Bangalore District Court
/ Sri.P.Ramesh Kumar vs M/S.K.Manju Cinemas on 3 September, 2020
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 3rd day of September, 2020
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:52/2016
PLAINTIFF / SRI.P.RAMESH KUMAR,
PETITIONER S/o.Sri.A.P.Paul Durai,
Aged about 43 years,
Proprietor - M/s.K.S.Pictures Film Producer
R/at No.32, 3rd Cross,
Anjaneya temple Block, Marappa Garden,
Benson Town, Bengaluru -560 046.
[By Pleader Sri.S.V.Prakash]
/Vs/
DEFENDANT/ M/S.K.MANJU CINEMAS
RESPONDENT No.12/1, 3rd Floor, 4th Cross,
Gandhinagar, Bengaluru -560 009.
Reptd.by its Proprietor-Sri.K.Manju.
[By Pleader Sri.K.S.Venkataramana]
JUDGMENT
This suit is filed under Section 34 of the Arbitration and Conciliation Act, 1996, by Plaintif AS.52/2016 2 for setting aside the arbitral award dated 17.09.2014 passed in Arbitration Case No.AB/ 71/1730/14 by the Arbitration Board, Karnataka Film Chamber of Commerce, Bengaluru.
2) In brief, Plaintif's case is that, Plaintif and Defendant are the members of Karnataka Film Chamber of Commerce, Bengaluru. Both Plaintif and Defendant are Producers and Distributors of films. Plaintif produced Kannada colour film 'Romeo'. Plaintif and Defendant entered into Agreement dated 29.06.2012, whereunder, Defendant took distribution right of the film agreeing to certain terms and conditions. Dispute arose. Defendant lodged complaint to Karnataka Film Chamber of Commerce, Bengaluru, claiming money allegedly due by Plaintif and impugned award came to be passed by the Arbitration Board.
3) It is stated that, Plaintif came to know of the award when he received the notice in Execution AS.52/2016 3 Case No.548/2015. After receiving the notice, he made an application before Karnataka Film Chamber of Commerce, Bengaluru, to furnish copy of the award. His request was denied. He, then, got the certified copy of the award from the Court in execution case and filed this suit.
4) Being aggrieved by the award, Plaintif has challenged the same on the following grounds :
(1) Arbitration Board passed the award disregarding the rules of natural justice.
Objections filed by Plaintif were not considered. Materials placed before it were not appreciated. No points were arisen for consideration. No reasons were assigned as to how Plaintif is liable for the award. (2) Procedures to be followed in the arbitration were not explained.
(3) Award lacks reasonings and same is passed in violation of public policy of India.
(4) Interest has been awarded in contravention of the terms of Agreement.
AS.52/2016 4
(v) Arbitration Board lacks jurisdiction in arbitrating the dispute. Only Courts in Bangaluru shall have jurisdiction under the terms of Agreement.
For all these reasons, prays for setting aside the award.
5) On service of summons, Defendant marked appearance through his Counsel, but, he did not choose to file his written statement.
6) Heard learned Counsels for Plaintif and Defendant. Perused written arguments filed by Plaintif, as well as Defendant. Also perused the records.
7) Points that arise for my consideration are :
(1) Whether this suit filed under Section 34 of the Arbitration and Conciliation Act, 1996 is barred by limitation?
(2) Whether Plaintiff has made
out any of the grounds as
enumerated in Section 34 of
the Arbitration and
AS.52/2016
5
Conciliation Act, 1996 to set
aside the impugned award
dated 17.09.2014 ? 11-11-
2014?
(3) What Order?
8) My answer to the above points are :
Point No.1 - In the Negative;
Point No.2 - In the Affirmative;
Point No.3 - As per final order,
for the following :
REASONS
9) POINT NO.1 : This suit came to be filed by
Plaintif [Respondent in arbitral proceedings] under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 17.09.2014 passed by the Arbitration Board, Karnataka Film Chamber of Commerce, Bengaluru, whereby, the Arbitration Board was pleased to pass an award for Rs.45,00,000/- in favour of Defendant and against Plaintif by allowing the Claim Petition of Defendant [Claimant in arbitral proceedings] in part.
