* IN THE HIGH COURT OF DELHI AT NEW DELHI + OMP 284/2003 and IA No. 6597/06 Reserved on : February 29, 2008 Pronounced on : March 31st, 2008 KANTI BHAI DHAMANI ..... Petitioner Through Mr. S.B. Upadhyay, Sr. Advocate with Mr. Pawan Upadhyay, Mr. Rohit Kumar Yadav, Mr. Bikram Dekar, Advocates versus ASHWANI K. GOENKA & Ors. ..... Respondent Through Ms. Malvika Rajkotia, Mr. Jayant Mehta, Ms. Jyoti Srivastava, Advocates for respondent No.1. Mr. Ashu Bhanot, Advocate for respondent No.2. CORAM: Mr. Justice S. Ravindra Bhat 1. Whether reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes Mr. Justice S. Ravindra Bhat: 1. In this petition, under Section 34 of the Arbitration and Conciliation OMP 284/03 page no. 1 of 29 Act, 1996 (hereafter called “the Act”) the petitioner seeks setting aside of the Award dated 25.8.2001 (hereafter called “the impugned award”) passed by the third respondent. 2. According to the averments, the petitioner and second respondent are husband and wife, their marriage was solemnized in 1980. It is alleged that in 1982 the petitioner and his wife came into contact with the first respondent (since deceased), as the later was dealing in non-ferrous metals. The parties joined hands in a business relationship. It is claimed that some time thereafter, the petitioner became aware of the first respondent's involvement in criminal cases i.e. FIR No. 151/1998 where he was alleged to have committed offences punishable under Sections 409/420 IPC. The petitioner further claims that his wife, under the influence of the first respondent and the third respondent registered various complaints against him. 3. It is alleged that on 8.2.2002, the second respondent registered a First Information Report (FIR) against the Petitioner alleging commission of offences under Section 498A. According to the complaint of the second respondent, the relationship had turned hostile for 3-4 years. It is also alleged that the respondent attempted to extract money from the petitioner. It is further alleged that the first respondent later implicated in the petitioner in a false criminal case and registered an FIR 316/2002. The petitioner was taken into custody. He relies on an order dated 11.10.2002 of this Court in W.P.(C) 1026/2002 where the matter was directed to be enquired into by the District OMP 284/03 page no. 2 of 29 and Sessions Judge. 4. It is contended that during the course of police remand, the petitioner was forced to sign 50-60 written papers and 20-25 plain papers which he highlighted in an application to the Court. It is claimed that taking advantage of the said position, the respondents filed an EX. 114/2003 in March 2003 claiming enforcement of the impugned Award said to have to have been made on 25.8.2001. 5. It is contended that the petitioner was not aware of the Award said to have been made on 25.8.2001 and became aware of it only on 16.5.2003 when his counsel had detected the pendency of the execution proceedings. The petitioner was thereafter represented on 12.7.2003 in the execution proceeding, when he learnt that an ex-parte award was made saddling him with liabilities to the tune of Rs. 6.5 crores. It is alleged that no copy of the Award was ever sent to him. 6, The impugned Award is challenged on the ground of fraud played upon the petitioner and it being based on false and fabricated documents. 7. The petitioner further relies upon the fact that the impugned Award was supposed to have been made on 25.8.2001 whereas the Execution was filed in March 2003. It is claimed that the real story was that blank signatures were obtained in September 2002 during his police remand. Since the petitioner had filed an application, highlighting the illegality on the part of the police and the respondent, they kept waiting for outcome of the said OMP 284/03 page no. 3 of 29 application; the writ petition was later disposed of on 21.2.2003 as the charge sheet had been filed. It is claimed that the Award surfaced subsequently. At the time of institution of the present proceedings, the petitioner was in jail, having been arrested on 6.9.2002. 8. After notice was issued, the legal heirs of the first respondent i.e. Smt. Savitri Devi Goenka entered appearance and caused a reply to be filed. Apart from several technical objections, the ground pressed for rejection of the petition is that it was filed in July 2003, beyond the period of limitation. It is alleged that the petitioner had complete knowledge about the making of the Award. It is alleged that a copy of the Award was sent to the parties including the petitioner through registered post A/D letter dispatched on 7.9.2001. In these circumstances, it is claimed that the objections are hopelessly barred in view of Section 34(3) of the Act. 9. The respondent contests the allegations about the petitioner's counsel coming to know the existence of the Award on 16.5.2003 and detection of the execution case for the first time on 15.7.2003. It is claimed that the petitioner conceded that he had filed Civil Suit 86/2004 which was pending before the Civil Judge challenging the Award. The same was however, later withdrawn. 