Delhi District Court
Sanjiv Dutta vs Bikaji Maintenance Compine (A ... on 24 June, 2021
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (COMM.) No. 65/2020
Sanjiv Dutta
S/o Late Sh. Sant Kumar Dutta
R/o 232, West End Marg,
Saidulajab near Saket Metro Station,
New Delhi ...Petitioner
vs
Bikaji Maintenance Compine (A Partnership Firm)
Having Office At
Som Dutt Chambers-I, 5-Bikaji Cama Place,
New Delhi-110066 ....Respondent
Date of Institution : 02/09/2020
Arguments concluded on : 01/04/2021
Decided on : 24/06/2021
Appearances : Sh. Ashish Upadhyay, Ld.Counsel for petitioner.
Ms.Yashmeet Kaur, Ld. Counsel for respondent.
JUDGMENT
1. Petitioner had filed the present petition under Section 34 of The Arbitration and Conciliation Act, 1996 (herein after referred as The Act) seeking setting aside of the arbitral award dated 27/06/2019 passed by Sh. R.K Sharma Advocate, Learned Additional District & Sessions Judge (Retired), as Ld. Sole Arbitrator in arbitration petition no. 316 of 2019, titled as "Bhikaji Maintenance Combine vs Sanjeev Dutta". Ld. Sole Arbitrator in impugned award awarded Rs.3,69,358.20 in favour of claimant/ respondent and against the present petitioner and said sum was payable within two months of the date of award failing which future interest @ 12% per annum on aforesaid sum OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 1 of 30 was also payable from the date of filing of claim petition till its realization.
2. Factual matrix of the case of petitioner in brief is as follows:-
Petitioner was allottee of Shop no. BT-06/5 admeasuring 260 Sq.Feet (hereinafter referred to as the flat), Somdutt Chambers-I, 5, Bikaji Cama Place, New Delhi and the maintenance and services were rendered by the respondent.
Petitioner had entered into Buyers Agreement dated 22/06/1987 with the owner. Petitioner had also entered into Maintenance Agreement with the respondent on 22/06/1987. Respondent had filed a claim petition against the petitioner for recovery of Rs.27,38,786/- with interest @ 18% per annum for the sum over due and payable by the petitioner to the respondent for the alleged rendered maintenance services by the respondent to the petitioner with respect to aforesaid flat before Ld. Sole Arbitrator. It is the case of petitioner that the award records that the arbitrator entered upon reference fixing the first date as 09/03/2018 and therein it was further stated that notice of the claim petition was received back with the report "No such Person" and the petitioner was proceeded ex parte. Impugned ex parte award in favour of respondent was passed by Ld. Sole Arbitrator on 27/06/2019 and copy of the impugned award was sent to petitioner through speed post no. ED419093935IN on 11/12/2019 and was served upon the petitioner on 17/12/2019.
3. The petitioner has impugned the arbitral award in question on following grounds:-
OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 2 of 30A. The impugned award passed by Ld. Arbitrator is absolutely unjust, illegal, arbitrary and bad in law. B. It is a fraud played upon the petitioner as it was passed arbitrarily.
C. Ld. Sole Arbitrator was not impartial and independent, in terms of Section12 of The Act and did not disclose in writing that there were no circumstances giving rise to justifiable doubts as to the independence or any impartiality of the Arbitrator. There is no whisper of any such declaration being given by Ld. Sole Arbitrator in the impugned award. D. The proceedings of the Arbitral Tribunal were against the principles of natural justice and public policy.
E. No consent was given by the petitioner for appointment of Ld. Sole Arbitrator and the unilateral appointment of Ld. Sole Arbitrator was illegal in terms of the law laid down by the Supreme Court in the cases of (i) Perkins Eastman Architects DPC vs HSCC (India) Ltd., 2019 SCC Online SC 1517; (ii) TRF Ltd. vs Energo Engg. Projects Ltd., (2017) 8 SCC 377 and
(iii) Bharat Broadband Network Ltd vs United Telecoms Ltd, (2019) 5 SCC 755, whereby it was held that person interested in the outcome of a dispute cannot appoint a Sole Arbitrator and such unilateral appointment of Sole Arbitrator is illegal.
F. Ld. Sole Arbitrator had lacked jurisdiction to conduct the proceeding as there was no valid reference of the disputes to arbitration since the requisite notice OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 3 of 30 under Section 21 of The Act was not served upon the petitioner.
G. Impugned award is in conflict with the public policy of India.
H. Since no proper notice was issued for the appointment of arbitrator and of the commencement of the abitral proceeding, there was a violation of the principles of natural justice in terms of Section 18 of The Act.
