TMI Blog2003 (3) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... prietor Mr. Atul Kanodia had approached the U. P. Stock Exchange Association Ltd., Kanpur Nagar, seeking arbitration reference raising a claim against the present appellant Vipul Agarwal who had various business dealings in diverse capacities with M/s. Atul Kanodia and company in respect whereof on balance being struck, a sum of ₹ 26,18,364.90 paise was found due and recoverable from the present appellant. Since Sri Vipul Agarwal, the present appellant inspite of demand, had refused to pay, hence the arbitration reference was sought for praying for a direction to pass an award against the present appellant requiring him to pay a sum of ₹ 26,18,364 together with interest at the rate of 24% per annum calculated w.e.f. 28.11.1997 till its actual payment. 5. The U. P. Stock Exchange Association Ltd. on the aforesaid reference made by M/s. Atul Kanodia and company through its proprietor Mr. Atul Kanodia, a member of the U. P. Stock Exchange Association Ltd. had appointed Sri G. D. Sarada as an Arbitrator. The U. P. Stock Exchange sent the prescribed form to the present appellant requesting him to appoint an Arbitrator of his choice within 7 days from the date of receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assertion of denial by Atul Kanodia on oath. 9. The Arbitrators had found that M/s. Atul Kanodia and Company and Vipul Agarwal in his diverse capacities as an individual as well as the Director of Sri Girdhar Investments and Shares Pvt. Ltd. , a company belonging to him had been dealing with M/s. Atul Kanodia and Company in respect of sale and purchase of shares. M/s. Atul Kanodia and Company had filed true copies of all contracts and statement of transactions/Bills pertaining to all transactions done by the respondent which had been duly received and acknowledged by the reception counter, under the seal of the office of Vipul Agarwal and the affidavit of Atul Kanodia stating on oath that the transactions were in consonance with the statutory requirements of the U. P. Stock Exchange Association Ltd. It was observed from the contracts that apart from other terms and conditions mentioned therein, there is mention that the Contract is made subject to Rules, Bye-laws and Regulations and usages of the U. P. Stock Exchange Association Ltd., Kanpur and further that in the event of any claim (whether admitted or not), difference or dispute arising between you and us (the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appellant. 12. A perusal of the impugned order passed by the learned District Judge indicates that he was of the view that the materials on record clearly indicated that Vipul Agarwal was trading with M/s. Atul Kanodia and Company under both his own name as well as in the name of Sri Girdhar Investments and Shares Pvt. Ltd. The contracts by him were also made in his personal capacity. Further M/s. V. K. Financiers was the sole proprietorship firm of Sri Vipul Agarwal and he had paid a sum of ₹ 13 lacs to M/s. Atul Kanodia and Company. The learned District Judge observed that from the materials on record by the appellant that each and every contract between the parties performs relating to the deal between the parties contained an arbitration clause stipulating that the dispute would be decided by the Arbitration and the Arbitration would be in accordance with the bye-laws of the U. P. Stock Exchange and further that the contracts were subject to the rules, bye-laws and Regulations of the U. P. Stock Exchange Association Ltd. The court below negatived the assertions of the present appellant to the effect that there was no agreement in between the parties. Observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radict such statements by affidavit or other evidence. If a party thinks that the happenings in Court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to call the attention of the every Judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. 16. In the aforesaid view of the matter, the statement of facts occurring in the impugned Judgment indicating that there was no dispute about those facts have to be accepted as correct. 17. The learned counsel for the appellant has strenuously urged that there was no arbitration agreement as defined under Section 7 of the Act and the constitution of the Arbitral Tribunal comprising of D.D. Sarda, M.L. Jain and Shri Gopi Shyam Nigam not being in accordance with law the aforesaid Arbitrators had no jurisdiction to give the award fastening a liability on the present appellant. It is further urged in this connection that the appellant had no confidence in the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Shri Gopal Shyam Nigam, advocate, as the third Arbitrator. Noticing that date for the hearing had been fixed by the Arbitrators, they were requested to desist from mala fide conduct and stop the illegal arbitration proceedings for which Shri Vipul Agrawal had not given any consent indicating further that he had no confidence in so called Arbitrators Shri M.L. Jain or Shri D.D. Sharda. A copy of the notice was also sent to Shri Gopi Shyam Nigam requesting him not to initiate any arbitration proceedings informing him that Shri Vipul Agrawal had not given any consent for the same and he could not be compelled to participate in such frivolous arbitration proceedings. 19 . The Arbitral Tribunal after affording an opportunity of being heard to Shri Vipul Agarwal had, however, taken a decision negativing his contentions and had refused to withdraw. They had further found that the Arbitral Tribunal had been validly constituted in accordance with law and had returned a finding against Shri Vipul Agarwal as contemplated under Section 16(5) of the Act upholding the competence of the Arbitral Tribunal to enter upon the reference and give the award. 