Back
2016 Supreme(Cal) 372
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SOUMEN SEN, J.
M/s. Rangali Agrotech Pvt. Ltd. & Ors. - Petitioners
Versus
Smt. Gayatri Devi Poddar & Ors. - Respondents
AP No.1221 of 2014
Decided On : 24-08-2016
Advocate Appeared:
For the Petitioners: Mr. Sarbapriya Mukherjee, Mr. Amal Kumar Saha
For the Respondents: Mr. Rudradeb Chaudhuri, Mr. Biswabrata Basu Mallick, Mr. Khagendra Nath Jana
A party who fails to raise an objection to the jurisdiction of an Arbitral Tribunal under Section 16 of the Arbitration and Conciliation Act, 1996, waives its right to object to the jurisdiction of the Tribunal in a subsequent proceeding under Section 34 of the Act.
Headnote:
ARBITRATION - SETTING ASIDE OF AWARD - FORGED AGREEMENT - JURISDICTION OF ARBITRATOR - WAIVER OF OBJECTION - ARBITRATION AND CONCILIATION ACT, 1996 - SECTIONS 16, 34.
Fact of the Case:
Petitioner filed an application to set aside an arbitral award passed in favor of the respondents, alleging that the award was based on a forged agreement containing an arbitration clause. The petitioners claimed they never intended to enter into any arbitration agreement and that the arbitrator was biased.
Finding of the Court:
The Court held that the petitioners could not challenge the existence of the arbitration agreement at this stage, as they had failed to appear and raise an objection to the constitution of the Arbitral Tribunal under Section 16 of the Arbitration and Conciliation Act, 1996. The Court noted that the petitioners were aware of the arbitral reference and had received notices to appear before the Tribunal but had deliberately avoided the proceedings.
Issues: 1. Whether the petitioners can challenge the existence of the arbitration agreement at this stage after failing to appear and raise an objection to the constitution of the Arbitral Tribunal under Section 16 of the Arbitration and Conciliation Act, 1996? 2. Whether the arbitrator had jurisdiction to decide the matter in light of the petitioners' allegations of fraud?
Ratio Decidendi: 1. The Court held that the petitioners had waived their right to object to the jurisdiction of the Arbitral Tribunal by failing to raise such objection when they were made aware of the arbitral reference being taken up. The Court noted that the petitioners had received notices of demand and notices under Section 21 of the Act and were fully aware of the initiation of proceedings before the Arbitral Tribunal. 2. The Court held that the arbitrator was competent to rule on its own jurisdiction, including ruling on any objection regarding the existence or validity of the arbitration agreement. The Court noted that the petitioners could have questioned the existence of the arbitration agreement before the arbitrator, and the arbitrator would have been the competent authority to decide such an issue.
Final Decision: The Court dismissed the petition, holding that the petitioners could not challenge the existence of the arbitration agreement at this stage and that the arbitrator had jurisdiction to decide the matter.
Soumen Sen, J.
1. The petitioner has filed this application for setting aside of an award dated 8th May, 2014 passed by a sole Arbitrator.
2. The award was passed in favour of the respondents.
3. The principal grievance of the petitioners against the award appears to be that the award was passed on the basis of an agreement which is manufactured and forged. The said alleged agreement contains an arbitration clause. The petitioners never intended to enter into any arbitration agreement. The award passed is an unreasoned award. The Arbitrator appointed at the instance of the respondents was regularly representing the respondents in various proceedings.
4. The petitioners admit to have received a notice of arbitration on 3rd October, 2013 from the named Arbitrator. The petitioners alleged that the petitioners did not receive any copy of the statement of facts. The petitioners alleged that although they have received letters dated 3rd October, 2013 and 30th September, 2013 but the petitioners could not remember and or trace out any other letter wherefrom it could be ascertained that the statement of claim or minutes of the proceeding were communicated to the petitioners. The petitioners alleged that the agreement and the cheques relied upon by the respondents in the proceeding were issued in consideration of stock of paddy to be supplied to the petitioners by the respondents. The petitioners alleged that the respondents are supplier of paddy. The petitioner no.2 signed some cheques in the month of March 2013 with the object of handing over the same to one Mr. Manoj Kumar Patni and Sandip Kumar Patni being the suppliers and traders of the paddy in connection with an agreement arrived at between the petitioners and the persons named aforesaid. The petitioner no.2 signed few cheques with the intent to hand over the said cheques to Manoj and Sandip on 1st March, 2013 but they refused to receive those cheques on the ground that they had no stock of paddy as required by the petitioners at the relevant point of time and they assured the petitioners to receive those cheques subsequently as and when required amount of paddy was available with them. Thereafter, the said cheques were kept under lock and key in an almirah lying at the petitioners’ office at Kharupetia. However, in the month of November, 2013 and subsequently in January and February, 2014 the petitioners received letters dated 19th November, 2013, 20th January, 2014 and 25th February, 2014 calling upon the petitioners to attend arbitration proceeding but for alleged non-supply of documents, the petitioners did not participate in the said proceeding. It is alleged that the respondents have initiated arbitration proceeding by practicing fraud upon the petitioners as also upon the Arbitrator by falsely representing that the petitioners are the investors of the company. The petitioners alleged that the petitioners had no business dealings with Ratan Lal Poddar.
5. The award holder on the other hand contends that the petitioners were aware of the existence of the agreement and have deliberately avoided the arbitration proceeding and at this stage the petitioners could not be heard to contend that there is no valid arbitration agreement. In the supplementary affidavit filed by the respondents, documents have been disclosed to show that letter of demand followed by the notice under Section 21 of the Arbitration and Conciliation Act, 1996, were issued and duly served upon the petitioners and it could not be contended at this stage that the petitioners had no notice of the said proceeding or that the agreement is forged. The letter of demand and the notice under Section 21 of the Act specifically refers to the agreement which is now sought to be challenged.
6. Mr. Sarbapriya Mukherjee, learned Counsel appearing on behalf of the petitioner submits that in a proceeding for setting aside of the award, the petitioner can question the existence of the arbitration agreement and/or the ag
