Rajasthan High Court - Jaipur
Sampati Devi And Anr vs Shriram Transport Finance Co Ltd on 6 October, 2017
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
JUDGMENT
S.B. Civil Miscellaneous Appeal No. 232 / 2017
1. Sampati Devi W/o Shri Ramdayal Gupta, R/o New Mandi, Jain
Colony, Hindauncity, Distt. Karauli
2. Bhoodev Sharma S/o Shri Vishambhar Sharma, R/o 142, Mohan
Nagar, Hindaun City, Distt. Karauli
----Objector-Appellants
Versus
Shriram Transport Finance Company Limited Through Its
Authorized Officer, Having Registered Office At 123, Anagappa
New Chem Street, Channai, Regional Office At 4-Gems Enclave
Calagari Road, Malviya Nagar, Jaipur
----Claimant-Respondent
Connected With
S.B. Civil Miscellaneous Appeal No. 258 / 2017
1. Nirmala Devi W/o Shri Bhoodev Sharma, R/o 306, Mohan
Nagar, Hindaun City, Distt. Karauli
2. Mithlesh Kumar Gupta S/o Shri Ramdayal Gupta, R/o New
Mandi, Jain Colony, Hindauncity, Distt. Karauli
----Objector-Appellants
Versus
Shriram Transport Finance Company Limited Through Its
Authorized Officer, Having Registered Office At 123, Anagappa
New Chem Street, Channai, Regional Office At 4-Gems Enclave
Calagari Road, Malviya Nagar, Jaipur
----Claimant-Respondent
_____________________________________________________
For Appellant(s) : Mr. J.P. Goyal, Sr. Adv. with
Mr. Abhi Goyal, Adv.
For Respondent(s) : Mr. Devendra Sharma,
Mr. Aditya Mitruka, Adv. on behalf of
Mr. B.R. Vashisth, Adv.
_____________________________________________________
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HON'BLE MR. JUSTICE DINESH CHANDRA SOMANI
Date of Judgment :: 06/10/2017
In both these appeals common question of law is involved,
the same are decided by this common judgment.
The instant appeals have been preferred by the non-
claimant/appellants under Section 37 (b) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to "the Act) against the
orders dated 09/12/2016 passed by the learned Additional District
Judge No.10, Jaipur Metropolitan, Jaipur (hereinafter referred as
the "learned Court below") in Civil Miscellaneous Arbitration Case
No.702/2015 and Civil Miscellaneous Arbitration Case
No.703/2015 whereby, the objections filed by the appellants under
Section 34 of the Act against the awards dated 08/09/2014, have
been dismissed.
The brief facts of CMA No.232/2017 are that the appellant
No.1 availed loan facility amounting to Rs.2,22,000/- from the
respondent vide agreement dated 24/06/2009 for the purchase of
vehicle No.RJ-34-G-0125, which was required to be paid along
with interest amounting to Rs.3,01,365/- in 25 equal monthly
instalments, first instalment was of Rs.12,069/- and rest 24
instalments were of Rs.12,054/- each per month. The appellant
No.2 stood surety for the repayment of said loan availed by the
appellant No.1. The appellants failed to repay the loan, therefore,
the respondent sent a legal notice through registered post on the
last known address of the appellant and thereafter Shri Arif Mohd.
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Madani, retired Additional District Judge was appointed as
Arbitrator. The Arbitrator commenced the arbitral proceedings and
notice of the arbitration proceedings were sent through registered
post, which were returned with the remark "Unclaimed".
Therefore, the Arbitrator proceeded with the arbitration
proceedings ex-parte against the non-claimant/appellants and
passed award on 08/09/2014.
The brief facts of CMA No.258/2017 are that the appellant
No.1 availed loan facility amounting to Rs.6,50,000/- from the
respondent for the purchase of vehicle No.RJ-02-G-1920, which
was required to be paid along with interest in 35 equal monthly
instalments. The appellant No.2 stood surety for the repayment of
said loan availed by the appellant No.1. The appellants failed to
repay the loan, therefore, the respondent sent legal notice through
registered post on the last known address of the appellants and
thereafter Shri Arif Mohd. Madani, retired Additional District Judge
was appointed as Arbitrator. The Arbitrator commenced the
arbitral proceedings and notice of the arbitration proceedings were
sent through registered post, which returned with the remark
"Unclaimed". Therefore, the arbitrator proceeded with the
arbitration proceedings ex-parte against the non-
claimant/appellants and passed award on 08/09/2014.
