Bombay High Court

Mukesh Nanji Gala And 2 Ors vs M/S Heritage Enterprises And Anr on 8 December, 2014

Author:
R.D. Dhanuka

Bench:
R.D. Dhanuka

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ARBP515.13

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 515 OF 2013

1. Mukesh Nanji Gala, )
of Mumbai, Indian Inhabitant, )
Aged 49 years, Occupation : Business, )

residing at 502, Aster Co-operative Housing)
Society, Opp.Agri Samaj Road, )
Gatla Village Road, Chembur East, )
Mumbai - 400071 )

2. D.Venugopal, ig )
of Mumbai, Indian Inhabitant, )
Aged 48 years, Occupation : Service, )
residing at D-13, Yogakshema Building, )

Nath Pai Nagar, Ghatkopar (East), )
Mumbai - 400071 )

3. C.S.Srinivasan )

of Mumbai, Indian Inhabitant, )
Aged 83 years, Occupation : Retired, )

st
residing at Flat No.10, Apsara, 21 Road, )
Chembur East, Mumbai - 400071 ) ..... Petitioners

VERSUS

1. M/s.Heritage Enterprises, )
a partnership firm, having its office at )
18, Charisma Centre, 19th Road, )
Chembur East, Mumbai - 400071 )

2. Justice Arvind V.Savant (Retd.) )
of Mumbai Indian Inhabitant, having its )
office at 1004-A, Mittal Towers, A Wing, )
10th Floor, Nariman Point, )
Mumbai-400021 ) ..... Respondents

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Mr.Hiralal Thacker, Senior Advocate, a/w. Mr.Jeetendra Ranawat, Ms.Urvi Patel,
i/b.Mr.Manoj Kadam for the Petitioners.

Mr.P.K.Samdhani, Senior Advocate, a/w. Mr.Aashish Kamat, Mr.S.A.Oak,

Mr.C.M.Jadhav, i/b. Mahesh Menon & Co. for Respondent no.1.

CORAM : R.D. DHANUKA, J.

RESERVED ON : 28th NOVEMBER, 2014

PRONOUNCED ON : 8th DECEMBER, 2014
JUDGMENT

By this petition filed under
section 34
of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as the said 'Act') the petitioners have prayed for
leave to file this petition for raising their objections to the impugned award dated

19th March, 2013 and have prayed that the said award be quashed and set aside.
The learned arbitrator is impleaded as respondent no. 2. The petitioner has also
prayed that this court shall direct the learned arbitrator to deposit in this court all

the records, paper and proceedings of the arbitration between the respondent no. 1

(original claimant) and the society i.e. Apsara Coop. Hsg. Soc. Ltd. By the
impugned award the learned arbitrator had declared that the MOU dated 30 th April,
2008 executed between M/s. Heritage Enterprises (original claimant in arbitration

proceedings and respondent no. 1 herein) and Apsara Coop. Hsg. Soc. Ltd. is valid
subsisting, enforceable and binding upon those parties and that the claimant is
entitled to specific performance thereof.

2. At the threshold Mr. Samdani learned senior counsel for the respondent no. 1
raises a preliminary objection to the maintainability of this petition. In view of the
issue of maintainability raised by the learned senior counsel for respondent no. 1 I
have heard the learned senior counsel for the petitioner as well as the respondent
no. 1 on the issue of maintainability of this petition filed by the petitioners.

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3. Mr.Samdani learned senior counsel for the respondent no. 1 submits that the

memorandum of understanding which recorded an arbitration agreement was
between the respondent no. 1 developer and M/s. Apsara Co-op. Hsg. Soc., Ltd a

society registered under the provisions of
Maharashtra Co-operative Societies Act,
. The said society consists of 24 tenements allotted to 24 persons who are
members of the said society. Petitioners are three of the members of the said

society. Learned senior counsel submits that the petitioners were not parties to the
said memorandum of understanding which contained arbitration agreement. It is

submitted that the society had passed a resolution pursuant to which dispute was
referred to arbitration. The petitioners were not parties to the arbitration

proceedings as they were not parties to the arbitration agreement.

4. It is submitted that since the petitioners were not parties to the arbitration
agreement, petitioners cannot file a petition under
section 34
of the Arbitration and
Conciliation Act, for impugning an arbitral award. In support of this submission

learned senior counsel invited my attention to
section 34
and also definition of

'Party' defined under
section 2(1) (h)
of the Act. It is submitted by the learned
senior counsel that only a party to the arbitration agreement can file a petition

under
section 34
of the Act and not an outsider. It is submitted that
section 34
has
to be read with
section 2(1) (h)
of the Act. There is no general power under
section
of the Act to permit a person who is not a party to the arbitration agreement to
file a petition for impugning an arbitral award. It is submitted that the said Apsara

Co. Hsg. Soc. Ltd. who was party to the arbitration agreement and also before the
learned arbitrator has accepted the arbitral award by passing a resolution. The
impugned award has been acted upon by the society. The petitioners who are
members of the society thus cannot be allowed to impugn the arbitral award as
they were not parties to the arbitration agreement.

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5. Learned senior counsel submits that this court has no power to grant any

leave to the petitioners to file arbitration petition and to impugn the arbitral award.
It is submitted that this is not an appellate proceeding in which a party aggrieved

can apply for leave to file an appeal. Learned senior counsel placed reliance on

section 36
of the Mah. Coop. Societies Act, 1960 and submits that the society
having registered is a body corporate and thus society only can be sued or sue in its

own name. Society has to act through the committee. No members can file any
proceedings on behalf of the society. It is submitted that the members of the

society speak through society and has no independent say.
In support of this
submission, learned senior counsel placed reliance on the judgment of Division

Bench of this court in case of
Girish Mulchand Mehta Vs. Mahesh S.Mehta &
Anr.
2010 (1) All MR 719 and in particular paragraphs 15 and 16 which read thus :

15. The Appellants would then rely on the decision of the Apex
Court in
Ramesh Himmatlal Shah v. Harsukh Jadhavji Joshi

reported in MANU/SC/0531/1975 : AIR 1975 SC 1470 to

contend that the flats in question occupied by them have been
allotted to them by the Housing Society which allotment is

coupled with the right to transfer their shares of the Society
and interest in the said flat which is the property of the Society.

In
the said decision
, the Apex Court has observed that the right
so enjoyed by the member is the species of the property

namely the right to occupy a flat of this type, which assumes
significant importance and acquires under the law a stamp of
transferability in furtherance of interest of commerce. It went
on to observe that there is no fetter in any of the legal
provisions against such a conclusion and for which reason the

attachment and sale of the property of the member in execution
of the decree are valid under the law. The legal position
expounded by the Apex Court in
the said decision
will be of no
avail to the case on hand. The crucial question is whether the
members can be heard to say that their rights in the flats
occupied by them were dehors the rights of the Society therein
and that they were not claiming under the Society at all. In our
considered opinion such stand of the members(Appellants

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herein) cannot be countenanced.

