Calcutta High Court
Magma Fincorp Limited vs Ashok Kumar & Ors on 13 September, 2017
Author: Tapabrata Chakraborty
Bench: Nishita Mhatre, Tapabrata Chakraborty
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
Present:
The Hon'ble Acting Chief Justice Nishita Mhatre
&
The Hon'ble Justice Tapabrata Chakraborty
GA 922 of 2017
with
APOT 89 of 2017
EC 1285 of 2015
Magma Fincorp Limited
versus
Ashok Kumar & Ors.
For the Appellant : Mr. Samrat Sen, Ld. Senior Counsel.
Mr. Satarup Banerjee, Adv.
Ms. Manali Bose, Adv.
Mr. K. K. Pandey, Adv.
Mr. Paritosh Sinha, Adv.
Mr. Debayan Ghosh, Adv.
Hearing is concluded on : 19.06.2017.
Judgment On : 13th September, 2017.
Tapabrata Chakraborty J. :
1. In an application under Section 36 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the said Act)
initiated towards implementation of an ex-parte award dated 13th
August, 2014, the learned Single Judge passed an order on 6th
December, 2016 observing that "since the award-holder cannot
demonstrate service of the arbitral award on any of the award-
debtors, EC 1285 of 2015 is dismissed as not maintainable" and
granted liberty to the award-holder to apply afresh for execution
in accordance with law, but only upon first demonstrating service
of the arbitral award on such award-debtor against whom
execution is levied. The award holder has come up in appeal
against the said order dated 6th December, 2016 stating, inter
alia, that in an arbitration proceeding which emanated from a
Hire Purchase Finance Agreement dated October 10, 2012 for
taking on hire a vehicle being EiCHER entered into by and
between the appellant and the respondent no.1, the respondent
no.1 agreed to make payment of the total hire purchase price of Rs.14,06,400/- by way of 48 (forty eight) monthly instalments and the respondent nos.2 and 3 duly guaranteed the performance by the respondent no.1. In part discharge of their obligations under the said agreement the respondent no.1 made payment of the 1st to 12th instalment but thereafter failed and neglected to make payment of the subsequent instalments and as such the appellant by a notice dated March 25, 2014 terminated the said agreement. In view of such recalcitrant conduct of the respondents the appellant had no alternative but to make a reference to arbitration. The arbitral award was passed on 13th August, 2014 and the same was served on the respondent nos.1, 2 and 3 on August 21, 2014 by registered post with acknowledgement due card but the same did not return.
2. Drawing the attention of this Court to different paragraphs in the execution application, Mr. Sen, learned advocate appearing for the appellant submits that the execution application contains necessary averments to raise the presumption of service of the award. According to Section 114 of the Indian Evidence Act, 1872 read with Illustration (f) thereunder, when it appears to the Court that the common course of business renders it probable that a thing would happen, the Court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed.
3. He further argues that in the said Act save and except an obligation cast upon the arbitrator to deliver a signed copy of the award, there is no provision requiring the award holder also to effect service of the award. In the absence of such requirement the award holder has to depend upon the service to be effected by the arbitrator and the prescribed period of limitation towards setting aside of the award is to be computed on the basis of such service and after expiry of such period of limitation the award holder would be able to proceed for execution of the award.
4. He submits that the arbitrator fulfilled the requirements of section 3(a) of the Act. The words "delivered" and "received" cannot be interpreted in a pedantic fashion i.e. of requiring or insisting upon actual delivery of the award to the parties. The practical view of the existing realities and practices has to be taken in this regard. Once it is held that the arbitral tribunal is entitled to serve/deliver the award on the parties through the medium of post/courier, the law with respect thereto including the presumptions arising under Section 114 of the Evidence Act would get attracted.
5. He further submits that in a case where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 could profitably be imported in such a case. By virtue of the provisions of Section 27 of the General Clauses Act and read with Section 3 of the Arbitration & Conciliation Act, 1996, the respondents are deemed to have notice of the arbitral award. The arbitral award is deemed to have been duly served in accordance with law. In support of his arguments, Mr. Sen has placed reliance upon the judgments delivered in the case of C.C. Alavi Haji -vs- Palapetty Muhammed and Another, reported in (2007) 6 SCC 555, in the case of M/s. SRS Entertainment Limited
-vs- M/s. Home Stores (India) Ltd., reported in 2010 (2) R.A.J 477 (Del), in the case of Amrik Singh -vs- MAGMA Fincorp Ltd. & Ors., reported in (2011)2 CAL LT 314(HC) and in the case of M/s. Ajeet Seeds Ltd. -vs- K. Gopala Krishnaiah, reported in AIR 2014 SC 3057.
