A. P. Nirman Ltd. vs Sindhu Trade Links Ltd & Anr.
2011 Latest Caselaw 1414 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                              Reserved on:             24th February, 2011
                           Date of decision:             10th March, 2011

+       FAO (OS) No.387/2010

A. P. NIRMAN LTD.                                           .....Appellant
               Through:                  Mr. Siddharth Yadav, Advocate.

                -versus-

SINDHU TRADE LINKS LTD & ANR.                            .....Respondents
             Through: None.

        FAO (OS) No.388/2010

A. P. NIRMAN LTD.                                           .....Appellant
               Through:                  Mr. Siddharth Yadav, Advocate.

                -versus-

SINDHU TRADE LINKS LTD & ANR.                            .....Respondents
             Through: None.

        FAO (OS) No.389/2010

A. P. NIRMAN LTD.                                           .....Appellant
               Through:                  Mr. Siddharth Yadav, Advocate.

                -versus-

SINDHU TRADE LINKS LTD & ANR.                            .....Respondents
             Through: None.

    %   CORAM:
        HON'BLE MR. JUSTICE VIKRAMAJIT SEN
        HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

        1.     Whether 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.

FAO (OS) 387/2010, 388/2010 & 389/2010                            page 1 of 9
                                 JUDGMENT

SIDDHARTH MRIDUL, J.

1. By the impugned judgment dated 20th January, 2010 the

Single Judge has collectively dismissed OMP No.242/2002, OMP

No.170/2005 and OMP No.169/2005 filed by the Appellant

under Section 34 of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as 'the Act').

2. By the aforementioned petitions the Appellant herein had

challenged the Award dated 30th October, 2000 passed by the

sole Arbitrator by virtue of objections under Section 34 of the

Act. The present three Appeals seek to challenge the impugned

judgment dated 20th January, 2010 of the Single Judge whereby

the petitions of the Appellant have been dismissed with costs of

`25,000/- each.

3. As the factual matrix of the present Appeals are similar

therefore the same are being dealt with by way of this common

order.

4. The facts as are necessary for the adjudication of the

present Appeals are that:

(a) Since the Appellant was interested in purchasing

Tippers, it approached the Respondent No.1 for

financing of the said vehicles. The Appellant and the FAO (OS) 387/2010, 388/2010 & 389/2010 page 2 of 9 Respondent No.1 entered into a hire purchase

agreement dated 15th April, 1998 whereunder the

Appellant having taken a loan for purchase of the

said Tippers were required to repay the same to the

Respondent No.1 in 22 installments.

(b) The dispute arose between the parties on account of

non-payment of the installments by the Appellant to

the Respondent No.1. Thereafter Respondent No.1

invoked Clause 7 of the agreement between the

parties which contained an agreement to arbitrate.

Resultantly, a sole Arbitrator, the Respondent No.2

was appointed after following the procedure to be

adopted in appointing the Arbitrator.

(c) It is an admitted fact that notice of the claim issued

to the Appellant on 2nd August, 2000 with a direction

to appear before the Arbitrator on 16th August, 2000

was received by the Appellant. Since the Appellant

did not appear on 16th August, 2000, fresh notice

was issued to the Appellant for appearance on 7th

September, 2000 which was duly received by the

Appellant on 30th August, 2000. None appeared on

behalf of the Appellant before the Arbitrator on 7th

September, 2000. However, the Arbitrator received

FAO (OS) 387/2010, 388/2010 & 389/2010 page 3 of 9 an application under Section 13(2) of the Act

objecting to the jurisdiction of the sole Arbitrator.

However, neither the Appellant attended any of the

further arbitration hearings before the Arbitrator

nor did they file a statement of defence.

Furthermore, none appeared on behalf of the

Appellant to argue or press the application under

Section 13(2) of the Act as aforesaid filed by the

Appellant.

(d) Consequently, vide order dated 30th October, 2000

the Respondent No.2 was pleased to pass the ex-

parte Award against the Appellant. This Award

dated 30th October, 2000 was assailed by the

Appellant by raising objections under Section 34 of

the Act before the Single Judge. The impugned

judgment dated 20th January, 2010 passed by the

Single Judge is being challenged before us by way of

present Appeals under Section 37 of the Act.

5. Since no one entered appearance on behalf of the

Respondent No.1 and 2 despite being duly served, the Appeals

before us are being heard after setting the Respondents ex-

parte.

FAO (OS) 387/2010, 388/2010 & 389/2010 page 4 of 9

6. On behalf of the Appellant, it was urged by Mr. Siddharth

Yadav, Advocate that the Appellant did not have sufficient time

to contest the arbitration proceedings, as the Appellant-

Company is based in Korba, Chhattisgarh, since the interval

between the dates fixed by the Arbitrator for hearing during

arbitration proceedings was comparatively short. Next,

predicated on the decision in Aoki India Limited and Anr.-vs-Mira

International and Anr., 2006(3) Arb. LR 503 (Madras), it was

contended that the application under Section 13 was not

decided prior to passing of the Award on merits. Thirdly, it was

urged that the Arbitrator had no jurisdiction to enter into the

dispute, inasmuch as no prior notice of invocation had been

served by the Respondent No.1 on the Appellant and,

consequently, no consent was given by the Appellant for the

appointment of the sole Arbitrator. Lastly, it was argued that

the sole Arbitrator did not possess the territorial jurisdiction to

entertain the claim, since no cause of action arose in Delhi.

