The High Court · 2023
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI (Commercial Appellate Jurisdiction) Commercial Appeal No.21 of 2019 Vinay Choudhary, s/o late Ram Avatar Choudhary r/o Flat No.501, Alak Nanda Apartment, Shanti Bhawan, PO-Dhanbad, PS-Bank More, District- Dhanbad (Jharkhand) ...… Appellant Versus Sumit Sanwaria s/o Prem Kumar Sanwaria r/o Lal Bazar, PO & PS-Jharia, District-Dhanbad (Jharkhand) …. ... Respondent CORAM: HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR HON'BLE MR. JUSTICE RATNAKER BHENGRA For the Appellants : Mr. P.K. Bhattacharya, Advocate Mr. R.C. Sahu, Advocate For the Respondent : Mr. Sumeet Gadodia, Advocate Mr. Amritansh Vats, Advocate Ms. Niharika Nidhi, Advocate --------- O R D E R 12th May 2023 Per, Shree Chandrashekhar, J. Vinay Choudhary in whose favor an Award was made has challenged the judgment dated 17th July 2018 passed in Original Suit No.36 of 2018 by which the Award has been set-aside. 2. The initial dispute which arose between the parties pertained to partnership deed dated 2nd May 2002 executed between Vinay Choudhary and Sumit Sanwaria with an understanding that the partnership business shall continue in the name and style of M/s Chhotanagpur Hard Coke Industries and the principal place of business shall remain at Lal Bazar within Jharia PO in the district of Dhanbad. This partnership deed was executed after Rajendar Sawariya and Alok Sawariya who were the uncles and Amit Sanwaria who is the brother of Sumit Sanwaria had agreed to dissolve the earlier partnership deed – it was dissolved on 1st May 2002. As per the re-constituted partnership deed dated 2nd May 2002, the partners were required to make capital investment for carrying on the business with a provision for interest @ 7% per annum to the partners on the credit balance lying in their respective capital account. It was further agreed upon between the parties that the first account of the re-constituted partnership business shall be closed on 31st March 2003 and, thereafter, every year 2 Comm. Appeal . No.21 of 2019 profit and/or loss shall be determined as on 31st March and shall be shared 50% by both the partners. It was mutually agreed between them that each partner shall be authorized to open, operate or close the banking account either independently or jointly in the name and on behalf of the Firm. There was also a stipulation in the partnership deed that any partner may retire from the business by giving one month's notice in writing to the other partner of his intention to do so. However, such notice shall not be necessary if a partner retires with the consent of the other or the remaining partners. 3. This is the case set up by the claimant that the other partner has mis-appropriated the funds and profits accrued on business. Sumit Sanwaria who is the other partner has set up a defence that the claimant expressed his desire to retire after October 2004 from the partnership and, accordingly, accounts were prepared/reconciled and the investments/profits etc. accrued to the claimant were paid to him and he executed a deed of retirement dated 16th October 2004. 4.
Legal Reasoning
There is no dispute that through legal notice dated 4th January 2005 the claimant proposed the name of the Sole Arbitrator to which the respondent raised an objection to the effect that an Arbitrator can be appointed only by taking recourse to section 11 (6) of the Arbitration and Conciliation Act, 1996. However, the Arbitral Tribunal constituting Mr. Pawan Kumar Bauri continued with the arbitral proceeding, and rendered the Award. 5. Aggrieved thereof, the respondent filed an application under section 34 of the Arbitration and Conciliation Act, 1996 raising the following objections to challenge the Award passed against him: “(i) That dispute between the parties stemmed from a Business of manufacture and sale of hard coke under the name of CHOTANAGPUR HARD COKE INDUSTRIES hereinafter referred to as CHCI, which as for practical purpose been a family business of petitioner and his family or Sawarias since 1980. (ii) That till 2002 petitioner has been carrying on the said business in partnership with his family members i.e. Rajendra Sanwaria (Uncle), Alok Sanwaria (Uncle) and Amit Sanwaria (Brother) but thereafter said partnership was dissolved by deed of dissolution dated 1.5.2002 whereby and whereunder all partners except the petitioner left CHCI and my client remained whole proprietor thereof. (iii) That the opposite party was taken in as partner in CHCI by deed of reconstitution dated 2.5.2002 and ever since 2.5.2002 the petitioner continued to carry on the business of CHCI in 3 Comm. Appeal . No.21 of 2019 partnership with opposite party till October 2004 and thereafter opposite party expressed desire to retire from partnership of CHCI and settle his all dues. As desired by opposite party accounts were prepared/reconciled and whatever was found to opposite party against on account of his investment/profit etc. There after opposite party retired from CHCI by executing