Bangalore District Court
Nalanda Enterprises vs M/S Mars Distributors on 5 July, 2021
IN THE COURT OF I ADDL. CITY CIVIL &
SESSIONS JUDGE AT BENGALURU. (CCH.No.2)
Present :- Sri. Somashekar C. Badami, B.Com., LLB.,
I Addl. City Civil & Session Judge,
Bengaluru.
Dated this the 5th day of July 2021
A.S.No.5 / 2016
Plaintiff :- NALANDA ENTERPRISES
A registered Partnership Firm
Having its place of business at
Plot No.4E, Asten Garden Apartments
Opposite IBP Petrol Bunk
81, Hessaraghatta Cross
Bangalore
Represented by its partner-
Sri R.V.S.R.H. Prasad.
(By Sri S.D.N. Prasad, Adv.)
- VS -
Defendants :- 1. M/s MARS DISTRIBUTORS
No.40, 2nd Main, Gandhinagar
Bangalore-560 009
Represented by its proprietor-
Sri V.H. Suresh.
2. M/s TRIBHUVAN CHITRAMANDIRA
Gandhinagar, K.G. Road
Bangalore-560 009
Represented by its Proprietor-
Paramanand & Sons
A registered Partnership Firm
Having its place of business at
No.7, 2nd Floor, Bajaj Complex
No.84/85, 5th Main Road
Gandhinagar, Bangalore-560 009
Represented by its Managing Partner
Sri Vijaykumar P. Bajaj.
2 A.S.No.5/2016
3. M/s MEGHANA Enterprises
A Partnership Firm
Having Office at:-
No.122, N.P. Lane, Cottonpet
Bangalore- 53
Represented by its Partner
Sri S. Ananth Raju.
4. THE KARNATAKA FILM CHAMBER
OF COMMERCE
Apex Body of Karnataka Film
Industries, No.28, 1st Main,
Crescent Road, High Grounds,
Bangalore-560 001
Represented by its Chairman.
(D.1 rep. by Sri C.S. Srinivas, Advocate; D2
rep. by Sri S.V. Srinivas, Advocate; D.3-
Placed exparte and D.4 rep. by Sri S.M.
Hegde Kadave, Advocate)
Date of Institution of the suit 02.01.2016
Nature of the Suit (suit for Aggrieved by the award passed in
pronote, Suit for declaration and Arbitration Case No.AB/86/2015
possession, Suit for injunction, dated 16.07.2015 by the defendant
etc.): No.4
Date of the commencement of
recording of the Evidence: Nil
Date on which the Judgment
was pronounced: 05.07.2021
Total duration: Year/s Month/s Day/s
05 06 03
(Somashekar C. Badami)
I Addl. City Civil & Sessions Judge,
Bengaluru.
3 A.S.No.5/2016
JUDGMENT
The plaintiff has filed this arbitration suit under Section 34 of the Arbitration and Conciliation Act, 1996, praying to set aside the award passed in Arbitration Case No.AB/86/2015 dated 16.07.2015 passed by the defendant No.4- The Karnataka Film Chamber of Commerce, Bangalore and for costs.
2. The brief facts of the case of plaintiff are as under: The defendant No.2- M/s Tribhuvan Chitramandira is a prominent theatre, showing various cinematographic films of different languages on weekly basis. The plaintiff is a Contractor engaged by the defendant No.2 for the purpose of operating, running and engaging in the business of exhibition of cinematographic films. An agreement has been executed in between plaintiff and defendant No.2. The defendant No.3 is a tenant under the plaintiff on a monthly lease basis for a period of two years, commencing from 15.08.2012 to 19.09.2014 under oral tenancy agreement. The said lease between them came to be terminated and after termination of the said lease, the defendant No.3 is due to pay Rs.14,00,000/- to the plaintiff as per statement of account (customer account ledger report) maintained by it.
