IN THE SUPREME COURT OF BANGLADESH

HIGH COURT DIVISION

(CIVIL REVISIONAL JURISDICTION)

Present:

Mr. Justice Zafar Ahmed

Civil Revision No. 1525 of 2019

In the matter of:

Bangladesh Bridge Authority

Petitioner -Versus-

Jamuna Resort Limited

Opposite Party Mr. Zafar Sadeque, Advocate

...For the petitioner

Mr. Margub Kabir, with

Mr. Taisir Mahmud, Advocates

.........For the opposite party

Heard on: 25.11.2024 and 03.12.2024 Judgment on: 08.12.2024

The  instant  Rule  issued  on  18.06.2019  is  directed  against judgment and order dated 20.01.2019 passed by the learned District Judge, Dhaka in Arbitration Miscellaneous Case No. 340 of 2015 appointing two arbitrators under Section 12 of Arbitration Act, 2001.

The  present petitioner,  namely  Bangladesh Bridge Authority (hereinafter referred to as ‘Authority’) and opposite party, namely Jamuna  Resort  Limited  (in  short,  the  ‘Company’)  entered  into  a concession agreement on 21.11.1999 to develop, manage, operate and

maintain  specific  areas  for 30  years.  The  agreement  contained  an arbitration clause in Clause No. 35. It is stated in the said arbitration clause  that  in  the  event  of  any  dispute  or  difference  of  opinion between the parties upon or in relation to or in connection with the agreement with regard to the performance of any obligations under the agreement  by  the  parties  shall  be  settled  in  accordance  with  the provisions  of the  Arbitration  Act,  1940.  Be  it  mentioned  that  the Arbitration  Act,  1940  was  repealed  by  the  Arbitration  Act,  2001 which came into force on 10.04.2001.

During subsistence of the agreement, dispute arose between the parties regarding terms and conditions as well as performance of the agreement.  The  Company  gave  a  notice  to  the  Authority  on 27.04.2014 to resolve the dispute by invoking by Arbitration Clause No. 35. However, the Authority did not respond. The Company gave two  more  reminders  to  the  Authority  regarding  the  matter  i.e. resolving  the  dispute  through  arbitration  but  again  received  no response.  Eventually,  the  Authority  terminated  the  agreement  on 01.04.2015 on the grounds stated in the termination letter. Thereafter, on 11.05.2015 the Company filed an application under Section 12 of the Arbitration Act, 2001 before the learned District Judge, Dhaka to appoint  arbitrator  to  resolve  the  dispute  through  arbitration. Accordingly, Arbitration Miscellaneous Case No. 340 of 2015 was registered.  The  Authority  being  the  opposite  party  in  the  said miscellaneous  case  entered  appearance  on  02.11.2015  by  filing  a written objection taking the grounds that the arbitration miscellaneous case is not maintainable for the reason, inter alia, the agreement in question had already been terminated and thus, there is no scope and necessity  for  arbitration.  20.01.2019  was  fixed  for  hearing  the miscellaneous case. Both the parties filed petitions for adjournment of the hearing. The learned District Judge rejected both the petitions and directed the parties to conduct the hearing. The Company then filed hazira. The Authority did not file any hazira. The learned District Judge proceeded with the hearing ex parte and appointed Mr. Md. Azizul  Haque,  former  Judge  of  the  High  Court  Division  of  the Supreme Court of Bangladesh as arbitrator for the Company and Mr. Md. Fazlul Karim, retired District and Sessions Judge and former Registrar  of  the  Bangladesh  Supreme  Court  as  arbitrator  for  the Authority with direction upon them to appoint 3rd arbitrator to act as Chairman  of  the  Arbitral  Tribunal.  Accordingly,  the  arbitration miscellaneous case was disposed of on 20.01.2019. The Authority has challenged the said order in the instant civil revision, obtained Rule and order of stay on 18.06.2019.

