Bangalore District Court
) Late Sri.S.A.Narahari Setty vs ) Sri.S.N.Santosh Kumar on 8 January, 2016
IN THE COURT OF THE VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
CCCH. 11
Dated this the 8th day of January, 2016
PRESENT: Smt.Kalpana M.Kulkarni, B.A.,LL.B.,(Spl.)
VI Addl. City Civil & Sessions Judge,
Bengaluru City.
A.S.NO: 20/2014
APPELLANTS : 1) Late Sri.S.A.Narahari Setty,
(Since deceased by LRs.)
1A. Smt.C.P.Veena,
W/o.Sri.C.R.Prashsant Kumar,
Aged about 40 years,
R/at A 005, Mantri Gardens,
1st Block, Jayanagar, Madhavan Park,
Bengaluru-560 011.
2) Smt.Lakshmi Devi,
W/o.late Sri.S.A.Narahari Setty,
Partner of Vijayalakshmi Cotton Agencies,
Aged about 62 years.
3) Sri.S.N.Arun Kumar,
S/o.late Sri.S.A.Narahari Setty,
Partner of Vijayalakshmi Cotton Agencies,
Aged about 37 years.
4) Smt.S.A.Vijeetha,
W/o.Sri.S.N.Arun Kumar,
Partner of Vijayalakshmi Cotton Agencies,
Aged about 33 years.
2 AS.20/2014
All Appellants No.2 to 4
R/at Horticulture Office Road,
V.P.Extension, 1st Main Road,
Chitradurga - 577 501.
/Vs/
RESPONDENTS : 1) Sri.S.N.Santosh Kumar,
S/o.late Sri.Narahari Setty,
Aged about 44 years,
Partner of Vijayalakshmi Cotton Agencies.
2) Smt.S.S.Madhavi,
W/o.Sri.S.N.Santosh Kumar,
Aged about 39 years,
Partner of Vijayalakshmi Cotton Agencies.
Both the Respondents are
R/at No.99, 1st Floor, 3rd Cross,
3rd Main, Silver Oak Street,
J.P.Nagar, 7th Phase,
Bengaluru-560 078.
--
JUDGMENT
This appeal is filed by the Appellants under Section 37(2) (b) of the Arbitration and Conciliation Act, 1996, to set aside the impugned order dated 25.02.2014 of the learned sole Arbitrator.
2) In the appeal it is stated as below :-
The impugned order dated 25.02.2014 is unfair, unreasonable and liable to be set aside as contrary to judicial opinion. The Arbitral Tribunal failed to notice that the Respondents/Claimants in their 3 AS.20/2014 application had vaguely stated that in view of several allegations made by the Appellants against the Respondents, the documents being sought for in the I.A. under Section 17 of the Arbitration and Conciliation Act, 1996, were needed to file re-joinder to the counter claim of the Appellants. The Respondents have made the application at a premature stage i.e. even before filing their pleadings and disputing the allegations made by the Appellants. Such an application becomes unnecessary and vexatious. Hence, the impugned order dated 25.02.2014 is liable to be set aside. The Respondents have not yet filed their rejoinder to the counter claim of the Appellants and have allegedly filed the I.A. under Section 17 of the Arbitration and Conciliation Act, 1996, to file such rejoinder. It is apparent on the face of the record that the documents sought for by the Respondents which include Balance Sheets of Partners for the year ending March, 2002 till date with respect to the 1st and 3rd Appellants and from 1st October, 2006 till date with respect of other Appellants, Balance Sheet of the firm from March, 2009 to March, 2012 and as on 18.06.2011 and all ledger account details of all partners from year ending March 2002 till date, are not relevant, material and necessary for the Respondents to file their rejoinder. It is submitted that the Respondents are merely on a fishing 4 AS.20/2014 expedition to seek information from the Appellants and the application lacks bona fides, hence, the impugned order dated 25.02.2014 is liable to be set aside. The impugned order dated 25.02.2014 is without jurisdiction, prejudicial and not maintainable in the eye of law and is liable to be set aside. The application seeking for the documents is beyond the scope of the subject matter of the Arbitration and is not maintainable. It is well settled law that the procedure adopted by the Hon'ble Arbitral Tribunal has to be fair and in accordance with principles of natural justice. By allowing the application for serving interrogatories to the Appellants for production of documents, even before requiring the Respondents to file their rejoinder, if any, and even before arriving at points for determination in the Arbitration proceedings is premature and unfair against the Appellants.
