Madras High Court
Chaudrhary Avadhesh Kumar vs Volleyball Federation Of India on 31 May, 2018
Author: M.Sundar
Bench: M.Sundar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 26.02.2019
Delivery on : 06.03.2019
CORAM
THE HON'BLE MR.JUSTICE M.SUNDAR
O.P.No.62 of 2019
and
A.No.771 of 2019
Chaudrhary Avadhesh Kumar ..Petitioner
Vs.
1.Volleyball Federation of India
Rep. By its General Secretary
Room No.72, Jawarharlal Nehru Stadium
Chennai – 600 003
2.Ramavtar Singh Jakhar
General Secretary VFI
Room No.72, Jawarharlal Nehru Stadium
Chennai – 600 003
3.Raj Kumar
Executive Vice President
Chairman – Core Committee IVL
Volleyball Federation of India
No.72, Jawaharlal Nehru Stadium
Chennai – 600 003
4.J.Nadrajan
Joint Secretary
Volleyball Federation of India
No.72, Jawaharlal Nehru Stadium
Chennai – 600 003
http://www.judis.nic.in
2
5.Indian Olympic Association
Rep. By its President
B.29, Olympic Bhavan
Qutub Institutional Area
New Delhi – 110 016
6. Indian Overseas Bank
Rep. by its Branch Manager
Purasaivakkam Branch
Chennai – 600 084 .. Respondents
Original Petition filed under Section 34 of Arbitration and
Conciliation Act, 1996 (Act 26 of 1996) to set aside the award passed by the
arbitrator dated 31.05.2018.
For Petitioner : Mr.T.N.Rajagopalan
for Mr.D.Vairamoorthy
For Respondents : Mr.J.Sivanadaraaj
for Mr.Adeesh Anto
JUDGMENT
An arbitral award dated 31.05.2018 (hereinafter 'impugned arbitral award' for brevity) made by a 'sole arbitrator' (hereinafter 'Arbitral Tribunal' for clarity) is assailed in the instant 'Original Petition' (hereinafter 'OP' for brevity) by the first respondent before the Arbitral Tribunal.
2. Challenge to impugned arbitral award in the instant OP is under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter 'A & C Act' for brevity).
http://www.judis.nic.in 3
3. As mentioned supra, first respondent before the Arbitral Tribunal has filed the instant OP and he is the sole petitioner. Claimants 1 to 4 before the Arbitral Tribunal are Respondents 1 to 4 respectively in the instant OP before me. Respondents 2 and 3 before the Arbitral Tribunal are Respondents 5 and 6 respectively in the instant OP before me. Instant OP, which has been presented in this Court on 29.08.2018, has been listed for admission before me.
4. Mr.T.N.Rajagopalan, learned counsel representing the counsel on record for sole petitioner and Mr.J.Sivanandaraaj, learned counsel representing the counsel for Caveators (to be noted, caveat has been lodged by Respondents 1 to 4) are before me.
5. I heard learned counsel for petitioner and learned counsel for caveators.
6. As I embark upon the exercise of testing the impugned arbitral award on the basis of arguments advanced before me as such an exercise will be within the contours of Section 34 of A & C Act, it is deemed appropriate to start with a prefatory note that Hon'ble Supreme Court in Fiza Developers [Fiza Developers and Inter-Trade Private Limited Vs. http://www.judis.nic.in 4 AMCI (India) Private Limited reported in (2009) 17 SCC 796] held that proceedings under Section 34 of A & C Act are summary in nature. This Fiza Developers principle was reiterated by Hon'ble Supreme Court in Emkay Global Financial Services Ltd. v. Girdhar Sondhi reported in (2018) 9 SCC 49 and while so reiterating Hon'ble Supreme Court held that Fiza Developers principle is a step in the right direction. This is the perimeter within which test of impugned arbitral award instant OP will perambulate. In this view of the matter, it will suffice to give a thumbnail sketch of facts and I do so under the caption 'Précis of facts' infra.
7. Precis of Facts 7 (i) 'Volleyball Federation of India' ('VFI' of brevity) is an entity, which has been registered as a Society under the Tamil Nadu Societies Act, 1975 (Act 27 of 1976). VFI was formed primarily with the objective of promoting the sport of Volleyball. VFI has a set of bylaws and suffice to say that it is duly registered with the jurisdictional Registrar.
