Atul R. Shah vs V. Vrijlal Lalloobhai and Co. and another

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1998 Supreme(Bom) 515

IN THE HIGH COURT OF BOMBAY
F.I. Rebello, J.
Atul R. Shah ..... Petitioner.
Versus
M/s. V. Vrijlal Lalloobhai Co. another.... Respondents.
Arbitration Petition No. 268 of 1988, decided on 8-9-1998.
Advocates appeared :
Phiroje Andhiyarujina i/b G.R. Mehta, for petitioner.
S.J. Purohit, for respondent No. 1.

Headnote:Sections 10 and 34(2)(a)(v)Reference to an Arbitral Tribunal in terms of the Bye-laws of the Bombay Stock Exchange-Tribunal not constituted in accordance with the procedure under Section 10 of 1996 Act Award of Tribunal liable to be set aside in terms of Section 34(2)(a)(v) of the Act-Tribunal cannot assume jurisdiction in contravention of Section 10 merely because no objection was raised by party.-In respect of proceedings in arbitration pursuant to Bye-laws framed by the Bombay Stock Exchange, the procedure under Section 10 of the Arbitration and Conciliation Act, 1996 for constitution of the Tribunal will be applicable. If the Tribunal is not properly constituted the award would have to be quashed and set aside in terms of Section 34(2)(a)(v). The fact that an Arbitral Tribunal is not properly constituted and objection has not been raised by the petitioner before the Tribunal, cannot result in the Arbitral Tribunal exercising jurisdiction if its constitution was in contravention of Section 10 of the Arbitration and Conciliation Act, 1996. Courts cannot confer jurisdiction on themselves, by consent of the parties and clothe themselves with jurisdiction. A Court without jurisdiction merely on account of non-objection by the parties cannot assume jurisdiction in itself. The same is also true of Arbitral Tribunals. Arbitration Petn. No. 130 of 1998, Vinay Bubna v. Yogesh Mehta and others, dated 7.9.1998 (Rebello, J.), Rel.
       Section 13-Reference-Award -Objection taken that petitioner was not informed whether the Arbitrator was empanelled-Said objection was not raised before Tribunal-Such objection could have been raised under Section 13-Objection negatived.
       Section 19-Reference-Matters adjourned for final award informing parties that no fresh notice would be given-Plea that no notice of closure of reference was given untenable.
       Sections 25 and 34(2)(a)(iii)-Reference - Ex- parte proceedings - Party was given notice of draft award and about date of passing of final award when present-Party not only chose not to appear but did not even send a communication to show reasons for non-appearance- Tribunal after giving notice to parties and after having adjourned matter on request of said party was not supposed to further defer matter in absence of any request-Plea, therefore, that party was not given sufficient opportunity to present case, not acceptable.

JUDGMENT - F.I. REBELLO, J.:---Admit. Respondents waive service. Heard forthwith.

2.The petitioner by this petition is challenging the impugned Award dated 26-6-1998 under section 34 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the Arbitration Act, 1996. Before dealing with the various contentions raised to challenge the Award, a few necessary facts which are essential for disposing of the said contentions are herein set out.

3.The dispute between the respondents and the petitioner was referred to an Arbitral Tribunal in terms of the Bye-laws of the Bombay Stock Exchange. The petitioner is a non member and the respondent No. 1 a member of respondent No. 2 the Bombay Stock Exchange. In the course of the Arbitral proceedings one of the Arbitrators expired. Due notice was given to the parties by the Stock Exchange by their letter dated 15-5-1998. The parties were informed that the matter would be heard again after appointing a new set of Arbitrators. Parties were also informed that the date, time and the name of the Arbitrator would be intimated later on. The record discloses that before the Arbitral Tribunal as originally constituted the matter was heard on different dates between 13-11-1997 to 17-3-1998. Notice after reconstitution of the Arbitral Tribunal was given to the parties on 15-5-1998 fixing the meeting on 25-5-1998. The Minutes of 25-5-1998 disclose that the Arbitrators have gone through the details of papers filed by both the parties. The draft award which is incomplete was gone through by both the arbitrators and matter was kept on 4-6-1998 at 5.00 p.m. for final award. No notice to the parties.

It may also be pointed that the Minutes of 4-6-1998 also record that the Arbitral Tribunal had also not received any communication in writing from the petitioner herein for non appearance on that date. The award was pronounced in favour of the respondents on that date. The formal award was signed on 26-6-1998.

4.At the hearing of the petition on behalf of the petitioner the award is challenged on the following grounds :

(a) The Arbitral Tribunal it is contended was not constituted in terms of section 10 of the Arbitration Conciliation Act, 1996 and consequently the award is liable to be set aside by virtue of section 34(2)(a)(v).

(b) No notice of closing of the reference was given to the petitioner and consequently also the award on that count is also liable to be set aside.

(c) The Arbitral Tribunal could not have proceeded ex parte after parties failed to appear, on the contrary the proceedings ought to have been adjourned in order to enable the party absent to participate in the proceedings. This it is contended is denial of a reasonable opportunity to the petitioners to present his case and consequently the award is liable and set aside under section 34(2)(a)(iii).

(d) It is also contended that the Arbitrator appointed in the place of the deceased Arbitrator has to be empaneled with the B.S.C. The petitioner was not informed whether Arbitrator was empaneled and consequently on that count also the award is liable to be set aside.

On behalf of the respondents in so far as the contentions (a) is concerned it is contended that this objection of constitution of Arbitral Tribunal was not raised before the Arbitral Tribunal and as such this Court is precluded from considering the said contention. It is further contended that there is no merit in the other contentions.

5.Dealing with the first contention, by my judgment dated 7th September, 1998 in Arbitration Petition No. 130 of 1998 (Vinay Bubna v. Yogesh Mehta others)1, I have held that in respect of proceedings in arbitration pursuant to Bye-laws framed by the Bombay Stock Exchange the procedure under section 10 of the Arbitration Conciliation Act, 1996 for constitution of the Tribunal will be applicable. I have further held that if the tribunal is not properly constituted the award would have to be quashed and set aside in terms of section 34(2)

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