Bangalore District Court
M/S. Metal Closures Pvt. Ltd vs Fullerton India Credit Company Ltd on 5 December, 2018
IN THE COURT OF THE XII ADDL. CITY CIVIL JUDGE, AT
BENGALURU
Dated this the 5th day of December, 2018.
PRESENT: SRI. SATHISHA L.P., B.A.,LL.B.,
XII ADDL.CITY CIVIL & SESSIONS JUDGE
(CCH.No.27), BENGALURU
A.S.No.188/2015
PLAINTIFFS/ 1. M/s. Metal Closures Pvt. Ltd.,
PETITIONERS : Represented by its Director
# 39/4, 12th KM, Kanakapura Road,
Bengaluru-560 062
2. Mr. Prashanth Hegde,
336, 7th Main, HAL 2nd Stage,
Indiranagar, Bengaluru-560 008.
3. Mrs. Shereen Hegde,
W/o Mr. Prashanth Hegde,
336, 7th Main, HAL 2nd Stage,
Indiranagar, Bengaluru-560008.
VS.
DEFENDANTS; 1. Fullerton India Credit Company Ltd.
RESPONDENTS : A Company incorporated under the
Provisions of the Indian Companies Act,
1956, having its Registered Office at
2nd Floor, Brahmananda Court,
No.37, Lalbagh Road, Bengaluru-560027
Represented by its Authorised
Representative
2 A.S.No.188/2015
2. Sri Mariappa M.S. (Sole Arbitrator)
Mariappa Associates, 7th Floor,
Vokkaligara Bhavana, Hudson Circle,
S.R. Nagar, Bengaluru-560 027
3. Mr. Syed Khamruddin (Sole Arbitrator)
KNS Legal, Advocates & Solicitors,
No.52, Cubbon Road, Shivajinagar,
Bengaluru-560 001.
JUDGMENT
This suit is filed by the petitioners U/Sec.34 of Arbitration and Conciliation Act, 1996 challenging the Arbitration award dated 5th September 2015 passed by the third respondent herein in Arbitration Case No.20/2014 between the petitioners and respondent No.1.
2. The brief facts of the case is that, M/s. Metal Closures Pvt. Ltd., i.e., petitioner No.1 has availed loan facility from respondent No.1, the petitioners No.2 and 3 are the directors of petitioner No.1 Company. When the loan availed was not repaid, the matter was referred to the Arbitration, as there was an Arbitration agreement between the parties. 3 A.S.No.188/2015
3. Initially, second respondent herein was appointed as sole Arbitrator, later on he discontinued as Arbitrator for his personal inconvenience and same was written to the plaintiff company on 15.05.2015 and thereafter third respondent was appointed as sole Arbitrator and he continued the proceedings and passed the impugned award.
4. Now, the petitioners are before the Court challenging the award passed by the third respondent. The petitioners have pleaded that sufficient notice of appointment of Arbitrator was not given to them and the appointment of Arbitrator was made by respondent No.1 unilaterally. The petitioners have not been provided with sufficient opportunity to present their case, and they have been denied opportunity to cross-examine respondent No.1 witness and they have not provided opportunity to present their case and the impugned award was obtained by the respondent No.1 with fraud, corruption and there is bias on the part of the respondents No.2 and 3 and Arbitrators have not followed the principles of natural justice while conducting the 4 A.S.No.188/2015 Arbitration proceedings and impugned award is in conflict with the basic notions of morality and justice and further it is conflict with the public policy of India and with other grounds they seeks for setting aside the award.
5. After the service of notice from this Court, respondent No.1 has appeared before Court and has filed detailed objections to the petition. In the objections, respondent No.1 has contended that impugned award passed is in accordance with law and appointment of the Arbitrator was within the knowledge of the petitioners and they have participated in the proceedings and they are making false allegations only with an ulterior motive and with other grounds, they seeks for dismissal of the suit.
