M/S Packraft India Pvt. Ltd vs Central Dairy Farm & Another
2015 Latest Caselaw 3981 Del

$~19
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+     EA (OS) 86/2014, 350/2009,98/2008,504/2014,710/2009 in EX.P.
      195/2007

      M/S PACKRAFT INDIA PVT. LTD                       ..... Decree Holder

                           Through:    Mr.H.L.Tiku, Sr.Adv. with
                                       Ms.Yashmeet, Ms.Usha Mann, Advs.

                           Versus

      CENTRAL DAIRY FARM & ANOTHER                   ..... Judgement Debtor

                           Through:    Mr.S.R.Gupta, Adv.

      CORAM:
      HON'BLE MR. JUSTICE V. KAMESWAR RAO
                   ORDER

% 19.05.2015

1. This execution petition has been filed seeking execution of award

dated November 30, 2006 passed by the learned sole Arbitrator who was

appointed vide order dated October 4, 2001 in Arbitration Application

No.339/1997 passed by the learned Additional District Judge. The sole

Arbitrator, has in his award, directed as under;

(i) Rs.60,526.75, along with interest @ 20.5% per annum w.e.f 21st November, 1992 to 31st August, 1994, and 25.5% w.e.f 1st September, 1994, to the date of Award (strictly in terms of para 20 (h) (vi) (b) (ibid);

Ex.Pet.No.195/2007 Page 1

(ii) Rs.3,000/- along with interest @ Rs.18% per annum w.e.f. 22nd March, 1993, to the date of the Award;

(iii) Interest @ Rs.18% per annum on Rs. 13,000/- w.e.f. 22nd March, 1993, to 24th March, 1994, and also on the amount of such unpaid interest hereof to the date of the Award ;

(iv) Rs.50,000/- towards the cost incurred by the Claimant on account of litigation and Arbitration expenses, Claimant's Counsels fees and Arbitrator's fee, etc., (inclusive of the 50% unpaid share of the Respondents paid by the Claimant),

(v) Rs.3,525/- incurred by the Claimant on account of cost of Public Notice date 15th November, 2003, published in The Statesman, New Delhi on 28th November, 2003 ; and

(vi) Rs.3000/- incurred by the Claimant on account of stamp duty paid for the Award.

(b) The Respondent shall pay the aforesaid sums to the Claimant within a period of two weeks from the date of receipt of this Award, failing which the Claimant shall be entitled to an interest @25.5% per annum on item No. (a) (i), and @ 18% on items No.

(a); (ii) to (vi) hereinabove from the date of the Award till, the said sums are actually paid by the Respondents to the claimant.

2. The judgment debtor did not make the payment. Accordingly, this

petition was filed on July 21, 2007. No objections were filed to the

Arbitration Award, till July 15, 2009, when the judgment debtor had filed

three applications EA Nos. 442, 443 and 444 of 2009 which are objections

Ex.Pet.No.195/2007 Page 2 under Section 34 of the Arbitration & Conciliation Act read with Section 5

of Limitation Act for condonation of delay in filing objections to the award

(Application No. 444/2009) and applications under Section 16, 30 and 34 of

the Arbitration & Conciliation Act read with Section 151 CPC for staying

the execution (EA Nos. 442 and 443/2009). The applications were

dismissed by this Court on August 21, 2009 as the period for filing the

objection challenging the Award has expired. Pursuant thereto, the

judgment debtor filed an Appeal EFA (OS) NO. 41/2009 against order dated

August 21, 21009 before the Division Bench of this Court. The Division

Bench in Appeal directed the judgment debtor vide its order dated December

18, 2009 and order dated February 9, 2010 for the deposit of the decreetal

amount.

3. The judgment debtor in compliance to the orders, deposited an

amount of Rs.32,99,686.39/- on February 24, 2010 in this Court being the

amount due as on June 30, 2007. The Appeal was dismissed on November

8. 2011 and the deposited amount was released to the decree holder on

November 28, 2011.

4. The judgment debtor filed Special Leave Petition before the Supreme

Court against order dated November 8, 2011 which was also dismissed on

Ex.Pet.No.195/2007 Page 3 March 23, 2012. A Review Petition filed before the Supreme Court was also

dismissed on July 12, 2012. In the meantime, the judgment debtor filed

objections under Section 47 read with Section 151 of CPC to the execution

petition being EA No. 350/2009. By this order, this Court is deciding this

application. The objections primarily, are that the contract having been

entered and executed at Aligarh and the decree holder agreed for the

arbitration proceedings at Aligarh, the Court at Aligarh only has the

jurisdiction to entertain the matter and this Court has no jurisdiction to

entertain the present petition and sought the dismissal of the execution

petition.

