Gala No. 111 vs M/S. Maheshwar Textiles
2012 Latest Caselaw 262 Bom

    KPP                                      -1-

                                                     




                                                                                         
                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                        ORDINARY ORIGINAL CIVIL JURISDICTION 




                                                                 
                         ARBITRATION PETITION NO. 266  OF 2011

    M/s. Zapp India Limited                                              )




                                                                
    Gala No. 111, RIICO Industrial Area, Mansarovar,                     )
    Jaipur-302 020                                                       )...Petitioner

          vs. 




                                                   
    M/s. Maheshwar Textiles                                              )
    70,Ramwadi, Jay Jagruti Niwas, 
                                 ig                                      )
    Cavel Cross Lane No.3, 2nd floor, Room No. 24,                       )
    Mumbai-400 002                                                       )...Respondent
                               
    Mr. Ghanshyam Upadhyay along with Mr. Pawan Kumar Mishra, instructed by 
    M/s. Law Juris, for the Petitioner.
    Mr. S.K. Jain, instructed by M/s. S.K. Jain and Associates for the Respondent. 
         
                                         CORAM:  S.J. KATHAWALLA, J.

                                         DATE:      OCTOBER 23, 2012.
    ORAL JUDGMENT:
     

1. The above Arbitration Petition is filed by the Petitioner on 19 th January,

2011, challenging the Arbitral Award dated 19 th August 2009, under Section 34

of the Arbitration and Conciliation Act, 1996 ("the Act"). The Award was

dispatched to the Petitioner by the Hindustan Chamber of Commerce on 4 th

September 2009. However, on 7th September 2009 the Petitioner refused to

accept service of the said Award.

2. The brief facts of the matter are set out hereunder:

KPP -2-

3. By a letter dated 2nd February 2009, the Respondent informed the

Hindustan Chamber of Commerce that they have sold and supplied goods to the

Petitioner at G-111, RIICO Industrial Area, Mansarovar, Jaipur-302 020,

Rajasthan vide their various invoices, particulars of which were set out in the

said letter and the total outstanding after giving credit for the part payment

received, along with interest thereon amounted to Rs. 53,99,688/-. The

Respondent requested the Hindustan Chamber of Commerce to use their good

offices to collect the genuine dues of the Respondent from the Petitioner as early

as possible. The Respondent recorded in the said letter that if no satisfactory

reply is received within seven days from the receipt of the said letter/notice, the

Respondent will have no other option but to put their dispute before the Learned

Arbitrators of the Hindustan Chamber of Commerce, for their decision under its

Arbitration Rules.

4. The bills raised by the Respondent on the Petitioner which were

submitted by the Respondent to the Arbitral Tribunal, clearly stipulated as

follows:

"Any dispute if any relating to this transaction will be subject

to the Arbitration Rules, Hindustan Chamber of Commerce, Mumbai only."

5. The Hindustan Chamber of Commerce by its letter dated 10 th February

2009, addressed to the Petitioner, forwarded a copy of the letter dated 2 nd

KPP -3-

February 2009, received from the Respondent and informed the Petitioner that as

set out in the said letter, the Petitioner is requested to remit the balance

outstanding amount of Rs. 53,99,688/- to the Respondent within one week,

failing which the Respondent would be taking out appropriate legal/arbitration

proceedings against the Petitioner as they deemed fit.

6. On 3rd April 2009, the Respondent filed an application before the

Hindustan Chamber of Commerce which was received by the Chamber on 8 th

April, 2009, registering their dispute against the Petitioner and requesting the

Hindustan Chamber of Commerce to settle the said dispute. The Respondent

appointed Shri Parameshwarji Tapadia as their Arbitrator and also forwarded

the names and addresses of the Directors of the Petitioner Company.

