Karnataka High Court
Sri. Shivappa Dhulappa Holkunde Since ... vs Sri. L Narasimhaiah on 26 July, 2024
Author: K.Somashekar
Bench: K.Somashekar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF JULY, 2024
PRESENT
THE HON'BLE MR JUSTICE K.SOMASHEKAR
AND
THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA
COMMERCIAL APPEAL NO. 307 OF 2023
BETWEEN:
SRI. SHIVAPPA DHULAPPA HOLKUNDE
(SINCE DEAD BY HIS LEGAL REPRESENTATIVE)
SMT. PRATIMA BYALE,
W/O. GOWRISHANKARBYALE,
D/O LATE SHIVAPPA HOLAKUNDI,
AGED ABOUT 53 YEARS,
R/AT FLAT NO.703,
HIRANANDINI MEADOWS,
NEAR PAWAR NAGAR,
THANE.
.... APPELLANT
(BY SRI. CHANDRANATH ARIGA K., ADVOCATE)
AND:
1. SRI. L. NARASIMHAIAH
S/O LATE LAXIPATHAIAH,
NO.193, 27TH CROSS,
2ND MAIN, 6TH BLOCK,
JAYANAGAR,BANGALORE-560082.
2. NORTH EAST KARNATAKA ROAD
TRANSPORT CORPORATION
CENTRAL SARIGESADAN,
GULBARGA,
REPRESENTED BY ITS MANAGING DIRECTOR
... RESPONDENTS
(BY SRI. L. NARASIMHAIAH, PARTY IN-PERSON-R1;
SMT. H.R. RENUKA, ADVOCATE FOR R2)
2
THIS COMMERCIAL APPEAL UNDER SECTION 13(1A) OF
COMMERCIAL COURT ACT R/W SECTION 37 OF THE ARBITRATION
AND CONCILIATION ACT, 1996, PRAYING TO SET ASIDE THE
JUDGMENT DATED 17.04.2023 PASSED IN COMMERCIAL
A.P.NO.49/2023 ON THE FILE OF LXXXV ADDL. CITY CIVIL AND
SESSION JUDGE, BENGALURU (COMMERCIAL COURT) AND ETC.
THIS COMMERCIAL APPEAL HAVING BEEN HEARD AND
RESERVED FOR ARGUMENTS ON 25.06.2024, COMING ON FOR
PRONOUNCEMENT, THIS DAY, DR. CHILLAKUR SUMALATHA, J.,
DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE K.SOMASHEKAR
AND
HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA
CAV JUDGMENT
(PER: HON'BLE DR. CHILLAKUR SUMALATHA) Challenge in this appeal is the judgment that is rendered by the Commercial Court, Bengaluru in COM.A.P. No.49/2023 dated 17.04.2023.
2. Heard Sri.Chandranath Ariga K., learned counsel for the appellant and Sri.L.Narasimhaiah - respondent No.1 who appeared and argued as party-in-person.
3. The flow of events as could be perceived through the material available on record are that respondent No.1 herein had filed a claim petition contending that he did business of giving buses on hire to North East Karnataka Road Transport Corporation 3 ('NEKRTC' for short) i.e. respondent No.2 herein. He was allotted tender to run buses on hire by respondent No.2 - NEKRTC from 20.04.2001 to 19.09.2006. A sum of Rs.2,00,000/- was deposited as security deposit by respondent No.1. Respondent No.1 and father of the appellant i.e. Shivappa Dhulappa Holkunde entered into partnership which is named as M/s Kalyan Travels. Partnership Deed was executed on 29.12.2001. A sum of Rs.6,75,000/- was invested as opening capital. It was agreed upon that the remuneration of the partner should be Rs.2,500/- per cluster and out of the total profit or loss, the respondent No.1 is entitled for 51% share out of the payments received from NEKRTC. NEKRTC made the payments in the name of the firm as agreed upon. Though respondent No.1 requested for annual returns, the details about the number of workmen employed by the firm, their salary etc., there was no response from father of the appellant and NEKRTC. The father of the appellant withheld the dues which the respondent No.1 is entitled. The respondent No.1 issued a legal notice. However, in response to the said notice, a sum of Rs.1,50,000/- only was paid by the father of the appellant. On 10.11.2008 another legal notice was issued to the father of the appellant requesting him to supply necessary accounts of business. However, the father of the appellant did not reply. Another legal notice was issued on 28.11.2008 stating that as per Clause-15 of the Partnership Deed for settlement of dispute through Arbitration, 4 Prof.M.Narayana Reddy was suggested as sole Arbitrator. Though it was served upon father of the appellant, there was no response. On that, the respondent No.1 approached the High Court of Karnataka and the High Court has appointed the Arbitrator.
