Kamal Ghanshyamdas Bhatia & Ors. vs Religare Finvest Ltd.
2015 Latest Caselaw 1261 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
                                 Judgment delivered on February 11, 2015
+                          O.M.P. 154/2015
KAMAL GHANSHYAMDAS BHATIA & ORS                             ..... Petitioner

                           Through:      Mr.Prashant Mendiratta,
                                         Mr.Adarsh Ramakrishnan, Advs.

                           Versus

RELIGARE FINVEST LTD                                        ..... Respondent

                           Through:      Mr.Ajay Uppal, Adv. with
                                         Mr.Kuljeet and Mr.K.Karthikey,
                                         AR of the respondent company
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J. (Oral)

1. This is a petition filed by the petitioners under Section 34 of the

Arbitration and Conciliation Act, 1996 (Act in short), challenging the

award dated December 5, 2014 passed by the sole Arbitrator in

Arbitration Petition No. RFL/Mortgage/LRN/L-3/540.

2. Some of the relevant facts are that, the petitioner No. 1 had offered

a loan of Rs. 5 Crores to the respondent. The EMI was fixed for 84

months at Rs. 8,90,142/- per month. The petitioner No. 1 defaulted in

making the monthly instalments. The respondent had invoked the

arbitration clause and appointed an Arbitrator. The Arbitrator had held

the first proceedings on August 12, 2013 on which date, notice was

issued for August 27, 2013. Since the registered A.D./Post was not

received back, nor anyone was present for the respondent, the matter was

adjourned by the learned Arbitrator to September 20, 2013. On

September 20, 2013, no proceedings could take place. When the

proceedings were held on January 10, 2014, a representation was made

by Mr. Rajneesh Diwan, Advocate for the petitioners herein. The

proceedings were adjourned to January 21, 2014. On January 21, 2014,

statement of claim was filed by the respondent herein and the matter was

adjourned to February 14, 2014 when time was sought by the counsel

appearing for the petitioners for filing reply and matter was adjourned to

March 7, 2014, on which date, last opportunity was given for filing reply

to the petitioners herein.

3. The petitioners, on April 1, 2014, filed an application under

Section 16 of the Act. The learned Arbitrator heard the arguments on the

application and reserved the application for orders to come on April 16,

2014. It appears that the respondent herein also filed an application

under Section 17 of the Act. Be that as it may, no order on the

application of the petitioners was passed by the learned Arbitrator on the

said date. The matter was adjourned to April 21, 2014. On April 21,

2014, no-one was present for the petitioners herein. Vide order dated

April 21, 2014, the learned Arbitrator allowed the application filed by

the respondent herein under Section 17 and dismissed the application

under Section 16 filed by the petitioners herein. It is also seen from the

arbitral record, which has been produced in the Court, that pursuant to

the passing of the order dated April 21, 2014, neither the order dated

April 21, 2014 was sent to the petitioners herein nor any

communication/information was sent by the learned Arbitrator for

holding the proceedings on May 21, 2014.

4. Thereafter, the proceedings were held on July 4, 2014 when no-

one was present for the petitioners herein and the same was adjourned to

September 12, 2014. On September 12, 2014, the learned Arbitrator

heard the arguments on behalf of the respondent herein and directed the

respondent to supply the stamp papers as soon as possible and reserved

the proceedings for award.

5. A perusal of the proceedings sheets on the dates mentioned above,

would show that even though no representation was made by the

petitioner on April 21, 2014, when the matter was adjourned to May 21,

2014, the learned Arbitrator had neither sent the copy of the order dated

April 21, 2014, dismissing that application filed by the petitioners herein

nor informed the next date of hearing, in the proceedings i.e. May 21,

2014, with the result, the petitioners herein, were not aware of the date of

hearing and could not present themselves before the learned Arbitrator.

Suffice to state, the non-issuance of notice for the hearing of May 21,

2014 and for the subsequent proceedings, is surely in violation of

principles of natural justice.

6. Learned counsel for the respondent would urge that the petitioners

went unrepresented because of their own fault inasmuch as despite

knowing the date of hearing as April 21, 2014, when the date of May 21,

2014 was fixed, no-one was present for the petitioners herein on that

date.

7. In other words, had there been representation on behalf of the

petitioners, the petitioners would have known the date of hearing as May

21, 2014. The resultant absence in future proceedings was also for the

same reason. He would state that the learned Arbitrator was not required

to send the notice in that regard. I am unable to agree with the learned

counsel for the respondent on this inasmuch as, when the learned

Arbitrator has passed an order dated April 21, 2014, on the application

filed by the petitioners herein under Section 16 of the Act, he would at

least, require to send the copy of the order to the petitioner herein for its

information. Surprisingly, I note, that the learned Arbitrator has sent the

copy of the order passed by him on the application filed by the

petitioners herein under Section 16 of the Act to the bank. Vide the

order dated 21st April, 2014 the learned Arbitrator has attached the bank

accounts. This conduct of the learned Arbitrator appears to be very

peculiar inasmuch instead of giving the copy to the respondent herein, to

enable the respondent to take the matter with the bank, the Arbitrator

himself directly communicated with the bank. In any case, if the

petitioners had known the passing of the order dated April 21, 2014, the

petitioners would have at least come to know of the dismissal of the their

application.

8. It is the stand of the petitioners that the counsel informed the Sole

Arbitrator that he has filed an application under Section 16 of the Act

that, while taking objection to his appointment as the Sole Arbitrator and

the said objections need to be decided first so that the petitioners can

take recourse in case the Sole Arbitrator decides to reject the application.

The Sole Arbitrator assured that he will decide the application under

Section 16 of the Act and would inform him. However, till December

26, 2014, despite repeated requests and reminders, the Sole Arbitrator

did not inform the counsel for the petitioners as to what has been the fate

of the said application. The counsel for the petitioners has sent associate

advocate as well as the clerk to find out the fate of the application. No

information was forthcoming except kept stating that the matter is

pending.

9. In any case, even if it can be said that the date of April 21, 2014

and May 21, 2014 were in the knowledge of the counsel for the

petitioners, the learned Arbitrator knowing the fact that there is no

appearance on behalf of the petitioners, could have even then informed

the petitioners or their counsel of the next date of hearing i.e. July 4,

2014. Even such a communication was not sent and on the said date, the

final arguments were heard from the respondent's (Claimant therein)

side. I find that this is in violation of principles of natural justice as due

opportunity was denied to the petitioner. On this ground, the impugned

award needs to be set aside. I do so.

10. The matter is remanded back to the learned Arbitrator with a

direction to afford the petitioners herein an opportunity of filing reply to

the claim petition filed by the respondent herein, and thereafter, proceed

with the matter in accordance with the law. The learned counsel for the

parties agree that a date be fixed before the learned Arbitrator. I do so

accordingly. The parties to appear before the learned Arbitrator on

February 24, 2015 at 4.00 p.m.

11. The petition is disposed of accordingly with the aforesaid

directions. No costs.

(V.KAMESWAR RAO) JUDGE FEBRUARY 11, 2015/akb