The Respondents have contended that the firm stands dissolved as on 18.06.2011, have sought not to be held responsible for any loss that accrues after such date and have failed to seek relief of settlement of accounts in their claim petition. Thus, the Respondents cannot now assert their rights as partners for the period after 18.06.2011. It is submitted that the order dated 5 AS.20/2014 25.02.2014 allowing the application for production of all accounts up to date, is unfair, unreasonable and illegal, hence, this appeal.
3) The Respondents have filed objections and have contended as below:-
The appeal filed by the Appellants is not maintainable either under law or on facts and hence, liable to be dismissed in limine. AT the outset and without prejudice to the rights and remedies available to the Respondents, the Respondents hereby submit that the appeal filed by the Appellants is devoid of merits, false and frivolous. The averments made in the appeal are general in nature and are matter of record. The contents of paragraphs-II(1)(2) and (3) are correct. It is submitted that though the Appellants have narrated the chronological dates of proceedings, such averments are made in such fashion as if filing of an application under Section 17 of the Arbitration and Conciliation Act, 1996, was illegal and that the Respondents do not have any right to file such an application, which is against the spirit of the order passed by the learned sole Arbitrator. It is submitted that the sole Arbitrator has passed a considered order by proper application of mind and taking into consideration the facts and circumstances of the case and the 6 AS.20/2014 Appellants have failed to demonstrate as to how the impugned order is liable to be set aside. The Appellants are misrepresenting before this court by twisting the actual facts of the case. It is stated that the Appellants are in custody of the documents sought and as it is their duty to share such documents under the provisions of the Indian Partnership Act, they cannot refuse to carry on their duty against the provisions of the Indian Partnership Act. The grounds raised by the Appellants is against the principles of partnership and is nothing but imaginary and hence, it cannot be looked into by this court. It is apparent by the submission of the Appellants that they do not want to share the details of the partnership account, as such, it would bring the actual fact before the sole Arbitrator and consequently, the malafide intentions of the Appellants would not be fulfilled. It is stated that though the firm is dissolved by the Respondents as on 18.06.2011, it is pertinent to note that the firm is not yet would up and the accounts have not been settled between the parties, hence, refusal of the Appellants to share the accounts of the firm is illegal and does not deserve any consideration from the hands of this court. The Respondents submit that the Appellants are just beating around the bush with false and imaginary grounds so as to cause harm and injury to the Respondents. It is stated that 7 AS.20/2014 the sole Arbitrator having perused the material on record, the facts and circumstances of the case and the provision of law contained in Section 9 of the Partnership Act, has passed the impugned order and the same is fair and in accordance with the principles of law long settled. The allegations and grounds raised by the Appellants are false, frivolous and against the provisions of law, hence, it is prayed to dismiss the above appeal with exemplary costs.
4) I have heard the arguments of the learned counsel for the Appellants and Respondents. The Appellants have relied on certain citations noted below:
(i) AIR 2000 Delhi 354 : MANU/DE/1620/2000 (M/s.AFL Developers Pvt. Ltd. & Anr.)
(ii) AIR 1987 Or 207: MANU/OR/0059/1987 (J.S.Construction Pvt. Ltd., Vs. Damodar Rout) I have gone the said citations. It is my endeavor to follow the guidelines therein, wherever the facts of this case do warrant the same.
5) The points that arise for my consideration are as below:-
(1) Whether the present appeal against the impugned order passed by the sole Arbitrator in CMP.No.56/2012 dated 25.02.2014 is 8 AS.20/2014 maintainable before this court/district court, under Section37 R/W Section 17 of the Arbitration and Conciliation Act, 1996 ?
(2) Whether the Appellants are entitled for the reliefs sought for ?
