Delhi High Court
Mrs. Ruchi Agarwal & Ors. vs Nicolian (India) & Ors. on 15 October, 2010
Author: Manmohan
#163-166 & 174-177
* IN THE HIGH COURT OF DELHI AT NEW DELHI
163
+ O.M.P. 444/2006
MRS. RUCHI AGARWAL & ORS. ..... Petitioners
Through Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
versus
NICOLIAN (INDIA) & ORS. ..... Respondents
Through Mr. Jayant Nath, Senior Advocate
with Mr. S. Kumar and Mr. Krishna
M. Singh, Advocates for R-1.
Mr. Alok Singh with Ms. Ratna,
Advocates for R-2.
AND
164
+ O.M.P. 445/2006
MRS. RUCHI AGARWAL & ORS. ..... Petitioners
Through Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
versus
NICOLIAN BROS & ORS. ..... Respondents
Through Mr. Jayant Nath, Senior Advocate
with Mr. S. Kumar and Mr. Krishna
M. Singh, Advocates for R-1.
Mr. Alok Singh with Ms. Ratna,
Advocates for R-2.
AND
165
+ O.M.P. 446/2006
MRS. RUCHI AGARWAL & ORS. ..... Petitioners
Through Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
OMP 444-447/2006, 511-514/2006 Page 1 of 35
versus
NICOLIAN ( I) PVT. LTD. & ORS. ..... Respondents
Through Mr. Jayant Nath, Senior Advocate
with Mr. S. Kumar and Mr. Krishna
M. Singh, Advocates for R-1.
Mr. Alok Singh with Ms. Ratna,
Advocates for R-2.
AND
166
+ O.M.P. 447/2006
MRS. RUCHI AGARWAL & ORS. ..... Petitioners
Through Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
versus
C.S. PROPERTIES PVT. LTD. & ORS. ..... Respondents
Through Mr. Jayant Nath, Senior Advocate
with Mr. S. Kumar and Mr. Krishna
M. Singh, Advocates for R-1.
Mr. Alok Singh with Ms. Ratna,
Advocates for R-2.
AND
174
+ O.M.P. 511/2006 & I.A. 12068/2006
APOGEE INTERNATIONAL LTD. ..... Petitioner
Through: Mr. Alok Singh with Ms. Ratna,
Advocates
versus
NICOLIAN INC. & ORS. ..... Respondents
Through: Mr. Neeraj Kishan Kaul, Senior
Advocate with Mr. S. Kumar,
Advocate for R-1.
Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
for R-2 to 4.
OMP 444-447/2006, 511-514/2006 Page 2 of 35
AND
175
+ O.M.P. 512/2006 & I.A. No. 12080/2006
APOGEE INTERNATIONAL LTD. ..... Petitioner
Through: Mr. Alok Singh with Ms. Ratna,
Advocates
versus
NICOLIAN (INDIA) PVT. LTD. & ORS. ..... Respondents
Through: Mr. Neeraj Kishan Kaul, Senior
Advocate with Mr. S. Kumar,
Advocate for R-1.
Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
for R-2 to 4.
AND
176
+ O.M.P. 513/2006 & I.A. No. 12081/2006
APOGEE INTERNATIONAL LTD. ..... Petitioner
Through: Mr. Alok Singh with Ms. Ratna,
Advocates
versus
NICOLIAN SECURITIES &
FINANCE (P) LTD. & ORS. ..... Respondents
Through: Mr. Neeraj Kishan Kaul, Senior
Advocate with Mr. S. Kumar,
Advocate for R-1.
Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
for R-2 to 4.
AND
OMP 444-447/2006, 511-514/2006 Page 3 of 35
177
+ O.M.P. 514/2006 & I.A. 12083/2006
APOGEE INTERNATIONAL LTD. .... Petitioner
Through: Mr. Alok Singh with Ms. Ratna,
Advocates
versus
C.S. PROPERTIES (P) LTD. & ORS. ..... Respondents
Through: Mr. Neeraj Kishan Kaul, Senior
Advocate with Mr. S. Kumar,
Advocate for R-1.
Mr. T.K. Ganju, Senior Advocate
with Mr. Rohit Choudhary,
Ms. Divya Kesar, Ms. Preeti
Khiwani, Mr. Manmohit Puri,
Mr. Gaurav Dudeja and
Ms. Aradhana Kaura, Advocates
for R-2 to 4.
% Date of Decision : 15th January , 2010
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
JUDGMENT
MANMOHAN, J (ORAL)
1. Eight petitions have been filed under Section 34 of Arbitration
and Conciliation Act, 1996 (hereinafter referred to as "Act, 1996")
challenging four Awards dated 10th June, 2006 passed by Mr. Justice
P.N. Nag (Retd.), Sole Arbitrator. While four objection petitions have
been filed by the legal representatives of Late Mr. Rakesh Agarwal, the
other four objection petitions have been filed by M/s. Apogee
International Ltd. (in short "AIL").
2. The brief facts relevant to the present controversy are that
according to the first respondent -claimant, it had advanced to M/s.
Gulmohar Estates Ltd. (in short „GEL‟) various sums of money totaling
to about Rs.2.20 Crores for booking property in Garden Estates,
Gurgaon. Since, according to first respondent -claimant, GEL had
failed to construct and deliver possession of flats in question by 31 st
March, 1996 and was not in a position to deliver the same in the near
future, an Agreement dated 18th November, 1999 was entered into by
and between the first respondent-claimant, Hotal Banjara Ltd. (in short
„HBL‟), Mr. Rakesh Agarwal, GEL, M/s. Rakesh Agarwal HUF and
AIL. In the said agreement, it was stated that the entire share -holding
of HBL held by Mr. Rakesh Agarwal and his HUF as well as AIL
would be transferred in favour of the first respondent-claimant so as to
discharge the entire liability of GEL, Mr. Rakesh Agarwal, his HUF
and AIL. The agreement according to the respondent/claimant was
signed by Mr. Rakesh Agarwal on behalf of GEL, AIL, HBL, M/s.
Rakesh Agarwal HUF and himself.
3. In fact, it is the first respondent‟s case that in consideration for
Rs. 2.20 Crores, Mr. Rakesh Agarwal had also executed Deeds of
Personal Guarantee and Indemnity dated 15th May, 1991 and Corporate
Guarantee dated 15th May, 1991 on behalf of AIL.
