Kerala High Court
M/S.International Nut Alliance Llc vs Biju John on 7 January, 2010
Author: Thomas P. Joseph
Bench: Thomas P.Joseph
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE THOMAS P.JOSEPH
TUESDAY, THE 8TH DAY OF JANUARY 2013/18TH POUSHA 1934
OP(C).No. 3580 of 2011 (O)
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ORDER IN IA NO.1267/2011 IN OP(ARB.) NO.167/2010 OF ADDITIONAL DISTRICT COURT,
KOLLAM
PETITIONER(S)/RESPONDENT:
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M/S.INTERNATIONAL NUT ALLIANCE LLC,
19 SPEAR ROAD,SUITE 303,RAMSEY,
NJ 07446,UNITED STATES OF AMERICA
REPRESENTED BY AUTHORISED SIGNATORY S. ANILKUMAR
49 YRS,S/O.SREEDHARAN, NO.237,
13TH CROSS ROAD,GIRINAGAR,KADVANTHRA P.O.
COCHIN-686020.
BY ADV. SRI.T.R.ASWAS
RESPONDENT(S)/PETITIONER:
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BIJU JOHN, PROPRIETOR, JOHN'S CASHEW
COMPANY,MUKKODU P.O.,KARIPPURAM
KUNDARA, KOLLAM, PIN-691 501.
BY ADV. SRI.RAJA VIJAYARAGHAVAN
BY ADV. SRI.M.T.SURESHKUMAR
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 08-01-2013, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
OP(C0 NO.3580/2011
APPENDIX
PETITIONER(S) EXHIBITS:
EXHIBIT P1. TRUE COPY OF THE INTERNATIONAL CONTRACT BETWEEN PARTIES.
EXHIBIT P2 TRUE COPY OF THE ARBITRATION RULES OF AFI.
EXHIBIT P3 TRUE COPY OF DEMAND FOR ARBITRATION CLAIMING US $ 23,066.83.
EXHIBIT P4 TRUE COPY OF NOTICE OF ARBITRATION DATED JANUARY 7TH 2010 SENT
TO RESPONDENT.
EXHIBIT P5 TRUE COPY OF COMMUNICATION DATED 9/2/2010 SENT BY THE
RESPONDENT IN REPLY TO EXHIBITS P3 AND P4 TO THE ABRITRAL AGENCY QUESTIONING
JURISDICTION AND RAISING PLEA OF FORGERY.
EXHIBIT P6 TRUE COPY OF AFI LETTER DATED MARCH, 24TH 2011 TO THE
RESPONDENT.
EXHIBIT P7 TRUE COPY OF AFI AWARD DATED 11/5/2010.
EXHIBIT P8 TRUE COPY OF SECTION 34 PETITION FILED BY THE RESPONDENT AS OP
167/2010.
EXHIBIT P9 TRUE COPY OF CR AFFIDAVIT OF THE PETITIONER DATED 7/4/2011 IN
EXT.P8.
EXHIBIT P10 TRUE COPY OF PROOF AFFIDAVIT DATED NIL FILED BY RESPECT IN EXT.P8.
EXHIBIT P11 TRUE COPY OF IA 1267/2011 FILED BY THE PETITIONER.
EXHIBIT P12 TRUE COPY OF OBJECTION FILED BY THE RESPONDENT DATED 22/10/2011
TO EXHIBIT P11.
EXHIBIT P13 TRUE COPY OF IMPUNGED ORDER IN IA 1267/2011 DATED 24/10/2011 IN
EXHIBIT P11.
RESPONDENTS' EXHIBITS: NIL
//TRUE COPY//
P.S.TO JUDGE
THOMAS P. JOSEPH, J.
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O.P.(C). No.3580 of 2011
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Dated this the 8th day of January, 2013.
JUDGMENT
This Original Petition is filed by the respondent in O.P.(Arb.) No.167 of 2010 of the Additional District Court, Kollam for the issue of a writ of certiorari quashing Ext.P8, O.P.(Arb.) No.167 of 2010 or to set aside Ext.P13, order on I.A.No.1267 of 2011 in the said proceeding and direct the learned Additional District Judge to dispose of O.P.(Arb.) No.167 of 2010 as expeditiously as possible.
