K Alias P Dhananjaya, Secunderabad vs K Kumar, Secunderabad And 8 Others
2024 Latest Caselaw 3667 Tel

Telangana High Court

K Alias P Dhananjaya, Secunderabad vs K Kumar, Secunderabad And 8 Others on 6 September, 2024

      THE HON'BLEJUSTICE MOUSHUMI BHATTACHARYA
                         AND
         THE HON'BLE JUSTICE M.G.PRIYADARSINI


                           I.A.No.1 of 2024
                                IN/AND
                        C.M.A.No.420 OF 2017

JUDGMENT:

(Per Hon'ble Justice Moushumi Bhattacharya)

The Appeal arises out of the Common Order dated

03.03.2017 passed by the Chairman, Land Reforms Appellate

Tribunal-cum-II Additional District Judge, Ranga Reddy District at

L.B. Nagar. The impugned order was passed in 4 Arbitration

Original Petitions (A.O.Ps) filed by the parties before the Trial

Court. The appellant before this Court was the petitioner in 2 of

the 4 A.O.Ps before the Trial Court and respondent No.1 in the

remaining 2.

2. The A.O.Ps. filed were as follows:

A.O.P.No.782 of 2010 was filed by the appellant challenging

the interim Award passed by the learned Arbitrator on 02.06.2010.

A.O.P.No.1039 of 2010 was filed by the appellant against the

final Award passed by the Arbitrator on 27.08.2010.

A.O.P.No.979 of 2010 was filed by the respondent No.1

against the interim Award passed by the Arbitrator on 02.06.2010.

A.O.P.No.1137 of 2010 was filed by the respondent No.1

against the final Award passed by the Arbitrator on 27.08.2010.

3. By the impugned Common Order, the interim Award dated

02.06.2010 and the final Award dated 27.08.2010 were confirmed

and all the 4 A.O.Ps were dismissed.

Facts:

4. A brief background to the Appeal should first be stated.

The dispute involves a Cinema Theatre "Sri Laxmi Kala

Mandir" at Alwal, Hyderabad, Telangana. Dhananjaya (appellant),

K. Kumar (respondent No.1), Nagabhushanam (respondent No.2),

Shyam Rao (respondent No.3) and one Srinivasulu own 20%

shares each in the partnership firm- M/s.Sri Laxmi Enterprises

which was formed on 23.12.1982. Srinivasulu died and his heirs-

Lokesh (respondent No.4) and Sailesh (respondent No.5) own 10%

shares each in the partnership firm.

5. The appellant filed O.P.No.80 of 1992 for appointment of an

Arbitrator in October, 1992 before the Principal Subordinate

Judge, Ranga Reddy District, under Section 8 of The Arbitration

Act, 1940. The appellant also filed I.A.No.1284 of 1992 seeking

appointment of a Receiver pending disposal of the said O.P. The

said I.A. was dismissed on 19.01.1993. Challenging the said order

of dismissal, the appellant filed A.A.O.No.123 of 1993 before the

erstwhile High Court of Andhra Pradesh, which passed a judgment

on 08.11.1994 setting out the modalities for the management of

the theatre. The modalities included entrusting the management

to the deceased respondent No.3 and for the appellant, respondent

No.1 and respondent No.2 to receive Rs.30,000/- each per month.

The respondent Nos.4 and 5 were to receive Rs.15,000/- each

every month. The appellant, respondent Nos.1, 2 and 3 as well as

respondent Nos.4 and 5 were each entitled to withdraw the

amounts specified in the judgment.

6. The O.P. filed by the appellant for appointment of Arbitrator

was allowed on 03.05.1997 and Sri V.V. Ramanatham, Retired

District Judge was appointed as the Sole Arbitrator.

Sri V.V.Ramanatham was succeeded by Justice Vaman Rao,

Retired High Court Judge, who was subsequently succeeded by

Justice A.Gopal Rao, Retired High Court Judge, and thereafter by

Sri P.V. Vidyasagar, Retired District Judge. The parties filed a

Memo before Justice A. Gopal Rao on 25.09.2003 for converting

the proceedings from The Arbitration Act, 1940 to the new Act i.e.,

The Arbitration and Conciliation Act, 1996, which came into force

w.e.f. 22.08.1996. Thereafter, the respondent No.1 filed

I.A.No.2778 of 2008 in O.P.No.80 of 1992 for appointment of a new

Arbitrator which was allowed by the Principal Senior Civil Judge,

Ranga Reddy District at L.B. Nagar, on 27.01.2009 appointing

Justice G.Bikshapathy, Retired Judge of the erstwhile High Court

of Andhra Pradesh, as the Arbitrator.

