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Judgment
B.P. Colabawalla, J.—This chamber summons has been filed by the respondent praying that the execution application filed by the claimant be dismissed and the attachment levied on his flat No. 1101, Imperial Heights 58, Nargis Dutt Road, Pali Hill, Bandra (W) Mumbai 400050 (suit property) be raised and/or set aside. The primary ground of challenge is that the decision given by the committee of "Indian Motion Picture Producers'' Association" (IMPPA) on 28th January 2010 is not an arbitral award as contemplated under the Arbitration and Conciliation Act, 1996 (the Act) and consequently no execution proceedings under the provisions of the Code of Civil Procedure, 1908 (CPC) could be initiated for enforcement thereof. The facts relevant to the dispute are as follows:-
(a) The claimant is a producer of a feature film "JAAN KI BAAZI" starring the respondent as well as other actors. The shooting for the film started in October, 2001 and was 50% complete. According to the claimant the respondent was paid Rs. 50,00,000/- at the time when he attended the Muharat of the film and had also shot for the film on a few occasions but thereafter did not allot any further dates for the next 7 years.
(b) For this reason, after a period of about 7 years, the claimant filed a complaint on 23rd December 2008 before IMPPA bringing these facts to their notice and requested IMPPA to direct the respondent to give 30 days of shooting dates to the claimant at the agreed price of Rs. 1.5 crores failing which strict instructions be issued to all producers not to co-operate with him in any manner whatsoever.
(c) By his letter dated 15th January 2009, the respondent through his advocate, informed IMPPA that the complaint filed by the claimant was only for the purposes of extorting monies from him and that in spite of him having attended 2 days of shooting in October 2001, there was no payment made to the respondent in connection with the said film. The respondent categorically denied that he was paid a sum of Rs. 50,00,000/- and call upon the claimant to produce any evidence in respect thereof.
(d) Thereafter, a host of correspondence was exchanged between the respondent, the claimant and IMPPA which is not really relevant for deciding the issue raised in this chamber summons. It would only be relevant to refer to a letter dated 29th of December 2009 addressed by the respondent''s advocate to IMPPA once again reiterating what was stated in his earlier letter dated 15th January 2009 and contending that there was no legal requirement to appear before IMPPA of which he was not a member.
(e) Shortly thereafter, a decision was given by IMPPA dated 28th January, 2010 wherein it directed the respondent to allot 30 days of shooting to the claimant within 15 days from the date of receipt of the said decision failing which, the respondent was directed to compensate the claimant by returning Rs. 50,00,000/- allegedly taken as remuneration, and losses caused to the claimant amounting to Rs. 1,53,75,000/- along with interest at the prevailing rate. It is important to note that this decision was styled as an award and was on Rs. 100 stamp paper that was purchased in the name of the proprietary concern of the claimant. The alleged award itself records that the claimant was a member of the dispute resolution committee and that he rescued himself from the same being the interested party in the matter, and thereafter appeared in person for his proprietary concern. Another very peculiar fact, is that despite the so called award being passed on 28th January 2010, a notice dated 1st February 2010 was issued to the respondent calling upon him to attend a meeting to be held on 5th February 2010 failing which an ex parte decision would be passed by IMPPA. When this court inquired as to how or why this notice was issued after the alleged award was already passed, there was no answer from the advocate for the claimant.
(f) Be that as it may, treating the said decision dated 28th January, 2010 as an arbitral award under the Act the claimant filed the above execution application for enforcement thereof.
Mr. Thorat, the learned senior counsel appearing on behalf of the respondent contended that in the present case, (i) there was no arbitration agreement; (ii) IMPPA was not an arbitral Tribunal; (iii) what was filed before IMPPA by the claimant was a complaint and not a reference as contemplated under the Act; and (iv) consequently, the decision given by IMPPA on the said complaint could never be an arbitral award under the Act that could be enforced by this court under the provisions of the CPC. Mr. Thorat submitted that in order for this court to construe the decision of IMPPA as an arbitral award, there has to be (i) an arbitration agreement; (ii) a meeting of the minds between the parties on a reference to arbitration; and (iii) the existence of an arbitral Tribunal constituted under the provisions of the Act which decides the disputes on the basis that it is adjudicating upon differences between the parties, and upon which it renders a reasoned award. Mr. Thorat contended that none of the above ingredients were fulfilled in the present case, and submitted that the execution application was non-est, an abuse of the process of the Court and therefore had to be dismissed.