10. The respondent No.1 does not deny that the petitioner was arrested on 6.9.2002 in connection with an FIR lodged by the late Ashwani Kumar Goenka. It is claimed that the petitioner was given documents of the charge sheet dated 5.12.2002 by the Inquiry officer in the Court of Sh. M.C. Gupta, OMP 284/03 page no. 4 of 29 Metropolitan Magistrate. They included documents pertaining to the Award. It is also urged that the record of the arbitration was seized from the third respondent on 9.9.2002 and it is part of the judicial record pending before the Metropolitan Magistrate, later summoned by this Court, in the present proceedings. 11. It is claimed that the petition is not supported by an affidavit of Kanti Bhai Damani. The respondents dispute the authority of Hetal Damani, daughter of the petitioner to file the present proceedings. It is also averred that the entire record of the charge sheet in the criminal proceedings were furnished to the petitioner on 5.12.2002. He applied through his counsel on 13.3.2003 for inspection of the record. The record included the seizure memo dated 9.9.2002 along with the original record of the Arbitrator. It is, therefore, alleged that the petitioner had full knowledge of the award and could have taken effective steps to approach the Court in a timely manner. 12. It is also alleged that the petitioner and his wife i.e. the second respondent continue to live as husband and wife and that the sureties for grant of bail to the petitioner, at Police Station, Tilak Marg were his wife's brother. It is alleged that if indeed the relationship were strained, as alleged, such surety would not have appeared to have him released. 13. Mr. S.B. Upadhyay, learned senior counsel submitted that late Ashwini K. Goenka was Managing Director of Savitri Metal Pvt. Limited. He had criminal antecedents and several cases were pending against him. He OMP 284/03 page no. 5 of 29 developed intimacy with the second respondent i.e. the petitioner's wife. On 29.4.1993 an agreement was executed between the second respondent and Savitri Metal Private Limited whereby she was appointed as authorized agent of the company. Counsel further stated that the petitioner's conduct and business were not liked by his wife and Ashwini K. Goenka and they attempted to oust him from their life and business. As a result, the second respondent got the petitioner implicated in a matrimonial dispute and filed FIR 83/2002 alleging offences under Sections 498-A/406 I.P.C. It is also claimed that the petitioner left Delhi in October 2001 and settled in Ahmedabad. He filed a writ petition seeking the quashing of the First Information Report (FIR). He was arrested upon a visit to New Delhi on 6.9.2002 and detained in police custody for 14 days. He was later remanded to judicial custody till 31.10.2003 when he was eventually released on bail. Its counsel submitted that during police custody, the petitioner was taken to a room in Qutub Hotel where the late Ashwini Kumar Goenka, respondents 2 and 3 and others tortured him physically on one pretext or the other. Counsel also relied upon an affidavit filed in W.P.(C) 1026/2002 alleging that he was forced to sign various papers including documents belonging to arbitration proceedings. 14. Learned counsel submitted that the falsity of the so called arbitration proceedings is evident from no mention of it in the First Information Report or in the charge sheet filed in the criminal proceedings lodged by Ashwini K. OMP 284/03 page no. 6 of 29 Goenka. It is claimed that the complicity of the Ashwini K. Goenka and the second respondent is clear form that that though the second respondent who is the petitioner's wife was named as an accused in the FIR, yet he bequeathed 50% of his property in her favour in a Will. Probate proceedings are pending in this Court in respect of the said Will. 15. Counsel invited a reference to the original award and submitted that its false and fabricated nature is apparent, on a bare glance as some typed sheets are stuck to stamp paper. It was also alleged that the falsity of the Award is further apparent from the fact that the