Kailash Rani Dang vs Rakesh Bala Aneja & Anr

2. These appeals arise out of the following facts: On 7th June, 1995 a partnership deed was executed between Subhash Chander Aneja, since deceased, his son Amit Aneja and the appellant Kailash Rani Dang, a cousin of Subhash Chander Aneja, aforesaid with regard to the running of Alka Cinema, situated at P-2, Sector-15 NOIDA. The shares in the 2 partnership were also delineated therein. On 21st July, 1998, a family arrangement was entered into between Subhash Chander and Kailash Rani, in which it was agreed that the latter would get 50% of the earnings from the Cinema Hall as well as from the commercial exploitation of the adjoining plot, whereas 50% would go to the former. This agreement also contained an arbitration clause whereby all disputes and differences would be referred to the sole arbitration of Shri Hans Raj Dang and on his non-availability, to the sole arbitration of Dr. Amar Nath Kumar. Disputes having arisen, Kailash Rani vide her letter dated 2nd July, 1999, invoked the arbitration clause in the family arrangement by writing to Shri Hans Raj Dang requesting him to act as the arbitrator. Shri Hans Raj Dang, however, vide his letter dated 7th July, 1999 informed Kailash Rani that he would not be able to act as such because of ill-health. Copies of these letters were sent to the respondent Subhash Chander as well. Kailash Rani, in these circumstances, wrote a letter dated 12th July, 1999 to the alternate Arbitrator Dr. Amar Nath Kumar requesting him to act as the arbitrator and also informing him that though the 3 cinema hall was bringing an income of Rs. 2.5 lacs per month, she had not been paid a single penny on that account. Dr. Amar Nath Kumar accordingly wrote a letter dated 17th July, 1999 to Kailash Rani calling upon her to file her statement of claim before 25th July, 1999 and to send a copy thereof to Subhash Chander, through registered post. He also called upon Subhash Chander to file his reply to the statement of claim by 2nd August 1999 and fixed 11.00 A.M. on 8th August, 1999 as the date and time of the hearing at a specified venue at Ghaziabad. On 23rd July, 1999, Kailash Rani dispatched her statement of claim by registered post to the Arbitrator as well as to Subhash Chander. The receipt of this statement was acknowledged by Subhash Chander by his communication on 29th July, 1999 addressed to Kailash Rani wherein he asked for the supply of certain documents, failing which it would not be possible for him to file a reply to the statement of claim. Kailash Rani, vide her letter dated 2nd August 1999, replied reminding Subhash Chander that the documents he was seeking were already in his possession as he was one of the executants thereto, but that in any case the 4 copies could be taken from the arbitrator during the course of hearing on 8th August, 1999. Subhash Chander nevertheless, through his Advocates, M/s. Sen & Sen addressed a communication dated 7th August, 1999 to the arbitrator denying the execution of any family arrangement dated 21st July, 1998 and again asking for the supply of the documents referred to in the statement of claim, and further, that the arbitration proceedings be deferred till all the documents were in fact supplied. As a follow up to the communication from his Advocates, Subhash Chander did not appear before the Arbitrator on 8th August, 1999. The Arbitrator, accordingly, addressed a letter to him pointing out that his non-appearance justified the initiation of ex-parte proceedings but another opportunity was being afforded to him and further that Kailash Rani had undertaken to supply copies of all documents relied upon by her on the next date of hearing in his presence. The hearing was also fixed at 11.00 A.M. on 25th August, 1999. Subhash Chander however did not appear before the Arbitrator on 25th August, 1999 as well and after waiting till 2.00 P.M. on that date the Arbitrator ordered 5 ex-parte proceedings and thereafter passed an ex-parte Award against him. A copy of the Award was sent by the Arbitrator to both parties through speed post; the copy of the Award being addressed to Subhash Chander at his business address, Alka Cinema, P-2, Sector -15, NOIDA. The Postman visited the cinema premises on 30th August, 1999 but Subhash Chander was not present. The Postman went to the address again the next day but Subhash Chander refused to receive the registered envelope, though the name of the sendor Dr. Amar Nath Kumar, the Arbitrator stood written thereon. The Postman accordingly returned the envelope to the sender with an endorsement of refusal dated 31st August 1999. Kailash Rani thereafter (on 7th April, 2000) filed an Application in the Court of the District Judge, Gautam Budh Nagar for the execution of the Award. Subhash Chander at this stage filed an Application under Order 21 Rule 26 of the Code of Civil Procedure in the Executing Court seeking a stay of the execution proceedings, and denying any knowledge of the passing of the Award dated 25th August, 1999 and also, inter alia, pleading that though he had not appeared before the 6 Arbitrator on 25th August, 1999, one Mishra, his Manager, had done so on his behalf, who, after having waited for an hour, had found neither the appellant nor the Arbitrator present, on which he had gone away and that this fact had been communicated to the Arbitrator by Registered post on 6th September, 1999. He also filed an application dated 28th November 2000 under Section 34 of The Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") praying that the ex-parte Award dated 25th August, 1999 be set aside emphasizing therein that he had received a copy of the Award only on 7th October, 2000 during the course of the execution proceedings. Subhash Chander expired on 29th November 2000 and is now represented by his L.Rs including respondent No. 1 Rakesh Bala Aneja, his widow. Kailash Rani, in response to the aforesaid objection petition, filed a reply pleading that it was time barred and raising several objections on merits as well. The District Judge - the Executing Court, thereafter, called upon the parties to produce their evidence. The statement of the Postman Dharam Pal, who had tendered the envelope on 30th and 31st 7 August, 1999 which Subhash Chander had refused to accept was recorded. The Court accordingly concluded that as Subhash Chander had refused to accept the notice from the Postman he was deemed to have been served and as such the application under Section 34 was clearly beyond time as the maximum time permissible for such an application was 90 days. The objection petition was, thus, dismissed. Rakesh Bala filed a Revision Petition in the Allahabad High Court which set aside the order of the Executing Court vide the impugned judgment dated 13th November 2006, which to us, suffers from some basic contradictions. This is what the Court had to say:

