IN THE COURT OF Dr. [ENTITY]: ADDL. DISTRICT JUDGE II (CENTRAL DISTRICT): TIS HAZARI COURTS: DELHI CS No. 116/2015 Unique Case ID No.: 02401C0189422015 [PRECEDENT] [ENTITY] - 110058 Petitioner/ Objector Versus 1. [ENTITY] 6, Vaishali Enclave, 1st Floor, near Gulab Sweets, Kohat Enclave, Pitampura, New Delhi - 110034 2. Sh. [ENTITY] One of the partners of the partnership firm 1043, Ward No.8, Mehrauli, Delhi - 110030 3. Sh. [ENTITY] Respondents Date of institution: 10.4.2015 Judgment Reserved on: 14.5.2015/ 15.5.2015 Judgment Pronounced on: 15.5.2015 [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 1 of 18 JUDGMENT (Oral):
(1) These objections under [SECTION] of the [ACT] have been filed against the award dated 23.2.2015 passed by the respondent no.3 Sh. [ENTITY] (Sole Arbitrator). The impugned award has been challenged on the ground that firstly the respondent no. 3 had never sent any notice to the objector or to his counsel informing them of all the subsequent dates of hearing despite repeated visits of the counsel for the objector to the office of the Arbitrator. Secondly that the copy of the statement of claim had never been supplied to the objectors on account of which they were deprived of filing their reply. Thirdly that the impugned award is bad in as much as the Ld. Arbitrator never inquired from the respondent no.1 the details of the installments which remain due. It is alleged that the entire award was given without any evidence and material which would have enabled the Arbitrator to arrive at a conclusion with respect to the outstanding amount. Fourthly that the Ld. Arbitrator has failed to consider the payment made by the objector during the pendency of the proceedings. Lastly that all the partners of the partnership firm have not been impleaded in the statement of claim as well as the claim. According to the petitioner, the impugned award dated 23.2.2015 is against Public Policy and also the procedure adopted by the Ld. Arbitrator is violative of Principles of Natural Justice and existing law, warranting the setting aside of the same. [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 2 of 18 (2) In so far as the respondent no.3 Arbitrator is concerned, the entire record of the Arbitration proceedings have been duly received. The respondent no.1 has put in their appearance and have filed a detailed reply to the objections raised by the petitioner. The respondent no.2 had also put in his appearance but not filed any reply to the objections. (3) It is submitted by the respondent no.1 that the objections are not maintainable as the objections have been filed by concealing the material facts. It is submitted that the objector as well as the respondent no.2 had been represented through their counsel Sh. [ENTITY] on 11.7.2014 and his presence has not only been marked by the Ld. Arbitrator in the proceeding sheet dated 11.7.2014 but he has also signed the said proceedings as a token of his presence in so far as the [CASE NUMBER] in Suit bearing [CASE NUMBER]. Ld. Counsel for the respondent no.1 has also pointed out that the objector as well as the respondent no.2 had attended the proceedings on 11.7.2014, 1.8.2014 and 29.8.2014 and kept on assuring that they would clear the outstanding amount due on their loan account till December 2014 and requested for adjournment till December 2014 after which the matter was even adjourned to 3.1.2015. It is pointed out by the respondent that when the petitioner could not fulfill their assurance of paying up the does, they chose not to appear before the Arbitrator on 3.1.2015 which was despite the knowledge of the said date of hearing. Ld. Counsel for the respondent no.1 has also pointed out that the objectors did not appear on 3.1.2015 and also on 6.2.2015 despite issuance [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 3 of 18 of the notice dated 20.1.2015 which was sent to the addresses of the objectors as well as the respondent no.2 which was duly served upon them but they intentionally avoided to appear before the Ld. Arbitrator. It is also submitted that the objectors are falsely blaming the Arbitrator for his non availability during two visits and were in full knowledge of the arbitration proceedings and they deliberately did not appear on 3.1.2015 and thereafter the Ld. Arbitrator sent a notice dated 20.1.2015 to the objectors but the objectors did not appear before the Ld. Arbitrator. It is further submitted that the Ld. Arbitrator had afforded sufficient opportunity to the petitioner to settle the matter with the bank, but the objectors as well as the respondent no.2 intentionally avoided the same. Ld. Counsel for the respondent no.1 has also pointed out that the proceedings under [SECTION] of the [ACT] for appointment of Receiver have been instituted by the respondent no.1 against the petitioner before the Court of Sh. [ENTITY], Ld. District Judge, Patiala House Courts which are still pending for final disposal and as per the mandate of [SECTION] and [SECTION] of the [ACT] the Court of competent jurisdiction is required to be in Patiala House Court complex and the petitioner has deliberately has filed the petition before this Court as they are avoiding their appearance in the said proceedings pending before the Ld. District Judge, Patiala House Courts and have not even filed their reply. It is also pointed out that the petitioner/ objector and the respondent no.2 are in collusion with each other and hence these objections are devoid [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 4 of 18 of merits.