Such being the facts, it is learnt to the plaintiff that on 01.04.2015, the defendant No.1 has filed a complaint before the defendant No.4 i.e., The Karnataka Film Chamber of Commerce, stating that the defendant 4 A.S.No.5/2016 No.3 was approached the defendant No.1 and both were made a deal amongst themselves and as per the said deal, the defendant No.1 was received an amount of Rs.2,40,000/- from the defendant No.3 as weekly rent, etc., and thereafter on 29.09.2015, it is learnt to the plaintiff from receipt of copy of the award passed in Arbitration Case No.AB/86/2015 conducted by the defendant No.4- Karnataka Film Chamber of Commerce wherein it was ordered that the plaintiff is due to the defendant No.1 for an amount of Rs.5,23,242/- with interest at 9% per annum with effect from 09.04.2015 till the date of realisation since DCR is in the name of theatre. Being aggrieved by the exparte award passed by the defendant No.4- Karnataka Film Chamber of Commerce in Arbitration Case No.AB/86/2015 dated 16.07.2015 and issued on 16.09.2015 and delivered to the plaintiff on 28.09.2015, the present suit is filed on the following grounds:-
(i) The arbitration proceeding was conducted by the defendant No.4 is contrary to the express provisions of Arbitration and Conciliation Act, 1996;
(ii) The plaintiff never entered into any agreement with the defendant No.1 at any point of time for reference about their alleged grievance to the arbitration and there upon the arbitration proceedings against them does not arise at all;
(iii) The plaintiff never served with any notice by the defendant No.1 with regard to referral of the alleged grievance as against the plaintiff to the arbitration proceedings;5 A.S.No.5/2016
(iv) The plaintiff was not at all received any notice and the initiation of an arbitration proceeding by the defendant No.4-
Karnataka Film Chamber of Commerce based on a complaint of defendant No.1 and passed an award without any notice to the plaintiff is suffering from principles of natural justice and the same is an exparte award and liable to be set aside;
(v) No reference to the Hon'ble High Court of Karnataka made by defendant No.1 with regard to appointment of arbitrator as contemplated under the provisions of Arbitration and Conciliation Act, 1996;
(vi) As per Section 10(1) of the Arbitration and Conciliation Act, 1996, the number of arbitrators should be an even number, however in the impugned award passed by the defendant No.4, the number of arbitrators is six in number;
(vii) The impugned arbitration award not at all disclosed as to how, in what manner, calculation, evidence and it arrived at the conclusion of plaintiff is due to the defendant No.1 the amount of Rs.2,14,082/- as claimed by the defendant No.1 and hence the award suffers from illegality;
(viii) The impugned arbitral award is passed mechanically without applying any mind to the true facts and circumstances of the case;
(ix) The alleged Arbitration Board constituted by the defendant No.4 has no authority in law to carry out arbitration proceedings and passed the impugned arbitration award;
(x) The arbitration proceeding is bad for non-joinder of proper and necessary parties. When the plaintiff specifically contended he has leased out the theatre in question to the 6 A.S.No.5/2016 defendant No.3, which was taken note by defendant No.4, then the defendant No.3 ought to have been arrayed as a necessary party to the impugned arbitration proceedings conducted by the defendant No.4;
(xi) The plaintiff is a registered Partnership Firm and as such, all the partners of the plaintiff-firm are not personally liable for any of the debts, dues, etc., that the said firm has incurred, as such the very initiation of the arbitration proceedings as against a single partner of the plaintiff-firm itself is not maintainable in the eyes of law;
(xii) The impugned award came to be passed on 16.07.2015, which was issued only on 16.09.2015. The said award was delivered to the plaintiff on 29.09.2015 and therefore the suit is in time.
Thus, viewed from any angle, the impugned award is opposed to the facts and circumstances, law, probabilities and equities of the case. Hence, this suit against the defendants for setting aside the award passed in Arbitration Case No.AB/86/2015 dated 16.07.2015 by the defendant No.4- Karnataka Film Chamber of Commerce.
3. As could be seen from the records, after institution of the present suit, the Principal City Civil and Sessions Judge, Bengaluru has made over this case to this Court. After service of summons to the defendant No.1 to 4, the defendant No.1 appeared through Sri C.S.S., Advocate; defendant No.2 appeared through Sri S.V.S., Advocate; the defendant No.3 remained absent and placed it as exparte and defendant No.4 appeared through Sri S.M.H., Advocate. 7 A.S.No.5/2016
4. I heard the arguments of both plaintiff and defendant No.1, 2 & 4. In addition to the arguments canvassed by defendant No.4, he submitted his written arguments with memorandum of article of association as a synopsis to support his argument. He also files a memo with citations. I perused the entire records and applied my mind to the settled principles of law.
5. On the basis of facts and circumstances, the following points that are arises for my consideration: -
1. Whether suit filed under Sec.34 of the Arbitration and Conciliation Act, 1996 is in time ?
2. Whether plaintiff has made out any of the grounds as enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the impugned exparte award dated 16.07.2015 in Arbitration Case No.AB/86/2015 by the defendant No.4/Karnataka Film Chamber of Commerce, Bengaluru ?
3. What order ?
6. My findings on the above points are as under :-
POINT NO.1 : In the affirmative,
POINT NO.2 : In the affirmative,
POINT NO.3 : As per final order;
for the following :-
REASONS
7. POINT NO.1: As per the learned counsel for the plaintiff, the present suit is well within time as it is filed within 3 months from the date of receipt of the xerox copy of award on 29.09.2015. Inspite of this, to 8 A.S.No.5/2016 the abundant caution, the plaintiff has filed IA No.2 under Sec.5 of the Limitation Act with his affidavit, wherein it is sworn that, due to his ill- health, he was not able to travel frequently from his residence in Guntur of Andhra Pradesh to Bengaluru, Karnataka. Accordingly, he requested to condone the delay if any. On the other hand, the learned counsel for the respondent No.1 has submitted his 10 pages of written arguments, but nowhere he is denied the sworn statement of the plaintiff and not at all contended that, the suit is barred by time. However, the learned advocate for the arbitrator/respondent No.4 - Karnataka Film Chamber of Commerce also filed its arguments, wherein at para No.14, it is submitted that, the present IA under Sec.5 of the Limitation Act is not appreciable and the reasons assigned in the affidavit are not satisfactory. With these contentions, it is submitted the present suit is filed beyond 90 days and accordingly, it is liable to be dismissed as time barred under Sec.34(3) of the Arbitration and Conciliation Act. In the light of arguments of both sides first of all I have gone through the relevant provisions of the Arbitration and Conciliation Act.
