Delhi District Court
Arbt.Ptn.1825/2013 "M/S Infovinity ... vs Sandeep Singh" Date Of Order: ... on 19 September, 2013
Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
IN THE COURT OF VINOD YADAV: ADDL. DISTRICT JUDGEI:
SOUTHWEST DISTRICT: DWARKA COURTS: NEW DELHI
Arbitration Petition No.1825/2013
In the matter of:
M/s Infovinity Sytems Pvt. Ltd.,
Through Its Director Shri Prakash Khandelwal,
10041005, Vishvdeep Towers, District Centre,
Janakpuri, New Delhi110 058.
.....Petitioner/Applicant
(Through Shri Gautam Dhamija, Advocate)
Versus
Shri Sandeep Singh,
S/o Shri Virender Singh,
R/o H.No.111/9, Kishangarh,
Vasant Kunj, New Delhi110 070.
.....Respondent
(Through Shri Sachin Sangwan, Advocate)
Date of Institution of petition : 05.10.2002
Date of Transfer to this Court : 31.05.2013
Date of reserving judgment : 19.09.2013
Date of pronouncement : 19.09.2013
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 1 of 10
Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
19.09.2013
J U D G M E N T:
This is a petition U/s 34 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as the "Act"), filed by the petitioner, seeking setting aside of Award dated 08.02.2012, passed by the sole Arbitrator (hereinafter referred to as the "impugned Award"). The record from the office of Ld.Arbitrator has been received.
2. I have heard arguments advanced at bar by Shri Gautam Dhamija, learned counsel for the petitioner and Shri Sachin Sangwan, learned counsel for the respondent and perused the entire material on record. The challenge to the impugned Award by the petitioner is summarized as under:
(a) That the parties in "Web Site Development Agreement", dated 10.11.2010, i.e, the petitioner and the respondent had specifically agreed to the resolution of dispute, if any, between them through arbitration as an "Alternative Dispute Resolution" mechanism and the jurisdiction for entertaining any such proceedings was chosen to be Indore, Madhya Pradesh; but the Ld.Arbitrator entered the Reference on his appointment as the sole Arbitrator by the respondent in Delhi and passed the impugned Award. The said Award is, therefore, without jurisdiction and liable to be set aside U/s 34 (2) (v) of the Act;Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 2 of 10
Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
(b) That the respondent invoked the arbitration in the matter without following the due procedure, as contemplated U/s 11 (5) of the Act;
(c) That the Ld.Arbitrator did not comply with the provisions of Section 31 (5) of the Act, as no signed copy of the Award was sent to the petitioner.
3. The learned counsel for the respondent has very vehemently argued that the petition is barred by limitation, as the same has not been filed within the time period prescribed U/s 34 of the Act. The Website Development Agreement between the parties was a time bound Agreement, but the petitioner failed to perform its part of contract even after receiving the complete payment and that the Ld.Arbitrator had the jurisdiction to enter Reference because the entire cause of action in the matter had arisen within the jurisdiction of Delhi and no part thereof had arisen within the jurisdiction of Indore, Madhya Pradesh, the venue which finds mention in the said Agreement.
4. I have gone through the entire arbitration proceedings from the original Arbitrator's record. I would deal with the argument of learned counsel for the petitioner mentioned at point 2 (c) first. The original proceedings clearly establish that the Ld. Arbitrator did not even bother to send signed copy of the impugned Award to the petitioner. The record further does not suggests that any signed copy of the impugned Award was sent to the petitioner, as there is no postal receipt or acknowledgment card on record.
