Madhya Pradesh High Court
M/S Master Point (Partnership Firm) ... vs Smt. Sandhya Chouhan on 27 August, 2024
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2024:MPHC-IND:24810
1 MP-2880-2024
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI
ON THE 27th OF AUGUST, 2024
MISC. PETITION No. 2880 of 2024
M/S MASTER POINT (PARTNERSHIP FIRM) THROUGH PARTNER
JAGDISH CHOUHAN AND OTHERS
Versus
SMT. SANDHYA CHOUHAN
Appearance:
Shri Abhinav Dhanodkar, learned counsel for the petitioners.
ORDER
Per: Justice Vivek Rusia This petition under Article 227 of the Constitution of India has been filed by the petitioners challenging the order dated 20.05.2024 passed by the learned Arbitrator in Arbitration Case No. 2 of 2022 (HC) whereby the application filed by the petitioners under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) seeking termination of arbitration proceedings has been dismissed.
2. The brief facts of the case are that in Arbitration Case No. 40 of 2021 decided on 28.10.2022, this Court appointed Mr. Justice I.S.Shrivastava (Retd.), Former Judge, High Court of M.P. to decide the dispute between the partners of petitioner No.1. Petitioner No.1 is the partnership firm created by way of oral agreement dated 31.03.2005. The Signature Not Verified Signed by: SREEVIDYA Signing time: 30-08- 2024 14:53:54 NEUTRAL CITATION NO. 2024:MPHC-IND:24810 2 MP-2880-2024 respondent became partner on 31.03.2005. A partnership deed was executed on 07.01.2010. Thereafter, one of the partners/petitioner No.2 got executed a dissolution deed dated 24.07.2017. The respondent served a notice dated 16.09.2018 demanding resolution of dispute by appointment of Arbitrator. After the aforesaid order dated 28.10.2022, arbitration proceedings were commenced by the learned Arbitrator. The present petitioners filed an application seeking direction to the respondent to produce the original deed of partnership which contained the arbitration clause. Vide order dated 25.04.2024, the learned Arbitrator allowed the application and directed either of the parties whosoever was in possession of the original partnership deed, to submit the same and thereafter, the same was to be sent to the Collector of Stamps, Indore for realization of property stamp duty and penalty. The respondent/claimant filed an application seeking consideration of the photocopy of the partnership deed as a secondary evidence. The said application was opposed by the petitioners. Vide impugned order dated 20.05.2024, the learned Arbitrator allowed the application filed by the respondent granting permission to exhibit the photocopy of the partnership deed dated 07.01.2010 as secondary evidence. Simultaneously, the Arbitrator also dismissed the application for sending the photocopy of the deed for the purpose of stamping. Petitioners filed an application under Section 32(2)(c) of the Act of 1996 contended that unless and until the agreement is duly stamped, the same cannot be acted upon in terms of Section 35 of the Indian Stamp Act, 1899, therefore, the proceedings be terminated. Vide impugned order dated 20.05.2024, the learned Arbitrator Signature Not Verified Signed by: SREEVIDYA Signing time: 30-08- 2024 14:53:54 NEUTRAL CITATION NO. 2024:MPHC-IND:24810 3 MP-2880-2024 has dismissed the said application. Hence, the present petition before this Court.
3. So far as the rejection of application filed under Section 32(2)(c) of the Act of 1996 filed on the ground that the agreement is liable to be stamped as per Section 35 of the Indian Stamp Act is concerned, this issue is no more res integra. The Apex Court in Curative Petition (C) No. 44 of 2023 in the matter of Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 reported in (2024) 6 SCC 1 has concluded that non-stamping or inadequate stamping is a curable defect. The agreements which are not stamped or inadequately stamped are inadmissible in evidence but such agreements are not rendered void or void ab initio or unenforceable.
4. So far as the admissibility of the photocopy of the agreement as a secondary evidence is concerned, the learned Arbitrator has held that the partnership deed is an admitted document and its contents are also admitted by both the parties, therefore, the arbitration can proceed. However, the photocopy of the partnership deed cannot be sent for impounding for recovery of the stamp duty.
5. The Apex Court in case of Bhaven Construction vs. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. And Anr., reported in (2022) 1 SCC 75, has held as under :
17. Thereafter, Respondent No. 1 chose to impugn the order passed by the arbitrator under Section 16(2) of the Arbitration Act through a petition under Article 226/227 of the Indian Constitution. In the usual course, the Arbitration Act provides for a mechanism of challenge under Section 34. The opening phase of Section 34 reads as Signature Not Verified Signed by: SREEVIDYA Signing time: 30-08- 2024 14:53:54 NEUTRAL CITATION NO. 2024:MPHC-IND:24810 4 MP-2880-2024 ''34. Application for setting aside arbitra award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3)'.
(emphasis supplied) The use of term 'only' as occurring under the provision serves two purposes of making the enactment a complete code and lay down the procedure.
18. In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337 , this Court referred to several judgments and held:
"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation - L. Chandra Kumar v. Union of India, (1997) 3 SCC 261. However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasijudicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.
(emphasis supplied) It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional Signature Not Verified Signed by: SREEVIDYA Signing time: 30-08- 2024 14:53:54 NEUTRAL CITATION NO. 2024:MPHC-IND:24810 5 MP-2880-2024 rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient.
19. In this context we may observe Deep Industries Limited v. Oil and Natural Gas Corporation Limited, (2019) SCC Online SC 1602, wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analyzed as under:
"16. Most significant of all is the nonobstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed [See Section 37(2) of the Act].
17. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us herein above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction."
(emphasis supplied)
20. In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or 'bad faith' on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage.......'' Signature Not Verified Signed by: SREEVIDYA Signing time: 30-08- 2024 14:53:54 NEUTRAL CITATION NO. 2024:MPHC-IND:24810 6 MP-2880-2024
6. In view of the foregoing discussions and principle laid down by Apex Court, we are of the considered opinion that this petition filed against an interlocutory order passed by the learned Arbitrator is not maintainable. After passing of the final award in the arbitration proceedings, either of the parties may challenge the same under Section 34 of the Act of 1996 raising all the grounds in accordance with law before the competent Court.
7. Accordingly, this petition stands dismissed. Needless to say that the petitioners shall be at liberty to challenge the final award in accordance with law, if so advised.
(VIVEK RUSIA) (BINOD KUMAR DWIVEDI)
JUDGE JUDGE
vidya
Signature Not Verified
Signed by: SREEVIDYA
Signing time: 30-08-
2024 14:53:54