Universal Glass vs Karamsar India Traders And Ors.
1997 Latest Caselaw 168 Del

JUDGMENT

M.K. Sharma, J.

(1) This is an application filed by the petitioner under Sections 14 and 17 of the Arbitration Act, for filing of the award dated 29.11.1992 and for making the same a Rule of Court.

(2) On 8.2.1980, a contract was entered into between the petitioner and the respondent No. 1 for supply of glass bottles, in pursuance of which, the petitioner from time-to-time sold and delivered to the respondent No. 1, various quantities of glass bottles for a total value of Rs. 2,16,707.40 and raised the invoices.

(3) On 3.5.1980, the respondent No. 1 paid a sum of Rs. 36,117.90 by Demand Draft dated 26.2.1980. Thereafter, the respondent No. 1 from time-to-time issued various cheques totalling in aggregate Rs. 1,66,597.28 in favour of the petitioner as part payment of the aforesaid outstanding. It is stated that out of the above mentioned cheques, some of the cheques totalling about Rs. 1,04,597.28 when presented were returned unpaid and were bounced. The petitioner requested the respondent No. 1 to pay the outstanding amount of Rs. 1,10,986.02 together with interest, but the respondent No. 1 failed and/or neglected to pay the said outstanding amount in respect of which the petitioner also served a legal notice on the respondent No. 1 for recovery of the aforesaid amount on 5.9.1980.

(4) It is stated that on Ii .9.1980, the respondent No. 1 requested for some more time for making the payment and on 19.10.1980, the respondent No. 1 confirmed the outstanding amount of Rs. 1,10,986.02 due to the petitioner as on 30.9.1980.

(5) On or about 1.1.1981 by Demand Draft, the respondent No. 1 paid a sum of Rs. 10,986.02 to the petitioner. Subsequently, the respondent No. 1 issued two cheques, one for Rs. 7,500.00 dated 23.3.1981 and the other also for Rs. 7,500.00 dated 28.3.1981. Out of the aforesaid two cheques, one cheque issued on 28.3.1981 for Rs. 7,500.00 was encashed and the other cheque got bounced, when presented to the Bank. The petitioner from time-to-time requested the respondent No. 1 to release the outstanding amount, but the respondent No. 1 failed to clear the balance outstanding. Accordingly, in terms of the Arbitration Agreement between the parties, the petitioner informed the respondent No. 1 about reference of the dispute to arbitration of the Phd Chamber of Commerce and Industry, New Delhi, and referred the matter to the said authority in accordance with the Arbitration Agreement contained in the contract.

(6) The respondent Nos. 3 and 4 were appointed Arbitrators in the case by the Tribunalofarbitration,PHD Chamber of Commerce and Industry, and on 29.11.1982, the respondent Nos. 3 and 4 made and signed the award and notice of publication of the award was issued to the parties.

(7) After passing of the aforesaid award dated 29.11.1982, the present petition has been filed by the petitioner for filing the original award in this Court and for making the award the Rule of the Court. On service of notice of filing of the award, the respondent No. 1 appeared in the present case and filed an objection under Sections 30 and 33 of the Indian Arbitration Act against the award dated 29.11.1982.

(8) In view of filing of the aforesaid objection by the respondent No. 1, the issue that arises for my consideration in the present suit is whether the award passed by the Arbitrator on 29.11.1982 is liable to be set aside.

(9) I have heard the teamed Counsel appearing for the parties and considered the records of the arbitration proceedings as also the pleadings of the parties including the objections raised by the respondent No. 1 against the impugned award.

(10) The Counsel appearing for the respondent No. 1 submitted that the petitioner has no locus standi to file the present petition. According to him, the present petition has been filed on behalf of M / s. Universal Glass which claims itself to be a division of M/s. Jagjit Industries Limited. According to the learned Counsel M/s. Universal Glass not being the juristic person, no petition on behalf of M/s. Universal Glass could be filed and, therefore, the present petition has not been filed and instituted properly arid in accordance with law.

(11) Counsel appearing for the petitioner submitted that the aforesaid objection raised by the respondent No. 1 is baseless and that the petition was properly filed and the case has been properly instituted by the petitioner. It is stated that M/s. Universal Glass Ltd. was amalgamated with M/s. Jagjit Industries Limited and the unit manufacturing glass bottles is now known as M/s. Universal Glass. Under the aforesaid circumstances, according to the learned Counsel for the petitioner, the petition has been duly filed and instituted.

(12) I have considered the rival submissions of die learned Counsel appearing for the parties.