deed of retirement dated 16.10.2004 and dues payable to him (Opposite party) were duly paid and opposite party acknowledged the receipt of payment of sum of Rs.4,20,000/- by cheque dated 27.10.2004 as finally settled amount payable to him on his retirement. (iv) That retirement of opposite party was intimated to the banker of CHCI i.e.Punjab National Bank or PNB on 13.10.2004 as well as Inspector of Factories immediately after retirement. Later on information was given to Sales Tax Department on 25.6.2004 got effecting necessary correction/amendment in sales Tax Registration. Thus in October 2004 itself all the statutory authorities as well as other organizations including Bank with which CHCI had/has intimate connections and regular dealings were informed about retirement of opposite party from the business of CHICI w.e.f. 16.10.2004. (v) That after retirement of opposite party, the petitioner took in his brother Manish Sawaria as a partner of CHCI and ever since the petitioner has been carrying on the business of CHCI in partnership with his brother Manish. (vi) That though the retirement of opposite party and payment of his retrial dues had been smooth and hassle free, but the opposite party, for reasons best known to him, sent a legal notice dated 30.11.2004 through his advocate Subhrojyoti Roy whereby various false and baseless allegations of misappropriation as an malfeasance had been made against the petitioner, much to latter's shock and surprise because opposite party had retired and took his retrial dues a little over a month before sending the said Notice. (vii) That nevertheless the petitioner through his advocate Shahnawaz Abdul Malik sent reply thereto on 13.12.2004 refuting all baseless allegations made in opposite party's notice. (viii)That thereafter the opposite party sent a notice dated 4.1.2005 through his advocate Subhrojyoti Roy and the said notice captioned as "Notice for appointment for arbitrator as per arbitration clause No.18 of deed of partnership dated 2.5.2002 whereby the opposite party unilaterally appointed one Sri Pawan Kumar Bawri as sole arbitrator to arbitrate upon the disputes, allegedly cropped up between the petitioner and opposite party and by that notice the petitioner was requested to accede to the appointment of Sri Bawri as sole arbitrator within reasonable time. (ix) That the petitioner who was till unable to understand the real intention of the opposite party in pursuing a dead matter, however sent a reply to the aforesaid notice appointing arbitrator of the opposite party dated 4.2.05, through his advocate Shahnawaz Abdul Malik and in the said reply the petitioner flatly and categorically refused to accept any arbitrator unilaterally appointed by the opposite party far less the one i.e. Mr. Bawri, the name of whom was proposed in the notice dated 4.1.2005. Having categorically denied to accept the arbitrator proposed or nominated by the O.P. the petitioner pointing out that in view of antagonistic relation as well as bitterness and distrust between the parties the only mode available or acceptable to the petitioner was an appointment of arbitrator through a request to Chief Justice of High Court U/s.11(6) of the Act. It is further pointed out that the parties i.e. the petitioner and the opposite party had never agreed upon a procedure for appointment of arbitrator as contemplated in 4 Comm. Appeal . No.21 of 2019 Sec.11(2) of the Act, and thus the opposite party had no right whatsoever to nominate a sole arbitrator. (x) That as Mr. Pawan Kumar Bawri, so called arbitrator unilaterally and illegally appointed by the opposite party meanwhile at the behest of the opposite party and showing extra ordinary haste, sent a notice dated 21.1.2005 to the petitioner urging him to appear before him or commencement for arbitration proceeding notwithstanding the fact the Mr. Bawri has never been appointed by the parties (i.e. petitioner and the opposite party) so the petitioner sent a copy of his Advocate Mr. Malik's reply dated 4.2.2005 to Mr. Bawri so as to inform him that his unilateral appointment was ex facie illegal and he has no authority to even commence the arbitration proceeding. (xi) That however, though the factual position including the patent illegality of the appointment of the Mr. Bawri as arbitrator being brought to the notice of Mr. Bawri the latter continued to proceed with the arbitration proceeding as it subsequently transpired from the aforementioned tainted award. (xii) Here it worth mentioning that opp. party not only remained satisfied with leveling baseless allegations of misappropriation of funds, non furnishings of accounts etc. in his legal notices but he also filed several false criminal cases, being Dhanbad (Bankmore) P.S.Case No.683/2004, Baliapur P.S.Case No.128/04, and C.P.Case No.1884/2004. The gravamen of allegations in those criminal cases was that the petitioner and his men obtained opp. party's signatures on various papers, stamp papers, documents etc. by putting him in fear of death (at the point