Whether director of company can be made accused in cheque dishonour case if cheque does not bear his signature?

 Now, turning towards the second point, it is to be noted that as regards accused nos. 02 to 12, only at two places, same statement has been made by the complainant, that they are the directors of accused no. 01, who are in-charge and responsible for the conduct of the affairs of the company. The complainant has not given what is the nomenclature and how each one of accused nos. 02 to 12 is in-charge. Admittedly, accused nos. 02 to 12 are not the signatories to the disputed cheques. In fact, in para no. 05 of the complaint, the complainant has stated that accused nos. 01 to 12 issued a cheque ..... None of them i.e. accused nos. 02 to 12 had issued that cheque but somebody else is the signatory to the cheque. This fact is also suppressed by the complainant. The learned Magistrate ought to have considered as to who is the signatory to the cheque and whether he is made an accused or not before proceeding to issue process against accused nos. 02 to 12.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Application No. 2052 and 2055 of 2018

Decided On: 31.08.2018

 Rajeev Raj Kumar  Vs.  The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Vibha Kankanwadi, J.

Citation: 2019(2) MHLJ 628

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Whether Arbitration award can be enforced against non signatory to arbitration agreement?

The present case relates to a post award situation. The enforcement of the arbitral award has been sought against the Appellant on the basis that it claims under KCP and is bound by the award. Section 35 of the Arbitration and Conciliation Act 1996 postulates that an arbitral award "shall be final and binding on the parties and persons claiming under them respectively". The expression 'claiming under', in its ordinary meaning, directs attention to the source of the right. The expression includes cases of devolution and assignment of interest (Advanced Law Lexicon by P. Ramanatha Aiyar15 ). The expression "persons claiming under them" in Section 35 widens the net of those whom the arbitral award binds. It does so by reaching out not only to the parties but to those who claim under them, as well. The expression "persons claiming under them" is a legislative recognition of the doctrine that besides the parties, an arbitral award binds every person whose capacity or position is derived from and is the same as a party to the proceedings. Having derived its capacity from a party and being in the same position as a party to the proceedings binds a person who claims under it. The issue in every such a case is whether the person against whom the arbitral award is sought to be enforced is one who claims under a party to the agreement.

22. The submission which was urged on behalf of the Appellant, proceeds on the basis that since the Appellant was not impleaded as a party to the arbitral proceedings, proceedings for the enforcement of the award will not lie against it. This line of submissions clearly misses the central facet of Section 35, which is that a person who claims under a party is bound by the award. The fact that the Appellant was not a party to the arbitral proceedings will not conclude the question as to whether the award can be enforced against it on the ground that it claims under a party. Essentially, the Court is called upon to consider whether the test embodied in Section 35 is fulfilled in the present case, so as to bind the Appellant.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 10025-10026 of 2017

Decided On: 24.04.2018

Cheran Properties Limited  Vs.  Kasturi and Sons Limited and Ors.

Hon'ble Judges/Coram:

Dipak Misra, C.J.I., A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ.

Citation: (2018) 16 SCC 413

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Whether a witness can be confronted in cross examination by showing document of which he is neither signatory not scribe?

Order 7 Rule 14(3), Order 8 Rule 1A(4) and Order 13 Rule 1(3) all provide that the rule for filing a document alongwith pleadings and/or before the settlement of issues does not apply to documents with which a witness may be confronted in his cross examination. The question which arises is as to with what documents a witness can be confronted; whether with those mentioned in Sections 144 and 145 of the Evidence Act only or with others also. In the opinion of this court, no limitation can be placed on the documents which can be confronted to the witness. The present case itself gives a classic illustration in this regard. The witness is an architect who claims to have inspected the property and reported that the tenants have carried out unauthorized changes in the property and which changes have lowered the value, utility or security of the building. The endeavour of the cross examining party would be to falsify the said report. The same can be done by showing to the said witness the photographs or other material which would run contrary to the testimony or report of the said witness. Such material would not necessarily be one to which the witness would be a signatory or a scribe. 

IN THE HIGH COURT OF DELHI

C.M.(M) Nos. 692, 702, 9953 and 10057/2009

Decided On: 30.11.2009

 Surinder Kumar Bajaj  Vs.  Sheela Rani Pasricha

Hon'ble Judges/Coram:

Rajiv Sahai Endlaw, J.

Citation: 2009 SCC Online Del 3855

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Whether dispute between non-signatory to arbitration agreement can be referred to arbitration in domestic arbitration?