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10) Plaintif contends that he submitted his reply to the Arbitration Board on 18.02.2013. In the reply, he sought for further time to file his detail objection and documents. When fact being thus, he was served with notice in execution case filed by Defendant, in which, he appeared through his Counsel. On appearance, he came to know of the award passed by the Arbitration Board. It is contended that, on coming to know about the award, he made an application to Karnataka Film Chamber of Commerce, Bengaluru, on 08.10.2015 to furnish the award copy. His request was denied and therefore, he got the certified copy of the award from the City Civil Court, Bengaluru, in execution case on 12.02.2016 and filed this suit.
11) Admittedly, from the award, it is clear that, Arbitration Board passed the award on 17.09.2014, which came to be issued on 11.11.2014. Plaintif filed this suit under Section 34 of the Arbitration and Conciliation Act, 1996 [for brevity 'Arbitration AS.52/2016 7 Act, 1996] on 23.03.2016. This makes it clear that, suit has been filed after a lapse of 01 year 04 months.
12) Section 34(3) of the Arbitration Act, 1996 makes it mandatory to file application within three months from the date of receipt of the award. Application can also be filed within the extended period as mentioned in proviso to Section 34(3), if sufficient cause is shown to the satisfaction of the Court. Section 34(3) reads thus :
"34. Application for setting aside arbitral award.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, or, if a request had been made under Section 33, from the date on which that request had been disposed of by the Arbitral Tribunal.
PROVIDED that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
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13) Further, Section 31(5) of the Arbitration Act, 1996 makes it mandatory for Arbitral Tribunal to deliver the signed copy to each party. Section 31(5) reads as under :
"31. Form and contents of arbitral award.
(5) After the arbitral award is made, a signed copy shall be delivered to each party."
14) In Union of India (UOI) Vs. Tecco Trichy Engineers and Contractors, [(2005) 4 SCC 239], the Hon'ble Supreme Court was pleased to hold that, delivery of an arbitral award under sub- section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. Para-8 of judgment (supra) reads as follows :
" 8. The delivery of an arbitral award under sub-section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be "received" by the party. This delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of AS.52/2016 9 limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from the date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings." .
15) Same principles of law have been reiterated in The State of Maharashtra and Ors. vs. Ark Builders Pvt. Ltd., [AIR 2011 SC 1374]. The Hon'ble Supreme Court, in Para-13, was pleased to hold that :
" 13. The highlighted portion of the judgment extracted above, leaves no room for doubt that the period of limitation prescribed under Section 34(3) of the Act would start running only from the date a signed copy of the award is delivered to/received by the party making the application for setting it aside under section 34(1) of the Act. The legal position on the issue may be stated thus. If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of AS.52/2016 10 limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law."
16) From the above principles of law, it is, thus, clear that, delivery of arbitral award is not a mere formality. It is a matter of substance. Actual delivery of the arbitral award and its receipt by the party are made mandatory under Sections 31(5) and 34(3) of the Arbitration Act, 1996. In the light of the above principles of law, contentions of Plaintif are required to be viewed.
17) Plaintif's contention is that, he did not receive the award said to have been issued on 11.11.2014 and in fact, he came to know about the award only after service of notice in execution case filed by Defendant for enforcement of the award. From the records, it is clear that, Plaintif made an application to Karnataka Film Chamber of Commerce, Bengaluru, on 08.10.2015 to furnish the certified copy of the award and other AS.52/2016 11 documents. In pursuance of the application of Plaintif, Karnataka Film Chamber of Commerce, Bengaluru, is said to have furnished the photo copies of the documents sought for by Plaintif vide letter dated 09.10.2015. However, Plaintif, in his letter dated 08.01.2016, specifically stated that, Karnataka Film Chamber of Commerce, Bengaluru, never furnished arbitration award as stated in its letter dated 09.10.2015.
