Delhi District Court
Iqbal Ali vs Mahindra & Mahindra Financial Services ... on 12 March, 2012
1/31
IN THE COURT OF SHRI VINOD GOEL, ADDITIONAL DISTRICT &
SESSIONS JUDGE, (EAST) KARKARDOOMA COURTS, DELHI.
In re:-
Suit No. : 09/2010
Date of Institution: 16.12.2010
Arguments heard on : 03.03.2012
Date of order : 12.03.2012
Iqbal Ali
S/o Sh. Hakim Ali
R/o House No.213, Main Road,
Village Khichripur,
New Delhi-110091 ....Applicant
Versus
1. Mahindra & Mahindra Financial Services Ltd.
G-1, Sikka Plaza-2, 2nd Floor,
Anand Lok Society, Mayur Vihar, Phase-I,
Delhi-110092 ....Respondent
Also at :
223, 225, 227, Ansal Chambers-II,
Bhicaji Cama Place,
New Delhi.
Also at :
508, Vth Floor District Centre,
Laxmi Nagar, Delhi-110092
2. Sanjiv K.Bhardwaj, Advocate
Sole Arbitrator
Chamber No.33, Lawyers Chamber,
Supreme Court of India,
New Delhi-110001.
Also at :
702, Green Heavens,
Iqbal Ali Vs. Mahindra & Mahindra
Suit No. 09/2010
2/31
Plot No.35, Sector-4,
Dwarka,
New Delhi-110078
Application u/s 34 of The Arbitration and Conciliation Act, 1996
for setting aside the ex-parte award dated 5.5.2010.
ORDER
1. Shorn of unnecessary details, the brief facts for disposal of this petition U/s 34 of The Arbitration and Conciliation Act, 1996 (herein after referred to as "Act") for setting aside the ex-parte award dated 5.5.2010 are that the petitioner Iqbal Ali purchased a Chevrolet Tavera car bearing registration No. DL-1V-B-4381 in September 2006 for a sum of Rs.6,49,730/- from M/s Regent Automobiles Ltd., Mathura Road, New Delhi-44 and he obtained a loan of Rs.4,75,000/- from respondent no.1 and the said vehicle was hypothecated by him with respondent no.1. He has paid a sum of Rs. 35,281/- for registration charges to respondent no.1 through the said car dealer and he was supplied a photocopy of the Registration Certificate of the said car. It is also the case of the petitioner that he paid 11 installments @ Rs. 13,543/- each to respondent no.1. In December 2006, the petitioner was challaned for not producing the original Registration Certificate of the said car to the Traffic Police and at that time the petitioner noticed that the hypothecation of the said car was in the name of "M/s UTI Bank Ltd. A/c Apeejay Finance Group Ltd., Mathura Road, New Delhi" instead of respondent no.1 i.e. "M/s Mahindra & Mahindra Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 3/31 Financial Services Ltd." and he brought it to the notice of the Sales Manager of the said car dealer and also the officer of respondent no.1 who assured him of necessary rectification and when the mistake was not rectified, the petitioner sent a legal notice dated 2.7.2008 to respondent no.1 & the car dealer and ultimately, the petitioner filed a complaint before the District Consumer Forum, Saini Enclave, Delhi, against respondent no.1 and the said car dealer. The petitioner alleged that he suffered physical and mental harassment for want of requisite correction on the certificate and for that reason he stopped making payment of monthly installments to respondent no.1.
2. The respondent no.1 filed a petition U/s 9 of the "Act" against the petitioner and on 12.2.2009, the court of Ld. District Judge (East) appointed Sh. Ankush Rawal, Customer Manager as Receiver and directed him to take possession of the said vehicle from the petitioner herein with further direction that the vehicle shall not be sold till further orders of the court. It is also alleged that the respondent no.1 did not file the status of arbitral proceedings before the court of Ld. District Judge despite directions and on 27.3.2010, the respondent no.1 suddenly filed an order dated 17.11.2009 passed by respondent no. 2/arbitrator Sh. Sanjiv K.Bhardwaj by which the respondent no. 2/arbitrator directed that the Respondent No. 1 shall repossess the said vehicle and get it revalued and after giving 15 days notice to the borrower they shall dispose of the same and adjust the loan amount.
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 4/31 On receiving a copy of this order on 27.3.2010, the petitioner filed an appeal U/s 37 (2) (b) of the "Act" which came up for hearing before the court of Sh. S.S.Malhotra, Ld. ADJ (East) and on 28.9.2010 the said court observed that the Arbitrator has already passed the award and the certified copy of the award was filed and appeal was dismissed on 8.10.2010.
