Madras High Court
Maruthi Apartments Owners/Residents ... vs K.V.Narasimhan on 21 March, 2019
Author: M.Sundar
Bench: M.Sundar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated :21.03.2019
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.Diary No.116747 of 2018
Maruthi Apartments Owners/Residents Welfare Association
Represented by Secretary P.R.Perumal,
14, Temple Avenue, Srinagar Colony,
Saidapet, Chennai – 600 015. .. Petitioner
vs.
K.V.Narasimhan,
S/o. K.Veeraraghavachariar,
Flat No.3-A, No.6, North Avenue,
Srinagar Colony, Saidapet,
Chennai – 600 015. ... Respondent
Original Petition filed under Section 34 of the Arbitration and Conciliation
Act, 1996, Read with Order 14 Rule 8 of the O.S rules, pleased to
1) To set aside the exparte award dated 04.02.2017
2) Direct Respondent to pay the cost of the petition and
3) Pass such further or other orders as may be deemed fit and Proper and
thus render justice.
For Petitioners : Mr.K.V.Muthu Visakan
http://www.judis.nic.in
2
ORDER
Instant 'Original Petition' ('OP' for brevity) has been presented in this Court on 22.10.2018 assailing an 'arbitral award dated 04.02.2017' (hereinafter 'impugned award' for brevity) made by an 'Arbitral Tribunal' ('AT' for brevity) constituted by a sole arbitrator. To be noted, sole arbitrator is a retired District Judge.
2. Instant OP has been filed under Section 34 of A & C Act. Section 34 of A & C Act is under Chapter VII captioned 'RECOURSE AGAINST ARBITRAL AWARD' . A perusal of Section 34 of A & C Act reveals that recourse to a Court against an arbitral award may be made by an application. Section 34 itself is captioned 'Application for setting aside arbitral award'. Be that as it may, the nomenclature ' Original Petition' is being assigned by Registry to proceedings under Section 34 of A & C Act and therefore, I am referring to the instant proceedings as 'OP' for the sake of convenience and clarity.
3. Registry has placed a Maintainability Note before this Court, which reads as follows:
'It is most respectfully submitted that M/s.K.V.Muthu Visakan, Counsel for petitioner has filed Original Petition bearing Diary No.116747 of 2018 for setting aside the award dated 04/02/2017.
http://www.judis.nic.in 3 It is submitted that the arbitral award was dated 04/02/2017, and the time limit to file a petition to set aside the award ended on 03/06/2017. But the petitioner filed the petition on 22/10/2018 only. Therefore the petitioner has not filed the petition within the time allowed U/s. 34 of Arbitration and Conciliation Act, 1996.
Proviso to the Section 34 of the Arbitration and Conciliation Act, 1996 reads as follows:-
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.
In the circumstances, the Registry entertains a doubt about the petition which has been filed on 22/10/2018 after a period of 120 days (90 days + 30 days) i.e., beyond the time prescribed under the Act.
“It is submitted that the petitioner did not receive a signed copy of the Arbitration award. The Arbitrator did not comply with the provisions under Sec.31(5) of the Act. The Arbitrators Address is also not found in the award. The respondent have filed execution petition before the IX Assistant City Civil Court Chennai and taking emergent steps to levy execution. Hence, the petitioner has filed the above O.P within the time stipulated in Sec.34(3) of the Arbitration and Conciliation Act, 1996.
The petitioner further submits that he is filing the above O.P with a certified copy of Arbitration award received on 21.08.2018 from the Hon'ble IX-Asst. City Civil Court, Chennai. The above O.P is in time from the date of receipt of the certified copy of the Arbitration award from the Hon'ble http://www.judis.nic.in 4 IX-City Civil Court, Chennai.
Therefore, it is prayed that this Court may be pleased to direct the registry to number the O.P.D.No.11674 of 2018”.
In the above circumstances, it is most respectfully submitted for orders as to whether the Original Petition Diary No.116747 of 2018 may be pleased for maintainability before the Hon'ble Court.'
4. Before proceeding with the matter any further, this Court finds it necessary to make it clear that Registry has taken 3 months from the date of the impugned award as the period of limitation. In paragraph 2 of the Maintainability Note, Registry has noted that arbitral award i.e, impugned award is dated 04.02.2017 and the time limit to file a petition to set aside the impugned award ended on 03.06.2017. This is plainly incorrect. The reckoning date for computing limitation for a petition under Section 34 of A & C Act is not the date of the award, but it is the date of receipt of the award by the party filing an application under Section 34 of A & C Act. This is amply clear from a reading of Sub-Section (3) of Section 34 of A & C Act together with the proviso there to. Section 34(3) reads as follows:
34(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 http://www.judis.nic.in 5 was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.'