I. Impugned award was passed after expiry of 12 months of appointment of Ld. Sole Arbitrator and the mandate of the arbitrator stood terminated as per Section 29A of The Act.
J. No services of any nature were being rendered by the respondent and the claim petition was absolutely false; bills were raised in house as the common area was being maintained by the owners themselves; no bill was ever served upon the petitioner.
K. Ld. Sole Arbitrator wrongly appreciated The Limitation Act in respect of the recovery suit and gave recovery rights of 12 years whereas there is no mortgage or charge on the property of the petitioner. L. There were no services rendered and no premise for raising any claim, still a false and malicious claim was raised by respondent and Ld. Sole Arbitrator entered upon the reference having no jurisdiction.
M. Petitioner was never supplied with the claim petition or documents.
N. Petitioner was residing sometime till the year 1988 OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 4 of 30 in premises B-2/12, Vasant Vihar, New Delhi which was rented premises and no notice could have been served on the said address upon the petitioner. Per contra, no summons of arbitration proceedings were served upon the petitioner on the said flat. The respondent could have also provided the mobile phone number of petitioner but no efforts were made to serve the petitioner as actual purpose was to have an ex parte award only.
4. The petitioner averred that the petition has been filed within limitation period as the three months period for filing petition elapsed on 16/03/2020 whereas the Supreme Court extended the limitation period with effect from 15/03/2020 till normal functioning of the Courts. Yet, separate application for condonation of delay had been filed since senior citizen petitioner with a history of ailments was confined to his house since after 01/03/2020 on account of Covid-19 advisory which started in the month of February 2020 by the Government of India.
5. In the filed reply, respondent through Counsel denied and controverted the averments of the petition. It was stated that the objections of petitioner find no mention under which clause of Section 34 of The Act the petition was preferred. It was averred that petitioner was served with the notice dated 21/07/2017 of lawyer of respondent invoking the arbitration clause at the address of the aforesaid flat but petitioner chose not to respond. It was further averred that respondent appointed Retired Additional OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 5 of 30 District Judge, Delhi as Ld. Sole Arbitrator who fixed first date of hearing as 09/03/2018 and issued notice on 01/02/2018 at two addresses of petitioner i.e., at aforesaid flat and also at given residential address of petitioner at Vasant Vihar and notice sent to the address of aforesaid flat was served upon the petitioner on 02/02/2018 but petitioner decided not to appear before Ld. Sole Arbitrator. It was further averred that notice on June 11, 2018 sent by Ld. Sole Arbitrator to petitioner at the address of the flat was refused by the petitioner. It was also averred that signed copy of the award was received by petitioner at the very address of the aforesaid flat. It was averred that petitioner had not shown any sufficient cause for non appearance before Ld. Sole Arbitrator but urged false plea that Ld. Arbitrator did not follow the principles of natural justice.
6. It was further averred by respondent through Counsel that this Court is not entitled to superimpose its reasoning over that of the Arbitral Tribunal as this Court does not sit as a Court of appeal. It was further averred that petitioner failed to point out any error of fact or law in interpreting the Maintenance Agreement read with Delhi Apartment Ownership Act, which was duly considered by the Arbitral Tribunal in the light of the documentary and oral evidence, whereas after considering the entire material before it, Ld. Arbitrator passed the impugned award and the view taken by Ld. Arbitrator is neither perverse nor contrary to the terms of the contract or law. Reasoned award was given by Ld. Sole Arbitrator and petitioner has failed to show any ground requiring interference in the same. It was also averred that petitioner failed to show as to how the impugned OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 6 of 30 award was in conflict with the public policy of India. It was averred that no fraud was played upon the petitioner nor the award was passed arbitrarily nor was it liable to be set aside. It was also averred that no reasons have been furnished by the petitioner nor any proof has been submitted which gives doubts to impartiality or independence of Ld. Arbitrator. It was averred that against the claim of Rs.27,38,786/- with interest @ 18% per annum and costs preferred by the respondent, Ld. Sole Arbitrator awarded only sum of Rs.3,69,358.20 with interest @ 12% per annum from the date of award till realization despite the fact that petitioner was ex parte and it was an uncontested matter, which proves that Ld. Sole Arbitrator was impartial. It was averred that proceedings were conducted by Ld. Sole Arbitrator in fair manner by following principles of natural justice. It was also averred that the precedents relied upon by the petitioner were prospective in operation and not retrospective in operation. It was averred that Article 62 of The Limitation Act prescribes the limitation of period of 12 years for enforcing payment of money otherwise charged upon immovable property and thus the decision of Ld. Sole Arbitrator was legally valid. It was also averred that there was no maliciousness on the part of respondent. Respondent also denied that it was a false claim or no services were rendered or Ld. Arbitrator had no jurisdiction to enter upon the reference. It was averred that the petition was barred by limitation. It was prayed to dismiss the petition being false and frivolous.
