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IN THE HIGH COURT OF ALLAHABAD
Manoj Kumar Gupta, Prashant Kumar, JJ.
Deviram Singhal and others – Appellants
Versus
Manjeet Singh Duggal and another – Respondents
Appeal Under Section 37 of Arbitration and Conciliation Act 1996 No. - 224 of 2023
Decided On : 21-04-2023
Arbitration and Conciliation Act, 1996 - Section 9, 17, 34 and 37 - Partnership agreement - Business - Arbitration clause - Parties herein had entered into a partnership agreement with intention to construct a hotel and run same in partnership - It was decided that business would be carried out in a partnership which would run hotel, bar and restaurant in Agra and head office of this business would be at E-14, Kailash Colony - Arrangement was such where claimant (respondents herein) would invest capital, and appellants (herein) would be a working partner and would be responsible for running business, maintaining accounts and handle situation which arises in ordinary course of business After appellants (herein) turned dishonest and stopped paying profit to respondents on pretext that business was running in loss - He did not allow respondents to inspect accounts - Since hotel was located at prime location, hence, occupancy was very high - Appellants stopped respondents from entering into property hotel - Whether the view taken by the Arbitrator is a plausible view on the fact, pleadings and evidence before the Arbitrator - Aggrieved against order passed by the Commercial Court, Agra, the appellants (herein) had preferred the instant appeal under Section 13 (1A) which is specifically enumerated under Section 37 of the Arbitration Act. [Para 13]
Finding of Court : Law is well settled that, where Arbitrator has assessed material and evidence placed before him in detail, court while considering objections under Section 34 of said Arbitration Act does not sit as a court of appeal and is not expected to re-appreciate entire evidence and reassess case of parties - Jurisdiction under Section 34 is not appellate in nature and an award passed by an Arbitrator cannot be set aside on ground that it was erroneous - It is not open to Court to interfere with award merely because in opinion of Court, another view is possible - Duty of Court in these circumstances is to see whether view taken by Arbitrator is a plausible view on fact, pleadings and evidence before Arbitrator - Extent of judicial scrutiny under Section 34 of Arbitration Act is limited and scope of interference is narrow - Under Section 37, extent of judicial scrutiny and scope of interference is further narrower - An appeal under Section 37 is like a second appeal, first appeal being to court by way of objections under Section 34 - Where there are concurrent findings of facts and law, first by Arbitral Tribunal which are then confirmed by court while dealing with objections under Section 34, in an appeal under Section 37, Appellate Court would be very cautious and reluctant to interfere in findings in award by Arbitral Tribunal and confirmed by court under Section 34.
Result : Appeal is accordingly dismissed.
Based on the provided legal document, here are the key points:
JUDGMENT :
Prashant Kumar, J.
1. Heard Sri Navin Sinha, learned Senior Counsel assisted by Sri Utkarsh Srivastava, counsel for the appellants and Sri Syed Safdar Ali Kazmi, learned counsel for the respondents.
2. Brief facts of the case are, that the parties herein had entered into a partnership agreement on 01.04.1997 with the intention to construct a hotel and run the same in the partnership. It was decided that the business would be carried out in a partnership which would run the hotel, bar and restaurant in Agra and the head office of this business would be at E-14, Kailash Colony at New Delhi. This arrangement was such where the claimant (respondents herein) would invest the capital, and the appellants (herein) would be a working partner and would be responsible for running the business, maintaining the accounts and handle the situation which arises in the ordinary course of business. During the construction of hotel the claimant not only provided sufficient fund for construction and for running the hotel, but also gave a personal loan of Rs. 20 lakh to the appellants. The construction was completed in December 1999. After opening and till July 2002, the hotel ran well and made a profit. After July, 2002, the appellants (herein) turned dishonest and stopped paying the profit to the respondents on the pretext that the business was running in loss. He did not allow the respondents to inspect the accounts. Since the hotel was located at the prime location, hence, the occupancy was very high. After February 2003, the appellants stopped the respondents from entering into the property the hotel.
3. In the agreement there was an arbitration clause which provided for arbitration in case of dispute between the parties which is reproduced herein under:-
It was worthwhile to mention that the arbitration clause was silent on the place of arbitration.
4. Since the respondents were not given the due profit share neither they were allowed to enter the property or had access to the accounts, so the respondents were left with no other option, but to invoke the arbitration clause, and approached the Court for appointment of arbitrator to adjudicate the differences so arose between the parties.
5. The respondents (herein) on 09.11.2006 had filed application under Section 9 of the Arbitration and Conciliation Act, 1996 (herein after for the sake of brevity has been referred to as “Arbitration Act”) which was numbered as Arbitration Case No. 533 of 2006.
6. On this Section 9 application, the Court was pleased to direct that, “the applicant (respondents herein) would be allowed to enter the premises and inspect the record relating to the business and to take part in the management of the business as well”.
7. On 02.01.2008 on the joint request of the parties one Sri Rakesh Kaushal resident of Jaipur was nominated by both the parties to be the sole arbitrator in the case. Accordingly, the Court appointed Sri Rakesh Kaushal as sole arbitrator. The Court directed that the arbitrator shall be at liberty to pass orders under Section 17 of the Arbitration Act. The Court further directed that claimants would not be restrained by the appellants from entering the business premises and also from taking part in the management of the business.
8. The arbitrator took up the Arbitration Reference on 12.07.2008 and after hearing both the parties, the Tribunal decided that the venue of the Arbitration Tribunal, would be at 43, Burmese Colony, Jaipur.
9. On 17.08.2008 the Claimant/Respondents filed his claim. Numerous opportunities were given to the appellants to file Statement of defence/Written statement. For the reasons best known to them, they chose not to file the same. They neither filed
Point of Law : An award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.
The court emphasized the wide scope of reference of the arbitrator and the appellant's failure to file a defense, highlighting the limited scope of interference under Section 37 of the Arbitration an....
The courts have a limited scope of interference under Section 34 and 37 of the Arbitration Act, and the Arbitral Tribunal's detailed consideration of evidence and claims is final.
Court affirmed limited judicial review under Section 34 of the Arbitration Act, emphasizing non-interference with arbitral awards unless specific grounds are established, rejecting claims of arbitral....
The court reaffirmed the limited scope of judicial review of arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, emphasizing that courts cannot reappraise evidence or in....
The jurisdiction of the court under Section 37 of the Arbitration and Conciliation Act, 1996 to adjudicate the Award and order passed under Section 34 of the said Act is narrow and circumscribed.
The court established that the timeline for invoking arbitration under the General Condition of Contract is critical and that the arbitrator's jurisdiction is determined by the latest relevant decisi....
Section 31(7)(a) of Act deals with grant of pre-award interest.
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