5. To this extent, the maintainability note is based on a wrong premise, but unfortunately, the matter does not end there for the petitioner.
6. Petitioner has to necessarily mention the date of receipt of the arbitral award, i.e., impugned award.
7. As would be evident from the maintainability note and compliance made by the petitioner which has been extracted therein, it is petitioner's case that AT did not deliver the impugned award to the petitioner and that the petitioner came to know about the impugned award only on receipt of notice from the Executing Court when E.P.No.3047 of 2017 was launched by the respondent in the instant OP (claimant before AT) for executing the impugned award. To be noted, this Court is informed that E.P.No.3047 of 2017 is on the file of IX Assistant Judges Court, City Civil Court, Chennai. From the case file placed before me, it comes to light that the aforesaid 'Execution Petition' ('EP' for brevity) is dated 06.10.2017. The exact date on which notice in the EP was received by the petitioner in instant OP has not been mentioned, but the seal http://www.judis.nic.in 6 of the Executing Court reveals that application for certified copy has been made on 03.08.2018, stamps have been called for on 21.08.2018, stamps have been deposited on the same day and certified copy has also been delivered on the same day i.e., 21.08.2018.
8. Strictly speaking, the petitioner should be able to give the exact date on which notice was received from the Executing Court in the E.P. However, the petitioner says that petitioner entered appearance on 15.03.2018 in EP.
9. Considering the strict time lines provided under Section 34(3), petitioner should have acted immediately on receipt of notice from the Executing Court. However, as the exact date on which the petitioner received notice from the Executing Court is not placed before this Court, I am not delving into that aspect of the matter. However, I examined whether there is any delay on the part of the petitioner between the date of entering appearance in EP and the date on which the petitioner applied for a certified copy of the impugned award.
10. However, in an affidavit dated 25.02.2018 filed in this Court vide Diary No.7000 (Diary No.7000 dated 25.02.2018), petitioner has made an averment in paragraph 9 to the effect that petitioner has sworn to an affidavit http://www.judis.nic.in 7 saying that he entered appearance in the execution petition i.e., EP on 15.03.2018. However, as mentioned supra, an application for certified copy of the impugned award has been made in the Executing Court only on 03.08.2018 more than 4 ½ months later. This period between 15.03.2018 and 03.08.2018 itself completely subsumes and consumes 3 months and 30 days provided under Section 34(3) and proviso thereto. Therefore, the petitioner can certainly not claim benefit of date of delivery of the certified copy of the order by the Executing Court i.e., 21.08.2018 and say that this should be the reckoning date for computing limitation period for instant OP.
11. However, without allowing the matter to rest here, owing to the facts of the case and owing to the nature of the submission made, this Court embarked upon the exercise of ascertaining whether the impugned award has been delivered to the petitioner by AT.
12. Mr.K.V. Muthu Visakan, learned counsel on record for petitioner is before this Court and it is learned counsel's pointed submission that impugned award was not delivered on the petitioner. In other words, it is his say that there is an infarct of Section 31(5) of A & C Act.
13. Earlier proceedings of this Court dated 08.02.2019, 25.02.2019 and 28.02.2019 read as follows:
Proceedings dated 08.02.2019 http://www.judis.nic.in 8 'Mr.K.Muthu Visakan, learned counsel for petitioner, who is before this Court submits that no notice of arbitral proceedings was served on the petitioner. It is also submitted that the arbitral award was never served on the petitioner. It is petitioner's specific case that there is an infraction of Section 31(5) by the arbitral Tribunal.
2. Learned counsel submits that petitioner came to know about the arbitral award only on receipt of notice from executing Court i.e., IX Assistant Judges Court, City Civil Court, Chennai.
3. Learned counsel for petitioner submits that thereafter a copy application was made in the executing Court and a certified copy of the award was obtained.
4. Learned counsel seeks time to file the aforesaid details in the form of an affidavit sworn to by the petitioner inter alia giving exact details/particulars with regard to what has been set out supra.
