Lalitkumar V. Sanghavi (D) Th. LRs Neeta Lalit Kumar Sanghavi vs Dharamdas V. Sanghavi

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2014 Supreme(SC) 180

SUPREME COURT OF INDIA
Dr. B.S. CHAUHAN, J. CHELAMESWAR, M.Y. EQBAL, JJ.
Lalitkumar V. Sanghavi (D) Th. LRs Neeta Lalit Kumar Sanghavi & Anr. – Appellants
Versus
Dharamdas V. Sanghavi & Ors. – Respondents
CIVIL APPEAL NO. 3148 OF 2014 [Arising out of Special Leave Petition (Civil) No.4267 of 2013]
Decided On : 04-03-2014

Headnote:Arbitration and Conciliation Act, 1996-Sections 11,14,32(2)-Termination of Arbitration proceedings-Arbitration application for appointment of some fit and proper person as arbitrator for entering reference and adjudicating upon disputes-Dismissed by High Court holding that such an application invoking Section 11 of the Act was not maintainable-Appeal- From the language of Section 32, it could be seen that arbitral proceedings get terminated either in the making of the final arbitral award or by an order of the arbitral tribunal under sub-Section 2- Sub-section (2) provides that the arbitral tribunal shall issue an order for the termination of the arbitral proceedings in the three contingencies mentioned in sub-clauses (a) to (c) thereof-On the facts of the instant case, applicability of sub-clauses (a) and (b) of Section 32(2) was clearly ruled out - Order dated 29th October, 2007 by which Tribunal terminated the arbitral proceedings could only fall within the scope of Section 32, sub-Section (2), sub-clause (c) i.e. the continuation of the proceedings had become impossible- By virtue of Section 32(3), on the termination of the arbitral proceedings, the mandate of the arbitral tribunal also comes to an end- Having regard to the scheme of the Act and more particularly on a cumulative reading of Section 32 and Section 14, question whether the mandate of the arbitrator stood legally terminated or not could be examined by the court “as provided under Section 14(2)”- Apprehension of appellant that they would be left remediless held to be without basis in law-The appellants held to be at liberty to approach the appropriate court for the determination of legality of termination of mandate of arbitral tribunal -Appeal dismissed(paras13to18)
       Facts of the Case –
       The parties herein were carrying on some business in the name and style of a partnership firm constituted under a partnership deed. The partnership deed provided for the resolution of the disputes arising between the partners touching the affairs of the partnership by means of an arbitration. In view of certain disputes between the partners the original applicant filed arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996. By his order dated 29th October, 2007, the presiding arbitrator informed the appellants that the arbitration proceedings stood terminated. Original applicant filed arbitration application with prayers that this Hon’ble Court be pleased to appoint some fit and proper person as arbitrator for entering reference and adjudicating upon the disputes in respect of M/s. Sanghavi Brothers.That application came to be dismissed by the order under appeal in substance holding that such an application invoking Section 11 of the Act is not maintainable.
       B.Present appeal has been filed against said order of High Court.
       Findings of the Court –
       On the facts of the instant case, applicability of sub-clauses (a) and (b) of Section 32(2) was clearly ruled out . Order dated 29th October, 2007 by which Tribunal terminated the arbitral proceedings could only fall within the scope of Section 32, sub-Section (2), sub-clause (c) i.e. the continuation of the proceedings had become impossible. By virtue of Section 32(3), on the termination of the arbitral proceedings, the mandate of the arbitral tribunal also comes to an end. Having regard to the scheme of the Act and more particularly on a cumulative reading of Section 32 and Section 14, question whether the mandate of the arbitrator stood legally terminated or not could be examined by the court “as provided under Section 14(2)”. Apprehension of appellant that they would be left remediless held to be without basis in law. The appellants held to be at liberty to approach the appropriate court for the determination of legality of termination of mandate of arbitral tribunal .Appeal was dismissed.

JUDGEMENT

Chelameswar, J. –

1. Aggrieved by an order dated 24th September, 2010 in Arbitration Application No. 44/2008 on the file of the High Court of Bombay, the instant SLP is filed by the two children of the applicant (hereinafter referred to as “the original applicant”) in the above mentioned application. The SLP is filed with a delay of 717 days. Therefore, two IAs came to be filed, one seeking substitution of the legal representatives of the deceased appellant and the other for the condonation of delay in filing the SLP.

2. The 1st respondent is the brother of the original appellant and the other respondents are the children of another deceased brother of the original applicant. Respondents are served and they have contested both the IAs.

3. Accepting the reasons given in the applications, we deem it appropriate to condone the delay in preferring the instant SLP and also substitute the original appellant (since deceased) by his legal representatives. Both the IAs are allowed. Delay condoned.

Substitution allowed. Leave granted.

4. The undisputed facts are that the parties herein are carrying on some business in the name and style of a partnership firm constituted under a partnership deed dated 20th October 1962. The partnership deed provided for the resolution of the disputes arising between the partners touching the affairs of the partnership by means of an arbitration. In view of certain disputes between the partners (details of which are not necessary for the present purpose) the original applicant filed arbitration application No.263/2002 under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’, for short) before the Chief Justice of the Bombay High Court which was disposed of by an order dated 21st February, 2003 by a learned Judge of the Bombay High Court, who was the nominee of the Chief Justice under the Act. The relevant portion of the order reads as follows:

“Considering that applicant respondent No.1 have appointed two arbitrators, Justice H. Suresh, Retired Judge of this Court is appointed as presiding arbitrator. The arbitral tribunal so constituted to decide all disputes including claims and counter claims of the parties arising from the controversy. In case respondents do not cooperate with the matter of appointment of third arbitrator, applicant initially to bear the made part of final award in the position, application disposed of accordingly.”

5. By his order dated 29th October, 2007, the presiding arbitrator informed the appellants that the arbitration proceedings stood terminated.

The relevant portion of the order reads as follows:

“The matter is pending since June, 2003 and though the meeting was called in between June, 2004 and 11th April, 2007, the Claimant took no interest in matter. Even the fees

directed to be given is not paid.

In these circumstances please note that the arbitration proceedings stands terminated. All interim orders passed by the Tribunal stand vacated.”

6. In response to the said communication, the original applicant, through his lawyer, communicated to the arbitrators and also the advocates of the respondents herein that the order of the arbitrators dated 29th October, 2007 does not reflect the true factual position of the matter. The relevant portion of the letter reads as follows:

“The Hon’ble Arbitral Tribunal is therefore requested to kindly revoke the said letter dated 29th October 2007 and modify the same and kindly record that the proceedings are being terminated due to non compliance of orders/directions as also non payment of fees and charged by the Respondent No.1”

7. On 17.1.2008, the original applicant filed arbitration application No.44/2008 with prayers (insofar as they are relevant for the present purpose) as follows:

a) this Hon’ble Court be pleased to appoint some fit and proper person as arbitrator for entering reference and adjudicating upon the disputes in respect of M/s. Sanghavi Brothers.

b) the Respondent No.1 to 4 be dire

Click Here to Read the rest of this document

2014 Supreme(SC) 180

Cases Referred (1)