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Biharilal Bhagwandas Makhija Vs. Pribhlal K. Gavalani - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtMumbai High Court
Decided On
Case NumberArbitration Petition No. 85 of 1982 in Award No. 25 of 1982
Judge
Reported in1983(2)BomCR539
ActsArbitration Act, 1940 - Sections 8 and 9
AppellantBiharilal Bhagwandas Makhija
RespondentPribhlal K. Gavalani
Advocates:V.S. Parsnani, Adv.
Excerpt:
.....the petitioner as follows :hearing held adjourned fourth may same time place your duty bring arbitrator chhaproo failed under section 9 :bijlani advocate. parsnani, the learned advocate for the petitioner narrated the aforesaid facts and urged that there is no material before this court that the said khatri failed and neglected to act as an arbitrator or refused to act as an arbitrator. that in any event, if the said khatri had failed to act as an arbitrator, the proper course for the respondent was to proceed as per the provisions of section 8 of the indian arbitration act. bijlani could not have acted as an arbitrator because his appointment would be bad. parsnani urged that the said bijlani could not have proceeded with the arbitration in any case in the absence of the said..........was inter alia addressed to the said t.c. chhaproo and the petitioner and the respondent. in this letter, bijlani purported to record that he was appointed as arbitrator in place of c.d. khatri and was requested to proceed with the matter. that by the said letter, he gave notice that the hearing of the disputes would proceed on the 1st of may, 1982, at the premises of m/s. doulatram and brothers on the 2nd floor at 107, mohamedali road, bombay 400 003 and that the petitioner should be present 'with all the full facts and documents' so that the matter could be decided. that if the petitioner remained absent, the hearing would proceed ex parte. that thereupon, the said t.c. chhaproo (who was to act as co-arbitrator) addressed a letter dated 28th april, 1982 to the said a.j. bijlani. by.....
Judgment:

N.K. Parekh, J.

1. This is petition for setting aside an award dated 4th May, 1982.

2. According to the petitioner, the facts that lead to this petition are that the petitioner was and is occupying some premises belonging to the respondent. That disputes and differences arose between the petitioner and the respondent in respect of these premises and the compensation thereof. That by an agreement dated 17th August, 1976, entered into between the petitioner and the respondent, the respondent agreed to sell these premises to the petitioner for the price of Rs. 16,700/-. It was also agreed that the petitioner should pay a sum of Rs. 2,000/- on the execution of the said agreement and the balance thereof by instalments of Rs. 400/- per month. The first of such instalments was to be paid on or before the 30th of August, 1976, and the subsequent instalments on the 10th of each succeeding month. The agreement further provided that if the petitioner committed three defaults in the payment of the monthly instalments, the respondent was entitled to the interest on the balance amount @ 18% per annum till the 'default' was covered, and the said interest was to be paid along with the monthly instalment that became due and payable. That if the petitioner committed six defaults, then all the previous instalments were to stand forfeited by the respondents. Clause 5 of the agreement provided as follows :---

'That it is further agreed that the purchaser shall not pay to the vendor or deposit in vendor's account the 7 (seven) monthly instalments of Rs. 400/- and shall deposit the same in joint account of Shri Choithram D. Khatri, as arbitrator for the vendor and Shri. T.C. Chhaproo, Advocate, as arbitrator for the purchaser, who shall pay the said balance amount to the vendor after both being satisfied that the vendor has cleared all the dues of Municipal taxes, convenience charges, water charges and other outgoings due and payable in respect of the said tenement till 31st July, 1976. AND in case if any dispute arises between the vendor and purchaser, the decision of said Shri Choithram D. Khatri and Shri T.C. Chhaproo, Advocate shall be binding on both parties, and in case if there be any arrears, the same shall be paid from the said retained amount, and balance, if any, shall be paid to the vendor.'

(Reproduced as recorded).

3. It is the petitioner's case that he paid the entire amount of Rs. 16,700/- although there were some defaults. That disputes had arisen on account of these defaults and the interest payable. That on the 9th of April, 1982, the petitioner received a letter from the respondent. In this letter, the respondent purported to state that he had asked the said C.D. Khatri and T.N. Chhaproo to arbitrate upon the disputes as far back as January, 1982. That the arbitrators had not moved in the matter although a period of over four months had elapsed. That in view of this, he was appointing one A.J. Bijlani, Advocate as an arbitrator in place of the said C.D. Khatri and further that he was writing to the said Bijlani, Advocate to expedite the hearing of the matter. That thereafter on the 12th of April, 1982, the petitioner received a letter from the said Bijlani. This letter was inter alia addressed to the said T.C. Chhaproo and the petitioner and the respondent. In this letter, Bijlani purported to record that he was appointed as arbitrator in place of C.D. Khatri and was requested to proceed with the matter. That by the said letter, he gave notice that the hearing of the disputes would proceed on the 1st of May, 1982, at the premises of M/s. Doulatram and Brothers on the 2nd floor at 107, Mohamedali Road, Bombay 400 003 and that the petitioner should be present 'with all the full facts and documents' so that the matter could be decided. That if the petitioner remained absent, the hearing would proceed ex parte. That thereupon, the said T.C. Chhaproo (who was to act as co-arbitrator) addressed a letter dated 28th April, 1982 to the said A.J. Bijlani. By the said letter, the said Chhaproo protested at Bijlani's having issued a notice fixing a meeting without consulting him (i.e. Chhaproo) and or without his (i.e. Chhaproo's) consent. By the said letter, the said Chhaproo further pointed out that the 1st of May, 1982, was a holiday and it was not feasible for him (i.e. the said Chhaproo) to attend the said hearing. The said Chhaproo also protested to the venue of the hearing inasmuch as the premises belonged to a third-party. The said Chhaproo by another letter dated 18th May, 1982, addressed to the said Bijlani further pointed out that before the disputes could be gone into, it was necessary that an initial meeting be fixed and an umpire be appointed as also the fees for arbitrators be fixed. That despite these letters from the said Chhaproo to the said Bijlani, Advocate Bijlani on the 1st of May, 1982, in the absence of the said Chhaproo his co-arbitrator, and in the absence of the petitioner purported to proceed with the hearing of the dispute. That by a telegram dated 1st May, 1982, the said Bijlani informed the petitioner as follows :---