8. At the outset, the present arbitration suit of the plaintiff filed under Sec.34 of the Arbitration and Conciliation Act, 1996 by the plaintiff seeking for the relief of setting aside the award passed by the respondent No.4 in Arbitration Case No.AB/86/2015. Accordingly, it is relevant to seen to determine the point of limitation by invoking Sec.34(3) of the Act as rightly contended by the respondent No.4. 9 A.S.No.5/2016
9. As per Sec.34(3) of Arbitration and Conciliation Act, the application for setting aside an award shall not be entertained by the Court it is made after three months have lapsed from the date on which the applicant had received the arbitral award. However, the proviso to this section provides that, if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed time, it may entertain the application within a further period of 30 days, but not thereafter. Accordingly, if the suit is filed without any explanation after lapse of 120 days, then only the suit is said to be barred by time.
10. Section 31(5) of the Arbitration and Conciliation Act stipulates that, "a signed copy of the award shall be delivered to each party". The Hon'ble Apex Court in the case of Union of India Vs Tecco Trichy Engineers and Contractors reported in (2005) 4 SCC 239, it is held that:
"The period of limitation would commence only after a valid delivery of an arbitral award take place under Sec.31(5) of the Act. The Hon'ble Court further held in this case that, this is not a matter of mere formality, it is a matter of substance. The delivery of the arbitral award to the party, to be effective, has to be received by the party. This delivery by the arbitral tribunal and receipt by the party sets in motion the period of limitation."
On relying upon the above principles, in State of Maharashtra and others VS ARK Builders Pvt. Ltd., reported in (2011) 4 SCC 616, the Hon'ble Supreme Court held that, "expression" party making 10 A.S.No.5/2016 the application has received the arbitral award" cannot be read in isolation, and it must be understood that, Sec.31(5) of the Act requires the signed copy of the award to be delivered to each party.
Further, in the case of State of Himachal Pradesh Vs Himachal Techno Engineers, reported in (2010) 12 SCC 210, the Hon'ble Apex Court held that, "when the award is delivered or deposited or left in office of a party on a non-working day, the date of such physical delivery is not the date of receipt of the award by the party. Delivery, thus, has to be effective so as to be called as receipt by the party.
11. In the light of these principles of interpretations of law by the Hon'ble Apex Court, I have to scrutinize the submissions with the records of arbitration proceedings in the case on hand. It is undisputed between the parties that, the respondent No.4 -the Karnataka Film Chamber of Commerce, Bengaluru having its arbitration board passed an exparte award on 16.07.2015 on the complaint of the respondent No.1 in respect of a dispute between the respondent No.1 and the present appellant / plaintiff and respondent No.2 in arbitration case No.AB/86/2015.
12. Looking to the said copy of the award dated 16.07.2015, it is revealing that, the same was issued on 16.09.2015. In para-2 of the memorandum of application under Sec.34 of the Act, the plaintiff though 11 A.S.No.5/2016 admitted about the date of issuance, but it is mentioned specifically that, the same was delivered to him on 29.09.2015. The same contents are repeated in Para-21 of the said application. Contrary to the same, the respondent No.4/arbitrator not at all produced any record to show that, the copy of the award was actually received by the plaintiff and other parties before 29.09.2015.
13. The learned counsel for respondent No.2 argued that, he being the owner of Tribhuvan Chitra Mandira not served any notice of the proceedings or the copy of the award and learnt about the same after the summons of the present suit. It is further submitted that, in the award, the name Sri. Bajaj is mentioned as Proprietor of the Theatre is wrong and even no records to show that, any copy of the award sent to said Sri. Bajaj. Therefore, according to the learned counsel for the respondent No.2, the award though not binding upon him, but he is also affected with the terms of the award and accordingly he supported fully to the case of the plaintiff. In fact, the arbitrator not at all furnished any record to show that, the copy of the award issued to the respondent No.1/Sri. Bajaj of the award. Even the date of delivery of copy of award as admitted by plaintiff i.e., 29.09.2015 is taken into consideration, the present arbitration suit under Sec.34 of the Act ought to file on 29.12.2015 within 90 days from the said admitted date of receipt. However, the plaintiff filed the present arbitration suit on 02.01.2016 i.e., on 93rd day from the admitted date of receipt of the xerox copy of award. 12 A.S.No.5/2016
14. Though, Sec.5 of the Limitation Act is not at all applicable as rightly argued by the respondent No.4, but the sworn affidavit of the plaintiff can be received as an explanation for filing the present suit on 93rd days i.e., after lapse of 90 days. This Court empowered to extend further one month i.e., till 120th day from the date of the receipt of the award. In view of the fact that, no record to show about actual receipt of the copy of the notice to the respondent No.1 / Sri. Bajaj of the award or its owner i.e., the present defendant No.2, the reasons assigned by the plaintiff in his affidavit are sufficient and satisfactory in the light of the same are not at all denied by the respondent No.1. The arbitrator has no locus standi to deny the said satisfactory sworn statement of the plaintiff and accordingly such arguments of the advocate for the respondent No.4 are ignored. Thus, having regard to the facts and circumstances of this case revealing from the proceedings of the award, I feel there is no lapse of 120 days as prescribed under Sec.34 (3) of the Act and its proviso clause in filing the present arbitration suit. Therefore, I am of the considered opinion that, this suit is well within time. Hence, Point No.1 is held in the affirmative.