The appellants assailed the awards under Section 34 of the
Act on 29/05/2015. The said objections were contested by the
claimant/respondents on the ground of limitation stating therein
that the objections are barred by limitation contending that the
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appellants were having knowledge of the pendency of the arbitral
proceedings as such, the delay cannot be condoned and prayed to
dismiss the objections filed by the objector/appellants.
The learned Court below dismissed the said objections vide
impugned orders dated 09/12/2016 passed separately while
holding that the objections have been filed after the prescribed
period of limitation provided under Section 34 (3) of the Act.
Being aggrieved and dissatisfied with the impugned orders
passed by the learned Court below, the appellants have preferred
these appeals.
Mr. J.P. Goyal, Senior Advocate assisted by Mr. Abhi Goyal,
Advocate for the appellants contended that the objector/appellants
were neither served with the notice for appointment of Arbitrator
nor any notice of the arbitration proceedings was received by
them, nor any copy of the award was received by them. The
appellants were out of town in the month of May, 2015 and after
return therefrom, they came to know from the neighbours that
one person from Shri Ram Transport Finance Company had come
with notice. Then they contacted the office of the
claimant/respondent, but they refused to show any documents
and disclosed that they have obtained awards from Jaipur. The
appellants came to know about the Arbitrator and thereafter,
contacted him on 15/05/2015 and requested to supply the copies
of the award but the Arbitrator avoided to give certified copies,
and ultimately on 21/05/2015 the appellants were hardly given
copies of the awards. Thereafter, the appellants filed objections
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under Section 34 of the Act within three months from the date of
knowledge along with an application under Section 5 of the
Limitation Act showing sufficient cause to condone the delay.
Learned counsel for the appellants also contended that the
appellants have neither been provided reasonable and proper
opportunity of hearing before appointment of Arbitrator and during
the pendency of the arbitral proceedings, nor they ever served
with the notices issued by the Arbitrator, therefore, the ex-parte
proceedings against them are in flagrant violation of principles of
natural justice.
Learned counsel for the appellants also contended that the
learned Court below has committed grave error in dismising the
objections filed by the appellants under Section 34 of the Act
being barred by limitation. The provisions of Section 34 (3)
provides that an application for setting aside the award cannot be
filed after three months have elapsed from the date on which the
party making that application had received the arbitral award. In
the present cases, the appellants have not duly received the
arbitral awards, therefore, the said limitation of three months
provided in Section 34 (3), is not applicable.
Learned counsel for the appellants also submitted that the
copy of award was made available to the appellants on
21/05/2015 and they filed the objections on 29/05/2015, as such
the objections were filed well within the period of three months
from the date of receipt of copy of impugned awards. Moreover, if
it is assumed that the objections filed by the appellants are barred
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by limitation, then the appellants have made prayer for
condonation of the delay showing the sufficient cause for not
making the objections within the prescribed period.
Learned counsel for the appellants further contended that the
learned Court below has drawn presumption of the service under
Section 3 of the Act read with Section 27 of the General Clauses
Act, which is wholly against the law, in as much as the
presumption under Section 3 can be drawn only when the
communication is delivered to the addressee personally or if he is
not found on any of the places mentioned in Clause (a) after
making reasonable inquiry, then it can be deemed to have been
received if it is sent by registered post to his last known place of
business, residence or mailing address but none of the
requirements has been proved in the present cases. In support of
his contentions, learned counsel for the appellants placed reliance
on AIR 2005 Supreme Court 1832 titled as Union of India
versus Tecco Trichy Engineers and Contractors and AIR
2011 Supreme Court 1374 titled as State of Maharashtra &
Ors. versus M/s. Ark Builders Pvt. Ltd.
