Tea Auction Ltd. v. Grace Hill Tea Industry and Another

1. Both these appeals involve more or less identical facts and being between the same parties, can therefore be heard and disposed of together.

2. The challenge by means of these appeals, is to the impugned orders of the trial Court dated 9.8.2010 which have allowed the objections under Section 34 of the Arbitiation & Conciliation Act, 1996 (hereinafter referred to as 'the Act') of the respondent and set aside the Awards. The basic reason for setting aside the Awards is that when the respondent sought to get the exparte proceedings against him set aside, before the Arbitrator, the Arbitrator put an unduly harsh condition of deposit of 50% of the suit amount before the expafte proceedings are set aside. The trial CourL has held that this condition of deposit of 50% of the suit amount is against the principle of natural justice and Award is liable to be set aside.

3. I do not find any error whatsoever in the impugned judgment which calls for interference by the Court. The Supreme Court in the case of Tea Auction Ltd. Vs. Grace Hill Tea Industry and Another (2006) d I "a FAO Nos.397/2O7O & 392/2O7O 2011:DHC:14521 ', 72 SCC 7O[4] has held that when a person against whom an exparte decree is passed presses for setting aside the exparte decree, the condition imposed must not be unnecessarily onerous, unreasonable or excessively harsh. In Tea Auction Ltd, case, the Supreme Court held the direction to deposit the entire suit amount as harsh. Similar is the view in the case of Vijay Kumar Madan and Others Vs. R.ru, Gupta Technical Education Society and Others (2OO[2]) 5 SCC 3O in which it is stated that the defendant by seeking setting aside of an exparte order could not end up to a worse position than if he had not filed an application for.setting aside the exparte proceedings. lt was also held that the order setting aside exparte order should not have an effect of pre-judging controversy or practically decreeing the suit. Thus in my opinion, direction to the respondent to deposit 50o/o of the arbitration claim amount would amount to an unnecessarily harsh/stringent direction having the effect of preventing the respondent from contesting the proceedings.

4. Learned counsel for the appellant sought to argue that the t { objections were barred by time and therefore the objections had to be dismissed outrightly. Firstly, I must note that the impugned order does not show that at all any such case was argued, lf really it was argued, as is being contended by the counsel for the appellant, then this being an extremely important point and allegedly the trial Court did not decide the %, same, the appellant was bound to file an application before the trial Court bringing to its notice the fact that this issue was not decided. lt has been held by the Supreme Court consistently right from the decision in the case of State of Maharashtra Vs. Ramdas Srinivas Naik (L982) 2 SCC 463 that what is recorded in an order of the trial Court cannot be challenged by means of filing an affidavit in an appeal. lf there is any fact which has not been correctly recorded by the trial Court in a judgment, it is necessary for the aggrieved party in such a case to immediately move an application before the same Court when the matter is fresh in the mind of the Jucige bringing to its notice the fact, however, if not so done the matter must necessarily rest there. ln my opinion, this principle will also apply when the appellant alleges to claim that a very important point of limitation was argued but not decided by the trial Court. The appellant, in my opinion, therefore ought to have approached the trial Court by means of a review application or an application for recall of the impugned judgment, and which admittedly has not been done and thus it must be held that this point was given up before the trial Court. To satisfy my judicial conscience, I however went through the arbitration record. lt appears that the appellant is raising an objection without even looking at the record because the arbitration record shotrys that the Award which was sent to the respondent was received back,t/ t' unserved. Thus there is no service of the Award on the respondent. In such circumstances, the provision of limitation cannot be unduly harshly read against the respondent to deny him the valuable right of filing objections under Section 34 of the Act.

5. This case was listed on 1.8.2011 when after hearing arguments, learned counsel for the appellant took time for taking instructions inasmuch as during the course of hearing, it transpired that the impugned order can be sustained, however, the respondent can be put to terms including costs for the delay caused, however, the counsel for the appellant, on instructions, states that the appeal has to be argued on merits.

6. ln view of the above, there is no merit in the appeals. Dismissed. I / AUGUST 04,?OLL Ne' lr-. n V 6Jt*,nlt'tr'tt14n- VALMtKl J. MEHTA, J.