7. The newly-appointed Arbitrator passed the interim Award on

02.06.2010.

8. The appellant and the respondent No.1 filed applications for

setting aside of the interim Award which became the subject

matter of challenge before the Trial Court culminating in the

impugned Common Order. The Arbitrator made the final Award on

27.08.2010 which was also challenged by the appellant and the

respondent No.1. This also forms a part of the impugned Common

Order.

9. The appellant also filed an Application questioning the

jurisdiction of the Arbitrator under Section 16 of the 1996 Act on

12.08.2010 which was dismissed on 27.08.2010.

Submissions made on behalf of the Parties:

10. Learned Senior Counsel appearing for the appellant submits

that the appellant has filed a petition before the erstwhile High

Court of Andhra Pradesh for appointment of an Arbitrator under

the provisions of the Arbitration Act, 1940 and also made an

Application for appointment of a Receiver for managing the cinema

theatre. Counsel submits that although the Application was

initially dismissed by the Trial Court on 19.01.1993, the erstwhile

High Court of Andhra Pradesh allowed the A.A.O. filed against the

said order, by appointing a Receiver on 05.04.1993. Counsel

submits that the said Receiver managed the affairs of the theatre

until he was removed by the High Court. Counsel submits that 4

Arbitrators were thereafter appointed and that the parties filed a

Joint Memo before the 3rd Arbitrator - Justice A. Gopal Rao to

convert the proceedings under the new Act i.e., 1996 Act which

was recorded by the sole Arbitrator on 25.09.2003. Counsel places

strong objection to the appointment of Justice G. Bikshapathy as

well as the interim and the final Awards. Counsel submits that

once the new Act came into force, the parties could only have

approached the High Court under section 11 of the 1996 Act for

appointment of Arbitrator.

11. Counsel further submits that the appellant had also

questioned the jurisdiction of the sole Arbitrator on that basis

under Section 16 of the 1996 Act but the said Application was

dismissed by the Arbitrator on 27.08.2010. It is submitted that

the final Award was also passed on the same day i.e., on

27.08.2010. Counsel submits that the final Award suffers from

perversity and is in violation of the principles of natural justice.

Counsel further submits that the Sole Arbitrator misdirected the

proceedings by describing himself as "Receiver-cum-Arbitrator".

Counsel submits that the interim Award was also liable to be set

aside as the Arbitrator showed bias against the appellant by

requesting the learned Principal Senior Civil Judge, Ranga Reddy

District at L.B. Nagar to initiate necessary action against the

appellant, the respondent No.1 and the respondent No.3 (now

deceased). Counsel goes to the extent of submitting that the

Arbitrator misappropriated an amount of Rs.9,57,000/- and that

the appellant filed an Application before the Trial Court for

recovery of this amount.

12. Learned Senior Counsel appearing for the respondent No.1

submits that the proceedings before the Arbitrator were deemed to

be under the old Act i.e., The Arbitration Act, 1940 and that the

Arbitrator dismissed the Application under section 16 of the 1996

Act, without giving any opportunity of hearing to the parties.

Counsel supports the case sought to be made out by the appellant

namely the appointment of the Arbitrator could only have been

made under section 11 of the 1996 Act. Counsel submits that the

Arbitrator failed to provide any particulars with regard to the

period relevant to the final Award and relied on the Report of a

Chartered Accountant without putting the same for the

scrutiny/objections of the parties before him.

13. Learned Senior Counsel appearing for the respondent No.4

disputes the contentions made on behalf of the appellant and the

respondent No.1 on all points including with regard to the

appointment of the Arbitrator as well as the interim and the final

Awards. Counsel submits that the Arbitrator, namely, Justice

G. Bikshapathy, conducted the proceedings as per the procedure

contemplated under the 1996 Act. Counsel submits that the

objections of the appellant and the respondent No.1 to the interim

Award were in view of the order passed by the Arbitrator directing

the appellant to pay Rs.62,02,940/- and the respondent No.1 an

amount of Rs.14,71,084/-. Counsel submits that the Arbitrator

acted as per the directions of the High Court and hence there was

no occasion for the Arbitrator to act beyond the jurisdiction.

