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2008 DIGILAW 497 (MP)

LORDS WEAR PVT LTD v. ANANDKUMAR DEVENDRA KUMAR

2008-03-31

N.K.MODY

body2008
Judgment ( 1. ) THIS judgment shall also govern disposal of A. A. No. 2/2007 and A. A. No. 3/2007 as in all the appeals the point involved is one and the same and in all the appeals the appellant is one and the same. All the appeals are being filed against the order dated 26- 2-2007 passed in Arbitration Case No. 14/2005,15/2005 and 13/2005 passed by XI AD J Indore. In all the appeals appellant is one and the same but the respondent No. 1 is different. In A. A. No. 1/2007 respondent No. 1 is M/s. Anandkumar Devendra Kumar, in A,a. No. 2/2007 respondent No. 1 is hukumchand Munnalal Patni while in A. A. No. 3/2007 respondent No. 1 is hemantkumar Patni,. In all the cases the claim case was filed by respondent No. 1 before respondent No. 2 Arbitration Tribunal (Shrimant Maharaja Tukojirao cloth Market Merchants Association, MT Cloth Market, Indore ). The amount which was claimed in all the three appeals were as under:-A. A. No. 1/2007 Rs. 2,33,938. 85 paise a. A. No. 2/2007 Rs. 2,04,369. 90 paise a. A. No. 3/2007 Rs. 2,07,854. 00 paise ( 2. ) AFTER giving repeated notice to the appellant the matter was finally disposed of by the respondent No. 2 by passing award in favour of respondent no. 1 against which the objections were filed by the appellant before the learned court below for setting aside the award. The objections submitted by appellant were dismissed by the impugned order against which the present appeal has been filed. ( 3. ) MR. Subodh Abhyankar, learned Counsel for the appellant submits that the learned Court below committed error in dismissing the objections filed by appellant. Learned Counsel submits that the award passed by respondent no. 2 and the impugned order passed by learned Court below are nullity and non est in the eye of law as the same has been filed by playing fraud and by suppression of material evidence from the Adjudicating Authority, i. e. , respondent No. 2. Learned Counsel submits that the bills on which reliance is placed by respondent No. 2 are not originals. It is submitted that in number of documents it is mentioned that the account is settled and full and final payment of bills has been made. Learned Counsel submits that the bills on which reliance is placed by respondent No. 2 are not originals. It is submitted that in number of documents it is mentioned that the account is settled and full and final payment of bills has been made. It is submitted that this aspect of the matter has not been taken into consideration by learned Court below while passing the impugned award. ( 4. ) LEARNED Counsel further submits that at the initial stage the appellant took the plea that respondent No. 2 is not having territorial jurisdiction to decide the dispute between the parties. It is submitted that no order was passed on the preliminary objection raised by the appellant. ( 5. ) LEARNED Counsel placed reliance on Section 16 of the Act which relates to the jurisdiction and lays down that the objection that Arbitral Tribunal does not have jurisdiction, has to be raised not later that the submission of the statement of defence, however, a party shall not be precluded from raising such a plea merely because that he has appointed or participated in the appointment of an arbitrator and the plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of it authority is raised during the arbitral proceedings. Learned Counsel submits that sub-section (5) of Section 16 of the Act lays down that Arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3)and when the Arbitral Tribunal takes a decision rejecting the plea continue with the arbitral proceedings and make an arbitral award. ( 6. ) LEARNED Counsel placed reliance on a decision in the matter of arati Dhun Vs. S. K Dutta, 2002 (3) LHM 171, where it was held that it is clear from the conjoint reading of the aforesaid three sub-sections of Section 16 of the act, 1996 that the arbitrator is under an obligation to decide the plea of jurisdiction and his authority to continued the arbitration depends on his decision rejecting the plea about his jurisdiction. In other words, sub-section (5)of Section 16 envisages that the arbitrator may reject the plea about jurisdiction and then to continue with the proceedings and make an award. In other words, sub-section (5)of Section 16 envisages that the arbitrator may reject the plea about jurisdiction and then to continue with the proceedings and make an award. It was further observed that in the instant case, without rejecting the question to his jurisdiction the arbitrator has proceeded with the award and as such committed grave error of law. Reliance was also placed on a decision in the matter of national Insurance Co. Ltd. Vs. Siemens Atkeingesellschanft, reported in (2007)4 SCC 451 , wherein Honble Apex Court has held that under Section 16 (5), the arbitral Tribunal has the obligation to decide the plea referred to in Sections 16 (2) or (3) and when it rejects the plea, it could continue with the arbitral proceedings and make the award. ( 7. ) MR. R. C. Mehra, learned Counsel for respondent submits that respondent has supplied the goods to the appellant and no payment has been made by the appellant to respondent. Notices were sent to the appellant but the appellant remained absent and before learned Court below also in spite of giving number of opportunities to adduce evidence no evidence was adduced. It is submitted that in the facts and circumstances of the case the appeal deserves to be dismissed. ( 8. ) FROM perusal of record it is evident that after receipt of notice from the Tribunal objections were filed by the appellant which were sent through post and in the said objections the appellant submitted that the learned Tribunal is having no territorial jurisdiction as the appellant was carrying on business at nagpur and the order was placed at Nagpur itself. From perusal of record it is also evident that after making such objections the appellant remained absent and no decision was taken by the learned Tribunal on the said objection. Keeping in view sub-section (2) of Section 16 of the Act and also keeping in view the law laid down by the Honble Apex Court, it was duty of respondent No. 2 to decide the issue relating to territorial jurisdiction. After deciding the question of jurisdiction in favour of respondent only the Tribunal was empowered to proceed with the case. Since the objection raised by the appellant was not decided and the respondent No. 2 proceeded with the case without deciding the objection which goes to show that whole action of respondent No. 2 was without jurisdiction. After deciding the question of jurisdiction in favour of respondent only the Tribunal was empowered to proceed with the case. Since the objection raised by the appellant was not decided and the respondent No. 2 proceeded with the case without deciding the objection which goes to show that whole action of respondent No. 2 was without jurisdiction. In the facts and circumstances of the case, learned Court below committed error in not deciding the objection filed by the appellant. However, appellant was absent before the learned Tribunal. If the appellant would have remained present before the Tribunal, then the objection relating to territorial jurisdiction would have been decided finally at that stage only. In the facts and circumstances of the case, the appeal stands allowed. The impugned order passed by the learned Court below and the award passed by the learned Tribunal stand set aside subject to payment of cost of Rs. 10,000/- in all the three cases and also upon furnishing solvent security for a sum of Rs. 5 lacs before the learned court below on or before 16-6-08 to the effect that in case final award is passed by the respondent No. 2 against the appellant, the same, shall be satisfied by the appellant. Appellant shall remain present before the learned Tribunal on 16-6-08. No order as to costs. Copy of this order be placed in connected appeals.