Mr. Thorat, further submitted that the respondent was not even a member of Indian Motion Picture Producers'' Association (IMPPA) and hence not bound either by their Memorandum and Articles of Association or by their bye-laws, rules and regulations, if any. According to Mr. Thorat, as per the Memorandum and Articles of the Association of IMPPA, the respondent was not even eligible to become their member. He stated that M/s. Sanjay Dutt Productions Pvt. Ltd., a company incorporated under the Companies Act, 1956 was a member of IMPPA and that he was a director of the said company. He contended that in the present case the complaint was admittedly filed against the respondent in his personal capacity and not as a director/nominee of his Company, namely M/s. Sanjay Dutt Productions Pvt. Ltd. In view thereof, he submitted that in any event, any decision given by IMPPA directing him to make any payment or forcing him to allot any days of shooting to the claimant was non-est and not binding upon the respondent. Consequently no such decision could be enforced taking recourse to execution proceedings in this court.
To appreciate the controversy, it would be necessary to refer to some of the relevant provisions of the Act. Section 2(a) of the Act defines "arbitration" as any arbitration whether or not administered by a permanent arbitral institution. Section 2(b) stipulates an "arbitration agreement" to mean an agreement referred to in section 7. Section 2(c) defines the expression "arbitral award" to include an interim award. Section 2(d) defines "arbitral tribunal" to mean a sole arbitrator or a panel of arbitrators. Section 7, which is important for our purposes, defines the expression "arbitration agreement" which reads as follows:-
Arbitration Agreement --- (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
Sub-section 1 of section 7 provides that an arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them. Sub-section 2 stipulates that an arbitration agreement may be contained in a arbitration clause in the contract or by way of a separate agreement. Sub-section 3 states that an arbitration agreement shall be in writing and sub-section 4 stipulates that an arbitration agreement is in writing if it is contained in (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. Sub-section 5 provides that a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make the arbitration clause a part of the contract.
Section 11 of the Act inter alia provides for appointment of an Arbitrator/s. Sub-section (2) of Section 11 of the Act stipulates that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-section (3) provides that failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. Sub-section (5), stipulates that failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a 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 or any person or institution designated by him. Sub-section (6) provides that where, an appointment procedure is agreed upon by the parties, and (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of 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 the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
On a conjoint reading of these provisions, it clearly emerges that the sin qua non for any dispute to be referred to arbitration, there has to be an arbitration agreement. Without there being an arbitration agreement, there cannot be any reference to arbitration and consequently there cannot be any award as contemplated under the Act. For an arbitration agreement to come into existence, there has to be a meeting of minds of the parties to resolve their disputes through the process of arbitration. The attributes or elements of an arbitration agreement are (a) the agreement should be in writing; (b) the parties should have agreed to refer any disputes (present or future) between them to the decision of a Private Tribunal; (c) the Private Tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it; and (d) the parties should have agreed that the decision of the Private Tribunal in respect of the disputes referred to it, will be binding on them. Therefore, the starting point of this entire process is the arbitration agreement as defined u/s 7, which finally culminates in an arbitral award. This award, thereafter, can be challenged u/s 34 of the Act, and if such challenge is made and refused, or the award is not challenged within the time frame prescribed, the arbitral award thereafter becomes executable as a decree of this Court as set out in section 36 of the Act.
In the present case, I find a complete absence of any arbitration agreement as contemplated u/s 7 of the Act. Admittedly, there is no contract between the parties that contains an arbitration clause and neither is there any separate arbitration agreement signed between the parties. There is no exchange of letters, telegraphs or other means of telecommunication which provide a record of any such arbitration agreement. It is not even the case of the claimant that there was any arbitration agreement between the parties as contemplated u/s 7 of the Act and neither has any such agreement been brought on record of this court.