14. Learned counsel appearing for the respondent No.2 supports

the case of the respondent No.4 and submits that the appellant

and the respondent No.1 having consented for the appointment of

a new Arbitrator and for regulation of the affairs of the theatre till

passing of the Award, cannot now question the jurisdiction of the

Arbitrator or the manner in which the arbitration was conducted.

15. Learned counsel appearing for the respondent No.5 submits

that the Arbitration was initially conducted under the provisions of

the 1940 Act but that the parties subsequently filed a Joint Memo

for converting the said proceedings under the 1996 Act. Counsel

submits that the Chartered Accountant, Sri M. Murali Jagan

Mohan, called upon all the parties to submit their claims and

objections along with supporting vouchers for the purpose of audit

of the accounts of the theatre and that the Audit Report was

submitted to the Arbitrator which formed the basis of the interim

Award dated 02.06.2010 and final Award dated 27.08.2010.

Counsel submits that the appellant participated in the Arbitration

and has also received the proceeds of the auction process as

directed by the Court and as such is estopped from objecting either

to the appointment of the Arbitrator or the Arbitration proceedings.

Decision:

16. We have heard learned counsel appearing for the parties and

have also perused the impugned Common Order dated 03.03.2017

as well as the interim and the final Awards passed by the

Arbitrator on 02.06.2010 and 27.08.2010 respectively.

17. This is a case where the facts would be relevant for

adjudication of the issue of whether the appellant can be permitted

to challenge the interim and the final Awards by way of an

Application for setting aside of the same under section 34 of the

1996 Act. The relevance of the facts with regard to the points of

law adjudicated by the parties would be clear from the paragraphs

below.

18. The Trial Court, by way of the impugned Common Order

dated 03.03.2017, dismissed the Applications filed by the appellant

and the respondent No.1 on the ground of the limited scope of

interference under Section 34 of the 1996 Act. The Trial Court was

also of the view that the procedure adopted by the Arbitrator

cannot be questioned since the parties themselves opted to convert

the proceedings from The Arbitration Act, 1940 to the new Act of

1996 and further that the appellant has resisted in complying with

his liability as fixed by the Arbitrator and has also protracted the

litigation by approaching a different forum on flimsy grounds. The

Trial Court accordingly declined to interfere with the interim and

the final Awards passed by the Arbitrator and rejected the 4

Applications filed by the appellant and the respondent No.1.

19. The related issues which have been argued by the appellant

and the respondent No.1 are as follows:

(a) Whether the appointment of the Arbitrator was under

the relevant statutory provisions?

(b) Whether the impugned Common Order refusing to set aside the Interim and Final Awards should be interfered with?

(c) Whether the application filed by respondent No.1 for transposition as the appellant No.2 can be allowed in the attending facts and circumstances?

20. The issues are answered as follows:

Point No.1 - Whether the appointment of the Arbitrator was under

the relevant statutory provisions?

21. The admitted facts would show that the appellant filed an

Application (O.P.No.80 of 1992) for appointment of an Arbitrator

before the Principal Sub-ordinate Judge, Ranga Reddy District

under section 8 of The Arbitration Act, 1940. This Application was

made in October, 1992. The Arbitrator was subsequently

appointed with the consent of all the parties which would be

evident from an order dated 03.05.1997 passed in an Application

filed by the respondent No.1 herein. The order dated 03.05.1997

allowed the petition filed by respondent No.1 for appointment of an

Arbitrator and the Court appointed Sri V.V. Ramanadham, a

Retired District Judge as the Sole Arbitrator to settle the disputes

of the firm, M/s. Sri Lakshmi Enterprises. The Arbitrator was

authorized to maintain the cinema theatre with the assistance of

any persons nominated by him till making of the Award. The

Arbitrator was also authorized to take the assistance of a qualified

accountant of his choice for the aforesaid purpose.

22. Sri V.V. Ramanadham was replaced by Justice Vaman Rao

and thereafter Justice A.Gopal Rao. Significantly, the parties to

the Arbitration filed a Memo on 29.05.2003 to the effect that the

parties wish to continue the proceedings under new Act - The

Arbitration and Conciliation Act, 1996 and not under the old Act of

1940. The Memo is a part of the proceedings dated 29.05.2003

before Justice A.Gopal Rao (Arbitrator) which records as follows:

"All the parties have filed a joint memo requesting the Arbitrator to continue the proceedings hereafter under the new Arbitrator of and conciliation Act of 1996 and nor under the old Act, 1990."