7. I have heard Sh. Ashish Upadhyay, Ld. Counsel for petitioner; Ms. Yashmeet Kaur, Ld. Counsel for respondent and OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 7 of 30 perused the relied upon precedents and record of the case as well as arbitral proceedings record filed on behalf of Ld. Sole Arbitrator and given my thoughtful consideration to the rival contentions put forth.
8. Ld. Counsel for petitioner argued in terms of grounds of the petition and relied upon precedents referred therein as well as on the pronouncement of Supreme Court in the Suo Motu Writ Petition (Civil) No. 03/2020, In Re: Cognizance For Extension Of Limitation; order dated 23/03/2020, submitting that in view of extension of period of limitation for filing the petitions including the petitions like present petition by Supreme Court in the Covid-19 pandemic situation, the present petition was within the period of limitation.
9. Ld. Counsel for respondent argued in terms of the filed reply, afore elicited. It was argued that any parcel dispatched by speed post within Delhi is delivered within one day and the award dispatched on December 11, 2019 by speed post, within Delhi would have been delivered on December 12, 2019 and period of limitation for filing the present petition which was three months was over on March 11, 2020 and the present petition has been filed well after expiry of period of limitation. Ld. Counsel for respondent relied upon the case of Assam Urban Water Supply and Sewerage Board Vs. Subash Projects and Marketing Limited, (2012) 2 SCC 624, wherein it has been held that the objections/petition under Section 34 of The Act can be filed within prescribed period of three months extendable for further period of 30 days by the Court but not thereafter. It was OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 8 of 30 also argued that petitioner had enjoyed all maintenance facilities and benefits of various common areas and facilities including lifts, water supply, electricity supply to common areas, maintenance of common areas, insurance of building etc. but failed to pay the maintenance dues. It was also argued that petitioner has not placed on record of having ever informed respondent that he was no longer residing at Vasant Vihar address. It was argued that despite service of lawyer's notice dated 21/07/2017 and later notice of Ld. Sole Arbitrator neither petitioner paid the payable dues nor appeared before Ld. Sole Arbitrator nor joined arbitral proceedings nor objected before Ld. Sole Arbitrator including with respect to his independence and being impartial, never challenged the appointment of Ld. Arbitrator, so cannot raise aforesaid grounds for setting aside the impugned arbitral award. It was argued that the impugned arbitral award was well reasoned and there was an obligation on petitioner to pay maintenance charges to respondent which petitioner failed to pay. It was argued that Ld. Arbitrator gave reasoned award and petitioner has failed to show any ground requiring interference in the impugned arbitral award; so the objections/petition is liable to be dismissed. Ld. Counsel for respondent also relied upon the case of Metal Closures Pvt. Ltd. & Ors. Vs Religare Finvest Ltd. & Anr., 236 (2017) DLT 425 (DB), wherein it was inter alia held that the Court does not sit in appeal over an award and the grounds for interference with award are limited. Ld. Counsel for respondent also relied upon the case of M/s Gauri Shankar Educational Trust & Ors. vs M/s Religare Finvest Ltd., OMP (Comm.) No. 57/2019, decided on 5th February 2019 by Hon'ble Mr. Justice Valmiki J. Mehta OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 9 of 30 of Delhi High Court. The challenge laid by the petitioners to the impugned award therein on the ground of there being justifiable doubts as to the independence and impartiality of Ld. Arbitrator had failed and therein Delhi High Court had relied upon the case of Madhya Pradesh Rural Road Development Authority & Anr. vs L.G. Chaudhary Engineers & Contractors, (2018) 10 SCC
826. It was also held that it was for the petitioner to raise the objection under Section 16 of The Act with respect to lack of jurisdiction of the Arbitral Tribunal at the very first instance in the arbitral proceedings, whereas if no such objection is taken in arbitral proceedings, then after passing of an award, such an objection cannot be taken. It was prayed to dismiss the petition.
10. An Arbitral Award can be set aside on the grounds set out in Sections 34(2)(a), (b) and (2A) of The Act in view of Section 5 of the Act.
