Dismissed

Hiralal Liladhar v. Shamsunder Z. Lahoti

Bombay HC11 Jan 2011ARBP/62/2011

Case brief

AI extract

What is this about?

In urgent ad-interim arbitration petitions, the Single Judge declined to decide on the maintainability of the reference due to a long lapse of time arising from a pending appeal from 1998. The court dismissed the petitions but granted three weeks to file written statements.

What did the court decide?

Reliefs under section 33 declined as they could be raised before the Tribunal. Three weeks granted to file written statements.

Hiralal Liladhar Vs Shamsunder Z. Lahoti — Arbitration | Bombay HC (2011)

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ARBP16-17 1

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION LOD.NO.16 OF 2011

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M/s.Hiralal Liladhar .. Petitioner Versus Shamsunder Zumbarlal Lahoti .. Respondent

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WITH

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ARBITRATION PETITION LOD. NO.17 OF 2011

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M/s.Hiralal Liladhar .. Petitioner Versus Mrs.Ashalata S. Lahoti .. Respondent

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Mr.S.U.Kamdar, Senior Advocate with Mr.Chetan Kapadia, Mr.Shaukat Merchant, Ms.Kadambari and Ms.Saguna Panjwani i/b. M & M Legal Ventures for petitioner Mr.Simil Purohit for respondents

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CORAM : S.C.DHARMADHIKARI, J.

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DATE : 11th January 2011

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P.C.:

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1] These petitions were placed before me for urgent ad-interim

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orders. It was pointed out that the arbitral tribunal may proceed with the matter on the returnable date i.e. 12^th January 2011 and thereupon,

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these petitions would be rendered infructuous.

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2] In both these matters, the principal contention raised by Mr.Kamdar, learned Senior Counsel and adopted by Mr.Kapadia is that the matter was before this Court earlier. This Court had in a judgement delivered on 15^th October 1998 in Arbitration Petition Nos. 82 and 83 of 1997 and other connected matters held that the petitions deserve to be allowed and the Award is set aside. The matters are remitted back to the Arbitrators for deciding reference afresh within four months from the communication of the order of the Court. The submission is that this order was carried in appeal by M/s.Hiralal Liladhar, who is petitioner in one of the petitions and the Division Bench of this Court by an order dated 25^th July 2007 was pleased to dismiss the appeal. It is submitted that thereafter on 5^th October 2007, the respondents’ Advocate addressed a letter to the Arbitration Assistant, Bombay Stock Exchange and brought to their notice the orders of the Appellate bench. It was requested that the Arbitral Bench may be reconstituted and a preliminary meeting be fixed. It is submitted that this is well beyond the period of four months

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stipulation in the order passed on October 15, 1998 by the learned Single Judge and which came to be confirmed subsequently. During the pendency of the appeal i.e. From 1998 till 2007, there was no stay of the order and, therefore, nothing prevented the Arbitral tribunal from proceeding with the reference and rendering the award afresh. It is submitted that now by virtue of the provisions of section 16 of the Arbitration Act, 1940 and particularly sub-sections 2 and 3 thereof, the decision having not been rendered within the time period, the Arbitrators cannot proceed in the matter. Therefore, the continuation of the reference is void and without jurisdiction.

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3] Alternatively and without prejudice it is submitted that a reasonable request was made before the Arbitral Tribunal that the written statement of the petitioners may be allowed to be tendered, since the matter is commencing after a long time. However, in the meeting that was convened by the Tribunal on 21^st December 2010, the request of the petitioners to grant time to file written statement has been rejected on the ground that the matter is fairly old. This itself

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shows that the Arbitral Tribunal is biased and incompetent and, therefore, the reference cannot proceed before such a tribunal. For all these reasons, it is submitted that this Court should exercise its jurisdiction under section 33 of the Arbitration Act, 1940 and grant reliefs claimed in this petition.