(3) What Order?
6) My answer to the above points is as below:-
Point No.1 - In the Negative.
Point No.2 - In the Negative
Point No.3 - As per the final order,
for following reasons.
REASONS
7) Point No.1 : At the cost of repetition I note that, being
aggrieved by the impugned order passed by the learned sole Arbitrator in CMP.No.56/2012 the original respondents have preferred this suit/appeal before this court. For the sake of convenience, I refer the rank of the parties as they are arrayed in this appeal. The provisions of Arbitration and Conciliation Act, 1996, are under consideration and for the sake of brevity, I refer the said Act, as 'Act' hereinafter.
8) The perusal of the impugned order and the materials placed on the record show that during the pendency of Arbitration proceedings 9 AS.20/2014 between the parties to this appeal, the claimants/the present respondents filed interim application U/S.17 of Act, seeking permission to deliver interrogatories against the respondents to answer and produce documents relating to the subject matter of the dispute. As per the impugned order the learned Arbitrator has considered the application on merits and it is ordered that application is maintainable and the application is allowed permitting the claimants to deliver interrogatories against the respondents to answer and produce documents relating to the subject matter of this dispute. Being aggrieved by the said order, the appellant has preferred this appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996.
9) The records show that the alleged dispute between the parties before the learned sole Arbitrator is governed by the provisions of Arbitration and Conciliation Act, 1996. In the background of the arguments, now, I would like to note Chapter IX Sec.37 of the Arbitration and Conciliation Act, 1996, which reads as below:-
" Section 37.- Appealable orders:-
(1) An appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely:-10 AS.20/2014
a) granting or refusing to grant any measure under Section 9;
b) setting aside or refusing to set aside an arbitral award under Section 34.
(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal:-
a) accepting the plea referred in Sub-Section (2) or Sub-Section (3) of Section 16; or
b) granting or refusing to grant an interim measure under Section 17.
10) In the backdrop of this statutory provisions, now it is be considered whether this court is having jurisdiction and power to entertain and decide the appeal under Section 37 of the Act and the appeal preferred against the impugned order is maintainable before this court. As such, this court being 'district court' and that as per the notification of Hon'ble Principal City Civil and Sessions Judge, Bangalore, Dated: 12/08/1999, the Arbitration cases are allotted to this court, as such, this court being district court under section 2(e) of the Act, is empowered to deal with the matters coming within the purview of Section 9 or Section 34 or 37, 2 (a), (b)of the Arbitration and Conciliation Act, 1996.11 AS.20/2014
11) It is well settled law that right of appeal is a statutory right and unless the statute provides specific right of appeal, the aggrieved party is not entitled to prefer appeal against order. I would like to note that this statutory provision does not provide any right of appeal in respect of the order passed by the learned Arbitrator other than the orders passed under section 16 and 17 of the Act. So, it is evident that Section 37(2) of Arbitration and Conciliation Act, 1996 does not provide an appeal against interim orders passed by the Arbitrator except the orders passed under Section 16 and 17 of the Act, as mentioned in Sec.37(2) of the Arbitration and Conciliation Act, 1996.
12) In this context, I note Section 37(1), wherein, the words (and from no others) are used. In this context, I refer the book 5th Edition 2010, by Justice R.S.Bachawat's law of Arbitration and Conciliation Act, page No.2103, wherein, it is mentioned to the effect that 'the words "and from no other orders" appearing in sub-sec (1) of section 37 are analogous to the provisions of section 39 of the Arbitration Act, 1940 and came to be interpreted by a Full Bench of this Court in the case of Union of India v.
A.S.Dhupia, and Hon'ble Supreme Court in the case of Union of India v. Mahindra Supply Company, and the Supreme Court held that these words qualify the expression, "an appeal shall lie from the following orders", would qualify 12 AS.20/2014 section 39(2) as well, therefore, by the same analogy the expression "and from no others" used in section 37(1) of the Act would equally qualify section 37(2) and 37(3) of the Act.' So, it is material to note that no appeal against the interim order is maintainable unless it is specifically provided under section 37 of the Act.