7 (ii) Suffice to say that VFI is affiliated to 'Indian Olympic Association' ('IOA' for brevity ), which is Respondent No.5 before me and IOA in turn is affiliated to 'Federation of International Volleyball' ('FIVB' for brevity) and 'Asian Volleyball Federation' ('AVF' for brevity). All this is to nurture, develop and promote talent in this sport i.e., Volleyball. http://www.judis.nic.in 5 7(iii) Be that as it may, elections to various officers of VFI were held in the year 2013 and petitioner before me was elected as President. Respondents 2, 3 and 4 were elected as General Secretary, Executive Vice President and Joint Secretary respectively.
7(iv) While VFI was formed with the avowed objective of promoting the sport i.e., Volleyball in the Volleyball Courts, the office bearers of VFI sometime in February – March 2016, commenced instant litigation in Law Courts/Courts of Law. In other words, origin of this litigation was some time in February-March 2016 when the petitioner filed a suit in the Patiala House Court, Delhi and apparently it was brewing prior to February-March 2016 too.
7(v) Crux and gravamen of this dispute is that the petitioner, who was elected as President of VFI, was alleged to be acting in an autocratic manner giving a go by to democratic functioning. It was alleged that the petitioner had chosen sponsors for some events unilaterally and received certain sums of money from such sponsors, one such sum being to the tune of Rs.1 Crore and decision was subsequently thrust on VFI, is caveators' say.
7(vi) It can also be culled out from the case file placed before me that the petitioner made public announcements and held a press http://www.judis.nic.in 6 conference in Delhi on 24.02.2016 making some unilateral announcements including an announcement pertaining to sponsorship. This prompted the other office bearers to react. Respondent No.2 before me in his capacity as Secretary had issued a show-cause notice to the petitioner questioning his conduct and he also issued a notice dated 25.02.2016 advancing an Executive Committee meeting scheduled to be held on 11.03.2016 to 03.03.2016 at Chennai. Agenda qua this meeting included taking appropriate course of action against the petitioner. In the show-cause notice, second respondent before me in his capacity as General Secretary of VFI has laid charges, called upon the petitioner to respond to the same in writing by 03.03.2016 and had afforded an opportunity to petitioner to participate in the emergent Executive Committee Meeting scheduled to be held 03.03.2016 at Chennai. However, petitioner did not respond to the show-cause notice, but reacted by issuing a barrage of suspension orders dated 26.02.2016 wherein and whereby inter-alia all the core committee members who participated in a meeting held on 22.02.2016 were suspended. Further, out of 29 state units, 10 state units were suspended. Opposition to such action is by saying that the power of suspending a member is vested in the General Council only and all suspension proposed by the President must be confirmed by the Executive committee and the final decision therein is to be arrived at by the general council. http://www.judis.nic.in 7 7(vii) In the interregnum, as mentioned supra, petitioner had approached Patiala House Court, which vide an order dated 02.03.2016 directed the petitioner to participate in the emergent Executive Committee meeting to be held on 03.03.2016 at Chennai. Meanwhile, petitioner convened a meeting in Nagpur prompting VFI to initiate legal proceedings in Madras High Court i.e., this Court.
7(viii) This Court vide order dated 23.09.2016, by consent of all the parties concerned, appointed a retired Hon'ble Judge of this Court as Sole Arbitrator to resolve the disputes. Relevant portion of the order dated 23.09.2016 made by this Court has been extracted in the impugned arbitral award and that relevant portion of the order of this Court reads as follows:
'6.In view of the fact that 11 parties are represented by counsels, I have put to them whether the matter could be referred to an Arbitrator, appointed by this Court and, consequently, have the applications placed before the Court appointed Arbitrator for disposal under Section 17 of the Arbitration and Conciliation Act, 1996 (in short '1996 Act') “6.1: Counsel for Parties are agreed that in order to bring the main dispute to a quick resolution, this Court should proceed to appoint an Arbitrator, as it would be in the interest of all parties. Counsels are also agreed that the captioned applications can be placed before the Court appointed Arbitrator, who could then proceed to dispose of http://www.judis.nic.in 8 the captioned application by exercising power under Section 17 of the 1996 Act.”