(The mistakes are admitted typographical errors in the document)

23. The present Arbitrator, Justice G. Bikshapathy was

subsequently appointed pursuant to an Application made by the

respondent No.1 (I.A.No.2778 of 2008 in OP.No.80 of 1992) for

appointment of a fresh Arbitrator. The order dated 27.01.2009 is

on record. The Principal Senior Civil Judge, Ranga Reddy District

at L.B. Nagar appointed Justice G. Bikshapathy, a Retired Judge of

the erstwhile High Court of Andhra Pradesh, for running the

theatre in terms of the earlier orders passed by the High Court in

C.R.P.Nos.4021 and 4165 of 1997. Justice G. Bikshapathy

thereafter proceeded with the arbitration as per the procedure

contemplated under the new Act but primarily on the Joint Memo

filed by the parties herein to the arbitration.

24. Section 85(2) of the 1996 Act provides an exception to the

repeal of The Arbitration Act, 1940. Under section 85(2)(a), the

provisions of the old Act i.e., The Arbitration Act, 1940, have been

made applicable to arbitral proceedings which commenced before

the 1996 Act came into force, unless the parties agree otherwise.

The statutory position is hence clear. The parties have an option

to continue under the provisions of the 1940 Act provided the

arbitral proceedings commenced before 22.08.1996 when the new

Act of 1996 came into force.

25. Section 85(2)(a) of the 1996 Act will however not apply to the

present case since the parties filed a Joint Memo before the

presiding Arbitrator at that point of time i.e., on 25.09.2003 for

conversion of the proceedings under the new Act. Further, the

Arbitrator had already been appointed by the time the new Act

came into force.

26. Section 11 of the 1996 Act, which deals with appointment of

Arbitrators, would only be applicable if the arbitral proceedings

had not commenced and the parties were at the stage of agreeing

on a procedure for appointment of the Arbitrator or failed to

appoint an Arbitrator under sub-section (4), (5) and (6) of Section

11 the 1996 Act.

27. Significantly, both the appellant as well as the respondent

No.1 applied for setting aside of the Award before the Trial Court

under section 34 of the 1996 Act and before this Court under

Section 37 of the 1996 Act. Hence, the question of the parties

either following the old 1940 Act or questioning the appointment of

the Arbitrator after passing of the interim and final Awards on the

ground that the appointment should have been made under

section 11 of the 1996 Act does not arise. The argument is self-

serving and has been made for the purpose of unsettling the effect

of the interim and final Awards after both have gone against the

appellant and the respondent No.1.

28. For the sake of emphasis, once the parties agreed to be

governed by the law, which was in force at the relevant point of

time, and the arbitrator proceeded on that understanding and

made a final Award under the 1996 Act, the parties are estopped

by conduct from reversing their stand: Thyssen Stahlunion Gmbh

Etc vs. Steel Authority Of India Ltd 1, Delhi Transport Corporation

Ltd. vs. Rose Advertising 2 and Hyderabad Stock Exchange Limited

Vs. Kaveri Projects Ltd. 3 . The conduct of the appellant and the

respondent No.1 would also attract section 4 of the 1993 Act which

contemplates waiver of a party's right to object.

Point No.2 - Whether the impugned Common Order refusing to set aside the Interim and Final Awards should be interfered with?

29. As stated above, the Trial Court dismissed all 4 Applications

filed by the appellant and the respondent No.1 for setting aside the

interim Award dated 02.06.2010 and the final Award dated

27.08.2010.

30. With regard to the legality of the primary dispute i.e.,

whether the impugned Common Order dated 03.03.2017 should be

set aside or sustained, we rely on the admitted facts which have

already been stated above.

AIR 1999 SC 3923 2 (2003) 6 SCC 36 3 2010 (1) ALD 763 DB

31. The applicants sought for setting aside of the interim Award

dated 02.06.2010 and the final Award dated 27.08.2010 on the

ground that the Awards were passed in excess/beyond the

jurisdiction of the Arbitrator and are against the public policy of

India. The appellant and the respondent No.1 also challenged the

quantum of the liability fixed by the Arbitrator on the said parties.

The appellant and the respondent No.1 had argued that the figures

given by the Chartered Accountant was without any basis.

