* HIGH COURT OF DELHI : NEW DELHI
FAO No.298/2007 & CM No. 10296/07
% Judgment reserved on: 5th October, 2009
Judgment delivered on: 27th October, 2009
1. Smt. Anita Mittal
Sole Proprietor of
M/s. Amog Creations,
A -357, Meera Bagh,
Outer Ring Road,
Paschim Vihar,
New Delhi.
2. M/s Amog Creations
Through its Sole Proprietor
Smt. Anita Mittal
A -357, Meera Bagh,
Outer Ring Road,
Paschim Vihar,
New Delhi.
....Appellants
Through: Mr. V.K. Sharma, Adv.
Versus
1. M/s Pal Singh Kartar Singh,
814, Sangam Market, Katra Neel,
Chandani Chowk,
Delhi-110006.
2. Shri Rajender Gupta
Sole Arbitrator
Delhi Hindustani Mercantile Association (Regd.)
Chandani Chowk,
Delhi-110006.
FAO No.47/2007 Page 1 of 10
...Respondents
Through: Mr. R. G. Srivastava
with Mr. D. K. Goswami, Advs.
Coram:
HON'BLE MR. JUSTICE V.B. GUPTA
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
V.B.Gupta, J.
Present appeal has been filed by appellants under
Section 37 of Arbitration and Conciliation Act, 1996
(for short as „Act„), against judgment dated 28th May,
2007 passed by Additional District Judge, Delhi, vide
which objections preferred by appellants against ex
parte award dated 12th September, 2002, were
dismissed.
2. Brief facts are that respondent no.1-claimant,
filed claim against appellants before Arbitrator.
Arbitrator sent summons to both parties. Claimant
FAO No.47/2007 Page 2 of 10
appeared before Arbitrator, whereas, appellants did
not appear. The Arbitrator proceeded ex parte against
appellants. After considering the claim of claimant,
Arbitrator passed an award in his favour, on 12th
September, 2002.
3. It is contended by learned counsel for appellants
that as per Arbitration clause, both parties had to
jointly approach Delhi Hindustani Mercantile
Association or the Arbitral Tribunal, appointed by them
for settlement in case of any disputes regarding
payment etc. In the present case, respondent no. 1
approached Delhi Hindustani Mercantile Association
on its own, without any request from the appellants.
This unilateral act of respondent no.1 in approaching
the Association, was contrary to the arbitration clause
and not tenable. Appointment of Arbitrator was thus
contrary to the provisions and spirit of Arbitration
clause.
4. Other contention is that no notice of Arbitration
proceedings was actually served upon the appellants.
FAO No.47/2007 Page 3 of 10
As per various notices sent at different addresses
allegedly pertaining to that of appellants, it was clear
that appellants were not available at those addresses.
Thus there was no proper intimation with regard to the
Arbitration proceedings to the appellants. The
impugned judgment is thus liable to be set aside.
5. In support of its contentions, learned counsel for
appellant relied upon a decision of Supreme Court;
Municipal Corporation, Jabalpur and others Vs.
M/s Rajesh Construction Co. AIR 2007, SC 2069 and
a decision of this Court; FAO 112/05, decided on 18th
April, 2007.
6. On the other hand, it is contended by learned
counsel for respondent no. 1, that Arbitrator had sent
notices to appellants on the addresses given by
appellants. As per arbitration clause, both parties had
the right to approach for appointment of the
Arbitrator. It is nowhere stated that both parties had to
jointly approach for appointment of the Arbitrator.
FAO No.47/2007 Page 4 of 10
Hence, there is no ambiguity in the impugned
judgment.
7. Arbitration clause mentioned on the bills reads as
under:-
“In case of any dispute between you
and us regarding payment etc. or any
other business matter we both shall
approach the Delhi Hindustani
Mercantile Association Delhi or the
arbitrator or tribunal appointed by
them for settlement by arbitration
according to their rules & the decision
given by them shall be binding on both
of us & we shall have no objection to
it.”
8. As per this clause, in case of any dispute between
the parties, both of them had to approach the Delhi
Hindustani Mercantile Association, Delhi or Arbitrator
or tribunal appointed by them for settlement by
Arbitration.
