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Judgment
Z.A. Haq, J—Heard Shri Sanket R. Charpe, learned advocate for the applicants and Shri C.B. Dharmadhikari, learned advocate for the non-applicant no.1. None for the non-applicants 2 and 3 though served.
Rule. Rule made returnable forthwith.
The applicants have approached this Court under Section 11 of the Arbitration and Conciliation Act, 1996 praying that an Arbitrator be appointed to resolve the dispute between the applicants and the non-applicants. The applicants have prayed that the non-applicant no.3, who is appointed as an Arbitrator by the non-applicant no.1, be restrained from proceeding with the Appeal No. 1/2014.
The claim of the applicant no.1 is that its affiliation with the non-applicant no.1 has been illegally suspended and then illegally withdrawn and it is entitled for affiliation with the non-applicant no.1.
The applicant had filed Writ Petition No. 5432/2013 before this Court seeking directions to the non-applicant no.1 to recognize the representative of the applicant no.1 and to quash the decision of the non-applicant no.1 withdrawing the affiliation of the applicant no.1. This Court by the order dated 22nd July, 2014 found that the applicants have alternative efficacious remedy available in the form of an appeal before the Arbitration Commission of the non-applicant no.1 -Amateur Kabaddi Federation of India. This Court refused to entertain the writ petition for the above reason.
After the disposal of the Writ Petition No. 5432/2013, the applicants submitted an appeal to the non-applicant no.1. The non-applicant no.1 referred the appeal filed by the applicants to the Arbitration Commission and it came to be registered as Appeal No. 1/2014. The present dispute, which is the subject matter of the application filed by the applicants, started from this stage. The appeal submitted by the applicants came to be referred to Shri K. Jagadisheshwar Yadav (non-applicant no.3). According to the applicants, the Arbitrator came to be appointed unilaterally by the non-applicant no.1, without obtaining the consent of the applicants.
The case of the non-applicant no.1 is that it has followed the required procedure and 7 names were given to the applicants, however, the applicants failed to inform the non-applicant no.1 about the name of Arbitrator out of the proposed names and, therefore, the non-applicant no.1 appointed Shri K. Jagadisheshwar Yadav as the Arbitrator.
One of the issue which is required to be considered is as to whether the appointment of Shri K. Jagadisheshwar Yadav as the Arbitrator is proper and according to the requirements of Annexure "B" of the Constitution of Amateur Kabaddi Federation of India and Clause V of the Memorandum of Association of the Constitution of Amateur Kabaddi Federation of India.
The non-applicant no.1 had issued a communication dated 8th August, 2014 to the applicant no.2 informing 7 names out of which the applicant no.2 was required to choose any one who could be appointed as the Arbitrator. This action was taken by the non-applicant no.1 as per Clause 2(iv) of Annexure "B" of the Constitution of Amateur Kabaddi Federation of India which reads as follows :-
"2(iv) The General Secretary of AKFI on the recommendation of the Executive Committee, on receipt of any such request for arbitration will recommend 7 names to the disputing parties to select one name in consultation with the General Secretary of AKFI which is acceptable to both the parties."
The applicants had filed Civil Application No. 2309/2014 in the disposed of Writ Petition No. 5432/2013 seeking extension of the interim relief which was granted by this Court, till the decision by the Arbitration Commission on the application filed by the applicants in Appeal No. 1/2014 praying for interim orders. The President of National Federation had filed pursis dated 6th August, 2014 before this Court pointing out that the communication dated 5th August, 2014 was sent to the applicant no.2 requesting him to select one out of 7 proposed names who can be appointed as the Arbitrator. The President of National Federation filed another pursis dated 11th August, 2014 stating that if the applicants fail to select one person out of 7 persons, whose names were communicated to be the Arbitrator, then the Arbitrator will have to be appointed unilaterally. The applicants filed re-joinder dated 11th August, 2014 objecting to all the 7 persons proposed to be appointed as the Arbitrator and the applicants gave 2 names as follows :-
Mahendar Singh Ramnivas Tyagi and
Sajjan Jindal.
