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2024 Supreme(Guj) 2205

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SUNITA AGARWAL, C.J., PRANAV TRIVEDI, J.
Mahesh Jayramdas Meghrajani & Ors. - Appellants
Versus
Umesh Ratilal Shah & Ors. - Respondents
R/FIRST APPEAL NO. 4942 of 2018 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2018 In R/FIRST APPEAL NO. 4942 of 2018 With R/FIRST APPEAL NO. 696 of 2019 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2019 In R/FIRST APPEAL NO. 696 of 2019
Decided on : 12-09-2024

Advocates Appeared:
For the Appellant : MR. KAMAL B. TRIVEDI, SR. ADV. WITH MR MANAV A MEHTA(3246), WITH MS. ANKEETA RAJPUT, ADV, MR. RAJ S. TANNA, ADV.
For the Respondent: HARSH V GAJJAR, MR. SAURABH SOPARKAR, SR. ADV. WITH MR. ADITYA MEHTA, ADV., MR. SAURABH SOPARKAR, SR. ADV. WITH MR. ADITYA MEHTA, ADV., HARSH V GAJJAR

The arbitrator cannot review its own award on merits; only clerical or computational errors can be corrected under Section 33 of the Arbitration and Conciliation Act, 1996.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 33 and 37 - Appeals against dismissal of application under Section 34 - The court examined the scope of Section 33 regarding correction of awards and found that the arbitrator exceeded jurisdiction by revisiting findings and accepting new evidence. The original award dated 17.02.2012 was upheld, and the additional award dated 30.11.2013 was set aside for being contrary to the Act. (Paras 1, 24, 52, 62)

(B) Jurisdiction of Arbitrator - The arbitrator cannot review its own award on merits; only clerical or computational errors can be corrected under Section 33. (Paras 19, 39)

(C) Public Policy - An award that contravenes the Arbitration Act is patently illegal and can be set aside. (Paras 53, 56)

Facts of the case:
The appeals arose from a partnership dispute involving claims of mismanagement and dissolution of the firm, with the arbitrator's awards being contested for errors in partner shares and mismanagement allegations.

Findings of Court:
The court found that the arbitrator had no authority to modify the original award and that the additional award was beyond the scope of permissible corrections.

Issues: The main issues included whether the arbitrator had jurisdiction to modify the original award and the validity of the additional award.

Ratio Decidendi: The court ruled that the arbitrator's actions constituted a jurisdictional error, as the original findings could not be revisited under Section 33.

Result: Appeals allowed, and the additional award set aside.

ORDER :

(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)

Heard Mr. Kamal B. Trivedi, the learned senior advocate, with Mr. Manav Mehta and Ms. Ankeeta Rajput, the learned advocates appearing for the appellants and Mr. Saurabh Soparkar, the learned senior advocate with Mr. Aditya Mehta for Universal Legal for the respondent No.4 and the learned advocate Mr. Harsh Gajjar for the respondent Nos. 3 and 5.3 and perused the record.

2. The two connected Appeals under Section 37 of the Arbitration and Conciliation Act, 1996 have been filed against the judgment and order 24.10.2018 dismissing the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act, 1996’), upholding the award dated 17.02.2012 and the additional award dated 30.11.2013 passed by the learned sole Arbitrator.

3. The main question before us is about the scope and purport of Section 33 of the Act, 1996. To deal with the controversy at hand, certain relevant facts are to be noted at this stage. Pursuant to the arbitration clause contained in the deed of partnership, the dispute between the partners of M/s. Rupam Cinema Enterprise, a partnership firm was referred to the learned sole Arbitrator. There were four sets of claimants in the partnership firm before the learned Arbitrator. The firm in the name and style of M/s. Rupam Cinema Enterprise was constituted under a deed of partnership dated 9th August, 1973 to carry out business of running two theaters viz. Apsara and Aaradhana. When the firm was constituted, there were four group of partners and the shares of the partners in the profit and loss of the firm as provided in the original partnership deed were as under :-

“Group-I:

1.

Mohanlal Thakershibhai Patel

0.09 Ps.

2.

Navinkumar Mohanlal Patel

0.04 Ps.

3.

Narendrakumar Mohanlal Patel

0.04 Ps.

4.

Rasiklal Karshandas Patel

0.04 Ps.

5.

Shantilal Karshandas Patel

0.04 Ps.

6.

Chandulal Karshandas Patel

0.04 Ps.

7.

Mahendrakumar Atmaram Patel

0.03 Ps.

8.

Satish R. Patel

0.03 Ps.

9.

Kantilal Chunilal Thakkar

0.10 Ps.

Group-II:

 

 

 

10.

Manubhai Kanaiyalal Shah

0.05 Ps.

11.

Virendra Kanaiyalal Shah

0.05 Ps.

Group-III

12.

Umesh Ratilal shah

0.05 Ps.

13.

Ratilal Jethalal Shah

0.05 Ps.

14.

Jayantilal Jethalal Shah

0.10 Ps.

Group-IV

15.

Labhshankar Bhagwandas Raval

0.05 Ps.

16.

Mahendrakumar Bhagwandas Raval

0.05 Ps.

17.

Jayramdas C. Meghrajani

0.10 Ps.

18.

Shardaben Tribhovandas Shah

0.05 Ps.

4. It seems that out of the abovementinoed partners, Shardaben Tribhovandas Shah died on 28th December, 1981 and Rasiklal Karsandas Patel had died on 17th May, 1997. The first group of partners, noted hereinabove, had retired from the partnership firm in the year 1989 under the settlement arrived at between the parties in a Civil Suit filed by the said group. The business of the partnership firm, however, was carried on. It seems that a dispute has arisen between the partners in the matter of maintenance of the Books of Accounts and the allegations of embezzlement and mismanagement of the fund by one set of partners. In a petition filed under Section 11 of the Act, 1996, this Court appointed the Arbitrator, who proceeded to pass the original award dated 17.02.2012.

5. The claim statements were filed by three sets of claimants. The 4th set of claimants adopted the claim statement submitted by the 3rd set. As per the claim statement of the 1st set of partners, after the commencement of the partnership business in the year 1973 under the partnership deed, there have been number of changes in the constitution of the partnership firm. Number of partners either retired or died, so

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