11. Section 34 (1), (2) and (2A) of The Arbitration and Conciliation Act, 1996 read as under:
"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 OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 10 of 30 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.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 11 of 30 illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
12. Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could come to a different conclusion on the same facts.
The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are those mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
13. Supreme Court in case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 12 of 30 ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
14. Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has held that under Section 34 (2A) of The Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
15. Section 11 of The Act is with respect to the appointment of the arbitrators by the Supreme Court or as the case may be, by the High Court only.
16. Under Section 12 of The Act, when a person is approached in connection with his possible appointment as an arbitrator, he is bound to disclose in writing any circumstances, such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 13 of 30 professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months. Various grounds are set out in the Fifth Schedule as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. The disclosure shall be made by such person in the form specified in the Sixth Schedule. An arbitrator may be challenged by the parties only if any circumstances referred to in Section 12 (3) of The Act subject to Section 13 (4) of The Act exist which provide for an agreement between the parties for such procedure for challenge. If such challenge is unsuccessful, the party may make an application for setting aside an arbitral award in accordance with Section 34 of The Act.
17. Section 14 of The Act provides that the mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator if he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay and he withdraws from his office or the parties agree to the termination of his mandate.
18. Section 15 of The Act provides that the mandate of arbitrator is also terminated if he withdraws from office for any reason or by or pursuant to agreement of the parties. In such an event, the substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 14 of 30 being replaced. If such an arbitrator is replaced, any hearing previously held may be repeated at the discretion of the arbitral tribunal unless otherwise agreed by the parties. The earlier order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator shall not be invalid unless otherwise agreed by the parties.
19. Under Section 16 of The Act, the arbitral tribunal is empowered to rule on its own jurisdiction including ruling on any objection with respect to the existence or validity of arbitration agreement. Such plea shall be raised not later than the submission of the statement of defence. If such plea is rejected by the arbitral tribunal, it has to proceed with the arbitral proceedings and declare an award. If plea of jurisdiction is accepted by the arbitral tribunal, the respondent may file an appeal under section 37 of The Act. If plea of jurisdiction is not accepted, the respondent may challenge such ruling along with award under section 34 of The Act.
20. Supreme Court in case of TRF Ltd. vs Energo Engg. Projects Ltd., (2017) 8 SCC 377 has held that by virtue of section 12(5) of The Act, if any person, who falls under any of the category specified in the Seventh Schedule shall be ineligible to be appointed as an Arbitrator. It is held that the amended law under Section 11(6-A) of The Act requires the Court to confine examination of the existence of an arbitration agreement notwithstanding the judgment of the Supreme Court or the High Court while considering an application under section 11(6) of The Act. The designated arbitrator whose ineligibility to act as an OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 15 of 30 arbitrator by virtue of amendment to Section 12 of The Act by the Arbitration and Conciliation (Amendment) Act, 2015, does not have power even to nominate any other person as arbitrator. The Supreme Court and High Court in certain circumstances have exercised jurisdiction to nullify the appointments made by the authority in such situation.
21. Supreme Court in case of Bharat Broadband Network Ltd vs United Telecoms Ltd, (2019) 5 SCC 755 after construing Section 12(5) of The Act read with Fifth, Sixth and Seventh Schedule held that the Managing Director of the party, who was a named arbitrator, could not act as arbitrator nor could be allowed to appoint another arbitrator. The disclosure of a prospective arbitrator has to be made in the form specified in the Sixth Schedule and the ground stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Any prior agreement to the contrary is wiped out by the non-obstante clause in Section 12(5) of The Act the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be ineligible to be appointed as arbitrator. Such ineligibility can be removed by an express agreement in writing. It was held that learned arbitrator had become de jure ineligible to perform his function as an arbitrator.
22. Supreme Court in the case of Perkins Eastman Architects DPC vs HSCC (India) Ltd., 2019 SCC Online SC 1517 has held OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 16 of 30 that in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. The person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015. Supreme Court has set aside the appointment of an arbitrator appointed by one of the parties having exclusive right to appoint and appointed an independent arbitrator in the application filed under Section 11(6) of The Act.
23. Sub-section (1) of Section 29-A of The Act provides that the award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference. The explanation to the said provision provides that an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment. Sub- section (2) of Section 29-A of The Act provides that if the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. Sub-section (3) of Section 29-A of The Act provides that the parties may, by consent, extend the period specified in subsection (1) for making award for a further period not exceeding six months. Subsection (4) of Section 29-A of The Act provides that if the award is not made within the period specified in sub-section (1) or the extended period specified under sub-
OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 17 of 30section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period. If the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, the Court may pass an order for reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay. Sub-section (5) of Section 29-A of The Act provides that the extension may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.