Per contra, Mr. Devendra Sharma, learned counsel for the
respondent strongly opposed the contentions of learned counsel
for the appellants and supported the impugned orders passed by
the learned Court below. Learned counsel contended that the
pleadings of the objectors under Section 34 of the Act are totally
fictitious for the reason that according to the appellants they were
informed by their neighbour that a person came from Court with
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notice in May, 2015, but the appellants have not specified as to
which neighbour has intimated them. The story put forth by the
appellants, is afterthought and they were having knowledge of the
arbitration proceedings as well as award from very beginning, but
they did not choose to appear before the Arbitral Tribunal.
Learned counsel for the respondent also contended that main
contention of the appellants is that the copy of award was not
received by them, therefore, the limitation of three months
stipulated under Section 34 (3) of the Act is commenced from the
date of knowledge. The said contention is not tenable in the light
of provisions of Section 3 of the Act which speaks that a written
communication is deemed to have been received, if it is sent to
the addressee's last known place of business, habitual residence or
mailing address by registered letter as specified, then the
communication is deemed to have been received. Therefore in the
present matters, the limitation commences from the date of
attempt to deliver the copy of award sent on 24/09/2014 and the
objections filed by the appellants on 29/05/2015 are barred by
limitation. Learned counsel also contended that the learned Court
below has considered all the facts and circumstances of the case
and prayed to dismiss the appeals being devoid of any substance.
In support of his contentions, learned counsel for the respondent
has placed reliance on judgment passed by Coordinate Bench of this Court in SB CMA No.2498/2012 titled as Ranjeet Bafna & Anr. versus Kotak Mahindra Bank Ltd. & Anr. reported in 2015 (1) WLC (Raj.) 83.
(8 of 14) [ CMA-232/2017] In order to appreciate the contentions raised by learned counsel for the parties, it will be appropriate to set out Section 3, sub-Section (5) of the Section 31, sub-Section (3) of Section 34 and Section 43 of the Act:
3. Receipt of written communications.-- (1) Unless otherwise agreed by the parties,--
(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and
(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.
(2) The communication is deemed to have been received on the day it is so delivered.
(3) This section does not apply to written communications in respect of proceedings of any judicial authority.
31. Form and Contents of arbitral award.- (1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.
(2) xxxxxxxx (3) xxxxxxxx (4) xxxxxxxx (5) After the arbitral award is made, a signed copy (9 of 14) [ CMA-232/2017] shall be delivered to each party.
(6) xxxxxxxxxxx (7) xxxxxxxxxxx (8) xxxxxxxxxxx
34. Application for setting aside arbitral award.- (1) xxxxxxx (2) xxxxxxx (2A) xxxxxxx (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.
(4) xxxxxxx (5) xxxxxxx (6) xxxxxxx
43. Limitations.--(1) The Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in Court.
(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section 21.
(3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless (10 of 14) [ CMA-232/2017] some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
(4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted. Indisputedly, the Arbitrator has passed the impugned awards on 08/09/2014 and the objectors/appellants have filed the objections under Section 34 of the Act on 29/05/2015. Learned Court below has observed that copy of the award was sent by the Arbitrator to the appellants by registered post on 24/09/2014. Learned Court below has also observed that envelope of the appellant Sampati Devi returned back with remark of "the addressee not found even after going again and again and giving information, hence returned", envelope of Bhudev returned with remark of "left", envelope of the appellant Nirmala Devi returned back with remark of "the addressee not found even after going again and again and giving information, hence returned" and envelope of the appellant Mithilesh Kumar Gupta returned back (11 of 14) [ CMA-232/2017] with remark of "left". Thus, copies of the awards were sent by registered post on the habitual residence of the appellants but the same returned undelivered with above remarks, which amounts to "deemed to have been served" under Section 3 of the Act of 1996.
From the aforesaid observations made by the learned Court below, it is not in dispute that the awards passed by the Arbitrator on 08/09/2014, were never delivered to the appellants personally or at their place of residence or at their place of business.