16. In the present case, it is not in dispute that the General
Body of the Society which is supreme, has taken a conscious

decision to redevelop the suit building. The General Body of
the Society has also resolved to appoint the Respondent No. 1
as the Developer. Those decisions have not been challenged at
all. The Appellants who were members of the Society at the

relevant time, are bound by the said decisions. The Appellants
in the dispute filed before the Cooperative Court have only
challenged the Resolution dated 27/4/2008, which challenge
would merely revolve around the terms and conditions of the

Development Agreement.
As a matter of fact, the General
Body of the Society has approved the terms and conditions of

the Development Agreement by overwhelming majority.
Merely because the terms and conditions of the Development
Agreement are not acceptable to the Appellants, who are in

minuscule minority (only two out of twelve members), cannot
be the basis not to abide by the decision of the overwhelming
majority of the General Body of the Society. By now it is well
established position that once a person becomes a member of
the Cooperative Society, he looses his individuality with the

Society and he has no independent rights except those given to

him by the statute and Bye-laws. The member has to speak
through the Society or rather the Society alone can act and
speaks for him qua the rights and duties of the Society as a
body (see
Daman Singh and Ors. v. State of Punjab
reported in

MANU/SC/0392/1985 : AIR 1985 SC 973).

This view has
been followed in the subsequent decision of the Apex Court in
the case of
State of U.P. v. Chheoki Employees Cooperative
Society Ltd.
reported in MANU/SC/0332/1997 : AIR 1997 SC
1413. In this decision the Apex Court further observed that the

member of Society has no independent right qua the Society
and it is the Society that is entitled to represent as the
corporate aggregate. The Court also observed that the stream
cannot rise higher than the source. Suffice it to observe that so
long as the Resolutions passed by the General Body of the
Respondent No. 2 Society are in force and not overturned by a
forum of competent jurisdiction, the said decisions would bind
the Appellants. They cannot take a stand alone position but are

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bound by the majority decision of the General Body. Notably,
the Appellants have not challenged the Resolutions passed by

the General Body of the Society to redevelop the property and
more so, to appoint the Respondent No. 1 as the Developer to

give him all the redevelopment rights. The propriety rights of
the Appellants herein in the portion (in respective flats) of the
property of the Society cannot defeat the rights accrued to the
Developer and/or absolve the Society of its obligations in

relation to the subject matter of the Arbitration Agreement. The
fact that the relief prayed by the Respondent No. 1 in
Section 9

Petition and as granted by the Learned Single Judge would
affect the propriety rights of the Appellants does not take the

matter any further. For, the propriety rights of the Appellants in
the flats in their possession would be subservient to the

authority of the General Body of the Society. Moreso, such
rights cannot be invoked against the Developer (Respondent
No. 1) and in any case, cannot extricate the Society of its

obligations under the Development Agreement. Since the relief
prayed by the Respondent No. 1 would affect the Appellants,
they were impleaded as party to the proceedings under
Section
of the Act, which was also necessitated by virtue of Rule
803E of the Bombay High Court (Original Side) Rules. The

said Rule reads thus:

" R803E. Notice of Filling Application to persons likely to
be affected.-

Upon any application by petition under the Act, the
Judge in chambers shall, if he accepts the petition, direct
notice thereof to be given to all persons mentioned in the
petition and to such other persons as may seem to him to be
likely to be affected by the proceedings, requiring all or any

of such persons to show cause, within the time specified in
the notice, why the relief sought in the petition should not
be granted."

6. Mr. Samdani learned senior counsel submits that since the petition filed by
the petitioners itself is not maintainable this court cannot enter into the merits of
the matter and any adjudication on merits in these circumstances would be without

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jurisdiction.
In support of this submission, learned senior counsel placed reliance

on the judgment of Supreme Court in case of
T.K.Lathika Vs. Seth Karsandas
Jamnadas
(1999) 6 SCC 632 and in particular paragraph 9. It is submitted that the

said M/s. Apsara Coop. Hsg. Soc. Ltd. who were the parties to the arbitration
proceedings have not been even impleaded as party respondent to this proceedings.

7. Mr. Thacker learned senior counsel for petitioners in reply to the preliminary
objection raised by Mr. Samdani, learned senior counsel submits that the

petitioners are admittedly the members of the said society. It is submitted that the
petitioners being allottees of flats have right and interest to occupy their respective

flats which rights can be even sold/transferred and can be attached in execution of
the decree. It is submitted that since the society has in collusion with the

respondent no. 1 has not impugned the arbitral award which was rendered against
the society and in favour of the respondent no. 1 developer which affected the
rights of the petitioners, petitioners being parties affected by the impugned award,

are entitled to exercise their rights under
section 34
of the said Act to impugn such

arbitral award.

8. Learned senior counsel submits that even minority members of the society
can challenge an arbitral award if the majority members have decided not to
challenge the arbitral award for any reasons. It is submitted by the learned senior
counsel that though petitioners were not parties to the arbitration proceedings,

since the liability of the society as well as members are now crystalized under the
said award and the rights of the petitioners having been affected and prejudiced,
petitioners are entitled to challenge the impugned award. It is submitted by the
learned senior counsel that this court has wide powers to grant leave to the
petitioners to challenge the impugned award. Learned senior counsel submits

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that the petitioners have very good chances of succeeding in this petition on merits

and this court therefore, shall grant such leave in favour of the petitioners to
impugn the arbitral award.

9. Learned senior counsel placed reliance on the judgment of the Supreme
Court in case of Ramesh Himmatlal Shah Vs. Harsukh Jadhavji Joshi AIR 1975

SC 1470 and in particular paragraphs 17 and 18 in support of the submission that
the flat in a tenant co-partnership housing society under the Maharashtra Co-

operative
Societies Act
is liable to attachment and sale in execution of the decree
against the member who has been allotted flat by the society and is accordingly

party aggrieved., Paragraphs 17 and 18 of
the said judgment
read thus:

17. From a review of the foregoing provisions the position
with reference to the particular Society is as follows:

There is no absolute prohibition in the Act or in the Rules or in
the Bye-laws prohibiting transfer of interest of a member in the

property belonging to the Society. The only transfer which is
void under the Act is one made in contravention of Sub-section

(2) of
Section 47
[see
Section 47(3)
]. We have not been able to
find any other provision anywhere to the same effect. In the
scheme of the provisions a dichotomy is seen between share or
interest in the capital and interest in property of the Society.