4. According to respondent-claimant, as Mr. Rakesh Agarwal, AIL
and GEL had failed to repay the amount of Rs.2.20 Crores with the
stipulated interest @ 24% per annum with semi-annual interests,
respondent-claimant invoked the arbitration clause.
5. From the arbitral record in particular the order sheets of the
Arbitrator, it is apparent that Mr. Rakesh Agarwal was served on the
basis of a postal certificate wherein it was stated that Mrs. Ruchi
Agarwal wife of Mr. Rakesh Agarwal had refused to accept service.
The order sheet also reveals that though notice in the „Hindu‟
newspaper had been published, none had appeared for GEL and for Mr.
Rakesh Agarwal and his HUF. Accordingly, by order dated 11th
January, 2003, the aforesaid three respondents in the arbitral
proceedings were proceeded ex-parte.
6. AIL was the only party to the arbitral proceedings who had
appeared before the Arbitrator and sought time to file a reply/written
statement. The order sheets reveal that despite three opportunities, AIL
had not filed any reply/written statement but had only filed applications
under Section 16 of Act, 1996 as well as for production of original
documents and for interrogatories. All these applications were
dismissed by the Arbitrator on 10th April, 2003. While dismissing the
application under Section 16, the Arbitrator held that it involved highly
complicated questions of fact which could not be decided without trial.
Immediately after dismissal of the aforesaid applications including the
one under Section 16, the Arbitrator closed the right of defence of the
respondents to the arbitral proceedings. The Arbitrator thereafter fixed
the matter for filing of evidence by way of affidavit. Before the ex-
parte evidence was filed, Mr. Rakesh Agarwal unfortunately passed
away on 22nd October, 2003.
7. Upon an application being filed by respondent-claimant, the legal
representatives of Mr. Rakesh Agarwal were impleaded as parties to the
arbitral proceedings on 27th August, 2004. By virtue of the same order,
legal representatives of Mr. Rakesh Agarwal were given time to file
replies/written statements to the Claim-petitions.
8. However on 18th March, 2005, the Arbitrator at the instance of
respondent no.1 recalled his earlier order dated 27th August, 2004 and
held that the replies/written statements filed in the meantime by the
legal representatives could not be taken on record as the stage for filing
of the same was over long time back and Mr. Rakesh Agarwal had
already been proceeded ex-parte.
9. Subsequently, on 10th June, 2006, the Arbitrator passed the four
impugned Awards against all the respondents including the legal
representative of Mr. Rakesh Agarwal to transfer the shareholding held
by them in HBL or in the alternative to personally pay the stipulated
amount in each Award with interest.
10. Mr. T.K. Ganju, learned senior counsel appearing for the legal
representatives of the deceased Mr. Rakesh Agarwal submitted that the
impugned Awards were liable to be set aside under Section 34(2)(iii) of
Act, 1996 inasmuch as the petitioners-objectors had not been allowed to
present their case. According to him, the impugned Awards were
violative of the public policy of India as well as the principles of natural
justice. He pointed out that Section 18 of Act, 1996 required the
Arbitral Tribunal to give all the parties full opportunity to present their
case. In this connection, Mr. Ganju relied upon the following
judgments :-
A) Wazir Chand Karan Chand Vs. Union of India & Anr. reported
in AIR 1989 Delhi 175
B) S.L. Kapoor Vs. Jagmohan & Ors. reported in AIR 1981 SC 136
and
C) Power Grid Corporation of India Ltd. Vs. Electrical Mfg. Co
Ltd. & Anr. reported in 153 (2008) DLT 440.
11. Since, Mr. Ganju placed heavy reliance upon the judgment of this
Court in Power Grid Corporation's (supra), the relevant portion of the
said judgment is reproduced hereinbelow :-
20. In Halsbury‟s Laws of England, Fourth Edition, Vol. 2
Page 590 page 306 it has been stated as under:
"Where the arbitrator proposes to proceed with the
reference notwithstanding the absence if one of the
parties, it is advisable that he should give that party
distinct notice of his intention to do so. If reasonable
excuse for not attending the appointment can be
shown, the Court will set aside an award made by an
arbitrator who has proceeded ex parte."
21. In Russell on Arbitration, Nineteenth Edition page 271 the
following passage appears.
"Notice of intention to proceed ex parte:
In general, the arbitrator is not justified in proceeding
ex parte without giving the party absenting himself due
notice. It is advisable to give the notice in writing to
each of the parties or their solicitors. It should express
the arbitrator‟s intention clearly, otherwise the award
may be set aside. An ordinary appointment for a
meeting with the addition of the word „Peremptory‟
marked on it is, however, sufficient.
If the Arbitrator declines to proceed on the first failure
to attend a peremptory appointment, and gives another
appointment, he is not authorised to proceed ex-parte
at the second meeting, unless the appointment for it
was also marked „peremptory‟ or contained a similar
intimation of his intention."
22. The elementary Principle of Natural Justice implies a
duty to act fairly i.e. fair play in action. The Principle of
Natural Justice is not dogmatic in character and a duty is
cast upon on every adjudicatory body be it judicial or quasi-
judicial to strictly adhere to the Principle of Natural Justice
unless such adherence is dispensed with under any particular
Statute. The Rules of Natural Justice are although not
embodied Rules, but the same afford minimum protection to
the rights of any person against the arbitrariness of any
authority be it judicial, quasi-judicial or administrative
whose decision involves any civil consequences or can affect
the rights of an individual. The aim of Rules of Natural
Justice is to secure justice or to put it in the negative to
prevent miscarriage of justice.
xxxx xxxx xxxx xxxx
25. As already discussed above, the Arbitral Tribunal has
acted in utter haste in rushing through the arbitration
proceedings without affording proper and adequate
opportunity to the appellant in presenting its case, we,
therefore, feel that the interest of justice will be best served if
we refer the matter again to a Sole Arbitrator to adjudicate
the disputes between the parties afresh after giving due
opportunity to both the parties. The appointment of a Sole
Arbitrator would in our opinion cut short delay in the
disposal of the controversy which will remain raging for
another decade if we are to direct the process of appointment
of the Arbitrators to be started de novo."