32. The Trial Court noted that the grounds raised by the

appellant and the respondent No.1 for setting aside the interim

Award were similar to those raised in the Applications for setting

aside the final Award. The Trial Court also found that the

appointment of the Arbitrator was within the mandate of the 1996

Act and that the parties had also participated in the arbitration.

The Trial Court also found that the appellant and the respondent

No.1 resorted to every possible means to avoid the liability imposed

upon them and also failed to cooperate with the Arbitrator for

concluding the proceedings at the earliest. The Trial Court further

found that during the course of the arguments, the appellant and

the respondent No.1 gave up the argument on the appointment of

Arbitrator and focused only on the point of liability.

33. There are several findings in the impugned Common Order of

the appellant not co-operating with the Arbitrator including on the

apportionment of liabilities by the Chartered Accountant, who was

appointed to audit the accounts of the theatre therefor. The Trial

Court concluded that the scope of interference under section 34 of

the 1996 Act is limited and the Court cannot reappreciate the

evidence or substitute the findings given by the Arbitrator. The

Trial Court also found that the appellant and the respondent No.1

were trying to protract the litigation so as to avoid their respective

monetary liabilities. The Trial Court accordingly dismissed all the

4 Applications questioning the interim and final Awards.

34. We have carefully perused the interim Award and the final

Award passed by the Arbitrator which are necessary for deciding

on the legality of the impugned Common Order.

35. In the interim Award, the Arbitrator recorded that the

litigation was kept alive for 20 years due to the non-co-operation of

the parties and that the Arbitrator was hence faced with the

herculean task of arbitrating on the dispute and also ensure the

smooth running of the theatre. The Arbitrator also noted that the

parties did not maintain or produce any records which were

required for the Arbitrator to work out the liabilities of each of the

partners to the partnership firm. We find that the Arbitrator

meticulously recorded the proceedings of each of the 16 sittings

and the fact that the parties were given sufficient opportunity to

file their respective written submissions which they failed to do.

36. The interim Award notes that the appellant admitted that he

managed the records from 17.06.2005 to 31.08.2006 and had also

filed returns as well as made payments through cheques from his

bank account. The Arbitrator hence found that the appellant was

liable for rendition of accounts. Significantly, the Arbitrator also

recorded that the appellant sent several letters in March and April,

2010 to the Arbitrator for returning the warrant of appointment.

37. It is further recorded that the respondent No.1 filed a Memo

in May, 2010 for payment of Rs.4,00,000/-. The Arbitrator

recorded that the Chartered Accountant was appointed on the

request of the parties and the auditor conducted the audit

according to the prescribed norms and sufficient opportunity was

given to the parties to place the accounts. The Arbitrator

accordingly relied on the Reports submitted by the Chartered

Accountant and held the appellant liable for a sum payment of

Rs.62,02,940/- and the respondent No.1 for a sum of

Rs.14,71,084/-. The appellant and the respondent No.1 were

directed to deposit the said amounts to the credit of the original

proceedings - O.P.No.80 of 1992 within 2 months failing which

they would be liable to make the payment along with interest

@ 18% p.a. The Arbitrator also held that the respondent Nos.2, 3,

4 and 5 were eligible to receive the amounts of Rs.28,16,833/-,

Rs.26,30,974/-, Rs.16,04,741/- and Rs.6,21,476/- respectively.

38. The final Award records that the Arbitrator tried his best to

resolve the dispute between the parties and that the appellant and

the respondent No.1 filed one Memo after another to stall the

proceedings. The final Award further records that the appellant

has filed an Application under section 16 of the 1996 Act to

question the jurisdiction of the Arbitrator. The Arbitrator

proceeded to assess the final liability of each partner which was

decided as follows:

39. The appellant was to pay a total of Rs.74,69,470/- and the

respondent No.1 Rs.27,05,079/-. The respondent Nos.2, 3,4 and 5

were entitled to receive Rs.28,70,263/-, Rs.28,37,722/-,

Rs.17,67,530/- and Rs.7,85,384/- respectively. The appellant and

the respondent No.1 were given 2 months from the date of the

Award to deposit the amount to the credit of O.P.No.80 of 1992

failing which they would be liable to pay interest @ 18% p.a. simple

interest. The interim Award was made part and parcel of the final

Award.

40. The objections raised by the appellant and the respondent

No.1 to the Award must be seen within the statutory framework of

section 34 of The Arbitration and Conciliation Act, 1996.

