Bangalore District Court
Mrs. Jugraj Sethia vs Mr. Yakub S. Erinpurwala on 30 November, 2021
1 Com.A.S.No.193/2019
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL & SESSIONS
JUDGE (EXCLUSIVE COMMERCIAL COURT): BENGALURU CITY.
(CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl.City Civil & Sessions Judge
Bengaluru City.
Dated this the 30th day of November 2021
Com.A.S.No.193/2019
Plaintiffs: 1. Mrs. Jugraj Sethia, Aged 59 years,
S/o Mr. Danchand Sethia,
2. Mrs. Vijaya Devi Sethia,
Aged about 54 years,
W/o Mr. Jugraj Sethia
Both are residing at #D1503,
Vaishnavi terrace, Dollars Colony,
4th Phase, 4th Cross, J.P. Nagar,
Bengaluru - 560 078.
(By Sri. B.V.N., Advocate)
-vs-
Defendants: 1. Mr. Yakub S. Erinpurwala,
Aged about 70 years,
S/o Mr. Sajauddin,
# 402, Peace Heaven Apartments,
51/52, Langford Road,
Bengaluru - 560 025.
2. Mr. Roshan S Erinpurwala,
Aged about 68 years,
S/o Mr. Sajauddin,
# E-304, Adarsh Garden, 47th Cross,
8th Block, Jayanagar, Bengaluru - 82.
3. Mr. Yusuf S Erinpurwala,
Aged about 65 years,
S/o Mr. Sajauddin,
2 Com.A.S.No.193/2019
No.2563, 22nd Main, 28th Cross,
Banashankari II Stage,
Bengaluru - 70.
4. Mrs. Husena M Erinpurwala,
Aged about 67 years,
W/o Mr. Mohammed,
No.2563, 22nd Main, 28th Cross,
Banashankari II Stage,
Bengaluru - 70.
5. Mr. Murtuza M Erinpurwala,
Aged about 41 years,
S/o Mr. Roasha,
# E-304, Adarsh Garden, 47th Cross,
8th Block, Jayanagar, Bengaluru - 82.
(By Sri. M.S.R., Advocate for R1 to R5)
6. Mr. Danchand Sethia,
Aged about 88 years,
S/o late Mr. Jaichand Lal Ji Sethia,
# 25, Annipuram Main Road,
Sudham Nagar, Bengaluru - 27.
7. Mr. Dharmendra Bachawat,
Aged about 54 years,
S/o Bhanwar Lal Bachawat,
# 109/9, 9th Main, Wilson Garden,
Bengaluru - 27.
8. Mr. Hemraj Sethia, Aged about 55 years,
S/o Danchand Sethia,
# 44, 3rd Cross, 3rd Lane, Lalbhag Road,
Bengaluru - 560 027.
9. Mrs. Saroj Sethia, Aged about 50 years,
W/o Mr. Hemraj Sethia,
# 44, 3rd Cross, 3rd Lane, Lalbhag Road,
Bengaluru - 560 027.
(R6 to R9 - Exparte)
3 Com.A.S.No.193/2019
JUDGMENT
This is a petition under Sec.34 of the Arbitration and Conciliation Act, 1996 r/w Rule 4 of the High Court of Karnataka Arbitration (proceedings before the Courts) Rules 2001, filed by the petitioners and sought for, to set aside the award dated 11.01.2018 in AS No.91/2017 passed by the learned arbitrator before the Arbitration Centre - Karnataka (High Court of Karnataka), Bangalore allowing the claims made by the defendant No.1 to 5 as per the claim statement filed with the tribunal by directing them to receive the balance sale consideration from the defendant No.1 to 5 and to execute the registered sale deed in favour of the defendant No.1 to 5 in respect of the suit property within 3 months from the date of the award and put the defendant No.1 to 5 in possession of the suit property.
2. Nutshell of the petition are as under:
The plaintiffs in their plaint they were alleged that themselves and the defendant No.6 to 9 who are the co-owners of the property bearing municipal No.12, Municipal Division No.64, K.H. Road (Double Road), Shanthi Nagar, Bangalore. The defendant No.1 to 5 were desired in purchasing 1.9859% of undivided share, right, title interest in the said property from them and the defendant No.6 to 9, accordingly they entered into an agreement to sell dated 4 Com.A.S.No.193/2019 12.11.1998 at Bangalore, wherein themselves and the defendant No.6 to 9 were agreed to sell the said property i.e. undivided share to an extent of 1.9859% right, title and interest to construct commercial/office shop bearing No.212 on the 2 nd floor built up area of 411 Sq.ft. and the defendant No.1 to 5 would pay a sale price of Rs.1,67,000/- and a sum of Rs.1,40,000/- was payable by the defendants to them and the defendant No.6 to 9 on or before signing of the sale agreement dated 02.11.1998 and a sum of Rs.27,0000/- was payable on or before the time of registration. The defendant No.1 to 5 had paid a sum of Rs.70,000/- through cheque dated 09.07.1997 drawn on Bank of Maharashtra and a sum of Rs.30,000/- was paid by way of cheque dated 10.07.1997 drawn on Syndicate bank. In all the defendant No.1 to 5 were paid an amount of Rs.1,00,000/- to them and the defendant No.6 to 9 towards the agreed sale price. The defendant No.1 to 5 despite of signing of the agreement on 02.11.1998 failed to pay the balance sale consideration amount of Rs.40,000/- to them and the defendant No.6 to 9 as agreed in compliance of clause 1 of the said agreement, despite repeated reminders to the defendant No.1 to 5, but the defendant No.1 to 5 failed to comply with the contractual terms and not made attempts to discharge their obligations in terms of the contract.5 Com.A.S.No.193/2019
3. The plaintiffs in their plaint they further alleged that when the matter stood thus, in the month of July 2015, the 1 st plaintiff got a telephone call from the local postman stating that there was registered post for their old address, since they had vacated the premises and moved to No.24, Pallavi Heights, Basappa Road, Shanthi Nagar, Bangalore and they were informed to the said local postman of their new residential address and collected the registered post from the postman and came to know about the CMP No.78/2015 which was filed by the defendant No.1 to 5 against them and others before the Hon'ble High Court of Karnataka seeking for appointment of an arbitrator to adjudicate the disputes that had allegedly arisen under the agreement to sell dated 02.11.1998, upon perusal of the petition they came to know the defendant No.1 to 5 were alleging that themselves and the defendant No.6 to 9 had refuse to complete the sale transaction under the sale agreement by refusing to receive the balance sale consideration amount and refusing to execute the sale deed in August 2014 and allegedly issued a legal notice in February 2015 to them and the defendants purportedly calling upon them to execute the sale deed in respect of commercial unit and they never received any such kind of notice and the defendant No.1 to 5 have clearly admitted the notice dated 18.02.2015 was returned unserved and 6 Com.A.S.No.193/2019 they were entered in the appearance through their counsel and filed the objection to the CMP stating that the dispute were not attributable as it related the relief of specific performance and the relief is barred by limitation and the defendant No.1 to 5 failed to fulfill their obligations, but the Hon'ble High Court of Karnataka was pleased to pass an order dated 02.06.2017 appointing one A.C. Vidhyadhar, Retired District Judge as sole arbitrator to resolve the disputes between them, while holding the issues of arbitrarily of the disputes whether relief prayed for by the defendant No.1 to 5 was time bared opened to the learned arbitrator to consider and decide the issue and they have not received further communication from the defendant No.1 to 5 after passing of the orders by the Hon'ble High Court of Karnataka nor received any intimation form the arbitration center, Bangalore and they were moved from No.24, Pallavi Heights, Basappa road, Shanthi Nagar, Bangalore to the current residential address mentioned the cause title. On 22.09.2018 the 1st plaintiff received a telephone call from the court peon intimating them regarding the notice in execution petition bearing No.3260/2018 pending on the file of court of City Civil Judge, Bangalore.