7. In the instant case, it is observed that the Single Judge

came to the conclusion that if the Appellant was vigilant and in

fact wanted to pursue its right there was nothing which

prevented it from appearing before the Arbitrator. In this

behalf, it is seen that the submission made on behalf of the

Appellant that the interval between the dates was comparatively

FAO (OS) 387/2010, 388/2010 & 389/2010 page 5 of 9 short is emphatically negated by the fact that the date of 7th

September, 2000 was fixed by the Arbitrator after adjourning

the matter from the previous date of 16th August, 2000 and that

the Appellant did not appear on either of these dates despite

sufficient time having been granted for appearance before the

Arbitrator on 7th September, 2000. If the Appellant was serious

about his representation before the Arbitrator it could have

appeared on 7th September, 2000 or on any of the dates fixed

thereafter for the proceedings in the arbitration. In this behalf,

it is also seen that the Appellant apart from filing the application

under Section 13(2), as aforesaid, did not even file a statement

of defence before the Arbitrator. In this view of the matter, the

contention raised on behalf of the Appellant that they did not

have sufficient time to address the arbitration proceedings is

untenable and without merit.

8. On the submission made on behalf of the Appellant that

the application under Section 13(2) was not decided by the

Arbitrator before proceeding to pass the Award on merits, it is

observed that the application in this behalf was received by the

Arbitrator along with a letter on behalf of the Appellant on 13th

August, 2000. The copy of the said application was supplied to

the Respondent No.1 who was directed to file a reply to the

same. When the arbitration was conducted on 11th September,

FAO (OS) 387/2010, 388/2010 & 389/2010 page 6 of 9 2000 the Appellant did not appear before the Arbitrator and the

reply to the application filed on behalf of the Appellant was filed

by the Respondent No.1. The Arbitrator on that date proceeded

ex-parte against the Appellant and directed that intimation be

sent to the Appellant for 25th September, 2000, fixing the said

date for the arguments and evidence. It is further seen that

thereafter on 25th September, 2000 the Appellant did not appear

once again and arguments were thereupon heard on the

application of the Appellant, which was dismissed. Thus, it is

seen that the contention of the Appellant that the sole Arbitrator

did not decide the application under Section 13(2) of the Act

filed by the Appellant before proceeding to pass the Award on

merits does not hold any water.

9. Even otherwise, the judgment of the Madras High Court in

Aoki India Limited (supra) does not apply to the present case for

the following reasons. Firstly, in the present case the

application under Section 13 was simply sent by post and none

appeared on behalf of the Appellant despite repeated

opportunity to argue the application. Secondly, in Aoki India

Limited the application under Section 13 was straightaway dealt

with in the award and not earlier, whereas in the present case

the application was decided on 25th September, 2000 after a

reply had been filed to it on behalf of the Respondent No.1.

FAO (OS) 387/2010, 388/2010 & 389/2010 page 7 of 9 Lastly, in Aoki India Limited the arbitrator who had been

appointed was a director in the company that appointed him as

an arbitrator and his brother was the CEO of that company at

the relevant time. Furthermore, the arbitrator in that case had

also signed the agreement entered into between the parties and

in such circumstances it was held that a duty was cast upon him

to disclose in writing any circumstances likely to raise justifiable

doubts as to his independence and impartiality. By not doing so,

the arbitrator had put himself in a position in which it was very

difficult for him to come out unscathed.

10. As regards the contention raised on behalf of the

Appellant with regard to invocation of the arbitration without

consent of the Appellant is concerned, the same is without any

substance, for the reason that the learned Single Judge has

noted that the objection is factually incorrect, because a legal

notice dated 3rd July, 2000 invoking arbitration was duly issued

by the Respondent No.1 to the Appellant as has been noted by

the sole Arbitrator in subject Award. As regards the issue of

consent of the Appellant is concerned, it has been held that the

Arbitrator had been appointed as per the procedure prescribed

in the arbitration agreement by the Respondent No.1 which is in

consonance with the agreement entered into between the

FAO (OS) 387/2010, 388/2010 & 389/2010 page 8 of 9 parties. Resultantly, the said contention raised on behalf of the

Appellant is devoid of merit.

11. Lastly, we come to the objection relating territorial

jurisdiction of this court. In this behalf, it would be suffice to

state that the arbitration agreement was entered into between

the parties at Delhi and further in terms thereof the objections

to the Award have also been filed by the Appellant before this

Court.

12. In view of the foregoing, we find no infirmity in the

impugned order that warrants interference by us under Section

37 of the Act. Consequently, the Appeals are dismissed,

however, with no order as to costs.

SIDDHARTH MRIDUL, J.

VIKRAMAJIT SEN, J.

March 10, 2011 mk

FAO (OS) 387/2010, 388/2010 & 389/2010 page 9 of 9