Messers Laljee Godhoo & Co. vs Veena Nalin Merchant
2012 Latest Caselaw 204 Bom

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                                                                               NMs2327.12


              IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                              
                    ORDINARY ORIGINAL CIVIL JURISDICTION




                                                     
                      NOTICE OF MOTION NO. 2327 OF 2012
                                    IN
                     ARBITRATION PETITION NO. 791 OF 2012




                                                    
      1. Messers Laljee Godhoo & CO.,         )
      a Partnership firm registered under     )
      the Partnership Act 1932 and having     )
      its office at 213, Samuel Street,       )
      Mumbai - 400 003                        )




                                                   
      2. Jyoti A. Merchant, of Mumbai,
                                 ig           )
      Indian Inhabitant, having her address   )
      at 213, Samuel Street,Mumbai -          )
      400 003                                 )
                               
      3. Bimal A. Merchant, of Mumbai,        )
      Indian Inhabitant, having her address   )
      at 213, Samuel Street, Mumbai -         )
            


      400 003                                 )
         



      4. Aroon U. Vahalia, of Mumbai,         )
      Indian Inhabitant, having his address   )
      at 213, Samuel Street, Mumbai -         )





      400 003                                 )

      5. Pallav K. Bhatt, of Mumbai,          )
      Indian Inhabitant, having his address   )
      at 213, Samuel Street, Mumbai -         )





      400 003                                 )

      6. Karna A. Vahalia, of Mumbai,         )
      Indian Inhabitant, having his address   )
      at 213, Samuel Street,Mumbai -          )
      400 003                                 )     ..... Petitioners

                  Versus

      1. Veena Nalin Merchant, of Mumbai )
      Indian Inhabitant, residing at 301, )


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                                                                                     NMs2327.12


      Krishna Building, R.G.Thadani Marg,)
      Worli, Mumbai - 400 018           )




                                                                                    
                                                           
      2. Gayatri Nalin Merchant, of Mumbai)
      Indian Inhabitant, residing at 301, )
      Krishna Building, R.G.Thadani Marg,)
      Worli, Mumbai - 400 018             )               ..... Respondents




                                                          
      Mr.Pradip Sancheti, Senior Advocate, a/w. Mr.Rajesh Talekar, i/b. K.Ashar &
      CO. for the Applicants in Notice of Motion/Petitioners.




                                                  
      Ms.Somya Srikrishna, a/w. Mr.Ravi Gandhi, i/b. M/s.Kanga & Co. for the
      Respondents.               ig      CORAM : R.D. DHANUKA, J.

                                         DATE      : 18th OCTOBER, 2012.

      ORAL JUDGMENT :
            

This Notice of Motion has been taken out by the Petitioners for seeking

injunction restraining the Respondents from in any manner enforcing or acting

or acting in furtherance of the impugned interim award, including for the

purpose of valuation by the valuers appointed by the arbitral tribunal by an

order dated 18th April, 2012 pursuant to impugned award dated 17th April,

2012. It is not in dispute that by interim award declared by the arbitral tribunal

dated 17th April, 2012, it is declared that the petitioners and respondents are

entitled to 50% shares in the goodwill, trademarks, tradenames and labels. It is

also common ground that the petitioners as well as respondents have filed two

separate arbitration proceedings under Section 34 of the Arbitration and

Conciliation Act, 1996 impugning part of the said interim award. Both these

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petitions were filed within time prescribed under Section 34(3) of the

Arbitration and Conciliation, Act, 1996. Both these petitions are admitted by

this Court on 16th October, 2012.

2. The Learned Senior Counsel appearing for the Petitioners submit that in

view of the fact that time for making an application to set aside arbitration

award under Section 34 had not expired and since the application under

Section 34 of the Act had been already filed within time prescribed under

Section34(3), there would be automatic stay of the impugned award till

application under Section 34 is disposed off by this court. There is no dispute

raised by the respondents about this proposition of law canvassed by the

Learned Senior Counsel. It is submitted that since further order passed by the

arbitral tribunal on 18th April, 2012 appointing valuer pursuant to interim

award which has been impugned by both sides and are stayed in view of

Section 36 of the Act, further order issued by the arbitral tribunal pursuant to

such interim award is also liable to be stayed.