24. In the case of Proddatur Cable TV Digi Services vs. Siti Cable Network Ltd., 2020 SCC Online Del 350, it was inter alia held that following ratio of the judgment in the case of Perkins (supra), it is clear that a unilateral appointment by an authority which is interested in the outcome or decision of the dispute is impermissible in law. When the Arbitration Clause empowers the Company to appoint Sole Arbitrator, it can hardly be disputed that the Company acting through its Board of Directors will have an interest in the outcome of the dispute. The appellant had filed the petition under Section 14 and 15 of The Act seeking declaration that the mandate of the arbitrator appointed by the respondent be terminated and an arbitrator be appointed by High Court in the provisions of The Act. Following ratio of the judgments in Perkins (supra) and Bharat Broadband Network Limited (supra), the mandate of the Arbitrator was found terminated de jure and since the present arbitrator had become unable to perform her functions as an arbitrator, her mandate was terminated and another independent Sole Arbitrator was OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 18 of 30 appointed to substitute the previous arbitrator.
25. In the case of M/s Omcon Infrastructure Pvt. Ltd. Vs India Bulls Investment Advisors Ltd, OMP (T) (Comm.) 35/2020 and IA 6153/2020 decided on 01/09/2020 by Hon'ble Ms. Justice Rekha Palli, wherein petition was filed under Section 14 and 15 of The Act, seeking termination of the mandate of Ld. Arbitrator unilaterally appointed by the respondent and also quashing of order passed by Ld. Arbitrator, deciding the application of petitioner under Section 12 of The Act, the ratio of the decision in case of Perkins (supra) was applied and held that once the Managing Director of the respondent Company was ineligible to appoint the arbitrator, the same would also bar the Company itself from unilaterally appointing the sole arbitrator and reference was also made to the decision of Proddatur Cable TV Digi Services (supra). Therein also the mandate of the Ld. Arbitrator was terminated and new independent Sole Arbitrator was appointed.
26. Supreme Court in case of State of Maharashtra & Ors vs ARK Builders Private Ltd., (2011) 4 SCC 616, has held that the period of limitation prescribed under section 34(3) of The Act would start running only from the date of a signed copy of award is delivered to/received by a party making the application for setting aside the award under section 34(1) of The Act. Reliance was placed on the case of Union of India vs Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239, wherein also was so held.
OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 19 of 3027. Bombay High Court in case of E-square Leisure Pvt. Ltd. vs. K.K. Jani Consultants and Engineering Company, (2013) 2 Bom.C.R. 689, has held that the limitation for making an application under section 34(3) of The Act for setting aside an arbitral award would commence only after a signed copy of the award is received by a party from the arbitral tribunal under section 31(5) of The Act.
28. The present petition under Section 34 of The Act was filed on 02/09/2020 impugning the arbitral award dated 27/06/2019. In the entire arbitral proceedings record there is no proof of service of signed copy of impugned arbitral award in the month of June, 2019. At page no. 154 of the arbitral proceedings record, there are two speed post receipts stapled. First speed post receipt stapled is of date 06/07/2019 for parcel sent to petitioner at Vasant Vihar address and at page nos. 152 and 153 of the arbitral proceedings record is the said parcel received back by Ld. Sole Arbitrator with endorsement of official of postal authority that the addressee does not reside at the given address. Second speed post receipt pasted at page no. 154 of arbitral proceedings record is of date 11/12/2019 having no ED419083935IN. There is no tracking report as to when the parcel dispatched on 11/12/2019 by Ld. Sole Arbitrator purportedly containing the copy of impugned award was delivered/served upon the addressee/petitioner. At page nos. 24 to 26 of the paper book of the petitioner, the petitioner has placed on record the photocopies of the envelope of aforesaid parcel with aforesaid speed post receipt number with the endorsement of postman as to it being delivered on 17/12/2019. Accordingly for want of any tracking OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 20 of 30 report on arbitral proceedings record or any documents of respondent placed on record of this case that aforesaid speed post parcel dispatched on 11/12/2019 was delivered on any date before 17/12/2019; the put forth contention of petitioner of receipt of copy of impugned arbitral award on 17/12/2019 has to be accepted. Supreme Court in the Suo Motu Writ Petition (Civil) No. 03/2020, by order dated 23/03/2020 had extended the period of limitation in all proceedings, including for filing of present petition under Section 34 of The Act, with effect from 15/03/2020 till further orders, exercising power under Article 142 read with Article 141 of The Constitution of India. In terms of Section 34(3) of The Act, petitioner had three months period of limitation for filing the objections/present petition and such three months period started from the date of receipt of signed copy of the impugned award. Petitioner received the signed copy of impugned arbitral award on 17/12/2019 and the three months period, aforesaid, for filing the present petition was to elapse on 16/03/2020. Since the period of limitation for filing the present petition stood extended with effect from 15/03/2020 till further orders by the Supreme Court, as aforesaid, the present petition filed on 02/09/2020 is filed within the period of limitation.
