TMI Blog2014 (6) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... or, but cannot act in such dual capacity for only one party. Petitioner would have participated in the arbitration proceedings and resisted the claim in all respects. The Arbitrator would have passed the appropriate order. But in this case, the Petitioners having made their position clear in writing and had resisted every steps taken by the Respondents including the steps taken by the Arbitrator, who was no one else, but the Advocate of the Respondents and, therefore, the nonparticipation, in no way, can be treated as deliberate action to avoid the settlement of disputes through the arbitration proceedings. I am inclined to observe that both the proceedings so initiated and concluded is illegal, contrary and perverse. The Award so passed is unsustainable and liable to be quashed and set aside on all counts. - Decided in favour of appellant. - 121 OF 2012 - - - Dated:- 6-12-2012 - ANOOP V. MOHTA, J. JUDGMENT Heard finally by consent. 2. The Petitioners have invoked Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act) and thereby challenged an exparte award. The operative part of Award dated 14 August 2010 is as under : (i) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication/representation from the disputants, for the same but refundable on handing over peaceful possession with all the proprietary documents including share certificates registered in its favour and the 2BHK flat admeasuring 1050 SQFT and on signing of a quit claim deed on satisfactorily completing the above transactions. (iv) In the alternative, the opponents should arrange to pay a lump sum compensation of Rs.77,50,000 to the opponents shared equally by all the three opponents, being the difference in the cost of like flat of same size in the same vicinity, within the next 60 [sixty days]. Current market price being Minimum @11,000/per sq.ft. {Eleven thousand} x 1050 SQFT = Rs.1,15,50,000, less amount that was payable by the disputant Bombay High Court i.e. Rs.38,00,000. Hence the compensation/liquidated damages comes to Rs.77,50,000/(Rupees seventyseven lakhs fifty thousand) along with simple interest @ 10% (ten percent) per annum from 30 days after the date of receipt of this Arbitral Award until physical payment and if the compensation is settled after 90 days of receipt of the arbitral award beyond then interest has to be calculated @ 12% {Twelve per cent} per annum pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that there exists the arbitration clause in the agreement between the parties. As dispute arose, Respondents 1 and 2 invoked arbitration clause and thereby unilaterally appointed Advocate Shri Shailendra S. Gandhi as the Arbitrator. 6. The Petitioners immediately by letter dated 24 May 2010 replied to the notice issued by the Arbitrator dated 10 May 2010 by which he fixed the first hearing/meeting at his office and also directed the parties to deposit Rs.50,000/towards the initial payment. The Petitioners resisted every aspects of the invocation and the appointment of the Arbitrator and specifically mentioned that they would not be participating in the arbitration proceedings. It was Bombay High Court specifically pointed out about the dismissal of the Respondents' consumer complaint. It was also mentioned about the refund of Rs.50,000/to the Respondents. Therefore, there existed no dispute. The Petitioners thereby also contended that having once invoked the judicial proceedings, there was no question of invoking of arbitration clause apart from unilateral appointment of the Arbitrator. Dual capacity of Arbitrator and Advocate of one party is impermissible: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the Arbitrator who was Advocate of the Respondents, acted also as the Advocate and also as the Arbitrator. It is just impermissible. Such dual capacity of Advocate and/or even of the Arbitrator is against the basic provisions of the Arbitration Act and/or the arbitration scheme itself. The Advocate by consent can act as Arbitrator, but cannot act in such dual capacity for only one party. The award is illegal. 10 The learned Arbitrator, by the impugned Award, directed the Petitioner to provide flat to the Respondents and in the alternative, directed to pay compensation and/or liquidated damages to the extent of Rs. 77,50,000/along with simple interest at 10% and also awarded 12% interest, if amount as awarded is not paid within 90 days. He also proportionately awarded the cost of Rs.15,000/. The whole approach is contrary to law and the record. 11. As recorded above, the Petitioners, considering the facts and circumstances, immediately after receiving of arbitration notice, Bombay High Court denied the claim as well as the initiation of arbitration in such fashion and specifically opposed even the participation in the arbitration proceedings. The Petitioners the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law. The competent consumer court has already rejected the complaint of the Respondents. The Arbitrator, ought not to have decided the arbitration petition in such fashion. The Award is perverse. The Supreme Court has clarified that such proceeding is permissible though there exists arbitration clause. Therefore, even at this stage of passing of Award, the dispute/conflict so raised was pending before the judicial authority between the parties arising out of the same contract towards the same, still proceeded with the matter and passed the award without giving basic opportunity of any kind to the other parties. The award is against the principles of natural justice. It is necessary to note that the Petitioners, as recorded above, deliberately not attended the arbitration proceedings basically for the reason that the proceedings so initiated and the way in which the Arbitrator was appointed and proceeded further itself was contrary to the settled principles of arbitration law. I am not inclined to accept that the Petitioners deliberately not participated in the arbitration proceedings. The case is illegal inception and/or invocation of the arbitration proceedings itself. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as per the scheme of Arbitration Act, but nonparticipation of the Petitioners and not initiating proceedings within reasonable time, in my view disentitle him to claim the cost of this proceedings as prayed, because of delay in persuing the present arbitration petition. The Respondents in fact have initiated execution proceedings and even attached some property of the Petitioners. However, now in view of this order, as Award goes so also all the execution proceedings arising out of the same. This Court, after considering the averments of both the parties and though the Petitioners inspite of service failed to appear before the Arbitrator, but considering the above circumstances, inclined to quash and set aside the impugned Award including the cost awarded by keeping all points open for the parties to initiate and/or continue with their proceedings, if any, therefore also not awarding the costs as prayed. 17. Resultantly, the following order : (I)Award dated 14.08.2010 is quashed and set aside and also the execution proceedings and actions arising out of it; (II) The Petition is allowed accordingly. There shall be no order as to costs. - - TaxTMI - TMITax - Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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