(13) The order of amalgamation of the M/s. Universal Glass Ltd. and M/s. Jagjit Industries Limited is on record. It appears from the aforesaid order passed by the Allahabad High Court on 11.11.1982 that the amalgamation between the aforesaid two companies, namely,' M/s. Universal Glass Ltd. and M/s. Jagjit Industries Limited was approved and sanctioned by the Allahabad Court with a further direction that the amalgamation would take effect from the 1st day of January, 1980. In view of the aforesaid amalgamation ofM/s. Universal Glass Ltd. with M/s. Jagjit Industries Limited and the unit manufacturing glass bottles now known as M/s. Universal Glass, it cannot be said that the petition has not been properly filed and that the proceeding has not been properly instituted. Besides, the award has since been filed by the Arbitrator and in pursuance thereof, it is to be considered by this Court whether the said award is required to be set aside in view of the objection raised by the respondent No. 1 or the same is to be made a Rule of the Court and, therefore, the locus of the petitioner for filing the petition is immaterial and irrelevant.

(14) ' In view of the aforesaid findings, I do not find any force in the first objection raised by the respondent No. 1 and the same stands rejected.

(15) The next submission of the learned Counsel appearing for the respondent No. I is that the petition was not signed by an authorised person on behalf of the petitioner.

(16) On perusal of the records, I find that the present petition has been filed by Shri Subhash Chander Suman, who, it appears from the records, is duly authorised by resolution of th Board of Directors to institute the present petition and also to sign, verify and confirm. Accordingly, said Shri Subhash Chander Suman is held to be an authorised person to file the present petition and institute the present proceedings before this Court. The second objection is also held to be without any merit.

(17) The next submissions of the learned Counsel appearing for respondent No. I was that there was no Arbitration Agreement between the petitioner and the respondent No. 1 and, therefore, there could not have been any reference of any dispute between the parties to Phd Chamber of Commerce and Industry, as was sought to be done in the present case. 0nperusalofrecords,l find that the contract bearing Nos. 130/80enteredinto between the petitioner and respondent No. 1 on 8.2.1980 has been filed as a documentary evidence, which contains an arbitration clause being arbitration Clause No. Ix, which provides that in case of any dispute or differences arising between the parties, the same would be referred to Phd Chamber of Commerce and Industry, New Delhi. In that view of the matter, the aforesaid objection of the respondent No. 1 is also found to be baseless.

(18) Counsel appearing for respondent No. 1 submitted before me that the present disputes between the parties were referred to for adjudication to two Arbitrators. He also drew my contention to the award dated 29.11.1982 and also to the records of the proceedings before the Arbitrator. Placing reliance on them, the learned Counsel submitted that apparently the disputes between the parties were referred to for adjudication to two Arbitrators and were accordingly decided by the said two Arbitrators. Referring to paragraph 2 of the First Schedule of the Arbitration Act, the learned Counsel submitted that if the reference is to an even number of Arbitrators, the Arbitrators shall appoint an Umpire not later than one month from the latest date of their respective appointments. According to him, in the present case the two Arbitrators having not appointed the Umpire within one month from the date of their respective appointments, the entire arbitration proceedings and the award passed by the two Arbitrators are null and void and the award is required to be set aside.

(19) Counsel appearing for respondent No. 1 also submitted that under paragraphs of the First Schedule of the Arbitration Act, the Arbitrators are required to make their award within four months from the date of entering into the reference. According to the learned Counsel, the aforesaid period of limitation for making the award within four months from the date of entering into the reference is mandatory and in the present case, the Arbitrators having entered into the reference on 8.7.1982, on which date notice was issued to the respondent No. 1 to file their written statement against the claims of the petitioner, the said date should be construed as the date of entering into the reference by the Arbitrators and if the date is so construed,thetime of making the award expired on8.11.1982 and the award having been made on 29.11.1982, the said award is void as there was no extension of time granted to the Arbitrators thereafter for making the award either by the parties or by the Court. The learned Counsel appearing for the petitioner submitted that the aforesaid objections have not been pleaded in the objection filed by the respondent No. 1 and, therefore, the same could not be considered by this Court.

(20) Having considered the arguments advanced by the parties on the aforesaid two questions, I feel inclined to deal with the said issues as well. . The provisions of paragraphs 2 and 3 of the First Schedule of the Arbitration Act are applicable only when a different intention is not expressed in the Arbitration Agreement. In this connection, reference may be made to Section 3 of the Arbitration Act which provides that an Arbitration Agreement shall be deemed to include the provisions set out in the FirstSchedule, insofar as they are applicable to the reference unless, of course, a different intention is expressed in the Arbitration Agreement. In other words, under Section 3, the provisions incorporated in the First Schedule are applicable only if the Arbitration Agreement does not show a different intention to the contrary.