29. I now advert to the agreement in question between the parties to the lis. Copy of said agreement i.e., Maintenance Agreement between the parties to the lis is in the arbitral proceedings record and its para no. 11 reads as follows:-
"11. Both parties to this Agreement namely, the Buyer and the B.M.C. agree and bind themselves that in the event of any dispute relating or connected with (howsoever remote) this Agreement or in respect of the non-payment of bills or interest due or interpretation of any clause of this Agreement, the OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 21 of 30 same shall be referred to the Promoter or its nominee for arbitration whose decision will be binding on both the parties and shall be carried out by them as the final adjudication of the said dispute."
30. The 'Buyer' referred in aforesaid agreement is the present petitioner; the 'B.M.C.' referred therein is the respondent and promoter referred therein is "Som Dutt Builders (P) Ltd". As per afore elicited Clause 11 of the agreement in question inter se parties to the lis, on arising out of dispute, it was to be referred to the Promoter or its nominee for arbitration. In the impugned arbitral proceedings record at page no. 1 is the notice dated 15/01/2018 of Ld. Sole Arbitrator which finds mention that the respondent had appointed him as the Sole Arbitrator to decide the dispute between the petitioner and the respondent. In the entire arbitral proceedings record there is no material/written communication sent by respondent to Ld. Sole Arbitrator containing any proposal/appointment letter to Ld. Sole Arbitrator proposing or appointing him as Sole Arbitrator. There is also no material on record that respondent was the nominee of the aforesaid Promoter for the facet of arbitration between the parties to the lis. In terms of Clause 11 of Agreement between the parties to the lis the dispute between the parties was to be referred to the Promoter or its nominee for arbitration. Ld. Sole Arbitrator was neither the promoter nor the nominee of promoter, as per material placed on record. In terms of afore elicited averment in the notice dated 15/01/2018 of Ld. Sole Arbitrator, Ld. Sole Arbitrator was unilaterally appointed by the respondent to adjudicate the dispute between the parties. Such appointment of Sole Arbitrator was not in accordance with Clause 11 of the Agreement between the parties to the lis.
OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 22 of 3031. At page no. 2 of the arbitral proceedings record is the order- sheet dated 09/03/2018 of Ld. Sole Arbitrator finding mention of the fact that notice sent to the respondent has been received back with the report "No Such Person" and fresh notice be sent to the respondent (i.e., present petitioner/objector) at residential address/business premises address for 20/04/2018. In the order- sheet dated 20/07/2018 of Ld. Sole Arbitrator there is mention of the fact that report on one envelope sent to respondent is as refused and because of said refusal report the present petitioner was proceeded ex parte. Said envelope sent by speed post is at page no. 148 of the arbitral proceedings record and it finds mention of the following address for present petitioner:-
"MR SANJIV DATTA (OWNERS) BASEMENT-05, SOMDUTT CHAMBER-I, 5, B.C.P, R.K PURAM, NEW DELHI-66"
32. The Statement of Claim filed before Ld. Sole Arbitrator finds mention of the business address of petitioner as follows:-
"FLAT NO. BT-06/5, SOM DATT CHAMBERS-I, 5, BHIKAJI CAMA PLACE, NEW DELHI"
33. The aforesaid speed post parcel, having overleaf report of refusal dated 13/06/2018, sent by Ld. Sole Arbitrator to petitioner does not find the complete address of petitioner, as aforesaid, since it is not addressed to Flat No. BT-06/5; so by such service by report of refusal, it cannot be deemed to be proper service. On the basis of said service, the petitioner was proceeded ex parte. It is also very interesting to take note of the fact that the Statement OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 23 of 30 of Claim filed by the claimant/present respondent before Ld. Sole Arbitrator is bearing date 19/03/2019 and it was not filed before Ld. Sole Arbitrator before 20/03/2019 as all order-sheets of Ld. Sole Arbitrator before 20/03/2019 in arbitral proceedings record find mention of various opportunities given on various dates of hearings to the claimant/respondent for filing Statement of Claim with documents. Accordingly, when the present petitioner was proceeded ex parte by Ld. Sole Arbitrator on 20/07/2018, there was no Statement of Claim of claimant before Ld. Sole Arbitrator. There is no material on arbitral proceedings record that any copy of Statement of Claim, documents annexed with the Statement of Claim, affidavit of witness of claimant having ever been sent to present petitioner or served upon present petitioner either by the respondent or by Ld. Sole Arbitrator.