of gun to be more precise) and those papers etc. on which opp. party's signature had been converted or attempted to be converted into valuable security. Obviously barrage of criminal prosecutions sought to launched by opp.party against the petitioner with an ulterior motive to show that Deed of Retirement dated 16.10.2006 whereby opp. party retired from CHCI was a sham and colourable document but said disingenuous attempt of the opp. party to slap false charges on petitioner was foiled by Police as well as the court as all in those criminal- complains/cases were not found to be true and cognizable by Police and the learned Court in C.P. No.1884/2004 has been pleased to acquit the petitioner and others. (xiii) It must be noted that opp. party unleashed avalanche of false criminal cases against the petitioner from November 2004 i.e. well before he nominated Mr. Bawri as sole arbitrator in January 2005 vide legal notice Dt.4-5.01.2005 so it is too improvable to accept that any reasonable person would trust opp. party or his nominated arbitrator under such circumstances because evil intention and perfidy of the opp. party had manifested themselves through maliciously false and derogatory allegations levelled against the petitioner in those criminal cases.” 6. Before the Commercial Court, the appellant did not appear but filed his reply raising the following objections: “(i) The application filed under section 34(2)(a)(v)&(b)(ii) of Arbitration and conciliation Act, 1996 is not maintainable. (ii) The appointment of Arbitrator cannot be challenged under section 34 if the existence of the Arbitration clause stands admitted, and (iii) The notices were issued against both the parties by the learned Arbitrators. The objector never approached the Court to terminate the mandate of Arbitrator U/s 14(2), nor filed any specific objection under sections 12,13, or 16 of section 34. Section 16 (5) 5 Comm. Appeal . No.21 of 2019 and (6) clearly indicates and validate the arbitration clause which is not prohibited by deed of partnership agreement clause XVIII that is either of the parties shall not appoint sole Arbitrator.” 7. The Commercial Court at Dhanbad has held that interpretation of section 11(6) of the Arbitration and Conciliation Act, 1996 by the Arbitrator as to his jurisdiction was wrong and the only course available to the claimant was to take section 11(5) route. The Commercial Court has further held that the appointment of Sri P.K. Bauri as the Sole Arbitrator was barred under section 11(5) and while so the Award made by him was not in accordance with law. 8. In Original Suit No.36 of 2018, the Commercial Court at Dhanbad has held as under: “7. Admittedly both the parties were in a partnership business of manufacturing and sale of hard coke under the name of Chhotanagpur Hard Coke Industries(CHCI). Sumit Sanwaria has filed this case being aggrieved by Ex/party award passed by learned Arbitrator. The case is filed within time. On-perusal of record I further find that Binay Chaudhary has sent legal notice on 30.11.04 to Sumit Sanwaria for providing books of account and all other relevant papers including purchase register, stock register, sale register, salary payment register, despatch register, gate pass register, bill book and cash memo book within 15 days from service of the notice. Sumit Sanwaria has replied the same. Vide legal notice dated 04.01.05 the learned counsel Sri Subrojyoti Roy on behalf of Binay Chaudhary has given notice of the appointment of Arbitrator as per Arbitration Clause No. XVIII and deed of partition dated 02.05.02 to Sumit Sanwaria. As per Sec-11 (2) of Arbitration and conciliation Act, 1996 subject to sub sec.(6), the parties are free to agree of a procedure for appointing the Arbitrator or Arbitrators. Sri Subrojyoti Roy, learned counsel of Binay Chaudhary has sent notice dated 04.01.05 as per provisions of Sec-11(2) of the said Act. As per Sec.(3) of Sec. 11 of the Arbitration and conciliation Act, failing any agreement referred to in Sub Sec.(2) in an Arbitration with three Arbitrators each party shall appoint one arbitrator and the two appointed arbitrators shall appoint third arbitrator who shall act as the proceeding arbitrator. Sub Sec.(5) of Sec. 11 of the Arbitration and Conciliation Act 1996 provides that failing any agreement referred to any Sub Sec. (2) in an Arbitration with a Sole Arbitrator if the parties fail to agree on the arbitrator within 30 days from receipt of 6 Comm. Appeal . No.21 of 2019 request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. 