second respondent had named the petitioner as an accused and despite this the petitioner is alleged to have consented to having the matter referred to arbitration by her father i.e. the third respondent. It is submitted that the said FIR alleging commission of offences under Section 498A I.P.C. was lodged on 8.2.2002. It was submitted that even in the FIR there is no mention of the Award although the second respondent alleged that the petitioner had cheated or mis-appropriated funds of Ashwini K. Goenka and had compromised with him to pay money of which he got premature bonds of RBI encashed. Learned counsel submitted that upon an overall conspectus of the sequence of the events it is very clear that there was no arbitration agreement and that no arbitral proceedings were ever held; the so called proceedings were not arbitration proceedings in the eye of the law since no copy of the Award was ever received by the petitioner and he came to know about the same when his counsel met him in jail on 17.7.2003. OMP 284/03 page no. 7 of 29 Learned counsel also submitted that the reliance placed on the postal receipt dated 7-9-2001 ipso facto, establishes nothing as the third respondent’s affidavit itself discloses that the award was not disclosed. The petitioner never received it; indeed the late Ashwini Goenka never even asserted any rights in relation to the award, even though it purported to award him the amount of Rs. 6.5 crores with interest at 20% p.a; it was only after the petitioner was taken into custody and subjected to torture and also made to sign several sheets of paper, that were misused to create fabricated documents, that the award surfaced, in the form of an execution petition. In fact there was no arbitration proceeding, or award and no such document was sent to the petitioner, ever. 16. Learned counsel submitted the present petition has to be construed within time. He relied upon the decision reported as Bharat Bhushan Bansal vs. U.P. Small Industries Corporation Ltd. Kanpur, 1999 (1) RAJ 378 SC as well as Pramod Chiman Bhai Patel vs. Lalit Constructions & Anr., 2003(4) RAJ 171 Bombay to say that in the absence of a valid arbitration agreement, further proceedings and award said to have been taken or made further to it are a nullity. He adverted to the document dated 5.8.2001 and submitted that it never can be construed as an arbitration agreement because Ashwini K. Goenka was not a party to it, even assuming the petitioner to have signed it, though it was not so signed. He also submitted that there is absolutely no proceeding before the Court indicative of any compliance with the mandatory provisions of the Act showing that the petitioner and Ashwini K. Goenka ever OMP 284/03 page no. 8 of 29 submitted their disputes for reference and decision to the third respondent D.P. Jain in accordance with law. 17. It was also submitted that a delivery of an arbitral award under Section 31(5) is not a idle formality and is a matter of substance. It was contended that for delivery of the arbitral award to a party affected it should be received by him. This sets into motion several period of limitation prescribed under the Act. He relied upon the decision reported as Union of India vs. Tecco Trichy Engineers and Constructions, 2005 (4) SCC 239. Learned counsel submitted that apart from not mentioning about the Award in the FIR lodged by the second respondent even Ashwini K. Goenka made no mention about it in FIR 316/2002 dated 10.7.20902. Learned counsel placed reliance on the contents of the said FIR and submitted that these circumstances go to show that the so- called arbitral proceedings and Award cannot be construed to be so in the eyes of law. The affidavit of Sh. D.P. Jain a certified copy of which has been placed on the record was filed in the criminal proceedings. It clearly states that he had not despatched the Award to Ashwini K. Goenka. 18. It was submitted that the entire circumstances in which the award was procured are shrouded in extremely suspicious circumstances. It is also unreasoned, and therefore illegal, being contrary to Section 31 and the public policy in India. It does not disclose compliance with any form of legal or other proceeding, as mandated by Section 24; for these reasons, it has to be set aside as patently illegal. OMP 284/03 page no. 9 of 29 19. Learned counsel for the first respondent Ms. Malvika Rajkotia submitted that the Award has assumed the force of a decree and consequently execution proceedings were filed for its enforcement. Ashwini K. Goenka died and is legal representative i.e. the mother had been substituted in the present proceedings. Counsel submitted that the petitioner has no-where spelt out how he became aware of the Award. Even the present petition was not filed with his affidavit. The precise date on which the petitioner became aware of the Award is also not disclosed. It was contended that the statement that the Award was not received at the address, cannot be accepted at the face value because the second respondent i.e. petitioner's wife continues to reside there. 