(4) I have considered the submissions made before me and have gone through the record of the arbitration proceedings. Before coming to the merits of the grounds raised before me, I may observe that the provisions of [SECTION] of the [ACT] provide that the arbitral award may be set aside by the court on an application for setting aside the same being made on any grounds specified in the subsection (2) and within the time prescribed. The provisions of [SECTION] are reproduced as under:
"2 (a)the party making the application furnishes proof that
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 5 of 18 arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or failing such agreement, was not in accordance with this Part.' (5) Sub section 2 (a) also provides that party making such an application shall furnish proof to the court in support of such application.
The court is entitled to set aside the award only if the grounds mentioned in [SECTION] read with grounds stated in [SECTION] and [SECTION] of the Act are proved to its satisfaction by the party making such application for setting aside the award and too if satisfy the court that the allegations are true. The onus of proving that the grounds as per [SECTION] of the Act exists and that the award is liable to be set aside lies on the party making such an application. (6) The Delhi High Court has in the case of [PRECEDENT], by relying upon the ruling of the Hon'ble Apex Court in [PRECEDENT], observed that:
" a Court should approach an award to support it if it is reasonable, possible rather than to dispute it, by calling it illegal. The law in this regard as it existed prior to enactment of [ACT] still holds the field "
[PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 6 of 18 It was further observed that:
" the jurisdiction of the Court when called upon to decide the objections raised by a party against an arbitral award is limited, as expressly indicated in the [ACT]. The court has no jurisdiction to sit in appeal and examine the correctness of the award on merits with reference to the material produced before the arbitrator, it can not sit in appeal over the view of the arbitral "
(7) Similar view was also taken in the case of [PRECEDENT] wherein it was observed that:
" findings of the arbitrator on the factual matrix need not to be interfered with as the Court does not sit in appeal and the Courts are also refrained from re appreciating or reevaluating the evidence or the material before the arbitrator unless perversity is writ large on the face of the award or the award suffers from the vice of jurisdictional error, sanctity of award should always be maintained "
(8) The same view has been taken in the case of [PRECEDENT] and similar view was taken by Hon'ble High Court in Sh. [PRECEDENT] wherein it was held by the Delhi High Court that arbitrator being sole and final judge or fact and the Court is bound by the findings of arbitrator and cannot review them unless [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 7 of 18 unsupported by evidence or unless appears from award itself that there was no evidence to support findings.
(9) Further, it is also settled law that this court cannot substitute its own decision that of arbitration and that the award of the arbitrator both on facts and law is final. In this regard the observations of the Mumbai High Court in the case of [PRECEDENT] is very clear:
" Arbitral award is not invalid merely because on the basis of some inferences and some arguments it may be alleged that Arbitral Tribunal has committed some mistake in arriving at its conclusion on merits of the dispute referred to it for adjudication. When the court is called upon to decide the objections raised by a party against the arbitral award, the jurisdiction of the court is limited as expressly indicated in [SECTION] of the Act and it has no jurisdiction to sit in appeal and to examine the correctness of the award on merits with reference to the material produced before the Arbitral Tribunal. The court cannot sit in appeal over the view of the Arbitral Tribunal by reexamining and reappreciating the material "
(10) The Hon'ble court has further observed that:
" The arbitral award is not open to challenge on the ground that the Arbitral Tribunal has reached to a wrong conclusion or has failed to appreciate the facts and evidence. It is well settled that the parties constitute the Arbitral Tribunal as the sole and final judge as of the disputes arising between them and they bind themselves as a rule to accept the arbitral award [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 8 of 18 as final and conclusive. The arbitral award is not liable to be set aside on the ground that either on facts of in law it is erroneous "
(11) In the case of [PRECEDENT] the Delhi High Court has observed that an award made by the Arbitrator is conclusive and the court is only entitled to set aside the same if the arbitrator has misconducted himself and the scope in this regard is limited. It is a settled preposition of law that it will not be open for the court to reappriase the evidence and to arrive at a contrary conclusion which have already been rendered by the arbitrator on cogent grounds.