15. POINT No.2: Before going to discuss about the merits of the case on hand involved in this issue, let me know the scope of this Court to adjudicate the matter in issue as provided under Sec.34 of the Arbitration and Conciliation Act, 1996 as the present suit of the plaintiff 13 A.S.No.5/2016 filed under said provision, which reads as under:-
Sec.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
(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.14 A.S.No.5/2016
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."
16. At the outset, the facts of the case of plaintiff/appellant - Nalanda Enterprises (stood as respondent No.2 in the award) in brief that, there is a contractual terms in between it and Tribhuvan Chitra Mandira - respondent No.2 to run the theatre by exhibiting of cinematographic films as per agreement dated 26.09.2011 entered in between them. To show the said fact, the said agreement is produced for the perusal of this Court and it is not in dispute that, the plaintiff is a lessee of Tribhuvan Chitra Mandira and accordingly discloses as a lessee in the cause title of the award. In turn, the plaintiff allegedly leased out the said Chitra Mandira to M/s.Meghana Enterprises - respondent No.3 to run the theatre on oral agreement for a period from 15.08.2012 to 19.09.2014. To show this fact of oral agreement between them during this period, the plaintiff has produced its complete statement of account (customer account ledger report) and as such there was no any dealings or contract with the respondent No.1- M/s.Mars Distributors at any point of time. Inspite of this, on the basis of complaint dated 01.04.2015 of respondent No.1, the Karnataka Film Chamber of Commerce - respondent No.4 has initiated the arbitration proceedings against the plaintiff and another without any notice of such 15 A.S.No.5/2016 reference, which is contrary to the provisions of Arbitration and Conciliation Act and as against the principles of natural justice. Ultimately, without any proper reasons in a most illegal manner passed the impugned award dated 16.07.2015 fixing the liability upon the plaintiff to pay a sum of Rs.5,23,242/- with interest at 9% p.a. from 09.04.2014 till its realisation. The learned counsel for the plaintiff argued these facts of the case and law and therefore, it is requested to set aside the said arbitration award.
17. The respondent No.2 being the owner of Tribhuvan Chitra Mandira supported the case of the plaintiff. The learned counsel for the respondent No.2 has argued that, Sri Bajaj as mentioned as respondent No.1 in the award is not a proprietor of the Tribhuvan Chitra Mandira and he has nothing to do with the theatre. It is submitted that, one Vijay Kumar P. Bajaj being Managing Partner of Paramananda and Sons, a Partnership firm is the Proprietor of the said Tribhuvana Chitra Mandira. According to the learned counsel, the Tribhuvan Chithra Mandira was leased out and as such, the owner is nothing to do with the alleged dealings of any liability fixed in the award against proprietor. It is further argued that, there is no any notice of arbitration proceedings to the said owner or partnership firm or its Managing Partner Sri. Vijay Kumar P. Bajaj and no copy of award is furnished to it. Therefore, it is submitted that, the award passed by the respondent No.4 is illegal and prayed to set aside the same as per the request of the plaintiff. 16 A.S.No.5/2016
18. The learned counsel for contesting respondent No.1 - Mars Distributors vehemently argued according to his written arguments and submitted that, the award passed by the respondent No.4 is legal. According to him, there was oral agreement between respondent No.1 and Tribhuvan Chitra Mandira and in pursuance of oral agreement dated 28.03.2015 to exhibit its Kannada Film "Ulidavaru Kandanthe" in the Tribhuvan Theatre and exhibited the same for two weeks and accordingly, the said Chitra Mandira is liable to pay the amount of award as per DCR (Daily Collection Report) signed by one Prasad on behalf of the respondent No.2. It is argued that, the plaintiff and the respondent No.3 are strangers to the arbitration proceedings and the plaintiff has no locus standi to file the present suit and the same is not maintainable and prayed to dismiss the same with exemplary costs.
