Ajibar Rahaman And Anr vs Cholamandalam Investment And ...
2023 Latest Caselaw 1932 Cal/2

                      IN THE HIGH COURT AT CALCUTTA
                      Ordinary Original Civil Jurisdiction
                                ORIGINAL SIDE
                          (COMMERCIAL DIVISION)


Present :-

THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA.


                                AP/210/2023
                        AJIBAR RAHAMAN AND ANR.

                                        Vs

       CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LTD.

                                        AND

                                AP/248/2023
                        AJIBAR RAHAMAN AND ANR.

                                        Vs

             CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD.


For the Petitioner                  :         Mr. Priyankar Saha, Adv.
                                              Ms. Srijani Mukherjee, Adv.
                                              Mr. L. R. Mondal, Adv.


For the Respondent                  :         Mr. Ritoban Sarkar, Adv.
                                              Mr. Ranjit Singh, Adv.
                                              Ms. Pooja Sett Chakraborty, Adv.

Last Heard on                       :         01.08.2023



Judgment dictated in Court on       :         08.08.2023
                                         2


Moushumi Bhattacharya, J.

1. This is an application for setting aside of an Award dated 30th September,

2021 passed by a learned sole Arbitrator. The ground taken for relief is that

the Arbitrator was unilaterally appointed by the respondent.

2. Learned counsel appearing for the respondent/award-holder takes a

point of maintainability of the application on the ground that the application

has been filed beyond the prescribed limitation under Section 34(3) of The

Arbitration and Conciliation Act, 1996 read with the proviso. According to

counsel, while the Award is of 30th September, 2021, the present application

has been filed on 10th April, 2023 which is way beyond the timelines prescribed

under Section 34(3) read with the proviso.

3. The point of maintainability is required to be answered first.

4. Section 34(3) of the 1996 Act prescribes three months from the date of

the award being received by the applicant for filing of an application for setting

aside of the award. The proviso gives the applicant an additional window of

thirty days on sufficient cause being shown to the satisfaction of the Court.

The timelines under Section 34(3) and the proviso do not permit any further

extension for filing of an application for setting aside of the award under

Sections 34(1) and (2) of the Act.

5. Section 31(5) stipulates that a signed copy of the arbitral award shall be

delivered to each party.

6. If Sections 34(3) and 31(5) are read together, the obvious construction

would be that the limitation under Section 34(3) would start to run from the

date on which a party receives a signed copy of the Award. Section 2(1)(h)

defines a "Party" as a party to an arbitration agreement. Therefore, a further

addition to the above construction would be that the limitation for filing an

application for setting aside of an arbitral award would start to run from the

day when a party to the arbitration agreement receives a signed copy of the

arbitral award.

7. In the present case, the documents placed before the Court are required

to be referred to in order to ascertain the starting point of the limitation for

filing of the present appliation. The postal consignment track record annexed to

the application shows that the item, i.e., the impugned award was booked from

the Kolkata GPO on 30/10/2021. The item was redirected to Noapara, SO

North 24-Paraganas on 3/11/2021. The item was thereafter returned to

Kazipara, BO on 3/11/2021 as the addresee could not be located. The last

entry in the track report shows "Item delivered [To : SHIVAJI (Addressee)]".

Shivaji is the name of the Sole Arbitrator - Shivaji Mitra - who passed the

impugned Award.

8. It must be mentioned at this stage that none of the dates in the track

report are visible and the Court had to take the assistance of learned counsel

appearing for the parties to figure the actual dates.

9. Hence, as the matter stands and would be evident from the material

disclosed, the impugned award was returned to the arbitrator since the

petitioners/award-debtors could not be located.

10. Learned counsel appearing for the respondent/award-holder seeks to

argue that the facts however would amount to deemed service on the

petitioners/award-debtors. Counsel relies on Section 3 of the 1996 Act,

Section 27 of The General Clauses Act, 1897 and Section 114 of The Evidence

Act, 1872 in support of his argument.

11. Section 3 of the 1996 Act relates to receipt of written communications

and contemplates a deeming fiction with regard to receipt of any written

communication if it is delivered to the addressee personally or at its place of

business or habitual residence or mailing address [Section (3)(1)(a)] or if the

written communication sent to the addressee's last known place of business,

habitual residence or mailing address by registered letter or by other means

which provides for a record of the attempt to deliver it after making a

reasonable enquiry. [3(1)(b)]

12. Section 27 of the General Clauses Act defines service by post and

provides that unless a different intention appears, the service shall be deemed

to have been effected by properly addressing, pre-paying and posting, by

registered post, a letter containing the document and shall be deemed to have

been effected at the time at which the letter would have been delivered in the

original course of post unless the contrary is proved.

13. Section 114 of the Evidence Act entitles the Court to presume the

existence of a fact which it thinks likely to have happened, regard being had to

the common course of natural events, human conduct and public and private

business in relation to the facts of the particular case. Order 5 Rule 9(5) of The

Code of Civil Procedure, 1908 contains a further presumption on service of

summons on the defendant on an endorsement that the defendant had refused

to take delivery of the summons read with the proviso concerning the

acknowledgment not being received by the Court.