While
Section 29(2)
refers to transfer of a member's share or
his interest in the capital or property of any society,
Section 31

in contrast speaks of "the share or interest of a member in the
capital of a society".
The Act
, therefore, makes a clear
distinction between the share or interest in the capital and

share or interest in property of the Society. We have also
noticed that the Act does recognise interest in the immovable
property of the Society as well [see
Section 47(1)(b)
]. We have
seen the qualifications for membership. There is no reason to
suppose that if the qualifications under the Bye-laws are
fulfilled an application" for membership may be rejected. It is
admitted that the flat is owned by the Society and the
judgment-debtor has a right or interest to occupy the same.

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18. This right or interest to occupy is a species of property. We
have to consider whether this right to the particular property is

attachable and saleable in execution of the decree against the
judgment-debtor. It is contended by Mr. Chatterjee, amicus

curiae, that
Section 31
of the Act completely bars attachment
and sale of the said property in execution of the decree. We
have already pointed out the difference in language between

Section 29
and
Section 31
and also made reference to
Section

47(1)(b)
in that connection. There is nothing in the language of

Section 31
to indicate that the right to occupation which is the
right to be sold in auction is not attachable in execution of the
decree. There is nothing in
Section 31
to even remotely

include a prohibition against attachment or sale of the
aforesaid right to occupation of the flat. Once
Section 31
is out

of the way, we are left with
Section 29
wherein we do not find
even a provision of prior consent for transfer of share or
interest in such property. The only restrictions under
Section

29(2)
are that the member may not transfer his interest in the
property prior to one year and the transfer is made to an
existing member of the Society or to a person whose
application for membership has been accepted by the Society.
It is true that bye-law 71D says that a member to whom a

tenement is allotted shall not assign or underlet, vacate or part

with the possession of the tenement or any part thereof without
the previous consent in writing of the Managing Committee,
but there is nothing to show that contravention of this bye-law
makes the assignment void under the Act unlike in the case of

a transfer being void under
Section 47(3)
. There is no
impediment to ratification of the assignment by the Committee
particularly in view of the legal position arising out of the
conjoint effect of
Section 29
, Rule 24 and bye-law 9.
Section
read with Rule 24 shows that there is no prohibition as such

against transfer of a share to a member or even to a non-
member if he consents to be a member and makes an
application for membership by purchasing aye shares as
provided under bye-law 9. Reading the aforesaid provisions
there is no reason to think that there is any question of refusal
of membership of the Society to a non-member if he is
qualified otherwise and makes an appropriate application in
which case the transfer of shares will be operative and thus the

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assignment of the right to occupation will hold good. Further it
is significant that under
Section 146(a)
of the Act,

contravention of Sub-section (2) of
Section 47
is punishable
under
Section 147
of the Act. Contravention of any bye-law is,

however, no offence. We, therefore, unhesitatingly come to the
conclusion that this species of property, namely the right to
occupy a flat of this type, assumes significant importance and
acquires under the law a stamp of transferability in furtherance

of the interest of commerce. We have seen no fetter under any
of the legal provisions against such a conclusion. The
attachment and the sale of the property in this case in
execution of the decree are valid under the law.

10. Mr. Thacker learned senior counsel also placed reliance on the judgment of

Delhi High Court in case of Sohan Nayyar And Ors. Vs., Lf. Governor of Delhi
and another AIR 1983 Delhi 301 and in particular paragraph 17 to 21, 25 to 27 in

support of the submission that even minority members of the society can challenge
an arbitral award. Paragraphs 17 to 21 and 25 to 27 of the said judgment read
thus :

17. In the case of Co-operative Society, the liability of a

member may be limited or it may be unlimited. If there is a
limited liability, then the Society will use the words 'limited' or
its equivalent as part of its name. It so happens that in the
instant case, the liability of the members is limited' as it uses

the word 'limited' as part of its name. All this is provided in
various sections of the
Delhi Co-operative Societies Act, 1972
,
Even when the liability is limited, any claim against the
Society can be recovered from the property of the Society as
well as from the members of the Society to the extent of their

liability. This is so provided in
S. 75
of the Act Even if no
personal liability is involved, it is obvious that each member of
the Society has an interest in the Society and as each member
can have only one share, all the members share the interest
equally. If the interests of the Society are adversely affected,
the value of the share of each member to that extent is
diminished. So, it cannot be denied that each member has an
interest in the Society. One of the items in the award is that a

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sum of Rupees 22,45,742/- has to be paid to the
Administration. There is also another item to the effect that the

Society shall not contest the smooth acquisitions of its land
and shall not appeal for enhancement of its compensation.

These two items are sufficient to show that the interest of the
members is adversely affected to some extent, though it is
difficult to see the exact implications of the award.

18. It appears that on this ground the members of the
Society can maintain objections if the Society itself does not
file the same.

19. There is yet another reason to come to the conclusion that
the objection could be maintained. From an analysis of the

facts set out earlier in the judgment, it plainly appears that the
Managing Committee was superseded on 9th July, 1971. The
application moved in this Court under S. 14 of the Arbitration

Act was moved by Shri Bal Mokand Vig who was the ex-

Secretary of the Society.
S. 14 (2)
of the Act provides that the
arbitrators or umpire may file the award at the request of the
parties or under directions by the Court. Obviously, for the

purpose of that application, a member of the Society was
treated as being competent to obtain an order from the Court to

direct the filing of the award. If we come to the conclusion that
no objections could be filed, then it would also have to be held
that the award has been wrongly filed in the Court because it
was at the instance of a party not entitled to maintain the

application. We do not think that this is the correct view. The
exact language used in
S. 14 (2)
is as follows:

" The arbitrators or umpire shall, at the request of any party
to the arbitration agreement or any person claiming under
such Party or if so directed by the Court cause the award or

a signed copy to be filed in the Court."

This shows that a person claiming under a party to the
arbitration agreement has also a right. If this right exists under

S. 14 (2)
, it would appear that that party can also move the
Court and consequently can also file the objections. All the
members of the Society can be deemed to be persons claiming
under the Society and, therefore, they are entitled to get the

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award filed in the Court and must also have the right to
maintain the objections, otherwise, there was no point in

giving the right to a person claiming under a party to move the
arbitrator or the Court, as seems to be implicit in the language

of
S. 14 (2)
. For this reason also it seems the objections could
be maintained by the members.