20. In the aforesaid view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract ; and (b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso Jure the invalidity of the arbitration clause. (2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence ; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an Arbitrator. (3) A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (5) The Arbitral Tribunal shall decide on a plea referred to in Sub-section (2) or Sub-section (3) and, where the Arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award fn accordance with Section 34. 25. Default of a party,--Unless, otherwise agreed by the parties, where without, showing sufficient cause : (c) A party fails to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Act also contemplates that if the respondent fails to communicate his statement of defence in accordance with Sub-section (1) of Section 23, the Arbitral Tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant but where a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral Tribunal may continue the proceedings and make the arbitral award on the evidence before it. 24. In the aforesaid circumstances, the Arbitral Tribunal proceeded to determine its competence and own jurisdiction and also the objections raised in the notices. It has been observed by the Arbitral Tribunal that the present appellant had been directed for his personal presence and/or through a duly authorised representative at the appointed time, date and place, failing which hearing will proceed and the reference may be decided ex parte on merits on the basis of the material available to the Arbitrators on record but in spite of the notice having been duly served, he did not appear nor made any application for his non-appearance. After going through the evidence produced by the claimant and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d select as Arbitrator, and, therefore, it is clear that the highest faith should be shown by the Arbitrator. It also follows that the Arbitrator must disclose to the parties all the facts which are likely or calculated to bias him in any way in favour of one or the other party. A circumstance or a fact may in fact, not bias or influence the decision of the Arbitrator. The Arbitrator may have too strong a character, too deep a sense of justice to be influenced by any consideration extraneous to or foreign to the evidence which he has got to consider. But the question is not what is likely in fact to happen but what is likely to tend or is calculated to tend to a particular result. It is most fundamental principle of justice that a Judge or a Tribunal should not decide a dispute if there is a probability that he would be biased in the case. The test is whether he is likely to be biased. Actual bias need not be proved. 27. Bias may be defined as a preconceived opinion or a predisposition or pre-determination to decide a case or an issue in a particular manner, so much as that such predisposition does not leave the mind open to conviction. It is, in fact, a condition of mind, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitral award in accordance with Section 34 of the Act only. The remedy is of a very limited scope of interference. This position is clear from the provisions of Sections 16 and 37 of the aforesaid Act. 33. It is, therefore, obvious that the decision of the Arbitrator contemplated under Section 13(3) of the Act or a decision of the Arbitrators about the competence of the Arbitral Tribunal upholding its jurisdiction as contemplated under Section 16(5) of the Act has to be taken to be final which cannot be reopened in the proceedings under Section 34 of the Act except on limited grounds as envisaged thereunder. 34. This indicates that the legislative intent underlying the provisions of the Act is that the decision of the Arbitrator against whom allegations have been made attracting the challenge of the nature as indicated in Section 12(3) of the Act, if negatived by the Arbitrators, has to be taken to be final and not open to challenge in the proceedings under Section 34. 35. Taking into consideration the facts and circumstances of the present case as brought on record, we are clearly of the opinion that the submissions urged by the learned counsel for the appellant are tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had observed that under the Act, the grounds of challenge to an arbitral award were very limited and an award could be set aside only on a ground of challenge under Sections 12, 13 and 16 provided such a challenge is first raised before the Arbitral Tribunal and has been rejected by the Arbitral Tribunal. The only other provision is Section 34 of the said Act. 42. Learned counsel for the appellant has tried to infer from the aforesaid observations that the grounds available under Sections 12 and 16 of the Act are also available in the proceedings under Section 34 of the Act in spite of the use of the word only restricting the grounds of attack on an arbitral award to the grounds specifically mentioned in Section 34. 43. So far as the aforesaid aspect of the matter is concerned, from a perusal of the judgment in the case of Narayan Prasad Lohiya (supra), it is apparent that the question which had arisen in that case was as to whether Section 10 of the Act was a non-derogable provision and further in regard to the implications arising under Section 34(2)(a)(u) of the Act, it was held that so long as the composition of the Arbitral Tribunal or the arbitral procedure are in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