12. Mr. Ganju further submitted that impleadment of legal
representatives of Mr. Rakesh Agarwal was not by virtue of Order 22
CPC but by virtue of Section 40 of Act, 1996. According to him, by
virtue of Section 19 of Act, 1996 the provisions of CPC did not apply to
arbitral proceedings. He further contended that legal representatives‟
right to file a defence was not governed or controlled by CPC but by the
larger and general principles of natural justice inasmuch as every
person who had been impleaded as a party to an arbitral proceeding was
entitled to raise a defence. In any event, according to Mr. Ganju, even
under Order 22 Rule 4 CPC the right of newly impleaded respondent to
file a defence was not restricted or limited in any manner. In this
connection, he relied upon a judgment of Apex Court in Vidyawati v.
Man Mohan & others reported in (1995) 5 SCC 431 wherein it has
been held as under :-
"4. This Court in Bal Kishan v. Om Parkash [AIR 1986 SC
1952] has said thus:
"The sub-rule (2) of Rule 4 of Order 22 authorises the
legal representative of a deceased defendant to file an
additional written statement or statement of objections
raising all pleas which the deceased-defendant had or
could have raised except those which were personal to
the deceased-defendant or respondent."
13. Mr. Ganju also submitted that after the death of Mr. Rakesh
Agarwal, petitioners being the only members of HUF were entitled to
file their written statements/replies as a matter of right.
14. On merits, Mr. Ganju contended that the Arbitrator had
committed gross misconduct in not adjudicating upon the issue as to
whether the documents relied upon by respondent no. 1 were genuine or
fabricated. Mr. Ganju laid great emphasis on the fact that the
Agreement dated 18th November, 1999, the Deeds of Personal
Guarantee and Indemnity dated 15th May, 1991 and Corporate
Guarantee dated 15th May, 1991 were forged and fabricated. In support
of his plea, Mr. Ganju relied upon the following facts:-
i) The Board Resolution dated 15th May, 1991 filed by respondent-
claimant in support of the guarantees revealed that it had been
passed in accordance with Section 372A of Companies Act, 1956
even though the said provision had came into force with effect
from 31st October, 1998. Consequently, according to Mr. Ganju,
no such resolution could have been passed by AIL in the year
1991 when the said provision did not even exist in the Statute
Book.
ii) The Official Liquidator in his report to the High Court dated 22nd
August, 2008 filed in C.P. No. 122/1997 after a detailed enquiry
had come to the conclusion that the alleged guarantees, Board
Resolution dated 15th May, 1991 and other documents relied
upon by respondent-claimant were forged and fabricated. The
Official Liquidator in the said report had also concluded that Mr.
B.B. Patel had been selling properties of Company in liquidation
even after the Official Liquidator had been appointed and that
Mr. Patel was also operating the account of the Company for the
purposes of receiving and appropriating the monies belonging to
the Company.
iii) The four agreements dated 18th November, 1999 were similar,
but had been drawn in favour of four different concerns
belonging to one person, Mr. B.B. Patel. Mr. Ganju stated that
the entire shareholding of Mr. Rakesh Agarwal, his HUF and
AIL were sought to be transferred in default to four different
parties, which was clearly impossible.
iv) The interest rate stipulated in the agreement was not only
usurious but also unconscionable as no party would have agreed
to pay interest @ 24% per annum with half yearly interests. He
further stated that the agreements were contrary to human
conduct inasmuch as entire shareholding of a running five star
hotel could not have been agreed to be transferred for a meager
sum of Rs. 2 Crores as claimed by respondent-claimant.
v) Though there was a specific admission by respondent‟s sole
witness that there were several other transactions between
respondent-claimant and GEL, but none of the said transactions
had been shown in the alleged statement of account filed by the
respondent-claimant along with its claim statement.
15. Mr. Ganju also contended that it was settled position of law that
power of review could not be exercised until and unless the same was
specifically conferred upon an authority or tribunal under a Statute.
He pointed out that in the present case, the Arbitrator had recalled the
order dated 27th August, 2004 by virtue of which he had granted the
legal representatives of Mr. Rakesh Agarwal an opportunity to file
written statements/replies to the Claim statements. Mr. Ganju also
pointed out that the Arbitrator had also recalled his order by virtue of
which he had permitted the AIL to file affidavit by way of evidence.
16. Mr. Ganju also stated that as GEL was in liquidation and an
Official Liquidator had been appointed, no proceedings could have
been initiated against the said Company without taking leave of the
Court under Section 446 of Companies Act, 1956. He pointed out that
the Arbitrator had erroneously held that no leave was necessary on the
ground that no relief had been claimed against GEL.
17. Mr. Ganju submitted that though the respondent-claimant‟s
claims were ex-facie barred by limitation as they were based on
documents executed in the year 1991, the Arbitrator in his impugned
Award had given no finding on the said issue.
18. Mr. Alok Singh, learned counsel appearing for AIL emphasised
that the Agreement dated 18th November, 1999 and both the Personal
and Corporate Guarantee dated 15th May, 1991 were forged and
fabricated. He stressed the fact that the Board Resolution dated 15 th
May, 1991 referred to Section 372A of the Companies Act, 1956 even
though the same came into effect in the year 1998. In this connection,
he drew my attention to the following cross-examination of Mr. B.B.
Patel, the sole witness produced by respondent-claimant :-
Question: Please see document C-3 and C-4 and tell who
has signed these documents?
Answer: Rakesh Aggarwal himself.
Question: Did he sign these documents in your presence?
Answer: Yes
Question: When and where he signed these documents?
Answer: These documents had been signed by Rakesh
Aggarwal at his office at A-5, Gulmohar Park,
New Delhi on 15.05.91.
xxxx xxxx xxxx xxxx
Q. Who has signed Ex. C-3 i.e. Personal Guarantee dated
15.5.1991
A. Mr. Rakesh Aggarwal and on behalf of HUF as Karta
Q. Who gave this document?
A. Mr. Rakesh Aggarwal
Q. When did you receive this document
A. On 15.5.1991
Q. Please see document Ex. C-4, (Corporate Guarantee)
and who has signed this document?
A. Mr. Rakesh Aggarwal has signed this document on
behalf of M/s. Appoge International, as its POA.
19. Mr. Singh further contended that even if the Arbitrator was of the
view that Section 16 application involved complicated questions of
fact, the Arbitrator should not have dismissed the said application but
should have adjudicated upon it at the final hearing stage after
allowing the parties to lead their evidence.