19. The learned counsel for the Karnataka Film Chamber of Commerce/respondent No.4 being one of the arbitrators also submitted the detailed arguments as if it is a beneficiary of the award and justified the impugned award passed by it as it is not incontravention of any of the provisions of Arbitration and Conciliation Act, 1996 and the same is passed within the provisions of its memorandum of articles of association since the parties to the award are its members. Therefore, it is prayed to dismiss the suit of the plaintiff/appellant. In the light of the arguments canvassed by both the sides, I have carefully gone through the relevant provisions of Arbitration and Conciliation Act and 17 A.S.No.5/2016 also the memorandum of articles of association as produced by the respondent No.4.
20. Undisputedly, the respondent No.4 has initiated the arbitration proceedings before its Arbitral Board under Arbitration Case No.AB/86/2015 on the ground that, the respondent No.1 (Claimant under the arbitration award) has given a representation/complaint dated 01.04.2015 about his grievances. Accordingly, it is clear that, the respondent No.1 referred the matter for arbitration before respondent No.4. For further discussion, let us extracted the very complaint of the respondent No.1 as under:
ಮಮನನ ಅಧನಕಕರರ, ದನಮನಕ 01.04.2015
ಕನಮರಟಕ ಚಲನಚತತ ವಮಣಜನ ಮನಡಳ,
ಕಕತಸಕನಟಟ ರಸಕಸ, ಬಕನಗಳಳರರ.
ಮಮನನರಕರ,
ವಷಯಯ ತತಭರವನಟ ಚತತಮನದರದನದ ಉಳದವರರ ಕನಡನತಕ ಚತತದ
ಷಕರರರಹಣ ಪಮವಳ ಆಗದರರವ ಬಗಕಗ
ಮರಲಲನಡ ನಮಮ ಚತತವನರನ ದನಮನಕ 28.03.2015 ರನದರ ರಮಜಮನದನನತ ಬಡರಗಡಕ ಮಮಡದರದ, ಪತಧಮನ ಚತತಮನದರವಮಗ ತತಭರವನಟ ಚತತಮನದರದಲಲ ಪತದರರಸದರದ, ಚತತಮನದರದ ಪತತನಧಯಮಗ ರತರಯರತ ಅನನತರರವರರ ಖರದಮದಗ ನಮಮ ಕಚಕರರಗಕ ಬನದರ ರಳ.2,40,000-00 (ಎರಡರ ಲಕಕದ ನಲವತರಸ ಸಮವರ) ವಮರದ ಬಮಡಗಕಯನರನ ಗಕಳತರಸಪಡಸಕಕಳನಡರರತಮಸರಕ. ಈ ಚತತವವ ಎರಡರ ವಮರಗಳ ಕಮಲ ಪತದರರನವಮದ ನನತರ ಗಳಕಕಯನರನ ಆಧಮರವಮಗಟರಟಕಕಳನಡರ ಚತತವನರನ ಸಸಗತ ಗಕಳಳಸಲರ ನಮವವ ತಳಸದಮಗ ಚತತಮನದರದವರರ ನಮಗಕ ಬಕರರಮವವದಕರ ದಕಳಡಡ ಚತತ ಕಕಕಯಲಲಲಲದ ಕಮರಣ ಮಮರನನನ ವಮರ ಶಕರಕಡಮವಮರರ ಆಧಮರದಲಲ ಏನಮದರಳ ಕಕಳಡರತಕಸರವಕ. ಯಮವವದಕರ ಕಮರಣಕಳಲ ನಮಮನದ ಡಫಸಟಟ ಕಕರಳರವವದಲಲವಕನದರ ಆಶಮಶಸನಕ ನರಡ ಒಟರಟ ಮಳರರ ವಮರಗಳ ಕಮಲ ಚತತವನರನ ಪತದರರಸದರದ, ಇನದಗಕ ಒನದರ ವಷರವಮದರಳ ಸಹ ನಮಗಕ ಷಕರರರಹಣವನರನ ನರಡರರವವದಲಲ.
ಉದನಮದ ಏರಳತಗಳನರನ ಬಲಲ ನಮನರ ಇನದಲಮಲ ನಮಳಕ ಕಕಳಡರತಮಸರಕನರನವ ಭರವಸಕಯನದಗಕ ಸಸಜನನದನದಲಕರ ವನನತಸರತಮಸ ಬನದರರತಕಸರನಕ. ಆದರಕ ಇತಸರಚನ ದನಗಳಲಲ ರತರಯರತ ಅನನತರ ಅವರ ದಳರವಮಣ ಸನಪಕರಕಕಲ ಇಲಲವಮಗದರದ, ಚತತಮನದರದ ವನವಸಮಸಪಕರಳ ಸಮಪರಕ ಉತಸರವನರನ ನರಡರತಸಲಲವಮದದರನದ ಅನವಮಯರವಮಗ ವಮಣಜನ ಮನಡಳಯ ಮರಕಹಕಳರಗರತಸದರದ ದಯಮಮಡ ಈ ಕಕಳಗಕ ನಮಳದಸರರವ ನಮಮ ಭಮಗದ ಷಕರರರ ಮತಸ 18 A.S.No.5/2016 ಹಮಗಳ ನಮವವ ಅದರ ಬಮಬರಸ ಬಮನನಕಟ / ಲಕರವಮದಕರವಗಮರರಗಕ ನರಡರರವ ಬಡಡಹಣವನರನ ಸಹ ಕಕಳಡಸಕಕಳಡಬಕರಕಕನದರ ವನನತಸಕಕಳಳರಳತಕಸರನಕ.
