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2012 DIGILAW 1149 (MAD)

Apoorva Dadha v. S. Mohanchand Dadha

2012-03-02

A.ARUMUGHASWAMY

body2012
Judgment :- 1. These Original Petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996, praying to set aside the award dated 10.10.2005 passed by the respondents 1 to 3. 2. According to the petitioner in O.P.No.862 of 2007, he left abroad for pursuing higher studies and he was not in India during the arbitration proceedings and he was not even aware of the arbitration proceedings since no notice was served on him and all arbitrators are his relatives. On receipt of the summons from the Court in O.P.No.80 of 2006, the petitioner came to know about the passing of award and thereafter, only, the petitioner had taken steps by filing the present petition, praying to set aside the award. 3. Likewise, the petitioner in O.P.No.80 of 2006 also came forward to set aside the award, on the ground that the procedure adopted by the arbitrators while passing the impugned award is not in accordance with law and no documents were furnished to the petitioner and no minutes were maintained by the arbitrators. The petitioner was not issued notices of hearing and no opportunity was given to him to verify the genuineness and veracity of the documents relied on by the arbitrators. It is also stated that by passing the impugned award, the arbitrators had indirectly re-written the shareholding pattern in the companies and deprived the petitioner and other shareholders of their valuable in DEPL and DSL for which, the arbitrators have no authority to do so. The award is a defective one since the arbitrators instead of placing reliance on the audited accounts of companies, relied on the documents which were not genuine. 4. 4th respondent has filed counter affidavit, inter alia stating that the petitioner had in collusion with his father, who is none other than the petitioner in O.P.No.80 of 2006. According to the 4th respondent, the arbitration agreement dated 10.5.2005 was entered into by two groups, one consisting of this respondent and his family and another consisting of the petitioner and his family members.Even though, the petitioner was studying in abroad, he appointed his mother Mrs.Madhu Dadha as his power agent, vide Power of Attorney, dated 25.2.2003, empowering her to take care of his interests in India. Being duly empowered, the petitioner's mother signed the arbitration agreement for and on behalf of the petitioner. Being duly empowered, the petitioner's mother signed the arbitration agreement for and on behalf of the petitioner. It is also stated that the said power of attorney was used by the petitioner before the DRT, Hyderabad in CP No.78 of 2004, wherein also, the petitioner was represented by his mother and similarly, the petitioner also initiated rent control proceedings through his mother. Therefore, having authorized his parents to defend/initiate in all the legal proceedings for and on his behalf fright from 2003 till 2009, the petitioner cannot take a negative stand at this stage that too after passing the award. Therefore, the petition is not maintainable and it is liable to be dismissed. 5. As regards O.P.No.80 of 2006, fourth respondent has also filed the counter affidavit, stating that the arbitrators have duly followed the procedure contemplated in the agreement and by letter, dated 19.5.2005, the petitioner submitted his points for consideration and on consideration of both claims, the arbitrators have passed the well considered award, which requires no interference of this Court. It is also stated that at no point of time during the course of arbitration proceedings, this petitioner had not raised any objection regarding the conduction of the arbitration proceedings. Hence, this respondent sought for dismissal of the petition. 6. In view of the rival contentions, the following points arise for consideration. i) Whether the notice to every individual is necessary in the arbitral proceedings? ii) Whether petitioner in OP 862 of 2007 is duly represented by his mother by signing the agreement twice for herself and for and on behalf of the petitioner? iii) Whether the petitioner has authorized his mother to represent all the legal proceedings by way of registered power of attorney, if so, whether, such proceedings will not bind on the petitioner? iv) Whether the arbitrators violated principles of natural justice and conducted the arbitral proceedings by following the due procedure in accordance with law, as claimed by the petitioner in OP 80 of 2006? 7. The counsel appearing for the petitioner would vehemently contend that the petitioner was not served with notice in the arbitral proceedings and he was not aware of the said proceedings since he had been out of India. 