7. The Hindustan Chamber of Commerce by its letters dated 13 th April

2009, separately addressed to the Petitioner and the three Directors of the

Petitioner, inter alia informed them that the Respondent had filed a dispute

against them before the Hindustan Chamber of Commerce . A copy of the said

dispute along with the list of their panel Arbitrators was enclosed with the said

letter with a request to the Petitioner to appoint their arbitrator within a period

of 15 days failing which the Arbitration shall proceed under Rule 7 (k) of the

Hindustan Chamber of Commerce Rules. The said letters were sent by

Registered Post as well as by Certificate of Posting to the Petitioner and its

KPP -4-

Directors. From the original acknowledgement cards produced by the Hindustan

Chamber of Commerce, it is clear that the said letters were received by the

Petitioner as well as its Directors.

8. Since the Petitioner and/or its Directors failed to appoint an

Arbitrator, the Secretary, Hindustan Chamber of Commerce under Rule 7(k) of

its Rules appointed Shri Rajendraprasadji Bhauwala as an Arbitrator on behalf

of the Petitioner.

9. On 18th June 2009, the Petitioner as well as its Directors were once

again informed in writing that they should remain present before the learned

Arbitrators on 6th July 2009 at 2.30 p.m., along with their witnesses and

necessary documents. As can be seen from the original records produced by the

Hindustan Chamber of Commerce before this Court, the said letters were

forwarded to the Petitioner and its Directors by Registered Post as well as by

Certificate of Posting. From the original acknowledgement cards produced by the

Hindustan Chamber of Commerce, it is clear that the said letters were received

by the Petitioner as well as its Directors. However, the Petitioner as well as its

Directors failed and neglected to appear before the learned Arbitrators on 6 th

July 2009 at 2.30 p.m. As can be seen from the minutes of the arbitration

proceedings held on 6th July 2009, the learned Arbitrators decided to give one

more chance to the Petitioner to appear before them.

     KPP                                        -5-




                                                                                            
    10.           By   a   letter   dated     10th  July   2009,   the   Hindustan   Chamber   of 




                                                                    
    Commerce     therefore   informed   the   Petitioner   and   its   Directors   that   the   next 

hearing is fixed by the learned Arbitrators on 27 th July 2009 at 2.30 p.m. and

that they should remain present along with their witnesses and documents. The

said letter was forwarded to the Petitioner as well as to its Directors by

Registered Post AD and under Certificate of Posting. From the original

acknowledgement cards produced by the Hindustan Chamber of Commerce, it is

clear that the said letters were received by the Petitioner as well as its Directors.

Again the Petitioner and its Director failed to appear before the learned

Arbitrators. As can be seen from the minutes of Arbitration proceedings held on

27th July 2009, the Arbitrators decided to give a final notice to the Petitioner to

attend the arbitration proceedings. In view thereof, by a letter dated 1 st August

2009 addressed to the Petitioner and its Directors, the Hindustan Chamber of

Commerce informed the Petitioner as well as its Directors that the arbitration is

now fixed on 19th August 2009 at 2.30 p.m. and they should remain present with

their witnesses/documents. The said letter was forwarded to the Petitioner as

well as its Directors by Registered Post AD as well as under Certificate of Posting.

As can be seen from the original records produced by the Hindustan Chamber of

Commerce before this Court, the 3 Directors of the Petitioner received the said

letter dated 1st August 2009 . However, the Petitioner has refused to accept the

envelope containing the said notice and forwarded to the Petitioner by

KPP -6-

Registered A.D. In view thereof the postal authorities have returned the

envelope containing the said letter/notice to Hindustan Chamber of Commerce

with their remarks "Refused Sd/- 6/8/09". However, the notice sent to the

Petitioner under Certificate of Posting is not returned back to the Hindustan

Chamber of Commerce and therefore received by the Petitioners.

11. In view of the above, as can be seen from the minutes of the

arbitration proceedings dated 19th August, 2009, the learned Arbitrators have

after recording that despite repeated intimations sent to the Petitioner and the

Directors to attend the arbitration proceedings, they have failed to do so,

proceeded to pass their Award against the Petitioners. From the original

record produced by the Hindustan Chamber of Commerce before this Court, it is

clear that the Petitioner has refused service of the Award because of which the

envelope containing the Award is returned by the postal authorities to the

Hindustan Chamber of Commerce with the remark "refused sd/- 7-9-09".