2. According to the petitioner, it entered into Ext.P1, agreement dated 25.06.2009 with the respondent for the supply of cashew nuts. Dispute arose between the parties as to the quality and non-shipment of one container of cashew nuts. As per Ext.P1, agreement between the parties there was a clause for arbitration under the AFI. Pursuant to that clause, the petitioner referred the matter for arbitration. Ext.P3, demand for arbitration dated 16.12.2009 was issued to the respondent. That was followed by Ext.P4, notice dated 07.01.2010 to the respondent informing it about the date of commencement of arbitration and the seat of the Arbitrator. The respondent gave Ext.P5, reply to the AFI on 09.02.2010 where challenge was made to arbitration under the AFI and its jurisdictional competence to arbitrate the dispute. The AFI gave Ext.P6, reply dated 24.03.2010. According to the petitioner, in spite of Exts.P3, P4 and OP(C) No.3580/2011 2 P6, the respondent did not take part in the arbitration nor object to the jurisdictional competence of the AFI to arbitrate. That was followed by the AFI passing Ext.P7, award dated 11.05.2010.
3. The respondent filed O.P.(Arb.) No.167 of 2010 in the Additional District Court, Kollam challenging the said award under Sec.34 of the Arbitration and Conciliation Act, 1996 (for short, "the Act"). Various contentions are raised in Ext.P8, original petition including that the agreement for arbitration by the AFI was fabricated. The respondent also contended that he was not supplied with copies of documents or supporting evidence produced by the petitioner before the Arbitrator.
4. The petitioner filed Ext.P9, counter affidavit disputing the allegations in Ext.P8 and challenging maintainability of the petition under Sec.34 of the Act. The learned Additional District Judge posted Ext.P8, petition for evidence. The respondent filed proof affidavit and produced certain documents.
5. The petitioner filed Ext.P11, application - I.A.No.1267 of 2011 for review of the order posting the case for evidence. The respondent resisted that application by Ext.P12. The learned Additional District Judge passed Ext.P13, order dated 24.10.2011 closing I.A.No.1267 of 2011 (Ext.P7) as not necessary for the reason that the case is posted for evidence. Thus the original petition under Article 227 of the Constitution.
OP(C) No.3580/2011 3
6. The learned counsel for the petitioner has contended that Ext.P8, petition is not maintainable for the reason that part I of the Act has no application to the award passed in this case. It is pointed out by the learned counsel that as per Ext.P1, agreement between the parties, the dispute was to be arbitrated by the AFI. The learned counsel submits from Ext.P2, Arbitration Rules applicable to the AFI that the seat of arbitration is New York and that as soon as practicable, after the appointment of the Arbitrators at a time and place to be fixed by the Arbitrators through the President who shall also act as the Secretary of the hearing. If the hearing is held outside New York State, the arbitration should be held in accordance with the New York State Law. The learned counsel contends that whether or not the arbitration is held beyond New York State or in New York, the law applicable is the New York State Law, in which case, part I of the Act has no application and therefore, Ext.P8, original petition is not maintainable. A further argument the learned counsel has advanced is that as per Ext.P3, demand for arbitration dated 16.12.2009 served on the respondent, the latter was informed that unless within 20 days of service of the said notice of intention to arbitrate the respondent applied to stay the arbitration, he shall thereafter be precluded from objecting that a valid agreement was not made or has not been complied with and from asserting in court the bar of a limitation of time. It is also pointed out from Ext.P4, notice that the respondent was informed that the arbitration will be held in the office of Scarinci and Hollenbeck LLC, 1100 Valley Brook Avenue, Lyndhurst, NJ (New Jercy) on OP(C) No.3580/2011 4 16.02.2010 at 11 a.m. The respondent was requested to attend promptly with witnesses and to present his proofs. Ext.P4 mentioned the panel of Arbitrators selected by the Arbitration Board of the AFI.
7. In Ext.P5, reply dated 09.02.2010 by the respondent to Ext.P4 (wherein service of Ext.P4, notice on 22.01.2010 is acknowledged), the respondent informed the AFI that the date fixed for challenging selection of Arbitrators was on 18.01.2010 which expired even before service of Ext.P4, notice on the respondent, that the AFI has no jurisdiction to arbitrate and that Ext.P1, agreement dated 25.06.2009 did not contain any submission to arbitration by the AFI. The respondent also claimed that jurisdiction to arbitrate as per Ext.P1, contract was with the CENTA. But, it appeared that the petitioner has subsequently fabricated a copy of the agreement by scoring of "CENTA" and writing "AFI" which has not been endorsed by the respondent. The respondent requested the Arbitrators to consider the jurisdictional aspect and hold that the AFI has no jurisdiction to arbitrate. The respondent also required a decision on the preliminary issue (relating to the jurisdiction of the AFI to arbitrate).