At request of petitioner, adjourned by a fortnight. List this matter on 25.02.2019.' Proceedings dated 25.02.2019 Read this in conjunction with and in continuation of earlier proceedings/order of this Court dated 08.02.2019 and particularly paragraph 4 therein.
Mr.K.Muthu Visakan, learned counsel for petitioner seeks time to file an affidavit as set out in paragraph 4 of earlier proceedings.
List on 28.02.2019.
http://www.judis.nic.in 9 Proceedings dated 28.02.2019 'Instant OP has been placed before me under the caption 'FOR MAINTAINABILITY'.
2. Mr.K.V.Muthu Visakan, learned counsel on record for the petitioner is before this Court.
3. Read this in conjunction with and in continuation of earlier proceedings of this Court dated 08.02.2019 and 25.02.2019.
4. Those two earlier proceedings of this Court in turn have to be read in conjunction with maintainability note placed before me by the Registry.
5. Pursuant to paragraph 4 of earlier proceedings dated 08.02.2019, petitioner has filed an affidavit dated 25.02.2019, wherein the petitioner has stated that certified / signed copy of the arbitral award, that has been called in question in the instant OP being an 'arbitral award dated 04.02.2017' (hereinafter 'impugned arbitral award' for clarity) was not delivered to the petitioner in accordance with the mandate under Section 31(5) of the Arbitration and Conciliation Act, 1996.
6. A perusal of the impugned arbitral award reveals that the same has been made by an arbitral tribunal constituted by a sole arbitrator being Mr.K.Jayaraman, B.Sc..B.L., Retired District Judge and Former Registrar General, High Court of Madras and it can be seen from the impugned arbtiral award that his address for communication is No.12/1, 8th Main Road, Kasthuri Bai Nagar, Adyar, Chennai – 600 020.
7. Registry is directed to send a communication to the aforesaid sole arbitrator (to the aforesaid address) with a http://www.judis.nic.in 10 request to send to this Court all the records pertaining to the arbitration proceedings before him, which has been assigned the number Arbitration No. 1 of 2016, BETWEEN/ IN THE MATTER OF Mr.K.V.Narasimhan and Maruthi Apartments Owners/Residents Welfare Association.
8. Registry to send aforesaid communication at the earliest and in any event by 06.03.2019.
9. In this communication, Registry shall mention that the sole arbitrator shall deliver the entire arbitral records pertaining to the aforesaid impugned arbitral award in a sealed cover to the Registrar General of this Court within one week from the date of receipt of this communication by the sole arbitrator.
10. Registrar General shall thereafter put up the records so received in a sealed cover before this Court within three working days from the date of receipt of the same by the Registrar General.
11. When the Registry sends the aforesaid communication to the sole arbitrator, the same shall be sent in a mode, where there is acknowledgement for service. In other words, the Registry shall not send this communication by ordinary post or in some other manner where there is no provision for obtaining acknowledgement for service of the communication. It is made clear that it is open to the Registry to send the aforesaid communication through a special messenger also to meet the time line/time frame set out supra.
List this matter on 21.03.2019.' http://www.judis.nic.in 11
14. Pursuant to the aforesaid proceedings dated 28.02.2019, AT has sent the entire arbitral records pertaining to impugned award in a sealed cover and the same has been placed before me.
15. This Court had the benefit of perusing the records of AT.
16. A perusal of records of the AT reveals that AT has sent the impugned award to the petitioner by Speed Post with acknowledgement due vide postal receipt bearing reference No.ET178681865IN and the same has been returned with the postal endorsement 'Refused'. Returned envelope has also been placed before this Court as part of the records of AT.
17. Moreover, a perusal of the impugned award reveals that petitioner, who was a respondent before the AT, did not appear before AT on 07.11.2016, 14.11.2016 and 13.12.2016. Notices sent by AT for these hearings have also been returned with the postal endorsement 'Refused'. These returned envelopes also form part of the records of AT, which have been placed before this Court.
18. Whenever a communication is sent by speed post with http://www.judis.nic.in 12 acknowledgement due and when it is returned with the postal endorsement 'Refused', there can be no doubt that refusal tantamounts to service. In the instant case, it is not just one communication containing the impugned award, but notices pertaining to the arbitral proceedings and hearings have also met with the same fate i.e., they have been returned with the postal endorsement 'Refused'.