3. One interesting development has taken place during the pendency of these proceedings which is relevant to be mentioned here. As per the case of the petitioner and respondent no.1, it is the respondent no.2 Sh. Sanjiv K. Bhardwaj Advocate, New Delhi who had been appointed Arbitrator in this case and Sh. Sanjiv K. Bhardwaj, Arbitrator adjudicated the dispute on 5.5.2010. On 21.5.2011 when this case was listed for final arguments, the petitioner filed an affidavit to the effect that on 15.5.2011, he received a copy of the arbitral proceedings dated 6.10.2009 in a covering letter dated 7.5.2011 from one Mr. Krishna Kumar R.S. claiming to be an Arbitrator appointed by respondent no.1 in respect of the same agreement. The petitioner placed on record of this court the copy of covering letter dated 07.05.2011 cum arbitral proceedings dated 6.10.2009 and registered envelope. On 9.6.2011, an affidavit was filed by Sh. Samarjeet Kokhar, AR of Respondent No. 1 to the effect that the said notice dated 7.5.2011 was inadvertently issued by the sole Arbitrator Sh. Krishana Kumar R.S. due to bonafide mistake and the arbitration Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 5/31 proceedings have already been concluded before Sh. Sanjiv K. Bhardwaj, Advocate, and no other arbitral proceedings are subjudice before any Tribunal. Thereafter, on 30.7.2011 one letter cum certificate dated 24.05.2011 issued by Sh. Krishna Kumar R.S. was filed on by Ld. Counsel for Respondent No. 1 to the effect that the captioned matter in respect of contract no.507530 has already been withdrawn in the year 2009 and notice was issued to the parties in 2011 inadvertently and same stands withdrawn. On 24.8.2011 on behalf of Respondent No. 1, an affidavit of Sh. Anil Kumar Sharma was filed to the effect that the arbitral proceedings were initiated between the petitioner and respondent no.1 before the sole Arbitrator Sh. Krishna Kumar R.S. vide reference notice dated 12.9.2009 but the proceedings were withdrawn by respondent no.1 company on 21.9.2009 without prejudice to ongoing arbitrtal proceedings on the same cause of action before the arbitrator Sh. Sanjiv K. Bhardwaj and the notice dated 7.5.2011 for further proceedings on 27.5.2011 was sent inadvertently and arbitral proceedings were withdrawn vide communication dated 24.5.2011.
4. By way of present petition U/s 34 of the "Act", the petitioner seeks to set aside the ex-parte award dated 5.5.2010 passed by the sole Arbitrator Shri Sanjiv K. Bhardwaj, Advocate/respondent no. 2 on the ground that the petitioner was not given any notice of appointment of the arbitrator or of the arbitral proceedings; that in the proceedings of Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 6/31 appeal pending before the court of Ld. Additional District Judge against the order dated 17.11.2009 of the Arbitrator, the respondent no. 1 filed its reply on 7.8.2010 mentioning specifically therein that the petitioner may be directed to participate in the arbitral proceedings whereas the arbitral award has already been passed on 5.5.2010; that the Ld. Arbitrator has mis-conducted himself as he did not ask the claimant to file the accounts to verify as to how many installments have been paid by the petitioner and how many remains to be paid; that the Ld. Arbitrator failed to give any response to the letter dated 16.4.2010, 4.5.2010 & 8.7.2010 by which the petitioner requested the arbitrator to supply the entire proceedings of the arbitration and inspection of the record and inquired schedule date, time and place of arbitration; that the Arbitrator violated the provision of section 18 and section 24 of the "Act" and did not supply him the copies of documents or the statements; that the Ld. Arbitrator has awarded interest @ 36% in violation of Section 31 of the "Act"; that the said ex-parte award is against public policy. The petitioner has also pleaded that the objections are within time as the copy of the ex-parte award dated 5.5.2010 was handed over to the petitioner on 27.9.2010 in the court of Ld. District Judge, Karkardooma Courts, Delhi.
5. In its reply, the respondent no.1 pleaded that the petition is barred by time and the copy of the award was sent to the petitioner on 24.8.2010. It is also pleaded that no case is made out under any Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 7/31 ground enumerated in section 34 of the "Act". On merits, it is pleaded that Sh. Sanjiv K. Bhardwaj was appointed as sole arbitrator to resolve the dispute between the parties. It is pleaded that as per the contract, the petitioner was required to get vehicle registered in his name with endorsement of hypothecation. It is also pleaded that the hypothecation in favour of UTI Bank Ltd. A/c Apeejay Finance Group Ltd. was done by authorities inadvertently and M/s Apeejay Finance Group Ltd has issued a no objection certificate in favour of respondent no.1. The other allegations of the petitioner have also been denied.
6. The petitioner filed a rejoinder to the reply denying the allegations of respondent no.1 and reiterating the averments made in the application/petition.