'HEARING HELD ADJOURNED FOURTH MAY SAME TIME PLACE YOUR DUTY BRING ARBITRATOR CHHAPROO FAILED UNDER SECTION 9 : BIJLANI ADVOCATE.'

It is the petitioner's case that the said Bijlani then made and published an award which is now impugned in this petition. The petition is resisted by the respondent.

4. At the hearing of this matter, Mr. Parsnani, the learned Advocate for the petitioner narrated the aforesaid facts and urged that there is no material before this Court that the said Khatri failed and neglected to act as an arbitrator or refused to act as an arbitrator. That in any event, if the said Khatri had failed to act as an arbitrator, the proper course for the respondent was to proceed as per the provisions of section 8 of the Indian Arbitration Act. That this has admittedly not been done. That in view of this, the said A.J. Bijlani could not have acted as an arbitrator because his appointment would be bad.

5. Mr. Parsnani further urged that apart from this, even if it is assumed that the appointment of Bijlani was proper, Bijlani was not entitled to fix up any appointment at his own sweet will for the hearing of the matter. That he could have only done so with the consent or in conjunction with the said Chhaproo. That the letter of the said Chhaproo to the said Bijlani makes it clear that Chhaproo was not consulted in fixing the appointment for hearing of the matter. On the other hand, the letter of Chhaproo makes it clear that Chhaproo had objected to the hearing being fixed on the 1st of May, 1982 for more than one reason. That as a matter of fact, the said Chhaproo had pointed out (a) that the notice given by Bijlani was not proper and he could not have issued the said notice, (b) that the 1st of May, 1982, was a bank holiday and it was not possible for him (i.e. the said Chhaproo) to attend, (c) that venue of the meeting was at the premises of some third-party, (d) that before the disputes could be gone into, it was incumbent that an umpire be appointed and (e) that before the disputes could be gone into, it was necessary that the arbitrators' fees should also be fixed. That by this letter, Chhaproo has made it clear that he would not be attending the meeting on the 1st of May, 1982. That despite this, Bijlani purported to hold a hearing on the 1st of May, 1982, and the telegram of the said date, had recorded the fact. Mr. Parsnani urged that the said Bijlani could not have proceeded with the arbitration in any case in the absence of the said Chhaproo and the hearing of the matter would be bad and the consequential award must now fail. Mr. Parsnani urged that in the circumstances, the petitioner would well be entitled to the relief now claimed.

6. Insofar as the respondent is concerned, he urged that in view of the disputes and differences that arose between the parties, he had written a letter on the 7th of January, 1982, asking the said Khatri and the said Chhaproo to act in the matter. That the said Chhaproo raised a question of fees and hence on 20th January, 1982, he issued a cheque for Rs. 100/- to the said Chhaproo, which, the said Chhaproo had not encashed. That on the 10th of February, 1982, he addressed another letter to the said two arbitrators pointing out that although he had referred to the, there was no communication from them. That he then waited for an answer but since no answer was received, he took it that the arbitrators had refused to act. That it is in these circumstances that he addressed a letter on 9th April, 1982, (which has been referred to above). The respondent has contended that if Bijlani has proceeded in the matter, then he has rightly done so and the award that has been published would now be valid and binding on the petitioner herein.

7. Considering the rival contentions and assuming that the conduct of Khatri amounted to his refusal to act, then the proper course for the respondent would have been to move under section 8 of the Indian Arbitration Act, which he has not done. Even if it is assumed that Bijlani was rightly appointed as contended by the respondent, Bijlani could not have proceeded with the matter unilaterally. In the first instance, he would have had to fix up a meeting for the hearing in consultation and conjunction with his co-arbitrator which admittedly he has not done. In any event, when his co-arbitrator made it clear that he could not attend on the 1st of May, 1982, Bijlani could not have proceeded with the matter in his absence as he has chosen to do. Any hearing by Bijlani on his own was clearly bad and any award made in pursuance of such a hearing would also be bad.

8. In the circumstances, if must be held that the whole arbitration stands vitiated and in the result, the petition is made absolute in terms of prayers (a) and (b).


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