The affidavit of the instant revisional application was sworn on 03.06.2019 and the Rule was issued and order of stay was passed on 18.06.2019.  It  appears  from  the  counter  affidavit  filed  by  the Company that  meanwhile on 26.01.2019 two arbitrators appointed Mr. Kazi Habibul Awal, former Senior Secretary, who later on was appointed  as  Chief  Election  Commissioner,  as  Chairman  of  the Arbitral  Tribunal.  The  Tribunal  sent  notice  to  the  Authority  by registered  post,  vide  orders  dated  16.02.2019  and  07.04.2019 respectively. It is noted in the order dated 24.06.2019 that the service returned with A/D. The Authority did not appear before the Arbitral Tribunal. Meanwhile, on 18.06.2019 this Court issued a Rule and passed an order of stay. On 25.06.2019, the Authority for the first time appeared  before  the  Arbitral  Tribunal  and  submitted  the  lawyer certificate regarding the Rule and order of stay.

The  matter  does  not  end  here.  Earlier,  the  Company  filed Arbitration Miscellaneous Case No. 239 of 2015 under Section 7(ka) of the Arbitration Act, 2001 before the learned District Judge, Dhaka praying  for  stay  operation  of  the  notice  of  termination  of  the agreement  and  restraining  the  Authority  from  taking  over  the possession  of  the  schedule  land.  The  learned  District  Judge  on 02.04.2015  passed  an  order  of  status  quo.  The  Authority  entered appearance  in  the  said  miscellaneous  case  which  was  eventually dismissed on 22.04.2015. The said dismissal order was challenged by the Company in Civil Revision No. 984 of 2015. This Division, vide judgment and order dated 28.04.2016 made the Rule absolute. The Authority filed Civil Revision For Leave to Appeal (CPLA) No. 3302 of  2016  and  leave  was  granted  on  16.02.2020.  Thereafter,  Civil Appeal being No. 73 of 2020 was filed and the same is now pending for disposal. It appears from the judgment and order dated 16.02.2020 passed in the CPLA that leave was granted to consider four (04) grounds. The ground No. III is quoted below:

“III.  Because  the  agreement  in  question  having  been cancelled and possession of the case property having been taken over  by  Bangladesh  Bridge  Authority,  the  Jamuna  Resort Limited  at  best  can  claim  compensation,  if  any,  in  the arbitration proceeding but order of status quo in respect of the case property under Section 7(ka) of the Arbitration Act is not tenable and as such, the judgment passed by the High Court Division is liable to be set aside.”

Mr.  Zafar  Sadeque,  the  learned  Advocate  appearing  for  the petitioner i.e. the Authority submits that the instant Rule should not be disposed of at this stage, rather it should be decided after disposal of the Civil Appeal No. 73 of 2020. The learned Advocate next submits that the impugned order appointing two  arbitrators  was  passed ex parte without hearing the Authority. The learned Advocate finally submits that since the agreement has been terminated, there is no scope  to  settle  the  matter  by  invoking  Arbitration  Clause No.  35 contained in the agreement.

Mr. Margub Kabir, appearing with Mr. Taisir Mahmud, the learned Advocates for the opposite party i.e. the Company, on the other hand, submits that the subject matter of the Civil Appeal No. 73 of 2020 and that of the instant Rule is completely different and the cause of action is distinct under different provisions of the Act, 2001 and as such, the outcome of the Civil Appeal No. 73 of 2020 shall have no bearing upon the merit of the instant Rule. Mr. Kabir next submits  that  the  Authority  had  ample  opportunity  to  contest  the Arbitration Miscellaneous Case No. 340 of 2015 but it adopted a dilatory  tactics  and  therefore,  the  learned  District  Judge  rightly proceeded with the matter ex parte. In respect of the argument that once  the  agreement  is  terminated  arbitration  clause  becomes inoperative, Mr. Kabir refers to the cases reported in 21 BLC 122 and AIR 2007 SC 2327.

Civil Appeal No. 73 of 2020 arose out of a proceeding under Section 7(ka) of the Arbitration Act, 2001 in respect of interim order with regard to preservation of the subject matter by maintaining status quo. The instant proceeding arose out of an application under Section 12 of the Act, 2001 to appoint arbitrators. Therefore, cause of action of the two proceedings is completely different. The outcome of the civil appeal shall have no bearing, whatsoever, upon the outcome of the instant Rule. We have already noted that leave was granted in Civil Appeal in favour of the Authority considering its submission that the dispute can be resolved through arbitration. Therefore, the submission advanced on behalf of the Authority on this ground falls apart.