(21) In the present contract agreement arrived at between the parties, there is a specific clause being Clause No. 9 which states that all disputes or claims whatsoever arising on; or out of or in connection with any contract or order for the supply of goods by Seller to Buyer shall, should Seller so elect, be referred to the arbitration of the Delhi, Punjab and Haryana Chamber of Commerce according to the rules of its Tribunals of arbitration. In view of the aforesaid Arbitration Agreement between the parties, the Rules of the Tribunals of arbitration of Punjab, Haryana and Delhi Chamber of Commerce and Industry, are applicable. Accordingly, it would be necessary to look into the provisions incorporated in the aforesaid rules to find out whether any contrary intention has been indicated therein which nullifies the applicability of paragraphs 2 and 3 of the First Schedule of the Arbitration Agreement to the facts and circumstances of the present case. I may refer to Rule V(3) of the aforesaid rules which deals with the Constitution of Bench which is extracted below : "(3)The Committee, or such other authority, shall thereupon constitute a Bench for the adjudication of the dispute of difference in respect of which application has been made by appointing in writing one or more Arbitrators and also in case of need an umpire, or if both parties in and by such application so desire a single 'Arbitrator. The Arbitrator or Arbitrators or Umpire so appointed shall constitute the Bench".

(22) In respect of the conduct of arbitration. Rule Vi provides that the arbitration shall be conducted in accordance with the rules enumerated therein with which are incorporated the provisions of the Indian Arbitration Act provided contrary provisions are not expressly and impliedly provided for in the rules enumerated in the said set of rules. Sub-rule 3 of Rule Vi of the said rules provides that: "The Registrar shall place all statements, rejoinders, documents etc. received from the parties to the dispute before the Bench, and the Bench shall be deemed to have entered on the reference on being furnished with such statements, rejoinders, documents, etc."

(23) Having considered the submissions of the learned Counsel appearing for the parties and having regard to the provisions of the aforesaid rules, let me consider the validity of the objections raised by the Counsel for the respondent No. 1 in respect of the aforesaid two issues.

(24) Although under paragraph 2 of the First Schedule of the Arbitration Act it is provided that if the reference is to an even number of Arbitrators, the Arbitrators shall appoint: an Umpire not later than one month from the latest date of their respective appointments, the said provision is held to be directory and not mandatory by a decision of this Court in Mis. Chowdhury and Gulzar Singh, New Delhi-1 v. Mis. trick India Ltd. New Delhi-1, and also in Ratnawa v. Gurushiddappa Gurushantappa Magavi and Others reported in Air 1962 Mysore 135. It is also held in the aforesaid two decisions that even if the reference is made to two Arbitrators, non-appointment of an Umpire by them would not vitiate the arbitration proceeding and the award could not be said to be null and void. I respectfully agree with the principles of law laid down in the aforesaid two decisions. Moreover, the Rules of the Tribunal of Arbitration of Punjab, Haryana and Delhi Chamber of Commerce and Industry specifically lays down that the Committee is empowered to constitute a Bench for the adjudication of the dispute of difference which could be of two Arbitrators or more and also in case of need, an Umpil . may be appointed. The aforesaid rule specifically lays down that it is only in case of need an Umpire is required to be appointed by the Committee. Since the aforesaid rules are applicable to the facts and circumstances of the case being a part of the Arbitration Agreement, it was necessary to appoint an Umpire only in case of need i.e., in case of difference of opinion between the two Arbitrators and such need not having arisen in the instant case to appoint the Umpire by the two Arbitrators, there was no illegality in not appointing the Umpire as required under the provisions of paragraph 2 of the First Schedule of the Arbitration Act, since a contrary intention has been incorporated in the rules applicable to the facts and circumstances of the case. In that view of the matter, it cannot be held that the arbitration proceeding as also the award is vitiated as null and void.

(25) The next submission of the learned Counsel for respondent No. 1 in respect of the award being made after expiry of the stipulated period is also found to be without any merit on consideration of the facts and circumstances of the case. The Rules of the Tribunal of arbitration specifically lays down as extracted hereinabove that the Bench shall be deemed to have entered on the reference on being furnished with such statements, rejoinders documents etc. From the records of the arbitration proceeding, it appears that the Arbitrators proceeded to deal with the case for the first time on 14.10.1982. It, however, appears from the order sheet of the said date that none of the parties on that date filed statements, rejoinders and documents and the next date was fixed as 4.11.1982. On perusal of the order dated 4.11.1982,1 find that on that date, time was granted to the.petitioner to file further documents and affidavits by way of evidence. Accordingly, even if I construe 14.10.1982 to be the date of the Arbitrators entering into the reference when they sat for the first time and possibility of placing the records before the Tribunal of arbitration occasioned forthefirsttimeonthatdateonly,theawardpassedbytheArbitratorson29.11.1982 would be within the period of four months. In that view of the matter, this objection of the respondent No. 1 also stands rejected being without any merit.