4. The plaintiffs in their plaint they further alleged that they were informed the said peon that they were no longer residing at 7 Com.A.S.No.193/2019 the earlier address in the Chowdappa Layout and gave him the 1 st their work address i.e. J.D. Electricals, No.118, TV Complex, BVK Iyengar Road, Opposite to Cotton Showroom, Bangalore accordingly on 25.09.2018 the court peon served the copy of the summons and the execution petition on the 1st plaintiff at his work address. Upon perusal of the summons they came to know execution petition has been filed by the defendant No.1 to 5 against them and the defendant No.6 to 9 in respect of the award dated 11.01.2018 which passed in Arbitration Case No.91/2017, so they entered appearance through their counsel on 12.10.2018 in the said execution proceedings, on the same day approached the arbitration center and filed for copy of the arbitral award dated 11.01.2018 along with case papers on 29.10.2018, on perusal of the case papers, found that the defendant No.1 to 5 had showed their address to be that of No.12, Chowdappa Layout, Shanthi Nagar, Bangalore for which they vacated as far back in the year 2010 and which also known to the defendant No.1 to 5 as was evident from the affidavit filed by them in CMP No.78/2015. The defendant No.1 to 5 with an intention to place them as exparte and to snatch the order at their back had furnished wrong address in the claim statement. The defendant No.1 to 5 had canceled change of their address to the arbitral tribunal. Consequently, a notice from the arbitral tribunal was sent 8 Com.A.S.No.193/2019 to them to the old and incorrect address which expectedly came to be returned with postal shara addressee left, return to sender. The defendant No.1 to 5 mischievously sought leave of the tribunal and carried out the notice to them and the defendants by way of substitute service through newspaper publication in the Kannada daily newspaper Kannada Prabha and they were placed exparte and they were not in conversant in reading Kannada language and they had no reason or opportunity to come across the paper publication arrived at by the defendant No.1 to 5 and the tribunal pleased to pass the exparte award, thereby they were filed the instant petition for the following;
GROUNDS a. The award dated 11.01.2018 which passed by the sole arbitrator in AC No.91/2017 before the arbitration centre, is contrary to the letter and spirit of the Arbitration and Conciliation Act particularly Sec.34 of the Arbitration and Conciliation Act and the impugned order is in derogation of the applicable provisions of Indian Contract Act, 1872.
b. The award passed by the sole arbitrator is not supported by any cogent reasons and on the contrary is against to the terms of contract and violates Sec.28(3) of the Act which is wholly illegal arbitrary and is unjust. The award which passed by the sole 9 Com.A.S.No.193/2019 arbitrator is patently illegal, unjust and conflict with the public policy and by relying only on the materials produced by the defendant No.1 to 5 and failed to adjudicate the matter exercising the judicial discretion.
c. The learned tribunal failed to notice that the parties entered into agreement to sell as far back as 02.11.1998 and their exist no subsisting dispute between them as on the date when the defendant No.1 to 5 intimated arbitration proceedings and their claim hopelessly barred by limitation and failed to produce the materials before learned arbitral tribunal to show any action initiated by them against them from 1998 till 2015 in respect of the said property and the legal notice purportedly sent to them in the year 2015 was admittedly not served on them and the said notice has been returned with an acknowledgment as addressee left, return to sender.
d. The learned tribunal failed to consider the mischevious intention of the defendant No.1 to 5 to place them as exparte and to obtain the award, as they have changed their residential address that the defendant No.1 to 5 were misled the tribunal to issue notice to an address where they no longer resided and the defendant No.1 to 5 were aware of their new address of service as he was evident from the affidavit filed in CMP No.78/2015.
10 Com.A.S.No.193/2019
e. The defendant No.1 to 5 misled the tribunal by taking out paper publication in Kannada daily newspaper and when they were not conversant with the language.
f. The learned arbitrator has failed to notice that the legal notice which has been marked as Ex.P.3 in the arbitration claim was not served on them and the said legal notice has been returned with an acknowledgment as addressee left, return to sender.
g. The defendant No.1 to 5 had provided only the postal receipts which were marked as Ex.P.4 and not the acknowledgment card and the defendant No.1 to 5 were intend to on preventing them a fair opportunity to meet their case and the sole arbitrator has committed a procedural irregularity in conducting the arbitral proceedings which resulting a violation of principles of natural justice thereby resulting in failure of justice.
h. The arbitrator failed to take note of the fact that the defendant No.1 to 5 have failed to comply with their obligations under the agreement to sell and they have breached the agreement to sell not entitled for any discretionary relief from this court.
I. The sole arbitrator has awarded the specific performance of the instance of the party who is guilty of breach of contract and failed to appreciate that the subject matter is not capable of being settled by arbitration due to being barred by limitation. 11 Com.A.S.No.193/2019 j. The impugned award which granted by the arbitral tribunal prohibits Sec.16(1) and Sec.20 of the Specific Relief Act which is deserved for set aside.
k. The arbitral award which passed is perverse in nature and it is untenable relating in miscarriage of justice. l. The award which passed by the sole arbitrator opposed to the law of precedents, perverse in nature.
m. The arbitrator has not applied its mind to Sec.20 of the Specific Relief Act 1963 which contains rules governing granting of specific performance.
n. The arbitrator has failed to appreciate their claim and their terms and conditions of the agreement.
o. The learned arbitrator failed to appreciate that the defendant No.1 to 5 were never ready and willing to perform their part of contract.
p. The impugned award which passed by the sole arbitrator ignores settled law that the conditions readiness and willingness is a condition precedent to grant the relief of specific performance and to prove the readiness of the capacity have to be established and readiness has to be proved financially through an averments and the evidence to be led in.
12 Com.A.S.No.193/2019
q. The sole arbitrator failed to notice from the tribunal was sent to the wrong address and proceed to place them as exparte.
r. The sole arbitrator has not taken into consideration about non discharging of the liability of the defendant No.1 to 5 nor taken into execution of the agreement of sale and failed to notice the obligation was not on them which on the defendant No.1 to 5.
s. The impugned award which passed by the sole arbitrator violates Sec.34 of the Arbitration and Conciliation Act which suffers from other legal infirmities and the cause of action for the suit which arise on 02.11.1998 when the agreement to sale was entered into between them when the defendant No.1 to 5 failed to pay the sale consideration in terms of the agreement and on various dates when the arbitral tribunal was duly consituted and proceeding to place and on 11.01.2018 the date of award passed by the sole arbitrator in Com.A.S.No.91/2017 and on 21.05.2018 when they were received summons in execution petition No.1260/2018 and on 12.10.2018 and they were applied certified copy of the award in A.C.N.9/2017 and on 29.10.2017 when they were received the certified copies of the aforesaid documents within the jurisdiction of this court and prays for allow the petition.