18) Letter dated 11.11.2014 of Karnataka Film Chamber of Commerce, Bengaluru, goes to show that after passing of the award, same is allegedly sent to Plaintif by RLAD on 11.11.2014. Having regard to the cause title of the award, as well as cause title of plaint, it can be fairly said that, award was not sent to the address mentioned in the cause title of the award. Postal receipt accompanied with the letter dated 11.11.2014 makes it clear that, the same was sent stating the address as 'Benson Town S.O., Pin Code : 560046'. In fact, address of AS.52/2016 12 Plaintif shown in the cause title of the award as well as the plaint is that, 'No.32, 3rd Cross, Anjaneya Temple Block, Marappa Garden, Bengaluru - 560040'. Thus, it is clear that, actual receipt of award by Plaintif is not substantiated by the records of the arbitral proceedings. Under such circumstances, it is necessary to have regard to the certified copy of the award got obtained by Plaintif from the City Civil Court, Bengaluru, in execution case. Endorsement put on the certified copy of the award makes it clear that, Plaintif applied for the certified copy on 06.02.2016 and same was delivered to him on 12.02.2016. In absence of proof of actual receipt of the award, it shall be presumed that Plaintif was in actual receipt of the award only on 12.02.2016. Order sheet and plaint makes it clear that, Plaintif has filed this suit on 23.03.2016. Under Section 34(3) of the Arbitration Act, 1996, application may not be made after three months from the date of receipt of the award. In the instant AS.52/2016 13 case, three months would expire on 12.05.2016 from the date of receipt of the award. Suit came to be filed on 23.03.2016. It is, therefore, abundantly clear that, suit has been filed by Plaintif well within the period of limitation as contemplated in Section 34(3) of the Arbitration Act, 1996. In that view of the matter, this Court opines that, suit filed by Plaintif is well within the period of limitation as contemplated in Section 34(3) of the Arbitration Act, 1996; accordingly, I answer the above point in the negative.
19) POINT NO.2 : First and foremost contention of Plaintif is that, Agreement got entered into between Plaintif and Defendant does not contain arbitration clause. In the Agreement, both Plaintif and Defendant consciously agreed to the jurisdiction of the Civil Court in case of dispute. In spite of objection raised by Plaintif, Arbitration Board took the matter for adjudication. And, AS.52/2016 14 therefore, arbitration of the dispute by the Arbitration Board is against terms of Agreement and award is non est.
20) Contrary, Defendant contends that, Plaintif has admitted in his written argument that Karnataka Film Chamber of Commerce has its own bye-laws, whereunder, it has power to arbitrate the dispute by constituting Arbitration Board. It is contended that, after receipt of the notice from Arbitration Board, Plaintif appeared and filed his objections without disputing the jurisdiction and now, there is no basis to contend that Arbitration Board lacks jurisdiction in deciding the dispute raised by Defendant.
21) Section 7 of the Arbitration Act, 1996 makes it mandate that, an arbitration agreement shall be in writing. Section 7 reads as follows :
"7. Arbitration Agreement (1) In this part "arbitration agreement"
means an agreement by the parties to AS.52/2016 15 submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in -
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
22) At this stage, it is necessary to have regard to Clause-13 of the Agreement. It reads thus :
"13. For all purposes, the Courts in Bangalore City alone shall have jurisdiction".
AS.52/2016 16
23) Section 7(3) of the Arbitration Act, 1996 makes it clear that, arbitration agreement shall be in writing and Section 7(2) directs that arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. In the instant case, no arbitration clause finds place in Agreement, which contemplates the jurisdiction of Civil Court. It is not in dispute that there exists no arbitration clause in the form of a separate agreement. However, Defendant relies upon the 'Memorandum and Articles of Association' of Karnataka Film Chamber of Commerce. Clause-3(c) of 'Memorandum of Association' provides for dispute resolution through conciliation, mediation and arbitration. It reads thus :
"(c) To conciliate, mediate and arbitrate in all disputes that may be submitted for settlement by the members and others in the film trade".