7.Accordingly, Hon'ble Mr.Justice K.Chandru, former Judge of this Court, is appointed as an Arbitrator.
7.1: The captioned applications will be placed before the learned Arbitrator. The learned Arbitrator, after giving due opportunity to the contesting parties, will rule on the applications.” 7.5: “The learned Arbitrator will fix his own fee. In addition to fee, the learned Arbitrator will also be paid expenses, albeit, on actual basis. The burden fee and expenses will be borne in equal proportion by the contesting parties, which will exclude IOB and IOA.” 7(ix) Thereafter, the petitioner before me filed O.P.No.240 of 2017 inter alia with a prayer to terminate the mandate of the aforesaid sole Arbitrator appointed by Court order dated 23.09.2016. This O.P.No.240 of 2017 filed by the petitioner before me along with another OP with a similar prayer being O.P.No.239 of 2017 and Application Nos.1754 and 1755 of 2017 therein came to be disposed of by a Hon'ble single Judge vide a common order dated 29.08.2017. Suffice to say that the petitions were dismissed.
It is not in dispute before me that this order dated 29.08.2017 made in O.P.Nos.239 of 2017 and 240 of 2017 seeking to terminate the mandate of the sole arbitrator has become final. Under such circumstances, when the Arbitral Tribunal entered upon reference and commenced arbitral proceedings, certain interlocutory applications were taken out and an order http://www.judis.nic.in 9 was passed on 03.10.2016. Two other interlocutory orders made by the Arbitral Tribunal and the same are dated 19.10.2016.
7(x) Aforesaid three interlocutory orders were carried to this Court by the petitioner before me by way of three Civil Miscellaneous Appeals being C.M.A.Nos.2823 to 2825 of 2016. At the time of inception of the three Civil Miscellaneous Appeals, an interim order was granted owing to which the proceedings of the Arbitral Tribunal were stayed. However, ultimately all three Civil Miscellaneous Appeals came to be dismissed by a common order dated 06.04.2017 by another learned Hon'ble single Judge of this Court. To be noted, this is a reported judgment and it has been reported in 2017 (3) CTC I [Shri Chaudhary Avadhesh Kumar Vs. Volleyball Federation of India].
7(xi) Thereafter, the Arbitral Tribunal proceeded with the arbitration and ultimately passed the impugned arbitral award.
7 (xii) A perusal of the impugned arbitral award reveals that as many as 84 documents were filed on the side of the claimant and four documents were filed on the side of the respondent. No oral evidence was let-in.
7(xiii) Pivotal question or in other words bone of contention which is the nucleus of the lis before the Arbitral Tribunal, at the risk of simplification can be put in a nutshell as 'correctness or otherwise of http://www.judis.nic.in 10 calling of the meeting on 03.03.2016 and the decisions taken therein'. Be that as it may, 11 issues were framed by the Arbitral Tribunal. I deem it appropriate to extract those 11 issues to highlight that the entire arbitral proceedings are pivoted around the meeting held on 03.03.2010 and the decision taken therein regarding removal of the petitioner before me from the post of President of VFI. The 11 issues read as follows:
'1. Whether the President of the Volleyball Federation of India can be removed during the mid-term of his Office. If so, whether the 1st respondent should be treated as having been removed from his office effective from 03.03.2016 and whether the removal of the 1st respondent from his position as the president of the federation was done by following the due process prescribed under the bye-laws?
2. Whether the meetings dated 09.11.2016 and 22.02.2016 were conducted within frame work of the constitution of the Federation (VFI) and whether the President has the power to overrule the decision taken by the core committee on 22.02.2016 constituted by the Executive Committee?
3. Whether the President has been empowered by the byelaws to suspend any erring members and whether such procedure was duly followed for the suspension of office bearers on 26.02.2016?
4. Whether the demand for restoration of status quo as on 03.03.2016 made by the claimant so as to nullify all announcements, communications, resolutions, decisions and actions of the 1st respondent as and from 03.03.2016 and for indemnification of the first claimant against all claims arising therefrom is justified?