8. It appears that without taking recourse of Sec.11 (5) of the said Act, Binay Chaudhary got Sri P.K.Bauri appointed as learned sole Arbitrator which is out and out barred by the provisions of Sec. 11 (5) of the Arbitration and conciliation Act 1996. The learned Arbitrator has framed two issues to decide the dispute in between the parties. Issue No. I - Whether he has got jurisdiction/ competance of this Arbitral Tribunal as per clause- XVIII of the agreement dated 02.05.02? Issue No.II - Whether the claimant is entitled to the disputed claim. Regarding clause 18 of the deed of agreement, dealing with the appointment of Arbitrator he has given reasons on page No.19 of the award by stating that respondent says that he accepts the Arbitrator if be appoint U/s 11(6). It means ultimately the respondent shall have no objection if a sole arbitrator be appointment U/s 11 (6). He further held that the respondent has not filed any application U/s 12 and 14 of the Arbitration and conciliation Act before him. So he has got jurisdiction. This finding of the learned Arbitrator is not at all acceptable because Sec.11 (6) of the Arbitration and conciliation Act 1996 deals with the conditions where under an appointment procedure agreed upon by the parties (a) a party fails to act as required under that procedure or (b) the parties or the two appointed Arbitrators failed to reach an agreement accepted by them under that procedure or (c) a person including an institution fails to perform any function entrusted to him or it under that procedure, a party may request to Chief Justice or any person or institution designated by him to take necessary measure, unless agreement of appointment procedure provides other means for securing the appointment. This provisions clearly deals Sec. 11 (3) of the said Act and of course Sec. 11 (2) of that Act which is subject to Sub Sec. (6), the parties are free to agree on procedure for appointment of the Arbitrator or the Arbitrators. In the light of above discussion I find that the learned Arbitrator has wrongly interpreted Sec. 11 (6) of the Arbitration and conciliation Act 1996 for deciding his jurisdiction. In this case the denial of the proposal of Binay Chaudhary send by Sumit Sanwaria was within time, so the only recourse available to Binay 7 Comm. Appeal . No.21 of 2019 Chaudhary was to further act as per provisions of Sec. 11 (5) of the Arbitration and Conciliation Act, 1996.” 9. The aforesaid findings of the Commercial Court at Dhanbad have been challenged by the claimant by filing the present Commercial Appeal under section 13(1-A) of the Commercial Courts Act, 2015. 10. Mr. P. K. Bhattacharya, the learned counsel for the claimant has raised the following three-fold submissions: (i) the respondent who did not participate in the arbitral proceedings must be deemed to have waived his right to raise any objection to the appointment of the Sole Arbitrator (ii) section 4 read with section 25 (b) of the Arbitration and Conciliation Act, 1996 puts an embargo to challenge the Award on the ground of unilateral appointment of the Arbitrator, and (iii) the Commercial Court has passed a cryptic order without considering the interplay of sections 4, 5, 12, 14, 16 and 25 vis-a-vis section 11 of the Arbitration and Conciliation Act, 1996. 11. Sections 4, 5, 16, and 25 of the Arbitration and Conciliation Act, 1996 which are relevant for the present purpose are extracted as under: 4. Waiver of right to object.—A party who knows that— (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object. 5. Extent of judicial intervention.—Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. 16. Competence of arbitral tribunal to rule on its jurisdiction.— (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,— (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. 8 Comm. Appeal . No.21 of 2019 (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub- section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34. 25. Default of a party.—Unless, otherwise agreed by the parties, where, without showing sufficient cause,— (a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of Section 23, the arbitral tribunal shall terminate the proceedings; (b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of Section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited; (c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. 12. The pleadings of the parties in section 34 application disclose that the claimant did give notice to the respondent regarding the dispute which he was seeking to resolve through the arbitration. In his petition under section 34, the respondent has stated that after his retirement from the partnership business the claimant issued a legal notice dated 30th November 2004 through Subrojyoti Roy, the learned Advocate, making various false and baseless allegations of mis-appropriation and malfeasance. The respondent has further stated that a reply of the aforesaid letter dated 30th November 2004 was given by him through his Advocate Mr. Shahnawaz Abdul Malik on 13th December 2004. Thereafter the claimant issued legal notice dated 4th January 2004 captioned as, “Notice for Appointment for Arbitrator as per Arbitration Clause No.18 of the Deed of Partnership dated 2nd May 2002” suggesting the name of Sri Pawan Kumar Bauri to act as Sole Arbitrator. The respondent has stated in paragraph no.3(viii) of the petition under section 34 that he was requested by the claimant to accede to the appointment of Mr. Pawan Kumar Bauri as the Sole