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 3 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
5. The Hon'ble Supreme Court in a catena of judgments, starting from the judgment reported as, "2005 Volume IV SCC 239" titled as, "Union of India V/s M/s Tecco Trichy Engineers & Contractors", till the recent judgment reported as, "2012 STPL (Web) 516", titled as, "Banarasi Dass Krishna Committee & Ors. V/s Karma Yogi Waters Pvt.Ltd." has been pleased to categorically hold that word used in Section 31 (5) of the Act is "delivered" and not "despatched". Section 31 (1) obliges the Arbitrator to make the Award in writing and to sign it and Sub Section 5 then mandates that a signed copy of the Award should be "delivered" to each party. A signed copy of the Award would normally be delivered to the parties by the Arbitrator himself. A joint reading of Section 31 (1), 31 (5) and 34 (3) of the Act makes it mandatory upon the Arbitrator to "deliver" to the parties a copy of the Award signed by him and not any copy of the Award and then it has to be established in a petition U/s 34 of the Act by the Arbitrator that the other party/non claimant should have received such signed copy of the Award. The expression "Party making that application had received the Arbitral Award" cannot be read in isolation and it must be understood in the light of what is said earlier in Section 31 (5) of the Act that requires a signed copy of the Award to be delivered to each party. On reading the two provisions together, it is quite clear that the limitation prescribed U/s 34 (3) of the Act would commence only from the date the signed copy of Award is delivered to the party making the application for setting it aside. It has been further laid down in TeccoTrichy case (supra) that delivery of an Arbitral Award under SubSection 5 of Section 31 of the Act is not a matter of mere formality. It is a matter of substance. Para 8 of this judgment, which clearly clinches the issue in hand is reproduced as under:
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 4 of 10
Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013 xxxxx "8. The delivery of an arbitral award under subsection (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of 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 of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33 (1), an application for making an additional award under Section 33 (4) and an application for setting aside an award under Section 34 (3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the report thereof by each party constitutes an important stage in the arbitral proceedings."
xxxxx (highlighted portion emphasized)
6. The issue of limitation again came up for consideration before the Hon'ble Supreme Court in case reported as, "2011 (4) SCC 616", titled as, "State of Maharashtra & Ors. V/s A.R.K Builders Pvt. Ltd.", wherein after considering the judgment in case of Tecco Trichy (supra), the Hon'ble Supreme Court has been pleased to hold as under:
15. The highlighted portion of the judgment extracted above, leaves no room for doubt that the period of limitation prescribed U/s 34 (3) of the Act would start running only from the date a signed copy of the award is delivered to/ Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 5 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013 received by the party making the application for setting it aside under Section 34 (1) of the Act. The legal position on the issue may be stated thus. If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law.
16. We may here refer to a decision of the Patna High Court in Sheo Shankar sahay (Dr.) v. Commr. Section 18(1) of the Bihar Buildings (Lease Rent and Eviction) Control Act, 1947 prescribed a period of limitation of 15 days for filing an appeal against an order of the House Controller and provided as follows :
18. Appeal Any person aggrieved by an order passed by the Controller may within fifteen days from the date of receipt of such order by him, prefer an appeal in writing to the appellate authority;"
It was contended on behalf of the petitioner before the High Court that the ordersheet of the House Controller was shown to the lawyer of the respondent on 10.06.1959 and therefore, what would be the starting point of limitation under Section 18(1) of the Bihar Buildings (Lease, rent and Eviction) Control Act, 1947. A Division Bench of the High Court consisting of V. Ramaswami, C.J. (as His Lordship then was) and N.L. Untwalia, J. (as His Lordship then was) rejected the submission observing as follows :
"2... But we shall assume that the petitioner is right in alleging that the order was shown to the lawyer on 10061959. Even so, we are of opinion that the appeal preferred by Respondent 4 before the Collector of Shahabad was not barred by limitation. The reason is that Section 18(1) provides limitation of fifteen days Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 6 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013 'from the date of receipt of the order' and not from the date of communication of the order. It is significant that Section 14 of the Bihar House Rent Control Order, 1942, had provided that 'any person aggrieved by an order of the Controller may, within fifteen days from the date on which the order days from the date on which the order is communicated to him, present an appeal in writing to the Commissioner of the division'. Section 18(1) of Bihar Act 3 of 1949 is couched in different language. In our opinion, Section 18(1) implies that the Controller is bound, as a matter of law, to send a written copy of his order to the person aggrieved, and limitation for filing an appeal does not start unless and until the copy of the order is sent. In the present case it is not disputed that no copy of the order was sent to Respondent 4. It is true thatthe respondent himself applied for a copy of the order on 11121959 and obtained a copy on 14121959. In any event, therefore, limitation will not start running against Respondent 4 under Section 18(1) of the Act till 14121959, and as the appeal was filed on 26121959, there is no bar of limitation in this case..."
We are in respectful agreement with the view taken by the Patna High Court in Sheo Shankar Sahay(Dr.).
xxxxx (emphasis added)
7. The Hon'ble Supreme Court of India further considered the Tecco Trichy case (Supra) in Banarasi Krishan Committee & Ors. (supra) and emphasized that the service of the signed copy of the Award of the Arbitrator upon the other party/nonclaimant has to be strictly upon the party concerned and it does not admit of any kind of service upon his agent.