20. On the other hand, Mr. Jayant Nath, learned senior counsel for
respondent-claimant stated that as despite service Mr. Rakesh Agarwal
and his HUF had chosen not to enter appearance, they were rightly
proceeded ex-parte. In this connection, he pointed out that postal
authority had confirmed service of summons for hearing scheduled for
13th November, 2002 and further for hearing dated 3rd December,
2002, postal authority had confirmed that his wife Mrs. Ruchi
Agarwal had refused to accept the summons on Mr. Rakesh Agarwal
and his HUF. Mr. Nath further pointed out that by way of abundant
precaution, substituted service had also been effected by way of
publication in the „Hindu‟ newspaper on 11th December, 2002. Mr.
Nath also laid great emphasis on the fact that Mr. Rakesh Agarwal held
72% shareholding in AIL and as AIL had been served it was
inconceivable that Mr. Rakesh Agarwal was not aware of the arbitral
proceedings.
21. Mr. Nath pointed out that AIL had appeared before the Arbitrator
on 24th November, 2002, 3rd December, 2002, 11th January, 2003 and
8th March, 2003. On each of these dates, AIL had sought an
opportunity to file a reply/written statement. However, on 29 th March,
2003 instead of filing a reply/written statement, it had with a view to
delay and obstruct the arbitral proceedings, filed applications for
interrogatories, production of documents as well as under Section 16
of Act, 1996.
22. Mr. Nath stated that the Arbitrator had rightly dismissed these
applications as they were gross abuse of process of law and closed the
right of AIL to file its written statement. According to Mr. Nath, right
from beginning, the petitioners had participated in the arbitral
proceedings with the sole intention to somehow or the other delay the
same and to deprive the respondent-claimant of its rightful claims
against HBL.
23. Mr. Nath contended that from the aforesaid facts, it would be
apparent that principles of natural justice had been duly complied with
as several opportunities had been given to Mr. Rakesh Agarwal, his
HUF and AIL to file their defences but none of them had availed of the
same.
24. Mr. Nath submitted that this Court in exercise of power under
Section 34 of Act, 1996 should not interfere with the procedure
adopted by the Arbitrator. In this connection, Mr. Nath relied upon a
judgment of Supreme Court in Hari Om Maheshwari Vs. Vinitkumar
Parikh reported in (2005) 1 SCC 379 wherein it has been held as
under:-
"4. Two disputes pertaining to the claims of the appellants
against the respondent herein were referred to arbitration
and the same were numbered as Arbitration Reference No.
313 of 1995 in the case of Deepa Jain and Arbitration
Reference No. 316 of 1995 in the case of Hari Om
Maheshwari, the appellants herein. Though both the
arbitration proceedings were taken up for consideration
together. In Reference Case No. 313 of 1995 i.e. case of
Deepa Jain the evidence of both the parties concluded on 29-
1-1999 while the evidence of the appellant in Reference Case
No. 316 of 1995 pertaining to Hari Om Maheshwari was
concluded on 8-4-1999 and the matter was listed for evidence
of the respondent in that case to 10-5-1999/11-5-1999. On
that day i.e. on 10-5-1999 the respondent herein remained
absent. The arbitrators on that day closed the evidence and
posted the matter for making awards. Before the said awards
were made on 20-5-1999 the respondent herein sent an
application to the arbitrators seeking further opportunity to
lead evidence in Reference Case No. 313 of 1995 of Deepa
Jain in which the evidence of both the parties had closed. No
application was made in Reference Case No. 316 of 1995
which is the arbitration case of Hari Om Maheshwari. From
the record it is seen that the said application was not
entertained by the arbitrators and they delivered the award
sometime in November 1999. It is against the two awards the
respondent herein preferred two applications to set aside the
said awards under Section 30 of the Arbitration Act, 1940
(hereinafter referred to as "the Act") before the learned
Single Judge of the Bombay High Court. It was his contention
that he could not attend the arbitration proceedings on 10-5-
1999 because on the previous date of the proceedings he had
wrongly noted down the next date of hearing. Hence, the
arbitrators ought to have given him an opportunity of
presenting his evidence before making an award."
xxxx xxxx xxxx xxxx
14. A bare reading of the said section shows that the civil
court has very limited jurisdiction to interfere with an award
made by the arbitrators and it certainly does not permit the
civil court including the High Court to interfere with the
discretionary order of granting or refusing an adjournment.
This Court in Arosan Enterprises Ltd. v. Union of India
considering Section 30 of the Act held thus: (SCC pp.454-55)
"Section 30 of the Arbitration Act, 1940 providing for setting
aside an award of an arbitrator is rather restrictive in its
operation and the statute is also categorical on that score.
The use of the expression „shall‟ in the main body of the
section makes it mandatory to the effect that the award of an
arbitration shall not be set aside excepting for the grounds as
mentioned therein to wit: (i) arbitrator or umpire has
misconducted himself; (ii) award has been made after the
supersession of the arbitration or the proceedings becoming
invalid; and (iii) award has been improperly procured or
otherwise invalid. These three specific provisions under
Section 30 thus can only be taken recourse to in the matter of
setting aside of an award. The legislature obviously had in its
mind that the arbitrator being the judge chosen by the parties,
the decision of the arbitrator as such ought to be final
between the parties. Reappraisal of evidence by the court is
not permissible and as a matter of fact exercise of power by
the court to reappraise the evidence is unknown to
proceedings under Section 30 of the Arbitration Act. In the
event of there being no reasons in the award, question of
interference of the court would not arise at all. In the event,
however, there are reasons, the interference would still be not
available within the jurisdiction of the court unless of course,
there exist a total perversity in the award or the judgment is
based on a wrong proposition of law. In the event however
two views are possible on a question of law as well, the court
would not be justified in interfering with the award. The
common phraseology „error apparent on the face of the
record‟ does not itself, however, mean and imply closer
scrutiny of the merits of documents and materials on record.
The court as a matter of fact, cannot substitute its evaluation
and come to the conclusion that the arbitrator had acted
contrary to the bargain between the parties. If the view of the
arbitrator is a possible view the award or the reasoning
contained therein cannot be examined."
xxxx xxxx xxxx xxxx
16. From the above it is seen that the jurisdiction of the court
entertaining a petition or application for setting aside an
award under Section 30 of the Act is extremely limited to the
grounds mentioned therein and we do not think that grant or
refusal of an adjournment by an arbitrator comes within the
parameters of Section 30 of the Act. At any rate the
arbitrator‟s refusal of an adjournment sought in 1999 in an
arbitration proceeding pending since 1995 cannot at all be
said to be perverse keeping in mind the object of the Act as an
alternate dispute resolution system aimed at speedy
resolution of disputes."
