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2024 Supreme(Telangana) 527

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Moushumi Bhattacharya, M.G.Priyadarsini, JJ.
K Alias P Dhananjaya, Secunderabad – Petitioner
Versus
K Kumar, Secunderabad And Others – Respondents
I.A.No.1 of 2024 IN/AND C.M.A.No.420 OF 2017
Decided On : 05-09-2024

Advocates:
Advocate Appeared:
For the Petitioner: Setty Ravi Teja
For the Respondent: A Satyasiri

IMPORTANT POINT
Parties are estopped from challenging the jurisdiction of an Arbitrator after consenting to proceed under the Arbitration and Conciliation Act, 1996, and the Awards were upheld as not conflicting with public policy.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 – Appeal against interim and final Awards – Common Order dismissing Applications to set aside Awards upheld – Parties consented to proceed under new Act – Arbitrator's findings on liability not interfered with – Conduct of parties in prolonging litigation noted. (Paras 16, 18, 34, 64)

(B) Jurisdiction of Arbitrator – Appointment under relevant statutory provisions confirmed – Parties estopped from questioning jurisdiction after participating in proceedings. (Paras 20, 28)

(C) Public Policy – No contravention found in the Awards – Grounds for setting aside not established. (Paras 53, 64)

Facts of the case :

The dispute arose from the management of a cinema theatre involving multiple partners, leading to arbitration proceedings under the Arbitration and Conciliation Act, 1996. The appellant challenged the interim and final Awards, alleging bias and jurisdiction issues.

Findings of Court :

The Trial Court found no merit in the challenges to the Awards, emphasizing the limited scope of interference under Section 34.

Issues : The main issues included the validity of the Arbitrator's appointment and the grounds for setting aside the Awards.

Ratio Decidendi : The court ruled that the parties' consent to proceed under the 1996 Act precluded them from later contesting the Arbitrator's jurisdiction, and the Awards were not in conflict with public policy.

Result : Appeal dismissed.

JUDGMENT :

Moushumi Bhattacharya, J.

The Appeal arises out of the Common Order dated 03.03.2017 passed by the Chairman, Land Reforms Appellate Tribunal-cum-II Additional District Judge, Ranga Reddy District at L.B. Nagar. The impugned order was passed in 4 Arbitration Original Petitions (A.O.Ps) filed by the parties before the Trial Court. The appellant before this Court was the petitioner in 2 of the 4 A.O.Ps before the Trial Court and respondent No.1 in the remaining 2.

2. The A.O.Ps. filed were as follows:

    A.O.P.No.782 of 2010 was filed by the appellant challenging the interim Award passed by the learned Arbitrator on 02.06.2010.

A.O.P.No.1039 of 2010 was filed by the appellant against the final Award passed by the Arbitrator on 27.08.2010.

A.O.P.No.979 of 2010 was filed by the respondent No.1 against the interim Award passed by the Arbitrator on 02.06.2010.

A.O.P.No.1137 of 2010 was filed by the respondent No.1 against the final Award passed by the Arbitrator on 27.08.2010.

3. By the impugned Common Order, the interim Award dated 02.06.2010 and the final Award dated 27.08.2010 were confirmed and all the 4 A.O.Ps were dismissed.

Facts:

4. A brief background to the Appeal should first be stated.

The dispute involves a Cinema Theatre “Sri Laxmi Kala Mandir” at Alwal, Hyderabad, Telangana. Dhananjaya (appellant), K. Kumar (respondent No.1), Nagabhushanam (respondent No.2), Shyam Rao (respondent No.3) and one Srinivasulu own 20% shares each in the partnership firm- M/s.Sri Laxmi Enterprises which was formed on 23.12.1982. Srinivasulu died and his heirs Lokesh (respondent No.4) and Sailesh (respondent No.5) own 10% shares each in the partnership firm.

5. The appellant filed O.P.No.80 of 1992 for appointment of an Arbitrator in October, 1992 before the Principal Subordinate Judge, Ranga Reddy District, under Section 8 of The Arbitration Act, 1940. The appellant also filed I.A.No.1284 of 1992 seeking appointment of a Receiver pending disposal of the said O.P. The said I.A. was dismissed on 19.01.1993. Challenging the said order of dismissal, the appellant filed A.A.O.No.123 of 1993 before the erstwhile High Court of Andhra Pradesh, which passed a judgment on 08.11.1994 setting out the modalities for the management of the theatre. The modalities included entrusting the management to the deceased respondent No.3 and for the appellant, respondent No.1 and respondent No.2 to receive Rs.30,000/- each per month. The respondent Nos.4 and 5 were to receive Rs.15,000/- each every month. The appellant, respondent Nos.1, 2 and 3 as well as respondent Nos.4 and 5 were each entitled to withdraw the amounts specified in the judgment.

6. The O.P. filed by the appellant for appointment of Arbitrator was allowed on 03.05.1997 and Sri V.V. Ramanatham, Retired District Judge was appointed as the Sole Arbitrator. Sri V.V.Ramanatham was succeeded by Justice Vaman Rao, Retired High Court Judge, who was subsequently succeeded by Justice A.Gopal Rao, Retired High Court Judge, and thereafter by Sri P.V. Vidyasagar, Retired District Judge. The parties filed a Memo before Justice A. Gopal Rao on 25.09.2003 for converting the proceedings from The Arbitration Act, 1940 to the new Act i.e., The Arbitration and Conciliation Act, 1996, which came into force w.e.f. 22.08.1996. Thereafter, the respondent No.1 filed I.A.No.2778 of 2008 in O.P.No.80 of 1992 for appointment of a new Arbitrator which was allowed by the Principal Senior Civil Judge, Ranga Reddy District at L.B. Nagar, on 27.01.2009 appointing Justice G.Bikshapathy, Retired Judge of the erstwhile High Court of Andhra Pradesh, as the Arbitrator.

7. The newly-appointed Arbitrator passed the interim Award on 02.06.2010.

8. The appellant and the respondent No.1 filed applications for setting aside of the interim Award which became the subject matter of challenge before the Trial Court culminating in the impugned Common Order. The Arbitrator made the final Award on 27.08.2010 which was also challenged by the appellant and

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