6. Sufficient opportunity was provided to both the parties to submit their arguments. From 20.06.2017, the matter posted for arguments, but both the parties and their counsels remained absent and they have not addressed any argument. Hence on 05.11.2018 arguments from both sides has taken as heard and posted for judgment.
5 A.S.No.188/2015
7. On the basis of the pleadings, the following point arose for my consideration:-
Whether this suit is deserves to be allowed?
8. My answer to the above point is in the 'negative' for the following:
REASONS
9. Admittedly, this is suit filed by the plaintiffs/ petitioners challenging the award passed by the third respondent herein dated 05.09.2015 in Arbitration Case No.20/2014 U/Sec.34 of Arbitration and Conciliation Act.
10. To challenge any award U/Sec.34 of Arbitration and Conciliation Act, they must satisfy the ingredients of Section 34. The ground urged by the petitioners is that, they have not been given sufficient notice of appointment of either of the sole Arbitrators and appointment is unilaterally made by respondent No.1 company, cannot be accepted for the simple reason, the petitioners have participated in the proceedings. If at all notice of appointment was not given to the petitioners, then they should 6 A.S.No.188/2015 not have participated in the proceedings. In the Arbitration proceedings, the petitioners have participated and they have even engaged counsel and they have also filed objections to the Arbitration petition. This is clear from the original records submitted by the Arbitrators. The order sheet of the proceedings speaks the truth, the petitioners counsel who has signed the order sheet during participation of the proceedings. Hence the contention of the petitioners that no notice of appointment of Arbitrator was given, cannot be accepted.
11. Further the petitioners have contended that they have not been granted sufficient opportunity to present their case and opportunity was not given to cross-examine the respondent witness and not permitted to lead evidence, also cannot be accepted. On perusal of the order sheet, it shows that sufficient opportunity was provided to the petitioners to cross-examine the witness of the respondent No.1 Company, but the petitioners herein have not utilized the opportunity and hence that contention also cannot be accepted. The petitioners despite sufficient 7 A.S.No.188/2015 opportunity, have not cross-examined the witness of respondent No.1 company and also not adduced any evidence in support of their contention. The other ground urged by the petitioners is that, the impugned award is obtained by fraud, corruption and it is oppose to public policy of India and morality. To substantiate this, they should place material before Court. Here, except filing the Arbitration Suit challenging the impugned award, they have not argued nor placed any material before the Court. U/Sec.34(2)(b) (i) it can be challenged. But they should satisfy the Court the allegations of corruption and opposed to public policy of India, and should satisfy Section 75 and 81 of Arbitration and Conciliation Act. Section 34 (2)(b) (i) reads as under:
"(i) the making of the award was induced or affected family fraud or corruption or was in violation of section 75 of section 81."
Here, mere making bald allegation of corruption and oppose to public policy of India, cannot be accepted, when there is a valid agreement of Arbitration, it cannot be said that it is oppose to public policy and when they have made allegation of 8 A.S.No.188/2015 fraud, it should be supported by some material on record. Here they have not placed any material on record to show that Arbitral award is obtained or passed by playing fraud or corruption. The petitioners have not satisfied this Court the other provisions of Section 34 of Arbitration and Conciliation Act. To intervene in the impugned order to set aside the award by exercising Section 34 of Arbitration and Conciliation Act, the party must be under some incapacity. It is not the case of the petitioners that they are under incapacity. When the Arbitration agreement is also not valid, then also it can be set aside. But it is not the contention of the petitioners that Arbitration agreement entered into between the parties is not valid and it is also not the case of the petitioners that the Arbitral award is passed which is not complied upon between the parties. Hence from considering any of the grounds mentioned in Section 34 of Arbitration and Conciliation Act, the petitioners have not made out their case to intervene in the impugned award. Hence I proceed to pass the following: 9 A.S.No.188/2015
ORDER The Arbitration suit is dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected, signed and then pronounced by me, in open Court, on this the 5th day of December, 2018.) (SATHISHA L.P.) XII ADDL.CITY CIVIL & SESSIONS JUDGE BENGALURU CITY