8. It is in answer to Ext.P5, the AFI sent Ext.P6, letter dated 24.03.2011. There, the AFI informed the respondent that the AFI will proceed with the hearing and as previously notified, the hearing has been rescheduled for 11.05.2010. The respondent was given opportunity to present in person or in writing his testimony regarding the dispute.
OP(C) No.3580/2011 5
9. According to the petitioner, the respondent did not respond to Ext.P6 and that was followed by Ext.P7, award which the respondent has challenged in the Additional District Court, Kollam in O.P.(Arb.) No.167 of 2010 (Ext.P8). The petitioner would challenge jurisdiction of the Additional District Court to entertain a petition under Sec.34 of the Act. It is contended that so far as the AFI is concerned, the arbitration is governed by the New York Civil Practice Law and Rules and that even as stated in Ext.P2, the law which would apply whether the seat of arbitration is New York or outside the State of New York is the New York State Law.
10. Alternatively, it is argued by the learned counsel for the petitioner that even if the argument of the respondent is accepted and as stated in Ext.P6, letter the agreement as referred by the petitioner was for arbitration with the CENTA, still the question of application of Sec.34 of the Act does not arise since the arbitration with CENTA is governed by the terms and conditions of the CENTA and the law applicable is the Law of England. It is pointed out that in case the arbitration is with CENTA, the seat of arbitration is London and the law applicable is that of England. The learned counsel has placed reliance on the decisions in M/s.Abbas Cashew Company v. M/s.Bond Commodities and another (2010 (3) KHC 325) and Shastha and another v. Olam International Ltd. (2011 (4) KLJ 208).
OP(C) No.3580/2011 6
11. It is further argued by the learned counsel that whether the arbitration is with the AFI as per Ext.P1 as pleaded by the petitioner or it is with CENTA as claimed by the respondent in Ext.P5, the law applicable is either the law of the State of New York or the Law of England. Thus, the parties have expressly excluded application of part I of the Act. In that situation, it is contended that Sec.34 coming within part I of the Act has no application. It is argued that in that view of the matter, the allegation of forgery pleaded by the respondent is irrelevant. The learned counsel would also contend that so far as the seat of the Arbitrators is outside India, be it the case pleaded by the petitioner or the respondent, unless and until the parties have impliedly or expressly excluded part I of the Act alone, that part would have application to the award passed by the Arbitrator. Reliance is placed on the decisions in M.L.Subbaraya Setty (dead) by Lrs. and others v. M.L.Nagappa Setty (dead) by Lrs. and others ((2002) 4 SCC 105), Venture Global Engineering v. Satyam Computer Services Ltd. and another ((2008) 4 SCC 190) and Venture Global Engineering v. Satyam Computer Services Limited and another ((2010) 8 SCC 660).
12. A further argument the learned counsel has advanced is that in so far as the respondent has not challenged validity of the arbitration agreement with the AFI as required in Exts.P2 and P3 within the time stipulated in Ext.P3 (20 days), the respondent cannot now be heard to say that the arbitration agreement (Ext.P1) is not valid for any reason whatsoever. It is argued by the learned counsel that the bald plea of fraud, collusion or undue influence is not OP(C) No.3580/2011 7 sufficient to make Sec.34 of the Act applicable, at any rate. Reliance is placed on the decision in Union of India and others v. Master Construction Company ((2011) 12 SCC 349).
13. In response, it is argued by the learned counsel for the respondent that the documents produced by the respondent are eloquent indication of the fact that Ext.P1 is the result of forgery. It is argued that even as per Ext.P1, the word 'CENTA' occurring against the clause 'arbitration' is seen scored off and the word 'AFI' written and at that part of Ext.P1, the respondent has not signed in acknowledgment of any such change. A further argument is that there must be an 'agreement' as understood in Secs.2 and 7 of the Act. In this case there is no such agreement. Mere mention of the expression CENTA or AFI in the agreement, according to the learned counsel, is not sufficient to create an agreement to arbitrate. It is also argued that if the agreement for arbitration is the result of forgery, it is against the public policy of this Country and hence an award procured pursuant to a forged agreement can be challenged under Sec.34 of the Act. According to the learned counsel, it is only by evidence that the said aspect could reveal and hence there is no reason to interfere with Ext.P13, order. The learned counsel submits that even going by Ext.P2, the contract so called in Ext.P1 for arbitration does not satisfy the requirements of Ext.P2 and hence at any rate, the agreement for arbitration is not enforcible. It is argued that the Arbitrator has not passed any order regarding its jurisdictional competence to preclude the petitioner from challenging its jurisdiction to arbitrate. A further argument is that even in Ext.P9, counter affidavit filed on OP(C) No.3580/2011 8 behalf of the petitioner, maintainability of Ext.P8, original petition on the grounds pleaded in this original petition are not pleaded. It is also argued that as pointed out in Ext.P5, the date fixed for challenging the selection of the Arbitrator was on 18.01.2010 which expired even before service of Ext.P4, notice and hence the respondent did not get sufficient opportunity to challenge jurisdiction of the Arbitrator.