However, a copy of the Award sent to the Petitioner under Certificate of Posting

is not returned back to Hindustan Chamber of Commerce and therefore received

by the Petitioners.

12. The above Petition was initially heard by this Court on 18 th September,

2012, on the basis of the photo copies taken by the Respondent of the original

records of Arbitration proceedings, and the same was dismissed. However, this

KPP -7-

Court before dictating reasons in the matter, came across an allegation raised in

the Affidavit-in-Rejoinder dated 29th August 2012 filed by the Petitioner in Court

on 18th September 2012, wherein it was averred that the Respondent has not

stated in their pleadings that the Arbitrators had forwarded a signed copy of the

Award to the Petitioner. In view thereof, the Petition was placed for directions

on 9th October 2012, and the Hindustan Chamber of Commerce was directed to

produce the original record pertaining to the Arbitration Proceedings between

the above Parties. Accordingly, the Secretary of the Hindustan Chamber of

Commerce produced the original record before this Court on 22 nd October 2012.

However, since the Advocate for the Petitioner was not present, the Petition was

adjourned to today i.e. 23 rd October, 2012. Today, copy of the sealed envelope

received from the postal authorities by the Hindustan Chamber of Commerce

and deposited with this Court on 22nd October 2012 was given to the Advocate

for the Petitioner who was asked to open the same and ascertain as to whether

the copy of the Award sent to the Petitioner and the service of which was

refused by the Petitioner, contained a signed copy of the Award, as required

under the law. The learned Advocate appearing for the Petitioner has opened

the said envelope in Court and has confirmed that the said envelope contains a

signed copy of the Award.

13. In the Petition, the Petitioner has made several incorrect and

irresponsible allegations against the Hindustan Chamber of Commerce as well

KPP -8-

as the Respondent. It is alleged that there was no Arbitration Agreement

between the parties; that the documents are fabricated by the Respondent in

collusion with the Hindustan Chamber of Commerce ; that the Hindustan

Chamber of Commerce was interested in the dispute and as such cannot act as

an Arbitrator and cannot judge its own case and that no notice was ever received

by the Petitioner from the Respondent. The Original records produced by

Hindustan Chamber of Commerce belies all the above allegations made by the

Petitioner against the Respondent and the Hindustan Chamber of Commerce.

From the said record it is clear that the Award was passed by the learned

Arbitrators on 19th August 2009, the same was forwarded to the Petitioner by

Registered Post as well as under Certificate of Posting. Whilst the envelope sent

under Certificate of Posting is not returned back to Hindustan Chamber of

Commerce , the envelope containing the signed copy of the Award, which was

posted to the Petitioner on 4th September 2009 was refused to be accepted by the

Petitioner on 7th September 2009 and returned by the postal authorities to the

Hindustan Chamber of Commerce on 11 th September 2009. Refusal of service of

the Award is good service under the law. However, the Arbitration Petition is

filed by the Petitioner on 19 th January 2011 i.e. after more than 15 months from

the service of the Award, on grounds which are false and incorrect to the

knowledge of the Petitioner. The Petitioner has not sought condonation of delay

in filing the Arbitration Petition. However, even if such a condonation

Application would have been filed, this Court would not have entertained the

KPP -9-

same in view of the decision of the Hon'ble Apex Court in Union of India vs.

Popular Construction Co.1 wherein it is held that Section 5 of the Limitation Act ,

1963 is not applicable to an application challenging an Award under Section

34 of the Arbitration and Conciliation Act, 1996. The decision of the Hon'ble

Apex Court in Bihar Mineral Development Corporation and another vs. Encon

Builders (I) (P) Ltd.2 relied on by the Petitioner does not lend any assistance to

the Petitioner.

14. In view thereof, the Petitioner has not filed the Petition within the time

prescribed under Section 34 (3) of the Act. The above Arbitration Petition is

therefore hopelessly time barred and the same is dismissed with costs.

(S.J. KATHAWALLA, J.)

1 AIR 2001 SC 4010 2 (2003) 7 SCC 418