Delhi District Court
Sh. Jitender Bhatia vs Sh. Vijay Khanna on 2 February, 2008
1
IN THE COURT OF MS. ASHA MENON, ADJ,
TIS HAZARI, DELHI.
Suit No. :189/06
1. Sh. Jitender Bhatia ....Petitioners/ Objectors
S/o Late Sh. Swarn Singh
Sole Proprietor M/s Soni Garments
B-25, Shivaji Vihar, Janta Colony
Raja Garden, New Delhi
2. M/s Soni Garments
B-25, Shivaji Vihar, Janta Colony
Raja Garden, New Delhi
Vs.
1. Sh. Vijay Khanna ....Respondents
Arbitrator
Delhi Hindustani Mercantile Association (Regd.)
1210/16, Chandni Chowk, Delhi-06
2. Sh. Manoj Handa
Proprietor M/s Handa Traders
349, Naya Katra, Chandni Chowk
Delhi-06
ORDER
This order will dispose of the objections filed by Sh. Jitender Bhatia, Proprietor of M/s Soni Garments against the award passed by Sh. Vijay Khanna on 07.08.06, awarding a sum of Rs. 4,51,835.93 paise along with interest of Rs. 2,50,019/- per annum till 30th April 2002, along with costs totaling Rs. 7,10,054.95 paise along with interest @ 15% per annum w.e.f. 01.05.02 till recovery.
The facts as have been stated are that Sh. Manoj 2 Handa filed arbitration case before Sh. Vijay Khanna on 25.03.02 claiming a balance of Rs. 7,02,434.93 with interest and costs on the ground that he had supplied cloth to the objector Sh. Jitender Bhatia from 01.04.1996. On this claim the arbitration award was passed. Aggrieved by the award the present objections have been preferred under Section 34 of the Arbitration & Conciliation Act 1996.
It is submitted that Sh. Manoj Handa who had filed the claim had not filed his claim properly as it commenced with para no. 8 without paras 1 to 7 and written statement had been filed by the objector pointing out this fact and raising several preliminary objections to the effect that the claim could not be entertained in the absence of the complete paras. It was submitted that an application for amendment was moved by the respondent no.2 which was allowed by the Arbitrator without jurisdiction. Thereafter, a fresh written statement was also filed by the present objector. It is stated that in August 2004 the respondent no. 2 again filed an application under Order 6 Rule 17 CPC claiming that the partnership firm which had filed the original claim had been dissolved on 31.03.02 and thus the respondent no. 2, Sh. Manoj Handa had become the Proprietor of the firm M/s Handa Traders. Therefore the present objectors filed a reply submitting that the claim was not tenable as it had 3 been filed on behalf of the partnership firm of M/s Handa Traders which was not even in existence on 23.05.02 and that therefore the amendment could not be allowed. However, the application was once again allowed by the respondent no. 1 , Ld. Arbitrator.
The further case of the objector is that objector no. 1 on account of serious illness could not attend the case and Ld. Arbitrator recorded exparte evidence and passed the award impugned. It has been stated in the grounds of the present objections that the Ld. Arbitrator had failed to appreciate the fact that no claim existed before him when the partnership had stood dissolved even at the time the first claim /petition had been filed. It is further stated that the Ld. Arbitrator was also a Member of the Delhi Hindustani Mercantile Association (Regd.) of which the respondent no. 2 was also a member and therefore undue favour had been shown to respondent no. 2. It has been thus alleged that the Ld. Arbitrator has misconducted proceedings.
It is further submitted in the grounds of objections that the Ld. Arbitrator had failed to appreciate the fact that the statement of accounts filed by respondent no. 2 concerned dealings of the year 1994/95 showing that separate bills were raised for separate dealings and no claim /petition could be 4 entertained on billing from 1994 to 1999 as the same were barred by limitation since each bill raised in each year related to a separate deal. It has been submitted that the cause of action for recovery of the amount being 3 years and there being no running account, the claim was barred by time and the Ld. Arbitrator could not have entertained the same.