20. It is now necessary to turn to perhaps the most important

aspect of this case, which is regarding the rights of individual
members of a Corporation to maintain a suit in the name of the
Corporation or in the interest of the Corporation, since it is the
analogy of a Corporation that has been applied here to a Co-

operative Society as well. This matter was considered by the
Federal Court in Dr. Satya Charan Lal v. Rameshwar Prosad

Bajoria, . It was stated in that judgment that it was well-settled
that in order to redress a wrong done to a company or to
recover monies or damages alleged to be due to the company,

the action should be brought by the company itself. This was
the rule in Foss v. Harbottle, . It is unnecessary to refer to the
other cases cited by the Federal Court. The law was
summarised in the following terms:-

" The correct position seems to us to be that ordinarily the
directors of a company are the only persons who can

conduct litigation in the name of the company, but when
they are themselves the wrong-doers against the company
and have acted mala fide or beyond their powers, and their
personal interest is in conflict with their duty in such a way

that they cannot or will not take steps to seek redress for the
wrong done to the company, the majority of the
shareholders must in such a case be entitled to take steps to
redress the wrong."

This view upheld the right to the majority of share-holders to
maintain an action in the name of the company. The law has
been summarised in this behalf in Para No. 767 of Halsbury's
Laws of England, Fourth Edition Vol. 7 as follows:

" In an action to redress a wrong done to a company or to
recover money or damages alleged to be due to it, the
company is the only proper plaintiff, but its name should be

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used as plaintiff by direction of the company or its
directors. Where the members complaining represent the

majority of the company, the action may be brought in the
company's name, ever though the directors object. The

court may allow the matter to stand so that a company
meeting can be held to decide whether the action should
proceed in the company's name. At such a meeting the votes
of the persons complained of cannot be excluded.

Nevertheless, proceedings may be brought by any member
or members in his or their own name or names where such
authority cannot be obtained and the act complained of is of
a fraudulent character or oppressive or is ultra vires the

company, or criminal or where the wrongdoers control the
majority of votes; or where the result would otherwise be

that the company was carrying out by an ordinary
resolution something which could only be properly carried
out by a special resolution, or by any other resolution

requiring a prescribed majority."

Thus, the position as far as the latest Edition of Halsbury's
Laws of England is concerned is that the action may be
brought without the directors consent by a majority of

shareholders in the name of the company and in some cases

where the majority does not support the litigation by the
shareholders in their representatives capacity. In such a case,
the suit may be either by all the complaining members
altogether or representatively by some of them. There is no

case in which the minority of shareholders cannot protect their
interest.

21. Keeping this in view, it does not seem right to hold that the
members of the Society who have filed objections cannot

maintain the objections. These objections have been filed in
the individual names of the members and now, they are
supported by the present management of the Society. No
meeting was called by the Court because it was not a case of
objections being filed in the name of the CO-operative Society.

25. Applying the above principle to the case of the present
objector, on the footing that they are a minority set of
shareholders in the Co-operative Society, it would appear that

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some remedy should be open to them in respect of the
Society's failure to object to the award. For the purpose of this

analysis, it must be assumed that there is something wrong
with the award, if this is so, it would be for the Society to

challenge the same in normal circumstances. If the persons in
charge of the management refuse to challenge the award, then
it should be open to the minority shareholders to maintain a
suit in respect of the award. However.
S. 32
of the Arbitration

Act states that no suit can lie on any ground whatsoever for a
decision upon the existence, effect or validity to arbitration
agreement or award. So, these 143 members could not
maintain a suit, on the principles laid down by the Supreme

Court in Jawahar Lal Barman v. Union of India,
MANU/SC/0005/1961 : AIR 1962 SC 378. This means that

they can only approach The Court under the
Arbitration Act
.
This is, therefore, an additional ground on which the
objections could be heard by the Court.

26. To summarise the conclusions, it may be useful to state the
following propositions:-

(1) In the case of Corporations, where there are members, a

suit may be maintained by the Corporation acting through its
directors. If the directors refuse to act or the action complained

of is that of the directors themselves, then such a suit can be
maintained by the majority shareholders in the name of the
Corporation.

(2) If the action is challenged by the minority shareholders
when the directors refuse to act, then the action or suit has to
be brought by the minority shareholders in their own name.

This may be done by them acting jointly or there may be a
representative suit by a class of shareholders or members.

(3) In the case of an arbitration award which is filed in Court,
the objections may be filed by the parties thereto or if the
parties refuse to file objections or fail to file objections, then a
person claiming under them can also file objections provided
they can show some interest in the subject-matter of the award
or reference, as the case may be.

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(4) The principle which applies to appeals, namely, that third
parties can also file objections, even though not parties to the

suit, applies also to objections against an award being made a
rule of the Court subject to the same limitations, i.e., the

objectors must show that they have an interest in the subject-
matter of award or reference and they obtain leave of the Court
which should normally not be refused.

(5) In the case of arbitration awards against a Corporation
which have been filed in the Court, members of the
Corporation can maintain objections as they are debarred from
filing a suit because of
S. 32
of the Arbitration Act, to

challenge the award or the arbitration agreement, as the case
may be. These objections can be filed on the same basis as a

suit can be filed by majority or minority shareholders of a
company, which means that if the majority shareholders object
to the award they can do so in the name of the company and if

the minority shareholders challenge the same, they can do so
in their own names,

(6) In order to determine whether it is the majority or minority
shareholders who are maintaining the objections, the Court can

even call a meeting of the company.

27. Applying these propositions to the circumstances of this
case, it clearly appears that the nominated management of the
Society was not willing to file objections to the award. The
award was filed at the instance of one of the members of the

Co-operative Society and not at the instance of the parties to
the reference. Against this award, objections could be filed by
the majority of the members in the name of the Co-operative
Society or by a minority in their own names. If the objectors

could establish an interest in the subject-matter of the award,
they were entitled to get the leave of the Court to maintain the
objections or they could be treated as persons claiming under a
party and, therefore, entitled to maintain objections.
Alternatively, they could maintain these subjections on the
principles on which minority shareholders could challenge the
decision of the majority. For all these reasons, we think the
objections in this case were maintainable and we could allow

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the present appeal.

