Case: Kinnari Mullick &amp; Another Vs. Ghanshyam Das Damani

2. The Appellants, being joint owners of premises No.4 Wood Street, Kolkata, known as 4C, Dr. Martin Luther King Sarani, Kolkata, entered into two development agreements with the Respondent for a construction of a multi storied building. On completion of construction of the building sometime in 2003, the Appellants entered into a further agreement with the Respondent in terms of which the Respondent, for better enjoyment of the property, distributed the owners allocation. In terms of the said agreement, the Respondent fully sold and transferred his share of the premises to various prospective buyers with proportionate area of the land to them as well as in common areas. According to the Appellants, the Respondent is not in possession of any portion of the suit premises. The Appellants have also executed and registered the conveyance along with the proportionate right in common areas and land of the said premises to various transferees, save and except two flats. The said agreement contained an Arbitration clause which readsThat all disputes and/or differences between the parties herein shall be referred to arbitration in terms of the provisions of the Arbitration & Conciliation Act, 1996.The Respondent asserted that he was entitled to execution and registration of conveyance in respect of 50% built up area on the ground floor of such premises. That claim was rejected by the Appellants. The Respondent, through his advocates letter dated 21.11.2009 addressed to the Appellants, inter alia informed them about the appointment of one Siddhartha Sankar Mandal, Advocate as arbitrator and further, that the said arbitrator would send intimation to the Appellants about the date, time and venue in respect of the arbitration proceedings to be held by him. The said letter, however, did not specify that Siddhartha Sankar Mandal was appointed as Sole Arbitrator nor did it call upon the Appellants to appoint their nominee arbitrator. The Appellants then received communication through Siddhartha Sankar Mandal dated 01.11.2009 stating that he has been appointed as arbitrator to arbitrate the dispute between the Appellants and the Respondent and that he would enter upon the reference on 10.11.2009. By this letter, the Appellants were called upon to remain present so as to hold a meeting as scheduled. According to the Appellants, the letter did not even provide for 30 days time between the date of meeting and the receipt of the communication by the Appellants. Nevertheless, the arbitrator proceeded with the arbitration proceedings and held meetings. The Appellants did not file their statement of defence. Instead, they filed an application on 10.05.2010 before the arbitrator under Section 16 of the Act, inter alia challenging the composition of the Arbitral Tribunal and also raising the issue of jurisdiction to proceed with the arbitration as a Sole Arbitrator. The arbitrator, however, rejected the said application on 27.08.2010 by an interim award.4. The Appellants then filed their counter statement in November 2010 to the statement of claim in the said arbitral proceedings without prejudice to their contention that, the Arbitral Tribunal has not been properly constituted and that the arbitrator had no jurisdiction to adjudicate the alleged dispute referred to him. The Appellants were also advised to file an application under Section 14 before the High Court, alleging bias on the part of the arbitrator and for a declaration that the arbitrator had become incompetent to perform his functions. The learned Single Judge of the High Court at Calcutta vide judgment dated 17.09.2012 disposed of the said application by reserving the right of the Appellants to raise all grounds mentioned in the application regarding the competence of the Arbitral Tribunal at the time of challenging the award under Section 34 of the Act, if such occasion arose.5. The Appellants then received a copy of the purported award dated 18.06.2013 passed by the Arbitral Tribunal. The arbitrator allowed the claim of the Respondent and directed the Appellants to execute and register appropriate deed and/or deeds as proposed by the Respondent vide its Advocates letter dated 29.06.2009; and further directed that conveyance and/or conveyances was/were to be executed and registered by the Appellants, costs and expenses thereof were to be borne by the Respondent within a period of 30 days from the date of the award irrespective of any intervening holiday and/or holidays. The said award, however, did not contain any reason for allowing the claim of the Respondent.6. Being dissatisfied with the interim award dated 27.08.2010 and final award dated 18.06.2013 passed by the Arbitral Tribunal, the Appellants filed an application under Section 34 of the Act, for setting aside of the said awards. The learned Single Judge was pleased to allow the said application on the finding that the impugned award did not disclose any reason in support thereof. The impugned award was accordingly set aside and the parties were left to pursue their remedies in accordance with law. The relevant portion of the decision of the learned Single Judge readsthe present award is completely lacking in reasons and is littered with the unacceptable expressions like "I feel that the claim is justified", "I find no basis" and the like which cannot be supplement for reasons that the statute demands, A.P. No.1074 of 2013 is allowed by setting aside the award dated June 18, 2013. The parties are left free to pursue their remedies in accordance with law.Against the aforementioned decision the Respondent preferred an appeal before the Division Bench of the High Court at Calcutta. The Appellants also filed a cross objection in respect of the adverse findings recorded by the learned Single Judge against them. The cross objection bearing APO No.223 of 2014 and APOT No.318 of 2014, were heard and decided together by the Division Bench vide impugned judgment dated 13.08.2014. The Division Bench affirmed the findings