MOHAMMED MASROOR SHAIKH VS. BHARAT BHUSHAN GUPTA & ORS.

Advertisements

Spread the love

Post Views: 156

MOHAMMED MASROOR SHAIKH VS. BHARAT BHUSHAN GUPTA & ORS.

CASE NAME	MOHAMMED MASROOR SHAIKH VS. BHARAT BHUSHAN GUPTA & ORS.
CITATION	2022 Livelaw (SC) 120
DATE OF JUDGMENT	February 02, 2022
CASE NO	Civil appeal no. 874 of 2022(arising out of SLP (civil) no. 7635 of 2021)
CASE TYPE	Civil Appeal
APPELLANT	Mohammed Masroor Shaikh
RESPONDENT	Bharat Bhushan Gupta & Ors
BENCH	J.Indira Banerjee, J.Abhay S. Oka
STATUTES REFERRED	Arbitration and Conciliation Act, 1996: Section 11, Section 16 and Section 34.

INTRODUCTION

Dispute and arbitration are integral aspects of the legal landscape, offering alternative methods for resolving conflicts outside traditional court proceedings. A dispute arises when parties have conflicting interests or claims, often leading to legal challenges. Rather than opting for a conventional courtroom setting, parties may choose arbitration as a method of dispute resolution. Arbitration involves the submission of a dispute to an impartial third party, the arbitrator, who reviews evidence, hears arguments, and renders a binding decision. This alternative dispute resolution method provides a more flexible and private forum for resolving conflicts, often resulting in quicker and more cost-effective resolutions compared to traditional litigation. The case in question directly ties to this introduction, exemplifying the utilization of arbitration to resolve a dispute. The legal matter involved a challenge to the appointment of an arbitrator by the Bombay High Court. The court’s decision in this case underscores the significance of procedural regularity and adherence to legal principles in the context of arbitration-related disputes.

FACTS OF THE CASE

The case involves an appeal challenging order made by a Single Judge of the Bombay High Court. The key parties are the appellant and respondents, who were partners in different partnership firms.

Parties Involved:

Appellant: Partner in M/s M.M. Developers, Nisarga.

Respondent No.1: Former partner who retired.

Respondent Nos. 3 to 5: Partners in the same firm.

The case involves three partnership firms: M/s M.M. Developers, Nisarga; M/s M.M. Developers, Shanti Nagar; M/s M.M. Developers, Shramjivi.

A deed of retirement-cum-continuation was executed on September 12, 2014, regarding the firm M/s M.M. Developers, Nisarga. The retirement deed recorded that respondent no.1 retired from the partnership firm, and the business was continued by the appellant and respondent nos. 3 to 5.

In light of an advocate’s notice dated February 18, 2019, Respondent no.1 invoked the arbitration clause (clause 19) specified in the retirement deed. However, there was no response from the appellant and respondent nos. 3 to 5 to this notice. Subsequently, due to the absence of any reply to the arbitration notice, Respondent no.1 initiated a petition under Section 11 of the Arbitration and Conciliation Act, 1996.

On March 6, 2020, the Single Judge of the Bombay High Court allowed the petition and appointed a member of the Bar as the sole arbitrator. Similar orders were passed for the other two partnership firms.

Respondent no.1 filed a counter affidavit, claiming the appellant was served notice but did not appear in the petition. The appellant, respondent no.2, and respondent nos. 4 and 5 were represented by a common advocate during arbitration proceedings.

Respondent no.3 filed objections under Section 16 of the Arbitration Act, claiming no arbitration agreement existed and that the claim was time-barred. The objections were rejected by the arbitrator in an order dated May 25, 2021.

The appellant filed appeals challenging the arbitration order on June 9, 2021. Respondent no.1 submitted additional documents, including an appeal filed by the appellant challenging the order before the High Court. Then the appellant, represented by Senior Counsel, filed a petition under Section 34 of the Arbitration Act to challenge the order dated May 25, 2021.

ISSUE RAISED

Whether a court is right to refer a dispute to arbitration when contentions on non- arbitrability are arguable before it?

ARGUMENTS BY APPELLANT

The appellant claimed that the Court did not issue any notice on the petition filed under Section 11. The appellant contended that he was admitted to the intensive care unit of a hospital on 3rd May 2021 and was discharged on 3rd June 2021. He relied on documents in the rejoinder to support this claim. The appellant asserted that due to his hospitalization and the lack of notice, he could not contest the petition before the learned Single Judge

Another focal point of contention raised by the appellant’s senior counsel pertained to the terms of the retirement deed, specifically referring to clause 19. According to the appellant, the retirement deed did not contain provisions for the resolution of disputes between the retiring partner (Respondent No.1) and the continuing partners through arbitration, thereby challenging the very basis of the arbitration proceedings initiated by Respondent No.1.