11. Mr. Samdani learned senior counsel in rejoinder invited my attention to the

judgment of Madras High Court in case of Chennai Container Terminal Pvt.
Ltd.etc. Vs. Union of India and Ors. reported in AIR 2007 Madras 225 (DB) and
submits that Division Bench of Madras High Court has considered the judgment of

Delhi High Court in case of Sohan Nayyar and Ors. (supra) relied upon by
Mr.Thacker learned senior counsel and has also considered the provisions of

Section 34
read with
section 2(1)(h)
of Arbitration and Conciliation Act, 1996 and
has distinguished the judgment of learned Delhi Court on the ground that the

provisions for impugning award under
section 30
read with 33 of the
Arbitration
Act, 1940
which were considered by the Delhi High Court and
section 34
of the

Arbitration and Conciliation Act, 1996 are totally different. It is submitted that the
principles laid down by Madras High Court in which the court had considered the
provisions under
section 34
of the Arbitration and Conciliation Act, 1996 read

with
section 2(1)(h)
which are squarely applicable to the facts of this case and

shall be considered by this court and not the judgment of Delhi High Court.
Paragraph 9 to 11 of the said judgment of Madras High Court read thus :-

9. However, in the case on hand the learned single Judge
has held that though
Section 34
of the Act contemplates
challenge of the award made by the party to the arbitration
agreement, in view of
Section 2(1)(h)
of the Act, the import of
the word 'party' can be judiciously expanded, if the context so

warrants. Hence, the word 'party' may include not only the
signatory to the arbitration agreement, but also a party non-

signatory to the agreement. According to the learned single
Judge, the contextual facts and circumstances warrant
expansion of the definition found under
Section 2(1)(h)
of the
Arbitration & Conciliation Act, 1996 to include the
Government of India, which is a party non-signatory for the
purpose of challenging the award under
Section 34
of the Act.

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We fail to appreciate the stand taken by UOI that it is a non-
signatory party to the agreement. Learned ASG was unable to

show as to how UOI can be said to be a party to the agreement
in the face of express provision contained in the agreement,

which defined party to include only "ChPT & CCTPL". The
word 'Party' is defined in
Section 2(1)(h)
of the Act to mean a
"party to an arbitration agreement" and therefore, ordinarily,
the expression 'Party' as used in
Section 34
of the Act must

carry the same meaning, namely, a party to the arbitration
agreement or award. But, as the opening part of
Section 2(1)

(h) of the Act shows, the definitional meaning is subject to
anything repugnant in the subject or context. We must,

therefore, see whether there is anything in
Section 34
or in the
context in which it occurs which should compel us to place a

broader meaning different from the one given to it in
Section
2(1)(h)
. In our opinion, there is nothing in the subject or
context of
Section 34
which would suggest us to depart from

the definitional meaning of the expression 'party'. The
expression 'party' is used in
Section 34(2)
in its definitional
sense to mean a party to the arbitration proceedings and does
not include a third person, who is not a party to the agreement.
To our mind the interpretation suggested by the learned ASG

would make the Act totally unworkable. It is well settled that

an award is final and binding only on the parties and can be
enforced only against the party to the award. A third party
would therefore be in a position to challenge the award, but
not be bound by it, if the challenge fails. Equally, a third party

can render the limitation period envisaged under the Act otiose
by merely claiming knowledge of the award long after the
period of limitation has expired.

10. Learned ASG, however, submitted that UOI is an

aggrieved party inasmuch as the arbitrator has totally
misconstrued the guidelines of UOI and therefore, the UOI can
challenge the award of the arbitrator. In support of his
submission, learned ASG placed reliance on the Division
Bench judgment of the Delhi High Court in Sohan Nayyar v.
Lt. Governor, Delhi MANU/DE/0483/1982 : AIR 1983 Delhi

301. The said decision is under the old
Arbitration Act
of 1940
and the Bench clearly found that the provisions of the Act of

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1940 do not specify as to which can make an application, and
therefore held that as the Act does not prohibit filing of an

objection by a third parties, there is no bar to some one else
filing objections provided they have some interest in the

subject matter of the litigation. As observed by the Supreme
Court in
Sundaram Finance Limited v. NEPC Limited
, the

Arbitration and Conciliation Act, 1996
is based on
UNCITRAL Model. It is entirely different from the
Arbitration

Act, 1940
. The provisions of this Act must, therefore, be
interpreted and construed independently and in fact reference
to 1940 Act may actually lead to misconstruction. In order to
get help in construing these provisions it is more relevant to

refer to the UNCITRAL Model Law rather than the 1940 Act.

11. Learned ASG, relying upon the decision of the Supreme
Court in ITI Ltd v. Siemens Public Communications Network
Ltd. MANU/SC/0502/2002 : [2002]3SCR1122 submitted that

the provisions
of CPC
would apply to the proceedings under

Section 34
of the Act and an aggrieved party for the purpose of
challenging the award can invoke
Section 34
of the Act. The
contention is required to be stated only for rejection. In ITI

Ltd. Case the Court held that merely because second appeal is
barred under Sub-section (3) of
Section 37
, remedy of revision

would not cease to be available. Although revision is not
specifically provided for by the Act but in the absence of any
express exclusion
of CPC
, no inference can be drawn that

provisions
of CPC
would not apply to proceedings arising
under the Act and revision is not maintainable. This decision
has no application to the case on hand.
Section 34
of the Act
read with the definition of 'party' in
Section 2(1)(h)
of the Act
makes it amply clear that only a party to the arbitration

agreement can invoke the provisions of
Section 34
of the Act.
A third party has no locus standi to challenge the award under

Section 34
of the Act.

REASONS AND CONCLUSION

12.
Section 34
of the Arbitration and Conciliation Act, 1996 provides for an
application for setting aside arbitral award.
Section 34(2)
provides for the grounds

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of challenge of an arbitral award on which such award may be set aside by the

court. The said provision also provides that an arbitral award may be set aside if
the party making application furnishes any of the proof that is specifically setout in

section 34(2) (a) (i)
to (v). Under
section 2(1) (h)
party is defined as 'party' means
a party to an arbitration agreement.

13. A perusal of the record clearly indicates that none of the members of the
society were parties to the development agreement entered into between the

respondent no.1 and the society. It is however the case of the petitioners that since
the society did not challenge the impugned award and the said award has affected

the rights of the petitioners in respect of their respective flats in the society,
petitioners who are claiming through the society are also thus parties to the

arbitration agreement and being parties aggrieved are entitled to challenge the
impugned award though the society has not impugned the said arbitral award.

14. A perusal of the
Arbitration and Conciliation Act, 1996
in toto shows that the

term party has been used in almost every section of the said Act. Under
section 7

of the said Act the parties by an agreement can submit to arbitration all or certain

disputes which have arisen or may arise between them in respect of a defined legal
relationship whether contractual or not. It is provided that an arbitration agreement
shall be in writing.
Section 7(4)
of the Act provides as to when an arbitration
agreement can be construed as in writing if it is contained in various documents

and pleadings.

15.
Section 8
provides that a party to an arbitration agreement can file an
application before a judicial authority before which an action is brought in a matter
which is the subject of an arbitration agreement, to refer parties to arbitration.