25. Mr. Nath submitted that principles of natural justice were not an
unruly horse and the same would be attracted only if the petitioners
were able to show that any prejudice had been caused to them. He
pointed out that neither in the replies/written statements filed by the
legal representatives of Mr. Rakesh Agarwal nor in Section 16
application filed by AIL, the signatures of Mr. Rakesh Agarwal on
various documents were specifically denied or the factum of payment
made to GEL was ever disputed. He pointed out that the only plea
taken by AIL was that Mr. Rakesh Agarwal was not authorised to act
as a power of attorney holder.
26. According to Mr. Nath, the authority of Mr. Rakesh Agarwal to
execute the documents on behalf of AIL was apparent as Mr. Rakesh
Agarwal was not only its promoter director but was holding 72%
shares of the said Company and further his wife Mrs. Ruchi Agarwal
without holding any share was its Managing Director.
27. According to Mr. Nath, the petitioners‟ submission that in view
of Section 40 of Act, 1996, Order 22 Rule 4 CPC would have no
application, was untenable. According to him, in the absence of
anything to the contrary in Act, 1996 reliance on provisions of CPC
could not be said to be erroneous. He submitted that Order 22 Rule 4
CPC clearly indicated that on the death of one of the defendants, the
legal representatives stepped into the shoes of the deceased party and
the proceedings would continue from the stage at which the said party
expired. Mr. Nath repeatedly emphasised that the proceedings could
not commence de novo. In this connection, Mr. Nath referred to the
following judgments :-
A) Smt. Manju Parthi & Others v. Sh. Rohit Parthi reported in
2007 (99) DRJ 257 wherein it has been held as under:-
"4. For the following reasons, I locate no substance in these
submissions. The law laid down in the above said authority
does not dovetail with the facts of the present case. The facts
of the present case are altogether different. It must be borne
in mind that in this case the deceased defendant was
proceeded against ex parte. He was deprived of the right to
file the written statement. The petitioner has stepped into his
shoes. The petitioner is not authorised to alter or amend that
situation. The proceedings are to start from that stage where
the same were left by his father. Merely because he is legal
representative of the deceased defendant, he does not get a
new right to put the clock back and file the written statement
as if the case had started afresh. Procedure is not meant to
hamper the cause of justice or sanctify miscarriage of justice.
The only remedy open to the petitioner is to move application
for setting aside the ex parte decree, if sufficient grounds exist
in his favor or that of his predecessor, or, if, he has got
independent right, he can move an application for
impleadment nor merely as a LR of the deceased but also in
his personal capacity.
5. The above said view finds support from a case titled as
Ramgopal and Anr. v. Khiv Raj and Ors.
MANU/RH/0203/1998, wherein it was held:
7. In my opinion, the contention of the learned Counsel
appearing for the petitioners is devoid of any force. It
is settled law that the legal representatives are stepped
into the shoes of the deceased-plaintiff or defendant, as
the case may be, and they must adopt the position
occupied by his predecessor plaintiff or defendant. The
legal representatives, thereforee, must proceed with
the litigation from the stage where death of defendant
or plaintiff had taken place. They are legally bound by
the pleading of his predecessors-in-interest in whose
place they have been substituted. Hence, the legal
representatives substituted under Order 22, Rule 4;
C.P.C. cannot set up a new case. The petitioners are
bound by the proceedings taken so far against the
deceased-defendant. They cannot be allowed to file the
written statement, the right of which was closed as
soon as the ex parte order was passed against the
deceased-defendant-Govind Ram.
8. In this connection, I may refer to a decision of the
Madras High Court in Thavazhi Kanavan v. Sankunni
MANU/TN/0314/1934 : AIR1935Mad52 , wherein it
has been observed as under:
A party who comes into the suit as the legal
representative of another party cannot be allowed to
depart from or vary or contradict the attitude taken up
by the party whose legal representatives he is, it is
obvious that if he were permitted to do so, it would be
impossible to conduct any litigation where legal
representatives come in.
9. I further place reliance on a decision of the Calcutta
High Court in Babulal v. Jeshankar
MANU/WB/0107/1972 : AIR1972Cal494 , wherein it
has been observed as under:
A legal representative substituted in place of a
deceased-defendant cannot be permitted to make out a
new case afresh in another written statement at this
stage. He has to take up the suit at the stage at which it
was left when the original party died and to continue
it. The only right he has is to make a defense
appropriate to his character as a legal representative
of the deceased-defendant. His case is on a different
footing than the addition of a new defendant which is
governed by Order 1, Rule 10(iv). therefore, only the
order for substitution would be served on the
substituted defendant and no fresh writ or summons
could be issued for service on the substituted
defendant."
B) Ramgopal & Anr. v. Khiv Raj & Others reported in AIR 1998
RAJ 98 wherein it has been held as under:-
"2. The plaintiff-respondents No. 1 and 2 filed a suit for
ejectment and arrears of rent against the deceased-defendant-
Govin,d Ram and defendant-respondent No. 3 Moolchand.
During the pendency of the said suit, defendant-Govind Ram
expired on 29-7-1993. The plaintiff-respondents' No. 1 and 2
filed an application purporting to be under Order 22, Rule 4,
C.P.C. along with an application under Section 5 of the
Limitation Act. That application was allowed. It may be
stated here that in that suit, an ex parte order was already
passed against the defendants-Govind Ram and Moolchand
because their counsel Hariram pleaded no instructions on
their behalf;
xxxx xxxx xxxx xxxx
6. The learned counsel appearing for the defendants-
petitioners has contended that an ex parte order was passed
against the defendants when their counsel without contacting
them pleaded no instructions. It caused lot of prejudice to the
defendants but since Govind Ram died, his cause could not be
pleaded. The legal representatives of deceased-defendant-
Govind Ram, in the interest of justice, be given an
opportunity to file the written statement contesting the suit
filed by the plaintiff-respondents No. 1 and 2 so that justice
may be done.
7. In my opinion, the contention of the learned counsel
appearing for the petitioners is devoid of any force. It is
settled law that the legal representatives are stepped into the
shoes of the deceased-plaintiff or defendant, as the case may
be, and they must adopt the position occupied by his
predecessor plaintiff or defendant. The legal representatives,
therefore, must proceed with the litigation from the stage
where death of defendant or plaintiff had taken place. They
are legally bound by the pleading of his predecessors-in-
interest in whose place they have been substituted. Hence, the
legal representatives substituted under Order 22, Rule 4,
C.P.C. cannot set up a new case. The petitioners are bound
by the proceedings taken so far against the deceased-
defendant. They cannot be allowed to file the written
statement, the right of which was closed as soon as the ex
parte order was passed against the deceased-defendant-
Govind Ram."