It has been further submitted that the Ld. Arbitrator had failed to appreciate that there existed an Arbitration Agreement between the parties and that in any case each bill which allegedly contained the term of arbitration required separate claims to be filed and one claim could not cover all the bills. It has been submitted that the Ld. Arbitrator had no jurisdiction in the matter. It has been further submitted that the Ld. Arbitrator could have given an award only on the basis of statement of accounts as no bills nor challan had been filed or proved in terms of the Evidence Act before the Ld. Arbitrator. It has been submitted that no custom or usage has been proved before the Ld. Arbitrator showing the rate of interest either at 2% or 15% and the Ld. Arbitrator could not have awarded the same.
It is further stated in the objections that the Ld. Arbitrator had failed to appreciate that the objector had already returned goods worth Rs. 1,18,881/- to the respondent 5 no. 2 and this amount had not been deducted from the statement of accounts. It has been further stated that the Ld. Arbitrator had failed to appreciate that objector no. 1 had met with an accident and was not financially sound to make any payment being handicapped to the extent of 65% and having no money and therefore no award could have been passed against him. On all these grounds it has been prayed that the arbitration award be set aside.
In the reply filed by respondent no.2 it has been submitted that the sole motive of the present petition was to delay the execution of the award passed by the Ld. Arbitrator. It has been submitted that the award had been passed after awarding sufficient opportunity to the objector and that the objections were devoid of merits. It is submitted that the amendment had been allowed by the Ld. Arbitrator after hearing had been accorded to both sides. It has been denied that there was no valid claim that had been filed before the Ld. Arbitrator. Since at the time of filing of the claim/ petition the firm M/s Handa Traders was in existence and the person who has filed the claim petition was its partner and had become the proprietor after its dissolution and he had taken over its assets and liabilities. It has been denied that the Ld. Arbitrator has shown undue favour to the respondent no. 2 being a Member 6 of the Delhi Hindustani Mercantile Association or that the objector had been prejudiced because they were not members of the said Association. It has been denied that the claims were barred by time or that the Ld. Arbitrator had not assessed the evidence properly or had misconducted himself. It has been affirmed that there was a valid Arbitration Agreement between the parties and therefore the Arbitrator had the jurisdiction to decide the claim filed before him. It is further stated that the true copies of the bills had been placed before the Ld. Arbitrator and that the Arbitration Award had been passed after the Ld. Arbitrator had been fully satisfied about the claim. It is stated that the objector had failed to prove the return of goods worth Rs. 1,18,81/- and that therefore the Ld. Arbitrator had rightly rejected this claim of the objector.
In short the respondent no. 2 has refuted the allegations that the Arbitrator has misconducted the proceedings or had passed invalid award.
I have gone through the record and I have heard the submissions of counsel for the objector Sh. Pravin Suri and Counsel for the respondent no. 2 Sh. Goswami. The Ld. Counsel for the objector has submitted that the application under Order 6 Rule 17 CPC itself had shown that no partnership firm was in existence when the arbitration had commenced and therefore 7 the claim could not have been converted into one by a proprietor. It has been also submitted that there was no evidence to show how this claim had come into the share of the respondent as proprietor. It has also been submitted that all the claims were passed on time barred bills and that statement of account alone was insufficient to prove the claim. It has been submitted that there were no receipts on the bills and there was a wrong observation in the award. But it has been submitted that when the Ld. Arbitrator had followed the CPC for amendment then the rules of evidence were also applicable and the exhibits should have been marked. It has been submitted that the claim in any case could not have been filed in the manner it was since each bill was a separate transaction and there had been no transaction after 1998 and the claim was completely time barred. Thus the Ld. Counsel has prayed that the impugned award be set aside.
The Ld. Counsel for the respondent has submitted that all these arguments were beyond the scope of section 37 of the Arbitration & Conciliation Act 1996. It was submitted that the award had been passed on a valid arbitration agreement and that a legal notice had been given invoking the arbitration and setting out the claim. This notice had been replied to by the objector opposing the claim. It was submitted that there was a 8 term of arbitration in the invoice and the question had been hotly contested before the Ld. Arbitrator and the Ld. Arbitrator having once concluded that he had the jurisdiction, the same issue could not be raised now. It was submitted that the invoices were not disputed. It has been submitted that full opportunity had been given to the objector to plead and prove his case and the Court could not sit in appeal over the award passed. It has been submitted that the claim was within time since the last payment of Rs. 15,000/- had been made on 20.08.01 and therefore the claim was within time. It is submitted that unless misconduct was proved the award could not be set aside and merely because exhibits were not marked it could not be said that there was misconduct. In these circumstances, it has been submitted that the present petition was liable to be dismissed.