and conclusion recorded by the learned Single Judge that the award did not contain any reason whatsoever and thus rejected the appeal preferred by the Respondent, in the followinghave considered the rival contentions. Section 31 is clear that would require the Tribunal to assign reason. The award would suffer from such lacunae. We would not be in a position to agree with Mr. Sharma when he would contend, it was reasoned, but reasons might have been insufficient.The learned Judge observed, "The award does not indicate a line or sentence of reasons and notwithstanding the petitioners herein, having pulled out of the reference and not urging theiror any defence to the claim, it was still incumbent on the arbitrator to indicate the grounds on which the respondents were entitled to succeed".We fully endorse what his Lordship would say as quoted (supra). Hence, the appeal fails on suchconsidering the cross objection filed by the Appellants, the Division Bench negatived the ground urged before it about the inappropriate and illegal constitution of the Arbitral Tribunal. As a result, the cross objection filed by the Appellants was also rejected. Having decided as above, the Division Bench suo moto decided to relegate the parties before the Arbitral Tribunal by sending the award back with a direction to assign reasons in support of its award. It will be useful to reproduce the observations of the Division Bench in this regard. The same readson we would, however, agree with Mr. Sharma when he would draw our attention to Section 13. The learned Judge, in our view, rightly rejected the contention of the respondents. The challenge procedure as spelt out in Section 13 would refer to constitution of the Tribunal as well. Section 4 would clearly provide, if a party knowing his right does not take any step that would debar him to object at a later stage as if he shall be deemed to have waived his right to object.Section 34 would empower the Court to remit the award to the Arbitrator, at a stage when the award was under challenge, to eliminate the ground for setting aside of the arbitral award. Applying such provision we send the award back to the Arbitrator with a direction, he must assign reason to support his award. However, we wish to give the Arbitrator a free hand. If he feels, further hearing to be given to the parties, he may do so and upon hearing, he may publish his award in accordance with law adhering to the norms and proceduresunder the said Act 1996 without being influenced by the award that the learned Judge already set aside.The appeal is dismissed without any order as tosupplied)8. Aggrieved by the highlighted operative part of the direction issued by the Division Bench to send back the award to the Arbitral Tribunal for assigning reasons in support of the award, the Appellants have approached this Court by way of present appeal.

Court's reasoning:
11. We have heard the learned counsel for the parties. At the outset, we may note that, if the plea taken by the Appellants in relation to the concluding part of the impugned judgmentof sending the award back to the Arbitral Tribunal for recording reasonswas to be accepted, we may not be required to dilate on any other argument. Inasmuch as the learned Single Judge allowed the application under Section 34 of the Act for setting aside of the award preferred by the Appellants; and the Division Bench has already affirmed the conclusion recorded by the learned Single Judge while dismissing the appeal preferred by the Respondent. Thus, the award has been set aside on that count. The Respondent has not challenged that part of the impugned judgment and has allowed it to become final.On a bare reading of this provision, it is amply clear that the Court can defer the hearing of the application filed under Section 34 for setting aside the award on a written request made by a party to the arbitration proceedings to facilitate the Arbitral Tribunal by resuming the arbitral proceedings or to take such other action as in the opinion of Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. The quintessence for exercising power under this provision is that the arbitral award has not been set aside. Further, the challenge to the said award has been set up under Section 34 about the deficiencies in the arbitral award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award. No power has been invested by the Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in4 of Section 34.In the present case, the learned Single Judge had set aside the award vide judgment dated 07.03.2014. Indeed, the Respondent carried the matter in appeal before the Division Bench. Even if we were to assume for the sake of argument, without expressing any opinion either way on the correctness of this assumption, that the appeal was in continuum of the application under Section 34 for setting aside of the award and therefore, the Division Bench could be requested by the party to the arbitral proceedings to exercise its discretion under Section 34(4) of the Act, the fact remains that no formal written application was filed by the Respondent before the Division Bench for that purpose. In other words, the Respondent did not make such a request before the learned Single Judge in the first instance and also failed to do so before the Division Bench rejected the appeal of the Respondent.A priori, it must follow that the Division Bench committed manifest error in issuing direction in the concluding part of the impugned judgment, as reproduced hereinbefore in paragraph No.7. Such direction could not have been issued in the fact situation of the present case. The impugned direction suffers from the vice of jurisdictional error and thus cannot be sustained. We have no option but to quash and set aside the same.18. As the Respondent has not challenged the decision of the Division Bench, we are left with the situation where the award has been set aside, and as observed by the learned Single Judge, with liberty to the parties to pursue their remedies in accordance with law.