5. In response of the notice the respondents No.1 to 5 were appeared through their respective counsel, though the notice has 13 Com.A.S.No.193/2019 been served on the defendant No.6 to 9 they did not appear nor filed their objection statement, thus they were placed exparte. The defendant No.1 to 5 in their statement of objections were stated the application which filed by the plaintiffs is totally devoid of merits and the same is deserved for dismissal and the petition which filed under Sec.34 of the Arbitration and Conciliation Act is not maintainable which is barred by limitation and the plaintiffs have not challenged the arbitral tribunal within 4 months. Therefore, on this ground alone the petition is deserved for dismissal in view of Sec.34(3) of the Arbitration and Conciliation Act and the plaintiffs have falsely created the cause of action to bring the suit before this court and the plaintiffs have not made out any case as to why there is a delay, their for challenging the award and falsely stated they got to know about the arbitration proceedings only on 22.09.2018, when the court peon telephoned them about summons to be served on them in E.P.No.3260/2018 pending on the file of City City Court, CCH-41 and they were entered on reference in the said E.P. on 12.10.2018 and on the same day they applied for certified copies before the arbitration center, but they have been delivered copies only on 29.10.2018 in A.C.No.91/2017 by the arbitration center i.e. 7 days belatedly the petition has been filed and the motto of the arbitration center to ensure speedy justice to the litigants and the 14 Com.A.S.No.193/2019 petitioners have made false allegations do not call for interference of this court. The defence taken up the plaintiffs does not even constitute a valid ground for setting aside the award as per the Sec.34 of the Arbitration and Conciliation Act.
6. The respondents in their statement of objection they further alleged that the petition which filed by the petitioners is not maintainable which is deserved for dismissal and the arbitral award which passed is the final and binding on them and the court does not sit as a court of appeal against the award which passed by the arbitrator. The grounds which raised by the plaintiff cannot be examined by this court it would be a contrary view and it cannot disturb the findings of the arbitrator. The sale agreement dated 12.11.1998 which executed in between them, but the plaintiffs have falsely alleged that they were failed to comply the contractual terms without any basis nor issued any notice or cited the clause for which they have breached the same and again they falsely alleged that they have received legal notice on 18.02.2015 and vehemently contested before the Hon'ble High Court of Karnataka in CMP No.78/2015. After issuance of paper publication they were appeared and they were always ready and willing to perform their part of the contract but the plaintiffs failed to perform their part of the contract as per the agreement of sale dated 02.11.1998 and the plaintiffs 15 Com.A.S.No.193/2019 were never come forward to execute the final sale deed thereby they have breached the written statement of the agreement.
7. The defendants in their objection statement they further alleged the grounds which urged by the plaintiffs that there is a violation of under Sec.28(3) of ACT and the award is patently illegal, unjust against the natural justice and in conflict with the public policy of India and there was no subsisting dispute and the question of limitation has not been decided by the arbitrator and no notice was served on the parties and they were always ready and willing to perform their part of contract and CMP was came to be allowed and the sole arbitrator has been conducted the proceedings which is binding on them is not challenged by the plaintiffs and they were estopped from raising such plea repeatedly and the plaintiffs have misconstruing the law and they are trying to sit in the judgment over the judicial order passed by the court and the arbitrator appreciated the facts of the agreement and other issues in a prospective manner and same is resulted in delivering justice and the application which filed for stay of arbitral award and condonation of delay which filed are not maintainable and prays for reject the petition.
16 Com.A.S.No.193/2019
8. The petitioners apart form filing of the petition under Sec.34 of the Arbitration and Conciliation Act have filed the application under Sec.34(3) of the Arbitration and Conciliation Act and also sought for stay the execution of the award and filed the affidavits in support of the applications stating that themselves and the defendant No.6 to 9 who are co-owners of the property which involved in the agreement of sale and the defendant No.1 to 5 did not come forward to pay the balance sale consideration amount and filed the CMP before the Hon'ble High Court of Karnataka and the said petition was came to be allowed and the sole arbitrator has been appointed but no notice was served on them to appear before the arbitral tribunal to prosecute their case and the exparte award has been passed against them put in for enforcement through exciton petition then only they came to know about the exparte award and obtained the certified copy of the award on 29.10.2018 and thereafter sought for legal counsel and filed the instant petition. Therefore it is just sand necessary to condone the delay in filing the instant petition and to stay the execution of the award for which the defendant No.1 to 5 were filed their objection by denying the contention which taken by the plaintiffs in the affidavits filed in support of the application and the learned counsel for the plaintiff has requested the court to consider these two applications along 17 Com.A.S.No.193/2019 with main petition thereby these two applications were taken up along with main petition.
9. Heard the arguments on both sides.
10. The points that arise for consideration of this court are as under:
1) Whether the plaintiffs were made out sufficient cause to condone the delay in filing the instant petition?
2) Whether the plaintiffs were made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award which passed by the sole arbitrator?
3) What order?
11. My answer to the above points are as under:
Point No.1: In the Negative;
Point No.2: In the Negative;
Point No.3: As per final order, on the following;
REASONS
12. POINTS NO.1 & 2: The plaintiffs being said to be the owners of the property along with defendant No.6 to 9 which involved in the agreement of sale were approached the court on the ground that the agreement of sale was taken place in between 18 Com.A.S.No.193/2019 themselves and the defendant No.6 to 9 with the defendant No.1 to 5 and the defendant No.1 to 5 were paid the part sale consideration amount and they did not come forward to pay the balance sale consideration amount in spite of repeated request and demand thereby the CMP was came to be filed and which was came to be allowed, sole arbitrator was appointed who passed the award feeling aggrieved by the said award they have filed the instant petition.