The non-applicant no.1 claims that Shri K. Jagadisheshwar Yadav came to be appointed as an Arbitrator on 12th August, 2014 unilaterally as the applicants failed to communicate their choice out of 7 names. The non-applicant no.1 claims that the applicant no.2 was informed about the appointment of Shri K. Jagadisheshwar Yadav as the Arbitrator by the communication dated 12th August, 2014. However, the applicants submitted that they were not informed about the appointment of the Arbitrator. According to the non-applicant no.1, the applicants were aware about the appointment of the Arbitrator and the fact that first hearing of the Arbitration Commission was scheduled for 14th August, 2014 at 11 a.m. is clear from the order passed by the Division Bench of this Court on Civil Application No. 2309/2014 in Writ Petition No. 5432/2013 on 11th August, 2014. The non-applicant no.1 has not placed any document on the record to show that the applicants were communicated by it that Shri K. Jagadisheshwar Yadav has been appointed as the Arbitrator.
The applicant no.2 attended the proceedings before the Arbitration Commission on 14th August, 2014 as he got knowledge that the proceedings would be taken up on 14th August, 2014, as details were placed on the record of this Court along with reply to the Civil Application No. 2309/2014 in Writ Petition No. 5432/2013. According to the non-applicant no.1, the applicants objected to the appointment of Shri Jagadisheshwar Yadav as the Arbitrator. The learned Arbitrator has passed an interim award on 16th August, 2014. It is undisputed that the applicants have challenged the interim award by filing an appeal as per Clause 2(iii) of Annexure "B" of the Amateur Kabaddi Federation of India and the appeal is pending.
In the meantime, the applicants filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the learned Principal District Judge, Amravati, which came to be registered as Miscellaneous Civil Application No. 255/2014. The learned Principal District Judge by the order dated 23rd December, 2014 has rejected the prayer of the applicants for grant of interim relief. The learned Principal District Judge recorded that the affiliation of the applicant no.1 is withdrawn on 11th March, 2013 and in the earlier year also the applicant no.1 was not able to send its team for the Kabaddi Tournaments and, therefore, it is not a fit case for grant of ad-interim relief.
The learned Principal District Judge by the order dated 12th January, 2015 has rejected the application.
The applicant has filed the present application under Section 11 of the Arbitration and Conciliation Act, 1996 on 18th November, 2014.
Shri Dharmadhikari, the learned advocate for the non-applicant no.1 has raised the preliminary objection to the maintainability of the application at the behest of the applicants on the ground that the applicant no.2 has no locus to file the application on behalf of the applicant no.1. It is submitted that the elections of the applicant no.1 had taken place in 1986 and the names of the persons who were elected in those elections are recorded in Schedule I of the Public Trusts Register and the name of the applicant no.2 does not appear in Schedule I of the Public Trusts Register. It is submitted that the applicant no.2 claims to be the life member of the applicant no.1 on the basis of the fabricated documents. The non-applicant no.1 has elaborately explained in the submissions filed by it on 25th February, 2015, as to how the claim made by the applicant no.2 that he is the life member of the applicant no.1 is not correct.
The learned advocate for the non-applicant no.1 has raised objection to the tenability of the application before this Court on the ground of territorial jurisdiction as according to the non-applicant no.1 its office is situated at Jaipur. In support of this submission, the learned advocate for the non-applicant no.1 has pointed out the Clause 2 of the Memorandum of Association and Constitution of Amateur Kabaddi Federation of India.
It is submitted on behalf of the non-applicant no.1 that the application filed by the applicants is required to be dismissed for non-joinder of Amateur Kabaddi Association of Vidarbha which has been granted affiliation by the National Federation. It is submitted that the learned Principal District Judge while deciding the M.C.A. No. 255/2004 has recorded that the applicant no.2 has not taken any steps to implead the Amateur Kabaddi Association of Vidarbha showing its representation through proper person.