14. Having heard the learned counsel on both sides I am inclined to think that before going into the evidence on the question whether there was forgery as pleaded by the respondent, the learned Additional District Judge was required to decide whether the petition under Sec.34 of the Act itself was maintainable in view of the contentions raised by the petitioner. If Ext.P9, counter affidavit is not sufficient in details as to how the Ext.P8, original petition is maintainable, it is open to the petitioner to file additional counter affidavit stating further details if any required to show how the Ext.P8, petition is maintainable before the learned Additional District Judge.
15. The learned Additional District Judge has to consider whether Ext.P8, original petition is maintainable before him under Sec.34 of the Act. For that, the learned Additional District Judge has to decide whether there was an arbitration agreement and assuming that arbitration agreement was with CENTA, what is the law applicable to arbitration under the CENTA and whether that law excluded part I of the Act. To decide the above questions, it is open to the learned Additional District Judge to refer the relevant documents as to the OP(C) No.3580/2011 9 existence of arbitration agreement if any, the seat of the arbitration even as contended by the respondent and as to the law applicable to such arbitration, whether the parties had agreed expressly or by necessary implication to exclude part I of the Act. Only if the learned Additional District Judge found that the arbitration attracts part I of the Act, the question of maintainability of the application under Sec.34 of the Act and recording of evidence in that petition arose. Needless to say that if the learned Additional District Judge finds that part I of the Act would apply, he has to enquire into the question whether the plea of forgery raised by the respondent is correct or not?.
16. I stated that if Ext.P9 is not sufficient in details as to how Ext.P8, original petition is maintainable before the learned Additional District Judge, it is open to the petitioner to file additional counter affidavit stating details.
17. In view of the decision I have taken, it is not necessary to proceed with the evidence regarding the alleged forgery at this stage. Viewed in that line, I am inclined to set aside Ext.P13, order but, making it clear that if the learned Additional District Judge accepted the contention of the respondent that part I of the Act is applicable, then it will be open to the learned Additional District Judge to record the evidence regarding the alleged forgery pleaded by the respondent.
18. It is submitted by the learned counsel for the petitioner that the learned First Additional District Judge, Kollam is being posted as Judge of the Family Court, Attingal and that the said Officer is understood be leaving charge immediately.
OP(C) No.3580/2011 10
19. Having regard to the above and considering the urgency of the matter it is directed that O.P(Arb.) No.167 of 2010 will stand withdrawn from the court of learned First Additional District Judge, Kollam and made over to the court of the learned Second Additional District Judge, Kollam. The office of the transferor court shall transmit the records to the transferee court forthwith. The case will stand posted in the court of learned Second Additional District Judge, Kollm on 21.01.2013.
Resultantly the original petition is disposed of as under:
i. Ext.P13, order dated 24.10.2011 on I.A.No.1267 of 2011 in O. P. (Arb.) No.167 of 2010 of the Additional District Court, Kollam is set aside. I.A.No.1267 of 2011 will stand allowed.
ii. The learned Second Additional District Judge, Kollam is directed to decide on the maintainability of Ext.P8, original petition under Sec.34 of the Act with reference to the question whether part I of the Act would apply to the case on hand in the light of the observations made above. It is open to the learned Second Additional District Judge to refer to the relevant documents, at this stage to decide the said question.
iii. The parties shall appear before the learned Second Additional District Judge, Kollam through counsel on 21.01.2013. OP(C) No.3580/2011 11
iv. The learned Second Additional District Judge is directed to decide the question above stated as early as possible, giving it all priority.
Parties or any of them shall produce a copy of this judgment in the First Additional District Court, Kollam on or before 19.01.2013.
THOMAS P.JOSEPH, Judge.
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