1 abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 439 OF 2006 M/s Bombay Potato Traders & ors. .. Petitioners V/s Bombay Mercantile Co-operative Bank Ltd. .. Respondent Mr. H.P. Narsana i/b Harshad & Co. for the petitioners. Ms. Mamta Sadh with Ms. Sapna Rachure i/b T.N. Tripathi & Co. for the respondent. CORAM : D.G. KARNIK, J. DATE : 29TH JUNE 2009 P.C. : 1. Heard the learned counsel for the parties. 2. By this petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”), the petitioners takes exception to the award dated 17th July 2006 passed by the learned Arbitrator. 3. The respondent is a Multi State Cooperative Bank. The petitioner no.1 is a partnership firm and petitioner nos.2 to 5 are its partners. The respondent granted packing loan credit facility to the petitioners. An amount of Rs.5,29,47,939/- was due and payable by the petitioners to the 2 respondent. As the petitioners failed to pay the said amount, the respondent approached the Central Registrar for appointment of an arbitrator. The arbitrator was appointed by the Central Registrar and the respondent made a claim before the learned Arbitrator for an award of Rs.5,29,47,939/-. The petitioners respondent contested the claim on several grounds. The grounds inter alia are – (i) the respondent’s claim was barred by limitation, (ii) the respondent had received the sum of Rs.1,92,00,000/- from E.C.G.C. And the respondent had not give the credit of the said sum to the petitioners, (iii) the petitioners had fabricated the documents including the guarantee, (iv) the petitioner nos.2 to 5 had not signed any deed of guarantee as alleged, and (v) the petitioner no.1 was a partnership firm and the other members were not members of the respondent bank and as such the dispute between the respondent and the petitioners for recovery of loan could not be referred to arbitration under the provisions of the Multi State Cooperative Societies Act. 4. The learned Arbitrator rejected all contentions of the petitioners and held that the respondent no.1 bank had proved its case and passed by the impugned award. 5. Learned counsel for the petitioners submitted that the learned Arbitrator misconducted the proceedings. No evidence was led by the respondent before the learned Arbitrator that the petitioner no.1 was a member of the respondent bank and as such the learned Arbitrator lacked 3 inherent jurisdiction in conducting the proceedings. On merits, the impugned award is challenged on several grounds. The respondent had received Rs.1,92,00,000/- from E.C.G.C. and were entitled to the credit thereof which was not given. There was settlement between the parties and the petitioners had paid to the respondent Rs.70,00,000/- realised by them by sale of the only property of the firm and the respondent had received the same in full and final settlement of their claim. As such no amount was due. 6. As regards the misconduct of the proceedings, the petitioners submitted that the learned Arbitrator did not take any oral evidence on affidavit and otherwise and accepted the case of the respondent without any evidence and without proper opportunity to the petitioners to defend. Counsel invited my attention to the roznama in support of his contention. 7. Before the learned Arbitrator, the petitioners filed their written statement denying the liability. The roznama shows that the respondent filed the rejoinder to the written statement on 13th February 2006. The roznama of 13th February 2006 reads thus: “Officer of the Bank Mr. Javed Patel is present together with Ld. Advocate Mr. Salim Valjee. He files a rejoinder to the written statement. Al the Respondents are absent. Adjourned for hearing. 4 Matter adjourned to 27.2.2006 at 11.00 a.m.” On 27th February 2006, the petitioner no.4 – partner of the petitioner no.1 was present. The roznama dated 27th February 2006 reads thus: “Officer of the Bank is present together with the Ld. Advocate Mr. Salim Valjee. Respondent No.4 is present. Heard the Ld. Advocate for applicant Bank. Adjourned for arguments of Respondents. Matter adjourned to 13.3.2006 at 11.00 a.m.” Thereafter the matter was adjourned on a few more times without any further proceedings to 26th June 2006. Respondent’s arguments were heard on 26th June 2006 and the award was pronounced thereafter. The entire roznama does not disclose that the original documents on the basis of which the respondent had made the claim were not produced. Before me, the learned counsel for the respondent admitted that the original documents were not produced before the learned Arbitrator but only copies were filed. The record does not disclose that the petitioners had admitted the correctness of the copies filed by the respondent bank. No oral evidence was adduced nor any affidavits were filed. The matter was straightway posted for arguments after the respondent filed a rejoinder to the written statement of the petitioners. There was no material before the learned Arbitrator to 5 conclude that the petitioner no.1 was a member of the respondent bank. Similarly, though the learned Arbitrator in the award has stated that an amount of Rs.1,92,00,000/- was received by the respondent bank from E.C.G.C., credit thereof was not given to the petitioners. Learned Arbitrator has only stated that the law is very specific that the amount from E.C.G.C. Can be appropriated only after it is shown that the respondent bank has failed to recover its dues after making all efforts against the petitioners. No rule, contract or any other material was produced before the learned Arbitrator to show that the amount received from E.C.G.C. could not be adjusted forthwith, but could be only adjusted after making all efforts for recovery against the petitioners. Thus, this finding is based on no evidence and is not based on any material on record. Perusal of the record shows that the learned Arbitrator has not followed even the ordinary principles of usual procedure followed in any legal proceedings. Copies were admitted in evidence without there being admission. No evidence was adduced, no affidavits were filed and no material was placed before the learned Arbitrator. The correctness of the averment of misconducting the proceedings by the learned Arbitrator is writ large on the record.. 8. In the circumstances, there is no alternative but to set aside the award. The petition is accordingly allowed and the impugned award is set aside. (D.G. KARNIK, J.)