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Section 9
of the Act provides for interim measures which can be applied by a party.

Section 10
provides for composition of arbitral tribunal which can be determined
by the parties to the arbitration agreement.
Section 11
of the Act provides for

appointment of arbitrators in the mode and manner prescribed therein and
prescribes for an application to be made by a party to the arbitration agreement for
appointment of arbitrators before the Chief Justice or any person or institution

designated by him.

16.
Sections 12
and
of the Act provides for grounds for challenge which
challenge can be made only by the parties to the arbitration agreement. Under

section 14
of the Act, the parties to the arbitration agreement can apply to the court
to decide on the termination of the mandate if a controversy remains concerning

any of the grounds referred to in clause (a) of sub-
section 1
of
section 14
.
Section
of the Act provides for termination of mandate and for making an application by
the parties to the arbitration for substitution of arbitrator.
Section 17
of the Act

permits parties to the arbitration agreement to apply for interim measures before

the arbitral tribunal.
Section 18
of the Act provides that the parties shall be treated
with equality and each party shall be given a full opportunity to present his case.

17.
Section 19
provides for determination of rules of procedure and further
provides that subject to the said part, the parties are free to agree on the procedure
to be followed by the arbitral tribunal in conducting its proceedings.
Section 20

provides for an agreement between the parties to the arbitration agreement to agree
on the place of arbitration.
Section 21
provides as to when the arbitral proceedings
commences unless otherwise agreed by the parties.
Section 22
to
of the Act
provides for the mode and manner of conducting arbitration proceedings by the
parties before the arbitral tribunal and consequence of a default of a party.

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18.
Section 28
of the Act provides that what rules shall be applicable to

substance of dispute. The arbitral tribunal has to decide in accordance with the
terms of the contract entered into between the parties. Under
section 31
, the

arbitral tribunal has to render reasons in the arbitral award unless the parties have
agreed that no reasons are to be given. It provides that a signed copy of the arbitral
award has to be delivered or shall be delivered to each party. The arbitral tribunal

is empowered to grant interest unless the parties have otherwise agreed that interest
not to be awarded by the arbitral tribunal. Under
section 32
of the Act the arbitral

proceedings are terminated if the parties agree on the termination of the
proceedings. Under
section 33
, a party may apply for correction, interpretation and

for additional award. Under
section 34
of the Act, a party can challenge an arbitral
award on the grounds setout therein.

19. A perusal of the aforesaid provisions of the Act and the scheme makes it
clear that only the parties to the arbitration agreement can exercise various rights

and invoke the mechanism of adjudication of disputes by arbitration by referring

their disputes to arbitration for adjudication and not by an outsider. The only
exception carved out under the Act is under
sections 40
and
i.e. in case of the

death of a party to the arbitration agreement which can be enforceable by or
against the legal representative of the deceased and in case of insolvency, if such
insolvant was party to arbitration agreement and if official assignee or receiver
adopts such contract.

20. In my view the arbitral tribunal is a private forum and gets jurisdiction to
adjudicate upon the disputes between the parties to the arbitration agreement and
not the persons who are not parties to the arbitration agreement. Proceedings under

section 34
of the Act are not by way of an appeal. There is no other provision

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under the Act for challenge of an arbitral award except what is provided under

section 34
of the Act. In my view only a party to the arbitration agreement which
is defined under
section 2(1) (h)
of the Act can challenge an arbitral award under

section 34
of the Act and not by a person who is not a party to the arbitration
agreement unless covered by
sections 40
and
of the Act. However if a person
is wrongly impleaded as party to the arbitration proceedings and is aggrieved by

arbitral award, he can invoke
section 34
of the Act.

21. Division Bench of this court in case of
Girish Mulchand Mehta and
another
(supra) has held that a member of the society speaks through the society

and has no independent right qua the society. Society is entitled to represent as the
corporate aggregate.

Division bench of this court has considered the judgment of

Supreme Court in case of
Ramesh Himmatlal Shah
(supra) which is relied upon
by Mr.Thacker, learned senior counsel for the petitioners and held that the
members of the society not having challenged the resolution passed by the society

and such resolution not having been set side by the appropriate forum are binding

on all the members.

22. Supreme court in case of
Firm Ashok Traders vs. Gurmukhdas Saluja and
others
AIR 2004 SC 1433 while construing
section 9
of the Act held that a person
not a party to an arbitration agreement cannot enter the court for protection under

section 9
of the Act. A party to an arbitration agreement can invoke the said

jurisdiction for securing relief which the court has power to grant before, during or
after arbitral proceeding by virtue of
section 9
. The court is competent to grant
such relief to a party under clauses (i) and (ii) of
section 9
. In my view the
principles
laid down by
the Supreme Court while interpreting
section 9
of the Act
which provides for a remedy of interim measures available only to a party to

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arbitration agreement are applicable also to the proceedings under
section 34
of the

Act for setting aside an award only by a party to an arbitration agreement subject to

sections 40
and
of the Act and by a person wrongly impleaded as party to

arbitration proceedings and is aggrieved by such arbitral award.

23. Supreme court in case of The state of
Maharashtra & Ors. vs. Ark Builders

Pvt. Ltd.
AIR 2011 SC 1374 while interpreting
section 31 (5)
of the Act has held
that copy of an arbitral award has to be delivered to the party by the arbitral

tribunal and the limitation for making an application for correction or interpretation
of award under
section 33(1)
and for making an application for setting aside an

award under
section 34(3)
commences from the date of delivery of such arbitral
award by the arbitral tribunal to a party to the arbitration agreement. Paragraph 12

of
the said judgment
reads thus:-

12. We are supported in our view by the decision of this Court

in
Union of India v. Tecco Trichy Engineers & Contractors
MANU/SC/0214/2005
: (2005) 4 SCC 239; in paragraph 8 of

the decision it was held and observed as follows:

8. The delivery of an arbitral award under Sub-section (5)
of
Section 31
is not a matter of mere formality. It is a matter
of substance. It is only after the stage under
Section 31
has

passed that the stage of termination of arbitral proceedings
within the meaning of
Section 32
of the Act arises. The
delivery of arbitral award to the party, to be effective, has to
be "received" by the party. This delivery by the Arbitral
Tribunal and receipt by the party of the award sets in

motion several periods of limitation such as an
application for correction and interpretation of an award
within 30 days under
Section 33(1)
, an application for
making an additional award under
Section 33(4)
and an
application for setting aside an award under
Section
34(3)
and so on. As this delivery of the copy of award has
the effect of conferring certain rights on the party as also
bringing to an end the right to exercise those rights on

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expiry of the prescribed period of limitation which would
be calculated from that date, the delivery of the copy of

award by the Tribunal and the receipt thereof by each party
constitutes an important stage in the arbitral proceedings.