IMPPA, being a company incorporated under the Companies Act, 1913, has its own rules and bye-laws for adjudication of complaints and disputes which have been framed under Article 3(x) of it''s Memorandum and Articles of Association. These rules define an "Award/Decision" as an award/decision and findings given by the Committee on the cases and/or complaints heard by it. A "Member" has been defined to mean a member of the association duly admitted as such by IMPPA in accordance with it''s Memorandum and Articles of the Association. The definition of a "Non-member" (outsider) includes a Producer, Distributor, Overseas Right Holder, Foreign buyer, Video Copyright Owner, Finance, Equipment Supplier, Studio, Laboratory, Music Company, Travel Agent or any Satellite Channel, Cable Channel or anyone connected in any way with the entertainment business. Rule 8 provides the procedure for adjudication which reads as follows:-
Procedure for Adjudication
The Committee/Sub-Committee shall be entitled to take cognizance of the following matters:
a) Complaints and claims filed by its Members against its Members.
b) Complaints and claims filed by its Members against Outsider/Non-Member.
c) Disputes and differences between Members inter se.
d) Disputes and differences between its Members and outsiders/non-members.
e) Complaints suo moto initiated by it against Members who according to the Committee are acting in a manner detrimental to the interest of the Company or who are failing to observe any Articles, Rules, Byelaws, circulars of the Company.
f) Complaints, Claims and Disputes of non-members against its members.
Even the rules and bye-laws of IMPPA do not spell out any arbitration agreement. In fact, from a bare reading of Rule 8, it is ex-facie clear that the adjudication done by the committee of IMPPA can never be an arbitration as contemplated under the Act because it can even decide disputes and differences between its members and outsiders/Non-members. Needless to state that Non-members of IMPPA can never be bound by it''s Memorandum and Articles of Association or it''s rules and bye- laws unless the non-member agrees to be bound by the same. Furthermore, what is filed before the committee of IMPPA is a complaint and not a reference as contemplated under the Act. The proceedings before IMPPA do not partake the character of arbitral proceedings, which commence, unless otherwise agreed by the parties, on receipt of a request to refer the disputes to arbitration as set out in section 21 of the Act. In the present case, (i) there being a complete absence of any arbitration agreement; (ii) admittedly, no notice being given u/s 21, which is the starting point of the arbitral proceedings before the arbitral tribunal and (iii) no reference being filed before IMPPA for resolution of the disputes, the decision of IMPPA can never be construed as an arbitral award under the Act.
The fact that a decision given by IMPPA can never be construed as an arbitral award under the Act, is further fortified on a perusal of rule 15 which reads as under:-
Implementation of Decision:-
Failing compliance with the decision within the given time, the Award Holder may apply to the Committee/Sub-Committee for enforcement of the decision and if the Committee/Sub-Committee is satisfied that the Award has not been complied with it shall declare the Defendant and/or all other firms/companies or organizations which are either controlled by him or in which he is directly or indirectly interested or connected as defaulter, with a view to safeguard the interest of the Award Holder and to inculcate a sense of discipline in the trade. The names and address of such parties who are declared defaulters shall then be circulated to Members and/or other Associations and the Members shall strictly avoid any dealing with such defaulters until they have complied with the decision. On compliance with the decision, the Secretary shall cause a circular to be issued to all Members/Associations notifying that the default has been remedied and their names have been deleted from the defaulter list.
The said rule clearly sets out how a decision of IMPPA is to be implemented. It categorically states that if a person is not complying with it''s decision, the award holder may apply to the committee/sub-committee for enforcement of the decision and if committee/sub-committee is satisfied that the award has not been complied with, it shall declare the defendant and/or other firms/companies or the organizations which are either controlled by him, or in which he is directly or indirectly interested or connected, as a defaulter with a view to safeguard the interest of the award holder and to inculcate a sense of discipline in the trade. Rule 15 further provides that thereafter the name and address of such defaulter would be circulated to other members and associations with a request that the members shall strictly avoid any dealings with such defaulter until he has complied with the decision. Therefore, the rules itself contemplate a procedure on how a decision of IMPPA is to be implemented. It does not contemplate that it would be executed as if it were a decree of the court.
It is therefore clear that even the rules and bye-laws of IMPPA do not spell out any arbitration agreement that would bind the respondent. The adjudication proceedings before IMPPA are not arbitral proceedings and consequently, the decision of IMPPA under its rules, can never partake the character of an arbitral award under the Act. I may hasten to add that the respondent is not a member of IMPPA in his personal capacity and therefore even if any such arbitration agreement could be spelt out from the Memorandum & Articles of Association or the rules and bye-laws of IMPPA, it would make no difference. The respondent not being a member of IMPPA, nor agreeing to be bound by its rules and bye-laws, would not be bound by any such agreement or decision rendered by IMPPA under it''s own rules and bye-laws.
IMPPA at the highest, can be said to be a private tribunal, other than an arbitral tribunal, with consensual jurisdiction whose decision is intended to affect private rights of two parties inter se, but not in a manner which creates a legally enforceable remedy. Examples of such private tribunals would be local religious communities or persons privately appointed to act as mediators, to name a few.