ಮದಲನಕರ ವಮರದ ಗಳಕಕ ರಳ.6,38,145-00
ಬಮಡಗಕ ರಳ.2,40,000-00
ರಳ.3,98,145-00
ಎರಡನಕರ ವಮರದ ಗಳಕಕ ರಳ.2,98,080-00
ಬಮಡಗಕ ರಳ.2,40,000-00
ರಳ.58,080-00
ಮಳರನಕರ ವಮರದ ಗಳಕಕ ರಳ.2,23,390-00
ಬಮಡಗಕ ರಳ.67,017-00
ಹನಚಕಕದಮರರ ಭಮಗ ರಳ.67,017-00
ಒಟರಟ ರಳ.3,98,145-00
58,080-00
67,017-00
ರಳ.5,23,242-00
(ಐದರ ಲಕಕದ ಇಪಪತಸಮಳರರ ಸಮವರದ ಎರಡರನಳರ ನಲವತಕಸರಡರ ರಳಪಮಯಗಳರ)
21. It is one of the grounds for setting aside the award urged by the plaintiff that, the arbitration proceedings itself is bad for non-joinder of proper and necessary parties and passed wrongly against him without any privity of agreement in between him and the respondent No.1. The copy of the above complaint is also produced by respondent No.4 for the scrutiny of this Court. On plain reading of the contents of the above extracted complaint, one can very well arrived at a conclusion that, as per respondent No.1, there was oral privity of contract between him and one Sri.Ananthu as a representative of Tribhuvan Chitra Mandira to exhibit the film "Ulidavaru Kandanthe" in 19 A.S.No.5/2016 the said Tribhuvan Chitra Mandira. The said Sri.Ananthu is nothing but a partner of M/s.Meghana Enterprises, who arrayed as respondent No.3 / defendant No.3 to the present suit urging by the plaintiff that, he was his lessee on oral lease agreement and his lease was terminated as he was defaulter to pay certain lease amount to him. Though, he served with summons of this suit, he remained absent and accordingly, the say of the plaintiff to that effect is remained unchallenged and also it is affirmed by looking to the contents of the above extracted complaint of respondent No.1. Such being the case of the respondent No.1 as per his above extracted complaint, the subject matter of the 'lis' is between the respondent No.1 and respondent No.3 or Sri.Ananthu. However, looking to the impugned arbitration award passed by the respondent No.4, said Sri.Ananthu, who is said to have been represented for respondent No.3 was not at all a party to the arbitration proceedings. But, the present plaintiff and one Sri. Bajaj are arrayed as party to the arbitration proceedings and fixing the liability against them is prima facie appears to be wrong and there is a merit in the arguments canvassed by the counsel for the plaintiff and the defendant No.2 to that effect. In this context, it is relevant to refer the verdict of the Hon'ble Supreme Court in the case of Rechitt Benckiser (India) Private Limited Vs Reynders Label Printing India Private Limited & Ano., (2019) 7 SCC 62, in which it is held that, "the party who is not a signatory to the arbitration agreement cannot be subjected to the arbitral proceedings".
