Sh. O.P. Mittal vs M/S Bobby Enterprises And Anr.
2001 Latest Caselaw 1565 Del

ORDER

A.K. Sikri, J.

1. This petition is filed by the petitioner under Section 8 of the Arbitration and Conciliation Act, 1996 (for short 'Act'). It is the case of the petitioner that the petitioner was holding the distribution rights of the motion picture RAJKUMAR for Delhi and Up circuit. On 13th march, 1996 he entered into agreement with the respondent No. 1 who was controlling the playing time of Savitri Cinema for exhibition of picture RAJKUMAR at the said cinema hall on a theatre hire of Rs. 1,15,000/- for 28 effective shows in a week. It was also agreed between the parties that the petitioner shall contribute a sum of Rs. 20,000/- per week as issuing tickets to boost up the business and he shall not be entitled to call for the details of the same. The movie was to be screened for three weeks. Screening of the film started on 22nd March, 1996. However, the since the movie could not do well at the box office on 3rd April, 1996 i.e. after two weeks the petitioner requested for discontinuation thereof. The respondent No. 1 thereafter submitted the accounts as per which it had to recover the money from the petitioner. Since the petitioner did not pay the amount, the respondent No. 1 filed a claim of Rs. 1,18,210.10 paisa before the Dues Realisation Commission under Special Sub Committee (for short 'DR Committee') of respondent No. 2 i.e. Motion Picture Association (hereinafter referred to as the 'Association'). It may be mentioned at this stage that both the petitioner and respondent No. 1 are the members of this Association and are therefore governed by Rules and Regulations which contain procedure for Realizing the commission and also arbitration in case of dispute. The petitioner filed reply on 9th June, 1997 before the DR Committee. On 11th June, 1997 the DR Committee held that amount due to the respondent No. 1 to the extent of Rs. 1,18,210.10 paisa was payable by the petitioner to the respondent No. 1. The respondent No. 1 thereafter reminded the petitioner to pay the aforesaid amount. On the other hand, the petitioner approached the DR Committee for reconsideration and on the said request of the petitioner, the DR Committee directed that the matter be placed before it for final consideration on 20th August, 1997. The respondent No. 1 opposed the recalling notice and move of the DR Committee to reconsider the matter. Thereafter the DR Committee referred to the matter to Mr. G.S. Mayawala for settlement/adjudication. The minutes of the meeting held on 2nd September, 1997 which were recorded show that Mr. Mayawala was to act as sole arbitrator. At this stage, the present petition was filed.

2. In this petition the petitioner has stated in para 4 that Mr. Mayawala has been appointed as arbitrator by the Association. In the relief clause the petitioner has prayed that another arbitrator be appointed by the Association and Mr. Mayawala be removed as arbitrator. The removal of Mr. Mayawala is sought on the ground that he is an interested party and a biased person. In addition to the dispute relating to screening of motion picture RAJKUMAR, the petitioner has a claim of Rs. 10 lacs as damages on account of alleged malafide and illegal action of the respondent No. 1. In para 17 of the statement of Fact, the following disputes are raised:

"a) Whether the respondent is entitled to claim an deficit in theatre hire amounting to Rs. 80,000/- i.e. Rs. 40,000/- being paid under the table and Rs. 40,000/- allegedly due on account of sale of tickets without tendering the counterfoils of the tickets so sold in account of the petitioner as per agreement dated 13.3.1996?

b) Whether the respondent No. 2 is not liable to pay Rs. 10 lacs as damages suffered by the petitioner on account of the mala fides, illegal action of the respondent No. 1 in coercing the respondent no. 2 in withholding the draft for Rs. 10 lacs lying with the respondent No. 2 in Trust and in the name and for the benefit of the petitioner?

3. In the reply filed by the respondent No. 1, it is stated that there is no dispute which has to be referred for adjudication inasmuch as the DR Committee has already directed the petitioner to pay a sum of Rs. 1,18,210.10 paisa. It is stated that the petitioner has in fact admitted that the aforesaid amount is payable by the petitioner to the respondent No. 1. It is further submitted that in any case appeal is provided against the decision of the DR Committee under the rules and the petitioner could file the said appeal. Having failed to file the appeal, the present petition was not maintainable. It is also stated that in the minutes of the DR Committee held on 11th June, 1997 it was wrongly recorded that Mr. G.S. Mayawala would be the sole arbitrator. When the respondent No. 1 pointed out this by its communication dated 18th/19th September, 1997 to the DR Committee, it realised its mistake. In the meeting of 30th September, 1997 it was recorded that Mr. Mayawala was not appointed as arbitrator but for mediation. Accordingly, it is submitted by the respondent No. 1 that the petition is misconceived and the arbitrator is not required to be appointed. The position in respect of this is summed up by the respondent No. 1 in the following manner:

1. It is the admitted position between the parties that the petitioner had agreed by letter dated 13th March, 1996 to contribute sum of Rs. 20,000/- per week for issuance of tickets. The same is admitted position.