14. From a conjoint reading of the three sections referred to from the three

Acts, it would appear that the Court can presume the existence of certain facts

with regard to service being effected on the intended addressee where the

attending facts conform to the three provisions. The deeming fiction or

presumption of service being effected becomes necessary and relevant since

there is an absence of evidence of actual receipt by the addressee.

15. This presumption of service was considered in Magma Fincorp Ltd. Vs.

Ashok Kumar 2018(1)CHN(CAL) 391, a Division Bench decision of this Court

and in New Globe Transport Corporation Vs. Magma Shrachi Finance Ltd.,

(2011) 2 CHN 287 and Amrik Singh Vs. Magma Fincorp Ltd., (2011) 2 CHN 684,

co-ordinate Bench decisions of this Court. A similar question also arose before

a Division Bench of the Bombay High Court in Logic Eastern India Pvt. Ltd. Vs.

KEC International Limited (Cables SBU), 2018 SCC OnLine Bom 916. All of the

aforesaid cases involved delivery of the arbitral award to the last known

address of the concerned party by registered post with A.D. or other means of

satisfactory postal receipt. In Logic Eastern India, an earlier document had

been sent to the same address. In Magma Fincorp, the Division Bench found

that the document had been served at the address as mentioned in the

arbitration agreement with affixation of proper stamps. In New Globe Transport

Corporation, the document was returned as "Not Claimed". Amrik Singh

involved a case where the packet was returned undelivered by the postal

authorities but the A.D. card showed receipt. These facts are distinguishable

from the present case where it is admittedly not a case of a vague postal

endorsement of the addressee/petitioner not being found or having left his

present address but the document doing a full circle and being returned to the

arbitrator.

16. The defence of the execution petition being served and received by the

petitioner at the same address becomes irrelevant in the face of the

consignment track record which clearly shows that the award was returned to

the arbitrator. Hence the facts before the Court cannot give rise to any

deeming fiction as contemplated under the Acts referred to above.

17. The Court in The State of West Bengal and Anr. v. M/s. Motilal Agarwala

and Anr. reported in AIR 2016 Cal 271 came to a finding that the award had

not been served on the party to the arbitration and the application for setting

aside was hence not barred by limitation. The Division Bench relied on Union of

India v. Tecco Trichy Engineers & Contractors reported in (2005) 4 SCC 239 and

on Benarsi Krishna Committee v. Karmyogi Shelters Private Limited reported in

(2012) 9 SCC 496 to opine that an award must be served on a party to the

arbitration agreement and not on an agent or an advocate, amongst others. In

JSC Ispat Pvt. Ltd. and Others v. HDB Financial Services Ltd. reported in 2018

SCC OnLine Bom 538, a Division Bench of the Bombay High Court also relied

on Tecco Trichy Engineers & Contractors and Benarsi Krishna Committee to hold

that there was an absence of conclusive material on record to show that the

arbitral award had been served on the appellants. The Court therefore held

that the appellants were prevented by sufficient cause from making the

application for setting aside of the award.

18. Needless to say, delivery of an arbitral award in the manner

contemplated in Section 31(5) entails important consequences. The delivery

must be effective inasmuch as the party must "receive" a signed copy of the

award. Delivery of a signed copy of the award to a party under Section 31(5)

sets in motion important rights of the party at several levels including for

correction and application for an additional award. The rights conferred would

also include the right to apply for setting aside of the award within the

prescribed time limits under Section 34(3) read with the proviso. Therefore, it is

of utmost importance that any contention with regard to deemed service of the

award on a party to an arbitration agreement be guided by all the attending

circumstances. The Court must ascertain the existence of all facts on whch the

deeming fiction rests. A mistaken presumption as to a party having received

the award may lead to an irrevocable loss of valuable statutory rights in respect

to the award. As much as the presumption is one of necessity to keep the

proceedings moving, the real consequences of that fiction must also not lead to

miscarriage of justice.

19. The presumption of service is therefore not to be taken lightly and the

Court must be satisfied that there are sufficient factual inconsistencies or

lackings for the deeming fiction to be pressed into service. If the facts are clear

before the Court, there is no place for presumptions.

20. In the present case, the impugned Award is of 30th September, 2021

while the application for setting aside was made on 10th April, 2023. The Court

was hence invited to decide on the maintainability of the application. The

respondent/award-holder's case is that the application has been filed outside

the time limits of Section 34(3) of the Act.

21. Since the Court has come to the specific finding that the impugned

Award travelled back to the Arbitrator after several failures to locate the

petitioners, the Court must hold that the impugned award was not served on

the petitioners before 11.01.2023 when the petitioners received the execution

petition.

22. 11th April, 2023 would hence be the window available for filing the

application; even without the proviso to Section 34(3). The present application

was filed one day before the expiry of three months from the date of receiving

the execution petition. The application is hence well within the period of

limitation and is accordingly held to be maintainable.

23. The parties shall be at liberty of mentioning the matter for inclusion in

the list.

Urgent photostat certified copies of this judgment, if applied for, be

supplied to the respective parties upon fulfillment of requisite formalities.

(Moushumi Bhattacharya, J.)

kc/R.Bhar