20 A.S.No.5/2016
22. It is one of the strongest grounds urged by the plaintiff for setting aside the impugned award is there is no any agreement or contract between him and the respondent No.1 at any point of time and no notice from respondent No.1 to refer the matter for arbitration by respondent No.4 and accordingly, the impugned award passed against him and copy of the same issued to him by respondent No.4 is contrary to the provisions of Arbitration and Conciliation Act. The learned counsel for the respondent No.1 in his written arguments, of course stated that, Sri. Prasad-the present plaintiff under his individual capacity as a lessee had exhibited his film in the Tribhuvan Chithra Mandira. But nowhere in his above extracted complaint such of his contention or name of Sri.Prasad is disclosed. In this context, it is necessary to refer Sec.2(h) of the Arbitration and Conciliation Act, as "party" means a party to an arbitration agreement". Now, we have to seen the definition of Arbitration agreement. As per Sec.2 (b) of the said Act define the "arbitration agreement" means an agreement referred in Section 7;
"Arbitration agreement - (1) In this part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration; clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.21 A.S.No.5/2016
(4) An arbitration agreement is in writing if it is contained in -
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
23. On close reading of these provisions of Arbitration and Conciliation Act, 1996, it is mandatory that, "arbitration agreement shall be in writing signed by the parties". It is not at all in dispute between the parties to the present suit or in the imguned award that, there is no any such written agreement between them. As admitted by the counsel for the respondent No.1 himself during the course of his arguments that, there was oral agreement in respect of exhibiting his film in the Tribhuvan Chitra Mandira either with Sri.Ananthu as mentioned in his above extracted complaint or with Sri.Prasad on his individual capacity as argued in his written arguments at para No.1. The oral agreement is not permissible to refer a matter for arbitration and basically there is no scope for the arbitral tribunal / board to adjudicate the matter without any written arbitration agreement within the scope of Sec.7 of the Act. Even the complaint as extracted above of the respondent No.1 not disclose any agreement about referred to arbitration. In other words, 22 A.S.No.5/2016 there is no arbitration clause. In this context, it is relevant to seen Sec.28 (2) and (3) of the Arbitration and Conciliation Act, which mandates that the arbitral tribunal shall decide ex adequo or as amiable compositeur only if the parties have expressly authorised it to do so and in all other case, the Arbitral Tribunal shall decide the matter in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. Even it is relevant to seen Sec.15 of the Act which deals with competence of arbitral tribunal to Rule on its jurisdiction. Therefore, the arbitral tribunal / board has no jurisdiction or power to decide a dispute before it without a written agreement or contract between the parties shown in the impugned award. Of course, the learned counsel for the respondent No.1 during the course of his arguments repeatedly submitted that, the present plaintiff / Sri.Prasad has signed on DCR, which is based for the respondent No.4 to pass the impugned award. The said DCR is produced by the respondent No.4/Arbitrator for the scrutiny of this Court. The said DCR admittedly, the daily collection report signed by Manager of Tribuhuvana, but not the present plaintiff / Sri.Prasad as argued by the counsel for the respondent No.1. Even in the DCR produced by the respondent No.4 in respect of exhibition of film Ulidavaru Kandanthe dated as 03.04.2014, 10.04.2014 and 17.04.2014. Thus, the date mentioned in the above complaint and said DCR not at all tallied. As I have already pointed out as per the case of the plaintiff he was let out the theatre to respondent No.3. Though, for 23 A.S.No.5/2016 a moment we accept that, the plaintiff / Sri.Prasad in his individual capacity signed on DCR, but the said DCR is not deemed as an agreement as admittedly it is not contended an arbitration clause. In fact, DCR is not signed by the respondent No.1. For an agreement, there must be two parties and both is required to signed on it. Therefire, in my opinion, DCR cannot be considered as an agreement.
24. The learned counsel for the respondent No.4 straneously argued in his written argument that, the arbitration is permissible as per the provisions of its memorandum of Articles of Association since the parties to the award are its members. To show that the plaintiff is its member, the respondent No.4 produced memo dated 23.06.2021 with a copy of membership register maintained by it. On perusal of the same, it appears that, the present plaintiff Nalanda Enterprises mentioned as a member. However, no record is produced to show that, the respondent No.1 as shown in the award is also its member. In the light of this and such of written arguments of respondent No.4, it is crystal clear that, the liability fixed on the plaintiff, but not against Sri.Prasad on his individual capacity and accordingly, the arguments canvassed by the counsel for the respondents is devoid from merit. This Court is also gone through the articles of association of respondent No.4 placed by the Arbitrator.
24 A.S.No.5/2016
25. As per clause 3(c) of Memorandum of Association of the respondent No.4 / Karnataka Film Chamber of Commerce, no doubt provides conciliation, mediation and arbitration in all disputes that may be submitted for settlement by its members and others in the film trade and for the purpose there are other provisions to constitute of such dispute resolution board as per Clause 37 to 39 and clause 2 (k) of articles of association, which defines the same as under:
k) "DISPUTE RESOLUTION BOARD" means a Board constituted by Executive Committee under these Articles for the purpose of settling film trade disputes amongst the members of the Chamber including the Affiliated members of the Chamber or between a member or non member and members of any other similar cine trade organizations and affiliations or Associations as hereinafter defined, provided if the dispute involve a non member an agreement in the prescribed form shall be executed by the non member for submitting to the jurisdiction of the Dispute Resolution Board. The proceedings shall be deemed to be Dispute Resolution under the provisions of the Arbitration and Conciliation Act, 1996."