5. It is the stand of the judgment debtor that the Managing Director of

the Pashudhan Udyog Ltd was the only person who was competent to be

appointed as an Arbitrator. It is the judgment debtor's case that the award

passed is void ab-initio and the same cannot be treated as decree under the

provisions of Arbitration Act and the same is unexecutable by this Court and

is liable to be dismissed. Alternatively, it was also contended that assuming,

the Delhi Court had jurisdiction, it was the District Judge who was

competent to entertain the present petition. It was their case that most of

their employee have been retrenched and removed and the matter could not

Ex.Pet.No.195/2007 Page 4 be properly represented before the District Judge and before the arbitrator as

well. Had the judgment debtor been able to represent itself, no reference

could have been made to the Arbitrator by the District Court at Delhi.

6. The parties have filed their submissions/synopsis.

7. Mr. H. L. Tiku, learned Senior Counsel appearing for the decree

holder would submit that the judgment debtor is raising a misconceived

objection and delaying the proceedings for the recovery of the balance

amount. According to him, the objection of the judgment debtor with

respect to appointment of Arbitrator after 14 years of his appointment based

on misinterpretation and applicability of Section 42 and Section 2 (1) (e) to

Section 11 of the Arbitration Act. According to him, the objection is

misconceived, as, in terms of the scheme for appointment of Arbitrators

1996, notified by notification dated February 2, 1996 by the then Hon'ble

Chief Justice of this Court, empowered the District Judges/Additional

District Judges to deal with the appointment of the Arbitrator under Section

11 of the Arbitration Act according to the value of the subject matter. He,

also relied upon the judgment of the Supreme Court in S.B.P. and Co. vs.

Patel Engineering Ltd and Anr. 2005 Vo. 8 SCC 618 wherein in para 47

(xi) the Supreme Court recognized the power of Additional District Judges

Ex.Pet.No.195/2007 Page 5 to deal with such matter and observed that such appointment orders, thus, far

made will be treated as valid.

8. On the other hand, Mr. S. R. Gupta, Advocate would contend that the

impugned award has been made without jurisdiction because it is based on

the reference made by Additional District Judge, Delhi at New Delhi who

had no power to make the reference and to appoint any Arbitrator.

According to him, the impugned Award, being executed, is ultra-virus and

of no effect in the teeth of the provisions of Section 2 (1) (e) read with

Section 42 of the Arbitration & Conciliation Act 1996, thus, the instant

execution proceedings are also null and void. He would also state, that the

impugned Award does not exist in law on account of fraud played by

Director of the decree holder. He would also state, that in terms of the

settled law that an Award/Decree passed by an authority lacking jurisdiction

or obtained by fraud from any Court lacking inherent jurisdiction even if the

same has attained finality under Article 141 of the Constitution, is a nullity.

The aforesaid submission of his, is based on the interpretation to section 2

(1) (e) read with Section 42 of the Act. He states, only the District Judge

which is the Principal Civil Court of the District had the jurisdiction to

decide the application under section 8 and 11 of the Act. According to him,

Ex.Pet.No.195/2007 Page 6 the decree holder did not issue 30 days notice to the judgment debtor and

also did not file the complete copy of the agreement as required under

Section 8 and 11 of the Act, 1996. He would also state, that the arbitration

application filed by the decree holder could not have been assigned to the

Additional District Judge at New Delhi who had passed the order of

reference on Oct 4, 2001.

9. He would also rely upon the following judgments in support of his

contentions.

(i) Raipur Development Authority Vs. Sarin Construction air 2006 Chattisgarh page 12.

(ii) T.I. Ltd., Naini, Allahabad vs District Judge, Allahabad 1998 (3) AWC 2244.

(iii) Northern Coalfields Ltd., P. O. Singrauli Colliery, District Singrauli (Madhya Pradesh) Vs. The Aluminium Industries Ltd., Regd. Office No.1, Ceramic FactoryRoad, Kundara (Kerala) F.A.F.O. 1334 0f 2011 decided by the High Court of Judicature Allahabad

(iv) Fountain Head Developers vs Mrs. Maria Arcangela Sequeira AIR 2007 Bombay 149

Ex.Pet.No.195/2007 Page 7

(v) Abhishek Talwar S/o Vipin Talwar Vs. L & T Finance Ltd. and others APPEAL (L) No. 161 OF 2015 in Chamber Summons No.2068 of 2011 in Execution Application (L) No. 1499 of 2011 decided on 23 rd February, 2015.