Arbitrator, within reasonable time. This is also an admitted position that the respondent sent his reply on 4th February 2005 raising his objection to the appointment of the Sole Arbitrator and suggested the claimant that the Arbitrator appointed under section 11(6) shall only be acceptable to him. 9 Comm. Appeal . No.21 of 2019 13. The Arbitration Act has been held to be a self-contained Code [“Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.” (2011) 8 SCC 333] and in “Pasl Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd.” (2021) 7 SCC 1 the Hon'ble Supreme Court has held that the Arbitration Act is a complete Code. The scheme of the Act is such that the question of jurisdiction is required to be raised during arbitration proceedings or soon after initiation thereof and the jurisdictional question is required to be determine as a preliminary issue. 14. Section 4 provides that a party who has knowledge of non- compliance of any requirement under the arbitration agreement or this Act and yet proceeds with the arbitration without stating his objection to such non-compliance and without undue delay shall be deemed to waive his right to raise objection. In “Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh” AIR 1968 SC 933 the Hon'ble Supreme Court has held that a waiver is an intentional relinquishment of known right and there can be no waiver unless it is established that the person against whom the waiver is claimed had full knowledge of his rights and measures to enforce such rights. The respondent who has taken an objection in his reply to the legal notice issued by the claimant must be held to have the knowledge about consequence of his non-appearance before the Arbitrator. His reply dated 4th February 2005 refers to the provisions of the Act and, therefore, it must be concluded that has knowledge of the provisions under sections 4, 5, 16 and 25 of the Act. 15. In “McDermott International Inc.” the Hon'ble Supreme Court has held as under: “51. After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the arbitrator has an obligation to raise the said question before the arbitrator. Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the arbitrator would be the subject- matter of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal thereagainst was provided for under Section 37 of the Act.” 16. Section 16(2) provides that a party which has appointed the Arbitrator or participated in the appointment of an Arbitrator shall not be precluded from raising a plea that the Arbitral Tribunal does not have jurisdiction in the matter. Sub-section (6) to section 16 provides that a party 10 Comm. Appeal . No.21 of 2019 aggrieved by an Arbitral Award may make an application in accordance with section 34. Sub-section (6) would therefore necessarily imply that objection to the authority and jurisdiction of the Arbitrator can be challenged only on the grounds specified under section 34. 17. Clause (b) to section 25 provides that if the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23 the Arbitral Tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegation by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited. Clause (c) further provides that if a party fails to appear at an oral hearing or to produce documentary evidence, the Arbitral Tribunal may continue the proceedings and make the Award on the evidence before it. 18. A conjoint reading of clause (b) and clause (c) of section 25 read with section 4 would be that the respondent, who inspite of notice of the arbitral proceedings if fails to file his statement of defence or fails to appear at the oral hearing or to produce documentary evidence cannot be permitted to challenge the appointment of the Arbitrator. After his appointment the Sole Arbitrator has issued notice to the parties. The respondent has admitted in his petition under section 34 that a notice dated 21st January 2005 was issued by the Sole Arbitrator urging him to appear in the arbitral proceedings. The respondent has further stated that in a response to the notice issued by the Sole Arbitrator on 21st January 2005 he forwarded a copy of his reply dated 4th February 2005 to the Sole Arbitrator. 19. In our opinion, after having received notice from the Arbitrator on 21st January 2005, the only recourse available to the respondent was to file an application seeking termination of the mandate of the Arbitrator or to appear before the Arbitrator and challenge his authority and jurisdiction to proceed with the arbitral proceedings. 20. In the circumstances of this case, the respondent must be held to have knowingly waived his rights to challenge appointment of the Sole Arbitrator. The scheme of the Act is such that if the respondent has failed to challenge the authority and jurisdiction of the Arbitrator by filing a petition under section 16 he cannot have the remedy of challenging the Constitution 11 Comm. Appeal . No.21 of 2019 of the arbitral Tribunal not in accordance with law as provided under section 34(2) of the Arbitration and Conciliation Act, 1996. 