28. Mr. Nath submitted that petitioners have repeatedly and
knowingly made false allegations to frustrate a valid Award. He
rebutted the various contentions to the said effect.
29. Mr. Nath stated that the contention of petitioners that residential
address of Mr. Rakesh Agarwal had been wrongly given by the
respondent-claimant was false. He relied on HBL documents filed
before the Registrar of Companies (in short "ROC") showing the
address of Mrs. Ruchi Agarwal and Mr. Rakesh Agarwal as 68, Uday
Park, that is, the address at which Mr. Rakesh Agarwal was served.
The same address had been mentioned by Mrs. Ruchi Agarwal as her
address in the present petition. He further relied upon the Annual
Report of GEL dated 30th September, 1991, and 30th September, 1993
filed before the ROC wherein the address of Mr. Rakesh Agarwal and
Mrs. Ruchi Agarwal was shown as A-5, Gulmohar Park, New Delhi.
He submitted that in view of same, the contention that Mr. Rakesh
Agarwal was wrongly served at 68, Uday Park, Delhi was a false
submission made knowing it to be false.
30. Mr. Nath also denied the contentions of petitioners that
respondent-claimant had fraudulently sold properties of GEL situated
at Sohna. He pointed out that the Balance Sheet of GEL as on 31st
March, 1995 showed receipt of consideration of Rs.122.72 lacs for the
sale of Sohna lands. The said balance sheet also noted that lands other
than Garden Estate were transferred during the year along with
possession and had been booked as sale pending execution of a
registered sale deed. He submitted that this was also a false submission
made by petitioners knowing it to be false.
31. Mr. Nath also contended that the submission of petitioners that
Mr. B.B. Patel was operating a bank account of GEL was also totally
false. He stated that the respondent-claimant at no stage ever operated
any account through Mr. B.B. Patel or otherwise in the name of GEL.
He also stated that the allegation of the Official Liquidator to the said
effect was simply based on no evidence whatsoever. The land at Sohna
was sold by respondent-claimant to various purchasers and
consideration received from sale of such land was accepted by the
respondent-claimant in their own name.
32. Mr. Nath further stated that the plea taken by petitioners before
this Court that GEL did not receive the consideration which is subject
matter of the present arbitral proceedings was also absolutely false and
that no such a plea was ever raised before the Arbitrator and had been
raised for the first time before this Court. He contended that all
payments which are subject matter of the arbitral proceedings, namely,
Rs.2.2 Crores were made by the respondent-claimant vide cheques
drawn on Union Bank of India, F Block, Connaught Place, New Delhi.
The Encashment Certificates from the said public sector bank form
part of the record of arbitral proceedings/evidence. Accordingly, Mr.
Nath stated that the submissions of petitioners to the contrary
regarding non receipt of consideration were absolutely false.
33. Mr. Nath also contended that the petitioners were given several
opportunities by the Arbitrator to cross-examine the witness of
respondent-claimant, namely, Mr. B.B. Patel. The said witness was
cross-examined at length for several hours on various dates.
34. Mr. Nath also stated that much had been made of the Board
Resolution dated 15th February, 1991/31st July, 1991 in view of the
provision incorporating the subsequent amendment of 1999. He further
stated that although the witness might have stated in evidence that it
was handed over in 1991, it might have been inadvertent and a matter
of not proper reexamination. The Agreement pertaining to HBL was
dated 18th November, 1999. It was possible that Mr. Rakesh Agarwal
handed over the resolution during the negotiations for the said
Agreement in view of the long outstanding overdue payment and
obvious insistence of the respondents to secure themselves. Nothing
much therefore should turn on the said document. He further stated
that the transaction was quite old.
35. Mr. Nath also stated that the Official Liquidator‟s report dated
28th August, 2008 was never filed before the Arbitrator though the
Official Liquidator had appeared in the arbitral proceedings. He
submitted that the aforesaid report was false and totally perverse as it
ignored facts as well as the correct legal position. He stated that this
Court in Asha M. Jain Vs. Canara Bank & Ors. reported in 94 (2001)
DLT 841 had clearly recognised power of attorney sale and held them
to be protected from attachment on account of dues of the transferor.
36. Mr. Nath lastly submitted that the grounds of challenge in
Section 34 proceedings were limited and this Court cannot sit in appeal
over the conclusion arrived at by the Arbitrator. He submitted that this
Court cannot go into the merits of the case as a Court of appeal and
delve into the arbitration record to find out the correctness or
otherwise of the Award of the Arbitrator. He submitted that the
Arbitrator is the sole judge both on law and facts and even if his
decision was erroneous, it cannot be interfered with by a Court.
According to him, sufficiency of reasons cannot be gone into by the
Courts and the grounds relied upon and urged by petitioners were not
available to them. According to him, the Arbitrator had dealt with all
the said defences by giving sufficient and cogent reasons. In this
connection, Mr. Nath relied upon judgments of Supreme Court in Puri
Construction Pvt. Ltd. Vs. Union of India reported in (1989) 1 SCC
411, Hindustan Tea Co. Vs. K. Sashikant Co. & Anr. reported in
1986 Supp.(1) SCC 506 and Olympus Superstructures Pvt. Ltd. Vs.
Meena Vijay Khetan & Ors. reported in AIR 1999 SC 2102.
37. Mr. Neeraj Kishan Kaul, learned senior counsel appearing for
respondent-claimant in the batch of petitions filed by AIL submitted
that the petitioners at the same time could not approbate and
reprobate. He stated that as the petitioners had stated in their Section
16 application that Mr. Rakesh Agarwal in collusion with respondent-
claimant had signed the Agreement dated 18th November, 1999 as well
as Personal and Corporate Guarantees, petitioners were estopped from
now contending that the said documents had not been executed by Mr.
Rakesh Agarwal. He further submitted that as the petitioners
themselves had filed an application to file a written statement under
Order 22 Rule 4 CPC, it did not lie in their mouth to now contend that
the said provisions did not apply to the present case.