5. Whether the 1st Respondent's action in freezing the bank http://www.judis.nic.in 11 account of Volleyball Federation of India was bonafide, legal and whether the President has the power to freeze or curb the accounts of the federation in the event of mishap/mismanagement of the federation so as to keep the integrity of the federation?
6. Whether the Respondent has the power / authority to operate a new Bank Account in the name of the Volleyball Federation of India other than the four official accounts maintained hitherto and whether any directions to close the bank account without any liability to the Volleyball Federation of India should be granted?
7. Whether the Respondent has the right to print and use stationery other than the official stationery maintained at the registered office of Volleyball Federation of India?
8. Whether the demands of the claimants for the declaration of the results of elections held on 11.04.2016 under the supervisions of a retired judge of the High Court and for grant of permission for the office bearers to assume office are justified?
9. Whether the demand of the claimant for a permanent injunction restraining the 1st respondent from violating the resolutions of Claimant No.1 dated 03.03.2016 and 11.03.2016 by holding himself as the President of Volleyball Federation of India (registered under TN Societies Registration Act, 1976 with Regd. No.110/1987) as and from 03.03.2016 is justified?
10. Whether the President was empowered as on 02.01.2016 to negotiate and finalize any agreements /contracts with regards to the Indian Volleyball League on behalf of the Federation?
11. Whether parties are entitled for costs of the proceedings and if so to fix the quantum and its liability?
http://www.judis.nic.in 12 7(xiv) From an examination of the impugned arbitral award, it comes to light that the aforesaid 11 issues have been elaborately discussed and answered by the Arbtiral Tribunal.
8. The grounds on which the impugned arbitral award was assailed, the rival submissions and discussion on the same shall all be set out infra under the caption 'Dispositive Reasoning'.
9. Dispositive Reasoning 9(i) Mr.T.N.Rajagopalan, learned counsel representing the counsel on record for the petitioner, conscious of the obtaining legal position that this is a petition under Section 34 of A & C Act, which is neither an appeal nor a revision/review, but a mere challenge to impugned arbitral award, which has to be made by perambulating within the contours of Section 34 of A & C Act submitted that he is assailing the impugned arbitral award on two grounds which neatly get packed in two specific slots which can be described as pigeon holes of Section 34. According to learned counsel for petitioner, one is a jurisdictional issue and the other is an issue touching upon impunged arbitral award being in conflict with public policy. As far as jurisdictional issue is concerned, learned counsel submitted that the composition of the Arbitral Tribunal was not in accordance with the agreement between the parties. In other words, learned counsel submitted http://www.judis.nic.in 13 that he is assailing the jurisdiction of the Arbitral Tribunal and this is under sub-clause (v) of Clause (a) of Sub-Section (2) of Section 34 of A & C Act. It is in other words, under Section 34(2)(a)(v) of A & C Act. The second challenge is primarily predicated on the ground that adequate notice (as required under the bylaws) was not given for the contentious meeting convened on 03.03.2016 and therefore, it is a meeting held in breach of codified bylaws of a registered society. Holding a meeting held in breach of codified bylaws of a registered society, according to learned counsel, is in contravention with fundamental policy of Indian law and in conflict with the public policy of India. In other words, this second ground on which the challenge to the impugned arbitral award is predicated can be snugly fitted into Clause (ii) of Explanation 1 of sub-clause (ii) of Clause (b) of sub- section (2) of Section 34 of A & C Act. In other words, this second ground of challenge is under Clause 34 (2)(b)(ii) r/w.Sub-section (ii) Explanation 1.