(vi) United India Insurance Co. Ltd Vs. RAjendra Singh and ors S.L.P (Civil) No. 8479/99 decided o 14th March, 2000.

10. Having considered the submissions made by learned counsels for the

parties, the only issue which arises for consideration of this Court is the one

raised by Mr. Gupta, whether the award having been rendered by the sole

Arbitrator, on a reference made by the Court which did not had the

jurisdiction in view of the provisions of section 2 (1) (e) and Section 42 of

the Act, is a nullity.

11. Before I answer this question, I will deal with the judgments relied

upon by Mr. Gupta.

12. Insofar as the judgment relied upon by Mr. Gupta in Raipur

Development Authority (supra), is concerned the question arose whether it

is the Additional District Judge or the District Judge who would decide the

application filed under Section 34 of the Act keeping in view of the

provisions of Section 2 (1) (e) and 42 of the Act. The High Court at

Chattisgarh, was of the view that it is the District Judge Raipur who is the

Ex.Pet.No.195/2007 Page 8 Principal City Civil Court of District, competent to hear the petition and not

the Additional District Judge. In T.I. Ltd., Naini, Allahabad (supra), the

question arose whether the Additional District Judge is a Court within the

meaning of Section 2 (1) (e) of the Arbitration & Conciliation Act, 1996

and, if not, can the District Judge transfer the application moved for

setting aside the Arbitration Award under Section 34 of the said Act to

the Additional District Judge. It was held that the Court of District Judge

was competent and a direction was issued to the Additional District

Judge, Allahabad to send the record of the case to the Court of District

Judge, Allahabad for disposal in accordance with law. In Northern

Coalfields Ltd., P. O. Singrauli Colliery (supra), the question arose whether

the Court of Additional District Judge had jurisdiction to dispose of

objections under Secto 34 of the Act filed by the appellant before the

District Judge Sonebhadra. Reliance was placed on the judgment of T.I Ltd,

Naini Allahabad and it was held that the District Judge was competent to

hear the objections under Section 34. In Fountain Head Developers'case

(supra), the Full Bench of the Bombay High Court was seized of an issue

whether the Civil Judge, Senior Division or the District Judge should be

construed as being the Principal Court of Original Jurisdiction for the

Ex.Pet.No.195/2007 Page 9 purpose of a petition under Section 34 of the Arbitration & Conciliation Act,

1996. The Full Bench was of the view that the Principal Civil Court of

Original Jurisdiction in a District for the purpose of a petition under Section

34 of the Act of 1996 is a District Judge and does not include any other

Court inferior to the District Court. In Abhishek Talwar's case (supra), the

question arose whether the Execution Petition is maintainable before the

High Court in view of the fact that the respondent No.2 has challenged the

Award under Section 34 of the Act before the Additional District Judge,

Central District, Delhi. The High Court, on interpreting sections 42 and 2

(1) (e) of the Act, was of the view that the execution petition was

maintainable before that Court. In United India Insurance (supra), the

Supreme Court has held that since fraud affects the solemnity, regularity and

orderliness of the proceedings of the Court and also amounts to an abuse of

the process of Court, the Courts have been held to have inherent power to set

aside an order obtained by fraud practiced upon that Court. Similarly, where

the Court is misled by a party or the Court itself commits a mistake, which

prejudices a party, the Court has the inherent power to recall its order.

Suffice to state, the case before the Supreme Court arose from the order of

Motor Accident Claim Tribunal. The Supreme Court ultimately held that no

Ex.Pet.No.195/2007 Page 10 Court or Tribunal can be regarded as powerless to recall its own order if it is

convinced that the order was wangled through fraud or misrepresentation of

such a dimension as would affect the very basis of the claim.

13. None of the judgments, so relied upon by Mr. Gupta will be

applicable to the facts of this case. The judgments in the case of Raipur

Development Authority (supra), T.I. Ltd., Naini, Allahabad (supra),

Northern Coalfields Ltd., P. O. Singrauli Colliery (supra) and Fountain

Head Developers (supra) are concerned with the question, which Court is

competent to hear the objections to the Award under Section 34 of the Act.

In so far as Abhishek Talwar's case (supra) is concerned, the issue was

with respect to the maintainability of an execution application in the High

Court. The same would also not be applicable to the facts of this case.

Insofar as the law laid down by the Supreme Court in United India

Insurance (supra) is concerned, the same would have no relevancy, keeping

in view, the issue raised by Mr. Gupta in his submissions based on Section 2

(1) (e) and Section 42 of the Act. Suffice to state, there is no dispute that if

a person has played fraud on the Court, such a person would not be entitled

to any relief. It must be kept in mind that the present proceedings are

execution proceedings seeking execution of the Award of the Arbitrator

Ex.Pet.No.195/2007 Page 11 which has attained finality till the Supreme Court after the S.L.P. as well as

review thereafter, have been dismissed by the Supreme Court.