(12) Hon'ble Mr. Justice [ENTITY] has in the same judgment relied upon the judgment in the case of [PRECEDENT] [ENTITY] reported in [PRECEDENT] wherein the observations made by Lord [ENTITY], Chief Justice in [PRECEDENT] are as under:
" The day has long gone by when the courts looked with jealously on the jurisdiction of the arbitrators. The modern Tendency is in any opinion more especially in commercial arbitrations, to endaveour to uphold awards of the skilled persons that the parties themselves have selected to decide the questions at issue between them. If an arbitrator has acted within the terms of the submissions and has not violated any rules of what is [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 9 of 18 so often called natural justice the courts should be slow indeed to set aside his award "
(13) Also in the case of [PRECEDENT] [ENTITY] reported in [PRECEDENT] it has been observed that:
" when the reasons given by the arbitrator are germane, relevant and have rational nexus with the conclusions arrived at by him, the reasonableness of the reasons cannot be challenged and it cannot be said to be unreasonable. The word "reasonable" has in law the primafacie meaning of reasonable in regard to those circumstances of which the actor called on to act reasonable knows or ought to know. Reasons vary in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks "
(14) In the case of [PRECEDENT] it has been observed as under:
" It is well established that an award made by an arbitrator is conclusive as a judgment between the parties and the court is entitled to set aside the award only if the arbitrator has misconducted himself for the proceedings or when the award has been made after the use of an order by the court superseding the arbitration or if the arbitration proceedings have become invalid under [SECTION] of the Act, or where an award has been improperly procured or he has proceeded beyond jurisdiction or is otherwise invalid [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., [CASE NUMBER] under [SECTION] of the Act. The award may be set aside by the court on the ground of error on the face of the award but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator had committed some mistake in arriving at some conclusion "
(15) Further, the Delhi High Court has relied upon the judgments in the case of [PRECEDENT] and in the case of [PRECEDENT], it has been observed that:
" The scope of interference by the court of limited Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of evidence. The court has no jurisdiction to sit in appeal and examine the correctness of the award on merits. The arbitrator is the sole judge of the quality as well as quantity of the evidence and it is not for the court to taken upon itself the task of being a judge of the evidence before the arbitrator. It may be possible that on the same evidence the court might arrive at different conclusions than the one arrived at by the arbitrator but that by itself is no ground of setting aside the award of an arbitrator where there is no violation of principles of natural justice nor there is any allegations of misconduct nor that the arbitrator has not considered the material procedure before him or has not heard the parties or has not given opportunity to lead evidence "
[PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 11 of 18 (16) It was held in the case of [PRECEDENT] that normally the courts would not interfere with the arbitral award and the attempt of the court should always be to support the award within letter of law.
(17) Also in the case of [PRECEDENT] it was held by the Hon'ble Mr. Justice [ENTITY] that:
" If the award of the arbitrator is a reasoned one and reasons have been assigned for making award against each claim. Learned counsel for the objector, during the course of arguments dealt specifically with each claim and questioned the findings recorded by the arbitrator thereupon.
The scope of interference to the arbitrator's award in such like case where objections are to the effect that the same is bad on the ground of error apparent on the face of the record is limited. Arbitrator's award both on facts and law is final. Court cannot review and correct any mistake in his adjudication unless objection is to the legality of award which is apparent on the face of it. An error of law apparent on the face of the record means that you can find in the award or a document actually incorporated thereto some legal preposition which is the basis of the award which you can they say is erroneous. It is not permissible to refer to any other document to show that the award is erroneous. Court cannot substitute its own decision for that of the arbitrator. Assessment of evidence is a [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 12 of 18 matter within the province of the arbitrator "
(18) As observed by the Hon'ble Supreme Court in the case of [PRECEDENT], it is the petitioner who files an application who will have to make out the ingredients of any of the grounds mentioned in SubSection (2) and prove the same. Therefore, the only question that arises in an application under [SECTION] of the [ACT] is whether the award requires to be set aside on any of the specified grounds in Subsection (2) thereof and as observed by the Hon'ble Apex Court Subsection (2) clearly places the burden of proof on the person who makes the application. (19) Applying the settled principles of law to the facts of the present case, at the very Outset I may note that the conduct of the petitioner before this Court has been evasive and non serious. In fact after the service of the respondents, particularly the respondent no.1, the petitioner/ objector/ Counsel has evaded appearance which appears to be deliberate. I am informed by the Ld. Counsel for the respondent no.1 that the proceedings under [SECTION] of the [ACT] which have been initiated by the respondent no.1 against the petitioner are pending disposal before the court of Sh. [ENTITY], Ld. District Judge, Patiala House Courts where the petitioner before this Court is the respondent and has been repeatedly avoiding to appear on one pretext or the other despite [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 13 of 18 service, so much so that they have not even filed a reply to the said proceedings.