9. Admittedly, in the present case, appellants never
approached Delhi Hindustani Mercantile Association or
Arbitrator. It is respondent no. 1 who alone had
approached Delhi Hindustani Mercantile Association
FAO No.47/2007 Page 5 of 10
for appointment of the Arbitrator. Thus, there is clear
violation of above clause of the Arbitration.
10. In Municipal Corporation, Jabalpur (Supra), it
was observed that;
“It has to be kept in mind that it is
always duty of the Court to construe the
arbitration agreement in a manner so as
to uphold the same. Therefore, we must
hold that the High Court ought not to
have appointed an arbitrator in a
manner, which was inconsistent with
the arbitration agreement”.
11. So, the appointment of Arbitrator only at the
instance of respondent no. 1 alone, is contrary to the
arbitration agreement. The matter could have been
referred to Arbitrator, only after both parties i.e
appellants as well as respondent no.1, had approached
Delhi Hindustani Mercantile Association or Arbitrator
for settlement of their disputes, which is not so, in the
present case. On this ground alone, the award of
arbitrator is liable to be set aside.
12. Now, coming to the service of notices sent by the
Arbitrator to the appellants, trial court has laid all the
FAO No.47/2007 Page 6 of 10
emphasis on service report dated 4th April, 2002 which
states “intimation delivered”. This notice was
admittedly sent at “A-353, Meera Bagh, Outer Ring
Road, Paschim Vihar, New Delhi”. As per appellants‟
case they have no concern with these premises.
13. During the course of arguments, learned counsel
for respondent no. 1 fairly conceded that there is
nothing on record to show that “A-353, Meera Bagh,
Outer Ring Road, Paschim Vihar, New Delhi” was the
recorded address, available with respondent no. 1 or
the Arbitrator.
14. As per appellants case their correct address is
“A-357, Meera Bagh, Outer Ring Road, Paschim Vihar,
New Delhi”. Admittedly, no notice was ever sent by
Arbitrator at “A-357, Meera Bagh, Outer Ring Road,
Paschim Vihar, New Delhi”. None of the notices sent
at other addresses, namely that of “Budh Vihar and
Krishan Vihar” was ever received by the appellants.
Various reports on the notices sent at the addresses of
FAO No.47/2007 Page 7 of 10
“Budh Vihar and Krishan Vihar” states; “left” and “no
such firm at the given address”.
15. Since there has been no valid and proper service
on the appellants, under these circumstances, there
was no occasion for the trial court to reach at the
conclusions that, service of notices sent by Arbitrator
upon the appellants is complete. Appellants must have
been given due opportunity by the Arbitrator and they
should not suffer unheard.
16. It has been observed by Supreme Court in
Kailash Rani Dang Vs. Rakesh Bala Aneja and
Anr., AIR 2009, Supreme Court, 1662;
“The mere entry of refusal of
acceptance by the postman upon the
registered envelop should not be given
so much importance as to shut the
entire available avenues for the
redressal of his grievance of a party
which has been quite adversely effected
by it.”
17. Since, there was no intimation to the appellants
with regard to the Arbitration proceedings as no
notices have been sent by the Arbitrator to the
FAO No.47/2007 Page 8 of 10
appellants at their given address, the impugned
judgment of the trial court under these circumstances
cannot be sustained and the same is hereby set aside.
CM NO. 10296/2007
18. On 1st August, 2007, when the appeal was listed
for admission, the appellant was directed to deposit
entire decretal amount in the shape of FDR on year to
year basis with the Registrar General of this Court.
The amount so deposited by the appellant was ordered
not to be paid to anyone, till further orders. As present
appeal has been allowed, amount lying deposited in the
fixed deposit along with up to date interest, be paid
back to the appellants only after expiry of period of
limitation of appeal. This application thus stands
disposed of.
19. Under the circumstances, appeal filed by the
appellants stands allowed.
20. Parties shall bear their own costs.
FAO No.47/2007 Page 9 of 10
21. Trial court record be sent back forthwith.
October 27, 2009 V.B.GUPTA, J.
bhatti
FAO No.47/2007 Page 10 of 10