6. A bare perusal of the aforesaid provisions would reveal that if a written communication is delivered to the addressee personally at his place of business, it shall be deemed to have been received by him on the day it was delivered. Admittedly, a copy of the award had been sent to Subhash Chander at the Alka Cinema which was, in fact, the property which was the subject matter of the partnership business between the 14 parties. In this view of the matter, the statement of the postman Dharam Pal becomes extremely relevant wherein he deposed that on the 30th August 1999, Subhash Chander had not been present in the cinema premises and that on the next day he had refused to receive the communication even when tendered to him which fact had been endorsed by him on the envelope which had then been returned to the sender. We are, thus, of the opinion that by virtue of sub-clause (a) of Section 3 (1) read with Section 3(3), a presumption that the document had indeed been delivered is writ large on the facts of the case. Mr. Ranjeet Kumar has, however, drawn our attention to the certificate issued by Hotel Shakti. We find that this document is dated 26th August 2003 that is about four years after the event. Moreover, it is significant that in the objections filed in the executing court, no reference whatsoever had been made to this communication and, even more significantly, it had been produced in the Executing Court for the first time during the course of arguments. We are, therefore, of the opinion that this document is an afterthought and created with the object of strengthening the 15 submission that the copy of the award could not have been delivered to Subhash Chander as he had been absent from the cinema on the two crucial dates.

The Chief Engineer is directly concerned with the arbitration, as the subject-

As would be evident, no analogy between the case before us and the above cited case exists. The second judgment relied upon by Mr. Ranjeet Kumar i.e. Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd. (2003) 5 SCC 705 20 deals with the general policy pertaining to certain kinds of arbitration agreements and has nothing to do with the question posed before us. We, therefore, find that Mr. Ranjeet Kumar's arguments based on these two cases are misplaced.

It will not be out of place to mention here that by means of letter dated 2.8.99 sent through speed post addressed to Shri S.C.Aneja and copy endorsed to me, Smt. Kailash Rani Dang informed that the documents shall be produced before the Arbitrator and that Shri S.C. Aneja is free to inspect and get the copies from Dr.Amar Nath Kumar on that date i.e. 8.8.99 accordingly.

I waited upto 2 p.m. on 25.8.99 for Shri S.C.Aneja to appear but nobody appeared on his behalf. Thus, it is established that Shri S.C.Aneja only wanted to delay the proceedings and he deliberately absented himself in the hearing and accordingly, I was left with no option but to proceed/continue with the arbitration proceedings in his absence."

Nothing more needs be said about Subhash Chander's conduct in the face of these serious indictments by the arbitrator.

9.In view of the above observations, and the fact that no misconduct has been alleged against the arbitrator, we must take it as proved that Subhash Chander had deliberately stayed away from the arbitration proceedings in order to frustrate and delay the claim of Kailash Rani. 25

11. The judgment of the High Court cannot, to our mind, be sustained. We, accordingly, allow Civil Appeal No. 7258 of 2008 arising out of SLP) No. 1958 of 2008, set aside the judgment of the High Court and restore that of the Executing Court dated 31st October 2006. Civil Appeal No. 7257 of 2008 arising out of SLP) No. 1957 of 2008 is rendered infructuous. There will be no order as to costs.