Section 34 provides for recourse to a Court against an arbitral

Award only on an application for setting aside the Award under the

grounds available to the parties under sub-sections (2) and (3) of

section 34. Section 34 (2) is further divided into (a) and (b) where

Clauses (iii) and (iv) deals more with the procedure including where

a party was not given proper notice or was unable to present

his/her case or where the arbitral Award deals with the dispute

not contemplated within the terms or matters beyond the scope of

the submission to Arbitration. Section 34 (b)(ii) envisages setting

aside of the Award where the Award is in conflict to the public

policy of India. Section 34(2A) contemplates setting aside of an

Award which is vitiated by patent illegality appearing on the face of

the Award.

41. There are several caveats built in section 34 with regard to

interference with the decision of the Arbitrator. These are found in

Explanation 2 to section 34(b)(ii) of the 1996 Act which bars the

Court from dealing with the merits of the dispute as well as in the

proviso to section 34(2A) which mandates that an Award shall not

be set aside merely on the ground of an erroneous application of

the law or by re-appreciation of evidence. The underlying statutory

message is clear: i.e., the Arbitral Award shall not be interfered

with unless the Award is in conflict with the public policy of India,

is patently illegal, perverse or the Arbitration Agreement itself is

invalid or the Award deals with a dispute which falls beyond the

scope of the submission to arbitration.

42. It is now judicially settled that the Court will also refuse to

set aside an Award if the Arbitrator has taken a plausible view as

opposed to an impossible view on the merits of the dispute.

43. In the present case, the Arbitrator has apportioned liabilities

between the 6 partners by holding that the appellant and the

respondent No.1 are to pay certain amounts and the respondent

Nos.2, 3, 4 and 5 are entitled to receive certain amounts. The

Arbitrator has taken the assistance of a Chartered Accountant to

arrive at audited figures of the liabilities of the partnership firm on

the basis of the period of management by each of the partners.

The liabilities include statutory liabilities in respect of Employee

State Insurance (ESI) and Entertainment Tax (ET). The Arbitrator

adjudicated on the issue of the liability of the partners including of

the appellant during the period in which the appellant was in

management. The statutory liabilities include Entertaining Tax

returns from the Commercial Tax Officer for the relevant period.

The Arbitrator recorded a finding that the appellant had filed

returns for the relevant period which showed that the appellant

had solely managed the theatre during that time frame and was

hence liable for rendering of accounts.

44. The appointment of the Chartered Accountant for the

Arbitrator's assistance cannot be called into question or said to be

perverse as the Chartered Accountant was appointed as per the

request of the parties. Moreover, the order dated 03.05.1997

passed by the Principal Sub-ordinate Judge, Ranga Reddy District,

in O.P.No.80 of 1992, permitted the Arbitrator to take the

assistance of any person including a qualified Accountant of his

choice for maintaining the cinema theatre till making of the Award.

45. The objection with regard to the Arbitrator managing the

theatre and acting as the "Arbitrator-cum-Receiver" is

unwarranted, to say the least. The order dated 27.01.2009 passed

by the Principal Senior Civil Judge, Ranga Reddy District, in

I.A.No.2778 of 2008 in O.P.No.80 of 1992, which was filed by the

respondent No.1 for appointment of a fresh Arbitrator, shows that

the Court directed the Arbitrator to run the theatre and to follow

the guidelines of the High Court in this respect. It is also

significant that the respondent No.1 also sought for a direction to

run the theatre by conducting an open auction amongst all the

partners in the said I.A.

46. It is relevant to mention in this context that a Division Bench

of the erstwhile High Court of Andhra Pradesh had passed an

order on 08.11.1994 in an Appeal (Appeal Against Order No.123 of

1993) filed by the appellant against an order passed by the Trial

Court refusing appointment of a Receiver. The Division Bench

appointed a Receiver and set out various modalities for running

the theatre including distribution of amounts to the 6 partners.

47. From the above, it is clear that the Arbitrator was under a

specific mandate to run the theatre by following the guidelines and

conditions passed in the previous orders including for appointment

of a Chartered Accountant for the purposes of audit and

assistance. The Arbitrator duly complied with this mandate and

apportioned the liability between the 6 partners. There is no

evidence on record to indicate that the Arbitrator went beyond his

mandate or travelled outside the contours of the dispute for fixing

the liability of the appellant and the respondent No.1 and the

amounts receivable by the respondent Nos.2, 3, 4 and 5. The

Arbitrator arrived at specific figures which are backed by the

findings including that of the appellant solely running the theatre

for a specific time frame. The Arbitrator has also individually dealt

with the statutory liabilities under individual heads.