7. The counsel appearing for the petitioner would vehemently contend that the petitioner was not served with notice in the arbitral proceedings and he was not aware of the said proceedings since he had been out of India. He would further contend that the petitioner was not signatory to the arbitral agreement and the arbitration proceedings are liable to be vitiated as principles of natural justice were violated and though the petitioner was arrayed as a party to the proceedings, but no notice was served on him. According to the learned counsel, the petitioner, in fact, he had not authorized any person much less his mother to represent him before the arbitrator, whereas on the other hand all the parties of the other branches were duly represented by individuals. Therefore, when the petitioner is having individual rights and claims over the property, which is the subject matter of the arbitral proceedings, it is not appropriate to proceed without even issuing any notice to the petitioner. Hence, the learned counsel prays to set aside the award. 8. On the other hand, the learned senior counsel appearing for the respondents contended that the petitioner has been arrayed as No.4 in the parties of second part in the agreement and since he was in abroad, he appointed his mother Mrs.Madhu Dadha as his Power Agent vide Power of Attorney dated 25.2.2003, empowering her to take care of his interests in India in respect of all legal aspects. He would further contend that being power agent, Mrs.Madhu Dadha has signed the agreement in the arbitration agreement twice, i.e. one for herself and another for her son and therefore, it cannot be contended that the petitioner had no knowledge about the execution of agreement and the arbitration proceedings and therefore, arbitration proceedings can be maintained as against the petitioner even no notice was served on him. He would further contend that in fact, the said power of attorney was utilized in rent control proceedings and before Debt Recovery Tribunal, Hyderabad. He would further contend that in fact, the said power of attorney was utilized in rent control proceedings and before Debt Recovery Tribunal, Hyderabad. Therefore, the learned senior counsel has categorically contended that when the same power of attorney had been represented in other legal proceedings, while in respect of the present arbitration proceedings alone cannot be disputed and if at all the petitioner is aggrieved, it is always open to him to initiate appropriate proceedings against his parents who acted on his behalf as Power Agent without his knowledge. With these contentions, the learned senior counsel sought for dismissal of the petition while confirming the award passed by the arbitrators. 9. Before dealing with the respective contentions advanced by the counsels on either side, it is worthwhile to refer the arbitration agreement dated 10.5.2005, wherein, it was agreed between the parties to refer the matters in dispute to three arbitrators. The petitioner herein was shown as 4th party and his mother Mrs.Madhu Dadha was shown as 2nd party respectively in the second part to the said agreement. No signature of the petitioner was found place, but in his place at Sl.No.4, his mother Mrs.Madhu Dadha had signed twice in the arbitration agreement. The vehement contention of the learned senior counsel for the respondents that the petitioner was represented by his Power of Attorney, Mrs.Madhu Dadha and for this reason, she had singed twice in the agreement. However, it is to be noted that nowhere in the said arbitration agreement, it was mentioned that the petitioner was represented by his mother Mrs.Madhu Dadha. If at all she represented her son, i.e. the petitioner and signed twice, the same ought to have been mentioned at place of the petitioner such as "4.Mr.Apoorva Dadha, aged about 20 years, S/o Shri Meher Dadha, (represented by Second Party, Mrs.Madhu Dadha being Power Agent vide Deed of Power of Attorney)". Therefore, merely signing twice by Mrs.Madhu Dadha, it cannot be construed that she had actually represented her son in the arbitration proceedings. Further in the agreement it is also not mentioned that the petitioner has given registered power in favour of his mother and there is no reference as to the registered power executed by the petitioner. Thereafter, it is not known whether the petitioner had been informed about the execution of the arbitration agreement. Further in the agreement it is also not mentioned that the petitioner has given registered power in favour of his mother and there is no reference as to the registered power executed by the petitioner. Thereafter, it is not known whether the petitioner had been informed about the execution of the arbitration agreement. Pursuant to the said arbitration agreement, arbitral proceedings were initiated, wherein, also it is admitted fact that no notice was served on the petitioner. According to the learned counsel for the petitioner, all along the petitioner was not aware of the execution of arbitration agreement as well as the arbitration proceedings and also passing of the impugned award. However, in the year 2006, when the petitioner came from abroad and came to know about the arbitration proceedings and the impugned award and in fact, he wrote a letter to the three arbitrators seeking a copy of the award and despite receiving notice by the arbitrators, no reply was sent nor a copy of the award, which constrained him to approach this Court by filing an application in Appl.No.5860 of 2007, seeking a direction to the respondents therein, to furnish a copy of the award to the petitioner. By order, dated 28.9.2007, this Court allowed the said application and directed the respondents therein to furnish the copy of the award and pursuant to the said order only, the petitioner was able to get the copy of the award and thereafter only, he came forward to challenge the said award. 