38. Initially, Mr. Kaul during the course of arguments suggested that
the arbitral award should be read as having been passed against the
petitioners in OMP Nos. 444-447/2006 in their capacity as legal
representatives of the deceased Mr. Rakesh Agarwal and not either in
their personal capacity or against their personal wealth. However,
when asked to file a statement in writing to this effect, respondent-
claimant did not do so as they were subsequently of the view that the
said legal representatives might have dealt with the shares of HBL in a
bid to dilute the effect of the agreement executed between the parties
and to frustrate the dues of the respondent-claimant. Learned senior
counsel for respondent-claimant stated that they were not aware of the
present shareholding of the petitioners and they would like to claim the
entire shareholding which Mr. Rakesh Agarwal, his HUF and AIL
owned on the date of the Agreement dated 18th November, 1999.
According to him, the aforesaid petitioners may be personally liable in
their individual capacity.
39. Having heard the parties at length and having perused the
impugned Award, I am of the view that it would be appropriate to first
outline the circumstances in which a Court can interfere with an
arbitral award passed under the Act, 1996. The Supreme Court in
Delhi Development Authority Vs. R.S. Sharma and Company, New
Delhi reported in (2008) 13 SCC 80 after referring to a catena of
judgments has held that an arbitration award is open to interference by
a court under Section 34(2) of the Act, 1996 if it is:-
(i) contrary to substantive provisions of law; or
(ii) contrary to the provisions of the Arbitration and
Conciliation Act, 1996; or
(iii) against the terms of the respective contract; or
(iv) patently illegal; or
(v) prejudicial to the rights of the parties.
40. Supreme Court has further held in the aforesaid judgment that an
award can be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality.
41. The Supreme Court in McDermott International Inc. Vs. Burn
Standard Co. Ltd. & Ors. reported in (2006) 11 SCC 181 has also held
as under :-
"The 1996 Act makes provision for the supervisory role of
courts, for the review of the arbitral award only to ensure
fairness. Intervention of the court is envisaged in few
circumstances only, like, in case of fraud or bias by the
arbitrators, violation of natural justice, etc..."
42. In my opinion, arbitration is an alternative dispute resolution
mechanism which binds only those parties who opt for it. Arbitration is
consensual in nature. The arbitration clause normally does not bind
those who are not parties to the arbitration agreement. The only
exceptions to this rule are those who are bound either by virtue of
statutory provisions like the legal representatives or by virtue of the
contractual provisions like successors-in-interest. In fact, Section 40 of
Act, 1996 stipulates that in the event of death of a party, the mandate of
an arbitrator shall not terminate and the arbitration agreement shall not
stand discharged except where by operation of law the right of action is
extinguished.
43. In my opinion, legal representatives having become a party to
the arbitral proceedings by virtue of a legal provision would be entitled
to be treated with equality and would be entitled to full opportunity to
present their case. The Act, 1996 itself explicitly states that an arbitral
tribunal is not bound by the provisions of Code of Civil Procedure,
1908 and Evidence Act,1872. In fact, the only principles by which an
arbitral tribunal is bound are the principles of natural justice. In this
connection, I may refer to Sections 18, 19 and 40 of Act, 1996. The
relevant portion of Sections 18, 19 and 40 are reproduced hereunder:-
"18. Equal treatment of parties. -The parties shall be
treated with equality and each party shall be given a full
opportunity to present his case.
19. Determination of rules of procedure. - (1) The
arbitral tribunal shall not be bound by the Code of Civil
Procedure, 1908 (5 of 1908) or the Indian Evidence Act,
1872 (I of 1872).
xxxx xxxx xxxx xxxx
40. Arbitration agreement not to be discharged by
death of party thereto. - (1) An arbitration agreement
shall not be discharged by the death of any party thereto
either as respects the deceased or as respects any other
party, but shall in such event be enforceable by or
against the legal representative of the deceased.
(2) The mandate of an arbitrator shall not be terminated
by the death of any party by whom he was appointed.
(3) Nothing in this section shall affect the operation of
any law by virtue of which any right of action is
extinguished by the death of a person."
44. In the present instance, the Arbitrator while recalling his initial
order by which he had granted the legal representatives of Mr. Rakesh
Agarwal a right to file a reply/written statement had observed that the
legal representatives by virtue of Order 22 Rule 4(2) of CPC were
entitled to file a reply/written statement, "only appropriate to the
character of the deceased from whom they have inherited the
property." In my opinion, this observation of learned Arbitrator is
based on a wrong proposition of law as the same is contrary to Sections
18 and 19 of Act, 1996 inasmuch as the Arbitrator was not bound by
technical rules of CPC. In any event, I am of the view that even if the
Arbitrator was bound by the provisions of CPC, the said test is contrary
to even Order 22 Rule 4(2) of CPC. The Supreme Court in Sumtibai
and Others v. Paras Finance Co. reported in (2007) 10 SCC 82 has
held as under :-
4. The appellants are the legal representatives of late Kapoor
Chand. A suit was filed by the respondent herein against
Kapoor Chand for specific performance of a contract for
sale. It was alleged that Kapoor Chand had entered into an
agreement to sell the property in dispute to the respondent-
plaintiff, M/s Paras Finance Co. In that agreement Kapoor
Chand stated that the property in dispute was his self-
acquired property. During the pendency of the suit Kapoor
Chand died and his wife, sons, etc. applied to be brought on
record as legal representatives. After they were impleaded
they filed an application under Order 22 Rule 4(2) read with
Order 1 Rule 10 CPC praying, inter alia, that they should be
permitted to file additional written statement and also be
allowed to take such pleas which are available to them. The
trial court rejected this application against which a revision
was filed by the appellant which was also dismissed by the
High Court. Hence this appeal by special leave.
5. We are of the opinion that a party has a right to take
whatever plea he/she wants to take, and hence the view taken
by the High Court does not appear to be correct.
6. Learned counsel for the respondent submitted that in view
of Order 22 Rule 4(2) a person who has been made a party
can only take such pleas which are appropriate to his
character of legal representative of the deceased. Learned
counsel also submitted that two of the applicants/legal
representatives of deceased Kapoor Chand i.e. Narainlal and
Devilal, had applied to the court under Order 1 Rule 10 to be
impleaded, but their applications were rejected. An
application was also filed by late Kapoor Chand praying that
his sons be impleaded in the suit but that application was also
rejected. Hence, the learned counsel submitted that the
appellants cannot be permitted to file an additional written
statement in this suit.
xxxx xxxx xxxx xxxx
8. Every party in a case has a right to file a written statement.
This is in accordance with natural justice. The Civil
Procedure Code is really the rules of natural justice which
are set out in great and elaborate detail. Its purpose is to
enable both parties to get a hearing. The appellants in the
present case have already been made parties in the suit, but it
would be strange if they are not allowed to take a defence. In
our opinion, Order 22 Rule 4(2) CPC cannot be construed in
the manner suggested by learned counsel for the respondent.