It is true that the order which has been impugned in the instant Rule was passed ex parte. We have already discussed the relevant chronology of events. The instant application under Section 12 of the Act,  2001  was  filed  on  11.05.2015.  The  Authority  filed  written objection  on  02.11.2015.  No  explanation  has  been  given  by  the Authority  for  dragging  the  matter  till  2019  by  way  of  seeking continuous adjournment. Therefore, the learned District Judge rightly proceeded with the matter ex parte otherwise the purpose of settling the dispute through arbitration would be frustrated. In fact, the learned District Judge ought to have disposed of the arbitration miscellaneous case earlier.

In Drilltee-Maxwell Joint Venture vs. Gas Transmission Company Limited (GTCL) and ors., 21 BLC 122, it is held:

“In the present case, clause 45.5 of the GCC that provides for arbitration has been couched in widest possible terms as can be well imagined. It includes any disputes, differences, claims and questions between the parties arising out of the said contract or in any way relating thereto. The contract agreement having been admittedly entered into between the parties and the disputes and differences have since arisen between them, I am accordingly of opinion that the arbitration clause 45.5 survives for determining the mode of their settlement although the contract has come to an end on account of termination or reputation.

In  this  connection  reliance  may  be  placed  on  a  decision referred by the learned Advocate for the petitioner reported in AIR  2010  SC  488  wherein  it  has  been  held  that  when  the contract is terminated by one party on account of the breach committed by the other particularly in it case where the clause is framed in wide and general terms. Merely because the contract has  come  to  an  end  by  its  termination  due  to  breach,  the arbitration  clause  does  not  get  perished  nor  rendered inoperative; rather it survives for resolution of disputes arising “in respect of” or “with regard to” or “under the contract.” This is the line with the earlier decisions of the  Indian  Supreme Court, particularly as laid down in Union of India vs. Kishori Lal Gupta, AIR 1959 SC 1362.”

In National Agricultural Co-op. Marketing Federation India Ltd. vs. Gains Trading Ltd., AIR 2007 SC 2327 one of the issues were whether an arbitration clause comes to an end, if the contract containing such arbitration agreement, was abrogated. It was held:

“Respondent  contends  that  the  contract  was  abrogated  by

mutual agreement; and when the contract came to an end, the

arbitration  agreement which  forms  part  of the contract,  also

came to an end. Such a contention has never been accepted in

law. An arbitration clause is a collateral term in the contract,

which relates to resolution disputes, and not performance. Even

if the performance of the contract comes to an end on account

of repudiation, frustration or breach of contract, the arbitration

agreement  would  survive  for  the  purpose  of  resolution  of

disputes arising under or in connection with the contract. [Vide:

Heymen v. Darwins Ltd. 1942 (1) All ER 337, Union of India

vs.  Kishori  Lal  Gupta  and  Bros.  MANU/SC/0180/1959:

[1960]1 SCR4 93 and The Naihati Jute Mills Ltd. v. Khyaliram

Jagannath MANU/SC/0348/1967: [1968]1 SCR 821].”                                 

In view of the decided cases, I have no hesitation to hold that the Arbitration Clause No. 35 contained in the agreement is alive in spite of termination of the agreement by the Authority.

In view of the above discussions, the submissions advanced on behalf  of  the  petitioner  Authority  have  no  legs  to  stand  on. Accordingly, this Court does not find any illegality in the order dated 20.01.2019 passed by the learned District Judge, Dhaka in Arbitration Miscellaneous Case No. 340 of 2015 appointing two arbitrators.

It  is  already  noted  that  the  two  arbitrators  on  26.01.2019 appointed  Mr.  Kazi  Habibul  Awal  as  Chairman  of  the  Arbitral Tribunal. The learned Advocates of both sides submit that later on Mr. Kazi Habibul Awal became the Chief Election Commissioner and resigned from the office of the Chairman of the Arbitral Tribunal. In that view of the matter, the arbitrators shall appoint a new Chairman for the Arbitral Tribunal and shall proceed with the matter.

With  the  above  observations  and  directions,  the  Rule  is disposed of.  

Arif, ABO