9(ii) With regard to the first ground of challenge, which is a jurisdictional issue, Mr.J.Sivanadaraaj, learned counsel for caveator submits that such a challenge ought to have been made before the Arbitral Tribunal under Section 16 of the A & C Act and therefore, the petitioner cannot now be heard to contend that the Arbitral Tribunal did not have jurisdiction. Be that as it may, learned counsel for petitioner, drew my attention to the bylaws of VFI, particularly Article XVIII and to state with http://www.judis.nic.in 14 specificity, sub-article (b) therein captioned 'Disputes / Conflict within the Federation', which reads as follows:
'(b) Disputes / Conflict within the Federation:
All unresolved disputes arising between the Federation and its constituent members or between the office bearers of the Federation and the Federation or between the constituent members inter-se or between the office bearers of the Federation inter-se subject to the provisions of the by- laws of the Federation shall be referred to the IOA for settlement under the Arbitration and Conciliation Act, 1996. For this purpose the IOA shall elect a panel of arbitrators to be decided by the IOA General Assembly at their Annual General Meeting, out of whom parties to the disputes in the Federation will select one arbitrator each and third arbitrator, out of the said panel will be mutually agreed upon by the two arbitrators. The arbitration proceedings should be completed within the period specified in the Arbitration Act, or within the time extended by the arbitrators with the consent of the parties (Amended after decision taken in the Annul General Meeting of the Federation held at Nagpur, Maharashtra on 13th July 2014).
The constituent members shall be deemed to continue its membership in the Federation on the specific condition that it voluntarily surrenders its right of seeking redress in any Court of law and undertake to accept the decision of the arbitrator subject to the provisions of Arbitration Act.' 9(iii) Learned counsel adverting to the aforesaid clause in the bylaws submits that the said clause cannot be given a go by and constitution of a one member arbitral Tribunal in complete derogation of same is clearly in conflict with fundamental policy of India. It was also submitted that the petitioner had not given consent for appointment of the sole arbitrator vide order dated 23.09.2016 made by this Court, which has been extracted http://www.judis.nic.in 15 supra.
9(iv) I shall deal with jurisdictional issue first. 9(v) The question whether the petitioner can raise a jurisdictional issue for the first time in proceedings under Section 34 of A & C Act without raising the same before the Arbtiral Tribunal, in my considered view is no more res intergra in the light of the authoritative pronouncement in this regard by Hon'ble Surpeme Court in Lion Engineering Case (M/s.Lion Engineering Consultants Vs. State of M.P & Ors reported in 2018 SCC Online SC 327). To be noted, in Lion Engineering Case, Hon'ble Supreme Court specifically set aside Paragraph concerned in MSP Infrastructure Ltd. vs. Madhya Pradesh Road Development Corporation Ltd. reported in (2015) 13 SCC 713. Relevant paragraph in Lion Engineering reads as follows:
'5. We may quote the observations from M/s MSP Infrastructure (supra):
“16. It is not possible to accept this submission. In the first place, there is nothing to warrant the inference that all objections to the jurisdiction of the Tribunal cannot be raised under Section 16 and that the Tribunal does not have power to rule on its own jurisdiction.
Secondly, Parliament has employed a different phraseology in Clause (b) of Section 34. That phraseology is "the subject matter of the dispute is not capable of settlement by arbitration." This phrase does http://www.judis.nic.in 16 not necessarily refer to an objection to 'jurisdiction' as the term is well known. In fact, it refers to a situation where the dispute referred for arbitration, by reason of its subject matter is not capable of settlement by arbitration at all. Examples of such cases have been referred to by the Supreme Court in Booz Allen and Hamilton Inc. V/s. SBI Home Finance Limited (2011) 5 SCC 532. This Court observed as follows:-
"36. The well-recognised examples of non-
arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grants of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
The scheme of the Act is thus clear. All objections to jurisdiction of whatever nature must be taken at the stage of the submission of the statement of defence, and must be dealt with under Section 16 of the Arbitration Act, 1996. However, if one of the parties seeks to contend that the subject matter of the dispute is such as cannot be dealt with by arbitration, it may be dealt under Section 34 by the Court.
http://www.judis.nic.in 17 9(vi) In the light of aforesaid authoritative pronouncement of Hon'ble Supreme Court in Lion Engineering, petitioner is certainly entitled to raise jurisdictional issue even without raising it before the Arbitral Tribunal.
