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IN THE HIGH COURT OF BOMBAY
J.A. Patil, J.
R.K. Textiles.... Applicants.
Versus
Sulabh Textiles Pvt. Ltd..... Respondents.
Chamber Summons No. 836 of 2001 in Execu. Appln. No. 214 of 2001 in Arbitration Case No. A/152/1998-99, decided on 16-3-2002.
Advocates appeared :
S.K. Jain, for applicants.
H.V. Gala Co., for defendants.
Arbitration - Jurisdiction - Act 1996, Section 34 - Summary of Acts and Sections: The court discussed the jurisdiction of the Arbitral Tribunal under Chapter IV of the Act 1996, particularly focusing on section 16 which deals with the competence of the Arbitral Tribunal to rule on its jurisdiction. The court also referred to the Division Bench decision of the court in Union of India v. Ajit Mehta and Associates Co. and highlighted the legal principles established in the judgment.
Fact of the Case:
The respondents sought a declaration that an Arbitral Award was without jurisdiction and not enforceable. The respondents disputed the claim made by the applicants and refused to pay any amount claimed by the applicants. The respondents filed an application under section 34 of the Act, 1996 for setting aside the said Award. The respondents also filed a Chamber Summons and prayed for quashing and setting aside the Execution Application taken out by the applicants R.K. Textiles and for raising attachment issued by this Court under the two warrants of attachment dated 21-4-2001 on the respondents properties.
Finding of the Court:
The court found that the Arbitral Award had become final and binding on the parties as the respondents failed to obtain any relief under section 34 due to the barred application. The court held that the executing Court cannot go behind the decree and has to execute it as it is unless it can be shown that the Court which passed it had inherent lack of jurisdiction.
Issues: The issues included the jurisdiction of the Arbitral Tribunal, validity of the Arbitration Agreement, and the grounds for setting aside the Award.
Ratio Decidendi: The court emphasized that the lack of jurisdiction must be patent and should not require investigation or examination of certain facts. It also highlighted that the executing Court cannot decide the existence of an arbitration agreement or its validity as it falls outside the jurisdiction of the executing Court.
Final Decision: The Chamber Summons was dismissed with costs to be paid by the respondents to the applicants.
2. The respondents carry on business of manufacturing of blended fabrics and they are not the members of H.C.C. The applicants are cloth merchants and they are the members of H.C.C. It appears that sometime in July or August 1997 the respondents had placed an oral order for purchase of certain cloth. It further appears that at the time of taking delivery of cloth, the respondents found the same defective and less in quantity and hence there arose disputes between the parties. The applicants referred the matter to the H.C.C. with a request to enforce their claim for damages. The H.C.C. referred the letter of the applicants to the respondents and asked them to settle the claim. The respondents disputed the claim made by the applicants and refused to pay any amount claimed by the applicants. Consequently, on 2-2-1999, the respondents lodged their claim with the H.C.C. with a request for referring the matter to the arbitrator as per the Arbitration Rules of the H.C.C. According to the respondents they pointed out that they were not the members of the H.C.C. and that there was no arbitration agreement with the applicants and that, therefore, the arbitration rules of the H.C.C. were not applicable. However, the H.C.C. persisted and appointed arbitrator on behalf of the respondents without their consent. The respondents, therefore appeared before the arbitrators under protest and submitted that they had no jurisdiction to arbitrate. The respondents also filed a written statement and counter claim. According to the respondents the arbitrators wrongly assumed jurisdiction and purported to make an Award which was not served upon the respondents either by the arbitrators or by the H.C.C. Thereafter, on 14-5-2000, the respondents filed Arbitration Petition No. 349/2001 under section 34 of the Arbitration and Conciliation Act, 1996 (For short, "Act 1996").
3. In the meantime, the applicants had taken out Execution proceedings and attached the Office, factory premises, stock, machinery etc. belonging to the respondents. The respondents claim that on 9-5-2001, they discovered the said Award passed in favour of the applicants as well as the Execution Application taken out by the applicants to execute the said Award which was for a sum of Rs. 1,28,345.10 ps. with interest thereon @ Rs. 1.75% p.m. The respondents filed an application under section 34 of the Act, 1996 for setting aside the said Award. It appears that there was a delay in filing the application and, therefore, an application was filed by the respondents for condonation of delay but the same came to be rejected as according to the learned Single Judge, there was no compliance of section 34. While dismissing the application for condonation of delay, the learned Judge proceeded to observe, "However, it is made clear that if in law the petitioner is entitled to contend that the Award is nullity it is always open to the petitioner in proceedings in execution to raise the said contention and it is for the executing Court to decide whether the petitioner could be allowed to raise the said objections at the stage of execution of the Award as a decree. It is on the basis of these observations that the respondents have taken out this Chamber Summons and prayed for the ab
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