In view of the earlier discussion in this judgment, I have no hesitation in holding that the decision given by IMPPA on 28th January 2010 against the respondent, can never be construed as an arbitral award as contemplated under the Act. In view thereof, there is no question of enforcing the same in execution under the provisions of the CPC.
Mr. Patil, the learned counsel for the claimant contended that that the decision given by IMPPA on 28th January, 2010 is an arbitral award under the Act and therefore the claimant is entitled to execute the same under the provisions of the CPC read with the provisions of the Act. In view of the detailed discussion above on this subject, this argument is without any merit and will have to be rejected.
Mr. Patil next submitted that assuming that the decision given by IMPPA was not an award, the respondent not having challenged the same u/s 34 of the Act, cannot raise any objection to the same in execution as the same had attained finality. I find the aforesaid argument totally fallacious. Firstly, if the decision is not an award (as I have already held earlier), then there would be no question of challenging the same u/s 34 of the Act. Section 34 is a recourse available to a party to challenge an arbitral award. If there is no arbitral award, then there is no question of taking recourse to section 34. Secondly, and more importantly, if the said decision is not an arbitral award, then this Court would inherently lack jurisdiction to entertain the execution application for the enforcement thereof. In this regard, the reliance placed by Mr. Thorat on the judgment of a Single Judge (Chandrachud J as he then was) of this Court in the case of Pride of Asia Films Vs. Essel Vision, is well founded. In the facts of that case, the complainant lodged a claim before another association of the film fraternity known as the Film Makers Combine (FMC), for a recovery of Rs. 1.25 crores on account of damages. After the complaint was filed, the parties submitted a joint undertaking to the FMC whereby they agreed to submit for adjudication by the FMC and/or it''s committee/sub-committee, in accordance with the rules and bye-laws framed for that purpose. The FMC thereafter directed the applicant to pay a sum of Rs. 25,00,000/- (Rs. Twenty Five lacs only) to the complainant on account of compensation for damages. As the said amount was not paid, the complainant instituted execution proceedings for enforcement, in this Court. In the facts of that case, the learned Judge, after discussing the relevant provisions of the Act inter-alia held that the participation by the parties in the proceedings before the FMC could not be regarded as participation in an arbitral proceeding that would culminate in an arbitral award. The learned Judge therefore held that the decision which was arrived at by FMC did not have a force of decree of the Court. After relying upon two Supreme Court judgments the learned Judge in paragraph 28 held as follows:-
Applying this test to the case in hand, it is impossible to come to the conclusion that the undertaking which was furnished by the parties on 10th April, 2002 constitutes an arbitration agreement or an agreement to refer their disputes to arbitration. The terms of the undertaking do not make it clear that the process which the parties have agreed upon is an arbitration. The undertaking refers to an adjudication by a "Committee/Sub committee/Joint Tribunal" of FMC in accordance with rules and bye-laws. There are no rules and bye-laws apart from the Articles of Association. The undertaking does not implicate a duty on the part of the Committee/Sub-Committee/Joint Tribunal to decide judicially in an impartial and objective manner and in accordance with law. On the contrary, what the undertaking specifies is that the decision of the Chairman of the committee/Sub-Committee/Joint Tribunal would be final and binding upon the parties. The agreement does not specify that the Committee will receive evidence from both the sides or that it will decide the dispute in accordance with law. What has in fact transpired before the Tribunal is reflective of what was always implicit in the nature of the undertaking which was furnished. Parties never intended that the undertaking would constitute an agreement to arbitrate; an arbitration that would take place by following norms of judicial procedure; an arbitration that would take place by following norms of judicial procedure; a decision which would be arrived at on the basis of evidence and in accordance with law; and an outcome which is enforceable as an arbitral award. Their participation in the proceedings before the Committee cannot therefore, be regarded as a participation in an arbitral proceeding that would culminate in an arbitral award.
Not only am I bound by this judgment, but I fully agree with the same. I therefore find no merit in the contention of the claimant that since the respondent had not challenged the said decision/award u/s 34, he was barred from raising any objection in the execution application. This court lacks inherent jurisdiction to entertain an execution application for the enforcement of a decision of a private tribunal other than an arbitral tribunal. The said decision is not an arbitral award and does not have the force of a decree of the court. Hence it cannot be enforced taking recourse to execution proceedings in this court. This strikes at the very root of the matter that render the entire proceedings non-est.