13. The learned counsel for the plaintiffs while canvassing his arguments has submitted that the plaintiffs and the defendant No.6 to 9 who are the co-owners of the property bearing Municipal No.12, Municipal Division No.64, K.H. Road, Shanthi Nagar, Bangalore. The defendant No.1 to 5 who are desires of purchasing of the said property, accordingly they entered into an agreement of sell dated 02.11.1998 and the plaintiff and the defendant No.6 to 9 were agreed to sell the said property to the defendant No.1 to 5 of their undivided share right, title and interest to construct the commercial/ office shop bearing No.212 on the 2nd Floor with built up area of 411 Sq.ft., accordingly the sale price has been fixed for Rs.1,67,000/- out of which the defendant No.1 to 5 were paid Rs.1,00,000/- through cheque and did not come forward to pay the balance sale consideration amount in spite of repeated request and demand and 19 Com.A.S.No.193/2019 the defendant No.1 to 5 were failed to comply with the contractual terms of the agreement and the defendant No.1 to 5 were filed the Miscellaneous Petition before the Hon'ble High Court of Karnataka and sought for appointment of the arbitrator for adjudication of the issue and the said petition was came to be allowed and sole arbitrator has been appointed, but no notice has been served on the plaintiffs and the exparte award was came to be passed as the plaintiffs have shifted their residence from No.24, to Pallavi Heights, Basappa Road, Shanthi Nagar, Bangalore, even in the CMP were also brought to the notice of the defendant No.1 to 5 about their new address knowing fully well the defendant No.1 to 5 have suppressed the said facts and obtained exparte award. Based on the exparte award were filed the execution petition and the court peon called them through telephone then only came to know about the exparte award which obtained by the defendant No.1 to 5 by suppressing the true facts, thereby they have applied certified copy of the arbitral award and obtained certified copy of the arbitral award on 29.10.2018 and filed the instant petition. If the delay is not condoned nor set aside the award which passed by the sole arbitrator the plaintiff and the defendant No.6 to 9 were put to irreparable loss and injustice and prays for allow the petition. 20 Com.A.S.No.193/2019
14. Per contra, learned counsel for the defendant No.1 to 5 in his arguments has submitted that the defendant No.1 to 5 have not disputed about the agreement which taken place in between the plaintiff, defendant No.6 to 9 with defendant No.1 to 5 and the petition which filed by the petitioners is not maintainable since the plaintiffs have not challenged the award which passed by the sole arbitrator within the statutory period of Sec.34(3) of the Arbitration and Conciliation Act, on this ground alone the petition is deserved for dismissal and the plaintiffs have falsely cooked up the story stating that the plaintiffs were came to know about the arbitral proceedings only on 22.09.2018 when the court peon telephoned them about summons to be served on them in E.P.No.3260/2018 pending on the file of City Civil Court, CCH-41 and thereby they entered on reference in the said E.P. on 12.10.2018 and on the same day applied for certified copies and the got obtained on 29.10.2018, but the reasons best known to them soon after receipt of the certified copy of the award they did not file the instant petition and there is a statutory period to challenge the arbitral award for 90 days, but the plaintiffs have not filed the instant suit with the statutory period and the plaintiffs have not made out any of the grounds in view of Sec.34 of the Arbitration and Conciliation Act to set aside the award as the defendant No.1 to 5 have taken 21 Com.A.S.No.193/2019 steps not only through RPAD but also through paper publication, but in spite of the same they did not come forward to prosecute the case before the arbitral tribunal knowing fully well the Hon'ble High Court has been directed to approach the arbitration center by the parties and their respective counsel. Now the plaintiffs were come up with the instant petition only with an intention to drag the proceedings and to escape their liability. When the application itself is not maintainable question of interference of this court in the award which passed by the sole arbitrator does not arise and prays for reject the petition.
15. It is an admitted fact the learned counsel for the plaintiff while canvassing his arguments has submitted that no notice has been served not only on the plaintiffs, but also on the defendant No.6 to 9 and the defendant No.1 to 5 have not taken the steps to the correct address of the plaintiffs and the defendant No.6 to 9 knowing fully well about their correct address and the award which passed by the sole arbitrator comes within the purview of Sec.34 of the Arbitration and Conciliation Act. So before considering the arguments which advanced by both the parties and the materials on record, let me know the legal aspects first for the proper appreciation.
1. What is arbitration?
22 Com.A.S.No.193/2019
2. When court can interfere with arbitral award?
3. What is the scope of Court's power to interfere with the arbitral award?
4. What are the grounds are required to set aside the award?
5. Setting aside of arbitral award when permissible?
Let me decide one by one for proper appreciation of the materials on record. Thus this court drawn its attention on Sec.2(1)(a) of the Arbitration and Conciliation Act, 1996 which reads like this:
2(1)(a). The definition arbitration means any arbitration whether or not administered by permanent arbitral institution.
Arbitration is a private dispute resolution mechanism agreed upon by the parties.
Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties.
Arbitration is a process of settlement extra curses curiae and the parties are at liberty to choose their judge. "The essence of arbitration without assistance or intervention of the court is settlement of dispute by a tribunal of the own choosing of the parties." Law of arbitration aids in implementation of arbitration agreement contract between the parties which remains a private adjudication by a forum consequently chosen by the parties and made on consequential reference.
Now let me know when court can interfere with the arbitral award. Thus this court drawn its attention on Sec.34(43) of the Arbitration and Conciliation Act, 1996 which reads like this:23 Com.A.S.No.193/2019
43. Principles of interference with arbitral award:-
The principles of interference with an arbitral award under Sec.34(2) of the Act are as follows:
(1) An award, which is -
(i) contrary to substantive provisions of law; or
(ii) The provisions of Arbitration and Conciliation Act, 1996, or
(ii) against the terms of the respective contract; or
(iv) Patently illegal or
(v) Prejudicial to the rights of the parties; is open to interference by the court under Sec.34(2) of the Act.
(2) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality.
(3) The award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the court.
(4) It is open to the court to consider whether the award is against the specific terms of the contract and if so interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
So by virtue of the provision which stated above, the court can interfere with the arbitral award in the grounds which mentioned above.
24 Com.A.S.No.193/2019
Now let me know what is the scope of Court's power to interfere with the arbitral award? Thus this court drawn its attention on Sec.34(34) of the Arbitration and Conciliation Act which reads like this;
Scope of Court's power to interfere with the arbitral award:
The scope of the interference by the court's in regard to arbitral award is limited. Courts do not sit in appeal over the findings and decision of the arbitrator, nor can it reassess or re-appreciate evidence or examine the sufficiency or otherwise of the evidence.
So by virtue of the provision which stated supra, the scope of interference by the court in regard to the arbitral award is limited scope. The scope of interference under Sec.34 of the Act is limited in view of the judgment of the Hon'ble Supreme Court of India which reported in AIR 2003 SC 2629 in between Oil and Natural Gas Corporation Ltd., V/s Shah Pipes Ltd., and in the said judgment, their Lordship held that;
'an award can be set aside if it is contrary to fundamental policy of Indian Law, the interest of India, justice or morality, if it is patently illegal and unfair and unreasonable it shocks the conscience of the court'.
Now let me know what are the grounds are required to set aside the award which passed. Thus this court drawn its attention 25 Com.A.S.No.193/2019 on Sec.34(18) of the Arbitration and Conciliation Act which reads like this:
18. Grounds to set aside award:- Under the new Act, 1996 misconduct of arbitrator is no ground to set aside an award but court may set aside an award in the following grounds:
(1) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(2) falling such agreement, the composition of arbitral tribunal was not in accordance with the part I of the Act.
(3) if the arbitral proceeding was not in accordance with -
(a) the agreement of the parties.
(b) failing such agreement - the arbitral procedure was not in accordance with part I of the Act. However exception for setting aside the award on the ground of composition of arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of part I of the Act from which parties cannot derogate;
(c) if the award passed by the arbitral tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
An award can be set aside, if it is against the public policy of India that is to so it is contrary to:
26 Com.A.S.No.193/2019
(1) fundamental policy of Indian law, (2) the interest of India, or (3) justice or morality , or (4) if it is patently illegal.
It could be challenged -
(a) as provided under Sec.13(5); and
(b) Sec. 16(6) of the Arbitration and conciliation Act. So the court can set aside the award, if the grounds found which stated supra.
So if the petitioner is made out the grounds which stated supra, court can set aside the award. Now let me know about the setting aside of arbitral award when permissible. Thus this court drawn its attention on Sec.34(4) of the Arbitration and Conciliation Act, 1996
4. Setting aside of arbitral award when permissible:-
That the court can set aside the arbitral award under Sec.34(2) of the Arbitration and Conciliation Act if the party making the application furnishes the proof that:
(i) a party was under some incapacity
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for time being in force.
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or otherwise unable to present his case.
