Madras High Court
RAMAPRASADA RAO,SURYA MURTHY
Alvel Sales - Appellant
Versus
Dujadwala Industries - Respondent
Decided On : 06/29/1977
ARBITRATION - SERVICE OF NOTICE - VALIDITY - INTERPRETATION OF S. 14 (2) OF THE ARBITRATION ACT - NOTICE NEED NOT BE IN WRITING - INTIMATION OR INTELLIGENCE OF FILING OF AWARD SUFFICIENT - SERVICE ON AUTHORIZED REPRESENTATIVE - IMPLIED AUTHORITY - DUTY TO CONVEY INFORMATION TO PRINCIPAL - LIMITATION FOR SETTING ASIDE AWARD - EX PARTE DECREE - DECREE IN TERMS OF AWARD NOT AN EX PARTE DECREE - S. 17 OF THE ARBITRATION ACT - MANDATORY.
Fact of the Case:
The appellant and the respondent were involved in a dispute. An arbitrator was appointed, and he passed an award in favor of the appellant. The appellant filed a petition under S. 14 (2) of the Arbitration Act for reception of the award and for further proceedings. Notice of the filing of the award was served on one Nandalal Agarwal, who was working in the Madras Branch of the respondent firm. The respondent did not participate in the enquiry started by the arbitrator and did not file any application for setting aside or modifying the award within the limitation period. The appellant filed an application for passing a judgment in terms of the award, and a decree was passed accordingly. The respondent filed an application to set aside the decree on the ground that it was an ex parte decree and that it had no knowledge of the passing of the award. The court set aside the decree.
Finding of the Court:
The court held that the service of notice on Nandalal Agarwal was valid service on the respondent firm. The court also held that the respondent had lost its right to seek for the setting aside of the award, as the limitation period had expired. The court further held that the decree in terms of the award was not an ex parte decree.
Issues: 1. Whether the service of notice on Nandalal Agarwal was valid service on the respondent firm? 2. Whether the respondent had lost its right to seek for the setting aside of the award? 3. Whether the decree in terms of the award was an ex parte decree?
Ratio Decidendi: 1. The court held that the service of notice on Nandalal Agarwal was valid service on the respondent firm because: a. Nandalal Agarwal was working in the Madras Branch of the respondent firm. b. Nandalal Agarwal received the notice and affixed the seal of the firm to the copy of the notice. c. Nandalal Agarwal had implied authority to act for the respondent firm functioning in Madras. d. Nandalal Agarwal should have conveyed the information of such service to the respondent firm. 2. The court held that the respondent had lost its right to seek for the setting aside of the award because: a. The respondent did not file any application for setting aside or modifying the award within the limitation period. b. The respondent had knowledge of the passing of the award, as it was served on Nandalal Agarwal. 3. The court held that the decree in terms of the award was not an ex parte decree because: a. The respondent had notice of the filing of the award. b. The respondent did not participate in the enquiry started by the arbitrator. c. The respondent did not file any application for setting aside or modifying the award within the limitation period.
Final Decision: The court allowed the appeal and set aside the order of the lower court setting aside the decree in terms of the award.
RAMAPRASADA RAO J. :- This appeal is directed against the order of Paul J. in Appln. No. 2703 of 1972 in O. P. 195 of 1971.
2. In connection with certain disputes which arose between the appellant and the respondent, one Mr. V. Venkataraman was appointed as Arbitrator by the appellant in the first instance and as per clause 21 of the arbitration agreement the respondent was called upon to nominate its arbitrator. On the failure of the respondent to do so, Mr. Venkataraman, in accordance with law, became the sole Arbitrator and he entered upon the reference as per the arbitration agreement in or about Aug. 1970. We are not, in this appeal, quoting the arbitration agreement, or the nature of the dispute between the parties, as it is not necessary.
3. The sole Arbitrator Mr. Venkataraman gave notice of his having assumed office, to both the parties and asked them to attend the enquiry on a date fixed by him in Aug. 1970. The respondent was not prepared to participate in the enquiry and wanted the Arbitrator not to proceed with the enquiry. In spite of it, the Arbitrator who was entitled to proceed with the enquiry in terms of his appointment, intended to hear the parties and fixed the 12th Sept. 1970, as the date of hearing of the contentions of the parties on the disputes raised. It appears that the then counsel, whom we characterise as the general counsel, appearing for the respondents, telephoned the Arbitrator and wanted time. Thereafter, the same counsel said that he did not want to participate in the arbitration enquiry as it would prejudice him.
4. By that time, a civil suit, C. S. 75 of 1970 was pending between the parties. In that suit, the relief prayed was for a direction to the respondent to produce the arbitration agreement into court for purposes of appointing an arbitrator through the intervention of court. As the said proceeding was by then pending, the sole Arbitrator Mr. Venkataraman who was appointed at the instance of the appellant in the circumstances already stated, filed an application for extension of time for passing of the award. In the view that an arbitrator had already been appointed, suit C. S. No. 75 of 1970 was withdrawan. The position, therefore, early in 1971, was that the respondent did not participate in the enquiry started by the arbitrator. In these circumstances, the arbitrator passed his award on 9-3-1971 and, admittedly, gave notice of such passing of the award to both the parties, which was received by the respondent thereafter. At this stage, therefore, it is obvious that the respondent had notice of the passing of the award by the arbitrator. Duty-bound, as he was in law, the arbitrator filed O. P. 195 of 1971, that being a petition under S. 14 (2) of the Arbitration Act, for reception of the award and for further proceedings.
5. It is common ground that the said O. P. 195 of 1971 failed by the Arbitrator was taken on file, and Ganesan J. issued notice to all parties concerned. This notice, according to the appellant, was served through the office of the Sheriff of the High Court on one of the representatives of the respondent firm, which by then, opened a Branch office in Madras. We shall, of course, after to this aspect in full at a later stage. It is common ground, however, that one Nandalal Agarwal working in the Madras Branch of the respondent firm, received the said notice, affixed the seal of the company and thus received the court notice issued under S. 14 (2). As such notices are only intended as steps-in-aid for either party to process its grievances, one party for obtaining a decree in terms of the award, and the aggrieved party for setting aside or modifying the award in accordance with the provisions of the Arbitration Act, the appellant discretely waited for passage of time and never took any steps till he came to court in Appn. No. 1043 of 1972 in O. P. 195 of 1971, for passing a judgment in terms of the award of Mr. Venkataraman dated 9-3-1971.
6. A decree in terms
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