13) It is material to note that, the records show that the application which resulted in passing of impugned order show that it is filed under Section 17 of the Act. The submissions and the records are to the effect that during arbitration proceedings after filing the claim statement, the present appellants had filed written statement/objections, at that time, prior to filing any re-joinder, the present Respondents filed application seeking permission to deliver interrogatories and direction to the present Respondents to produce documents as noted above. As such, looking to the nature of the application or the contents of the impugned order and the relief granted under the impugned order it does not warrant to consider that the said application was filed seeking an order against the present appellants to take any interim measure or protection in respect of the subject matter of the dispute as contemplated under Section 17 13 AS.20/2014 of the Act. So it is apparent that, the nature of the relief sought under interim application and the nature of the orders passed under interim application, that it does not come within the purview of the Section 17 of the Act, so as to attract the provisions of section 37(2) of the Act. Obviously, the nature of the impugned order discloses that it does not come within the purview of "an order" as contemplated under Section 37(2) of the Act. Hence, even though the application was filed under Section 17 of the Act, but the fact remained that by filing said application the present Respondent had not sought any relief as an interim measure for protection of the subject matter of the dispute and more so, the nature of the impugned order is not passed by way of an interim measure to protect the subject matter of the dispute. For the reasons noted above, in the opinion of the court, the present suit/appeal filed under Section 37(2) (a) (b) of the Arbitration and Conciliation Act 1996, before this court is not maintainable in the eye of law.
14) In the opinion of this court, when Section 37 of the Act does not provide appeal against the interim impugned order, even though this court is empowered to deal with the matters under Section 37 14 AS.20/2014 of the Act, on that ground, this court is not empowered to entertain this matter which is registered as suit/appeal.
15) It is well settled law that, there is no wholesale or automatic import of all the provisions of CPC., into the proceedings of the court while dealing with the Arbitration cases. Under these circumstances, it is material to note that when the statute does not confer power on this court and it specifically excludes certain orders from the purview of appeal as contemplated under Section 37 of the Act, then, consideration of the appeal under Section 151 of Code of Civil Procedure is unwarranted in the eye of law. The nature of the impugned orders is not appealable under Order XLIII of CPC. So, in view of the provision of CPC., also, the present appeal is not maintainable before this court.
16) No doubt, this court is having jurisdiction and power to entertain application U/S.34 of the Act, against the award passed by the Arbitrator which is functioning within the territorial jurisdiction of this court. But, for the reasons noted above, in opinion of this court, the present appeal in the present form before this court is not maintainable under the provisions of section 37 of Arbitration 15 AS.20/2014 and Conciliation Act, 1996 or under Section 151 of Code of Civil Procedure. Accordingly, I answer the above point in the negative.
17) Point No.2:- Even though the appeal is not maintainable, for argument sake, presuming that appeal is maintainable, now it is to be seen whether the appellant is entitled for the reliefs sought for in this appeal.
18) The gist of the case of the appellant is as below;
(a) The application for serving interrogatories even prior to filing rejoinder and arraying at points for determination in the arbitration proceedings is premature and unfair.
(b) The application is unnecessary and vexatious.
(c) The documents sought for are not relevant, material and necessary for the Respondents to file their rejoinder.
(d) The procedure adopted by the learned Arbitrator is unfair and not in accordance with the principles of natural justice and law.
On the other hand the contention of the Respondents is that:-
16 AS.20/2014
(a) The delivery of interrogation and production of documents as sought for are necessary for bringing the actual facts on record.
(b) The impugned order is fair and in accordance the principles of law long settled.
(c) The appellants are not willing to share the details of the partnership account, as such, it would bring the actual fact before the sole arbitrator.