7. In pursuance of the court notice, on behalf of the Ld. Arbitrator Sh. Sanjiv K. Bhardwaj arbitral record from page no. 1 to 71 was filed in this court on 14.2.2011. The arbitration record was also called by this court from Sh. Krishna Kumar R.S. Arbitrator, Chennai. But instead of sending original proceedings and documents, he transmitted 14 photocopies of in an envelope through respondent no.1 and these 14 documents are certified true copies. These arbitral proceedings contained notice dated 12.9.2009 by which the respondent no.1 appointed Sh. Krishna Kumar R.S.Advocate, Chennai, as the sole Arbitrator in the matter. There is a copy of notice dated 19.9.2009 by which the Ld. Arbitrator Krishna Kumar R.S addressed to the parties Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 8/31 next date of hearing as 6.10.2009 and on that day after hearing the claimant he also passed an interim order U/s 17 of the "Act" directing them to repossess the said car with further directions to keep the vehicle in safe custody and after getting it valued from a valuer, submit a report before the Arbitral Tribunal. It also contained a copy of letter dated 7.5.2011 by which he communicated to the parties copy of the arbitral proceedings dated 6.10.2009 and informed them the next date of hearing as 27.5.2011.
8. I have heard Sh. Sarfraz Ahmed, Advocate, for the petitioner and Sh. Sanjiv Pathak, Advocate, for the respondent No. 1 and very carefully perused the material placed on the record. Point of Limitation :-
9. The Ld. Counsel for the respondent argued that the award was passed by the Arbitrator Shri Sanjiv K. Bhardwaj on 5.5.2010 which was sent by him to the petitioner on 24.8.2010 and the petition has been filed after expiry of 90 days i.e. on 15.12.2010 and on this ground alone, the petition is liable to be dismissed.
10. Relevant provision on the point of limitation are sub-section (5) of Section 31 and sub-section (3) of Section 34 of the "Act" which read as under :-
"31.Form and contents of arbitral award:-
(1).............................................................................. (2).............................................................................. (3).............................................................................. (4).............................................................................
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 9/31 (5)After the arbitral award is made, a signed any shall be delivered to each party".
"34. Application for setting aside arbitral award:-
(1)...................................................................... .
(2)...................................................................... .
(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)....................................................................."
11. This provision came up for interpretation recently before Hon'ble Supreme Court in the case titled as "The State of Maharashtra & Ors. Vs. Ark Builders Pvt. Ltd.", 2011 (3) SCALE 20 and it it was held that the delivery of the arbitral award to the party, to be effective, has to be "received" by the party and this delivery by the Arbitral Tribunal and receipt by the party of the Award sets in motion several period of limitation such an application for setting aside an award U/S 34 (3) and so on and relevant para No.12 of the judgment reads as under:-
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 10/31 "12. We are supported in our view by the decision of this Court in Union of India Vs. Tecco Trichy Engineers & Contractors MANU / SC/0214/2005:
(2005) 4 SCC 239; in paragraph 8 of the decision it was held and observed as follows:"8. The delivery of an arbitral award under Sub-section (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 the 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 receipt thereof by each party constitutes an important stage in the arbitral proceedings".
12. As per the arbitral record of Arbitrator/Respondent No. 2, one postal receipt of the speed post dated 24.8.2010 is pasted on the copy of the award (Page No. 59) and the same is addressed to "Iqbal Ali Khichripur, New Delhi -110". Admittedly, the complete address of Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 11/31 the petitioner is "Iqbal Ali S/o Sh. Hakim Ali H.No. 213, Village Khichripur, Delhi-110091". There is no other document in the arbitral record to show that the signed copy of the arbitration award was received by the petitioner. Under Section 3 of the "Act", any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address or if it is sent to addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.
13. The copy of the award was not sent by the Ld. Arbitrator on the complete and correct last known address of the petitioner in as much as the house no. of the petitioner and pin code of the area was not mentioned. A perusal of the order sheet of the court of Ld. District Judge (East) dated 25.9.2010 reflect the submissions of the counsel for respondent no.1 to the effect that the arbitration proceedings have been put to an end and award has been passed and matter was adjourned to 27.9.2010 for filing of copy of the award (Page No. 117 of paper book). In the order-sheet dated 28.9.2010 of the Appellant Court of Sh. S.S. Malhotra Ld. ADJ, Karkardooma Courts, Delhi, reflects that the certified copy of the award was supplied to the counsel for the petitioner on that day (page 210 of paper book). It is clear as crystal that the petitioner came to know about the passing of the award dated Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 12/31 5.5.2010 only on 28.9.2010 when a copy of certified copy of the award was supplied to him and the petition U/s 34 of the "Act" having been filed on 15.12.2010 is obviously within the prescribed period of limitation of 90 days.
Adjudication on the ground for setting aside arbitral award:-
14. An arbitral award may be set aside by the court only on the ground mentioned in sub section 2 of the "Act" and the same is reads as under:-
"34. Application for setting aside arbitral award:- (1) ................................................................................... (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 parties, unless such agreement was in conflict with a provision Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 13/31 of this Part from which the parties shall not 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) 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".
