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2022 Supreme(Mad) 3602
IN THE HIGH COURT OF JUDICATURE AT MADRAS
SENTHILKUMAR RAMAMOORTHY, J.
Haripriya Kamireddy - Appellant
Versus
VankaSubhashini & Another - Respondent
O.P. No. 224 of 2014
Decided On : 06-09-2022
For the Petitioner:M/s. A.J. Jawad, S. Kumar, Advocates. For the Respondent:R1, M/s. K. Subburam, Advocate.
The absence of reasons for an arbitral award, non-compliance with notice requirements, and lack of agreement on disputed rules can lead to the setting aside of the award.
Headnote:
Arbitration Act - Challenge to Arbitral Award - Section 34 - Alleged Contract Dispute - Cpeace Mattuchadda Thani Naduver Rules - Lack of Reasons for Award
Fact of the Case:
The petitioner challenges an arbitral award under Section 34 of the Arbitration Act, arising from an alleged contract dispute for provision of services. The award was challenged on grounds including non-execution of the contract, lack of notice under Section 21, denial of opportunity, application of disputed rules, and absence of reasons for the award.
Finding of the Court:
The court found that the arbitral proceedings were not preceded by a notice under Section 21, and the disputed rules were not agreed upon by the parties. It also noted the absence of reasons for the award, including directing the respondent to endorse the Earth Charter and transfer funds to a bank in Costa Rica.
Issues: The issues revolved around the validity of the arbitral award, including the execution of the contract, notice requirements, application of rules, and absence of reasons for the award.
Ratio Decidendi: The court set aside the award due to the absence of reasons, lack of compliance with notice requirements, and non-agreement on disputed rules. It directed the first respondent to initiate de novo arbitral proceedings under the agreement dated 28.03.2007.
Final Decision: The Award dated 16.08.2012 was set aside, and the first respondent was given the option to initiate new arbitral proceedings under the agreement dated 28.03.2007, with no order as to costs.
JUDGMENT
(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 pleased to set aside the award dated 16.08.2012 passed by the second respondent in his proceedings Case No. ARC/SA-RSL- 133/2012.)
1. The petitioner challenges an arbitral award dated 16.08.2012 (the Award) under Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).
2. The dispute arises out of an alleged contract dated 28.03.2007 between the petitioner and first respondent for provision of services by the first respondent as care taker of the petitioner's female child. The first respondent instituted arbitral proceedings alleging non-payment by the petitioner and claimed a sum of Rs.14,86,000/-. By the Award, the arbitral tribunal awarded Rs.14,86,000/- and costs of Rs.1,46,000/-.
3. The Award is challenged on five grounds. The first ground was that the petitioner did not execute the contract dated 28.03.2007, which allegedly contained the arbitration clause. The second ground was that no notice under Section 21 of the Arbitration Act was issued by the respondent seeking constitution of the arbitral tribunal. The third ground of challenge was that the petitioner was unable to present her case and that reasonable opportunity was denied. The fourth ground was that the arbitral tribunal applied the Cpeace Mattuchadda Thani Naduver Rules, which had not been accepted by the petitioner. The fifth and last ground was that neither the interim award nor the final award are supported by reasons.
4. The respondent refuted these contentions. Learned counsel submitted that the respondent was employed as a domestic help by the petitioner to take care of her daughter in the United Kingdom. The petition was filed because amounts due and payable to the respondent were not paid by the petitioner. Notice dated 18.03.2012 was issued by the arbitral tribunal to the petitioner. Such notice was admittedly received by the petitioner and, in fact, the petitioner participated in the proceedings in the initial phase. Since the petitioner opted not to participate in further proceedings and contest the claim petition, it is submitted by learned counsel for the respondent that no interference is warranted with the Award.
5. Upon taking the above contentions into account, I propose to examine three fundamental grounds of challenge before deciding whether the other grounds are required to be considered. The first question to be determined is whether the respondent issued notice under Section 21 of the Arbitration Act to invoke the arbitration clause. The records were requisitioned from the arbitral tribunal and the parties to the proceedings also filed relevant documents. On perusal thereof, it is evident that the arbitral proceedings were not preceded by a notice under Section 21 of the Arbitration Act. Secondly, I find that the arbitral tribunal has extensively referred to rules described as Cpeace Mattuchadda Thani Naduver Rules. In the records submitted by the arbitral tribunal, a General Declaration cum Undertaking is enclosed and this document refers to but does not contain the Rules. This document also appears to contain the signatures of parties to various arbitral proceedings, including that of the first respondent herein and the mother-in-law of the petitioner. However, it cannot be inferred from this document that parties agreed to these rules. Even with regard to the General Declaration, the same cannot override statutory prescriptions under the Arbitration Act. This leads to the most important ground of challenge.
6. Section 31(3) of the Arbitration Act mandates that the arbitral tribunal should record reasons for its conclusions unless the parties expressly agreed that reasons are not required or the award is on agreed terms pursuant to a settlement. As per Section 25(b) and (c) read with Section 31(3) of the Arbitration Act, these requirements apply even if the respondent does not file a statement of defence or present e