(emphasis supplied)
45. In view of the aforesaid Supreme Court judgment, I am afraid
that Smt. Manju Parthi and Ramgopal & Anr.‟s cases (supra) relied
upon by Mr. Nath are no longer good law.
46. Even on first principles, I am of the view that a legal
representative is entitled to raise all defences open to him provided such
defences are not inconsistent with the stand taken by the deceased. Let
us take a case where a deceased had not taken either a legal or a factual
defence which was open to him. In my view, even in such a case the
legal representative would be entitled to take this new plea as to deny
him such a defence would be contrary to basic principles of fairness and
justice as enshrined in the Indian Constitution.
47. As far as the respondent-claimant‟s submission that adopting
such a course would lead to a fresh de novo trial causing serious
injustice to them, I am of the view that in the present case when the
legal representatives of Mr. Agarwal had filed their replies/written
statements, the proceedings were at an initial stage as the trial had not
commenced and no admission and denial of documents had taken place.
In fact, subsequent to Mr. Rakesh Agarwal having been proceeded ex
parte, no major development had taken place till the legal
representatives of Mr. Aggarwal had filed their replies/written
statements. It is pertinent to mention that after Mr. Rakesh Agarwal
had been proceeded ex parte, respondent-claimant had filed their
evidence by way of affidavit after approximately a year.
48. I am further of the view that though the Arbitrator had not
permitted the legal representatives of Mr. Rakesh Agarwal to file a
reply/written statement in their personal capacity, yet while passing the
final Award the Arbitrator had passed orders against their personal
wealth and in their personal capacity. This would be apparent from the
operative portion of the final Award in OMP No.444/2006 which reads
as under :-
"In the light of the foregoing :-
a) I pass an award in favour of the claimant and against
respondent no. 1 to 5 directing the said respondents to
transfer their entire share holding held by them in M/s. Hotel
Banjara Ltd. in favour of the claimant.
b) In the alternative, the respondents 1 to 5 will refund to
the claimant an amount of Rs. 6,73,11,273/- along with
interest @18% per annum pendentilite and future interest @
18% per annum from the date of the award till the amount is
actually paid to the claimant.
c) The respondent (1 to 5) are burdened with costs of
Rs. 25,000/-"
(emphasis supplied)
49. I am also not in agreement with respondent-claimant‟s argument
that in the present case, principles of natural justice had been duly
complied with and no prejudice had been caused to the petitioners. In
view of the fact that petitioners‟ replies/written statements were not
taken on record, the petitioners were prevented from leading evidence
in support of their allegations and averments. Though petitioners and
respondent-claimant made a number of allegations and counter-
allegations on the factual aspects, I am not entering into the said
controversy as I am of the view that it is for the Arbitrator to examine
the said contentions. I may also mention that in view of the petitioners‟
allegations with regard to Board Resolution dated 15th May, 1991 read
with the cross-examination of Mr. B.B. Patel as well as the report of
Official Liquidator dated 28th August, 2008 in C.P. No. 122/1997, some
prima facie doubts have been raised with regard to the validity of the
transactions. I may emphasise that these are only prima facie doubts
which can very well be explained and/or rebutted by respondent-
claimant. But all that I say is that the said doubts need to be examined
by an Arbitrator.
50. I agree with Mr. Nath that scope of interference with an arbitral
award under Section 34 proceedings is limited and, consequently, I am
of the opinion that principles of natural justice must be strictly
complied with by an Arbitrator and every party must have a chance to
at least once have a say before a forum of its choice. I emphasise that
observations with regard to the Board Resolution and final report of
Official Liquidator are tentative and the Arbitrator would be well within
its right to arrive at any finding with regard to the same after allowing
the parties to lead their evidence.
51. As far as the case of AIL is concerned, I am of the view that the
Award against it is contradictory and inconsistent as on the one hand
the Arbitrator had dismissed the application filed under Section 16 of
Act, 1996 on the ground that complicated question of facts were
involved which required trial but on the other hand he simultaneously
refused to permit AIL to file a reply/written statement and/or lead
evidence. In fact, by this strange process of reasoning, the pleas raised
by AIL in their Section 16 application have escaped adjudication.
52. In view of aforesaid discussion, I am of the opinion that the
impugned Awards are violative of principles of natural justice and
based on wrong proposition of law. Accordingly, the impugned Awards
dated 10th June, 2006 are set aside.
53. Consequently, with consent of parties but without prejudice to
the rights and contentions of respondent-claimant to file an appeal,
Mr. Justice (Retd.) R.C. Chopra, N-7, Greater Kailash, Part-I, New
Delhi, Mobile No.9818097777 is appointed as the new Arbitrator to
adjudicate upon all the disputes between the parties. Learned Arbitrator
would be entitled to fix his own fee schedule, which shall be equally
paid by both the parties. Since initially claim statements were filed
way back in the year 2002, I would request the newly appointed
Arbitrator to conclude the present proceedings preferably within a
period of nine months from today. The petitioners in present
proceedings are directed to file their replies/written statements within a
period of four weeks‟ from today. Parties are directed to appear before
the Arbitrator on 20th February, 2010 at 11.30 a.m. It is made clear
that learned Arbitrator would not grant any adjournment to either of the
parties for any reason whatsoever. I may mention that this categorical
direction is being given as the disputes between the parties to the
Agreement dated 18th November, 1999 have been pending for quite
some time.
54. I once again clarify that anything said in the present judgment is
not a reflection on merits of the case and would not prejudice the rights
and contentions of either of the parties.
55. However, till the new Arbitrator appointed by this Court passes a
final award, petitioners shall be bound by the voluntary statement made
yesterday by Mr. Ganju, Senior Advocate that in the meantime
petitioners would not transfer, alienate or create any third party rights in
75,000 shares of HBL held by M/s. Rakesh Agarwal HUF.
56. With the aforesaid observations, present petitions stand allowed
but with no order as to costs.
MANMOHAN,J
JANUARY 15, 2010
rn