15. From a bare reading of the aforesaid provision, it is evident that an arbitral award can be set-aside by the court only if the party making the application proves that
(i) a party was under some incapacity or
(ii) the arbitration agreement is not valid under the law or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or
(iv) the arbitral award deals with a dispute not contemplated within the terms of the submission to arbitration, or the composition of the arbitral tribunal or arbitral procedure was not in accordance with the agreement of the parties or
(v) the arbitral award is in conflict with public policy of India. Notice of appointment of an arbitrator:-
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 14/31
16. To deal with the issue, it is necessary to advert Section 21 and sub section (2) of Section 34 of The Arbitration and Conciliation Act, 1996. Section 21 of The Arbitration and Conciliation Act, 1996 reads as under:-
"21. Commencement of arbitral proceedings- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."
Sub-clause (iii) of sub-section (2) of section 34 of The Arbitration and Conciliation Act, 1996 reads as under:-
"34.Application for setting aside arbitral award:-
(1).......................................................... (2) An arbitral award may be set aside by the Court only if-
(a)..........................................................
(i)...................................................
(ii)...................................................
(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)...................................................
(v)...................................................
(b)............................................................... (3).............................................................. (4)..............................................................."
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 15/31
17. A conjoint reading of Section 21 and sub clause (iii) of sub section (2) of Section 34 show that the notice of appointment of Arbitrator shall be given to the other party (i.e. the Respondent before the ld. Arbitrator), failing which award is liable to be set-aside.
18. It is the case of the petitioner that no notice of his appointment was ever given to the petitioner by Respondent No. 1 and this fact has been disputed by the Ld. Counsel for the respondent no.1. The arbitral record of Arbitrator/ Respondent No. 2 Shri Sanjiv K. Bhardwaj contain a copy of notice dated 12.06.2009 on behalf of respondent no. 1 by Sh. Rupesh Kaushik Advocate addressed to the petitioner Iqbal Ali and guarantor Kasim Ali purportedly sent by UPC. By this letter Respondent No. 1 invoked the arbitration clause and appointed of Sh. Sanjiv K. Bhardwaj Advocate as sole Arbitrator to adjudicate and determine the dispute. However, no UPC is available on the arbitral record. There is no evidence like acknowledgment/AD Card on the record of Arbitrator/Respondent no. 2 that this notice was delivered to Petitioner herein. It is trite that sending any letter by UPC (under certificate of posting) is unknown to law and UPC can be procured easily by the interested persons. It has been held by our own Hon'ble High Court in Sona Finance Pvt. Ltd. Vs. Tirupati Paper Mills 106 (2003) DLT 653 (Para 4) that the service of certificate of posting is unknown to law. The Hon'ble Supreme Court has held in Gadakh Yashwantrao Kankarrao Vs. E.V. alias Bulasaheb Vikae Patil & Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 16/31 Others AIR 1994 Supreme Court 678 (para 60) that a certificate of posting is easy to procure and does not inspire confidence. Similarly in Shiv Kumar & Ors. Vs. State of Haryana & Ors. (1994) 4 SCC 445 (Para 5, 6), it is held by Hon'ble Supreme Court that is not difficult to get UPC at any point of time and the relevant extract of Para 5 & 6 of the Judgement is as under :-
"5......... what has been stated by the management in its counter-affidavit is that the notices had been sent to allow workmen under postal certificates and proof service had been submitted to the Specified Authority. Learned counsel appearing for the management produces before us some certificates evincing posting of some letters to concerned workmen on 26.12.92.
6..... ....... We have not felt safe to decide the controversy at hand on the basis of the certificates produced before us, as it is not difficult to get such postal seals at any point of time........"
Recently also our own Hon'ble High Court has held in Vinay Kumar Sharma Vs. Union of India & Ors.
Manu/DE/1132/2011(Para 27) that now UPC certificates can be easily managed.
19. Notice dated 12.06.2009 was allegedly sent by the counsel for Respondent no. 1 under certificate of posting (UPC) to the petitioner. Copy of notice dated 12.6.2009 is available at page No.1 & 2 of arbitral record. Neither UPC is available on the arbitral record nor the same is filed by Respondent No.1 on court record. Even otherwise Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 17/31 sending notice dated 12.6.2009 by UPC does not inspire confidence as held by the Hon'ble Supreme Court as well as our own Hon'ble High Court in before mentioned cases.
