Madras High Court

Mrs.Vinnamalaprasunna vs The Waterbase Ltd on 3 September, 2021

O.P.No.963 of 2017

IN THE HIGH COURT OF JUDICATURE AT MADRAS

Dated: 3/9/2021

CORAM

THE HONOURABLE Mr.JUSTICE N. SATHISH KUMAR

Original Petition No.963 of 2017

1. Mrs.VinnamalaPrasunna

2. Mrs.VinnamalaSudhir
rep. by Power of Attorney
Mr.Vinnamala Prasunna

3. Mr.VinnamalaSai Srinivas ... Petitioners

1. The Waterbase Ltd

2. Mr.S.Giridhari
Arbitrator ... Respondents

PRAYER : Petition filed under Section 34 of the Arbitration and Conciliation

Act, to set aside the award passed by the second respondent dated 4/3/2017 for

a sum of Rs.64,76,533/- payable tot he first respondent with applicable interest

of 18% from 5/3/2017 till the date of full and final payment of realisation.

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O.P.No.963 of 2017

For Petitioner ... Ms.G. Sridevi

For respondents ... Mr.A.Rajan
for R.1.
------

ORDER

This Original Petition has been filed, to set aside the award passed by the

second respondent, dated 4/3/2017, for a sum of Rs.64,76,533/-, payable to the

first respondent with applicable interest of 18%, from 5/3/2017, till the date of

full and final payment of realisation.

2. Brief facts which are necessary for the disposal of this Original

Petition are as follows:-

The claimant is a public limited Company, incorporated under the

Companies Act, 1956, an aquaculture unit engaging in Shrimp farming,

processing of shrimp for export and manufacturing and selling International

quality shrimp feeds under various brand names from the year 1990. The

deceased V.V.Ramana Reddy approached the first respondent to appoint him as

a dealer for Nellore area. The first respondent and deceased executed a

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Dealership Agreement, dated 15/6/2006 and further extended the Agreement by

the letter of renewal, dated 17/6/2009 upto 16/6/2012. As per the agreement,

the first respondent will extend the credit period to the deceased and in the

event of overdue payment beyond the credit period, interest will be charged at

the rate of 21% p.a., as mutually agreed. As the deceased committed default in

payment of money

3. The deceased issued twelve cheques to discharge part of the total

admitted liability. Cheques were dishonoured. On 12/5/2010, the first

respondent sent notice, but the same was returned by the Postal Department, on

15/5/2010, with remark on addressee “deceased.”. Thereafter, on 16/6/2010,

first respondent had issued notice to all the legal heirs of the deceased and as

per Clauses 9 and 10 of the agreement, the first respondent had called upon the

petitioners to submit the dispute for arbitration, which was received by the first

respondent, on 18/6/2010.

4. It is the contention of the learned counsel appearing for the first

respondent before the arbitrator that the dealership agreement got lapsed on

expiry of three years and as such, the arbitration claim based on the said

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agreement is not legal and valid.

5. The learned Arbitrator, taking note of the submission of both sides

passed the following award:-

“The respondents are jointly and severally

liable to pay Rs.64,76,533/- in favour of the claimant

with applicable interest of 18% from 5/3/2017 till the

date of full and final payment of realisation.”

6. Being aggrieved, the petitioners have come forward with the present

Original Petition, praying for the relief as stated therein.

7. Heard Ms.G.Sridevi, learned counsel for the petitioners and

Mr.S.A.Rajan, learned counsel for the first respondent.

8. The main contention of the learned counsel for the petitioners is that

even though, the matter was heard, on 27/7/2013, award was passed on

4/3/2017, i.e., after three years. The award is liable to be set aside, since the

very arbitrator is the financial controller of the first respondent. Hence prayed

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for dismissal.

9. The learned counsel appearing for the first respondent submitted that

award has been passed after giving proper opportunities to the parties and after

perusing all the materials produced before the Arbitrator. The very agreement

itself provided for arbitration, in case of any dispute between the parties.

Hence, the same cannot be found faulted in law.

10. Heard the arguments advanced on either side and perused the

materials available on record.

11. Arbitrator is none other than the financial controller of the first

respondent which fact has not been disputed. It is to be noted that the

appointment of Arbitrator by the employer is not in accordance with law, as

held in the judgment of the Hon'ble Supreme Court, in PERKINS EASTMAN

ARCHITECTS DPC & ANR Vs. HSCC (INDIA) LTD (2019 SCC

ONLINE SC 1517) and therefore, the very award cannot be sustained in the

eye of law. That apart, it is relevant to be noted that award has been passed

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after a lapse of four years. There was no explanation whatsoever given by the

arbitrator for an inordinate delay. This Court, in K.DHANASEKAR VS. 1.

THE UNION OF INDIA, REP. BY ITS GENERAL MANAGER, SOUTHERN

RAILWAY, PARK TOWN, CHENNAI 600 003 AND 4 OTHERS (O.P.No.4

of 2015 has held that in the absence of any explanation or reason for the delay

in passing the award, such delay, in fact, certainly have an impact and violation

of public Policy of India and set aside the award.

12. Yet another illegality apparent on the face of the award is that degree

was passed against the legal heirs which is against the substantive provisions

of C.P.C. If at all the degree has to be passed, it should be executed only as

against the property of the deceased, whereas the learned Arbitrator has passed

a personal degree. It is also cannot be sustained in the eye of law.

13. In view of the above, this Court is of the view that the award passed

by the sole Arbitrator cannot be sustained in the eye of law and hence, the

same is hereby set aside. It is open to the parties to go for fresh arbitration. At

this stage, both sides submitted that there is no objection for appointment of

any Advocate as an Arbitrator.

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14. Accordingly, with the consent of both sides, Mr.Uma Shankar,

learned Advocate is appointed as an Arbitrator, to enter upon reference and

adjudicate the matters. Parties are at liberty to raise all the pleas legally.

15. This Original Petition is ordered as follows:

i. Mr.R.Uma Shankar, Advocate, Sri Lakshmi

Rangan Nivas, New No.7, Kondi Chetty Street, Parrys,

Chennai 1 (Mobile No.9444010639) is appointed as a

Sole Arbitrator to enter upon reference and adjudicate the

matters.

ii. Learned Arbitrator appointed herein, shall after

issuing notice to the parties and upon hearing them, pass

an award as expeditiously as possible, preferably within a

period of six months from the date of receipt of the Order.

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iii. The learned Sole Arbitrator appointed herein

shall be paid fees and other incidental charges, fixed by

him and the same shall be borne by the parties equally.

16. This Original Petition is ordered, accordingly, leaving the parties to

bear their own costs.

3/9/2021

Index : Yes / No

Internet: Yes

Speaking/non speaking order

mvs.