SJP Motors, Over Bridge, Thiruvananthapuram v. TVS Motor Company Ltd.
2008-09-05
J.B.KOSHY, THOMAS P.JOSEPH
body2008
DigiLaw.ai
Judgment : Thomas P. Joseph, J. The ambit of the power of the Civil Court under Section 34(2)(iii) of the /arbitration and Conciliation Act, 1996 (for short, “the Act”) to set aside an ex parte Arbitral Award is the point arising for consideration in this appeal. 2. In terms of the agreement concededly executed between the appellant and the respondents, the latter initiated proceedings for appointment of the sole Arbitrator to thrash out the dispute that arose between them. Sensing that, the appellant instituted O.S.No.444 of 2004 in the Court of the Subordinate Judge, Thiruvananthapuram on 20.8.2004 challenging the very arbitration clause itself. Respondents initiated arbitration proceedings by appointing the sole Arbitrator on 9.2004. The Arbitrator issued notice to both parties to appear before him. The appellant is stated to have sent a letter accompanied by a copy of the plaint in O.S. No.444 of 2004 through his counsel, Advocate Shri Jagadeesh Kumar stating that he has already instituted O.S. No.444 of 2004 questioning the legality of the arbitration clause in the agreement and hence he is not legally bound to appear before the Arbitrator. He requested the Arbitrator to stay all further proceedings. The appellant thereafter also did not appear before the Arbitrator. The Arbitrator passed Award holding the appellant liable to pay Rs.10,92,678.24 with interest at the rate of 22% per annum. The appellant preferred O.P.(Arb.) No. 25 of 2006 in the court of the Prl.District Judge, Thiruvananthapuram to set aside the arbitral Award on the ground that he had no notice of the proceedings before the Arbitrator. The learned District Judge vide the impugned order dated 6.3.2008 refused to interfere and confirmed the Award. That order is under challenge. 3. Heard the learned counsel for the appellant. 4. It is submitted by the learned counsel that the appellant had no proper notice of the proceedings before the Arbitrator. It is also submitted by the counsel that the appellant was unable to present his case before the Arbitrator. He therefore requested this Court to interfere with the impugned order. 5. The only ground raised before the learned District Judge, could be raised and really urged before us on behalf of the appellant is regarding want of notice. The relevant provision is Section 34(2) (iii) of the Act. That provision read thus: “34(2) An arbitral award may be set aside by the Court only if: .(i) …….
5. The only ground raised before the learned District Judge, could be raised and really urged before us on behalf of the appellant is regarding want of notice. The relevant provision is Section 34(2) (iii) of the Act. That provision read thus: “34(2) An arbitral award may be set aside by the Court only if: .(i) ……. .(ii) …… (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.” 6. The term “notice” came from the Latin word “notifia” which means ‘a being known’. The term “notice” as per the Oxford Concise Dictionary means “intimation, intelligence, warning, etc”. In the legal sense, ‘notice’ mean information concerning a fact actually communicated to a party by an authorized person or actually derived by him from the proper source or else presumed by law to have been acquired by him which information is regarded as equivalent to knowledge in its legal consequences. It is the making of something known, of what a man was or might be ignorant before. The expression “proper” appended before the word “notice” in Section 34(2)(iii) of the Act means ‘sufficient notice’. The expression “proper” means appropriate, in the required manner, fit, suitable, apt. etc. As per Section 3 of the Transfer of Property Act, ‘a person is said to have notice’ of a fact when he actually knows that fact, or when, but for willful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it. 7. It is contended in this appeal that no “proper notice” was given to the appellant and that the Arbitrator ought not have proceeded with the proceedings since the correctness of the arbitration clause itself was under challenge in O.S. No.444 of 2004. It is however, not the case of the appellant that at any stage of the suit there was any order preventing the appointment of Arbitrator or his proceeding with the arbitration. Therefore, the mere institution or pendency of O.S. No.444 of 2004 cannot be said to have prevented the respondents from initiating arbitration proceedings or the Arbitrator initiating or continuing the proceedings.
Therefore, the mere institution or pendency of O.S. No.444 of 2004 cannot be said to have prevented the respondents from initiating arbitration proceedings or the Arbitrator initiating or continuing the proceedings. According to the appellant his Advocate (Shri Jagadeesh Kumar) had sent a letter with a copy of the plaint in O.S. No.444 of 2004 to the Arbitrator requesting to stop the proceedings in view of the pendency of the suit. When such a letter is sent by the Advocate on behalf of the client, the presumption is that it was under instruction from the client, the responsibility of rebutting that presumption being on the client himself. In the case on hand, the very same Advocate appeared for the appellant before the learned District Judge. The presumption is thus reinforced. It is therefore certain that the appellant was informed about the appointment of the Arbitrator. 8. It is seen from the impugned order that the Arbitrator had, at all possible stages given notice of the proceedings to the appellant. Though the appellant had challenged the arbitration clause itself and the Arbitrator was informed about that, the Arbitrator entered a finding that he has jurisdiction to proceed with the matter. Again notice was given to the appellant to appear before the Arbitrator on 29.2004. The appellant and counsel remained absent. Subsequent posting dates were also intimated to the appellant by notice. But the appellant chose to be an absentee. The Arbitrator in the above circumstances, recorded the evidence of the respondents. PWs.1 to 3 were examined and Exhibits C1 to C10 were marked. It is after consideration of the said evidence that the Arbitrator passed the ward which is sought to be set aside. Interest was awarded in accordance with the terms of the agreement. Thus, it is not a case of the appellant not being given notice of the appointment of the Arbitrator or the proceedings before the Arbitrator. 9. It is true that if any of the parties “is otherwise unable to present his case” before the Arbitrator, that is a ground to challenge The arbitral Award. The word “otherwise” should be read as “ejusdem generic”. The words “or was otherwise” appearing in the sub-section take colour from the context in which they are used.
9. It is true that if any of the parties “is otherwise unable to present his case” before the Arbitrator, that is a ground to challenge The arbitral Award. The word “otherwise” should be read as “ejusdem generic”. The words “or was otherwise” appearing in the sub-section take colour from the context in which they are used. The inability to present the case before the Arbitrator must be real and not concocted or carved out for the purposes of attracting the provisions of the sub-clause for filing an application to set aside the arbitral Award. The question whether a party was unable to present his case would depend upon the facts and circumstance of each case. In the case on hand, the appellant has not even pleaded that he was unable to present his case before the Arbitrator for any reason whatsoever, except of course his contention regarding want of proper notice which has already been adverted to. 10. Unlike the provisions of Order ix Rule 13 of the Code of Civil Procedure which confers discretionary power on the court in the matter of setting aside an ex parte decree when it is shown that the non-appearance of the defendant was not mala fide or intentional, by liberally construing the expression, “was prevented by any sufficient cause from appearing”, Section 34(2) of the Act does not confer any such discretionary power on the civil court as is clear from the presence of the words “only if” in Section 34(2) of the Act. The civil court can set aside an ex parte, arbitral Award on the ground of absence of a party before the Arbitrator only if the case came within the mischief of Section 34(2)(iii) of the Act. Therefore the question of the appellant requesting the Civil Court to exercise any discretionary power to set aside the Award also does not arise. 11. The learned District Judge has come to the conclusion that the appellant had sufficient notice of the appointment of the Arbitrator and the proceedings before the Arbitrator. We do not find reason to interfere with that finding. 12. The appellant has to pay for his gross negligence, if not willful abstention from the arbitration proceedings. The law cannot come to his rescue. The appeal is dismissed.