21. In “Gas Authority of India Ltd. v. Keti Construction (I) Ltd., (2007) 5 SCC 38 the Hon'ble Supreme Court has held that a plea to challenge constitution of Arbitral Tribunal or that it has no jurisdiction must be raised at the threshold before the Arbitral Tribunal so that the arbitral measures may be immediately taken and time and expense involved in hearing of the matter may be avoided. The Hon'ble Supreme Court has held as under: “25. Where a party has received notice and he does not raise a plea of lack of jurisdiction before the Arbitral Tribunal, he must make out a strong case why he did not do so if he chooses to move a petition for setting aside the award under Section 34(2)(a)(v) of the Act on the ground that the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties. If plea of jurisdiction is not taken before the arbitrator as provided in Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.” 22. In almost similar circumstances, in “Quippo Construction Equipment Ltd. v. Janardan Nirman (P) Ltd.” (2020) 18 SCC 277 the Hon'ble Supreme Court has observed as under: “24. It was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. Considering the facts that the respondent failed to participate in the proceedings before the arbitrator and did not raise any submission that the arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections.” 23. One of the objects which the Arbitration and Conciliation Act, 1996 seeks is expeditious disposal of the dispute between the parties. To achieve this purpose, the legislative mandate has been incorporated under section 5 which provides that no judicial authority shall intervene in the matters governed under Part-I of this Act except where so provided in this part. Section 5, therefore, defines the extent of judicial intervention in arbitral proceedings for encouraging expeditious resolution of disputes with less expenses. 24. The Arbitrator has referred to the re-constituted partnership deed dated 2nd May 2002 and the rights and obligations of the partner 12 Comm. Appeal . No.21 of 2019 flowing from the said partnership deed. He has made a reference of certain acts which a partner was not authorized to do without a written consent of the other partner such as acknowledgment of a time barred debt, compromise or reference to arbitration, taking custody of books of accounts or operating the bank accounts or managing day to day affairs of the partnership business. The Arbitrator has also taken note of the allegations made by the claimant that the respondent started operating accounts in breach of clause 16, did not permit the claimant to enter the factory premises on and from 9th November 2004, started selling the products and removing hard coke/ pearl coke without consent, devoured the entire sale proceed, mis-appropriated the assets, did not furnish any account/counter- signed/counter-check of raw materials, consumed items, transportation and details of diesel and electricity. The Arbitrator has, in fact, reproduced the accounts for the period April 2003 to December 2004 and the claims made by the claimant on account of (a) account for the period April 2003 to December 2004 amounting to Rs.3,01,68,492/- (b) loss of profit from April 2003 and turnover loss @ 10% for 2 years for approximately Rs.3.01 crores, that is to say, Rs.30 lacs (c) loss of goodwill etc. for Rs.2 crores and (d) interest from April 2003 @ 18% per annum till the realization. The Arbitrator has also taken note of the statement made by the claimant that the account for the period April 2003 to December 2004 for Rs.3,01,68,492/- was forwarded to the competent authority in the presence and knowledge of the respondent and in view of clause 8 of the partnership deed dated 2nd May 2002 under which both the partners are entitled to / liable for sharing 50% of the total loss/profit, held that the claimant is entitled for Rs.1,50,84,246/-. However, the Arbitrator has taken a plausible and practical view of the matter and allowed only 50% of the said amount against the claim under head (viii). The Arbitrator has allowed the claim for loss of profit but disallowed the claim for loss on account of turnover. Similarly, the claim for goodwill and interest @ 12% per annum w.e.f. arbitration notice dated 14th December 2004 till the actual realization have been granted. Therefore, it is not correct to say that the Award does not refer to the amount payable to the claimant. 