4. The sole Arbitrator who dealt with the matter had formulated the following points for consideration:
"1. Whether "M/s.Kalyan Travels" a firm operated by R-1 deserves to be dissolved?
2. Whether R-1 is liable to show profit and loss accounts of the above referred firm?
3. Whether the claimant is entitled for the remuneration as claimed from 29.11.2001.
4. Whether the claimant is entitled for refund of security deposit of Rs.2,00,000/- from R-1?
5. What Award?"
5. The learned Arbitrator giving his reasons for coming to a conclusion, passed an award allowing the claim petition that is filed by the respondent No.1 herein and directing the father of the appellant to supply profit and loss accounts and all other relevant books of accounts pertaining to the business run as per the partnership agreement. The father of the appellant was also directed to pay Ra.12,500/- per month from February 2003 till 28.11.2008 with interest at the rate of 9% per annum. A direction was also issued to NEKRTC to release Rs.2,00,000/- which was 5 deposited as security deposit by respondent No.1 within six months from the date of receipt of copy of the order.
6. Aggrieved by the award passed by the sole Arbitrator, the appellant herein filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996. The Commercial Court, Bengaluru, which dealt with the matter i.e., COM.A.P. No.49/2023, dismissed the same.
7. Arguing the matter, learned counsel for the appellant submits that there is no dispute about the execution of the Partnership Deed dated 29.12.2001. Learned counsel states that the partnership however lasted only for one week, as respondent No.1 herein retired from the partnership firm. Subsequently, dissolution of Partnership Deed was executed on 17.03.2002 and thereafter no business transactions were carried out. Learned counsel states that the father of the appellant was suffering with dementia and was taking treatment and therefore he could not participate in the arbitral proceedings. The respondent No.1 who obtained an award in his favour filed an execution petition. On receiving notice in the execution petition by the brother of the appellant, the family members came to know about passing of an arbitral award. On that the appellant challenged the award before the Commercial Court. However, with a plea that the appellant has no locus-standi to challenge the award, the arbitration petition 6 which was filed under Section 34 of the Arbitration and Conciliation Act was dismissed.
8. Learned counsel for the appellant further submits that the appellant being the daughter of one of the parties to the arbitral proceedings has got every right to contest the matter. In this regard, learned counsel brought to the notice of this Court the contents of Section 2(1)(g) of Arbitration and Conciliation Act. Learned counsel further submits that, the award was passed exparte against the father of the appellant and therefore the award that is passed by the Arbitrator is invalid. Learned counsel further contends that as per Clause-13 of the Partnership Agreement, the partnership firm does not dissolve upon the death of one of the partners and the same shall be continued by the legal heirs of the deceased partner. Therefore, the partnership extends to the legal representatives of the deceased partner and even on that count, the appellant has got every right to participate in the arbitral proceedings and also has got every right to challenge the award that is passed by the Arbitrator. Learned counsel also contends that respondent No.1 was aware that the father of the appellant was not keeping well. But suppressing the said fact, he invoked arbitration clause which is unjustifiable. Learned counsel finally seeks to set aside the order that is rendered by the Commercial Court in COM.AP No.49/2023 dated 17.04.2023.