(26) This leaves me with consideration of only the other issue/objection raised by the Counsel for respondent No. 1, which relates to violation of the principles of natural justice and not giving sufficient opportunity to the respondent No. 1 by the Arbitrators for presenting his case.

(27) I have heard the learned Counsel appearing for the parties at length on this issue.

(28) The learned Counsel appearing for the petitioner states that sufficient opportunity was given to the petitioner and that the petitioner has failed to avail of the opportunities provided for and in that view of the matter neither any relief nor any sympathy could be shown to the respondent No. 1.

(29) My attention was drawn to the contents of the award wherein the Arbitrators have recorded in details about the opportunities being granted to the respondent No. 1 for contesting the proceeding and for presenting its case before the Tribunal of arbitration. It appears therefrom that the case was initially fixed for hearing on 14.10.1982. Notice was issued to both the parties by registered post fixing the date of hearing. The aforesaid notice was served on the respondent No. 1 through the petitioner. However, from the order sheet it appears that, nobody appeared on behalf of the parties on that date. Accordingly, fresh notice was directed to be issued and accordingly fresh notice was sent to the parties by registered postfixingthedatefor4.11.198. On 14.10.1982,itwasspecifically ordered that notice be published in the daily issue of 'The Tribune', which is published from Chandigarh. The aforesaid notice directed to be published was in fact published in the daily issue of 'Sunday Tribune' on 11.10.1982. However, on 4.11.1982, in spite of the aforesaid publication, nobody was present on behalf of the respondent No. 1 and, therefore, the Tribunal of arbitration decided to fix this case on 18.11.1982 at 3.00 p.m. Notice about fixing of the date was also sent by registered post to the respondent No. 1. It appears that the notice was also published in the daily issue of 'The Tribune' on 9.11.1982. The registered letter sent to the resplendent No. 1 was returned back with the remarks "the addressee is not available despite repeated visits". On perusal of the aforesaid notice, it is found that it was specifically mentioned in the said notice which was also published in the daily issue of The Tribune' on 9.11.1982 that in the event of the respondent No. 1 not complying with the said notice, the matter would be decided ex parte.The aforesaid notice appears to have been however served on the respondent No. 1 through the petitioner.

(30) The Tribunal of arbitration has, however, specifically recorded in the award that Mr. lqbal Singh, partner of the respondent No. 1 visited the office of the Registrar of Tribunal at Delhi and had talks with the Registrar of arbitration and was informed about the position of the proceedings when the aforesaid meeting took place on 13.11.1982. Therefore, it appears that in spite of the aforesaid notices having been received by the respondent No. 1 fixing the date of the proceedings for 18.11.1982, none appeared on behalf of the respondent No. 1 and, accordingly, the Tribunal of arbitration had no other alternative, but to proceed exparte in the matter and the petitioner was heard on 18.11.1982, when it was adjourned to 23.11.1982 on which date the petitioner was asked to file a copy of the Party's Account in their books from 1.1.1980 onwards. Thereafter, the matter was then adjourned to 29.11.1982 when the award was passed. Although, the respondent No. 1 had full knowledge about the proceeding, it did not take steps to file any pleading, document or produce any witness.

(31) The aforesaid records of the arbitration proceeding clearly prove and establish that sufficient notice was issued to the respondent No. 1 by the Arbitrators to appear before them and in spite of such opportunities having been granted to the respondent No. 1, the respondent No. 1 did not appear before the Tribunal of arbitration.

(32) In also appears from the record of the arbitration proceeding that cheques were in fact issued by the respondent No. 1 in favour of the petitioner in respect of the entire claim of the petitioner, but, some of the said cheques were bounced. Accordingly, on appreciation of the said records, it becomes crystal clear that there has been acknowledgement of the liability in respect of the entire claim raised by the petitioner. The records of the arbitration proceeding also make it abundantly clear that by letters dated 12.8.1981 and 16.9.1981 issued by the respondent No. 1, there has been acknowledgement of the liability wherein they assured the payment of the outstanding balance within a short time.

(33) Under the circumstances, it cannot be said that no opportunity was granted by the Arbitrators to the respondent No. 1 or that there was any violation of the principles of natural justice in passing the award. This objection of the respondent No. I also, therefore, fails and is rejected.

(34) In the result, all the objections raised in the present petition against the award passed by the Arbitrators are found to be baseless and without any merit and the same stands rejected. The award passed by the Arbitrators is made a Rule of the Court. In addition, the petitioner shall be entitled to interest @ 15% per annum in terms of Section 29 of the Arbitration Act, from the date of decree till the date of realisation. Let a decree be prepared in terms of the award.