24) Clause 37 of Articles of Association deals with 'Arbitration Board'. Executive Committee shall AS.52/2016 17 have power to constitute Arbitration Board under Clause-37. Clause-38 deals with 'Fees Structure and Disputes'. It reads as follows :
"No.38. Fees Structure : Any member may register a complaint against another member for breach of contract and/or where the monetary consideration exceeds Rs.5,000-00 by paying the prescribed fee of ½ % of the claimed amount subject to a minimum of Rs.1,000-00 and maximum of Rs.5,000-00. However the executive committee may vary from time to time the fee payable for Arbitration.
DISPUTES: All complaints shall be pertaining to film trade and/or for monetary claim, shall be filed in the prescribed form by paying the fee as fixed by the Executive Committee from time to time and in accordance with the rules framed thereunder.
a) All disputes shall be first referred by any member to the Arbitration Board of the Chamber before taking the matter to a Court of Law, provided however, in matters of urgent nature requiring speedy remedy and decision, by a Court of Law, the prior intimation in writing to the Chamber shall be given before going to a Court of Law."
25) A bare perusal of Agreement makes it clear that, it does not contain any 'non obstante clause' [not withstanding anything contained] to the efect that not withstanding anything contained in the Agreement, 'Memorandum and Articles of AS.52/2016 18 Association will be applicable to the parties regarding the matter not contemplated in the Agreement. Similarly, no such clause is incorporated in 'Memorandum and Articles of Association' to the efect that notwithstanding the terms of the Agreement, 'Memorandum and Articles of Association' of Karnataka Film Chamber of Commerce will be applicable to the parties in addition to the terms of Agreement arrived at by the parties. Under such circumstances, in absence of specific terms in the Agreement in application of 'Memorandum and Articles of Association', no occasion would arise to interpret the Agreement in consonance with 'Memorandum and Articles of Association' and in that event, Agreement prevails over 'Memorandum and Articles of Association'. When fact being thus, Agreement remains sacrosanct.
AS.52/2016 19
26) Of course, Clause-3(c) of Memorandum of Association of Karnataka Film Chamber of Commerce contemplates the submission of disputes by its members. Both Plaintif and Defendant are the members of Karnataka Film Chamber of Commerce. Defendant lodged complaint to the Karnataka Film Chamber of Commerce raising certain claims against Plaintif disregarding the terms of the Agreement. Karnataka Film Chamber of Commerce constituted the Arbitration Board under Clause-37 of its Articles of Association. On issuance of notice, Plaintif appeared and submitted his objections subject to further submission. In his statement of objection dated 09.04.2013, he has taken specific contention that the Arbitration Board has no jurisdiction to entertain the dispute, in view of the terms of Agreement. Relevant portion of statement of objection reads thus :
"4(a) In complainant's complaint there is no a clause of arbitration between the parties in their agreement dt: 29.06.2012 and as per the clause 13 of the agreement has provide an opportunity to the parties if AS.52/2016 20 any dispute arises between them, they have to approach the appropriate court of law in Bangalore city and not other mode. Hence, on this ground also chamber has no jurisdiction to conduct the arbitration on the basis of arbitration and counseling act of 1996."
27) Section 16(2) of the Arbitration Act, 1996, deals with competence of arbitral Tribunal to rule on its jurisdiction. It reads as under :
" 16(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator."
28) From the above provision of law, it is clear that, plea regarding arbitral Tribunal does not have jurisdiction under Section 16(2) shall not be raised later than the submission of the statement of defense and plea regarding arbitral Tribunal is exceeding the scope of its authority shall be raised during the arbital proceedings. Under Section 16(5), both pleas raised under Section 16(2) and (3) shall AS.52/2016 21 be decided by the arbitral Tribunal before proceeding with the arbitration proceedings.
29) In the statement of objection, Plaintif has taken specific plea that Arbitration Board has no jurisdiction to entertain the complaint of Defendant in view of the terms of Agreement. In spite of the specific plea of Plaintif, Arbitration Board, without deciding the plea raised by Plaintif, passed the award in contravention of Section 16(5) of the Arbitration Act, 1996.