Shri Dharmadhikari, the learned advocate has submitted that Shri K. Jagadisheshwar Yadav -the learned Arbitrator has passed an interim award on 16th August, 2014 which the applicants have challenged by filing appeal before the Arbitration Commission of Olympic Association, which is pending and, therefore, the present application is not maintainable. It is submitted that as per Section 5 of the Arbitration and Conciliation Act, 1996, there has to be minimal intervention by this Court in the matter and that too in matters covered by part I of the Arbitration and Conciliation Act, 1996. In support of this, reliance is placed on the following judgments :
(i) Judgment given in the case of Unipack Industries Vs. Subhash Chand Jain and Others, (2001) 94 DLT 710 : (2002) 61 DRJ 586 ,
(ii) Judgment given in the case of Premier Electrical Corporation V/s. National Building Construction & Another reported in 2001 (Supp.) Arb LR 181,
(ii) Judgment given in the case of Ghaziabad Development Authority Vs. Subodh Builders (P.) Ltd. and Another, (2003) 6 AWC 5557 ,
(iii) Judgment given in the case of M/s. Indian Drugs and Pharmaceuticals Ltd. Vs. M/s. Indo Swiss Synthetics Gem Manufacturing Co. Ltd. and others, AIR 1996 SC 543 : AIR 1995 SC 543 : (1996) 1 ARBLR 77 : (1995) 6 SCALE 439 : (1996) 1 SCC 54 : (1995) 5 SCR 189 Supp and
(iv) Judgment given in the case of M/s. MIC Electronics Limited Vs. M/s. International Techno Media Pvt., Ltd. and another, (2012) 3 ALD 180 : (2012) 1 ALT 527 : (2012) 3 ARBLR 313 .
It is requested that the application be dismissed with costs.
Shri Sanket Charpe, the learned advocate for the applicants has pointed out the resolution passed by the General Body of the applicant no.1 authorizing the applicant no.2 to file the proceedings on behalf of the applicant no.1. The copy of the resolution is placed on the record along with the rejoinder filed by the applicants on 9th April, 2015. The learned advocate for the applicants has pointed the communication issued by the non-applicant no.1 on 8th August, 2014 to the applicant no.2 asking him to choose any one out of 7 names given in the communication, to be appointed as Arbitrator. The learned advocate has pointed out the similar communication from the non-applicant no.1 issued to the non-applicant no.2 on 5th August, 2014.
Considering the documents relied upon by the applicants, it cannot be said that the applicant no.2 has no locus to file the present application. Therefore, I hold that the present application at the behest of the applicants is maintainable.
Shri Charpe, the learned advocate has pointed out the communication issued by the non-applicant no.1 on 11th March, 2013 cancelling the affiliation of the present applicant no.1. It is clear from this document that the communication is served on the Vice-President of the applicant no.1 at Amravati. The learned advocate for the applicants has submitted that as the decision taken by the non-applicant no.1 to cancel the affiliation of the applicant no.1 has been informed to the applicant no.1 at Amravati, the cause of action has arisen at Amravati. Relying on the provisions of Section 11(12) and the provisions of Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 it is submitted that this Court has the jurisdiction to entertain the present application under Section 11 of the Arbitration and Conciliation Act, 1996.
Though it is submitted on behalf of the non-applicant no.1 that the head office of the non-applicant no.1 is situated at Jaipur and the applicants will have to agitate their grievance before the appropriate Forum at Jaipur, in my view, the submission made on behalf of the applicants in this regards are required to be accepted. The communication issued by the non-applicant no.1 on 11th March, 2013 cancelling the affiliation of the applicant no.1 has been served at Amravati and, therefore, the applicants can legitimately contend that the cause of action has arisen at Amravati which is within territorial jurisdiction of this Court. Hence, I hold that the application filed by the applicants is maintainable and the objection raised on behalf of the non-applicant regarding territorial jurisdiction is rejected.