20. At page no.3 & 4 of the arbitral record, there is a letter dated 15.7.2009 addressed to Sh. Sanjiv K. Bhardwaj, Advocate on behalf of respondent no. 1 by Shri Rupesh Kaushik, Advocate requesting him to enter upon reference and initiate arbitral proceedings and copy of this notice was sent to petitioner and guarantor Kasim Ali and AD cards are available at page no. 71. In this notice dated 15.7.2009, interestingly the address of the arbitrator is not mentioned by Shri Rupesh Kaushik, Advocate on behalf of Respondent No. 1. Therefore, the petitioner sent a letter dated 23.7.2009 (available at page no. 162 of the paper book) through his counsel Sh. Sunil Sagar, Advocate addressed to Sh. Rupesh Kaushik, Advocate of Respondent No. 1 through courier requesting him to intimate the names and address of the arbitrator appointed in the matter. Dispatch of this letter by the petitioner to Sh. Rupesh Kaushik Advocate by respondent no.1 is pleaded specifically in Para No. 24 of the petition and the same has not been denied by respondent no.1 in the corresponding para of its reply. Under Order 8 Rule 5 CPC when this fact is not denied specifically by the Respondent No. 1 in its reply, this is deemed to have been impliedly admittedly by respondent no.1. Therefore, this notice dated 23.07.2009 is meaningless as address of Arbitrator is not mentioned.
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 18/31 It thus comes out that no notice of the appointment of the arbitrator was issued to the petitioner by the respondent no.1 and award is liable to be set aside u/s 34(2)(iii) of the "Act".
Notice of the arbitral proceedings to the Petitioner:-
21. Arbitrator is also required to give notice of arbitral proceedings to both the parties U/S 18 read with section 23 & sub section (2) & (3) of Section 24 failing which under sub clause (iii) of sub section (2) of Section 34, award is liable to be set-aside.
22. At page No. 13 of the arbitral record of Arbitrator/Respondent no. 2, there is a copy of notice dated 28.7.2009 addressed to respondent no.1, petitioner and guarantor Kasim Ali by Sh. Sanjiv K. Bhardwaj Advocate/Sole Arbitrator intimating them date of hearing as 14.8.2009 at Sadhna House, 2nd floor, 570, P.B. Marg, Behind Mahindra Tower, Worli, Mumbai-400018 and at the bottom of this copy of notice, there are pasted two postal receipts addressed to "K.Ali Delhi" and "H.Ali, Delhi". Admittedly, the name and address of the petitioner is "Iqbal Ali S/o Hakim Ali, House No.213, Village Khichripur, Delhi-91", whereas the postal receipt no.8191 dated 1.8.2009 reflects his name and address as "H. Ali, Delhi". Neither the name nor the address of the petitioner is reflected in these postal receipts. There is no proof of service of notice dated 28.07.2009 on the petitioner in the form of AD Card/registered returned envelope with the report of postman. No other notice of arbitral proceedings was Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 19/31 issued by the Arbitrator/Respondent No. 2 to the petitioner and on 14.8.2009, the Ld. Arbitrator Sh. Sanjiv K. Bhardwaj proceeded the petitioner herein as ex-parte and adjourned the case for 10.10.2009.
So, there was no occasion for the Arbitrator/Respondent no. 2 to proceed the petitioner herein ex-parte on 14.08.2009. In the notice dated 28.07.2009, it is nowhere mentioned that Arbitrator/Respondent no. 2 has any intention to proceed the petitioner herein ex-parte. Therefore, the Arbitrator/Respondent no. 2 should have given another notice to the petitioner herein specifying his intention that he wanted to proceed against him ex-parte or regarding documents produced. Reference can be made to judgments of our Hon'ble High Court in C.P. Madan Vs. National Small Scale Industrial Corporation Ltd Manu/DE/7971/2007 and Shaminder Singh and ors. Vs. Motor and General Finance Ltd. 147 (2008) DLT 354. In relation to reasonable opportunity of being ward, our own Hon'ble Court has made following observation in Power Grid Corporation of India Ltd. Vs Electrical Mfg. Co. Ltd. and National Thermal Power Corporation Ltd. 153 (2008) DLT 440 (Para 18 & 21):-
"18. Indisputably, the arbitrators would in law neglect their duty if they do not listen to one party who might be interested either in controverting or who is legally entitled to controvert the claim of the party approaching them. Similarly, the person who is to be affected by the evidence ought to be present to hear it so that he would be able to meet and answer it. The arbitrator is ordinarily free from the Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 20/31 fetters of procedural law but that does not make him free from the fundamental principles of justice. Though the arbitrator may not strictly follow the rules and procedures as observed by the Civil Court but at the same time it would not imply that the Arbitrary Tribunal can ignore or circumvent the principles of natural justice and fair procedure. The omission in giving notice to a party before proceeding ex-party is a serious irregularity in the procedure and amounts to misconduct. It is a salutary principle of natural justice that nobody should be condemned unheard".