3. The Learned Counsel appearing for the Respondents on the other hand

however made the following submissions :-

(a) Order dated 18th April, 202 passed by the

arbitral tribunal appointing M/s.Shailesh Haribhakti

of BDO Company Private Limited is not an award.

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(b) The order dated 18th April, 2012 passed by

the arbitral tribunal is also not an appealable order

under Section 37 of the Act.

(c) That this Notice of Motion for seeking stay

of the said order is not maintainable on the ground

that the stay of award under Section 36 can not be

extended to the order passed by the arbitral tribunal

subsequent to the passing of award.

(d) In view of Section 5 of the Arbitration and

Conciliation Act, 1996, only those proceedings

which are specifically provided in Part I of the

Arbitration and Conciliation Act, 1996, this court

can intervene. Notice of Motion is not one of such

proceeding provided under Chapter I of the Act.

(e) The petitioners would have to comply with

this order and can challenge this order alongwith

final award if such award is adverse against the

petitioners.

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4. The Learned Counsel placed reliance on the Judgment of this Court in

case of United India Insurance Co. Ltd. vs. M/s.Kumar Texturisers and

another1 and in case of Harinarayan G.Bajaj vs. Sharedeal Financial

Consultants Pvt. Ltd. in support of her plea that Notice of Motion is not

maintainable as Notice of Motion seeking stay of order passed by the arbitral

tribunal is not one of the such proceeding provided under Arbitration Act and

thus cannot be entertained by this court. In para (5) of the Judgement in case

of United India Insurance Co. Ltd. (supra), this court has held thus :-

In other words, a conjoint reading of S. 5, Section 34, S. 37 and S. 14(2) of the Act of 1996 will show

that the Court can intervene only in cases covered by S. 14 Section 34 and S. 37.

5. The Supreme Court in case of National Aluminium Co. Ltd. vs.

Pressteel & Fabrications Pvt. Ltd. & Anr3. after interpreting Section 36 of the

Arbitration & Conciliation Act, 1996 has held as under :-

But then we noticed from the mandatory language of Section 34 of the 1996 Act, that an award, when challenged under Section 34 within the time stipulated therein, becomes unexecutable. There is

no discretion left with the court to pass any interlocutory order in regard to the said award except to adjudicate on the correctness of the claim made by the applicant therein.

6. Upon conjoint reading of Section 34 with Section 36 of the Act, it is

1 AIR 1999 Bombay 118 2 AIR 2003 Bombay 296 3 (2004) 1 MLJ 167 (SC)

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clear that if the petition challenging the award has been filed within the time

prescribed under Section 34(3) of the Act, till such application is disposed of,

such award is not executable. The question now arises for consideration of this

court is whether subsequent order passed by the arbitral tribunal on 18th April,

2012 appointing valuer to implement such interim award is also unexecutable

if the impugned award is unexecutable and is stayed. From the perusal of the

Order dated 18th April, 2012 passed by the arbitral tribunal appointing M/s.

Shailesh Haribhakti of BDO Company Private Limited, it is clear that the said

appointment was pursuant to the interim award as recorded in para (3) of the

said order. The correspondence on record indicates that the said valuer has

taken steps to implement the said interim award. In my view, once interim

award is itself unexecutable in view of Section 34 read with Section 36 and

law laid down by the Supreme Court in case of National Aluminium Co. Ltd.

(supra), subsequent order passed by the arbitral tribunal for implementation

and execution of the impugned award is also unexecutable till proceeding

under Section 34 is disposed off.

7. I am not inclined to accept the submission made by the learned counsel

appearing for the respondents that the Notice of Motion is not maintainable for

stay of subsequent order relying upon Section 5 of the Act. In my view, the

Learned Senior Counsel Mr.Sancheti is right in his submission that in this

Notice of Motion, the Petitioners have not applied for setting aside Order dated

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18th April, 2012 but only seek stay of the order passed for implementation of

impugned award which itself is unexecutable in view of Section 34 read with

Section 36 of the Act. In my view, this Notice of Motion taken out by the

petitioners in a pending petition is thus maintainable.

8. In the circumstances aforesaid, Notice of Motion is made absolute in

terms of prayers (a) and (b). There shall be no order as to costs.

(R.D. DHANUKA, J.)