Allowed

Bajirao Y. Pawar v. Kotak Mahindra Prime Ltd.

Bombay HC31 Aug 2009ARBP/396/2009

Case brief

AI extract

What is this about?

This arbitration petition challenged an ex-parte award for breach of natural justice. The High Court held that the award was unsustainable due to irregularities in notice service, failure to inquire into the petitioner's visit to the arbitrator, and lack of reference to the disposals of the subject vehicle, and set aside the award.

What did the court decide?

The impugned ex-parte award dated 24th November, 2008 was set aside.

Bajirao Y. Pawar Vs Kotak Mahindra Prime Ltd. — Arbitration | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO. 396 OF 2009

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Bajirao Yashwant Pawar Indian Inhabitant residing at 101, Merry Land CHSL, 46, Dr. R.G.Thadani Road, Worli, Mumbai-400 018

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...Petitioner.

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Vs.

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Kotak Mahindra Prime Ltd. A company incorporated under the Provisions of the Companies Act, 1956, having its REGISTERED MAIL Office at 36-38A, Nariman Bhavan, 227, Nariman Point, Mumbai-400 021 and its operations office at 159-A, 1^st Floor, Vinay Bhavya Complex, Kalina, Santacruz, (E), Mumbai – 400 098.

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...Respondent.

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Mr. S.K. Jain i/by M/s. S.K. Jain & Associates for the Petitioner. Mr. Chinmay Gupte i/by M/s. Mohit Gadkari & Co. for the Respondent.

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CORAM :- ANOOP V. MOHTA, J. DATED :- 31^st AUGUST, 2009.

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ORAL JUDGMENT:-

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1 The Petitioner, under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act), has challenged the impugned ex-parte award dated 24^th November, 2008. The Petition is filed within a period of limitation.

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2 Admittedly, there is a default committed by the Petitioner in making the payment. The merit with regard to the same, is not in dispute. The learned counsel appearing for the Petitioner makes statement that the Petition before invoking the Arbitration clause, the Respondent took the possession of the vehicle and disposed of it. There is no reference and or intimation to that effect, basically the adjustment of the amount after the sale of the said vehicle in the award. This definitely reflects the way in which the Claimant-Respondent proceeded in the matter.

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3 In the award, there is no mention about the notices, when, the Respondent had invoked the Arbitration clause and appointed the Arbitrator. A notice dated 24^th October, 2008, is on his record. The Petitioner has disputed the same. There is nothing on record to show the service of the notice. The submission is that, this notice is brought on record for the first time in the reply is not denied.

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4 The Petitioner, received the Arbitrator’s notice and accordingly, on 15/11/2008 visited the office of the Arbitrator at about 11.30 a.m. along

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with an advocate. The office of the Arbitrator was closed. They waited upto 1.30 p.m. . They left the office by keeping a visiting card and also informed to the father in law of the Arbitrator who was present in the office. The Petitioner never received any intimation from the Arbitrator, thereafter.

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5 On 15^th November, 2008, the Arbitrator proceeded with the matter ex-parte and directed the claimant to argue the case. On 20^th November, 2008, the Respondent filed its claim Petition signed by one authorized officer of the Respondent. This itself means that when the Arbitrator issued first notice, there was no claim Petition filed on the record or at least, there is nothing to show that the notice given by the Arbitrator was with the claim Petition. As none appeared on 15^th November, 2008, on 20^th November, 2008, the matter was listed on 22^nd November, 2008 before the learned Arbitrator.

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6 The learned Arbitrator, as the Respondent has not responded to the notice and avoiding to participate in the proceedings, and therefore, proceeded ex-parte based upon the foundation that the petitioner deliberately avoiding the service, as the Respondent served the notices as per Section 27 of the General Clauses Act, 1897 read with Section 114 (f) of the Indian Evidence Act, 1872. The Arbitrator has relied upon the various Supreme Court Judgments with regard to the service of notice. The Section 3 of the Arbitration Act also supports such service. The issue is the

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way in which the arbitration proceeding was conducted in the present case.

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7 In the award, there is no mentioned about the Petitioner visit along with his Advocate on 15/11/2008. The Award is dated 24^th November, 2008. The Petitioner’s notice is also dated 24^th November, 2008 informing to the Arbitrator about their visit on 15/11/2008. The copy was also forwarded to the Respondent.

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8 Normally, under Section 34 of the Act, there is no question of interfering with the award, basically when there is no much dispute about the due amount with regard to the agreement of loan for vehicle. However, on face of the record, if there is a clear breach of principle of natural justice and the way in which the proceeding was conducted before the Arbitrator that itself in my view, is unfair and illegal.

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9 The notice of invoking of Arbitration clause is a must. There is no record to show that such Arbitration notice was served and/or received by the Petitioner. It is necessary for the claimant/ Respondent to file claim before issuing any notice by the Arbitrator calling upon other side to appear, reply and participate in the proceedings. Two notices were sent by the Arbitrator, even at that time there was no claim petition was filed by the Respondent. Admittedly, the claim Petition was filed on 20^th November, 2008. As noted, the Petitioner along with his Advocate visited the office on 15/11/2008 at 11.30 a.m. but it was recorded that none appeared for the Petitioner and the Arbitrator proceeded ex-parte on 15^th November, 2008.

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Before passing the award, on 24/11/2008, therefore, it was desirable that the Arbitrator should inquire and or confirm the position about the alleged visit of the Petitioner with the advocate on 15/11/2008. There should have been reference to that effect in the award.

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10 From the award, it is also cleared that there is no reference made about the vehicle, which was disposed of long back. When the Respondent filed the affidavit or lead the evidence in support of their claim, the same should have been pointed out with details. The Arbitrator ought to have recorded such finding before passing the award. There are serious lacuna and illegality.

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14 The Apex Court in Security Printing and Minting Corporation of India Limited and Anr. Vs. Gandhi Industrial Corporation, (2007) 13 S.C.C. 236 , has reiterated that if the award is illegal and contrary to the record and based upon a clear breach of natural justice, such award is unsustainable. The alleged service of notice itself is not sufficient to maintain the award. The Arbitration proceedings were not proceeded in compliance of principle of natural justice. It is based upon the suppression of the facts and various serious irregularities, I am inclined to set aside the award.

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15 Resultantly, the Petition is allowed in terms of prayer clauses (a) and

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(b). No costs.

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(ANOOP V. MOHTA, J.)

Bajirao Y. Pawar v. Kotak Mahindra Prime Ltd.

Case brief

What is this about?

What did the court decide?

Bajirao Y. Pawar v. Kotak Mahindra Prime Ltd.

Case brief

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What did the court decide?

What the court decided

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