In the light of these contentions, prior to appreciating the validity of the impugned order, it is to be kept in mind that the Arbitrator is a Judge chosen by the parties and his decision is final, the court is precluded from appraising the materials even in a case where the order contains reasons, the interference therewith would still be not available within the jurisdiction of the court, unless, of course, the reasons are totally perverse or the order is based on a wrong proposition of law, an error apparent on the face of the records, would not imply closer scrutiny of the merits of documents and materials on record, once it is found that the view of the Arbitrator is a plausible one, the court will refrain itself from interfering. It is well settled law that, in order to see whether the 17 AS.20/2014 order is illegal or not, is impermissible to re-appreciate the materials laid before the learned Arbitrator and it is also well settled law that, merely because that the court may arrive to an alternative view, on that ground order can not be set aside. In the light of these principles it is hereby noted that the contents of the impugned order shows that the learned arbitrator by providing opportunity to the parties to put-forth their contentions and providing opportunity of an hearing to both the parties, the impugned order is passed. So, in the opinion of this court, it does not warrant to note that the order is suffering from the principles of natural justice. As such, the contention of the Appellant is not tenable in this regard in the eye of law.
19) It is material to note that the learned Arbitrator has opined that the production of the documents would help the parties to establish their respective contentions and no harm and injustice would be caused to either of the parties and it is also opined that it is also necessary for the tribunal to know the real dispute between the parties to render justice and noting that the objections raised by the respondents/the present appellants are technical one, the learned arbitrator has opined that they are not sustainable. In the 18 AS.20/2014 opinion of this court, the said conclusion of the learned Arbitrator need not be interfered with which is based on the facts and law, more particularly, the provisions of the Indian Partnership Act. As such, the contention of the Appellants noted above in this regard are not tenable in the eye of law.
20) The learned Arbitrator has specifically considered the applicability of the Code of Civil Procedure to the arbitral proceedings and noting that there is no other provision in the Act to file interrogatories to cause production of the documents and noting that the tribunal is not bound by the CPC., and noting that the application is filed in arbitral proceedings and not in a suit, appreciating the citations relied on by the parties noted above, has arrived to the conclusion that the production of the documents by the present appellants before the tribunal would help to the parties to prosecute and contest the matter and it is necessary to the tribunal to know the real dispute between the parties. Under the circumstances, noting Section 19 of the Act that the Arbitral Tribunal is at liberty to conduct the proceedings in the manner it considers appropriate, as because the impugned order is passed considering the facts and circumstances of the case and nature of the dispute 19 AS.20/2014 between the parties, as such, in the opinion of this court, the contention of the Appellant that filing of the application was pre- mature and the impugned orders suffers from illegality is not tenable in the eye of law.
21) No doubt, it is the contention of the Appellant that the impugned order is passed without jurisdiction. It is the contention of the Appellant that the said documents are not relevant to settle the dispute between the parties. But, the contents of the impugned order do not warrant to note that the present Appellant has raised this point that the Tribunal has no jurisdiction to grant the reliefs as sought for by the present Respondent before the learned Arbitrator. As noted above, in recognition of the statutory right of the partners for redemption of accounts and noting that the documents would be helpful to decide the dispute between the parties, the Tribunal has arrived to allow the application. Under the circumstances, in the opinion of this court, it does not warrant to hold that the impugned order is passed without any jurisdiction or exceeding the scope of authority. Looking from any angle within the parameters of principles of law noted above, this court does not find any valid reasons to interfere with the impugned order. As such, on merits 20 AS.20/2014 also, this court finds that it does not require any interference in the impugned order, accordingly, point No.2 is answered in the negative.
22) Point No.3:- Noting the well settled principles of law, the object of the Act is to provide an expeditious alternative binding dispute resolution process with minimal court intervention, as because, for the reasons noted above, the present appeal in the present form before this court challenging the interim orders passed by the learned Sole Arbitrator is not maintainable in view of Section 37 of the Arbitration and Conciliation Act, 1996, the appeal is liable to be dismissed. In the result, I pass the following order:-
ORDER The A.S.No.20/2014 filed under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, to set aside the impugned Order dated:
25.02.2014 in CMP.No.56/2012; is hereby dismissed.
No costs.
(Dictated to the Judgment Writer on computer, typed matter corrected and then pronounced by me in open court, dated this the 8th day of January, 2016.) (KALPANA M. KULKARNI) VI Addl.City Civil & Sessions Judge, Bengaluru City.
21 AS.20/2014