Bombay High Court
Nitin Harjivandas Rajyagor vs Rajesh Pravinchand Rajyagor on 14 June, 2016
Author: Anoop V.Mohta
Bench: Anoop V.Mohta, G.S.Kulkarni
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m.IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.306 OF 2016
in
ARBITRATION PETITION NO.423 OF 2012
Nitin Harjivandas Rajyagor }
Age: 64 years, Ooccu: Business
residing at 14, Garden View, }
Mumbai-400 036. .. Appellant
(Orig.Respondent)
vs
Rajesh Pravinchand Rajyagor }
Age: 46 years, Occu: Business
residng at 14, Garden View, }
45, A.K.Marg, Mumbai-400 036.
ig .. Respondent
(Orig.Petitioner)
Ms.Sonal a/w Mr.Filji Fredrick i/b FF & Associates
for Appellant
Mr.Simil Purohit i/b Mr Anand Hasmukh Gandhi
for Respondent
CORAM: ANOOP V.MOHTA &
G.S.KULKARNI,JJ
DATE OF JUDGMENT 14TH JUNE, 2016
ORAL JUDGEMENT (Per Anoop V.Mohta, J)
By consent, heard finally at admission stage.
1. This appeal is filed by the appellant against judgment dated
29th July, 2015 as the appellant's/original respondent's section 34 petition
under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as
the Act) is allowed whereby the award passed by the learned Arbitrator
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dated 9th May, 2011 has been set aside.
2. Admittedly, there exists an Arbitration agreement between
the parties. The Arbitrator as appointed by consent, being close to the
family members proceeded to deal with the family dispute. The relevant
agreement and clauses read as under :
"And whereas Shri Nitin Harjivandas Rajyagor and Shri Rajesh
Pravinchandra have made certain claims and counter claims in
respect of unresolved issues as well as in respect of certain issues
resolved earlier." And whereas said parties hereto have agreed to
refer the said disputes to sole arbitration of Shri Chandrakant
N.Shah CA and have assumed him that help to all the intervenors,
as may be required by the said sole Arbitrator will be extended to
him. And whereas both the parties shall hand over the issues/matters
not resolved as well as pending, requiring consideration of the
Arbitrator in separate paper duly signed by each of them.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
1. All the disputes, between the parties hereto shall be referred to
the sole arbitration of Shri Chandrakant N.Shah (hereinafter
referred to as "the Arbitrator" )for his final determination and
award.
2. The Arbitrator shall hear both the parties hereto and such of
their relatives as the Arbitrator in his sole discretion deem fit and
their witnesses interveners and look into such documents, records and
evidences as they may produce and give his award within 1 ½
months.
3. The Arbitrator shall have been power to proceed ex-parte in
case either party fails to appear before him after reasonable notice.
4. The cost of the arbitration shall be named by the Arbitrator
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and shall be paid by the parties hereto which shall be based on the
time and efforts involved. The parties shall pay an advance of
Rs.10,000/- (Rs Ten thousand only) on or before execution of this
agreement.
5) The award of the Arbitrator shall be binding on both the parties
hereto and to their family members to whom they represent and shall
not be revoked under any circumstances.
In witness whereof the parties hereto have hereunto set and
subscribed their respective hands the day and the year first herein
above written.
3. Both the parties based upon the agreement appeared and
proceeded before the learned Arbitrator. The unresolved disputes as agreed
were placed through a list of issues between the parties. This itself means
that the parties could not settle the disputes which were admittedly going
on since long, apart from testamentary and co-operative litigation by and
between the parties.
4. Admittedly, no oral evidence was led by the parties. An
application dated 17th April, 2006, under section 13 of the Arbitration, was
also filed by the respondent inter alia for two reasons. One to follow the
procedure under the Arbitration Act and second for objection to the delay in
the proceedings. This was admittedly after more than nine dates of hearing
as stated. There is no bar that the party cannot raise and/or file such
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applications. The learned Arbitrator has rejected these applications by a
common order dated 27th March 2008 and observed as under :
"After careful consideration of the Applications dated 17th April, 2006
and dated 14th February 2008 on the facts and circumstances of the case
and because on more than one occasion the applicant reposed the full
faith in the Sole Arbitrator after raising the doubts as to the
independence and impartiality of the Arbitrator, I reject both the
applications as frivolous and without merit."
S/d
th
Dated: 27 March 2008 Sole Arbitrator
Mumbai
5.