It was next sought to be contended, though feebly, that the respondent is a member of IMPPA. I find the aforesaid argument to be factually incorrect. The claimant himself has relied upon the affidavit of one Mr. Vinod Chabra dated 21st February 2011, who in Paragraph 6 has stated as follows:-
I say that the company also included all the Directors in respect of the said company and more particularly, the person who has been nominated for the company under the rules and regulations of IMPPA. I say that the said Rules of IMPPA, provides that as and when any such company is being accepted as a member, they are required to nominate one of their person who can be said to be a person concerned with the association. I say that in the present, it is Sanjay Dutt who has been nominated on behalf of the said company and hence, he in his personal capacity also is bound and liable by all the rules and regulations Memorandum of Association of IMPPA. I say that since he is bound by the same, obviously, he is bound by the arbitration procedure and the arbitration proceedings adopted by IMPPA.
It is therefore clear that it is the claimant''s own case that the respondent has been nominated on behalf of his company namely M/s. Sanjay Dutt Productions Pvt. Ltd., as a member of IMPPA. In the present case, admittedly, the claim made against the respondent was not against his company but against him in his personal capacity as an actor. Even otherwise, it would make no difference to the case. As held earlier in this judgment, the proceedings before IMPPA could never be construed as arbitral proceedings that culminated in an award that could be enforced in this Court. Therefore even assuming for the sake of argument that the respondent was a member of IMPPA, it would make no difference to what I have held in this Judgment.
Mr. Patil next submitted that at the highest the decision/award passed by the committee of IMPPA would be a void decision/award. According to him, this decision/award cannot be declared to be void in collateral proceedings like the present one. According to him, even if an order is void it requires to be declared so by a competent forum and it is not permissible for any person to ignore the same merely because in his opinion it is so. Mr. Patil submitted that in the present case, the appropriate forum to set aside the so called void award would be this court exercising jurisdiction u/s 34 of the Act. Not having availed of the said remedy, the respondent could not set up any challenge to the said award in these execution proceedings. In support of this submission he relied upon a judgment of the Supreme Court in the case of Sneh Gupta Vs. Devi Sarup and Others, and in particular paragraph nos. 68 and 69 thereof which read as under:-
Yet again, in M. Meenakshi v. Metadin Agarwal this Court held: (SCC p.478. Para 18)
It is a well-settled principle of law that even a void order is required to be set aside by a competent court of law inasmuch as an order may be void in respect of one person but may be valid in respect of another. A void order is necessarily not non est. An order cannot be declared to be void in a collateral proceeding and that too in the absence of the authorities who were the authors thereof. The orders passed by the authorities were not found to be wholly without jurisdiction. They were not, thus, nullities.
Yet again, in Sultan Sadik v. Sanjay Raj Suba this Court held: (SCC P.390. Para 39)
An order may be void for one and voidable for the other. An invalid order necessarily need not be non est; in a given situation it has to be declared as such. In an election petition, the High Court was not concerned with the said issue.
I fail to see how this judgment supports the case of the claimant. The proposition laid down by the Supreme Court in the aforesaid judgment is clear and it cannot be disputed that a void order cannot be ignored until set aside and cannot be declared to be void in collateral proceedings. In fact, paragraphs 68 and 69, on which the learned counsel places reliance, categorically makes a distinction between an order that is void and one that is non-est or passed wholly without jurisdiction. In the present case, the decision of IMPPA can never be construed as an award as contemplated under the Act. The decision is not one that creates a legally enforceable remedy. Therefore, the entire proceedings for the enforcement thereof, namely the execution application, are non-est and this Court inherently lacks jurisdiction to entertain any execution application for the enforcement thereof.
The reliance placed by Mr. Patil on another Supreme Court judgment in the case of Krishnadevi Malchand Kamathia and Others Vs. Bombay Environmental Action Group and Others, is also wholly misplaced. It merely follows the proposition laid down in the case of Sneh Gupta (supra). In view of what I have held earlier in this judgment, I have no hesitation in holding that the execution application filed by the claimant for the enforcement of the decision of IMPPA dated 28th January, 2010 is non-est and an abuse of the process of the Court. In view thereof, the chamber summons is made absolute in terms of prayer clauses (a) and (b). In the facts and circumstances of the case, the claimant shall pay costs of Rs. 1,50,000/- to the respondent.