20. Learned counsel contended that this Court should not on the basis of the pleadings and lack of particulars, go into details as to whether the notice of the Award was served and whether the parties were bound by an arbitration agreement. The criminal proceedings, learned counsel submitted led to seizure of the original award as well as the receipt dispatching the same to the petitioner and Ashwini K. Goenka. These are part of the judicial files, since the criminal proceedings were summoned for consideration by the Court. 21. Learned counsel submitted that the entire story about matrimonial discord between the petitioner and the second respondent cannot be accepted since there no divorce proceedings are pending between them. She relied upon the letter dated 5.8.2001 showing that an arbitral agreement existed OMP 284/03 page no. 10 of 29 between Ashwini K. Goenka and petitioner. The petitioner and the second respondent referred the same to the third respondent. The respondent after considering the points of view of both parties made his Award on 25.8.2001. This was subsequently dispatched to the parties, on 1.9.2001. If the petitioner was aggrieved, he would have preferred objections immediately upon receipt of the Award. He did not do so and has now come forward giving all kinds of excuses for the delay. 22. Learned counsel contended that while there is no doubt about certain facts such as the petitioner's arrest and his release in October 2003 yet there is ambiguity or no explanation about important and material aspects such as no express authorization to file the present proceedings; no separate pleading indicating the details as to how the petitioner became aware of the award; no explanation as to why the petitioner could not have been aware of the award, even if he is deemed not to have received it in September—October 2001, at least in December 2002 when copies of documents were furnished to him. Learned counsel submitted that the respondent No.2 has not denied the receipt of the Award. She too was a party to the proceedings and she continued to live in the premises. Her relationship with the petitioner cannot be considered as a strange since no divorce proceedings or any other matrimonial proceedings are pending between them 23. Learned counsel relied upon a judgment of this Court reported as Delhi cantonment Board vs. Daulat Rai & Sons, 2001 (60) DRJ 167 and stated that this OMP 284/03 page no. 11 of 29 Court has no discretion in the matter of entertaining a petition under Section 34 once the period prescribed under Section 34(3) i.e. the outer limit of 120 days from the receipt of arbitral award lapses. 24. A factual narrative discloses a very peculiar and if one may so express, unique set of facts. Before dealing with the discussion on the merits of the submission, it would be necessary to extract the letter dated 5.8.2001 which is has acted as reference to arbitration in this case: “To, Shri D. P. Jain (Arbitrator) C/o K.D. Saga & Co. D-1, Punjabi Basti, Nangloi, Delhi Reg: Arbitration in respect of dispute between Kanti Bhai Damani, Kusum Damani & Ashwini Kr. Goenka. Respected Sir (Babuji), This is reference to the above and discussion held with you with me alongwith Kusum and proceeding held on various dates. In this connection I would like to inform you that Shri Ashwini Kr. Goenka has demanded a sum of more than Rs.12 Crores but I am not in position to make payment of the entire 12 crores as I have already spent a sum of Rs.3.5 crores on various heads including Income Tax payment of Rs.2 crores and rest of the amount is invested by me in the name of your grand children and relatives and different financial institution. As such I would request you to get the case settled at a sum which is reasonable and which I have indicated to you verbally. Further I request you to kindly grant at lest one year's time to me to make the payment. OMP 284/03 page no. 12 of 29 I hope you will do the needful in the interest of your daughter (Kusum) and Grand children. Thanking you, Yours truly, (Kanti Bhai Damani & Kusum Damani) FU-42, Pitampura, Delhi-110085” 25. A schedule containing list of items has been annexed