Tuesday, 16 July 2019

Whether service of arbitral award on wife of partner of partnership firm is proper service?

It is the admitted position that the signed arbitral awards were forwarded by the arbitrator to the appropriate address of a partner of the appellant firm. The Single Bench noticed that the agreements had been executed by such partner of the firm and the signature of such partner appeared on all pages of the agreement. Once a postal article addressed to a partner of a firm is received at such appropriate address and acknowledged to be received on behalf of the addressee, by his wife no less, service would be deemed to have been appropriately effected on the addressee. Of course, it is open to the addressee to demonstrate otherwise; but the burden is on the addressee. The mere allegation that despite service being effected in such manner, the postal article was not received by the addressee, would not do. It does not appear to be the addressee's case that the wife deliberately suppressed the receipt of such postal article from the relevant partner or there were some other circumstances which prevented the wife from making over the postal article to the relevant partner. In the absence of a very high case and which is established by cogent evidence, in such a scenario, the delivery of the postal article at the appropriate postal address of the addressee would amount to service of the postal article on the addressee. It is, thus, evident that Section 31(5) of the Act was complied with in either case upon the signed copy of the arbitral awards being delivered at the address of the relevant partner.

IN THE HIGH COURT OF CALCUTTA

APO No. 247 of 2018, 

Decided On: 04.10.2018

 Manohar Lal & Co. Vs. Axis Bank Ltd.

Hon'ble Judges/Coram:
Sanjib Banerjee and Abhijit Gangopadhyay, JJ.

Citation: AIR 2019 Cal 84

1. This appeal and the time wasted in course thereof may be as a consequence of the extreme indulgence shown to this appellant by the Single Bench in not imposing costs for an unworthy cause.

2. Indeed, the present appeal demonstrates exactly what ails the civil justice system in this country where, possibly because of the judge-lawyer nexus, disingenuous litigants are spared costs even in commercial matters.

3. This appellant wanted to ride a Jaguar. He clearly does not have the means to take on the mechanical version of the Jaguar that comes at a pretty price. He purchased a second-hand Jaguar car, failed to pay the instalments therefor, suffered an arbitral award, waited till the time to challenge the award had expired and, in the execution proceedings, pretended that he was completely unaware of the arbitral reference. The car has been sold in the execution. In fact, there were two cars covered by these two appeals.

4. The facts have been appropriately recorded in the common judgment and order impugned dated July 19, 2018. The appellant has not questioned the recording of the facts.

5. By a letter dated June 21, 2016, the arbitrator apparently informed the parties to the reference that he had been appointed as the arbitrator by the respondent bank to adjudicate upon the disputes between the parties covered by the agreement of August 5, 2015. The arbitrator's letter indicated a schedule of the hearings and the dates for filing pleadings. The appellant herein was not represented in course of the references and awards were rendered on December 17, 2016.

6. The arbitral awards were despatched to the appellant under cover of letters sent by registered post with acknowledgment due. The postal receipts and acknowledgment cards show that the appellant had been served the arbitral awards on December 23, 2016. There is no dispute that the wife of the principal person in control of the appellant partnership firm received the awards at the Alipore address of such principal partner and accepted the receipt thereof by signing on behalf of her husband. No case is made out that the wife of the relevant partner is estranged or that she is not favourably disposed towards her husband.

7. The challenge to the arbitral awards dated December 17, 2016 was carried to this Court on August 11, 2017; long after the period of three months and thirty further days as envisaged in Section 34 of the Arbitration and Conciliation Act, 1996 had expired. In the meantime, the appellant had resorted to the usual trick that the debtors who are unable or unwilling to discharge their debts adopt: the appellant waited for the institution of the execution proceedings and pretended to be aware of the arbitral reference only upon receiving a copy of the affidavit in support of the tabular statement. The appellant sought to make out before the Single Bench that since the appellant came to be aware of the execution proceedings, and consequently of the arbitral reference and the awards rendered therein only in June or July of 2017, the period envisaged in Section 34 of the Act would begin to run from such point and not from the date of receipt of the awards by the appellant's controlling partner at his recorded address.