34. As has been elicited herein above, notice dated 15/01/2018 of Ld. Sole Arbitrator at page no. 1 of the arbitral proceedings record finds mention of his appointment as Ld. Sole Arbitrator by respondent and Ld. Sole Arbitrator having given his consent to preside over as Sole Arbitrator; the Arbitral Tribunal entered into the reference on or before 15/01/2018. The award was required to be made by Sole Arbitrator within a period of 12 months from the date the Arbitral Tribunal entered upon the reference in terms of Section 29A of The Act, elicited herein above. In terms of Section 29A of The Act, since the award was not made within the period specified in sub Section (1) of Section 29A of The Act nor such period of 12 months was extended by the consent of the parties nor was so extended by order of the competent Court, the mandate of Ld. Sole Arbitrator stood OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 24 of 30 terminated on or before 15/01/2019. Per contra the evidence of claimant i.e., present respondent was led before Ld. Sole Arbitrator on 20/03/2019 i.e., much after mandate of Ld. Arbitrator stood terminated. Subsequent thereto the impugned award was passed on 27/06/2019 by Ld. Sole Arbitrator which was also well after expiry of the period of 12 months prescribed under Section 29A of The Act and after the mandate of Ld. Sole Arbitrator stood terminated.
35. It is also clear from notice dated 15/01/2018 of Ld. Sole Arbitrator, above referred, that there was non compliance of elicited mandate of Section 12 of The Act by Ld. Sole Arbitrator as he did not send the disclosure in prescribed form specified in the Sixth Schedule to the present petitioner embodying existence or otherwise of the grounds giving rise to justifiable doubts as to his independence or his impartiality including relationship with the claimant/Counsel for claimant.
36. Supreme Court in the case of M/s Voestalpine Schienen GMBH Vs. Delhi Metro Rail Corporation Ltd.- (2017) 4 SCC 665 has construed Section 12(5) of The Act (as amended) and also the Seventh Schedule to The Act and has held that under Section 12(5) of The Act, notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. It is held that in such an eventuality, when the arbitration clause finds foul with the amended provisions i.e. Section 12(5) of The Act, the appointment of an OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 25 of 30 arbitrator would be beyond pale of arbitration agreement, empowering the Court to appoint such arbitrator(s), as may be permissible. Other party cannot insist for appointment of an arbitrator in terms of the arbitration agreement. In such situation, that would be the effect of non-obstante clause contained in Section 12(5) of The Act.
37. Supreme Court in case of HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India) Limited (Formerly Gas Authority of India Ltd.), 2017 SCC OnLine SC 1024 has held that if the learned arbitrator fails to file disclosure in terms of section 12(1) of The Act read with Fifth Schedule of The Act, the remedy of the party aggrieved in that event would also be to apply under section 14(2) of The Act to the court to decide about the termination of the mandate of the arbitral tribunal on that ground.
38. At page no. 135 of the arbitral proceedings record, is an unsigned note-sheet. At the outset in the note-sheet against date 15/01/2018 is mentioned that notice/order dated 15/01/2018 was sent by post to respondent at two addresses by speed post on 01/02/2018 and notice sent at Bhikaji Cama address was served on 02/02/2018, tracking report placed on record whereas notice at Vasant Vihar address was received back unserved with the remark no such person; as such service is complete. Aforesaid averments in unsigned note-sheet for date 15/01/2018 are contrary to averments in the signed arbitral proceeding record as signed order dated 09/03/2018 of Ld. Sole Arbitrator finds mention "notice sent to respondent has been received back OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 26 of 30 with the report no such person. Fresh notice be sent to respondent at residential address/business premises address. To come up for further proceeding on 20/04/2018 at 3 pm."