to the said document. The Award in this case bears the date 25.8.2001 on which day the third respondent signed it. The same reads as follows: "BEFORE SRI D.P. JAIN, NO. D-1, Punjabi Basti, Nangloi, New Delhi. BETWEEN Sri Kanti Bhai Damani son of Sri P.O. Damani and Smt. Kusum Lata Damani w/o Kanti Bhai Damani, Residing at No. FU-42, Pitampura, New Delhi (hereinafter referred to as "the First Party") AND Sh. Ashwini K. Goenka residing at No. H -538, RIICO Industrial Area, Bhiwadi (hereafter referred to as "the Second Party") AND WHEREAS Kusum Damani is my daughter. Sri Kanti Bhai Damani is my son-in-law are carrying on business jointly and / or severally as brokers and commission agents in aluminium trade having their place of business at No. FU-42, Pitampura, New Delhi and they did the business as broker and commission agent for Ashwini Kumar Goenka and his companies during the last 7 years i.e. from 1992-1999. AND WHEREAS the first party while working as agent/broker of the second party has collected huge amount of more than Rs.12 Crores by selling of Aluminium and its products to various OMP 284/03 page no. 13 of 29 existing and non-existing firms by setting and collecting payment from buyers of second party, during the period 1995 to 1999 when the second party was suffering from various diseases and sale of metal was totally looked after by the first party. And the first party has kept huge amount with them on account of the second party and the financial position of the second party has deteriorated and he has come to know about the above fact and in this process approximately Rs.12 crores are lying with the first party. AND WHEREAS the second party had made various enquiries and investigations and came to know that the first party has kept with them an amount of more than Rs.12 crores in the manner detailed above. Therefore, the disputes between the parties have arisen and the second party have asked for return of the said money from the first party. To resolve such disputes among the parties I Sri D.P. Jain son of Late Sri K. M. Jain was appointed as Arbitrator by mutual consent of all the parties to settle all the differences between the parties once for all. The parties hereto agreed that the decision of Sri D.P. Jain shall be final and binding on all the parties. AND WHEREAS I Sri. D.P. Jain held various meetings among the parties to adjudicate the disputes and difference between the parties and after discussing the matter at length with both the parties I am giving the following Award in the following manner:- AWARD a) It has been represented by the First Party that out of the total sum of Rs.12 Crores he has spent approx. Rs. 3.5 Crores on various heads including Income Tax payment of Rs.2 Crore and other amount has been deposited and invested in the name of their children in various banks/financial institutions and relatives etc. b ) The first party has submitted that in full and final settlement they are ready to pay a sum of Rs.6.5 Crores and asked for six months time to do the same. The Second party has accepted if subject to condition that the entire amount to be paid within six months from the date of award failing with which first party will pay a sum of Rs.12 Crores. c ) Although the second party is not agreeable to receive any amount less than Rs.9 crores, but I, on considering the submissions made by the respective parties and after obtaining the OMP 284/03 page no. 14 of 29 consent of all the parties pass the following Award. (i) The first party shall refund in aggregate the Sum of Rs.6.5 Crores to the second party within a period of 6 months from the date of Award after encashing all the RBI Bonds lying with him and selling the properties except the properties purchased before 1994 and / or transferring the properties in the name of the second party as well as recovering the deposits lying with his parties, relations, banks, financial institutions, etc. ( ii ) It is recorded that all the ornaments lying with the first party shall remain with them and the second party shall not make any claim against their ornaments. ( iii) In case the first party fails to repay the said money within the aforesaid agreed period of 6 months, the second party shall be entitled to recover the whole amount of money as per law and the first party shall be liable to pay interest also to be calculated @ 20% with yearly rest. D.P. JAIN Arbitrator" 26. Copies of letters which are in dispute, allegedly enclosing the award, written to Ashwini Goenka on 1.9.2001 and to the present petitioner are also on the record. The postal receipts bear the date 7.9.2001 and are attached