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms 27 Com.A.S.No.193/2019 of the submission to arbitrator or it contains visa decisions on matters behind the scope of the submission to arbitration.
(2) The court may set aside the award: (I) (a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(b) falling such agreement, the composition of the arbitral tribunal was not in accordance with part-1 of the Act.
(ii) if the arbitral procedure was not in accordance with:
(a) the agreement of the parties, or
(b) failing such agreement, the arbitral procedure was not in accordance with part-1 of the Act.
However exception for setting aside the award on the ground of composition of arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict within the provisions of part-1 of the Act from which the parties cannot derogate.
(c) If the award passed by the arbitral tribunal is in contravention of provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to:
(a) fundamental policy of Indian Law;
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.28 Com.A.S.No.193/2019
(4) It could be challenged-
(a) as provided under Sec.13(5); and
(b) Section 16(6) of the Act."
"B. Further held as follows in this case: (1) The impugned award requires to be set aside mainly on the grounds:
(I) There is specific stipulation in the agreement that the time and date of delivery of the goods was the essence of the contract;
(ii) in case of failure to deliver the goods within the period fixed for such delivery in the schedule, ONGC was entitled to recover from the contractor liquidated damages as agreed;
(iii) it was also explicitly understood that the agreed liquidated damages were genuine pre- estimate of damages;
(iv) on the request of the respondent to extend the time limit for supply of goods, ONGC informed specifically that time was extended but stipulated liquidated damages as agreed would be recovered;
(v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor;
(vii) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable.
(viii) in certain contracts, it is impossible to asses the damages or prove the same. Such situation is taken care by section 73 and 74 of the Contract Act and in the present case by specific terms of the contract" - Oil and Natural Gas Corporation V Shah Pipes Ltd. (2003)5 SCC 705 : AIR 2003 SC 2629; see also Moona Abousher V M/s.29 Com.A.S.No.193/2019
Cholamandalam DBS Finance Ltd. AIR 2019 Mad
233. The above provisions which referred above are very much clear when court can interfere with the arbitral award and what is the scope of court's power to interfere with the arbitral award and what are the grounds are required to be set aside the award as well as setting aside of arbitral award when permissible.
12. The learned counsel for the plaintiffs has much argued for non service of summons nor the notice from the arbitral tribunal. Thus this court drawn its attention on Rule 14 of the arbitration center - Karnataka (Domestic and International) Bangalore Rules 2012 which reads like this:
All notices or communications from the Director and the arbitral tribunal shall be in writing and deemed to have been duly delivered when sent to the last known address of the party or the duly notified representative of the parties. Such notice or communication may be made by any one of the following modes:
a) delivery against receipt,
b) Registered post,
c) Courier facia mail transmission telex,
d) Telegram or any other means of electronic communication.
So the above provision reflects Director and the arbitral tribunal shall issue notice in writing through the ways as referred above. 30 Com.A.S.No.193/2019
13. The learned counsel for the plaintiffs has much argued about non service of notice even then the Defendant No.1 to 5 have taken the steps in the wrong address of the plaintiffs and defendant No.6 to 8 as it is an old address of the plaintiffs and Tribunal wrongly placed the plaintiffs as exparte. Thus this court drawn its attention on Rule 24 of the arbitration center - Karnataka (Domestic and International) Rules 2012 which reads like this:
q. If any party to an arbitration agreement fails to participate at any stage before the signing of terms of reference, then such party shall be said exparte and a notice to the said fact shall be sent to the defaulting party along with copy of the other party or parties.
2. If any confirming party refuses or fails to take part in the arbitration proceedings such party shall be placed exparte by the arbitral tribunal and a notice to the said effect shall be issued to such party, however, this shall not be proclude such party from participating in any subsequent proceedings of the arbitration with the leave of the arbitral on such terms as it may impose.
So, by virtue of the rules which referred above, if the party to the agreement fails to participate in the arbitral proceedings shall be treat him as exparte. In the same manner if the party refuses or fails to take part in the arbitral proceedings shall not be procluded 31 Com.A.S.No.193/2019 from participating in any subsequent proceedings. Thus this court drawn its attention on Order 5 Rule 17 of CPC which reads like this:
Procedure when defendant refuses to accept service or cannot be found Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgement, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable time and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did do, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed. The above provision is very much clear where the serving officer after using all due and reasonable diligence cannot find the defendant who is absent from his resident at the time when the service is sought to be effect, service can be made to the serving officer shall affix on the outer door or some other conspicuous part of the house.
14. Now let me know the arguments which advanced by both the counsels, as the learned counsel for the plaintiffs while canvassing his arguments has drawn the court attention on the award passed by the sole arbitrator on the ground that the order which passed by 32 Com.A.S.No.193/2019 the sole arbitrator reflects notice has not been served on the plaintiffs nor the defendant No. 6 to 9. So, on careful perusal of the award in para 4 found that after the claim statement, notice was sent to the respondents through registered post acknowledgment due by the centry to submit their written response and same returned with postal shara respondent No.1 to 3 left, return to sender and the notice sent to respondent No.4 returned with postal shara as no such door number and the notice which sent to respondent No.5 and 6 returned with postal shara, as no such person in the address and return to sender and thereafter on 26.10.2017 notice through RPAD intimating the respondent about the first day of hearing as on 13.11.2017 was sent to the respondents by the centry. The notice sent to respondent No.1 to 3 returned with postal shara as left and in respect of respondent No.4 to 6 notice has been returned with postal shara as no such person in the said address. Thereafter, the claimants were taken the steps through paper publication and placed the plaintiffs and the defendant No.6 to 9 as exparte. So, in the order which passed by the sole arbitrator reflects though the defendant No.1 to 5 have taken the steps as per Rule 14 of the arbitration center - Karnataka (Domestic and International) Rules, but neither the plaintiffs nor defendant No.6 to 9 did not appear nor prosecute the case, thereby 33 Com.A.S.No.193/2019 they were placed them as exparte. So there is no bar to take the steps as stated above. Accordingly the defendant No.1 to 5 were taken the steps and the plaintiffs and the defendant No.6 to 9 were placed exparte.
15. The learned counsel for the plaintiffs has much argued that the defendant No.1 to 5 in the CMP filed before the Hon'ble High Court of Karnataka were not shown the correct address as they came to know about CMP which filed by the defendant No.1 to 5 through local postman who telephoned them about the postal article and they were also informed the new address to the said postman and collected registered post from the postman and they were appeared in the said CMP petition and filed their objection in the verifying affidavit shown their residential address, but the defendant No.1 to 5 were not corrected the address of the plaintiffs nor the defendant No.6 to 9 in the case title of the CMP petition and the said CMP petition was came to be allowed and no notice was served from the arbitration center to the plaintiffs.
16. It is an admitted fact the defendant No.1 to 5 were filed CMP 78/2015 before Hon'ble High Court of Karnataka and sought for appointment of an arbitrator to solve the dispute in between them. Accordingly the very plaintiffs and the defendant No.6 to 9 were 34 Com.A.S.No.193/2019 appeared and filed the objection. After hearing the arguments it was came to be allowed one A.C. Vidhyadhar, retired District Judge has been appointed as sole arbitrator to resolve the dispute between the parties and directed the registry to dispatch the copy of the order to the arbitration center, Bangalore and also directed the parties represented by their respective learned counsel to also approach the arbitration center, and filed the necessary papers. So, for the proper appreciation of the direction which issued by the Hon'ble High Court of Karnataka is necessary for reproduction which reads like this:
Register, to dispatch a copy of this order to the arbitration center, Bangalore.