9(vii) Be that as it may, in the instant case, in the light of the prior proceedings, this challenge to jurisdiction of the Arbitral Tribunal by the petitioner does not stand a moments scrutiny. As mentioned supra, the petitioner had filed O.P.No.240 of 2017 with a specific prayer to terminate the mandate of the sole Arbitrator appointed by orders of this Court and after full contest O.P.Nos.239 and 240 of 2017 came be to be dismissed by this Court on 29.08.2017. It is not in dispute before me that this order has become final and has been given legal quietus. This order has been made by another Hon'ble single Judge of this Court. As another Hon'ble single of this Court has gone into the question of a prayer of terminating the mandate of the sole arbitrator and negatived it by a detailed order after full contest, as a matter of sound legal principle, the petitioner cannot raise it again more so as it has been given quietus. It is not only a matter of legal principle, but it is also a matter of judicial discipline that I cannot examine the jurisdictional issue when another Hon'ble learned single Judge has passed an order after full contest negativing the petitioner's prayer to terminate the mandate of the sole arbitrator. This is more so, as there is no dispute or disagreement that the order of the learned single Judge has been given legal quietus. To be noted, in the unsuccessful challenge to the http://www.judis.nic.in 18 interlocutory orders made by the petitioner before me, this Court while dismissing the Civil Miscellaneous Appeals vide order dated 06.04.2017 reported in 2017 (3) CTC I has clearly held that the petitioner herein cannot be permitted to ride piggyback on an appeal against interlocutory orders under Section 17 and raise a plea regarding challenge to the legality of the constitution of the Arbitral Tribunal without taking resort to Section 16. This is contained in Paragraph 21 of the reported judgment and the same reads as follows:
'21. In essence the Appellant has lost all the opportunities to challenge the legality of the constitution of the Arbitral Tribunal and should not contend with this reality. And, by opting not to exercise his right under Section 16, there is no order that is now available for him to challenge under Section 37. What the Appellant cannot achieve directly be cannot be permitted to achieve indirectly, and any attempt to rise piggyback on an Appeal against an Interim order under Section 17 is an abuse of judicial process.' 9(viii) Be that as it may, this Court is clear in its mind that Lion Engineering Consultants Case, which is the obtaining position of law makes it clear that it is open to the petitioner under Section 34 of A & C Act to raise a challenge touching upon jurisdictional issue without resorting to Section 16, but in the instant case as the petitioner's OP with a prayer to terminate the mandate have been dismissed by an order of Hon'ble single Judge after full contest, it does not carry the petitioner any further .
http://www.judis.nic.in 19 Above said reference to Paragraph 21 is only for the limited purpose of saying that even after dismissal of petitioner's prayer to terminate the mandate vide order dated 29.08.2017 in O.P.No.240 of 2017, petitioner has made an attempt to raise it again in Civil Miscellaneous Appeals against interim orders passed by the Arbitral Tribunal.
9(ix) There is one more reason as to why this Court is unable to persuade itself with regard to the plea of the petitioner that the consent for appointment of sole arbitrator, which was given in Court proceedings, was given by his Counsel without his mandate. In State of Maharashtra Vs. Ramdas Shrinivas Nayak and Another reported in (1982) 2 Supreme Court Cases 463 (also popularly known as A.R.Antulay's case), Hon'ble Supreme Court laid down the time honoured principle that when a consent is given in a Court of law in the course of legal proceedings and that the same is recorded, if the litigant is aggrieved, it is for the litigant to apply to the judge concerned without delay and ask for rectification or review of the judgment. To be precise, this principle was laid down in Sarat Chandra Maiti Vs. Bibhabatti Debi reported in AIR 1921 Cal 584 and it was reiterated /restated in A.R.Antulay's case. In the instant case, petitioner's consent for appointment of sole arbitrator has been recorded by this Court (my predecessor Hon'ble Judge) vide order dated 23.09.2016 in A.No.3129 of 2016 and O.A.Nos.480 and 123 of 2016 and A.No.1090 of 2016 and the relevant portion reads as follows:
http://www.judis.nic.in 20 '6.In view of the fact that all parties are represented by counsels, I have put to them whether the matter could be referred to an Arbitrator, appointed by this Court and, consequently, have the applications placed before the Court appointed Arbitrator for disposal under Section 17 of the Arbitration and Conciliation Act, 1996 (in short 'the 1996 Act')' 9(x) There is absolutely nothing that is being put forth by the petitioner to say what prevented the petitioner from seeking rectification or review if he was aggrieved by such consent. In my considered view, if litigants are allowed to raise issues that a consent or concession was given by counsel without mandate belatedly, more so after seeing that the consequence / effect of such consent /concession is not to the litigants' liking, it will lead to a situation where absolute verity attached to orders of Court will get diluted and it will become a vehicle for animadversion of orders of Court.
