K. Hema, J.@mdashArbitrator proceedings were initiated by the 1st respondent against appellants and the 2nd respondent (deleted from party array) in this appeal on the ground that as per clause 15 (a) of the Hire Purchase Agreement, the parties agreed that the dispute/claim under the agreement will be settled by arbitration. Pursuant to the alleged power conferred on the Managing Director of the 1st respondent Company under the term of contract, the 3rd respondent (deleted from party array) in this appeal was appointed as the sole arbitrator. An arbitration award was passed directing the appellants and the 2nd respondent to jointly and severally pay a certain amount with interest to the 1st respondent herein. In the meantime, the 1st respondent had also filed O.P. (Arb) 43/1995 u/s 41(b) of the Act against appellants and 2nd respondent herein before the lower court for an order of injunction restraining the 2nd appellant herein from disposing of or otherwise alienating or creating any encumbrance over the petition scheduled property till a valid award is passed by the arbitrator and decree is passed thereof etc. He also sought for an order of interim attachment of the petition scheduled property till the 1st respondent realises the decree amount.
2. After passing of the award, 1st respondent filed O.P. (Arb) No. 23/96 before the Sub Court u/s 14 (2) and Section 17 of Arbitration Act, 1940 (''Arbitration Act'' for short) with the following prayers:
(i) direct the 3rd respondent herein to file the original award dated 1-2-96 along with the documents and other records relating to the Arbitration proceedings TVS 1/95
(ii) Pass a judgment and decree in terms of the award of the 3rd respondent dated 1.2.96 together with interest @ 18% per annum till the date of realisation; and
(iii) direct the respondents 1 to 4 to pay the costs of the proceedings.
3. A direction was issued to Arbitrator by the court and the Arbitrator filed the award before the court pursuant to a direction by the court. Appellants also filed I.A. No. 5436/99 in O.P. (Arb) 23/96 under Sections 30 and 33 of the Act to set aside the award filed in O.P.(Arb) 23/96. The main contention raised by appellant was that the arbitration agreement is void. According to appellants, there were financial dealings between the appellants and the respondent-company in liquidation, but they had not entered into a Hire Purchase Agreement dated 31.10.1992 in respect of the vehicle referred to in paragraph 5 of the affidavit. According to appellants, 1st respondent got signatures of the petitioners in many blank stereo typed forms and those were converted into agreements and guarantee paper by filling the blank to the convenience of respondents.
4. The appellants raised an objection regarding the very jurisdiction of the Arbitrator to conduct arbitration proceedings since the agreement is falsely created. The Arbitrator without considering the question of jurisdiction proceeded with the arbitration and passed an award and hence, it is liable to be set aside, it is contended. Appellants averred in the affidavit that they have evidence to prove that the alleged agreement is created, but those facts were not considered by the Arbitrator. A counter affidavit was also filed by the 1st respondent to the above-said I.A. 5436/99.
5. The court below disposed of O.P. (Ar) 23/96 and O.P. (Arb) 43/95 as per the impugned order. Both the O.Ps were allowed and decree was passed in terms of Ext. X1 award against appellants and 2nd respondent for a sum of Rs. 3,99,458.15 Ps. with future interest at the rate of 18% per annum from the date of award to the date of decree and thereafter at the rate of 6% per annum till realisation. Cost of Rs. 4,000/- was also ordered. O.P. (Arb) 43/1995 was allowed and an interim order of attachment passed was made absolute.
6. Appellants filed Arbitration Appeal 1/2005 challenging the order passed in O.P. (Arb) 23/96. They also filed C.R.P. No. 91/2005 challenging the order passed in O.P. (Arb) 43/1995. Both sides are heard and both the appeal and revision are being disposed of by this common judgment. The main grievance of the appellants is that both the O.Ps were allowed by the court below, without considering the question whether the award is liable to be set aside on the various grounds raised by appellants.
7. Learned Counsel for appellants pointed out that though I.A. No. 5436/99 was filed for setting aside the award filed in O.P. (Arb) 23/96 on various grounds, the court below even observed that no such petition was filed, even though in paragraph 4 of the impugned order itself the court below observed that appellants filed I.A. 5436/99 to set aside the award. It is also pointed out that the court below entered a finding that the appellants have not made out a case u/s 30 of the Act without considering the several contentions raised by appellants in I.A. 5436/99.
