opposite side, nor any respo-nse contemplated, and reliance placed only on the correspondence between the parties, in appointing an arbitrator, provided the point for overruling the decision.

This brings us to the next pointhow have courts distinguished one from the other The obvious analogy, therefore, is the exercise of powers by the company court in liquidation proceedings as in confirming sale of assets. The SC relied on a 1963 decision in dealing with this to hold that while realisation of assets is an administrative order, the company court has to exercise discretion in determining the claims of the bidder, creditors, and other affected parties, and so arrive at a judicial conclusion.

2002 SC ruling had said powers under section 11 were only administrative
It also said the powers did not allow the CJI to perform judicial functions
Konkan Railways contended section 11 gave only administrative powers
Another ground on which the Konkan Railway judgement relied was that section 11 contemplated delegation of the CJIs powers to a person not necessarily a judicial or quasi-judicial authority. It is, as the present judgement concurs, an established principle of law, that judicial power can be further conferred only on another judicial authority. The SC disagreed, holding that the CJI has to examine whether the claim is within the purview of the arbitration clause concerned . This involves adjudication of validity of the arbitration agreement and issue of jurisdiction.

The judgement further proceeds to hold that had this been a purely administrative order, there would be no need to vest the power in the CJI, instead of the principal civil court of original jurisdiction. The latter has the power to make interim orders, as well as to entertain challenges to and enforcement of awards. Therefore, the lawmakers did not contemplate the power under section 11 to be exercised by such courts. The same was conferred on the CJI in case of international arbitrations. If the CJIs power was merely an administrative act of constituting a tribunal, it would be an order which could be challenged in a high court under Article 226perish the thought!

The minority dissenting judgement holds that the majority view has been arrived at by looking at the matter backwards. The first assumption is that the CJIs function is a judicial one. And the rest, on delegation, purpose of section 11(6), scope of challenge, proceeds from that. If the section provides for delegation, so be it. If the intent is to expedite setting the arbitral process without exercise of discretion, it cannot be reconsidered in interpretation. That is the legislatives prerogative; courts cannot rewrite the law.

The purpose of providing arbitration as an alternative dispute resolution mechanism can be achieved by freeing it from judicial shackles. In opting to do so, the parties voluntarily gain some and lose some. With due respect, somehow, the Constitution bench, in self-preservation mode, seems to have lost sight of this ultimate objective.

The writer is a corporate lawyer and a partner, Rajinder Narain & Co., a Delhi-based law firm