The parties represented by their respective learned counsel to also approach the arbitration center and filed the necessary papers.
So, if the direction which made by the Hon'ble High Court of Karnataka is taken into consideration, the plaintiffs as well as defendant No.6 to 9 and the defendant No.1 to 5 have been directed to approach the arbitration center and to file the necessary papers and it is not the case of the plaintiffs nor the defendant No.6 to 9 that as per the direction of the Hon'ble High Court of Karnataka they were approached the arbitration center, when there is a direction from the Hon'ble High Court of Karnataka to approach the arbitration center to file the necessary papers it is the bounden duty 35 Com.A.S.No.193/2019 of the plaintiffs and the defendant No.6 to 9 to approach the arbitration center and to file their necessary papers, but either the plaintiffs nor the defendants No.6 to 9 did not do so, it shows their conduct in spite of direction which issued by the Hon'ble High Court of Karnataka, even then the defendant No.1 to 5 have taken the steps as per rules, but the plaintiffs did not appear, thereby they were placed them as exparte.
17. The learned counsel for the plaintiff while canvassing his arguments has much argued that the plaintiff No.1 has filed his verifying affidavit in which has shown the correct residential address, but the reasons best known to the plaintiffs when they were appeared before the Hon'ble High Court of Karnataka in CMP nothing is prevented to file an application to direct the petitioner for correction of their present address in the cause title of the petition, but the reasons best known to the plaintiffs did not taken any steps. Now they come up with instant petition stating that no notice has been served on them to appear before the arbitral tribunal. When there was a direction from the Hon'ble High Court of Karnataka to approach the arbitration center, without doing so now they come up with the instant petition on the ground of non service of notice. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water.
36 Com.A.S.No.193/2019
18. It is an admitted fact neither the plaintiff nor the defendant No.1 to 5 were not disputed about agreement of sale which taken place in between the plaintiffs and the defendants. It is the contention of the plaintiffs that the defendant No.1 to 5 did not come forward nor paid the balance consideration amount. The award which passed by the arbitral tribunal reflects the arbitral tribunal after considering the materials on record passed the award directing the defendant No.1 to 5 to deposit balance sale consideration amount within 3 months and directing the very plaintiff and the defendant No.6 to 9 to execute the registered sale deed in favour of the defendant No.1 to 5. Now the question is whether the petitioner brings the instant suit within the ambit of Sec.34 of the Arbitration and Conciliation Act. Thus this court drawn its attention on Sec.34 of the Arbitration and Conciliation Act which reds like this:
34 Application for setting aside arbitral 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 sub-section (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application furnishes proof that--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or 37 Com.A.S.No.193/2019
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation. --Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section
81. (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) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
The above provision is very much clear the person who approached the court by filing an application under Sec.34 of the Arbitration and Conciliation Act has to establish that he was under some incapacity to appear before the arbitration nor establish the grounds which are 38 Com.A.S.No.193/2019 enumerated under Sec.34 of the Arbitration and Conciliation Act to bring the suit with the ambit of Sec.34 of the Arbitration and Conciliation Act, as the plaintiffs in the plaint have stated about non-service of notice, but they have not disputed about the agreement of sale which taken place in between them and they were utterly failed to bring the suit within the ambit of Sec.34 of the Arbitration and Conciliation Act to grant the relief as prayed for. Therefore, the arguments which advanced by the learned counsel for the plaintiffs on this aspect holds no water. 39 Com.A.S.No.193/2019
19. The learned counsel for the plaintiffs while canvassing his arguments has submitted that the plaintiff were filed the objection in CMP by raising limitation and other aspects for enforcement of the agreement of sale for specific performance as per the agreement and the Hon'ble High Court of Karnataka granted liberty to the plaintiffs to raise the same before the arbitral tribunal and the agreement of sale was taken place on 02.11.1998 and the arbitral proceedings filed in the year 2017 and the same is a barred by limitation in granting the relief in pursuance of the agreement of sale, but on perusal of the award which passed by the sole arbitrator, the sole arbitrator not only taken into consideration of the observation which made by the Hon'ble High Court of Karnataka in CMP No.78/2015 but also considered the limitation which raised by the plaintiffs before the Hon'ble High Court of Karnataka and held that there was no clause with regard to the time for performance of the agreement and as per clause 3 of the agreement if the purchaser committed the default to pay the balance of sale price, the plaintiff shall give notice by registered post by acknowledgment due, but the reasons best known to the plaintiffs have not placed any materials on record to show that soon after the default which committed by the defendant No.1 to 5 they have taken steps in pursuance of the agreement of sale. Therefore, 40 Com.A.S.No.193/2019 the arguments which advanced by the learned counsel for the plaintiffs on this aspects holds no water.
20. The learned counsel for the plaintiffs while canvasing his arguments has submitted the plaintiffs have filed the instant petition within the limitation but on the other hand, the learned counsel for the defendant No.1 to 5 has submitted the petition itself is not maintainable since the plaintiffs were not filed the instant petition within the statutory period. Therefore, this court drawn its attention on Sec.34(3) of the Arbitration and Conciliation Act which reads like this:
(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.
The above provision is very much clear an application for setting aside the award shall not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award, provided if the court is satisfied that the applicant was prevented by sufficient cause from making the 41 Com.A.S.No.193/2019 application within the said period of 3 months, it may entertain the application within further period of 30 days.
21. So, if the aggrieved party is intending to challenge the award shall file the petition within 3 months, provided if satisfied the court that he was prevented by sufficient cause, it may entertain the application within a further period of 30 days. So, in order to avail the grace period of 30 days shall made out that he was prevented by sufficient cause from making the application, where as the plaintiff in the affidavit filed in support of the application has stated that he has received the documents from the arbitration center on 29.10.2018, thereafter sought legal counsel and preferred the subject suit since they were not aware of the arbitration proceedings before the arbitration center and they have to engage the counsel and procure the papers pertaining to the subject matter from the year 1998 thereby they were unable to file the suit within 3 months from receipt of the case papers. So for the proper appreciation of the reasons which assigned for non filing of the instant petition within the statutory period is necessary for reproduction which reads like this:
We state that since we were not aware of the award dated 11.01.2018 passed by the Hon'ble Tribunal and it came to out knwoledge only when we received the notice in the Execution Petition as stated above and immediately we approached 42 Com.A.S.No.193/2019 Arbitration Centre and filed for the certified copy of the award and connected case papers, without any delay and received the said documents on 29.10.2018. Thereafter we sought legal counsel andhave preferred the subject suit. Since, we were not aware of the arbitratoin proceeding before the Arbitration Centre and since we had to engage counsel and procure papers pertaining to the subject matter from the year 1998, we were unable to file the subject suit within three months from receipt of the case papers.43 Com.A.S.No.193/2019
If, the above recitals i.e. the reasons which assigned by the plaintiffs are taken into consideration, the plaintiffs were prevented for getting the legal opinion and to engage the counsel as well as procure the papers pertaining to the subject matter from the year 1998 unable to file instant petition within 3 months from the receipt of the case papers. Admittedly the plaintiffs were received the copy of the award and connected case papers without any delay on 29.10.2018, admittedly the plaintiffs were filed the instant petition on 26.02.2019. So, from 29.10.2018 is taken into consideration, 3 months will be expired on 29.01.2019. So, in the entire para 11 has assigned the reasons for non filing of the petition within 3 months on the ground of engaging of the counsels and to procure the papers, but have not at all stated sufficient cause as they were prevented from sufficient cause to file the instant petition, even after 3 months within 30 days as the provision which referred above mandate on the plaintiffs to assign sufficient reasons to avail 30 days grace period to file the instant petition but the reasons best known to the plaintiffs except stating that we are advised to state that we are filing suit within the additional 30 days prescribed under proviso to Sec.34(3) of the Arbitration and Conciliation Act, except this nothing is stated about the sufficient cause which they were prevented for filing the instant petition. 44 Com.A.S.No.193/2019 Therefore, the arguments which advanced by the learned counsel for the plaintiffs on this aspect holds no water. So, one thing is clear from the above provision if the plaintiffs did not file the instant suit within 3 months it may entertain the application within a further period of 30 days subject to establishment of sufficient cause but the reasons best known to the plaintiffs have not established sufficient cause to avail the benefit of grace period of 30 days. Therefore, the arguments which advanced by the learned counsel for the plaintiffs on this aspect holds no water.
