KB Computer Forms Vs YK Goel and Another

@JUDGMENTTAG-ORDER

CM 111/2010

1. Exemption allowed subject to all just exceptions.

FAO(OS) 9/2010

DB-1 could not assemble on 18th January, 2010, therefore the matter is taken up today.

This appeal u/s 37 of the Arbitration Act, 1996 is preferred with respect to the order dated 28th October, 2009 of the learned single Judge of this court dismissing in limine the petition u/s 34 of the Act for setting aside of the arbitration award dated 20th July, 2009 for Rs.28,64,924/- with future interest at 12% per annum in favour of the respondent and against the appellant.

2. The respondent had lodged a claim for recovery of monies from the appellant before the Paper Merchants Association (Regd.) Delhi. The arbitrator has in the award noted that he was appointed as the sole arbitrator by the said Association. The arbitrator issued notice to the appellant. The appellant, however, did not appear before the arbitrator and filed a suit before the Civil Judge, Delhi challenging the arbitration. The appellant also informed the arbitrator of the institution of the said suit and also sent a communication to the arbitrator denying that there was any arbitration agreement with the respondent. However, the appellant did not appear before the arbitrator to pursue the said plea.

3. The arbitrator has in the award noted that upon the failure of the appellant to appear in spite of repeated opportunities, the arbitrator had no option but to proceed ex parte against the appellant. Even though the appellant had not appeared before the arbitrator but the arbitrator still found that the parties had business dealings; that the cheques issued by the appellant in favour of the respondent in discharge of liabilities had been dishonoured and complaint of offences u/s 138 of the Negotiable Instruments Act had been filed by the respondent against the appellant; that the bills of sale of goods i.e. paper, by the respondent to the appellant and for the balance amount due where under the claim was preferred by the respondent, contained a clause as under:

In case of any dispute including dispute of non-payment in respect to this invoice the same shall be referred to the Paper Merchants Association (Regd.) Delhi for sole arbitration and the judgment given by the arbitrator / arbitrators appointed by the Executive Committee shall be final and binding on both the parties.

4. The arbitrator also found that the bills for sale of goods raised by the respondent on the appellant had been entered by the appellant in its books of accounts as evident from the statutory "C" forms issued by the appellant to the respondent against the said bills. The arbitrator thus held that he had jurisdiction and on examination of the other evidence adduced by the respondent made the arbitration award aforesaid.

5. The suit filed by the appellant challenging arbitration was dismissed by the court of the Civil Judge. An appeal there against is stated to be pending. Needless to add there was no stay of arbitration in any of the proceedings.

6. The appellant in spite of having not participated in the arbitration proceedings, preferred the petition u/s 34 for setting aside of the award. The learned single Judge has in the order impugned in this appeal noticed that there was no whisper in the petition u/s 34 preferred by the appellant on the merits of the case as to why the appellant is not liable to make payment of the amount in question on account of receipt of goods, namely paper, from the respondent. The only plea urged before the learned single Judge and before this court also is that there is no arbitration agreement. The learned single Judge has held that the bills under which the goods were supplied contained an arbitration clause and as a result of which the rules and regulations of the Paper Merchants Association applied. The other plea of the appellant of the parties alone being empowered to appoint the arbitrator was also negated.

7. The counsel for the appellant has before us also raised same pleas; generally, reference is made to Oil and Natural Gas Corporation Ltd. Vs. SAW Pipes Ltd., .

8. We are unable to agree. In Shri Chander Nath Ojha, Jaipur Vs. Shri Suresh Jhalani and Others, , the Supreme Court held that an arbitration agreement under the 1940 Act was not required to necessarily bear the signatures of the parties and the requirement is only of the same being in writing. The Division Bench of this Court in Patanjal and Another Vs. Rawalpindi Theatres (P) Ltd., , also held that the agreement need not necessarily be signed by the parties. Similarly this Court in Krishan Chander Ramesh Chander v. Sohan Lal, 20 (1981) DLT 454 , held that where the reverse of sale bills contained writing of reference of disputes to Delhi Hindustani Mercantile Association of which seller only was a member, there comes into existence an agreement between the seller and buyer of arbitration of the said Association. To the same effect is Bharat Steel Tubes Vs. State of Bihar, . Under the 1996 Act also, this Court in Unipack Industries v. Subhash Chand Jain, 2001 (94) DLT 710, has held that an arbitration agreement need not be signed in situations contemplated u/s 7(4)(b) and (c).

9. In view of the arbitration clause of the Paper Merchants Association (Regd.) empowering the executive committee of the said association to appoint the arbitrator, the appellant cannot be heard to contend that the arbitrator could not have been appointed by the said association or that the involvement of the appellant in the appointment of the arbitrator was necessary. u/s 11(2) of the Act, the parties are free to agree on a procedure for appointing the arbitrator. The parties in the present case under the said procedure had empowered the executive committee of the Association aforesaid to appoint the arbitrator and no error in the appointment of the said arbitrator can be found.

10. We may also notice that the Division Bench of this court in S.N. Malhotra & Sons vs. Airports Authority of India, Manu DE/0527/2008 has held that the arbitral award cannot be challenged u/s 34 on the ground of the arbitral tribunal not having jurisdiction without following the procedure provided u/s 16 of the Act. It was held that unless the party has moved an application in accordance with Section 16 before the arbitral tribunal to the effect that it does not have jurisdiction, that party would, in the event of the award going against him would not be entitled to raise such a ground in an application u/s 34. In the present case thought the appellant wrote to the arbitrator objecting to his jurisdiction but did not really press the said application by appearing before the arbitral tribunal and raising the pleas if any available to it. Such a party cannot be permitted to agitate in a petition u/s 34 or in appeal there against what has not been agitated before the arbitral tribunal.

11. As far as the suit aforesaid filed by the appellant is concerned and appeal against dismissal whereof stated to be still pending, we may notice that a Bench of three judges of the Supreme Court in K.V. Aerner Cementation India Ltd. vs. Bajrang Lal Aggarwal, (2001) 6 Supreme 265, has held that such a suit is not maintainable.

12. We, therefore, do not find any reason to entertain this appeal. The same is dismissed.