As far as the objection raised on behalf of the non-applicant no.1 that the application is not maintainable as Amateur Kabaddi Association of Vidarbha which is a necessary party has not been impleaded is concerned, it also cannot be accepted at this stage. The contention of the non-applicant no.1 is that the Amateur Kabaddi Association of Vidarbha is granted affiliation by the National Federation after cancelling the affiliation of the applicant no.1 and, therefore, it is a necessary party. The non-applicant no.1 has not been able to explain as to what prejudice would be caused to Amateur Kabaddi Association of Vidarbha if an Arbitrator is appointed for resolving the dispute between the applicants and the non-applicant no.1. If at all rights of Amateur Kabaddi Association of Vidarbha would be affected, it will have to be heard by the learned Arbitrator. Moreover, in my view, the Amateur Kabaddi Association of Vidarbha has been granted affiliation after the affiliation of the applicant no.1 has been cancelled. The Amateur Kabaddi Association of Vidarbha is not having any independent right.
The main issue which is required to be considered is as to whether an Arbitrator can be appointed considering the fact that the non-applicant no.1 has already appointed Shri K. Jagadisheshwar Yadav as an Arbitrator who has also passed an interim award.
Shri Charpe, the learned advocate for the applicants has submitted that the appointment of Shri K. Jagadisheshwar Yadav as the Arbitrator is illegal and void ab-initio as he has been appointed unilaterally by the non-applicant no.1 without taking consent of the applicants. It is submitted that the non-applicant no.1 had asked the applicants to choose anyone out of 7 persons whose names were mentioned in the communication dated 8th August, 2014 to be the Arbitrator, however, the applicants refused to accept anyone of the 7 persons whose names were given in the communication dated 8th August, 2014, to be the Arbitrator as all the 7 persons had participated in the meeting and are signatories to the resolution authorizing the President of the non-applicant no.1 to take action against the applicant no.1. It is submitted that the applicants had filed rejoinder to the pursis filed by the President of the National Federation, before this Court in Civil Application No. 2309/2014 in Writ Petition No. 5432/2013 in which the applicants had suggested 2 names out of which one person should have been appointed as the Arbitrator. It is submitted that the rejoinder was filed on 11th August, 2014, however, overlooking the objection of the applicants, the non-applicant no.1 hastily appointed Shri K. Jagadisheshwar Yadav as the Arbitrator on 12th August, 2014 unilaterally. It is submitted that this fact shows that there had been no bona fides on the part of the non-applicant no.1 and the appointment of Shri K. Jagadisheshwar Yadav as the sole Arbitrator is illegal and void ab-initio. Shri Charpe, the learned advocate has submitted that the appointment of the sole Arbitrator being illegal and void ab-initio, it is a nullity and the interim award passed by the learned Arbitrator will not come in the way of this Court while exercising jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996. In support of his submissions, the learned advocate for the applicants has relied on the following judgments :
(i) Judgment given in the case of Dharma Prathishthanam Vs. Madhok Construction Pvt. Ltd., AIR 2005 SC 214 : (2004) 5 CTC 442 : (2004) 9 JT 335 : (2004) 9 SCALE 205 : (2005) 9 SCC 686 4 and
(ii) Judgment given in the case of Ess Gee Real Estate Developers Pvt. Ltd. Vs. Rajkumar Kothari and Others, AIR 2014 Raj 56 .
It is submitted that the Petition for Special Leave to Appeal (Civil) No. 3393/2014 challenging the judgment passed by the Rajasthan High Court has been dismissed on 24th February, 2014.
Shri Dharmadhkari, the learned advocate has submitted that the judgment passed in the case of Dharma Prathishthanam V/s. Madhok Construction Pvt. Ltd. (cited supra) does not assist the case of the of the applicants as the matter had arisen out of the proceedings under the Arbitration Act, 1940 which did not contain any provision like Section 5 of the Arbitration and Conciliation Act, 1996. It is submitted that the judgment given in the case of Ess Gee Real Estate Developers Pvt. Ltd. V/s. Shri Rajkumar Kothari & Ors. (cited supra) also cannot be relied upon as the provisions of Sections 5, 12, 13, 34 and 37 of the Arbitration and Conciliation Act, 1996 are not considered while delivering the judgment. Relying on the judgments referred by him, it is submitted that Shri K. Jagadisheshwar Yadav was appointed as the sole Arbitrator on 12th August, 2014 and the applicants appeared before him on 14th August, 2014 and raised objection and an interim award has been passed on 16th August, 2014. It is submitted that in view of the provisions of Section 5 of the Arbitration and Conciliation Act, 1996 there has to be minimal interference by this Court and the interference can be only in matters covered by Part I of the Arbitration and Conciliation Act, 1996. It is submitted that the grounds of challenge can be only those as prescribed under Section 12 of the Arbitration and Conciliation Act, 1996. It is submitted that if at all the applicants are aggrieved by the interim award passed by the learned Arbitrator then the applicants should have availed remedy provided by Section 34 and then Section 37 of the Arbitration and Conciliation Act, 1996.