39. Section 18 of The Act mandates equal treatment of parties in arbitral proceedings and each party is to be given full opportunity to present his case. Section 23 of The Act mandates filing of Statement of Claim and defence before Ld. Sole Arbitrator. Such Statement of Claim or defence is to be provided to the opposite party by party filing such Statement of Claim/defence and Ld. Sole Arbitrator is to ensure providing of such copy to opposite party by the party filing such Statement of Claim/defence before him. On arbitral proceedings record there is no material to reflect providing of (a) copy of Statement of Claim, documents annexed with Statement of Claim, (b) copy of affidavit of witness of claimant; either by claimant/present respondent to present petitioner or by Ld. Sole Arbitrator to present petitioner or Ld. Sole Arbitrator ensuring providing of such copy by present respondent to present petitioner. Petitioner was not provided equal treatment in arbitral proceedings. Petitioner was proceeded ex parte on 20/07/2018 by Ld. Sole Arbitrator when before Ld. Sole Arbitrator even there was no Statement of Claim or documents in support thereof and when later Statement of Claim was filed with documents later to 19/03/2019, it was not ensured that copies of the same were provided by present respondent to the present petitioner.
40. In the case of Impex Corporation & Others vs Elenjikal Aquamarine Exports, 2007 SCC Online Ker 125, it was inter OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 27 of 30 alia held that where no proper and sufficient notice is given to a party by the arbitrator, there is violation of principle of natural justice and these are also violation of Section 18 and 25 of The Act.
41. At page nos. 92 to 94 of the arbitral proceedings record is the copy of demand legal notice dated 21/07/2017, given Ex CW1/6 before Ld. Sole Arbitrator, of Sh. Sanjiv Verma, Advocate on behalf of respondent addressed to present petitioner in terms of which there is a demand of Rs.24,69,623/- from present petitioner payable with interest @ 18% per annum within 30 days of receipt of notice failing which as per Clause 11 of the Agreement between parties, the dispute shall be referred to present Ld. Sole Arbitrator for adjudication without any further intimation. In the entire arbitral proceedings record there is no material reflecting service of aforesaid legal notice dated 21/07/2017 upon present petitioner. Respondent has also not placed on record any proof of service of notice dated 21/07/2017, aforesaid, upon the present petitioner.
42. Section 21 of The Act provides that unless and otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which the request for that dispute to be referred to the arbitration is received by the respondent. Limitation in respect of which a request is made by one party to other party to refer such dispute to the arbitration stops when such notice is received by other party.
43. Bombay High Court in the case of Bhanumati J. Bhuta vs OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 28 of 30 Ivory Properties & Hotels Pvt. Ltd., 2020 SCC Online Bombay 157 has held that the arbitral proceedings commence in respect of dispute when notice invoking of arbitration agreement is received by other side and not when such notice is only served upon the Arbitral Tribunal. The onus is on the applicant who had issued such notice to prove the delivery of such notice upon the other side.
44. In the case of International Nut Alliance LLC vs Beena Cashew Company, 2014 SCC Online Mad 425, it was inter alia held that before composition of arbitrators, a notice to the other party is very much essential.
45. In view of law laid down in the cases of (i) TRF Ltd. (supra); (ii) Bharat Broadband Network Limited (supra); (iii) Perkins Eastman Architects DPC (supra); (iv) HRD Corporation (supra); (v) Proddatur Cable TV Digi Services (supra) and (vi) M/s Omcon Infrastructure Pvt. Ltd. (supra), no arbitrator can be unilaterally appointed by the respondent/claimant. Not only the respondent has unilaterally appointed the present Ld. Sole Arbitrator but Ld. Sole Arbitrator was so appointed per contra to Clause 11 of the Agreement inter se parties to the lis, as elicited in detail herein above. Even the mandatory disclosure in terms of Fifth and Seventh Schedule of The Act in the format of Sixth Schedule of The Act was not conveyed by Ld. Arbitrator to the petitioner. Also the award was not made within period of 12 months from the date the Arbitral Tribunal entered upon reference, as elicited in detail herein above. In the fact of matter there existed no extension of period OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 29 of 30 for making award as per Section 29A of The Act either by the consent of parties or by the order of competent Court. The impugned award is accordingly liable to be set aside, as per (I) Section 34(2)(a)(iii) of The Act; (II) Section 34 (2)(a)(v) of The Act and also (III) under Section 34 (2A) of The Act as the impugned award is vitiated by patent illegality appearing on the face of the award, as elicited in detail herein above. Reliance placed upon the cases of Associate Builders (supra), Ssangyong Engineering & Construction Co. Ltd. (supra), International Nut Alliance LLC (supra), and Impex Corporation & Others (supra).
46. For the foregoing reasons, the petition is allowed and the impugned award is set aside.
47. The parties are left to bear their own costs.
48. File be consigned to record room.
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
th
on 24 June, 2021. Patiala House Court, New Delhi.
(Deepika) OMP (COMM.) No. 65/2020 Sanjiv Dutta vs. Bikaji Maintenance Compine Page 30 of 30