6. We have given our thoughtful consideration to the arguments advanced by the learned advocate appearing on behalf of the appellant with reference to the pleadings. In spite of service no one has appeared on behalf of the respondents.
7. Answering a query of this Court as to whether a recent judgment delivered by the Hon'ble Supreme Court on 13th April, 2017 in the case of Union of India -vs- M/s. Simplex Infrastructures Ltd., reported in 2017 SCC OnLine SC 438 would be applicable to the instant case, Mr. Sen submits that the said judgment is distinguishable on facts inasmuch as the said appeal was preferred against an order passed by the Single Judge on an application for condonation of delay filed along with the petition (for setting aside an Arbitration Award) under Section 34 of the Arbitration and Conciliation Act, 1996.
8. The present appeal has been preferred challenging an order passed under Section 36 of the said Act of 1996 which, inter alia, provides that an arbitral award under Section 34 shall be enforced in accordance with the provisions of the Code of Civil Procedure in the same manner as if it were are a decree of the Court.
9. The order impugned in the present appeal, passed by the learned Single Judge, is not appealable under the said Act and as the provisions of the Code of Civil Procedure have been set in motion, the remedy is by way of an intra-Court Letters Patent Appeal under clause 15 of the Letters Patent of High Court at Calcutta.
10. Clauses 9(b) of the arbitration agreement reads as follows:
"Any notice pursuant hereto shall be deemed to be duly given if sent by Registered Post/Courier Service addressed in case of MAGMA to the address mentioned hereinabove or to any changed address as may be published in the newspaper and in case of the Hirer/s/Guarantor(s) to the address mentioned hereinabove or to any changed address if such has been notified to MAGMA and such notice shall be deemed to have been given when the envelope containing the notice is posted/given to the postal authorities or the courier service agency. The Hirer/Guarantor(s) shall forthwith intimate the change in his address to MAGMA failing which service of a notice or correspondence to the address last given by the Hirer/s/Guarantor(s) shall be deemed to be service on the Hirer/s/Guarantor(s)."
11. It is a rule of interpretation that in construing the scope of a legal fiction it would be proper and even necessary to ascertain as to whether all those facts on which the fiction can operate, have been performed. The records reveal that the envelope containing the forwarding letter dated August 13, 2014 and the arbitral award dated August 13, 2014 were properly addressed to the respondents at the addresses mentioned in the arbitration agreement and proper stamps were affixed thereon and the envelopes were posted from Princep Street Post Office on August 21, 2014. Due postage was paid by affixing prepaid adhesive postage stamps and the postal article was duly put in course of transmission by registered post in the manner provided in chapter VI of the Indian Post Office Act, 1898. The postal acknowledgement cards have not been returned by the postal authority to the learned arbitrator. The procedure for serving notices as mentioned in the arbitration agreement has thus been strictly followed and as such upon application of the legal fiction the communication should be deemed to have been received on the day it is so delivered.
12. The error in the order impugned is that it fails to give due effect to the fiction contained in section 3 of the Act. There is not even a word in the impugned order in support of the finding that the service of the arbitral award on any of the award-debtors could not be demonstrated and on the said count also the impugned order is liable to be set aside since the learned Single Judge ought to have set forth the reasons, howsoever brief, in the order. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance [See the judgment delivered in the case of State of Rajasthan -vs- Rajendra Prasad Jain, reported in 2008 (2) Supreme 133].
13. For the reasons discussed above, we are of the opinion that the impugned order dated 6th December, 2016 is not sustainable in law and the same is, accordingly, set aside and the learned Single Judge is directed to decide the application under Section 36 of the said Act being EC 1285 of 2015 finally.
14. With the above observations and directions the appeal and the connected application are disposed of.
There shall, however, be no order as to costs.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard.
(Tapabrata Chakraborty, J.) (Nishita Mhatre, A.C.J.)