8. Learned Counsel for 1st respondent however, argued that a reading of the impugned order will show that the court below has actually considered the contentions raised in I.A. 5436/99 and held that no case is made out u/s 30 of the Act, to set aside the award. The contentions raised in I.A. 5436/99 by the appellants are stated in detail by paragraph 8, it is submitted. Both sides also argued the matter in detail with reference to various decisions for and against the proposition that there must be a separate agreement for a reference to Arbitrator; if the agreement itself is void the Arbitrator will lose jurisdiction; principle of estoppel will apply in the light of the verified petition filed on behalf of the appellants and subsequently withdrawing the memo filed on 7.10.1995. It is also contended that appellants will be estopped from raising contentions regarding lack of jurisdiction etc, especially having participated in the arbitration proceedings.
9. On hearing both sides, we find that for the purpose of disposal of this appeal and Civil Revision Petition, it is necessary to go into the merits of those contentions. However, we find from the impugned order that the court below committed a serious error in proceeding as though no petition was filed u/s 33 of the Act. In paragraph 9 of the impugned order the court below specifically held that the "person who challenges the arbitration agreement and the appointment of the arbitrator did not move the court or filed any application u/s 33 of the Act".
10. But, a perusal of I.A. 5436/99 makes it abundantly clear that the petition is filed by appellants under Sections 30 and 33 of the Act. Even though the said application is not filed specifically challenging the arbitration agreement or appointment of the arbitrator, the award is challenged under the said petition on the ground of want of jurisdiction, since according to appellants, the arbitration agreement is fabricated by misusing blank signed stereo typed forms. While challenging jurisdiction of Arbitrator, appellants have taken up the contention that agreement is fabricated.
11. It can also be seen that various other contentions were also raised by appellants as to why the arbitration award is not sustainable. One of the grounds taken up is want of jurisdiction, since the agreement is invalid and is fabricated by using blank signed forms. But none of those contentions are seen considered by the court below in the impugned order. To the application filed as I.A. 5436/99, detailed written objections were also filed raising various contentions. But the impugned order does not contain any consideration of the same. It is non-speaking in respect of the merits of the contentions in I.A. 5436/99.
12. At any rate, I.A. 5436/99 was not disposed of by the court below. It is not seen from the impugned order whether I.A. 5436/99 which was filed to set aside the award was disposed of by the court below. An argument was raised that the said I.A. is to be treated as dismissed, but such contention cannot be accepted. Any way in the absence of disposing of the above I.A. on merits, it was not proper on the part of the court to dispose of O.P.(Arb) 23/96 and also O.P. (Arb) 43/95. The order to be passed in I.A. 5436/99 will have a direct bearing on the orders to be passed in both the O.Ps. Therefore, having filed I.A. 5436/99 under Sections 30 and 33 of the Act, it was the duty of the court below to dispose the same of on merit, by considering the various contentions raised by both sides, but that has not been done. There can be no doubt that in the absence of doing so, the impugned award passed in both the Original Petitions cannot be sustained especially since the decision to be taken in I.A. 5436/99 will have some consequence on the fate of both these Original Petitions. We are not going into the merit of the contentions raised since it is likely to cause prejudice to the court below while disposing of the Original Petitions. Since Original Petitions are of the years 1995 and 1996, a direction is to be issued for expeditious disposal.
In the result, we pass the following order:
(i) The impugned orders passed in both the Original Petitions are set aside.
(ii) The Original Petitions are remanded to the court below for fresh consideration and disposal, in accordance with law, in the light of observations made in this judgment.
(iii) The court below shall dispose of both the Original Petitions and I.A. 5436/99 as expeditiously as possible and not later than 45 days from the date of receipt of a copy of this judgment.
(iv) Parties shall appear before the lower court on 28.11.2012.
(v) The interim order of attachment passed in O.P. (Arb) 43/95 will be in force till disposal of O.P. (Arb) Nos. 23/96 and, 43/95 and I.A. 5436/99 and subject to the result of those matters.
(vi) Transmit lower court records to the court below forthwith.
(vii) Refund the court fee u/s 67(1) of the Court Fees and Suits Valuation Act, 1959.
The Arbitration Appeal and Civil Revision Petition are disposed of accordingly.