48. On the other hand, the Arbitrator's findings of the

continuous road blocks placed by the appellant and the

respondent No.1 to the quick resolution of the proceedings is

significant. It is evident that both the appellant and the respondent

No.1 sought for setting aside of the interim and final Awards only

after the findings went against them with regard to the liability.

49. The appellant's objection with regard to dismissal of his

Application under section 16 of the 1996 Act questioning the

competence of the Arbitral Tribunal is equally specious. The

Application was filed on 12.08.2010 which was almost 2 months

after passing of the interim Award and that too on the ground that

the Arbitrator was not appointed under section 11 of the 1996 Act.

It would be evident from the conduct of the appellant that the

appellant chose to participate in the proceedings from 27.01.2009

and questioned the appointment of the Arbitrator only after the

appellant and the respondent No.1 were made liable for payment of

amounts to the credit of the O.P.

50. The Arbitrator records that the respondent No.1 filed a

petition seeking appointment of an Arbitrator with a direction to

take possession of the theatre and that the said I.A. clearly

mentions that all the partners had consented for appointment of

the Arbitrator. The Arbitrator also records that the appellant

participated in the arbitration without any objection and had also

received various amounts towards his share in the rental income.

The Arbitrator accordingly dismissed the application filed under

Section 16 of the 1996 Act. The fact of the Arbitrator dismissing

the application on the same date of passing of the final Award

cannot be accepted as a ground to upend the final Award. The final

Award was substantially similar to the interim Award. Hence, the

question of the Arbitrator accelerating the final Award with an

ulterior motive is wholly without any basis.

51. Section 37(1)(c) of the 1996 Act envisages an Appeal from an

order refusing to set aside an arbitral Award under section 34 of

the 1996 Act.

52. It is judicially settled that the scope of an Appeal under

section 37 of the 1996 Act from an order refusing to setting aside

of an Award under Section 34 also operates within the restricted

boundaries of an application under section 34. Hence, as per the

statutory mandate, we are not inclined to undertake an

independent assessment of the merits of the Award. The only

scope of our adjudication is whether the Trial Court has exercised

its power within the boundaries of section 34 of the 1996 Act and

not exceeded the scope of the provision: MMTC Limited v. Vedanta

Limited 4 and UHL Power Company Limited v. State of Himachal

Pradesh 5

53. This Court disagrees with the objection taken by the

appellant to the Award on the ground of public policy. Section 34

(2)(b)(ii) of the 1996 Act provides for the ground of an arbitral

Award being liable to be set aside if it is in conflict with the public

policy of India. Explanation 1 delineates this ground to include

contravention with the fundamental policy of Indian Law (Section

34(2)(b)(ii) (Explanation I (ii))). The appellant has failed to show

how the Award contravenes the Fundamental Policy of Indian law.

We do not find evidence of absence of a "Judicial Approach" on the

part of the Arbitrator in arriving at the findings of the interim and

final Awards: Sangyong Engineering & Construction Co. Ltd v.

National Highways Authority of India (NHAI) 6 and Oil & Natural Gas

Corporation Ltd v. Western Geco International Ltd ONGC 7 and PSA

SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar

Port Trust Tuticorin 8. The discussion of the public policy of India in

4 (2019) 4 SCC 163 5 (2022) 4 SCC 114

(2019 ) 15 SCC 131 7(2014) 9 SCC 263

8 2021 SCC OnLine SC 508

the context of section 34 in Unibros v. All India Radio 9 would not

apply in the facts of the present case since the Supreme Court in

that case dwelt on the aspect of an Arbitrator overreaching a

binding judicial decision.

54. The appellant's objection with regard to the appointment of

the Arbitrator, as already been discussed above, is without basis.

Hence, the superstructure falling on the foundation being removed

would not arise in the facts of the present case: Chairman-cum-

Managing Director, Coal India Limited v. Ananta Saha 10.

55. This Court fails to see any basis for interfering with the

impugned Common Order dated 03.03.2017 dismissing the

appellant's and the respondent No.1's challenge to the interim and

final Awards. The Court has carefully perused the orders passed

by the High Court and the District Courts in multifarious

proceedings initiated by the appellant and the respondent No.1.