(Emphasis added)

24. Supreme Court in case of
Benarsi Krishna Committee & Ors. vs. Karmyogi

Shelters Pvt. Ltd.
(2012) 9 SCC 496 has held that copy of the award has to be
delivered to the party as defined in
section 2(1) (h)
of the Act which clearly
indicates that such a person shall be a party to the arbitration agreement. A copy of

the award can be served only on the party himself and not his or her agent or

advocate. Paragraph 15 of
the said judgment
of the Supreme Court read thus :-

15. Having taken note of the submissions advanced on behalf

of the respective parties and having particular regard to the
expression "party" as defined in
Section 2(h)
of the 1996 Act
read with the provisions of
Sections 31(5)
and
34(3)
of the
1996 Act, we are not inclined to interfere with the decision of

the Division Bench of the Delhi High Court impugned in these
proceedings. The expression "party" has been amply dealt with

in
Tecco Trechy Engineer
's case (supra) and also in
ARK
Builders Pvt. Ltd.
's case (supra), referred to hereinabove. It is
one thing for an Advocate to act and plead on behalf of a party
in a proceeding and it is another for an Advocate to act as the

party himself. The expression "party", as defined in
Section
2(h)
of the 1996 Act, clearly indicates a person who is a party
to an arbitration agreement. The said definition is not qualified
in any way so as to include the agent of the party to such

agreement. Any reference, therefore, made in
Section 31(5)

and
Section 34(2)
of the 1996 Act can only mean the party
himself and not his or her agent, or Advocate empowered to
act on the basis of a Vakalatnama. In such circumstances,
proper compliance with
Section 31(5)
would mean delivery of
a signed copy of the Arbitral Award on the party himself and
not on his Advocate, which gives the party concerned the right
to proceed Under
Section 34(3)
of the aforesaid Act.

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25. Supreme Court in case of
S.N.Prasad vs. Monnet Finance Ltd. and others

AIR 2011 SC 442 after considering the definition of arbitration agreement under

section 2(1) (b)
definition of 'Party' under
section 2(1) (h)
and
section 7
of the

Arbitration and Conciliation Act, 1996 has held that there can be reference to
arbitration only if there is an arbitration agreement between the parties. An
arbitrator can be appointed under the said Act at the instance of a party to an

arbitration agreement only in respect of the disputes with another party to the
arbitration agreement. If there is a dispute between a party to an arbitration

agreement with other parties to the arbitration agreement as also non-parties to the
arbitration agreement, reference to arbitration or appointment of arbitrator can be

only with respect to the parties to the arbitration agreement and not the non-parties.
It is held that since there was no arbitration agreement between the parties, the

impleadment of the person not party to arbitration agreement as a respondent in the
arbitration proceedings and the award against such person in such arbitration can
not be sustained. Paragraphs 5, 7 and 19 of
the said judgment
read thus :-

5. The High Court of Delhi by two orders dated 23.5.2000
appointed a retired Judge of the High Court as the sole
arbitrator. The arbitrations ended in two awards dated
1.5.2002. The first award directed respondents 2 and 3 and

appellant to pay Rs. 93,23,288/- (that is Rs. 50 lakhs with
interest at 20; up to the date of the appointment of arbitrator)
with interest at 18% per annum from 24.5.2000. Similarly the
second award directed respondents 2 and 3 and appellant to
pay Rs. 46,49,315/- (that is Rs. 25 lakhs with interest at 20%

upto the date of appointment of arbitrator) with interest at 18%
per annum from 24.5.2000. The two arbitration awards were
challenged by the appellant by filing applications under

Section 34
of the Act (OMP No. 319/2002 and 322/2002). The
second and third respondents also challenged the awards in
OMP No. 320/2002 and 321/2002. A learned single Judge of
the Delhi High Court by a common order dated 22.5.2006
dismissed the said applications. The said common order dated

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22.5.2006, insofar as it dismisses OMP 319/2002 and
322/2002, is challenged by the appellant in this appeals by

special leave.

7.
Section 2(b)
defines "arbitration agreement' as an agreement
referred to in
Section 7
of the Act.
Section 2(h)
defines "party"

as party to an arbitration agreement.
Section 7
of the Act
defines an 'arbitration agreement'. Sub-section (1) of
Section 7

defines an arbitration agreement as an agreement by the parties
to submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not. Sub-section (2)

provides that an arbitration agreement may be in the form of
an arbitration clause in a contract or in the form of a separate

agreement. Sub-section (3) requires an arbitration agreement to
be in writing. Sub-section (4) explains as to when an
arbitration agreement could be said to be in writing, that is: (a)

a document signed by the parties; (b) an exchange of letters,
telex, telegrams or other means of telecommunication which
provide a record of the arbitration agreement; or (c) an
exchange of statements of claim and defence in which the

existence of the arbitration agreement is alleged by one party
and not denied by the other. Sub-section (5) provides that the

reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement if the contract is in
writing and the reference is such as to make that arbitration
clause a part of the contract. Thus there can be reference to

arbitration only if there is an arbitration agreement between the
parties.
The Act
makes it clear that an Arbitrator can be
appointed under the Act at the instance of a party to an
arbitration agreement only in respect of disputes with another
party to the arbitration agreement. If there is a dispute between

a party to an arbitration agreement, with other parties to the
arbitration agreement as also non-parties to the arbitration
agreement, reference to arbitration or appointment of arbitrator
can be only with respect to the parties to the arbitration
agreement and not the non-parties.

19. As there was no arbitration agreement between the parties
(the first respondent and appellant), the impleading of

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appellant as a respondent in the arbitration proceedings and the
award against the appellant in such arbitration cannot be

sustained. As a consequence, both the arbitration awards, as
against the appellant are liable to be set aside. If the first

respondent wants to enforce the alleged guarantee of the
appellant, it is open to the first respondent to do so in
accordance with law.

26. In my view since the petitioners herein could not have been impleaded as
parties to the arbitration proceedings before the learned arbitrator for want of
arbitration agreement between the petitioners and the respondent no.1, nor the

petitioners were parties to the arbitration proceedings, petitioners have no locus to

file petition under
section 34
of the Act for setting aside such an arbitral award.