26. Of course, on reading of the above relevant provisions, the respondent No.4 has got its own provisions for dispute resolution method as per the Articles of Association and it has got power to adjudicate such matters either by conciliation, mediation and arbitration. The above provisions though silent about referring the matter for arbitration on the basis of arbitration clause in the agreement, it does not mean that, without any written agreement contrary to mandatory provisions of Sec.7 of the statutory enactment permit to proceed for arbitration in respect of dispute of its member by invoking clause 2 (k). In the case on hand, the respondent No.4 not proceed for conciliation 25 A.S.No.5/2016 or mediation, but it was proceeded to resolve the dispute on the complaint of respondent No.1 by arbitration by passing the impugned award. The very provision under clause 2(k) in last sentence the proceedings shall be deemed to be dispute resolution under the provisions of the Arbitration and Conciliation Act, 1996. Accordingly, the proceedings must be in accordance with Arbitration Act only. Such being the case on record, the provisions of arbitration and conciliation Act are applicable wherever the procedures laid down in the memorandum of articles of association are silent under its Articles of Association and the same cannot be given override effect to the Arbitration Act, 1996. The learned arbitrator / respondent No.4 in its written arguments has cited the decisions of case reported in AIR 1997 SC 605, AIR 2006 SC 2422 and MFA No.7883/2019 by our Hon'ble High Court of Karnataka. With due respect, I have gone through the same, but none of these citations ruled out that, the arbitral tribunal / board are empowered to proceed for arbitration without any written agreement or arbitration clause between the parties to the lis. In fact, in all these cases, there was arbitration clause in a written agreement between the parties therein. In the context of the point in question, in a case between Kerala State Electricity Board Vs Kurien E. Kalathil, the Hon'ble Apex Court in para 39 of its judgment dated 9 th March 2018 pleased to observe as under:
"Referring the parties to arbitration has serious civil consequences. Once the parties are referred to 26 A.S.No.5/2016 arbitration, the proceedings will be in accordance with the provisions of Arbitration and Conciliation Act and the matter will go outside the stream of the Civil Court. Under Sec.19 of Arbitration and Conciliation Act, the arbitral tribunal shall not be bound by the Code of Civil Procedure and the Indian Evidence Act. Once the award is passed, the award shall be set aside only under limited grounds. Hence, referring the parties to arbitration has serious civil consequences procedurally and substantively. When there was no arbitration agreement between the parties, without a joint memo or a joint application of the parties, the High Court ought not to have referred the parties to arbitration and on that count, it is decided that, the order of High Court referring the parties to arbitration, in any event, interalia, cannot be sustained.
27. In the case on hand, admittedly there is no any written arbitration agreement or any document as required under Sec.7 of the Act or even no joint memo of the parties to refer the matter for arbitration by arbitral board of the respondent No.4. Therefore, it is considered view of this Court that, the impugned award passed by the respondent No.4 is certainly in contravention of the mandatory provisions of the Arbitration and Conciliation Act, 1996 as rightly argued by the learned counsel for the plaintiff. Therefore, none of the citations relied upon by the respondent No.4 are come to its rescue for justification of its award passed in contrary to the provisions of the substantive law and Arbitration and Conciliation Act. The only course left open to the respondent No.1 for his grievances is to approach civil 27 A.S.No.5/2016 court as he is already exhausted the remedy available to the members of the respondent No.4 to conciliate, mediate or arbitration.
28. On overall discussions, this Court arrived at a conclusion that, basically there was no written agreement or arbitration clause of agreement between the parties to the lis or between the parties as mentioned in the award to adjudicate by the same by Arbitration Board
- respondent No.4. Secondly, as per the complaint of the respondent No.1, which is based to proceed for arbitration by respondent No.4 the lis in between the respondent No.1 and one Sri.Ananthu representing the Tribhuvan Chithra Mandira, but the arbitration proceedings initiated against some other person i.e., present plaintiff and one Bajaj, who are not at all the parties to the oral agreement of the respondent No.1 as mentioned in his complaint. Thirdly, there is no prior notice by respondent No.1 to the present plaintiff and the respondent No.1 of the award to refer the matter to the arbitration before the respondent No.4. Fourthly, the arbitration conducted between the parties as mentioned in the award by the respondent No.4 itself is not capable of settlement by arbitration without written agreement as required under the law for the time being in force and there is no proper notice to the parties about referring the matter for arbitration and adjudication and the impugned award passed by respondent No.4 is without any proper evidence.. Therefore, the impugned exparte award passed by the respondent No.4 / arbitration board of the Karnataka Film Chamber of Commerce is 28 A.S.No.5/2016 suffering from principles of natural justice and also conflict with public policy of India and deserve to be set aside by invoking Sec.34 of the Arbitration and Conciliation Act, 1996 without touching to the merits of the lis of respondent No.1. Hence, my findings on point No.2 is in the affirmative.
29. POINT NO.3: In the result of discussion made supra, I proceed to pass the following:-
ORDER This arbitration suit under Sec.34 of the Arbitration and Conciliation Act, 1996 filed by the plaintiff is hereby allowed. In the result, the impugned ex-parte award dated 16.07.2015 passed by the Arbitration Board, the Karnataka Film Chamber of Commerce in its arbitration case No.AB/86/2015 is hereby set aside.
Having regard to the facts and circumstances of the case on hand, I directed both the parties to bear their own cost.
(Dictated to the Stenographer, transcription computerised by her, corrected and then pronounced by me in the open court on this the 5th day of July 2021.) (Somashekar C. Badami) I Addl.City Civil & Sessions Judge, Bengaluru.