1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.410 OF 2007 Nilesh Eshwar Narnaware .. Petitioner Versus M/s.S.Kumar Online Ltd. & Anr. .. Respondents Mrs.Shakuntala Joshi i/b. S.I.Joshi & Co. for petitioner Mr.Mangesh Shirsat for respondents. CORAM : S.C.DHARMADHIKARI, J. DATE : 24th September 2009. P.C.: 1] The award dated 6th July 2007 which is rendered in the following terms is impugned in this petition under section 34 of the Arbitration and Conciliation Act, 1996:- “6. Since the First Party has admitted its liability of Rs.84,448/- I instruct the First Party to pay Rs.84,448/- within 30 days from the date of receipt of the award. In case of 2 delay, First Party to pay interest @ 9% p.a. on such delayed payment.” 2] The petitioner is the second party in the arbitration reference whereas the respondent is the first party. The respondent has been directed to pay to the petitioner an amount together with interest but still aggrieved by the Award, this petition is preferred. 3] The only contention canvassed before me by Mrs.Joshi appearing in support of the petition is that she had no notice of the appointment of Arbitrator. The Award is, therefore, vitiated in terms of section 34(2)(a) (iii) of the Act. 4] My attention is invited to a letter dated 7th April 2006 (Annexure G page 79) wherein the Arbitrator has informed both parties that he has been appointed as sole arbitrator to hear and decide the pending dispute under a franchisee agreement and he fixed a preliminary meeting on 17th June 2006 at 11.15 a.m. It is urged that the appointment of Arbitrator itself has not been made in terms of the contract stipulation or the 3 provisions of law. In the letter, there is no reference as to how the sole arbitrator came to be appointed and from when. It is stated that the petitioner informed the sole arbitrator that the arbitration reference is illegal inasmuch as since the respondent did not make the payment despite issuance of letters of demand and legal notice, the petitioner filed a suit for recovery of Rs.4,87,618/- being Special Civil Suit No.597 of 2002 in the Court of Civil Judge, Senior Division, Nagpur. The suit summons came to be served but the defendants failed and neglected to put up their appearance. The suit proceeded ex parte and, therefore, a judgement and decree dated 30th June 2004 was passed in favour of the petitioner. Passing of the decree is a fact which has been known to the respondent. The execution application has also been preferred since the respondent failed to pay the decretal sum. The execution application is pending since the suit itself is decreed and even the immovable and moveable properties are attached in execution, the petitioner informed the arbitrator that he has no jurisdiction to commence the arbitral reference and calling upon him to attend the same. 5] Thus, the appointment of Arbitrator was not notified and, according 4 to the petitioner, in any event, the same was illegal. From the Award, it does not appear that the said contention has been adverted to, leave alone, considered. Since, the arbitrator was of the opinion that there is no merit in the defence of the respondent and he was to make an award in favour of the petitioner, he did not deem it fit to consider the objections of the petitioner. 6] Petitioner persists with the said objections before me. He states that the arbitral tribunal was bound to consider the objection and merely by referring to section 8(3) of the Act, the objection could not have been disposed of or rejected. 7] I had made it clear on the last occasion to Mrs.Joshi appearing for petitioner that this is an award in favour of the petitioner and the petitioner, if feels aggrieved by such an award, then, he must take appropriate decision. More so, when an application is made by the respondent to set aside the ex parte decree and the said application is under consideration of the Civil Court. One of the objection raised by the respondent to the decree is that there is valid arbitration agreement 5 between parties. The application for setting aside the ex parte decree is pending. Presently, there is stay of the execution of the decree. Mrs.Joshi sought time on last occasion and at her request the matter was adjourned till today for passing orders. 8] Today in the presence of the petitioner, Mrs.Joshi states that she desires to persist with the challenge to the Award. On a query from the Court Mr.Shirsat appearing for respondents states that as far as this petition is concerned, he does not wish to canvass any submissions, inasmuch as, the Arbitral reference has proceeded and the Award is made on merits. Since the ground that there is valid arbitration agreement has also been raised before the civil court, at this stage, respondent does not desire to have any adjudication with regard thereto. However, the respondent has no objection if the subject award is set aside. 9] Accordingly, by keeping open the objections with regard to the validity and legality of the arbitration agreement for being raised in the pending application or in appropriate proceedings, subject petition is allowed. The award passed by the sole arbitrator is set aside by consent. 6 No costs. 10] After taking instructions from petitioner, Mrs.Joshi makes a statement that the petitioner is ready and willing to return all benefits derived under the Award. In other words, the awarded sum having been received by him will be brought back and redeposited in this Court. The same shall be done within ten days from today. Mrs.Joshi should also notify Mr.Shirsat about the redeposit. On such redeposit Mr.Shirsat would be at liberty to withdraw the same on behalf of respondent and the Registry shall permit him to do so on production of an authenticated copy of this order. 11] Both, re-deposit and withdrawal of the amount, shall be without prejudice to the rights and contentions of parties. (S.C.DHARMADHIKARI, J)