25. In “U.P. SEB v. Searsole Chemicals Ltd.” (2001) 3 SCC 397 the Hon'ble Supreme Court has held that the Court will refrain itself from 13 Comm. Appeal . No.21 of 2019 interfering with an arbitral award if it is demonstrated that the view of the Arbitrator is a plausible one. 26. Under section 34 of the Arbitration and Conciliation Act 1996, there are limited grounds to lay a challenge to the arbitral award made by the Arbitrator. The central theme of the Arbitration and Conciliation act, 1996 is that sanctity of an arbitral award must be preserved and any judicial interference with the arbitral award must be within the confines of section 34. The expression “only by” in sub-section (1) and “only if” in sub- section (2) to section 34 leave no scope for any judicial interference with an arbitral award except on the specified grounds mentioned under sub-section (2) of section 34. Therefore, a plausible view of the Arbitrator cannot be substituted by the Court on re-appreciation of the evidence and by substituting its own view or to do what it considers to be just. The proviso to sub-section (2-A) of section 34 specifically provides that the decision of the Arbitrator cannot be turned down on re-appreciation of evidence even where the Arbitrator has wrongly decided a question of law. 27. In “Fiza Developers & Inter-Trade (P) Ltd. v. Amci (I) (P) Ltd.” (2009) 17 SCC 796 the Hon'ble Supreme Court has held that the proceedings under section 34 of the Arbitration and Conciliation Act, 1996 are substantially different from a proceeding in the civil suit. In the application under section 34, the party aggrieved of the arbitral award is required to prove one of the grounds set out in section 34 (2) (a & b), even if the Court has proceeded ex-parte. However, in a suit where the defendant has failed to file his defence it shall be lawful for the Court to pronounce the judgment under Order 8 Rule 5(2) of the Code of Civil Procedure. Similarly, there is no requirement in law to frame issue(s) in a proceeding under section 34 like any other summary proceeding such as proceeding for setting-aside ex-parte decree, for execution, for restitution, permission to sue as an indigent person etc., the proceedings under section 34 are also summary in nature and there is no necessity to frame issue(s) to decide validity of the arbitral award challenged therein. 28. The essence of the provisions under section 34 of the Arbitration Act is to maintain the sanctity of the Award inasmuch as an Award can be challenged only on the grounds of (i) a party was under some incapacity (ii) the arbitration agreement was not valid (iii) the party was not 14 Comm. Appeal . No.21 of 2019 given proper notice of appointment of an Arbitrator or of the arbitral proceedings or was otherwise unable to present his case (iv) the arbitral Award deals with a dispute not contemplated by or not falling within the terms of submission of arbitration (v) composition of the Arbitral Tribunal or the arbitral proceedings were not in accordance with the agreement (vi) the subject-matter of the dispute is not capable of settlement by arbitration, and (vii) the aribitral Award is in conflict with the public policy of India. This is also a settled law that the proceedings under section 34 are summary in nature and, notwithstanding that it is civil in nature, there is no requirement in law to frame issues for determination like a regular suit. 29. The provisions under section 16 of the Arbitration Act provides an opportunity to the party to question jurisdiction of the Arbitral Tribunal. Sub-section 2 to section 16 provides a shed to the respondent inasmuch as it has been provided therein that the party who questions jurisdiction of the Arbitrator shall not be precluded from raising such a plea merely because that he has appointed or participated in the appointment of an Arbitrator. 30. Mr. P.K. Bhattacharya, the learned counsel for the appellant has rightly referred to clause (b) to section 25 to submit that the respondent who had notice of appointment of the Arbitrator if failed to communicate his statement of defence, it was well within the discretion of the Arbitrator to forfeit his right to file statement of defence and continue with the arbitral proceedings and that is precisely what has been done by the Arbitrator in the present proceeding. 31. Therefore, the conduct of the parties shall be a relevant factor in the circumstances like the present one and therefore having regard to the nature, scope, and ambit of the arbitration agreement the Arbitrator cannot be said to have misdirected himself in passing the award by taking into consideration the conduct of the respondent. 32. Mr. Sumeet Gadodia, the learned counsel for the respondent has submitted that if at all the objection taken by the respondent is considered as an objection under section 16 of the Arbitration Act the respondent has this remedy under section 34 to challenge the reasoning given by the Arbitrator. 33. However, the main contention raised by the learned counsel for the respondent is that if an Award has been passed against the substantive 15 Comm. Appeal . No.21 of 2019 law of India that shall be against the public policy of India and on that ground the Award is liable to be set-aside. 34. To support his submission that an Award passed in derogation of the applicable laws of India shall be construed as against the public policy of India, the learned counsel for the respondent has referred to the judgments of the Hon'ble Supreme Court in “Dharma Prathishthanam v. Madhok Construction (P) Ltd.” (2005) 9 SCC 686, “Lion Engineering Consultants v. State of Madhya Pradesh and others” (2018) 16 SCC 758, and “Hindustan Zinc Limited (HZL) v. Ajmer Vidyut Vitran Nigam Limited” (2019) 17 SCC 82. 