8. The Single Bench reasoned that since the postal article was addressed to the appropriate address of the principal person in control of the partnership business and the same was received by the wife of such principal partner, service was deemed to have been effected appropriately on the partner. The Single Bench, thereafter, referred to Section 24 of the Partnership Act, 1932, which recognises that the receipt of any notice by a partner is deemed to be good service of such notice on the firm, unless the interest of the receiving partner is contrary to the interest of the firm.

9. In the context of how to effect service of an arbitral award, the appellant refers to Section 31 of the Act of 1996 and to a judgment of the Supreme Court reported at MANU/SC/0776/2012 : (2012) 9 SCC 496 (Benarsi Krishna Committee v. Karmyogi Shelters Private Limited). Paragraph 15 of the judgment indicates what was decided in such matter: that the service of an arbitral award on advocate would not be appropriate in the light of Section 31(5) of the Act as such provision requires the delivery of a signed copy of an arbitral award "on the party himself and not on his advocate..."

10. The dictum in Benarsi Krishna Committee is inapplicable in the present case as the arbitral awards in these cases were not served on advocate for the appellant. It is the admitted position that the signed arbitral awards were forwarded by the arbitrator to the appropriate address of a partner of the appellant firm. The Single Bench noticed that the agreements had been executed by such partner of the firm and the signature of such partner appeared on all pages of the agreement. Once a postal article addressed to a partner of a firm is received at such appropriate address and acknowledged to be received on behalf of the addressee, by his wife no less, service would be deemed to have been appropriately effected on the addressee. Of course, it is open to the addressee to demonstrate otherwise; but the burden is on the addressee. The mere allegation that despite service being effected in such manner, the postal article was not received by the addressee, would not do. It does not appear to be the addressee's case that the wife deliberately suppressed the receipt of such postal article from the relevant partner or there were some other circumstances which prevented the wife from making over the postal article to the relevant partner. In the absence of a very high case and which is established by cogent evidence, in such a scenario, the delivery of the postal article at the appropriate postal address of the addressee would amount to service of the postal article on the addressee. It is, thus, evident that Section 31(5) of the Act was complied with in either case upon the signed copy of the arbitral awards being delivered at the address of the relevant partner.

11. Despite the Single Bench completely disbelieving the lack of contemporaneous knowledge of the relevant partner of the arbitral awards, the Single Bench did not deal with the appellant in an appropriate manner. It may also be relevant to notice that the arbitrator had issued initial notices to the appellant herein and the arbitrator must have satisfied himself that the notices to the appellant had been received by the appellant before the arbitrator proceeded with the reference. It is also the usual experience that despite a party not responding to the first notice, a second notice is also sent by way of abundant caution. In any event, the appellant made no attempt to demonstrate or prove to the contrary.

12. In the light of the completely inarguable case that was carried by the appellant to this Court both before the Single Bench and by way of the present appeals and since the matter pertains to two luxury cars that the appellant or the relevant partner desired to possess, the appellant must appropriately compensate both the system and the respondent for this waste of time and the needless misadventure.

13. There is no merit in either appeal. APO No. 247 of 2018 with GA No. 2453 of 2018 and APO No. 248 of 2018 with GA No. 2455 of 2018 are dismissed. The appellant will pay costs assessed at Rs. 50,000/- to the respondent. Such costs should be paid within a fortnight from date and the respondent will be entitled to add the costs to the execution proceedings already initiated. In addition, the appellant will pay consolidated costs of Rs. 1 lakh to the West Bengal State Legal Services Authority, again within a fortnight from date. In the event such costs are not tendered within the time indicated, the respondent should ensure that such amount is extracted in course of the execution proceedings and made over to the State Legal Services Committee without undue delay.

14. Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.


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