With the amendment of the arbitration law the scope for intervention by the Court in arbitration has become extremely limited. There is no requirement for the Court to make the award a rule of the Court before the award becomes enforceable. Objections to the award can be filed Under Section 34 of the Arbitration and Conciliation Act 1996. Further such an application for setting aside an arbitral award can be moved only on very specific grounds as provided under the 9 said section. Section 34 of the Arbitration Act reads as under :
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 10 parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
b) the Court finds that -
I) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
ii) the arbitral award is in conflict with the public policy of India.
Explanation.- Without prejudice to the generality of sub-clause
(ii) of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.
3)An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days but not thereafter.
4) On receipt of an application under sub-section (1), the Court 11 may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to given the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
Therefore it becomes essential to determine whether the present set of objections filed fall within any of these situations and is thus maintainable. At the same time it has to be kept in mind that the Court does not sit as a Court of appeal to examine how the arbitrator has assessed the evidence to reach his conclusions . This is the settled law and has been reiterated once again by the Hon'ble High Court of Delhi in DDA Vs. Manohar Lal & Co. 2006 (1) Arb. L, R. 132 (Del).
The objections do not show how the present objector had suffered from some incapacity to participate in the arbitration proceedings. The objector has not been able to show how the arbitration agreement is invalid. The record shows that the present objector had been served with notice of hearing repeatedly and either he or his representative/ brother Sh. Hardeep Singh had regularly attended the proceeding as had the Counsel Sh. Pravin Suri till they themselves chose to remain absent. The present objector had even filed his written 12 statement to the claim of the respondent no. 2. Thus it is clear that the present arbitration proceedings do not suffer from a lack of due hearing being granted to the present objectors.
The present objector had claimed in the written statements that there was no arbitration agreement. However, it is to be noticed that they did not insist on the decision on this objection before the arbitration was proceeded with. Rather they continued to participate in the proceedings till the case was fixed for evidence by the Ld. Arbitrator. The Ld. Arbitrator in the award has referred to the arbitration clause in the bills to hold that there was a valid arbitration clause. The present objectors have claimed that each bill reflected separate transaction and thus repeated claims ought to have been referred to repeated arbitration and that the claim could not be clubbed. In other words the existence of the arbitration agreement or clause in the bills is not in dispute. As held in the case DDA Vs Manohar Lal & Co. (Supra) where a party has participated in the proceedings before the arbitrator, he would be estopped from challenging the arbitrator's jurisdiction subsequently. In the present case the objector has fully participated in the proceedings by opposing the application for amendment without first questioning the jurisdiction of the arbitrator to entertain a reference. Thus these objections now 13 taken cannot be entertained.
The party i.e. the present objector making the application for setting aside the arbitral award has failed to furnish proof as required under section 34 (2) Clause (a) for setting aside the arbitral award . This Court has not been able to find any subject matter that could not have been settled by way of arbitration nor does it find the arbitral award in conflict with the public policy of India. The Hon'ble Supreme Court in ONGC Vs SAW Pipes Limited 2003 (4) SCALE (92) has defined what would constitute the Public Policy of India. It has observed that Public Policy would entail a patently illegal award, against the provision of the statute and against the Principles of Natural Justice but none of these conditions prevail in the present case. As noticed above the Ld. Arbitrator has given ample opportunity of hearing to the objector and on the basis of the material before the Ld. Arbitrator has chosen to pass the award in favour of respondent no. 2.
The arguments that evidence has not been properly appreciated are arguments that cannot be considered as the Court does not sit in appeal over the arbitral award. The Superior Courts have gone to the extent of saying that if the view taken by the Arbitrator is possible the plausibility of a different view on the same material would not suffice to set it 14 aside. Even in the question of limitation as agitated in the present objections have a factual basis in as much as the claim of the respondent was on the basis of a running account and the Ld. Arbitrator had no basis for holding otherwise. The objector's were unable to substantiate their defence of limitation. Hence it cannot be held that the arbitral award against the provisions of a statute.
Thus the present objections do not fulfill the parameters of Section 34 of the Arbitration & Conciliation Act 1996. They are devoid of merits. The same are dismissed. File be consigned to the Record Room.
Announced in the open court on this 2nd day of February, 2008. (ASHA MENON) ADDL. DISTRICT JUDGE, DELHI.