9. (xi) This douses the fire and heat in the arguments regarding jurisdiction and constitution of the Arbitral Tribunal and takes us to the issue regarding sufficient notice being given.
9 (xii) Learned counsel for petitioner drew my attention to the statement of defence dated 26.10.2016 filed before the Arbitral Tribunal by the petitioner before me. Learned counsel drew specific reference to http://www.judis.nic.in 21 Paragraph 18 of the Statement of Defence and submitted that the General Secretary of BFI fudged the date, he sent the circular on 26th and put 25th as the date in the letter thereby giving only 6 days against the minimum 7 days pre-requisite for the emergent Executive meeting as per the bylaws. I deem it appropriate to extract the relevant part of Paragraph 18, which reads as follows:
'18........I submit that the action of the General Secretary in sending the notice for a Special General Meeting/Extra Ordinary Meeting is bad in law and again stands as a testament to his ill intensions. Further, it is submitted that the Secretary General fudged the date as he sent this circular on 26th and put 25th on the letter. Thus giving only 6 days against the minimum 7 days pre requisite for the Emergent Executive Meeting as per the Byelaws.......' 9 (xiii) Learned counsel for petitioner submitted that BFI is a registered society and its bylaws are registered with the jurisdictional Registrar and therefore, there could be no derogation of the same.
9 (xiv) In my considered view, a set of bylaws of a society is a contract between the members of the society and in other words, various bylaws are covenants in a contract between the members of the society.
The question whether the date was fudged is a factual issue which turns on appreciation of evidence and in the absence of the petitioner being able to show any great prejudice having been caused to the petitioner even if this be true, in my considered opinion it would not be appropriate to resort to http://www.judis.nic.in 22 evidence in a Section 34 proceedings in this case. In other words, I make it clear that the petitioner is unable to show that any great prejudice has been caused to the petitioner. To put it differently, even if it is established that date has, in fact, been fudged by the General Secretary, it is not the case of the petitioner that prejudice has been caused to the petitioner owing to that one day. To be noted, as rightly pointed out by learned counsel for caveators there are no pleadings in this regard in instant OP. Resorting to evidence Section 34 being a rare exception, I am of the considered view that the petitioner has not made a ground for interference in this regard.
9(xv) Before adverting to the plea of being in contravention with fundamental policy of Indian law two aspects have to be looked into with regard to lack of adequacy of notice argument. The first aspect pertains to whether any prejudice has been caused to the petitioner owing to inadequacy of the number of days in issuing notice. As would be evident from the pleadings of the petitioner, extracted and reproduced supra, particularly Paragraph 18 of the petition, it will be clear that it is petitioner's specific case that he was given only 6 days notice against requisite 7 days for emergent executive meetings. This plea is made by relying on bylaws of VFI. While dealing with a complaint of inadequacy of notice, qua number of days under Section 171 (1) of the Companies Act for Annul General Meetings ('AGMs' for brevity), Hon'ble Justice Pendse http://www.judis.nic.in 23 speaking for a Division Bench of Bombay High Court in Shailesh Harilal Shah Vs. Matushree Textiles Limited held that a party complaining of insufficient duration of notice should plead prejudice and it is thereafter that the Court will grant relief if such prejudice is established. To be noted, this view was taken while holding that Section 171(1) of Companies Act and notice thereunder for AGMs are directory. This view in Shailesh Harilal Shah case was reiterated in Mather And Platt Fire Systems Case, which was penned by Hon'ble Dr.Justice D.Y. Chandrachud sitting as a Judge of the Hon'ble Bombay High Court (as his lordship then was). In Platt Fire Systems case reiteration of Shailesh Harilal Shah principle is articulated in Paragraph 16 of Platt Fire Systems Case and relevant paragraph is Paragraph No.16, which reads as follows:
'16. In these circumstances, the allegation of an absence of notice is without any merit whatsoever. In such cases, unless there is material before the Court to demonstrate that by a course of devious conduct, the Company has deliberately avoided to transmit individual notices, isolated instances cannot lead to the invalidation of a meeting held to consider a scheme propounded under Section 391 of the Companies' Act, 1956. In Shailesh Harilal Shah v. Matushree Textiles Ltd. , a Division Bench of this Court formulated the principle which must apply in such cases. While holding that the provisions of Section 171(1) of the Companies' Act, 1956 were directory and not mandatory, the Court held as as follows :
The Court will not proceed to invalidate the proceedings on the ground of insufficient duration of notice only when it is established that defect is not intentional or deliberate and no prejudice whatsoever is caused to a particular case by shorter duration of notice. It would be necessary for a http://www.judis.nic.in 24 party complaining of insufficient duration of notice to plead prejudice caused and in case such prejudice is established, then even though the provision is directory, the Court would grant the relief.
