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2015 (6) TMI 1133 - HC - Indian LawsIllegal possession of the properties of the company after the termination of the contract - arbitration proceedings - Whether the application under Section 34 of the Arbitration and Conciliation Act 1996 is barred by limitation? - Held that - It is seen from the records that the learned Arbitrator has sent the award by registered post and it was returned as intimation refused and door locked . If the intimation is found as refused then under Section 27 of the General Clauses Act 1898 (Central Act X of 1897) the opposite party is deemed to have known the contents of the letter. The intimation was sent to the correct address of the opposite party. As per the judgement reported in M/s.Madan and Co. v. Wazir Jaivir Chand 1988 (11) TMI 348 - SUPREME COURT the Hon ble Supreme Court has held that there is presumption of service of notice under Section 27 of the General Clauses Act 1897. The intimation was sent to the correct address of the opposite party the award was passed on 15.01.2009 and the Arbitrator has sent a copy of the award on 25.07.2009. The Ar.OP was filed on 22.07.2010 and hence the Ar.O.P filed on 22.07.2010 under Section 34 is barred by limitation. Unilateral appointment of the Arbitrator by one party without consent of other party - Held that - The learned Arbitrator informed the opposite party on 05.01.2009 about the constitution of the Arbitral award. The opposite party received the notice on 16.01.2009. The opposite party did not send any reply objecting to the appointment of the Arbitrator nor he has filed any challenging petition within 15 days after becoming aware of the constitution of Arbitration Tribunal under Section 13(2) of the Act but the opposite party denied his signature under Ex.X2. The opposite party was also informed about the procedure to be followed and copy of the notice in Ex.X3 and the acknowledgment is marked as Ex.X4. The opposiate party failed to appear before the Arbitration Tribunal and so the opposite party was set exparte but the opposite party denied his signature in Ex.X4 in his reply. Therefore, the opposite party is aware of the Arbitration and he had consented to the appointment of the Arbitrator. Legality of award - whether the award is void ab-inito and non-est in law and the the fourth question is whether the Arbitrator has followed the principles of natural justice while passing the award? - Held that - The Arbitral Tribunal has followed the procedure properly and legally by sending the intimation at every stage and the opposite party has not at all taken part in the proceedings and the award was given by examining PW1 the 1st claimant and considering the Exs.P1 to P10 and Ex.X1 to X4 and so there is no violation of law and natural justice and the learned Arbitrator has considered all the documents and evidence let in by the party. There is no justification by the opposite party to avoid the Arbitral Tribunal and the opposite party knew about the proceedings. The opposite party gave a cheque of 50 lakhs to the claimants without funds in his account and the cheque was dishonoured. A criminal complaint was filed by the claimants in C.C.No.1406 of 2009 before the Judicial Magistrate I Coimbatore and that opposite party has sent a reply to the claimants that the entire matter was under Arbitration referred to the Arbitrator so the opposite party was consciously aware of the Arbitral proceedings. Therefore it cannot be now contended by the opposite party that he was not aware of the Arbitration proceedings. Therefore find that the award is not void ab initio and non-est in law. Principles of natural justice have been followed by the learned Arbitrator. Whether ex parte award is iniquitous without following the principles of equity good conscience and fair play - Held that - The learned counsel for the appellant is unable to support his argument on false principles except in the interested testimony relating to the denial of receipts of notice sent by the learned the Arbitrator.
Issues Involved:
1. Abandonment of Agreement 2. Readiness and Willingness to Perform Obligations 3. Termination and Enforceability of the Agreement 4. Re-delivery of Possession and Assets 5. Compensation for Loss of Production and Damages 6. Relief Entitlement 7. Appointment of Arbitrator 8. Limitation for Filing Petition to Set Aside Award 9. Compliance with Principles of Natural Justice Detailed Analysis: 1. Abandonment of Agreement: The Arbitrator framed the point of whether the opposite party abandoned the agreement dated 23.02.2007. It was found that the opposite party failed to perform his obligations within the stipulated time, resulting in the claimants terminating the agreement. 2. Readiness and Willingness to Perform Obligations: The Arbitrator assessed whether the claimants were ready and willing to perform their obligations. The claimants demonstrated their readiness by transferring shares and handing over possession of the company. The opposite party, however, failed to fulfill his payment obligations. 3. Termination and Enforceability of the Agreement: The Arbitrator examined if the agreement was terminated and had become unenforceable. Given the opposite party's failure to comply with payment terms, the claimants were justified in terminating the contract. The termination notices were valid, and the agreement was deemed unenforceable. 4. Re-delivery of Possession and Assets: The Arbitrator considered whether the opposite party was liable to re-deliver possession of the company and assets, including share certificates. The opposite party was found to be in illegal possession post-termination and was ordered to return all properties and documents to the claimants. 5. Compensation for Loss of Production and Damages: The Arbitrator determined the entitlement of the claimants to compensation for loss of production and damages. Despite the claimants' inability to provide exact income details, nominal compensation of Rs. 1 lakh per month was awarded from 30.12.2007 until possession was restored. 6. Relief Entitlement: The Arbitrator awarded the following reliefs: - Cancellation of the agreements dated 23.02.2007, 30.12.2007, and 09.07.2008. - Return of possession of the mill with all accessories and machineries to the claimants. - Return of all documents and deeds to the claimants. - Re-transfer of equity shares to the claimants. - Payment of accrued compensation and interest. - Payment of arbitration costs by the opposite party. 7. Appointment of Arbitrator: The court examined the appointment of the Arbitrator. The Arbitrator was nominated by the claimants after due notice to the opposite party. The opposite party did not object within the stipulated time, thus waiving his right to challenge the appointment. 8. Limitation for Filing Petition to Set Aside Award: The opposite party filed the petition to set aside the award beyond the prescribed limitation period. The award was deemed served on 28.07.2009, but the petition was filed on 22.07.2010, making it time-barred under Section 34(3) of the Arbitration and Conciliation Act. 9. Compliance with Principles of Natural Justice: The Arbitrator followed due process by sending multiple notices to the opposite party, who failed to participate in the proceedings. The court found no violation of natural justice, and the award was passed on the merits of the case. Conclusion: The appeal was dismissed, and the award by the Arbitrator was upheld. The court found no grounds to set aside the award, and the opposite party's petition was barred by limitation. The Arbitrator's decision was deemed fair, just, and in accordance with the principles of natural justice.
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