2014 (8) TMI 1230 - HC - Indian Laws

Validity of Arbitral Award - no arbitration agreement between the petitioner and the respondent - arbitrator had jurisdiction to decide the dispute between the parties or not - notice of the arbitral proceedings have been served upon the petitioner or not - whether the award deals with the dispute which is beyond the statement of claim - time limitation - HELD THAT - Admittedly, all the three persons to the transaction are members of IMPAA and the Articles of Association of IMPAA provides for resolution of the disputes inter se it's members, by way of arbitration conducted by Sub-Committee of Producers Grievances Cell and In-House Settlement . It is nobody's case that the IMPAA makes any distinction amongst it's members. Therefore, even if the dispute between it's members arises out of any capacity other than strictly that of a producer in the transaction between the parties, there can be no escape from the arbitration clause in the Articles of Association. There is one more reason for rejecting the argument of Mr. Davar of want of Arbitration agreement between the parties. It is the specific case of the respondent that father of the petitioner carried on business of film producing in the name and style of M/s. V.R. Pictures. The petitioner, who is also a producer, on the death of his father, continued the business of the father in the same name i.e. M/s. V.R. Pictures from the same business premises. Therefore, on the death of the father, he stepped into shoes of the father and became liable to repay the loan in the capacity of the principal borrower as well. There is no material on record to challenge this contention of the respondent. The petitioner next complains that notice of arbitration proceedings was not served upon him - HELD THAT - Perusal of the impugned award shows that, on receipt of the complaint from the respondent, IMPPA had called for the comments from the petitioner. When he failed to respond, IMPPA assigned the complaint to the Committee for arbitration. The Committee sent notice of the arbitration dated 17th September, 2007 to the petitioner calling upon him to remain present before itself for the arbitration proceedings - The final notice came to be issued on 24th March, 2008 with a specific intimation to the petitioner that on his failure to attend the meeting, an ex-parte decision will be taken in the dispute. Even thereafter, two more notices i.e. notices dated 6th May, 2008 and 26th June, 2008 were given by the Committee to the petitioner before passing the arbitral award. This material from the record is neither disclosed in the petition nor dealt with by the petitioner. In any case, the record shows that the petitioner had appointed Advocate Gajendra Singh to represent him in the arbitral proceedings. That is how the advocate had, received the award on his behalf. Therefore, there is no merit in the contention of non-service of notice of arbitration proceedings. Next ground of challenge canvassed is that, the award deals with the dispute which is beyond the statement of claim - HELD THAT - The details of this contention are not stated anywhere in the arbitration petition. The reference to the arbitration had been made by the letter dated 27th July, 2007 sent by the respondent to the Secretary, IMPPA for taking up the case with M/s. V.R. Pictures for refund of the amount of Rs. 57,0,000/- with interest thereon. The letter specifically refers to the extension of time to repay until 18th June, 2006. Therefore, it cannot be said that the reference to the arbitration was of a claim that beyond the statement of claim. There are no merit in the petition - petition dismissed.

Summary

Issues Involved:

1. Jurisdiction of the arbitrator due to the absence of an arbitration agreement.
2. Service of notice of arbitral proceedings.
3. Scope of the arbitral award relative to the statement of claim.
4. Limitation period for filing the petition under Section 34 of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Jurisdiction of the Arbitrator:

The petitioner argued that there was no arbitration agreement between the parties, as the tripartite agreement dated 18th June 2004 did not contain an arbitration clause. However, the respondent contended that the arbitration agreement arose from the Articles of Association of the Indian Motion Picture Producers Association (IMPPA), which provided for arbitration of disputes among its members. The court held that since all parties were members of IMPPA, the arbitration clause in the Articles of Association applied. Furthermore, the petitioner had stepped into his father's shoes in continuing the business and thus was bound by the arbitration agreement.

2. Service of Notice of Arbitral Proceedings:

The petitioner claimed that he was not served notice of the arbitration proceedings. The court found that multiple notices were sent to the petitioner by IMPPA, and the petitioner had appointed Advocate Gajendra Singh to represent him in the arbitral proceedings. The advocate had received the award on the petitioner's behalf, indicating that the petitioner was aware of the proceedings. Therefore, the court concluded that there was no merit in the contention of non-service of notice.

3. Scope of the Arbitral Award:

The petitioner contended that the award dealt with a dispute beyond the statement of claim. However, the court noted that the reference to arbitration was made by a letter dated 27th July 2007, which specifically mentioned the claim for refund of Rs. 57,00,000/- with interest. The court found that the award was within the scope of the statement of claim and dismissed this ground of challenge.

4. Limitation Period:

The respondent raised a preliminary objection that the petition was barred by the law of limitation, as it was filed on 26th February 2010, well beyond the three-month period prescribed under Section 34(3) of the Arbitration Act. The petitioner argued that he learned about the award only in January 2010 upon receiving notice of execution proceedings. The court examined the legal position on the delivery of the arbitral award, emphasizing that effective delivery must be to the party itself, not its advocate. The court accepted the petitioner's claim that he received the award in January 2010 and held that the petition was filed within the prescribed period of limitation.

Conclusion:

The court dismissed the petition, finding no merit in the challenges raised by the petitioner. The arbitral award was upheld, and the petition was deemed to be within the period of limitation.