27. This court in case of Supreme Megha Constructions LLP Vs.Symphony

Co-operative Housing Society Limited and Mr.Ajay Wadhwa applicant in Notice
of Motion (L) No.2410 of 2014 in Suit (L) No. 867 of 2014, delivered on 29 th
October 2014 has held that since the applicant in the notice of motion who was

member of the society was not party to the arbitration agreement cannot file an

application under
section 8
of the said Act for referring the parties to the suit to
arbitration. This court has considered
section 8
read with the definition of party

under
section 2(1) (h)
of the said Act and has held that society was party to the
arbitration agreement and not the applicant member and thus application under

section 8
would not be maintainable at the instance of such member who was not
party to the arbitration agreement. Paragraphs 23 and 24 of
the said judgment
read

thus :-

23. Perusal of the record indicates that except the plaintiff
and the defendant no.1 society, none of the parties to this
proceedings are party to development agreement. In my view
since applicant and other defendants except the society are not
parties to the arbitration agreement, even if application under

section 8
would have been filed by the applicant to this Notice

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of Motion or other defendants except the society, same would
not have been maintainable. Application under
section 8
can

be filed only by a party to the arbitration agreement.
Section 8

has to be read with
section 2(1) (h)
of the Arbitration and

Conciliation Act, 1996.

24. This court in case of
Vardhaman Developers Ltd. vs.
Andheri Krupa Prasad Co-op.Hsg.Soc.Ltd
. & Ors. in Notice

of Motion (L) No. 248 of 2014 in Suit No.94 of 2014 in a
judgment rendered on 20th February, 2014 has taken a view
that the member of the society who was not party to the
arbitration agreement cannot mention an application under

section 8
of the Arbitration and Conciliation Act, 1996. I am
therefore of the view that even such application under
section
of the Arbitration and Conciliation Act if would have been
filed by a member claiming through the society which society
is party to the arbitration agreement, such application would

not be maintainable.

28. In my view the principles
laid down by
this court in
the said judgment
in the
case of Supreme Megha Constructions LLP (supra) would be applicable to the

application made by the petitioners under
section 34
of the said Act. I am therefore

of the view that this petition is not maintainable at the instance of the petitioners.

29. In so far as judgment of Delhi High Court in case of Sohan Nayyar and

others (supra) relied upon by Mr.Thacker, learned senior counsel is concerned, a
perusal of the said judgment clearly indicates that the said judgment was delivered
in the proceedings governed by the provisions of
Arbitration Act
1940.
In case of

Chennai Container Terminal Pvt. Ltd.
(supra) Division Bench of Madras High
court has dealt with the proceedings under the provisions of the
Arbitration and
Conciliation Act, 1996
. Question of law considered by the Madras High Court was
whether the applicant who was neither a party to the arbitration agreement nor to
the arbitration proceedings could file an application under
section 34
of the

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Arbitration and Conciliation Act for setting aside the arbitral award. The Madras

High Court has held that there is nothing in the subject or context of
section 34

which would suggest the court to depart from the definitional meaning of the

expression 'party' . It is held that the expression party is used in
section 34 (2)
in
its definitional sense to mean a party to the arbitration proceedings and does not
include a third person who is not party to the agreement.

30. It is held that a third party can render the limitation period envisaged under

the Act otiose by merely claiming knowledge of the award long after the period of
limitation as expired. The Madras High Court in
the said judgment
has

distinguished the judgment of Delhi High Court in case of Sohan Nayyar (supra)
by holding that the Delhi high Court had found that the provisions of the

Arbitration Act
1940 did not specify as to who can make an application and
therefore held that as the said
Arbitration Act
1940 did not prohibit filing of an
objection by a third party, there was no bar to someone else filing objections

provided they had some interest in the subject matter of the litigation. The Madras

High Court adverted to the judgment of Supreme Court in case of M/s.Sundaram
Finance Limited vs. M/s.NEPC Limited 1999(2) SCC 499 holding that the

Arbitration and Conciliation Act
1996 is based on UNCITRAL Model and is
entirely different from the
Arbitration Act
1940. The Supreme Court has held in
the said judgment that the provisions of
Arbitration and Conciliation Act
must therefore be interpreted and construed independently and in fact reference to

1940 Act may actually lead to misconstruction.

31. A perusal of
section 30
read with
section 33
of the Arbitration Act, 1940
makes it clear that an application to challenge the existence or validity of an
arbitration agreement or an award or to have the effect of either determined could

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be applied to the court by any party to the arbitration agreement or any person

claiming under him. A perusal of the said Act makes it clear that the expression
'party to an arbitration agreement' has not been defined under the said
Arbitration

Act
1940. A perusal of the provisions of
Arbitration and Conciliation Act, 1996

and in particular
section 34(2)
makes it clear that an application for setting aside an
award can be made only by the party which is defined under
section 2(1) (h)
of the

said Act or by the party to the arbitration proceedings.

32. A perusal of
section 34
of the Act makes it clear that the said application has

to be filed within the time prescribed under
section 34(3)
of the said Act. The time

to file such application commences from the date of such party receiving copy of
the arbitral award from the learned arbitrator. Under
section 31(5)
of the Act the

arbitral tribunal has to deliver a copy of the award to each party. It is thus clear
that a party to the arbitration agreement who may be a party to the arbitration
proceedings and/or all the parties to the arbitration proceedings only would be

entitled to be furnished with a copy of the arbitral award by the learned arbitrator

under
section 31(5)
of the Act and upon delivery of copy of award from the
arbitrator it which would commence the period of limitation for the purpose of
filing an application under
section 34
and can be filed within the time prescribed

therein. If the arguments of the learned senior counsel appearing for the petitioners
are accepted that the petitioners though were not parties to the arbitration
agreement nor were parties to the arbitration proceedings can file an application for

setting aside an award, there would be no limitation for filing an application for
setting aside an arbitral award at the instance of such an outsider.

33. In my view the grounds of challenge which are available under
section 34
of
the Act and various other provisions which are applicable to the parties who are
defined under
section 2(1) (h)
of the Arbitration and Conciliation Act, 1996 cannot

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be exercised by an outsider or by a person who is not a party to the arbitration

agreement or the arbitration proceedings. In my view the petitioners who are
members of the society which society was party to the arbitration agreement not

having filed application for setting aside the impugned award cannot step into the
shoes of the society and cannot be granted any leave to challenge the arbitral
award. In my view there is no provision under the
Arbitration and Conciliation

Act, 1996
for granting any such leave as prayed by the petitioners to file an
application under
section 34
for setting aside the arbitral award.

34. In my view the petition filed by the petitioners who are neither parties to the

arbitration agreement nor parties to the arbitration proceedings can not maintain
this petition.

35. I therefore pass the following order :-

(a) Arbitration Petition is dismissed as not maintainable.

(b) No order as to costs.

[R.D. DHANUKA, J.]

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