Strikingly, the award was not immediately passed after
rejection of those applications. The date of impugned award is 9 thMay,
2011 passed after 3 years. Merely because the learned Arbitrator was
appointed by the family members that itself is not sufficient to overlook the
basic principles of law. There was no specific contra agreement between
the parties whereby they have decided not to follow the procedure of the
Arbitration Act, or to follow any other procedure. For early and for proper
management, the learned Arbitrator had called for the issues as there were
disputes. For proper adjudication and/or decision the basic principles of
law are required is to be followed by the Arbitrator. This is not a case
where parties have agreed that even if there are unresolved issues that
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would be decided by the Arbitrator by not following the procedure so
prescribed under the law. As recorded, the respondents did apply and
requested to follow the procedure under the Arbitration Act. The learned
Arbitrator however, rejected those applications and passed the Award and
decided the claim based upon the documents filed by the parties without
the statement of claim, replies or a counter claim and the supporting
documents and the oral evidence.
6. This also cover the basic principles of natural justice, the
principles in regard to the evidence necessary to resolve the disputes and
all other related aspects specifically when between the family members a
physical distribution and partition is required of the immovable and of the
movable properties. As the submitted issues were not resolved and
therefore, at least on those issues as there was a contest, it was obligatory
on the part of the learned arbitrator to deal with the same in accordance
with law.
7. The Arbitrator even in family matters unless specifically
agreed cannot force and/or compel the parties to accept and/or a particular
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claim and reject counter claims and/or vice-versa without giving equal
opportunity to both the parties as they were not agreeing to proceed on the
basis of the documents so placed on record. Once the request is made to
proceed as per the Arbitration Act, the learned Arbitrator ought to have
proceeded accordingly.The Arbitrator had not done so.
8. The parties have read and relied on the Judgment and the
record. We have also gone through the reasons given by the learned Judge
while setting aside the Award in question. Those reasons which we have
noted are recorded in the following paras, which are relevant even for
deciding the present appeal even on merits:
REASONS AND CONCLUSIONS
"74. In my view since the learned arbitrator rendered the
award after three years from the date of the last application made by
the petitioner i.e. on 27th March 2008, the learned arbitrator had
even otherwise ample time to follow the procedure prescribed under
the provisions of the Arbitration Act, 1996 and for hearing the
parties. It is not the case of the respondent that the award was ready
in all respects in the month of May, 2008 itself.
75. I am not inclined to accept the submission of learned counsel
for the respondent that since the parties had submitted the list of
issues to be decided by the learned arbitrator, filing of the statement
of claim along with documents and written statement was dispensed
with.
76. In my view, the filing of the pleadings stating facts supporting
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claim, the points at issue and the relief or remedy sought is
mandatory and is in compliance with the principles of natural
justice. The opponent is always entitled to know the case of the rival
party and the reliefs sought by him to enable him to deal with such
allegations and to seek the counter relief, if any. No party can seek
any relief orally before the learned arbitrator and has to plead his
case in writing. In my view provision for filing of pleadings stating
facts points at issue and reliefs or remedy sought is not derogable and
thus there is no question of waiver under section of the Arbitration
Act.
77. " The learned Arbitrator in my view has committed patent
illegality but not allowing the parties to file pleadings so as to
indicate their case and reliefs sought. The impugned award is thus in
violation of section 23 of the Arbitration Act, 1996 and deserves to be
set aside on this ground alone. In my view, since the award made by
the learned arbitrator is not in accordance with provisions in Part-I,
such arbitral award can be set aside under section 34 (2) (a) (v) of
the Arbitration Act.
78. In view of this unexplained gross delay in rendering the
arbitral award of more than three years, the case of the petitioner
was seriously prejudiced. Since the learned arbitrator did not fix any
hearing and did not follow any procedure though repeatedly
requested by the petitioner, the impugned order award deserves to be
set aside on this ground also.
79. The respondent was exchanging the correspondence with the
learned arbitrator behind the back of the petitioner. Though the
petitioner was requesting the learned arbitrator even during the said
period of three years to fix an early date of hearing and to follow the
procedure, the learned arbitrator did not inform the petitioner that
he was not declaring the award in view of the pending negotiations
between the parties.
80. In my view, the learned arbitrator could not have visited the
place of residence of the petitioner when the matter was subjudice
and that also without issuing any notice to the petitioner in advance
on the request of the respondent.
81. This Court in the case of Amrutlal Tirathram Gupta (supra)
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has held that an arbitrator cannot consult anybody behind the back
of the parties and even if the arbitrator wants to consult somebody
then that person has to be called as witness. In my view, the
judgment squarely applies to the facts of this case.
83. Even if it is held that under the arbitration agreement
entered into between the parties the learned arbitrator could have
held meetings with such intervenors, the information obtained by the
learned arbitrator could not have been used as evidence unless it was
brought to the notice of the parties and an opportunity ought to
have been given to the petitioner to deal with the same.
85. In my view, the issue in respect of flat was subjudice before the
Cooperative Court and the parties including the learned arbitrator
having decided not to decide that matter, the learned arbitrator could
not have adjudicated upon the issue in respect of the said flat. In my
view, the award on that issue on the face of it is without jurisdiction
and contrary to the agreement arrived at between the parties.