"21. The elementary Principle of Natural Justice implies a duty to act fairly i.e., fair play in action. The Principle of Natural Justice is not dogmatic in character and a duty is cast upon on every adjudicatory body be it judicial or quasi judicial to strictly adhere to the Principle of Natural Justice unless such adherence is dispensed with under any particular Statute. The Rules of Natural Justice are although not embodied Rules, but the same afford minimum protection to the rights of any person against the arbitrariness of any authority be it judicial, quasi judicial or administrative whose decision involves any civil consequences or can affect the rights of an individual. The aim of Rules of Natural Justice is to secure justice or to put it in the negative to prevent miscarriage of justice".
As already discussed, the Arbitral Tribunal has acted in utter haste in rushing through the arbitration proceedings without affording any opportunity of hearing to the petitioner herein. Therefore, it comes out that the petitioner was not issued any notice of the arbitral Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 21/31 proceedings by the Arbitrator/Respondent No. 2 Sh. Sanjiv K. Bhardwaj, Advocate and award is liable to be set-aside on this ground again u/s 34(2) (iii) of the "Act".
Whether Arbitral award is in conflict with public policy of India:-
23. Under sub clause (b) of sub section 2 of Section 34 of the Act, the arbitral award may be set aside by the court if it finds that the arbitral award is in conflict with public policy of India. This provision has come up for interpretation before the Hon'ble Supreme Court in ONGC Limited Vs. Saw Pipes Limited Manu/SC/0314/2003 = AIR 2003 SC 2629. The relevant para reads as under: -
"31.........in our view, the phrase 'public policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term "public policy" in Renusagar case, it is required to be held that the award could be set aside if it is patently illegal. The result would be - award could be set aside if it is contrary to
(a) fundamental policy of India law; or Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 22/31
(b) the interest of India; or
(c) justice or morality; or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void."
The Hon'ble Supreme Court has followed this judgment in MC Dermott International MC vs. Burn Standard Co. Ltd. (2006) 11 SCC 181 (Para 62, 63 and 64).
24. The arbitral record of Respondent No. 2 shows that the claim petition of Respondent no. 1 filed before Arbitrator available at page no. 5 to 12 is not signed either by its officer or counsel and it is just a computer typed copy. Similarly, an application of respondent no.1 U/s 17 of the Act available at page no. 17 to 20 of Arbitrator/Respondent No. 2 is also a computer typed copy and it is also neither signed by any officer of respondent no.1 nor by its counsel. The Ld. Arbitrator/Respondent No. 2 has not applied his mind and closed his eyes and failed to notice the same and proceeded to adjudicate the dispute in favour of the claimant on the basis of a blank statement of claim. When the Statement of Claim of Respondent no. 1 before the Arbitrator was neither signed by its officer nor by counsel, the Arbitrator should have rejected the claim or given an opportunity to Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 23/31 Respondent no. 1 to rectify the same. In fact, it was no statement of claim on behalf of Respondent no. 1 in the eyes of law. Under sub section (a) of section 25 of the "Act", when claimant fails to communicate his statement of claim, the Arbitral Tribunal shall terminate the proceedings. So, the Respondent No. 2/Arbitral should have rejected the claim of Respondent No.1. By way of statement of claim which is neither signed nor verified either by respondent no.1 herein or by its counsel, a sum of Rs.5,77,218/- was claimed against the petitioner herein with interest @ 3% per month. The respondent no.1 has placed on the record of the Arbitrator, a photostat copy of loan agreement available at page no. 27 to 34 and a photocopy of unfilled promissory notice available at page no. 35 of arbitral record. U/s 19(1) of the "Act" the Arbitral tribunal is not bound by the Code of Civil Procedure, 1908 and Indian Evidence Act, 1872 but the principles of natural justice, equity and fair play demands that whosoever file any claim petition or application or reply or written statement, the same must be duly signed and verified. However, the Ld. Arbitrator ignored this settled principle and shut his eyes and he appears to have become a rubber stamp of respondent no. 1. At page no. 69 and 70 of the Arbitral record, vide para no. 5 of the Award dated 5.5.2010, the Ld. Arbitrator awarded a sum of Rs.5,77,218/- with interest @ 36% per annum against the petitioner herein on the basis of statement of claim, documents and deposition made. "Deposition"