The appellant contended that the facts presented in the petition under Section 11 demonstrated that Respondent No.1’s claim was time-barred. This argument, grounded in the principles of limitation, even if the arbitration process was warranted, the claims brought forward by Respondent No.1 were barred by the applicable statutory limitations.

ARGUMENTS BY RESPONDENTS

Respondent No.1, in response to the appellant’s claims about insufficient notice, presented a counterargument. They asserted that proper notice of the arbitration petition had indeed been served upon the appellant. According to respondent No.1, the appellant was duly informed and made aware of the legal proceedings. This counterargument aimed to establish that the appellant had been properly notified, and any suggestion of inadequate communication was unfounded.

It was contended that the appellant had legal representation during the arbitration process. The advocate representing the appellant actively participated in the proceedings and supported objections raised by another partner, respondent No.3. This argument aimed to showcase the appellant’s engagement in the arbitration, demonstrating that they were not only notified but also actively involved through legal representation

Respondent No.1 highlighted a crucial development in the arbitration process – the arbitrator’s decision to overrule objections raised by the appellant’s representative. By underscoring this outcome, the respondent aimed to showcase that the objections were thoroughly considered and dismissed by the arbitrator, reinforcing the legitimacy of the arbitration proceedings. This argument contributed to establishing that the issues raised by the appellant during arbitration had been addressed and decided upon, shaping the course of subsequent legal actions.

JUDGEMENT

In this judgment, the court begins by referencing a previous decision where it was established that, when dealing with a petition under Section 11, the court would automatically refer the matter for arbitration if contentions regarding non-arbitrability are plainly arguable. In such situations, the issue of non-arbitrability is left open to be decided by the Arbitral Tribunal.

Upon examining the impugned order (the order being challenged), the court notes that the issues of non-arbitrability and the claim being time-barred have not been conclusively decided by the learned Single Judge of the Bombay High Court. Instead, the court observes that in clause (vii) of the operative part of the impugned order, the learned Single Judge has explicitly mentioned that the contentions of the parties have been kept open for further consideration.

The court also notes that the appellant has filed petitions under Section 34 of the Arbitration Act challenging the Order dated 25th May 2021, and these petitions are pending before the High Court. Section 34 allows parties to challenge arbitral awards. Based on these considerations, the court concludes that there is no case for interference at this stage. As a result, the appeals are dismissed.

However, the court explicitly states that it is leaving open the contentions raised by the appellant in the pending petitions under Section 34 of the Arbitration Act before the High Court of Bombay. This means that the appellant is still entitled to present and argue these contentions in the ongoing proceedings. Finally, the court declares that there will be no order as to costs, and any pending applications related to the case shall stand disposed of.

ANALYSIS

The current appeal challenges the Bombay High Court’s appointment of an arbitrator, contending insufficient issuance and service of notice for the arbitration petition. Citing the State of Orissa and another v. Damodar Das case, the appellant’s counsel asserts that inadequate notice deprived them of presenting objections before the Single Judge. By invoking this precedent, the counsel aims to demonstrate a deviation from proper legal procedures, hindering objection presentation. This case serves as an example where the court, despite contentions against arbitration, favored sending the dispute for arbitration. Notably, the Supreme Court, in reaching this decision, referenced the precedent set in Vidya Drolia and Others v. Durga Trading Corporation (2021) 2 SCC 1, highlighting a reliance on established legal principles for consistent interpretation and application of the law.

CONCLUSION

In conclusion, the court emphasized that notice had indeed been served, adhering to established practices in the Bombay High Court. The judgment emphasized that issues of non-arbitrability and the claim being time-barred were not conclusively decided by the Single Judge, allowing the appellant to raise these contentions in the ongoing legal proceedings. The court’s decision underscored the importance of procedural regularity and adherence to legal principles in arbitration-related matters.

REFERENCES

DECLARATION

This Article is written by Fathima Zohra, student of Kristu Jayanti College of Law, Intern at Legal Vidhiya.

Disclaimer: The materials provided herein are intended solely for informational purposes. Accessing or using the site or the materials does not establish an attorney-client relationship. The information presented on this site is not to be construed as legal or professional advice, and it should not be relied upon for such purposes or used as a substitute for advice from a licensed attorney in your state. Additionally, the viewpoint presented by the author is of a personal nature.