19. Hon'ble Supreme Court in Gujarat Electricity Board Vs. Atmaram Sungomal Poshani case reported in (1989) 2 SCC 602, held that cover / envelope returned with the endorsement 'refused' leads to presumption that notice has been served. It was also held that the burden to rebut such presumption lies on the party challenging this. In the instant case, though there was no direct or head-on attempt to rebut such a presumption, the submission to the effect that flat number in which Mr.P.R.Perumal lives has not been given in the address was made. This Court shall deal with the same elsewhere infra in this order. Be that as it may, paragraph 8 of Atmaram Sungomal case reads as follows:
'8.There is presumption of service of a letter sent under registered cover, if the same is returned back with a postal endorsement that the addressee refused to accept the same. No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the court to rebut the presumption by showing that the address mentioned on the cover http://www.judis.nic.in 13 was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same. The burden to rebut the presumption lies on the party, challenging the factum of service. In the instant case, the respondent failed to discharge this burden as he failed to place material before the Court to show that the endorsement made by the postal authorities was wrong and incorrect. Mere denial made by the respondent in the circumstances of the case was not sufficient to rebut the presumption relating to service of the registered cover. We are, therefore, of the opinion that the letter dated 24-4-1974 was served on the respondent and he refused to accept the same. Consequently, the service was complete and the view taken by the High Court is incorrect.'
20. In the aforesaid backdrop, learned counsel for petitioner pressed into service judgments of Hon'ble Supreme Court being Union of India Vs. Tecco Trichy Engineers & Contractors reported in (2005) 4 SCC 239 and State of Maharashtra and ors. Vs. ARK Builders Private Limited reported in (2011) 4 SCC 616. These two case laws were pressed into service for the proposition that delivery of award under Section 31(5) should be to the party to the arbtiral proceedings and that will be the effective date.
21. A perusal of the aforesaid two judgments reveal that they are clearly distinguishable on facts. Tecco Trichy is a case where the Hon'ble Surpeme Court held that service of the arbitral award on the General Manager by way of receipt in his inwards office cannot be taken to be sufficient notice http://www.judis.nic.in 14 so as to activate the department to take appropriate steps in respect of and in regard to the award passed by the arbitrators to constitute the starting point of limitation under Section 34(3) of A & C Act. Hon'ble Supreme Court, took the date of service of arbitral award on the Chief Engineer as the reckoning date and the date of service of the impugned award on the Chief Engineer was 19.03.2001 in that case. In complete contrast, in the instant case, the petitioner has plainly refused to receive the envelope. Therefore, the instant case is clearly distinguishable on facts.
22. Likewise, ARK Builders is also distinguishable on facts. A perusal of the facts therein reveals that in ARK Builders the Arbitrator did not send a copy of the award and had only sent a photo copy of the award, whereas the arbitrator had given a duly signed award to the other party to the proceedings. It is in this backdrop that that Hon'ble Supreme Court held that Section 31(5) of A & C Act contemplates not mere delivery of any kind of copy of the award, but it should be an award duly signed by the AT. Therefore, ARK Builders case law is for the proposition that award within the meaning of Section 31(5) of A & C Act should be a duly signed award and not mere a copy of the same much less a photocopy. In any event ARK Builders is distinguishable on facts as it is a case where photocopy of the arbitral award alone was sent to the party. http://www.judis.nic.in 15
23. This Court now reverts to the envelopes being returned with postal endorsement 'REFUSED' aspect. In the instant case, as a last desperate submission, learned counsel submitted that the petitioner in the instant OP is residing in Flat No.C1 and the flat number has not been mentioned and only the door number in which the entire apartment block is situate has been mentioned. A perusal of the records of AT before this Court and the case file reveal that the proceedings are against the Association, which goes by the name Maruthi Apartments Owners/Residents Welfare Association.
24. Learned counsel for petitioner, on instructions, submits in the hearing that P.R.Perumal has been the Secretary of the aforesaid Association from 2012, but admittedly there is absolutely no shred of paper to show that he has been elected and/or appointed as Secretary of the said Association. In any event, addressee is the Association and not P.R.Perumal. Association address cannot but be the address where the entire building is situate.
25. On instructions, learned counsel for petitioner submitted that the association, i.e., Maruthi Apartments Owners/Residents Welfare Association, is an entity that has been registered under the Tamil Nadu Societies Registration Act, 1975. If that be so, it is necessary that the association should have a name http://www.judis.nic.in 16 board displayed with the registration number and the name of the association should be in English and in local language. This means that some part of the building in which all flats / apartments are situate should be set apart (however small it may be) for office of such association. It cannot be gainsaid by the petitioner that impugned award had not been served on Mr.P.R.Perumal (by mentioning his flat number). In any event, the envelope has been returned with postal endorsement 'refused' and the presumption of service that flows from this has not been assailed and there is nothing to rebut this presumption.