After examining the documents filed by the parties on the record and considering the submissions made by the learned advocates for the respective parties, I come to the conclusion that the appointment of Shri K. Jagadisheshwar Yadav as the sole Arbitrator by the non-applicant no.1 is illegal and void ab-initio. The non-applicant no.1 has not been able to justify its action of unilaterally appointing Shri K. Jagadisheshwar Yadav as the sole Arbitrator, overlooking the objection taken by the applicants. The applicants had expressed an apprehension before this Court at the time of hearing on Civil Application No. 2309/2014 in Writ Petition No. 5432/2013, by filing rejoinder that none of the 7 persons (which included Shri K. Jagadisheshwar Yadav) should be appointed as the Arbitrator as they had participated in the meeting and are signatories to the resolution in which the President of the non-applicant no.1 was authorized to take action against the applicant no.1. The apprehension expressed by the applicants cannot be said to be ill-founded or frivolous. The non-applicant no.1 ought to have kept in mind the objection taken on behalf of the applicants while appointing the sole Arbitrator and also should have kept in mind the established principle that the justice should not only be done but seem to have been done. As I find that the appointment of Shri K. Jagadisheshwar Yadav as the sole Arbitrator is illegal and void ab-initio, the interim award passed by the learned Arbitrator will not come in the way of this Court in entertaining the application filed by the applicants under Section 11 of the Arbitration and Conciliation Act, 1996.
On consideration of the submissions made by the respective parties and examining the record of the present application, prima facie, I find that the dispute raised by the applicants falls within the purview of the arbitration clause and is required to be resolved by an Arbitrator. The dispute is a live dispute. The non-applicant no.1 has failed to act as required by the provisions of Clause 2(iv) of Annexure "B'' of the Constitution of Amateur Kabaddi Federation of India and, therefore, exercising the powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 the following order is passed :
(i) Shri S.D. Mohod, former Principal District Judge, R/o Plot No. 50-A, Chintamani Apartment, Flat No. 3, Hill Road, Gokulpeth, Nagpur (Mob. No. 9987506030) is appointed as Arbitrator to resolve the dispute between the applicants and the non-applicant no.1.
(ii) The applicants shall deposit Rs. 50,000/- (Rs. Fifty Thousand Only) and the non-applicant no.1 shall deposit Rs. 50,000/- (Rs. Fifty Thousand Only) with the Registry of this Court within four weeks as security towards fees of the learned Arbitrator. This amount shall be kept with the Registry of this Court till the disposal of the arbitration.
(iii) The applicants and non-applicant no.1 shall pay the fees of the learned Arbitrator as would be determined by him.
(iv) The applicants shall deposit Rs. 5,000/- (Rs. Five Thousand Only) towards the processing charges within four weeks.
(v) The issues raised by the applicants and the non-applicant no.1 touching the substantive rights of the parties are kept open for consideration by the learned Arbitrator.
(vi) The application is allowed in the above terms.
In the circumstances, the parties to bear their own costs.
At this stage, Shri Dharmadhikari, the learned advocate for the applicant no.1 requested that the effect and operation of this judgment be stayed for 4 weeks to enable the non-applicant no.1 to take appropriate steps in the matter.
Shri Charpe, the learned advocate for the applicants opposed the request made on behalf of the non-applicant no.1.
Considering the facts of the case, the effect and operation of the judgment is kept in abeyance for four weeks.