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 7 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
8. If the law laid down in the aforesaid authorities is applied to the facts of the present case, then the undisputed conclusion would be that the present petition is not barred by limitation.
9. I find substance in the argument of learned counsel for the petitioner that the respondent was not entitled to initiate arbitration proceedings in Delhi in the teeth of Clause 10.2 of the said Agreement, whereby the parties had agreed Indore (Madhya Pradesh) to be the place of arbitration. Through a series of judgments, it is now fairly settled that if the arbitration proceedings could be initiated at two places having jurisdiction. Lets say Place "A" and Place "B", then the parties with their consent can exclude place A and in turn agree for the place of arbitration as place B. In this regard, reference could be had to the judgment, passed in "IA No. 4652/2001 and OMP No.34/2000", decided on 01.12.2005, titled as, "Apparel Export Promotion Council V/s Shri Prabhati Patni, Proprietor Comfort Furnishers & Anr.", wherein the parties with their consent had agreed to have place of arbitration to be at Jaipur (Rajasthan), however, one of the parties invoked arbitration at Delhi and an Award was passed by the Arbitrator in Delhi. In a Miscellaneous Petition, filed before the Hon'ble High Court by the aggrieved party, the Hon'ble High Court has been pleased to hold as under:
xxxxx
16. Upon consideration of all the aforesaid decisions, the position becomes clear that where two or more competent courts have jurisdiction to entertain a matter, if the parties by contract agree to fix jurisdiction in only one of them, then such a contract or agreement would have to be held to be valid. The consequences thereof would be that the Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 8 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013 court on which the jurisdiction was conferred by agreement would be the only court entitled to exercise such jurisdiction. It is, in fact, not so much a question of conferment of jurisdiction but one of election or exclusion of jurisdiction. Where two or more courts have jurisdiction because part of cause of action may have arisen there within, parties may contract to exclude jurisdiction and elect to restrict it to one or more of the courts. In the present discussion, I have proceeded on the assumption that this court also has jurisdiction, although it is the contention of Mr. Moorjhani that no part of cause of action arose within the territorial jurisdiction of this court. Be that as it may, assuming that this court otherwise has jurisdiction, in view of the said clause 7, such jurisdiction has been excluded by agreement between the parties and only the courts at Jaipur would have jurisdiction in the matter.
xxxxx xxxxx
24. In view of the foregoing discussion, this application (IA No. 4652/ 2001) is allowed. The petition (OPM 34/2000) is dismissed on the ground of lack of territorial jurisdiction. No order as to costs.
xxxxx (emphasis supplied)
10. Therefore, the Ld. Arbitrator did not have the jurisdiction to enter Reference in the matter. I have gone through the impugned Award, passed by the Ld.Arbitrator in the matter. In para 11 thereof, without addressing the issue of jurisdiction, he has proceeded with the arbitration proceedings on the premise that the petitioner herein was not interested in getting the dispute resolved through the arbitration, which is bad in law.
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 9 of 10 Arbt.Ptn.1825/2013 "M/s Infovinity Systems Pvt. Ltd. V/s Sandeep Singh" Date of Order: 19.09.2013
11. I further find substance in the argument of learned counsel for the petitioner that the respondent herein never issued any notice to the petitioner, seeking invocation of the arbitration for redressal of the grievance(s) in terms of Clause 10.2 of the Agreement between the parties. On the contrary, it was the petitioner who had advised the respondent timely through replies dated 06.10.2011 as well as 28.12.2011 that the place of arbitration, as chosen by the parties is at Indore, Madhya Pradesh and not Delhi. In case, the respondent had any grievance and he had genuine intention of invoking arbitration proceedings as per Clause 10.2 of the Agreement and the petitioner had not responded to his request, then his right was U/s 11 of the Act to approach the Hon'ble High Court for the appointment of Arbitrator, which was not done in this case.
12. Considering the facts of the case from any angle, the invocation of arbitration proceedings in Delhi was clearly in violation of the Agreement containing Arbitration Clause and the settled proposition of law, as discussed in the above judgments, the "impugned Award" is, therefore, not sustainable in the eyes of law, same accordingly stands set aside.
13. File be consigned to Record Room.
Dictated & Announced in the (Vinod Yadav)
open Court on 19.09.2013 Addl. District JudgeI/SouthWest
Dwarka District Courts: New Delhi
Ptn.U/s 34 of Arbt.& Conciliation Act, 1996: "Petition Allowed: Award Set Aside" Page 10 of 10