10. Section 34 of the Arbitration and Conciliation Act envisages the circumstances under which, the arbitral award can be set aside. Section 34 (iii) of the Act reads as under: "34.) Application for setting aside arbitral award. (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; 11. A perusal of the above, it is apparently clear that the arbitral award is liable to be set aside if the party to the proceedings was not given proper notice of either appointment of an arbitrator or of the arbitral proceedings. Further, Section 2(h) of the Act defines as follows:- "(h) "party" means a party to an arbitration agreement." In the present case, admittedly, the petitioner was not given any notice as regards appointment of arbitrators as well as arbitral proceedings. Further, Section 2(h) of the Act defines as follows:- "(h) "party" means a party to an arbitration agreement." In the present case, admittedly, the petitioner was not given any notice as regards appointment of arbitrators as well as arbitral proceedings. Therefore, when admittedly, the petitioner was not made as a party to the arbitral proceedings without issuing any proper notice, I am of the considered view that the arbitral proceedings will not be in any way binding on the petitioner and accordingly, arbitral award is liable to be set aside. The only contention of the respondents is that the petitioner had been represented by his mother as Power Agent and therefore, when she is aware of the arbitral proceedings and award, there is no need to make the petitioner as party and issue notice on him. As already observed above, even though there is power of attorney given by the petitioner in favour of his mother, the fact remains that this fact has not been mentioned in the agreement and since no recital was found in the arbitral agreement to the effect that the petitioner was represented by his mother and for that purpose, she signed twice. Though it is contended that the mother of the petitioner had represented the petitioner by virtue of the same power of attorney and produced petitions in C.P.No.78 of 2004 and RCOP No.907 of 2005 (at pages 32 and 39 of typed set of papers), it is to be noted that in the said C.P.No.78 of 2004 and RCOP No.907 of 2005, affidavits duly sworn to by his mother were filed, wherein, it has been specifically stated the petitioner therein, i.e. Apoorva Dadha was duly represented by his constituted Attorney and GPA Holder Smt.Madhu Dadha and the said power of attorney was not disputed by the respondents therein. But in the present case, as far as the execution of the arbitration agreement and initiation of arbitral proceedings, though the petitioner was cited as a party, but there was no specific recital specifically mentioning that the petitioner was represented by his mother Mrs.Madhu Dadha. Therefore, in the absence of such recital, one cannot come to the conclusion that the petitioner was duly represented by his mother as his power agent. 12. Therefore, in the absence of such recital, one cannot come to the conclusion that the petitioner was duly represented by his mother as his power agent. 12. In view of the above discussion, this Court is of the view that the petitioner was not represented by his mother who is a party to the arbitral proceedings and merely the mother who is a party to the Arbitral proceedings signing twice in the agreement would not itself sufficient to hold that the petitioner was duly represented by the mother as his power agent and accordingly, the arbitral proceedings including the award are binding on him. As per Section 34(iii) of the Arbitration and Conciliation Act, notice to each and every individual to the arbitral proceedings is mandatory and admittedly, in the present case, the petitioner who was arrayed as party, was not issued any notice. Accordingly, the points (i) to (iii) are answered in favour of the petitioner. 13. For the foregoing reasons, the Original Petition in O.P.No.862 of 2007 is allowed and the impugned arbitral award, dated 10.10.2005 is hereby set aside. No costs. 14. Consequently, since the main arbitral award dated 10.10.2005 itself is held to be improper and set aside, the Original Petition in O.P.No.86 of 2006 filed challenging the same award on the ground that the procedure adopted by the arbitrators while passing the impugned award is not in accordance with law, etc., is also allowed. No costs.