These orders and the facts stated above would indicate that the

appellant and the respondent No.1 resisted each and every

direction passed by the Courts and the Arbitral Tribunal insofar as

the directions/orders were against them. The appellant and the

9 2023 SCC OnLine SC 1366 10 (2011) 5 SCC 142

respondent No.1 have tried every rule in the book to assail these

directions on trivial and flimsy pretexts only to prolong the

proceedings. Hence, equity also demands that the appellant is not

given any protection by an order of Court. Even otherwise, the

appellant has no case on merits. The Trial Court correctly invoked

its discretionary powers to dismiss the A.O.Ps questioning the

interim and final Awards passed by the Arbitrator. This Court

finds no ground to interfere with those findings or substitute its

views for those taken by the Trial Court and least of all by the

learned Arbitrator.

Point No.3 - Whether the application filed by respondent No.1 for transposition as the appellant No.2 can be allowed in the attending facts and circumstances?

56. The orders passed by this Court on 13.06.2024 and

08.07.2024 become material for I.A.No.1 of 2024 which is an

Application filed by the respondent No.1 to transpose the said

respondent as the appellant No.2 in C.M.A.No.420 of 2017.

57. The orders reflect the admitted facts in the present Appeal to

the extent that the respondent No.1 has supported the case sought

to be made out by the appellant for setting aside the Common

Order impugned in the present Appeal by which the Applications

filed by the appellant and the respondent No.1 for setting aside the

interim and the final Awards, were dismissed. Moreover, the

appellant filed an Application for appointment of an Arbitrator

under section 8 of The Arbitration Act, 1940, wherein all the

parties, including the respondent No.1, subsequently filed a Joint

Memo before the Arbitrator agreeing that the proceedings would be

conducted under the new Act i.e., The Arbitration and Conciliation

Act, 1996.

58. The respondent No.1/applicant has not filed any counter to

any of the I.As. in the Appeal but more importantly, has not filed

any Appeal from the impugned Common Order by which both the

applications filed by the respondent No.1 were dismissed.

59. Section 37 of the 1996 Act contemplates Appeals from the

orders enumerated under section 37(1) and section 37(2). While

the first set Clauses (a) and (b) of section 37(1) pertain to the

orders refusing to refer the parties to arbitration under section 8 or

the orders granting/refusing to grant any measure under section

9, section 37(2) provides for Appeals from the orders passed by the

Arbitral Tribunal. It is to be noted that clause (c) of section 37(1)

pertains to the orders setting aside/refusing to set aside an

Arbitral Award under section 34. Hence, section 37 does not

permit the party to assail an order refusing to set aside the Award

without invoking the provisions of section 37(1) or (2) i.e., without

filing an Appeal under section 37(1)(c).

60. Therefore, the arguments made on behalf of the respondent

No.1 in support of the appellant does not fall under any statutory

provision as contemplated under the1996 Act.

61. The present Interlocutory Application i.e., I.A.No.1 of 2024

was filed on 11.07.2024 which is pursuant to the order dated

08.07.2024.

62. It is evident that the respondent No.1 seeks to transpose

himself as the appellant No.2 having supported the case of the

appellant. This change of stand is however contrary to the law

under the 1996 Act wherein a party can only assail an order of

dismissal of a section 34 application under section 37(1)(c) by filing

an Appeal under the said provision. Not having done that, the

respondent No.1 cannot take up cudgels on behalf of the appellant.

In any event, the Appeal has been argued at length from

11.06.2024 on at least 6 occasions and the application was made

just before the arguments were closed in the matter.

63. Hence, we do not find any reason to allow I.A.No.1 of 2024

which is accordingly dismissed.

64. C.M.A.No.420 of 2017, along with all connected applications,

is dismissed for the reasons stated in the foregoing paragraphs.

The appellant shall pay costs of Rs.4,00,000/- (Rupees Four Lakhs

only) to the respondent Nos.2, 4, 5, and the Legal Representatives

of the respondent No.3 for needlessly prolonging the proceedings

and taking one specious plea after another with the sole motive of

circumventing the orders of the Court and the directions given by

the Arbitrator. The conduct of the appellant as well as the

respondent No.1 is to be strongly deprecated. Such conduct

warrants costs which the appellant shall pay as directed within a

period of 2 weeks from today.

____________________________________ MOUSHUMI BHATTACHARYA, J

_____________________________ M.G.PRIYADARSINI, J Date: 05.09.2024 Note: L.R. Copy to be marked va/bms.