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 24/31 means evidence given on oath. But evidence was neither directed to be filed by the Arbitrator nor adduced before him by respondent no. 1 at any point of time. The statement of claim filed by respondent no. 1 before the Arbitrator was not bearing signatures of any officer or its counsel. There is no affidavit of any officer of Respondent No. 1. There was no copy of statement of account on the arbitral record at the time of announcement of the award on 5.5.2010. U/s 25 ( c) if a party fails to appear at an oral hearing or to produce documentary evidence, the Arbitral Tribunal may continue the proceedings and make arbitral award on the evidence before it. When there was no evidence before the Arbitral Tribunal as to how amount of Rs5,77,218/- was due against the petitioner herein, he should have dismissed the claim. The computer generated copy of the statement of accounts available at page no. 49 to 52 of the arbitral record bears the date and time as "1:54 PM 2/14/2011" at the right top corner. This means that the copy of the statement of accounts was taken out of the computer on 14.02.2011 at 1:54 PM and inserted in the arbitral record to justify the award before this court. The arbitration record was placed on the record of this court on 14.02.2011 by Shri Shahjad Ali, Advocate. The Ld. Counsel for Respondent no. 1 Shri Sanjeev Pathak fairly admitted during the course of arguments that Sh. Shahjad Ali, Advocate has been working in his office. So, at the time of passing of the passing of the award on 5.5.2010, there was no copy of statement Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 25/31 of account before the Ld. Arbitrator and to justify the award dated 5.5.2010 a computer-generated copy of the statement of account taken out on 14.02.2011 which was inserted in the arbitral record before filing the same on that very day in this court. In his arguments, the Ld. Counsel for the respondent no. 1 tried to justify that the arbitral proceedings have been conducted partially in electronic medium & the statement of account in the form of data stored in pen drive/compact disc was submitted and print was taken out on piece of paper before submitting the arbitral record on the Court record. This is not at all comprehensible for the reason the Arbitrator has not at all mentioned in his proceedings or in the impugned award that the copy of the statement of account was submitted in a pen drive/compact disc. Even pen drive/computer disc is not part of arbitral record. If hard copy of a document from a pen drivers is taken out, it does not print the date and time of taking out the copy. But if a hard copy of the document is taken out by internet, it may generate the time and date. So, the impugned award dated 05.05.2010 is neither based on statement of claim nor statement of a/c nor any deposition. Arbitrator has wrongly concluded against the record that Rs.5,77,218/- was outstanding as upto June 2009 and before passing of the award on 5.5.2010, there was no material before the Ld. Arbitrator to arrive at a conclusion that a sum of Rs. 5,77,218/- was outstanding against the petitioner herein.
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 26/31
25. In its order dated 14.08.2009, the Ld. Arbitrator mentioned that a notice dated 3.7.2009 was sent by the claimant (respondent no. 1 herein) by UPC and proof has been filed. But this mention in the order is against his own record and there is no copy of notice dated 3.7.2009 or UPC on the arbitral record.
26. Vide order dated 17.11.2009, on application of the respondent no.1 U/s 17 of the Act, Ld. Arbitrator/Respondent No. 2 directed the respondent no.1 to possess the vehicle in question and get it valued by authorized valuer and after giving 15 days notice to the borrower, the respondent no. 1 shall dispose off the said vehicle through public or private auction at fair market value and adjust the amount from the outstanding amount. However, while deciding the matter finally vide award dated 5.5.2010, he mentioned in the award at Page No. 67 of arbitral record that vide interim order u/s 17 of the Act dated 17.11.2009 he has allowed the claimant to sell the vehicle if it was in his possession. The Ld. Arbitrator/Respondent No.2 unsuccessfully tried to clarify his order dated 17.11.2009 in final award dated 5.5.2010 against factual position.
27. As per arbitral record, Ist order sheet is dated 14.08.2009 when petitioner was proceeded exparte and matter was adjourned to 10.10.2009. An unsigned application u/s 17 was filed by claimant (Respondent No. 1 herein) on 10.10.2009 and the case was adjourned to 17.11.2009. On 17.11.2009, the Ld. Arbitrator/ Respondent No. 2 Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 27/31 allowed application of Respondent No. 1 u/s 17 of the Act vide separate order and adjourned the case to 5.3.2010 for declaration of final award though he did not hear any argument. There are no proceedings of the date 5.3.2010 on the arbitral record and ld. Arbitrator passed the award on 5.5.2010. It is not on record as to when he heard the arguments to decide the dispute finally or what transpired on 05.03.2010 or between 05.03.2010 and 05.05.2010. Interestingly, in its reply dated 13.8.2010 to appeal u/s 37(2)(b) of the "Act" filed by the petitioner against the order dated 17.11.2009 of Arbitrator/Respondent no.2, the respondent no. 1 pleaded in preliminary objection no. 4 that appellant ( petitioner herein) be directed to join arbitral proceedings and get his grievance redressed. (Annexure A-20 page 213 to 229 of paper book). So, it is a mystery whether award was in fact passed on 05.05.2010 or after 13.8.2010 and ante dated as 5.5.2010.