30) In Raj International Vs. Tripura Jute Mills Ltd., reported in AIR 2008 (NOC) 2218 (Gauhati), it has been held that, 'without giving decision on the question of jurisdiction, the Arbitrator has no right to proceed for making an arbitral award. He may accept or reject the plea as raised before him, but he cannot be abstained from giving any decision on such question of jurisdiction.' AS.52/2016 22
31) Had Defendant issued notice to Plaintif expressing his intention to invoke the arbitration clause in the Articles of Association of Karnataka Film Chambers of Commerce and had Plaintif given his consent for the same, then, the matter would have been diferent. Further, if Plaintif had not raised the plea of jurisdiction in his statement of objection and proceeded with the arbitration proceedings, then, the matter would have been diferent. Under such circumstances, it would be said that, Plaintif has waived his right under the Agreement. In the instant case, no occasion ever arises. Defendant, in contravention of the specific terms of Agreement, took the dispute to the Karnataka Film Chamber of Commerce, which was stoutly objected by Plaintif in his statement of objection. Arbitration Board, without deciding the same, proceeded with the arbitration proceedings and passed the award. Certainly, award has been passed in violation of Clause-13 of the Agreement AS.52/2016 23 and in contravention of Section 16(5) of the Arbitration Act, 1996. In that view of the matter, it has to be said that award vitiates.
32) Apart from the above observation, if the award is looked into, it is crystal clear that, award substantiates nothing as to how the Arbitration Board arrived to the conclusion that Plaintif is liable to pay a sum of Rs.45,00,000/- to Defendant. Award runs over 3 pages. It is most relevant to go through the award in order to find whether award contains reasons. Award reads as follows :
" The Arbitration Board has decided today the 17th September 2014 for passing the Award on the complaint filed bythe Claimant M/s.K.Manju Cinemaas, Gandhinagar, Bangalore-560 009 against Sri.P.Ramesh Kumar, M/s.K.S.pcitures, Bangalore-560 046 (Respondnet to whom the Claimant has given a sum of Rs.1,50,00,000/-(Rs.One Crore Fifty lacks) for the distribution of film "ROMEO"
(Kannada). Out of the above amount of Rs.1,50,00,000/- (Rs.One Crore Fifty lacs) Rs.1,00,00,000/- (Rs.One Crore) is Non Refundable and the balance amount of Rs.50,00,000/- (Rs.Fifty lacs) is refundable, if the total amount is not covered after realization of the picture.
Clause No.3 of the Agreement mentions that the Distributor shall provide AS.52/2016 24 a statement of expenses to the Producer to enable him to know the balance amount receivable.
Clause No.6 of the Agreement also provides for the distribution commission of 15% on the total realization of the picture "Romeo".
Clause No.8 of the Agreement provides the said picture should not be sold to anybody for which the Complainant has been given the rights/or dubbing rights etc until the non refundable advance of Rs.1,00,00,000/- (Rs.One crore) is covered.
The Producer has not supplied any publicity material etc as per Clause No.11 of the Agreement.
The Producer has also agreed not to telecast the picture "Romeo" (Kannada) in any channels for a period of ONE year from the date of theatrical release. The Complainant M/s.K.Manju Cinemaas has given a statement of all the theatres where the picture "Romeo" was released. Further, the Complainant M/s.K.Manju Cinemaas have given a statement of expenses incurred for the release of the picture "Romeo" which amounts to Rs.58,36,923/- (Rs. Fifty eight lacs thirty six thousand nine hundred twenty three only) to the Producer, a copy of which is submitted along with the Complaint to the Arbitration Board.
M/s.K.Manju Cinemaas has claimed a total sum of Rs.1,73,36,923/- (Rs. One Crore Seventy three lacs Thirty six thousand nine hundred twenty three) excluding commission of 15% on the total sum of Rs.1,47,00,000/- (Rs. One Crore Forty seven lacs).
AS.52/2016 25 AWARD After discussing all the aspects of the case members have felt that the Respondent should pay the balance principal amount of Rs.26,36,923/- (Rs.Twenty six lacs Thirty six thousand nine hundred twenty three) and commission at 10% on the total ralization of Rs.1,47,00,000/- (Rs.One Crore Forty seven lacs) amounting to Rs.14,70,000/- (Rs. Fourteen lacs Seventy thousand) on the interest amount of Rs.3,93,077/- (Rs. Three lacs ninety three thousand Seventy seven) in all aggregating to Rs.45,00,000/- (Rs.Forty five lacs)."