14. The issue which has been raised by Mr. Gupta, the answer to the said

question lies in the submission made by Mr. H.L Tiku, learned counsel for

the decree holder who had relied upon the notification issued by Hon'ble

Chief Justice in exercise of the powers conferred under sub section 10 of

section 11 of the Act. A perusal of the said notification, it is noted that a

request made under sub section 4 or sub section 5 or sub section 6 of section

11 can be entertained by the District Judge/Additional District Judge where

the value of the subject matter does not exceed Rs.5 Lacs. In terms of the

notification the Additional District Judge had the competency to appoint an

Arbitrator at the relevant time. It was in the year 2005, the Supreme Court

S.B.P. and Co. (supra) has clarified as under:-

"Where District Judges had been designated by the Chief Justice of the High Court under Section 11 (6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the concerned High Court or a Judge of that Court designated by the Chief Justice."

15. There is no denial to the fact that the order of reference was made by

Ex.Pet.No.195/2007 Page 12 the Additional District Judge for a dispute which was for less than Rs.5 Lacs

on October, 4 2001, much before the Judgment of the Supreme Court in

S.B.P and Co. (Supra) was pronounced. Further, the aforesaid notification

issued under sub-Section 10 of Section 11, which empowers the Chief

Justice to make such scheme as he may deem appropriate, no such scheme is

contemplated for the purpose of Section 34. The date on which the

reference was made/Arbitrator was appointed, such a reference/appointment

was valid in terms of the said notification, which empowered the Additional

District Judge as well. The order could not be questioned now. Suffice to

state, the appointments made before the judgment of the Supreme Court in

S.B.P and Co. (supra) have been saved by the Supreme Court in terms of

the aforesaid observations. The aforesaid, also, would make it clear that the

judgments relied upon by Mr. Gupta, primarily on the objections filed under

Section 34 of the Act, are not applicable to the facts of this case. No doubt,

it is a settled position of law that the plea of nullity of a decree can always

be set up before the executing Court and any judgment and order which is a

nullity, never acquires finality and it is, thus, open to challenge in the

executing proceedings (reference State of Haryana and another Vs. Kartar

Singh (D) through LRs AIR 2012 (11) Scale 536). In the given facts, the

Ex.Pet.No.195/2007 Page 13 decree is not a nullity.

16. In view of the discussion above, the only ground urged, to contend

that the award is a nullity, need to be rejected. During the course of the

submission, Mr. Tiku had pointed out that in view of the fact, the amount of

Rs.32,99,686.39/- was stood deposited in 2007 and released to the decree

holder in 2011, the difference of amount between the year 2007 and 2011

need to be paid to the decree holder and which according to Mr. Tiku, is

Rs.1,58,27,177 as on April, 2015. The objection having been dismissed, the

judgment debtor is itself required to calculate the amount still payable to the

decree holder and deposit the said amount in this Court within six weeks

from the receipt of copy of this order. The EA 350/2009 is dismissed.

EA No. 98/2008

17. An application No. 98/2008 has been filed by the decree holder inter-

alia seeking attachment of two shops situated in Connaught Place, for the

deposit of monthly licence fee being paid to the judgment debtor by M/s

Balaji Agency be directed to be deposited in this Court and further seeking a

restraint order that the property situated at Delhi bearing No. H-7, Tropical

Building, Cannought Place be not transferred, alienated etc.

Ex.Pet.No.195/2007 Page 14 EA No. 710/2009

18. This application was filed by the decree holder seeking attachment of

certain immovable properties, Uttar Pradesh Sadan, Chanakya Puri, New

Delhi, Uttar Pradesh Bhawan, Sardar Patel Marg and the bank accounts of

the judgment debtor.

EA 86/2014

19. This is an application, filed under Section 151 CPC, by the judgment

debtor seeking a restraint order from execution of the award and a direction

against the decree holder to furnish security for refund of Rs.32, 99, 686.39/-

with interest at the same rate which was recovered from the judgment

debtor.

EA No. 504/2014

20. This is an application filed by the judgment debtor under section 47

CPC read with section 44 Indian Evidence Act for direction to the decree

holder to comply with the orders of this Court passed on July 10, 2009.

21. List on August 03, 2015 along with the aforesaid applications.

22. Dasti to learned counsel for both the parties.

                                                   V. KAMESWAR RAO, J
MAY 19, 2015/ak




Ex.Pet.No.195/2007                                                     Page 15