(20) Secondly the record of the Arbitrator reflects that the objector/ petitioner had been duly served and had put in his appearance before the Ld. Arbitrator and Sh. [ENTITY] Advocate has even appeared before the Ld. Arbitrator and had sought time on behalf of the objectors to pay the installment of EMI. At no point of time the Ld. Counsel had informed the Ld. Arbitrator that he had not received the copy of the statement of claim or desired the same. In fact his signatures are also present on the proceeding sheets dated 11.7.2014 and 1.8.2014 in the record of the arbitration proceedings relating to claim in [CASE NUMBER] (i.e. in [CASE NUMBER]). On 1.8.2014 when Sh. [ENTITY] Advocate had appeared before the Ld. Arbitrator he submitted that the respondents/ objectors before this Court had deposited certain portion of the due amount towards the pending EMIs and assured that they would make the payments of due EMIs by 25.8.2014 on account of which the matter was renotified on 29.8.2014. Again on 19.8.2014 Sh. [ENTITY] Advocate had appearance on behalf of the respondents and assured that the amount of due EMIs would be deposited at the earliest on account of which the Sole Arbitrator renotified the matter on 3.1.2015. It is writ large that having failed to make the payment of the EMIs the respondents (petitioners before this Court) stopped appearing before the Ld. Arbitrator and it was on 3.1.2015 that the respondents were proceeded exparte but still the Sole [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 14 of 18 Arbitrator issued a notice to the respondents informing them of the next date of hearing, copies of which notices are present on record along with the speed post receipts bearing the correct address of the respondents and deemed to be a valid service of the respondents. It was despite the same that the respondent again did not appear on 6.2.2015 and the matter was re notified on 20.2.2015 and only thereafter that the exparte evidence of Sh. [ENTITY] was recorded by way of affidavit. The entire statement of account has been placed before the Arbitrator along with the details of the liability of the objectors.
(21) Thirdly it is an admitted case of the petitioner/ objector that they had been served with the Arbitration Award on the same address, against which they have filed the present objections which as per the record of the arbitrator is shown to have been dispatched and served on the same address.
(22) Fourthly one of the grounds raised by the petitioner/ objector is that the impugned award is against Public Policy but nowhere in the entire pleadings the petitioner has specified as to how it is against Public Policy. No doubt, the award can be set aside if it is found to be in conflict with the Public Policy of India. Reference in this regard is made to the case of [PRECEDENT]; [PRECEDENT]; [PRECEDENT], [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 15 of 18 Supreme Court, 2629; [PRECEDENT]; [PRECEDENT] and in the case of [PRECEDENT]. It is not sufficient for the objector to only to vaguely allege violation of Public Policy but necessary to establish how the Arbitrator had acted arbitrarily, irrationally, capriciously or beyond the terms of the agreement, beyond the jurisdiction conferred to him by the agreement and that the award given by him is injurious and harmful to Public Policy and Public Interest, which the petitioner has miserably failed to show. In fact on the contrary, the Arbitrator has recorded his reasons for coming to the conclusion and for allowing the claim and the petitioner has failed to prove that the award was induced or affected by fraud or corruption or was in violation of [SECTION] or [SECTION] of the Act, being contrary to the fundamental policy of Indian Law or Indian Interest or Justice and Morality.
(23) Lastly the petitioner/ objector has failed to bring its case within the provisions of [SECTION] of the [ACT] and to establish that he was in some incapacity; or that the Arbitration agreement was not valid; or that he was not given a proper notice or was otherwise unable to present his case; or that the arbitral award dealt with a dispute not contemplated by or not falling within the terms of the [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 16 of 18 submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. The petitioner has also failed to establish that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement between the parties or that the subject matter of the dispute was not capable of settlement by arbitration under the law for the time being in force or that the arbitral award was in conflict with the public policy of India.
CONCLUSIONS:
(24) It is settled law as reported in the case of [PRECEDENT] that an arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract and has sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract his award cannot be interfered"
(25) Hence in view of my aforesaid discussion, I hereby hold that the arbitration award dated 23.2.2015 is a reasoned award and does not suffer from any infirmity or error apparent on the face of the award. It is not for this Court to sit in appraisal of the evidence lead before the learned Arbitrator and this Court will not open itself to the task of being a judge on [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 17 of 18 the evidence placed before the learned Arbitrator which was subject matter of dispute. In the present case the learned Arbitrator has decided upon the issues under reference which were within his competency and as per the agreement entered into between the parties. There are no allegations against the learned Arbitrator i.e. Respondent no.3 regarding misconduct nor of having misconducted the proceedings which have either been alleged by the petitioner or established. The Arbitrator has duly explained the reasons for arriving at his decisions and the petitioner/ objector before this Court has failed to bring its case within the provisions of [SECTION] of the [ACT] and I find no ground to intervene.
(26) Therefore, I hereby hold that the objector/ petitioner has failed to make out any case for requiring any interference with the award under [SECTION] of the [ACT] and accordingly the objections being devoid of merits, are hereby dismissed. Parties are directed to bear their own costs.
(27) File be consigned to Record Room. Announced in the open court (Dr. [ENTITY]) Dated: 15.5.2015 ADJII(CENTRAL)/ DELHI [PRECEDENT] [ENTITY] Vs. [ENTITY] & Ors., CS No. 116/15 Page No. 18 of 18