33) Entire award makes it clear that, after referring certain clauses of Agreement, Arbitration Board passed the award without appreciating the contentions of Plaintif taken in his statement of objection. Most important is that, how the Arbitration Board has arrived to the conclusion that Plaintif is liable to the award is not clear. Without reference of any evidence and without appreciating the contentions of the parties, impugned award has been passed.
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34) Section 31(3) makes it mandate that, the arbitral award shall state the reasons upon which it is based. Section 28(3) specifies that "while deciding and making an award, the arbitral tribunal shall, in all cases take into account the terms of the contract and trade usages applicable to the transactions'.
35) In ONGC Ltd vs Saw Pipes Ltd, the Hon'ble Supreme Court was pleased to hold that :
"12. Under sub-section 1(a) of Section 28 there is a mandate to the Arbitral Tribunal to decide the dispute in accordance with the substantive law for the time being in force in India. Admittedly, the substantive law would include the Indian Contract Act, the Transfer of Property Act and other such laws in force." It is further held that :
"Under Section 31(3) the award has to be reasoned. The question is whether the award could be set aside if the Arbitral Tribunal has not followed mandatory procedure prescribed under sections 24, 28 or 31(3) which affects the rights of the parties. If it is held that such award could not be interfered, it would be contrary to basic concept of justice. If the Arbiral Tribunal has not followed the mandatory procedure prescribed under the Act, it would mean that it has acted beyond its jurisdiction and thereby the award would be patently illegal which could be set aside under Section 34."
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36) In Associate Builders, the Hon'ble Supreme Court was pleased to elucidate the same principles of law. It is held that, "contravention of substantive law of India, contravention of A & C Act, 1996 and contravention of the terms of the contract would amount to patent illegality, which is the fourth head of Public Policy of India."
37) In Som Datt Builders Ltd. Vs State of Kerala, [AWC (Supp) 1390 SC], the Hon'ble Supreme Court was pleased to hold that :
"25. The requirement of reasons in support of the award under section 31(3) of the Arbitration and Conciliation Act, 1996 is not an empty formality. It guarantees fair and legitimate consideration of the controversy by the Arbitral Tribunal. It is true that Arbitral Tribunal is not expected to write judgment like a Court nor it is expected to give elaborate and detailed reasons in support of its finding/s but mere noticing the submissions of the parties or reference to documents is no substitute for reasons which the Arbitral Tribunal is obliged to give. Howsoever, brief these may be, reasons must be indicated in the award as that would reflect thought process leading to a particular conclusion. To satisfy the requirement of section 31(3), the reasons must be stated by the Arbiral Tribunal AS.52/2016 28 upon which the award is based; want of reasons would make such award legally flawed".
38) It is, therefore, clear that, deciding the dispute in accordance with the terms of Agreement and reasons for the award are indispensable for Arbiral Tribunal and mandatory under the provisions of the Arbitration Act, 1996.
39) From the above discussion, it can be fairly said that, the Arbitration Board, without taking into consideration of Clause-13 of the Agreement passed the award in contravention of Section 16(5) and 28(3) of the Arbitration Act, 1996. Further, a cursory reading of the award makes it clear that, award is based on no reasons, which is indispensable under Section 31(3) of the Arbitration Act, 1996. In that view of the matter, it has to be said that award vitiates and same requires to be set aside; accordingly, I answer the above point in the affirmative.
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40) POINT NO.3 : In view of the foregoing discussion and answer to Points No.1 and 2, I proceed to pass the following :
ORDER (1) Suit filed by Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996; is hereby allowed.
(2) Impugned award dated 17.09.2014 passed in Arbitration Case No.AB/71/1730/14 by the Arbitration Board, Karnataka Film Chamber of Commerce, Bengaluru;
is hereby set aside.
(3) No order as to costs.
(Dictated to the Judgment Writer directly on computer, typed matter corrected and then pronounced by me in open court, on this the 3rd day of September, 2020.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge, Bengaluru City AS.52/2016 30