In Union of India versus Tecco Trichy Engineers and Contractors (supra), the question before the Apex Court was that which is the effective date on which the appellant was delivered with and received the arbitral award as that would be the date wherefrom the limitation within the meaning of sub-Section (3) of Section 34 of the Act, shall be calculated. Hon'ble Apex Court in para 8 of it's judgment, has observed and held as under:-
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 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.
(12 of 14) [ CMA-232/2017] In State of Maharashtra & Ors. versus M/s. Ark Builders Pvt. Ltd. (supra), question before the Apex Court was whether the period of limitation for making an application under Section 34 of the Act setting aside an arbitral award is to be reckoned from the date a copy of the award is received by the objector by any means and from any source, or it would start running from the date a signed copy of the award delivered to him by the Arbitrator? Relying upon its earlier judgment in Union of India versus Tecco Trichy Engineers and Contractors (supra), Hon'ble Apex Court in para 4, 13 and 17 of it's judgment, observed and held as under:-
4. According to the appellants, the decision to make an application for setting aside the award was taken on December 16, 2013, but no application could be made for want of a copy of the award from the arbitrator. Hence, on January 17, 2004, a messenger was sent to the arbitrator with a letter asking for a copy of the award. The arbitrator made an endorsement on the letter sent to him stating that on the request of the claimant the original award was given to him and the Xerox copy of the award (sent to him along with the letter), was being certified by him as true copy of the award. The endorsement from the arbitrator along with the Xerox/certified copy of the award was received from the arbitrator on January 19, 2004 and on January 28, 2004, the appellants filed the application under Section 34 of the Act.
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 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.
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17. In the facts of the case the appellants would appear to be deriving undue advantage due to the omission of the arbitrator to give them a signed copy of the award coupled with the supply of a copy of the award to them by the claimant-respondent but that would not change the legal position and it would be wrong to tailor the law according to the facts of a particular case.
In view of the above, delivery of copy of the arbitral award under sub-Section (5) of Section 31 is not a mere formality, rather it is a matter of substance. Therefore, mere sending of copy of the award cannot be taken to be sufficient notice to the appellant for taking proper steps i.e. filing objections under Section 34 of the Act. As stated by the appellants, they came to know about the award in the month of May, 2015 and thereafter, they contacted the Arbitrator on 15/05/2015 and requested him to supply copies of the awards but the Arbitrator avoided to give certified copies, and ultimately on 21/05/2015 the appellants were given copies of the awards. Therefore, the delivery of the copy of the award by the Arbitrator on 21/05/2015, would be the starting point of limitation to challenge the award in the Court. It is not in dispute that the objectors/appellants have filed the objections under Section 34 of the Act on 29/05/2015, as such the objections filed by the appellants are within limitation.
In Ranjeet Bafna & Anr. versus Kotak Mahindra Bank Ltd. & Anr. (supra), case of the non-claimant/appellants was that the sole Arbitrator has no jurisdiction to address the claim petition at Jaipur, the sole Arbitrator was biased against the non-claimants and was not an independent person, the Arbitrator passed the award relying upon the documents not admissible in evidence and (14 of 14) [ CMA-232/2017] wrongly invoked the provisions of Section 3 of the Act. Coordinate Bench of this Court observed that non-service of notice of arbitration proceedings not established even remotely, principles of natural justice not contravened, the non-claimant waived the objection to territorial jurisdiction, the award is detailed and well considered and dismissed the appeal filed by the non-claimants. Due to difference in facts and circumstances of the case, the law laid down by the Coordinate Bench is not of much help to the respondent.
In the light of discussions made above, the appeals deserve acceptance.
Accordingly, we set aside the impugned orders dated 09/12/2016 passed by the learned Court below i.e. Additional District Judge No.10, Jaipur Metropolitan, Jaipur. The objection petitions made by the appellants under Section 34 of the Act are restored before the Additional District Judge No.10, Jaipur Metropolitan, Jaipur who shall proceed to hear the parties on merits and decide the objection applications in accordance with law. The parties are directed to remain present before the learned Additional District Judge No.10, Jaipur Metropolitan, Jaipur on 01/11/2017.
(DINESH CHANDRA SOMANI)J. Manish/