IMPORTANT POINT
The court confirmed that failure to submit a written defense limits grounds for challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act.

JUDGMENT :

Mr. Vikram Aggarwal, J. :- CM-7-FCARB-2024

Prayer in the instant application preferred under Section 151 CPC is for placing on record certain documents as Annexures A-2 to A-6.

Learned counsel for the applicant-appellants submits that the documents in question could not be produced before the Arbitrator during the course of the arbitration proceedings and that the applicant-appellants be now permitted to place the said documents on record.

We do not find any reason to accede to the prayer made in the application, as the applicant-appellant cannot be permitted to now place on record the said documents once he did not even bother to file a written statement of defence before the Arbitrator. No cogent reason has been given for the acceptance of the prayer made in the application.

Accordingly, finding no merit, the application is dismissed.

FAO-CARB-58-2023

1. The present appeal assails the order and judgment dated 17.11.2023 passed by the Court of learned Additional District Judge, Kaithal, vide which the petition preferred by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the 1996 Act”), was dismissed. Along with the petition under Section 34 of the 1996 Act, objections had also been filed by the appellants in the execution petition preferred by the decree-holder (DH), which were also dismissed.

2. The respondent-HAFED invited tenders for leasing out its rice mills located at Ladwa, Pehowa, Dhand, Kalayat, Jakhal, Ratia, Ding, Kalanwali and Rania. The appellants, along with others, submitted their bids along with earnest money of Rs.5 lakh as per the terms and conditions of the tender notice. The offer of the appellants was accepted qua HAFED Rice Mill, Dhand for leasing of 9000 MT paddy for the year 2016-17, for a total lease money of Rs.26.01 lakh. Thereafter, agreement dated 01.10.2016 was also executed, wherein the terms and conditions for running the rice mill were enumerated. The possession of the rice mill was taken over by the appellants on 01.10.2016. As per the terms and conditions of the agreement, the appellants were to deposit security of Rs.5 lakh in addition to the earnest money. The same was paid by way of a cheque but was dishonoured. Other installments were also not paid, nor any response was given to various notices issued by the respondent. A criminal complaint under Section 138 of the Negotiable of Instruments Act, 1881 was also instituted. Finally the arbitration proceedings were initiated for recovery of amount of Rs.26.01 lakhs on account of loss suffered by the respondent-HAFED due to non-compliance of the terms and conditions of the agreement and tender notice by the appellants.

2(ii) During the arbitration proceedings, no written statement of defence was submitted though the representative of the appellants appeared before the Arbitral Tribunal and made verbal submissions. Accordingly, the arbitration proceedings concluded in favour of the respondent-HAFED. The award was accordingly passed in favour of the respondent-HAFED and against the present appellants and the claim was accepted in toto.

2(iii) Aggrieved by the award, a petition under Section 34 was preferred by the appellants, which was also dismissed by the Court of learned Additional District Judge, Kaithal, stating that since the appellants had not bothered to file any written statement of defence, no fault could be found with the award. Aggrieved by the said decision, the present appeal has been preferred.

3. We have heard learned counsel for the appellants.

4. Sh. Lekh Raj Sharma, learned counsel representing the appellants submitted that proper opportunity was not granted by the Arbitrator to the appellants and that the claim put forth by the respondent-HAFED was granted without delving into the issue.

5. Learned counsel submitted that though the appellants did not participate in the arbitration proceedings, inasmuch, as no written statement of defence was submitted, submissions were duly made before