26. Be that as it may, this Court reminded itself that the very scheme of A & C Act provides for expeditious disposal of matter pertaining to 'Alternate Dispute Resolution Mechanism' ('ADR Mechanism' for brevity). This Court has also reminded itself that Hon'ble Supreme Court in Fiza Developers and Inter- Trade Private Limited Vs. AMCI (India) Private Limited reported in (2009) 17 SCC 796 has held Section 34 applications are summary procedures. This 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 had held that Fiza Developers principle is a step in the right direction towards expeditious disposal of such applications. Be that as it may, post 23.10.2015, sub-section (6) which has been introduced in section 34, makes it clear that an application under section 34 of A & C Act should be http://www.judis.nic.in 17 disposed of expeditiously and in any event, within a period of one year from the date on which notice under sub-section (5) of section 34 is served on the adversary. In this regard, this court considers it to be pertinent to refer to the judgment of Hon'ble Supreme Court in State of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472. Though Bhumi Vikas Bank case is an authority / case law for the proposition that notice under sub section (5) of section 34 is directory and not mandatory, in paragraph 26, Hon'ble Supreme Court has made it clear that Courts hearing applications under section 34 shall make every endeavour to adhere to aforesaid time frame / time lines adumbrated in sub sections (5) and (6) of section 34 of A & C Act. Paragraph 26 of Bhumi Vikas Bank Samiti case reads as follows :
“26.We are of the opinion that the view propounded by the High Courts of Bombay and Calcutta represents the correct state of the law. However, we may add that it shall be the endeavour of every court in which a Section 34 application is filed, to stick to the time-limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. This will give effect to the object sought to be achieved by adding Section 13(6) by http://www.judis.nic.in 18 the 2015 Amendment Act.”
27. The aforesaid judgments of Hon'ble Supreme Court being Fiza Developers case, Emkay Global case and Bhumi Vikas Bank Samiti case have been referred only to make the narrative comprehensive and bring to light that pleas of this kind in the instant case cannot be entertained to endlessly procrastinate and protract OPs under Section 34 of A & C Act. No elucidation is necessary to say that contours of Section 34 of A & C Act are limited and this is another facet, besides expeditious redressal being a pillar of Alternate Dispute Resolution Mechanisam. Be that as it may, it is made clear that this is not the sole basis for testing the instant O.P and this is mentioned only to set out a comprehensive canvas.
28. Further more, on an extreme demurrer, even if the date on which the petitioner entered appearance in the executing court in E.P., which admittedly is 15.03.2018, is taken as reckoning date, instant O.P presented in this Court on 22.10.2018 is clearly hopelessly barred by limitation in the light of sub-section (3) and proviso thereto of section 34 of A & C Act as there is no explanation whatsoever for the delay from 15.03.2018 to 03.08.2018 when application for certified copy of award was made in the executing Court.
Owing to all that have been stated supra, particularly the delay http://www.judis.nic.in 19 between 15.03.2018 and 03.08.2018 and refusal to receive not only the impugned award sent by the sole Arbitrator, but prior notices regarding the arbitral proceedings also, instant OP cannot be held to have been filed either within the prescribed time limit. Petitioner cannot take umbrage under Section 31(5) of A & C Act. In other words, this Court, on examination of the case file and particularly the records of AT, comes to the conclusion that petitioner cannot claim advantage of alleged infarct of Section 31(5) owing to the aforesaid trajectory and conduct. Petitioner cannot take umbrage under alleged infarct of Section 31(5) after refusing to receive the impugned award that has been sent to the petitioner by Speed Post with acknowledgement due. It follows as a sequitur that instant OP is not maintainable and the same is dismissed as not maintainable. No costs.
21.03.2019 Speaking order/ Non-Speaking order Index: Yes/No gpa/mp Note to Office: Records received from the sole arbitrator shall be put up back in the envelope, sealed and kept along with case file.
M.SUNDAR.J., gpa/mp http://www.judis.nic.in 20 O.P.Diary No.116747 of 2018 21.03.2019 http://www.judis.nic.in