28. The Ld. Arbitrator has not placed on arbitral record a letter dated 4.5.2010 written to him by the petitioner. The petitioner became aware of the arbitral proceedings on 27.3.2010 when before the court of Ld. District Judge when he received the copy of interim order u/s 17 of the "Act" in the proceedings under section 9 of the "Act" and on behalf of the petitioner a letter dated 16.04.2010 was sent by his counsel Sh. Sunil Sagar Advocate to Sh. Sanjiv K. Bhardwaj Advocate (available at page no. 163 of the paper book) and (also at page 22 of the arbitral Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 28/31 record) to supply him certified copy of the entire record of the arbitration proceedings and for inspection of the record on 21.04.2010. On behalf of the petitioner, another letter dated 4.5.2010 was sent by his counsel Sh. Sunil Sagar Advocate to the said arbitrator Sh. Sanjiv K.Bhardwaj, Advocate to the effect that he (Arbitrator) has provided him only 28 pages of documents and some documents/orders are missing and requested for inspection of the entire record. This letter was served personally on the Arbitrator and sent by registered AD post and postal receipts and AD cards (available at page no. 181 & 182) of paper book. On the arbitral record at page No. 24, there is another letter dated 08.7.2010 issued by Sh. Sunil Sagar Advocate referring his previous letters dated 16.4.2010 and 4.5.2010 requesting him to supply entire arbitral record and inspection of the same. But the Ld. Arbitrator did not care to issue notice to petitioner giving an opportunity of hearing or providing him copies of entire record. Even as per arbitral proceeding, the case was adjourned to 05.03.2010 and no order sheet of 05.03.2010 is available on record. The Ld. Arbitrator received 2 letters from petitioner dated 16.04.2010 & 04.05.2010 before announcement of award on 05.05.2010 and one letter dated 08.07.2010 after announcement of award. So, instead of announcing the award hurriedly without evidence, the Ld. Arbitrator should have given an opportunity of hearing to the petitioner.
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29. Thus, as discussed in Para 24 to 28 of this order the award passed by Sh. Sanjiv K. Bhardwaj Advocate is contrary to justice and is illegal which goes to the root of the matter. The award dated 5.5.2010 is so unfair and unreasonable that it shocks the conscience of the court and such award is against the public policy and is required to be adjudged as void.
30. Apart from it, the Respondent No. 1 simultaneously got conducted parallel arbitral proceedings before another Arbitrator Sh. Krishna Kumar R.S., Chennai on the same subject. In its reply, the Respondent No. 1 concealed appointment Sh. Krishan Kumar R.S. as Sole Arbitraor on 12.09.2009 during the arbitral proceeding before Sh Sanjiv K. Bhardwaj. The petitioner who received a copy of the arbitral proceedings dated 6.10.2009 vide letter dated 7.5.2011 from Sh. Krishna Kumar R.S. informing him next date of hearing on 27.5.2011 at Mumbai and when this was placed on court record, an affidavit was filed on behalf of Respondent No. 1 by its AR Sh. Samarjit Singh Kokhar to the effect that the same was inadvertently issued due to bonafied mistake, and subsequently, another affidavit was filed by Sh. Anil Kumar Sharma to the effect that Sh. Krishna Kumar R.S. was appointed as Arbitrator vide reference notice dated 12.9.2009 and proceedings were withdrawn on 21.9.2009. If the proceedings were withdrawn on 21.9.2009, how the interim award U/s 17 of the Act dated 6.10.2009 was passed by the arbitrator Sh. Krishna Kumar R.S Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 30/31 for repossessing the vehicle in question after hearing the claimant. Even copy of letter by which the appointment of Sh. Krishna Kumar R.S. was cancelled or withdrawn, has neither been placed on record of this court by the Respondent No. 1 nor by the Arbitrator Sh. Krishna Kumar R.S. However, if Krishna Kumar R.S. was appointed vide reference dated 12.9.2009, why it was not intimated to Sh. Sanjiv K. Bhardwaj who had already entered upon the arbitral reference on 28.7.2009 acting upon the letter of respondent no.1 dated 15.7.2009. If interim order dated 6.10.2009 was passed by Arbitrator Shri Krishna Kumar R.S. to repossess the vehicle in question despite order u/s 9 of the Act, Ld. District Judge (East) dated 12.02.2009 for repossession, why there was necessity of obtaining of third interim order dated 17.11.2009 from the Arbitrator Shri Sanjiv K. Bhardwaj, Advocate for repossession of the said vehicle, its valuation and sale.
31. So, looked from any angle, the award dated 5.5.2010 passed by the Arbitrator Shri Sanjiv K. Bhardwaj, Advocate / Respondent no. 2 adjudicating the dispute between the petitioner and respondent no. 1 cannot be sustained and is liable to be set aside with cost of Rs. 20,000/- payable to Delhi Legal Aid by Respondent No. 1. Announced in the open Court Date : 12.03.2012 (Vinod Goel) Additional District Judge, East District, Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010 31/31 Karkardooma Courts, Delhi.
Iqbal Ali Vs. Mahindra & Mahindra Suit No. 09/2010