The Division Bench held that to hold otherwise would lead to very unusual results making it difficult for large public Companies to effectively function.
9(xvi) To be noted, as already mentioned elsewhere in this order in the instant case, there is not even a plea of prejudice and therefore, the notice period being short by one day does not advance the case of the petitioner any further in the instant case. To be noted, this is by testing the plea of inadequacy on a demurrer.
9(xvii) The second aspect of the matter is regarding how the number of days to be given while issuing a notice is to be computed. Though the learned cousnel for caveators pressed into service Saketh India Limited and others vs M/S. India Securities Limited reported in AIR 1999 SC 1090 in this regard, in the light of complete absence of plea of prejudice being caused owing to inadequacy of notice, it is not necessary to delve into this second aspect of the matter.
9(xviii) Reverting to fundamental policy of Indian law contravention plea, as a point has been raised, I deem it appropriate to refer to the celebrated judgment of the Hon'ble Supreme Court in ONGC Ltd. v. Western Geco International Ltd., reported in (2014) 9 SCC 263. Three http://www.judis.nic.in 25 fundamental juristic principles so laid down are judicial approach, adherence to principles of natural justice and perversity /irrationality. The above said three principles have been reiterated in Associate Builders case [Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49]. With regard to judicial approach Hon'ble Supreme Court held that an arbitral award should show fidelity qua judicial approach. With regard to natural justice, it was held by Hon'ble Supreme Court that it should be tested on the time honoured audi alteram partem principle and as to whether sufficient reasons have been given in the arbitral award.
With regard to third distinct juristic principle of irrationality/perversity, Hon'ble Supreme Court held that the same has to be tested on the time honoured Wednesbury principle of reasonableness. In other words, litmus test is whether the arbitral award passes the muster of Wednesbury principle of reasonableness.
9 (xix) Besides all this, it is also to be noticed that a careful reading of the impugned arbitral award, the orders of two different learned single judges of this Court made in O.P.Nos.239 & 240 of 2017 as well as C.M.A.Nos.2823 to 2825 of 2016 which have been alluded to supra reveal that both Hon'ble Judges have all opined that petitioner before me in instant OP, which is part of a barrage of legal proceedings is only attempting to delay the proceedings and preventing the same from being http://www.judis.nic.in 26 carried to its logical end. Expeditious disposal and minimum judicial intervention are two pillars of 'Alternate Dispute Absolution Mechanism' ('ADR Mechanism').
10. Conclusion:
10 (i) In the light of all that have been set out inter alia under the caption 'Dispositive Reasoning', I have no hesitation in coming to the conclusion that this OP is bereft of merits and it deserves to be dismissed.
10(ii) Though under normal circumstances, the barrage of legal proceedings and petitioner's tenacious effort to delay, if possible, derail the proceedings, calls for imposition of costs, I refrain from imposing costs owing to the nature of submissions made before me and the trajectory of hearing in instant OP.
11. Decision This petition is dismissed. No costs. Consequently, connected application is closed.
06.03.2019 Speaking order Index: Yes gpa http://www.judis.nic.in 27 M.SUNDAR.J., gpa Pre-delivery order in O.P.No.62 of 2019 06.03.2019 http://www.judis.nic.in