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4] On the other hand Mr.Purohit, learned Counsel appearing for respondents in each of these petitions submitted that although the learned Single Judge rendered the order on 15^th October 1998 and stipulated a time period therein for making of a fresh Award, yet, the matter was carried in Appeal and was pending there till 2007 and it was disposed of on 25^th July 2007. Immediately after disposal of the appeal, the respondents wrote to Bombay Stock Exchange and requested reconstitution of the Tribunal. This is not a case where section 16 or the rigor under sub-sections 2 and 3 thereof would apply, particularly because the Stock Exchange Rules, by-laws and Regulations 1957 and particularly Regulation 260 thereof would come into play. Thereunder, whenever an Award given under the by-laws

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and Regulations is set aside by the Court, the matter shall be referred to arbitration as provided under the same by-laws and regulations and the claim therein so also the disputes and differences shall be decided by Arbitration only. Regulation 261 empowers the Governing Board or President, if they deem fit, to extend time for making the award and, therefore, these regulations being statutory in character would override section 16 of the Arbitration Act, 1940. Therefore, it is not as if the reference is wholly void and without jurisdiction as contended by the petitioners.

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5] As far as the order/ direction of the Arbitral Tribunal with regard

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to filing of written statement is concerned, Mr.Purohit submits that being an old matter, the Arbitrators were well within their powers to refuse the request made belatedly. More so, when it is a dilatory tactic and not a bonafide request. He invites my attention to page 9 of the petition filed in this Court and submits that the averments would show that on some ground or the other or on some pretext or the other the petitioners are delaying the matters. Therefore, no interference is

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necessary with that direction.

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6] In support of the submission that section 16 is the governing provision and Bombay Stock Exchange by-laws do not override the statutory provision, reliance is placed on the Division Bench judgement of this Court reported 2008 (1) BCR 768 (Dowell Leasing and Finance Ltd. Vs. Radhesham B. Khandelwal).

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7] With the assistance of the learned Counsel appearing for both

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sides I have perused the petitions and the annexures thereto including the order of the Tribunal. As far as the first contention is concerned, I am of the opinion that at this stage it is not necessary to conclusively decide the same and it would be open for the petitioners to raise appropriate pleas before the Arbitral Tribunal. It will not be proper to go into and decide at this stage as to whether the learned Single Judge’s order dated 15^th October 1998 and the period provided thereunder is absolute or whether pendency of the appeal from that order and its ultimate decision rendered on 25^th July 2007 will have

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any effect on the plea of maintainability of the reference and limitation. Assuming that it is contended that there was no stay through out the proceedings, yet, it will be proper if the matter is left to the arbitral tribunal and not decided conclusively particularly because the respondents place reliance on the Stock Exchange Regulations and would urge that the order of this Court which is traced to section 16 by the petitioners cannot control the proceedings and the decision of the Stock Exchange in appointing Arbitral Tribunal for a decision on the reference afresh must hold field. All these aspects can be decided by the Arbitral Tribunal. Further, whether the Division Bench decision on which reliance is placed by the petitioners would be applicable to the facts of the present case or not is also a matter which must be left to be gone into at a subsequent stage. Today, when after a lapse of so many decades the Arbitral proceedings are going on, it will not be proper to interdict them at the instance of the petitioners and particularly when enough protection is given to them.

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8] Therefore, keeping open the plea of maintainability of the reference and limitation for being raised before the Tribunal at an appropriate stage, these petitions are dismissed. No costs.

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9] However, bearing in mind the peculiar facts of this case and considering that the reference has commenced afresh after a long gap of time, interest of justice would be served if three weeks time is granted to the petitioners to file their written statements/ replies. If they are filed within three weeks from today, the same shall be taken on record by the Tribunal without in any manner being influenced by their earlier orders and directions. If the same is not filed as directed,

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the Tribunal to proceed in accordance with law.

Hiralal Liladhar v. Shamsunder Z. Lahoti

Case brief

What is this about?

What did the court decide?

Hiralal Liladhar v. Shamsunder Z. Lahoti

Case brief

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