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2014 DIGILAW 534 (DEL)

Shubhra Chit Fund (P) Ltd. v. Vinod Kumar Anand

2014-02-17

VALMIKI J.MEHTA

body2014
Judgment : Valmiki J. Mehta, J. (Oral) 1. Both these appeals are being decided by the present judgment inasmuch as there are common issues of fact and law. The appeals have been filed by the M/s. Shubhra Chit Fund (P) Ltd against the impugned judgments of the court below dated 31.3.1993 by which objections under Sections 30 and 33 of the Arbitration Act, 1940 have been accepted and the Awards passed against the principal borrowers and guarantors, dated 30.11.1987 have been set aside. 2. I am taking the grounds on which Awards have been set aside as decided by the court below, and discussion on each of the ground will show that the impugned judgment is illegal and bound to be set aside. 3. The first issue held against the appellant was that the guarantee agreement cannot be said to contain an arbitration clause by which the disputes had to be referred to arbitration. The relevant clauses in this regard of the main agreement and the guarantee agreement are clause Nos.10 and 12, and which read as under:- “AGREEMENT CLAUSE 10: That all questions and matter of differences or dispute between the parties hereto or their representative touching the construction hereof or any Act or thing in regard to or concerning to the rights, duties obligations or there enforcement, performance, including the failure to pay a claim or instalment, herein before cited and/or arising out of this agreement or to the subject matter hereof shall be referred to the Sole Arbitration of Sh. S.P. Aggarwal Advocate, Chamber No.427, Western Wings, Tis Hazari Court, Delhi-54. Whose decision shall be final and binding on the parties concerned. The provisions of the Arbitration Act or any statutory modification thereof shall apply to the arbitration and any other submission shall not be determined by the prized subscriber or seek winding up of the company. It is further agreed that any of the parties may refer the dispute to the said arbitrator through court or otherwise. The provisions of the Arbitration Act or any statutory modification thereof shall apply to the arbitration and any other submission shall not be determined by the prized subscriber or seek winding up of the company. It is further agreed that any of the parties may refer the dispute to the said arbitrator through court or otherwise. AGREEMENT OF GUARANTEE: CLAUSE 12: The all questions and matters in “disputes or differences” between the parties hereto or their representatives touching the construction hereof or any Act, or thing in regard to or concerning or connected to the rights, duties and obligations or their enforcement, or performance, including the failure to pay a claim or instalment, hereinbefore recited and/or arising out of or relating to his agreement or to the subject matter hereof shall be referred to the Sole Arbitration of Sh. S.P. Aggarwal Advocate, Chamber No.427, Western Wings, Tis Hazari Court, Delhi. 54. whose decision will be final and binding on the parties concerned costs shall be at the discretion of the arbitration and the Award shall be final and binding on the parties concerned. The provisions of the Arbitration Act or any statutory modification thereof shall apply to the Arbitration and this submission shall not be determined by death of the prized subscriber or of the Guarantors or winding up of the company.” 4. A reading of the aforesaid clauses leaves no manner of doubt at all that there was an arbitration agreement by which the disputes and differences had to be referred to arbitration and therefore I fail to understand the wholly perverse findings of the court below that there was no arbitration agreement between the appellant and the objectors/guarantors. This finding of the court below is set aside. 5. The next aspect is that the arbitrator was not validly appointed and there was no proper reference. This aspect will have to be understood with the aspect that the objectors were proceeded exparte in the arbitration proceedings. In law if the objectors fail to appear and are proceeded exparte, then, objections cannot be entertained for the first time under Sections 30 and 33 of the Act and objections as to jurisdiction are deemed to be waived. 6. This aspect will have to be understood with the aspect that the objectors were proceeded exparte in the arbitration proceedings. In law if the objectors fail to appear and are proceeded exparte, then, objections cannot be entertained for the first time under Sections 30 and 33 of the Act and objections as to jurisdiction are deemed to be waived. 6. The facts of the present case show that in the arbitration proceedings, a compromise was arrived at on 18.9.1987 at Rs.23,550/- for payment upto September, 1987 in respect of three disputes whose cases were pending and guarantors were present at the time of settlement. The cheque of Rs.2,500/- drawn on New Bank of India, Rana Partap Bagh Branch, Delhi dated 19.9.1987 was given before the sole arbitrator. This cheque was however dishonoured and therefore arbitrator had no option but to continue the arbitration proceedings. The arbitration record as also the impugned order shows that the objectors were all along aware of the proceedings in the arbitration inasmuch as notices were sent to the stated address of the principal borrowers and the guarantors. There is a presumption of service because the addresses were the same addresses where the notices were initially sent. Merely because there is a UPC cannot mean in the facts of the present case that objectors were not served. Therefore, the fact of the matter is that the objectors never appeared in arbitration proceedings and therefore Awards, were validly passed against the principal borrowers and the guarantors/objectors with respect to the money of the Chit Fund which was received by the principal borrowers. It is important to note that the appellant/company is run with public funds and which is therefore money of public lying in trust with the appellant/company. Faith has been put by various persons in the appellant/company and therefore frivolous defences and objections to set aside the Awards are not permissible once the objectors did not appear in the arbitration proceedings. 7. I may also note that the name of Sh. S.P. Aggarwal is duly mentioned in the arbitration clause and once objectors appear in the arbitration proceedings at one stage but thereafter failed to appear, no objections can be raised as to existence of an arbitration agreement or validity of reference or jurisdiction of the arbitrator. 8. 7. I may also note that the name of Sh. S.P. Aggarwal is duly mentioned in the arbitration clause and once objectors appear in the arbitration proceedings at one stage but thereafter failed to appear, no objections can be raised as to existence of an arbitration agreement or validity of reference or jurisdiction of the arbitrator. 8. In view of the above, appeals are allowed by setting aside the impugned judgments dated 31.3.1993 and by upholding the Awards dated 30.11.1987 passed in favour of the appellant/Chit Fund company. Parties are left to bear their own costs.