86. In my view, none of the parties had produced copy of such
alleged will before the learned arbitrator. Even otherwise the said
alleged will of Mrs Kankuben could not have been taken into
consideration for the purpose of deciding the rights of the parties in
respect of the said flat. Learned arbitrator in my view has exceeded
his jurisdiction by referring to the alleged testamentary document
and deciding the said issue based on the said alleged will and bequest
alleged to have been made therein.
88. Learned arbitrator in paragraph 2.25 has referred to such
confirmation alleged to have been obtained form those intervenors
and has recorded a finding that all such intervenors had agreed that
the petitioner was not pressurized to agree to the payment of
Rs.12.51 lacs to the respondent. It is not the case of the respondent
that the said intervenors were produced as witness by any of parties
or were called in the arbitration meeting in presence of the petitioner.
Learned arbitrator did not disclose to the petitioner about the alleged
information obtained by him from those intervenors. Award is in
violation of principles of natural justice.
89. A perusal of the record also indicates that on the said
principal amount of Rs.12.51 lacs the learned arbitrator had allowed
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compound interest @ 18% p.a from 1 st April 1999 to 31st March
2011 which worked out to Rs.78,65,778/-. In my view, the award
shows patent illegality on the face of the record which goes to the
root of the matter. No reliance on the alleged will could be placed by
the learned arbitrator.
94. In so far as the award of interest @ 18% p.a. awarded by the
learned arbitrator on most of the claims at compound rate and that
also with effect from 31st March 1999 is concerned. In my view since
the entire award shows patent illegality and is in gross violation of
the principles of natural justice and the award is set aside on that
ground the award in respect of interest is also set aside.
95. Under section 37 (1) (a) of the Arbitration Act the learned
arbitrator in the absence of agreement between the parties can award
the reasonable rate of interest and cannot award at compound rate
that also @ 18% p.a. The award in respect of the interest deserves to
be set aside on that ground."
9. The learned Single Judge therefore taking note of various
anomalies in the vital procedure to be followed by the learned arbitrator
and the reasons given by the learned Arbitrator held that the Award is
contrary to the law and the record. We also find there is no perversity in the
judgment of the learned Single Judge in view of the above admitted
position of facts and law. No case is made out for the appellate Court to
interfere with the order passed by the learned Single Judge.
10. This Court in a judgment delivered in SAYHADRI
EARTHMOVERS VS L AND T FINANCE LIMITED & ANR 2011 (4)
Mh L.J. 200 has elaborated the basic parameters for Arbitrator to follow
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while dealing with any arbitration, out of which the following parameters
are relevant :
"Equal and fair treatment
(xii) The Arbitrator must give equal opportunity to both the parties and
therefore bound to follow the principles of natural justice, fair play and
equity.
CPC & Evidence Act.
(xiii) Though Code of Civil Procedure and the Evidence Act are not
applicable strictly, (section 19) but the settled principles do apply. The
power of Arbitral Tribunal to determine the admissibility, relevance,
materiality and weight of any evidence just cannot be overlooked.
To decide jurisdiction:
(xix) The Arbitrator is empowered to decide his own jurisdiction if
objected and even the issue of existence of arbitration agreement
(S/16) . It should be decided as early as possible by passing reasoned
order, as this could be additional ground of challenge under section 34
of the Arbitration Act.
Substantial laws customs commercial usages and practice
(xx) The Arbitrator is bound by the substantive laws of the land as well
as procedural laws and practice and principle apart from the custom and
usage of the trade referring the business and commerce between the
parties, in all respects.
To analyse the evidence and the record
(xxi) The Arbitrator is required to consider all the material and
evidence/documents placed by the parties on record read with the
evidence led by the parties. The Arbitrator is therefore bound to analyse
and appreciate the same by giving proper and correct interpretation of
terms of the contract subject to provisions of law, before passing
reasoned interim or final award. The Arbitrator to pass reasoned interim
and/or final award, unless agreed otherwise."
11. In view of the above reasons and the law, the contentions so
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raised by the learned counsel appearing for the appellant that the Award
was passed by the learned Arbitrator based upon the documents and agreed
procedure including interpretation of the Agreement so referred ought not
to have been disturbed by the learned Single Judge as there was no
perversity and/or any illegality while passing the Award by the learned
Arbitrator is unacceptable. The appeal is liable to be dismissed.
12.
The Apex Court in Venkatesh Construction Company vs
Karnataka Vidyuth Karkhane Limited (Kavika) 2016 (2) ALL MR 953
(S.C.) has observed as under :
"The Appellate Court may not interfere with the finding of the
trial court unless the finding recorded by the trial court is
erroneous or the trial court ignored the evidence on record."
13. In view of above, present appeal is liable to be dismissed.
Hence this order:
ORDER
Appeal is dismissed. No costs.
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