2. Perusal of the letter dated 3rd April, 1996 at page 3 of the respondent No. 1's documents which has been concealed by the petitioner is that he himself requested for discontinuance of the picture after two weeks though false stand has been taken in the petition that film was to be screened for three weeks. Despite of its own letter a false has been taken by the petitioner.

3. Bare perusal of the reply before DR Committee dated 9th June, 1997 itself demonstrates that there was no dispute of amounts as have been calculated.

4. That Sh. G.S. Mayawala was never appointed as sole arbitrator and rightly committee rectified in its minutes of the meeting dated 13th September, 1996 that he was appointed as mediator and not as sole arbitrator hence not only petition is not maintainable rather material facts have been concealed from this court.

4. The tenor of the petition would show that the petitioner has prayed for removal of Mr. Mayawala as an arbitrator and for appointment of another arbitrator by the Association. Such a prayer is not maintainable in view of the provisions of Sections 12,13 and 16 of the Act. As per Section 12 the arbitrator is to disclose to the parties in writing any such circumstances, likely to give rise to justifiable doubts as to his independence or impartiality. If the appointment of arbitrator is to be challenged on the ground that he is not an independent or impartial person, Sub-section 2 of Section 13 lays down the procedure as per which the party intending to challenge the appointment of arbitrator by sending written statement of reasons for the challenge to the arbitral tribunal. On making such a challenge it is the arbitral tribunal who has to decide on the challenge. Even if the challenge is unsuccessful, the arbitration proceedings would go on and only after the arbitral award is made the application for setting aside such an award is to be made by the party challenging the arbitrator in accordance with Section 34 of the Act. Admittedly, the petitioner has not resorted to this procedure contained in Section 13 of the Act. Judicial intervention during the arbitration proceedings is not permissible on this ground at this stage which is the mandate provided by Section 5 of the Act.

5. However, the respondent No. 1 have made things simpler for the petitioner on this aspect inasmuch as as per the minutes of the DR Committee recorded on 30th September, 1997 that Mr. Mayawala was not appointed as sole arbitrator but only a mediator. In view of this stand taken by the respondent No. 1, it is not necessary for the petitioner to ask for the removal of the arbitrator.

6. Now we come to the question of appointment of arbitrator by the Association. It may be mentioned here that the Association has framed Rules of Special-Sub Committee-2 D.R. Rules dealing with the complaints of recovery of dues. It is this procedure which was resorted to by the respondent No. 1 and the DR Committee opined that a sum of Rs. 1,18,210.10 paisa was payable by the petitioner to the respondent No. 1. If the petitioner was aggrieved by the decision of the DR Committee, it could prefer an appeal to the Executive Committee. Be as it may, further deliberations of the DR Committee show that the matter was reopened inasmuch as letter dated 5th August, 1997 was written by the DR Committee to the respondent No. 1 itself for final consideration of the matter on 20th August, 1997. Whether Mr. Mayawala was thereafter appointed as a mediator or arbitrator, this fact shows that the earlier decision of the DR Committee has bee reopened by the DR Committee itself. According to the petitioner, only a sum of Rs. 11,210.10 paisa is payable whereas the respondent No. 1 claims a sum of Rs. 1,18,210.10 paisa on this account. In these circumstances, it would always be open to the petitioner to approach the respondent No. 2/Association and invoke the arbitration as per Rule 63 which contains arbitration clause and procedure for appointment of an arbitrator. The petitioner has not approached the Association for this purpose so far. Once the petitioner approaches the Association for this purpose, the Association can take a view whether the amount payable by the petitioner is an admitted amount as earlier decided by the DR Committee or there is a dispute which needs to be adjudicated by the arbitrator. In fact claim damages of Rs. 10 lacs which is claim (b) as extracted above is the claim made for the first time by filing this petition and nowhere such a claim was raised earlier even with the respondent No. 1. The cause of action in the present petition would arise only if the Association refuses to appoint the arbitrator as provided under rule 63 which reads as under:

"In case of any dispute difference or question which may arise at any time between the different members of the Association or any person claiming under them in connection with their agreement for the production, distribution, or exhibition of the cinematograph films shall be referred for decision to the arbitration of the Motion Pictures Association, according to the rules and regulations relating to the arbitration framed by the association and in force at the time of dispute, difference or the question arises. The award made on submission to arbitration as aforesaid shall be binding on the parties to the arbitration as if the said rules and the arbitration agreements were incorporated in their respective agreements for production, distribution or exhibition of cinematograph films. The arbitration proceedings shall be conducted in accordance with the Indian Arbitration Act(a). The panel of arbitrator to be suggested by either party should consist of members of the Association who are ordinarily resident of Delhi.

(b) In case the opposite party fails to suggest the panel of names of Arbitrators within a period of 15 days from the date of issue of a letter, the President shall have power to appoint an arbitrator on behalf of the opposite party from out of the members of the Association for the arbitration of disputes between the parties in question in accordance with the Indian Arbitration Act.

7. This petition is therefore clearly not maintainable at this stage and is dismissed.