22. The learned counsel for the plaintiffs while canvassing his arguments has submitted that no notice was served on the plaintiffs and the defendant No.6 to 9, therefore, this court interference is required to set aside the award and drawn the court attention on the judgment of the Hon'ble Supreme Court which reported in 2013 (10) SCC 540 in between Sachin Gupta and Anr. V/s K.S. Forge Metal Pvt. Ltd., which reads like this:
Arbitration and Conciliation Act , 1996 - Ss. 34(2)(a)(iii), !!(8) and 18 - Grounds for setting aside award - matters at large under a S. 34 application - Award passed without issuing notice and without hearing respondent, held, liable to be set aside - Single Judge of High Court examined dispute between parties minutely and made remarks on conduct of parties while setting aside award - Tenability - Held, High Court ought not to have examined dispute so minutely as if it were a court of first appeal - However, High Court rightly set aside award on ground of no notice being issued to 45 Com.A.S.No.193/2019 respondent - Further held, it is appropriate if matter is referred to an independent arbitrator agreeable to both parties - Having referred to an independent arbitrator agreeable to both parties - Having felt that matter required to be referred to specific arbitrator, Supreme Court appointed retired Judge of High Court as arbitrator.
On careful perusal of the above judgment in the said judgment their lordship held that award shall be set aside if the award passed without issuing notice and without hearing the respondent, but in the instant case notice has been issued and those notice have been returned on the ground addressee not found and left the address and the Hon'ble High Court of Karnataka has been directed the plaintiffs and the defendant No.6 to 9 to approach the arbitration center and the plaintiffs had knowledge about the directions which issued by the Hon'ble High Court of Karnataka, therefore the judgment which relied by the learned counsel for the plaintiffs is not applicable to the case on hand, since the facts and circumstances of the present case and the judgment which relied are different.46 Com.A.S.No.193/2019
23. The learned counsel for the plaintiffs while canvassing his arguments has submitted that when no notice was served on the Plaintiffs any award which passed it is an exparte award which against to the principles of natural justice and when the notice which was issued against the plaintiffs and the defendant No.6 to 9 were returned back as left, not found in the address are clear notice has not been served on the plaintiffs and the defendant No.6 to 9 and the said counsel has drawn the court attention on the judgment of the Hon'ble Delhi High Court reported in 2001(60) DRJ 846 in between Daisy Trading Corporation Vs Union of India and Hon'ble Bombay High Court reported in 2007(1) Bombay CR 898 in between Lakhpatraj Sampatraj Jain Vs State of Maharashtra and others. On careful perusal of the said judgments in the said judgments notice has been sent for appearance through registered post but same was not returned and the respondent was placed exparte and presumed the sufficient service, but in the instant suit the steps have been taken in pursuance of the rules which referred above, since the rules empowers the arbitrator to issue notice in the modes as stated supra. Therefore, after taking the steps through paper publication then only the plaintiffs and the defendant No.6 to 9 were placed exparte. Therefore, I do respect to the judgments which relied but 47 Com.A.S.No.193/2019 the facts and circumstances of the present case and the judgments which relied are different.
48 Com.A.S.No.193/2019
24. The learned counsel for the plaintiffs has drawn the court attention on the judgment of Hon'ble Supreme Court which reported in 1932 SCC Online Madras 84 in between Gyanammal Vs Abdul Hussain Sahib and 2017 SCC Online Bombay 5628 in between The Commissioner of Income Tax V/s Abacus Distribution System (India) Pvt. Ltd. On perusal of the said judgments in the said judgments their lordship held that nothing is prevented to the defendant against whom exparte decree was passed from showing that he has not been duly served, in the sense that knowledge of his opponent claim has been brought home to him even though the formalities of substitute service have been carried and even the notice was wrongly addressed the presumption under Sec.27 of the General Clauses Act cannot be invoked, but in the instant case, the plaintiffs were filed the objection to the CMP by showing their correct address, but the reasons best known to them they have not brought to the notice of the Hon'ble High Court nor taken any steps for correction of their address which appeared in the cause title nor appear before the arbitration center as per the direction of Hon'ble High Court of Karnataka nor taken any steps because of their fault in the said proceedings, notice was ordered to be issued to the plaintiffs, but the plaintiffs nor the defendant No.6 to 9 did not appear, inspite of the steps which taken as per the rules as stated above, thereby the 49 Com.A.S.No.193/2019 sole arbitrator was proceeded with the case. Even while considering the issue has not only taken into consideration about the facts, but also taken into consideration about the objection which raised by the plaintiffs in the CMP. Therefore, I do respect to the decisions which relied but the facts and circumstances of the present case and the said decisions are different.
50 Com.A.S.No.193/2019
25. The learned counsel for the plaintiffs while canvassing his arguments has submitted there is a conflicting decision of the sole arbitrator which is against to the public policy and the said counsel has drawn the court attention on the judgment of the Hon'ble Supreme Court which reported in 2021 SCC Online SC 508 in between PSA Sical Terminals Pvt. Ld. Vs Board of Trustees. On careful perusal of the said decision in the said judgment their lordship held that the court is not expected to act as an appellate court and re appreciation of the evidence and scope of interference would be limited in view of Sec.34 of the Arbitration and Conciliation Act and the interference would be so warranted when the award is in violation of public policy of India. In the instant case the plaintiffs have not bring their case within the ambit of Sec.34 of the Arbitration and Conciliation Act as the plaintiffs were approached this court on the ground of non service of summons and also raised about the limitation and readiness and willingness of the defendant No.1 to 5, but if these objections are taken into consideration, this court has to appreciate the evidence which already considered by the sole arbitrator which is not permissible under Sec.34 of the Arbitration and Conciliation Act unless the plaintiffs established the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act for which the plaintiffs have failure the same. 51 Com.A.S.No.193/2019 Therefore, the judgment which relied is not applicable to the case on hand.