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9. Vehemently opposing the submission thus made by the learned counsel for the appellant, the respondent No.1 who appeared as party-in-person contends that he was deceived by the father of the appellant. He states that the version of the appellant on one hand is that the partnership firm was dissolved within one week and on the other hand contends that as per Clause-13 of the Partnership Deed, partnership firm will not dissolve by the death of one of the partners and it will be continued through the legal representatives, which is unjustifiable. Learned counsel also states that several legal notices were issued to the father of the appellant before initiating arbitral proceedings and those notices were received by the father of the appellant.
10. Respondent No.1 also submits that a copy of the claim petition was also sent to the father of the appellant by registered post and acknowledgement was received about due service, but the father of the appellant did not respond and thus the arbitral proceedings continued. Learned counsel also states that only to stall the executing proceedings, now the appellant and her siblings are filing one or the other petition before this Court. Respondent No.1 also states that only to escape from liability and to protect the property which devolved upon them from their father, such tactics are being played and thus observing all these facts, the present appeal is required to be dismissed.
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11. The version of the appellant is that her father is no more. In the grounds of appeal, the appellant at paragraph No.10 mentioned that her father died on 22.03.2018. Surprisingly, at paragraph No.30 she contends that her father died on 28.03.2017. Thus, there is clear ambiguity with regard to the exact date of death of father of the appellant. The sole Arbitrator passed an award on 20.08.2010. If it is taken that the father of the appellant died in the year 2017 as narrated in paragraph No.30 of grounds of appeal or in the year 2018 as narrated in paragraph No.10 of grounds of appeal, the fact that is clear is that the father of the appellant lived for more than six years from the date of the award. In the light of the said fact and also taking into consideration absence of any substantive proof with regard to the alleged acute ill-health of the father of the appellant, it cannot be held that the father of the appellant was not in a position to respond to the legal notices or to project his version contesting the arbitral proceedings.
12. Respondent No.1 has raised consistent version that initially a legal notice was issued to the father of the appellant and in pursuance of the notice Rs.1,50,000/- was paid by the father of the appellant on 11.2.2003. He also contended that again on 10.11.2008 another legal notice was issued, but there was no reply and on 28.11.2008 another notice was issued and though it was 9 served, there was no response. The learned Arbitrator in the impugned award in respect of service of notice observed as follows:
"Though notices were sent to the respondents by RPAD they did not appear. It is clear that claimant sent a copy of the claim petition to R-1 by RPAD, he did not respond. So the proceedings were conduced in his absence."
13. Thus, in the light of the aforementioned facts, though it cannot be held that the appellant has no right to represent her deceased father, yet having regard to the fact that the father of the appellant was given sufficient opportunity at every stage to project his version and was served with the required notices before initiation of arbitral proceedings and thereafter, this Court is of the view that the appellant now cannot seek for cancellation of the arbitral award. The Commercial Court gave a finding that the appellant has no locus standi to challenge the arbitral award, having observed the aforementioned fact and also in the light of the limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act.
14. As regard to the locus standi of the appellant to challenge the award and with a contention that the appellant being the legal representative of the deceased Shivappa Dhulappa Holkunde, is entitled to challenge the award, learned counsel for the appellant relied upon the decisions of the Hon'ble Apex Court in the 10 case between RAVI PRAKASH GOEL Vs. CHANDRA PRAKASH GOEL AND ANOTHER reported in (2008) 13 SCC 667 and in the case of MUKESH NANJI GALA AND OTHERS Vs. M/S. HERITAGE ENTERPRISES, MUMBAI AND ANOTHER reported in 2015(5) Mh.L.J.
15. Having regard to the fact that when the father of the appellant was given due notice with regard to the arbitral proceedings that are going to be initiated and in the light of the clear observation by the sole arbitrator that notice was duly served upon the father of the appellant, but he remained absent, this Court is of the view that basing on the aforementioned decisions, the appellant taking advantage of the death of her father cannot challenge the arbitral award.
16. Having observed thus, we are of the considered view that there are no grounds to interfere with. Resultantly the appeal stands dismissed without costs.
Sd/-
(K.SOMASHEKAR) JUDGE Sd/-
(DR.CHILLAKUR SUMALATHA) JUDGE AP CT:TSM