35. In “Dharma Prathishthanam” the Hon'ble Supreme Court has observed as under: “12. On a plain reading of the several provisions referred to hereinabove, we are clearly of the opinion that the procedure followed and the methodology adopted by the respondent is wholly unknown to law and the appointment of the sole arbitrator Shri Swami Dayal, the reference of disputes to such arbitrator and the ex parte proceedings and award given by the arbitrator are all void ab initio and hence nullity, liable to be ignored. In case of arbitration without the intervention of the court, the parties must rigorously stick to the agreement entered into between the two. If the arbitration clause names an arbitrator as the one already agreed upon, the appointment of an arbitrator poses no difficulty. If the arbitration clause does not name an arbitrator but provides for the manner in which the arbitrator is to be chosen and appointed, then the parties are bound to act accordingly. If the parties do not agree then arises the complication which has to be resolved by reference to the provisions of the Act. One party cannot usurp the jurisdiction of the court and proceed to act unilaterally. A unilateral appointment and a unilateral reference — both will be illegal. It may make a difference if in respect of a unilateral appointment and reference the other party submits to the jurisdiction of the arbitrator and waives its rights which it has under the agreement, then the arbitrator may proceed with the reference and the party submitting to his jurisdiction and participating in the proceedings before him may later on be precluded and estopped from raising any objection in that regard...............................” 36. In“Hindustan Zinc Limited (HZL)” the Hon'ble Supreme Court has held as under: “17. We are of the view that it is settled law that if there is an inherent lack of jurisdiction, the plea can be taken up at any stage and also in collateral proceedings. This was held by this Court in Kiran Singh v. Chaman Paswan as follows : (SCR p. 121 : AIR p. 342, para 6) “6. … It is a fundamental principle well-established that a decree passed by a court without jurisdiction is a nullity, and that its 16 Comm. Appeal . No.21 of 2019 invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject- matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities.” 37. It is well-settled that every judgment must be read as applicable to the particular facts proved, or assumed to be proved and one additional or different fact can make a world of difference between conclusions in two cases. 38. In “Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee” (2014) 6 SCC 677 the Hon'ble Supreme Court has held as under: “25............ Having provided for resolution of disputes through arbitration, parties cannot be permitted to avoid arbitration, without satisfying the Court that it will be just and in the interest of all the parties not to proceed with the arbitration. Section 5 of the Arbitration Act provides that the Court shall not intervene in the arbitration process except in accordance with the provisions contained in Part I of the Arbitration Act. This policy of least interference in arbitration proceedings recognises the general principle that the function of courts in matters relating to arbitration is to support arbitration process. A conjoint reading of Section 5 and Section 16 would make it clear that all matters including the issue as to whether the main contract was void/voidable can be referred to arbitration. Otherwise, it would be a handy tool available to the unscrupulous parties to avoid arbitration, by raising the bogey of the underlying contract being void.” 39. Therefore, the plea raised by Mr. Sumeet Gadodia, the learned counsel for the respondent that appointment of the Arbitrator not being in accordance with section 11(6) shall be against the applicable law of India and, therefore, against the public policy of India must be rejected. 17 Comm. Appeal . No.21 of 2019 40. “McDermott International Inc. v. Burn Standard Co. Ltd.” (2006) 11 SCC 181 the Hon'ble Supreme Court has held that the Arbitration and Conciliation Act, 1996 assigns supervisory role to the Courts to ensure fairness and intervention of the Court is envisaged in limited circumstances such as fraud or bias of the Arbitrator or violation of natural justice. The intervention by the Court has been envisaged under the Act at a minimal level which justifies the decision of the parties to the agreement who made a conscious decision to exclude the Court's jurisdiction by opting for arbitration. 41. In view of the aforesaid discussions, Commercial Appeal No.21 of 2019 is allowed and, consequently, judgment dated 17th July 2018 passed in Original Suit No. 36 of 2018 is set-aside. (Shree Chandrashekhar, J.) (Ratnaker Bhengra, J.) High Court of Jharkhand, Ranchi Dated:12th May 2023 sudhir/NAFR