26. The learned counsel for the plaintiffs has drawn the court attention on the judgment of the Hon'ble Supreme Court which reported in 2015(3) SC cases 49 in between Associate Builders Vs Delhi Development Authority. On careful perusal of the said judgment in the said judgment their lordship held that none of the grounds contained in Sec.34(2)(a) deal with the merits of the decision rendered by the arbitral award. It is only when arbitral award is in conflict with the public policy of India as per Sec.34(2)(b)(II) that merits of an arbitral award are to be looked into under a certain specified circumstances i.e. fundamental policy of Indian law compliance with the status and judicial precedents, need for judicial approach, natural justice compliance, wednesbury reasonableness, interest of India justice or morality and patent illegality, but the plaintiffs failed to bring the case in the circumstances which appeared in the judgment which relied. Therefore, I do respect to the judgment which relied but the facts and circumstances of the present case and the judgment which relied are different.
27. The learned counsel for the plaintiffs while canvassing his arguments has much argued regarding Sec.34(3) of the Arbitration 52 Com.A.S.No.193/2019 and Conciliation Act on the ground that the plaintiffs were filed the instant petition within the statutory period, as they have not filed the instant petition within 3 months, but they have filed the instant petition within the grace period of 30 days in total within 120 days and drawn the court attention on the following judgments.
1. (2012) 9 SCC 496 in between Bearsi Krishna Committee & Ors. Vs Karmyogi Shelters Pvt. Ltd.
2. (2005) 4 SCC 239 in between Union of India Vs Tecco Trichy Engineers & Contractors.
3. (2011) 4 SCC 616 in between State of Maharashtra & Ors. Vs ARK Builders Pvt. Ltd.
4. OMP (Comm) No.01/18 decided on 27.11.2019 in between Eddy Singh Vs SBI Cards and Payments Services.
5. FAO No.2885/2008 (Punjab & Haryana HC) decided on 12.11.2019 in between M/s Puneet Construction Company Vs Union of India.
53 Com.A.S.No.193/2019On careful perusal of the above judgments, in the said judgments their lordship held that limitation of 3 months under Sec.34(3) is to be reckoned from the date on which the party itself received award and not its advocate or agent and the expression cannot be read in isolation and it must be understood in the light of Sec.31(5) of the Arbitration and Conciliation Act and reading of two provisions together it is quite clear that the limitation prescribed under Sec.34(3) of the Arbitration and Conciliation Act would commence only from the date of signed copy of the award has been delivered and the award can be set aside in case the party making the application was not given proper notice of the appointment of an arbitrator or the arbitral proceedings, but the facts and circumstances of the present case and the judgments which relied are totally different, as the plaintiffs though have filed the application under Sec.34(3) of the Arbitration and Conciliation Act by admitting that they were not filed the instant petition within 3 months, but they have filed the instant petition within the period of 120 days, but in order to avail the grace period, they have to satisfy the court about the sufficient cause which was prevented them to file the petition within the statutory period, but the plaintiffs neither explained the sufficient cause nor established through the materials 54 Com.A.S.No.193/2019 before the court. Therefore, I do respect to the said decision, the said decisions are not applicable to the case on hand.
28. The learned counsel for the plaintiffs while canvassing his arguments has much argued that the sole arbitrator has not taken into consideration about the readiness and willingness of the defendant No.1 to 5 and drawn the court attention on the following judgments:
1. (2020) 3 SCC 280 in between C.S. Venkatesh Vs ASC Murthy (D) by LR's and Ors.
2. (2019) 3 SCC 704 in between Kamal Kumar Vs Premlata Joshi & Ors.
3. (1995) 5 SCC 115 in between N.P. Thirugnanam (Dead) by LR's Vs Dr. R. Jagan Mohan Rao and Others.
On careful perusal of the said judgment, in the said judgment their lordship held that the readiness and willingness means it is from the date of agreement till the decree which is a continuous readiness and willingness is a condition precedent to grant the relief of performance and the defendants have to establish their readiness and willingness to perform their part of the contract which is a condition precedent.
29. In the instant case, the sole arbitrator while passing the award in page 14 has not only taken into consideration about the limitation, but also taken into consideration readiness and willingness of the defendant No.1 to 5 and the plaintiffs were utterly 55 Com.A.S.No.193/2019 failed to bring the case within the ambit of Se.34 of the Arbitration and Conciliation Act, therefore I do respect to the judgments which relied but the facts and circumstances of the present case and the said decisions are different.
30. The learned counsel for the defendant No.1 to 5 while canvassing his arguments has submitted the plaintiffs were not participated in the proceedings nor raised the objection relating to the objection which raised in the instant suit. So, question of considering the said facts does not arise and re-appreciation of the evidence which already taken into consideration by the sole arbitrator does not arise and this court is not sitting as a appellate court for re-appreciation of the evidence and to arrive a different conclusion by holding that the arbitral award is against the public policy and the plaintiffs have not established any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award and interfering with possible view of the arbitrator on facts not permissible and court cannot substitute its own evaluation on question of law and facts to come to the conclusion that the arbitral tribunal acted contrary to the bargain between parties and the application challenging the award filing of time limit prescribed under Sec.34 of the Arbitration and Conciliation Act is absolute and unextendable and delay behind the 56 Com.A.S.No.193/2019 period of prescribed cannot be condoned and the said counsel has drawn the court on the following judgments:
1. AIR 2020 SC 2038
2. AIR 2019 Madras 215
3. 2014 AIR (Civil) 1075
4. (2015) 5 SCC 698
5. AIR 2010 SC 972
6. AIR 2015 SC 620
7. 2010 Arb. W.L.J. 544 (Del.)
8. AIR 2016 J & K 154
9. AIR 2001 SCC 4010
10. AIR 2016 Calcutta 160
11. AIR 2019 Calcutta 84
12. AIR 2019 Karnataka 46.57 Com.A.S.No.193/2019
On careful perusal of the said judgments in the said judgments, their lordship held that plaintiffs were not participated in the proceedings nor raised the objection relating to the objection which raised in the instant suit. So question of considering the said facts does not arise and re-appreciation of the evidence which already taken into consideration by the sole arbitrator does not arise and this court is not sitting as a appellate court for re appreciation of the evidence and to arrive a different conclusion by holding that the arbitral award is against the public policy and the plaintiffs have not established any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award and interfering with possible view of the arbitrator on facts not permissible and court cannot substitute its own evaluation on question of law and facts to come to the conclusion that the arbitral tribunal acted contrary to the bargain between parties and the application challenging the award filing of time limit prescribed under Sec.34 of the Arbitration and Conciliation Act is absolute and unextendable and delay behind the period of prescribed cannot be condoned. Therefore, the judgments which relied are applicable to the case on hand. The plaintiffs were approached this court on the ground no notice has been served on the plaintiffs while passing the award which passed by the sole arbitrator comes within the purview 58 Com.A.S.No.193/2019 of Sec.34 of the Arbitration and Conciliation Act, but the plaintiffs were utterly failed to establish their case in view of Sec.34 of the Arbitration and Conciliation Act nor made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award. Therefore, I am of the opinion that the point No.1 is answered as Negative.
31. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The petition under Sec.34 of the Arbitration and Conciliation Act, 1996 r/w Rule 4 of the High Court of Karnataka Arbitration (proceedings before the Courts) Rules 2001, filed by the petitioners is hereby dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 30th day of November, 2021) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City