Under the Act, an arbitration agreement means an agreement which is enforceable in law and the jurisdiction of the arbitrator is on the basis of an arbitration Clause contained in the arbitration agreement. However, in a case where the parties alleged that the arbitration agreement is vitiated on account of fraud, the Court may refuse to refer the parties to arbitration. In Ayyasamy case, this Court held that mere allegation of fraud is not a ground to nullify the effect of arbitration agreement between the parties and arbitration Clause need not be avoided and parties can be relegated to arbitration where merely simple allegations of fraud touched upon internal affairs of parties is levelled. Justice A.K. Sikri observed that it is only in those cases where the Court finds that there are serious allegations of fraud which make a virtual case of criminal offence and where there are complicated allegations of fraud then it becomes necessary that such complex issues can be decided only by the civil court on the appreciation of evidence that needs to be produced. In para (25) of Ayyasamy case, Justice Sikri held as under:

25......Therefore, the inquiry of the Court, while dealing with an application Under Section 8 of the Act, should be on the aforesaid aspect viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties. When the case of fraud is set up by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry into the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject-matter rather than relegating the parties to arbitration, then alone such an application Under Section 8 should be rejected.

32. While concurring with Justice Sikri, Justice D.Y. Chandrachud pointed out that the duty of the Court is to impart "sense of business efficacy" to the commercial transactions pointing out that mere allegations of fraud were not sufficient to decline to refer the parties to arbitration. In para (48) of Ayyasamy case, Justice D.Y. Chandrachud held as under:

48. The basic principle which must guide judicial decision-making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal. The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into such dealings, they do so with a knowledge of the efficacy of the arbitral process. The commercial understanding is reflected in the terms of the agreement between the parties. The duty of the court is to impart to that commercial understanding a sense of business efficacy.

(Underlining added)

33. When we apply the aforesaid principles to the facts of the present case, as discussed earlier, both parties have consciously proceeded with the commercial transactions to commission the Photovoltaic Solar Plant at Dongri, Raksa, District Jhansi, U.P. The first Respondent has proceeded to procure the materials, entered into agreement with Juwi India for engineering, installation and commissioning and the sale and purchase agreement with Astonfield, were all the conscious steps taken in the commercial understanding to commission the Solar Plant at Dongri, Raksa, District Jhansi, U.P. Even though Juwi India and Astonfield are not parties to the main agreement-Equipment Lease Agreement (14.03.2012), all the agreements/contracts contain clauses referring to the main agreement. It is the duty of the Court to impart the commercial understanding with a "sense of business efficacy" and not by the mere averments made in the plaint. The High Court was not right in refusing to refer the parties on the ground of the allegations of fraud levelled in the plaint.

34. It is only where serious questions of fraud are involved, the arbitration can be refused. In this case, as contended by the Appellants there were no serious allegations of fraud; the allegations levelled against Astonfield is that Appellant No. 1-Ameet Lalchand Shah misrepresented by inducing the Respondents to pay higher price for the purchase of the equipments. There is, of course, a criminal case registered against the Appellants in FIR No. 30 of 2015 dated 05.03.2015 before the Economic Offences Wing, Delhi. The Appellant No. 1-Ameet Lalchand Shah has filed Criminal Writ Petition No. 619 of 2016 before the High Court of Delhi for quashing the said FIR. The said writ petition is stated to be pending and therefore, we do not propose to express any views in this regard, lest, it would prejudice the parties. Suffice to say that the allegations cannot be said to be so serious to refuse to refer the parties to arbitration. In any event, the Arbitrator appointed can very well examine the allegations regarding fraud.

35. Main agreement-Equipment Lease Agreement (14.03.2012) for leasing and commissioning of Solar Plant at Dongri, Raksa, District Jhansi, Uttar Pradesh contains arbitration Clause (Clause 29). As discussed earlier, other three agreements-two agreements between Rishabh and Juwi India (01.02.2012) and Sale and Purchase Agreement (05.03.2012) between Rishabh and Astonfield are integrally connected with the commercial understanding of commissioning the Solar Project at Dongri, Raksa, District Jhansi, Uttar Pradesh and to resolve the dispute between the parties, they are to be referred to arbitration. The order of the High Court declining to refer the parties to arbitration cannot be sustained and is liable to be set aside. The four agreements namely:(i) Equipment and Material Supply Contract (01.02.2012) between Rishabh and Juwi India; (ii) Engineering, Installation and Commissioning Contract (01.02.2012) between Rishabh and Juwi India; (iii) Sale and Purchase Agreement (05.03.2012) between Rishabh and Astonfield; and (iv) Equipment Lease Agreement (14.03.2012) between Rishabh and Dante Energy and the parties thereon are referred to arbitration.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4690 of 2018 (Arising out of SLP (C) No. 16789 of 2017)

Decided On: 03.05.2018

 Ameet Lalchand Shah and Ors. Vs. Rishabh Enterprises and Ors.

Hon'ble Judges/Coram:

Ranjan Gogoi and R. Banumathi, JJ.

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Whether valid tenancy can be created if lease deed does not bear signature of lessor?

So far as the contention on behalf of the petitioner
regarding the need of signature of the lessor on the deed of
kirayanama for creation of a valid tenancy is concerned, the law has
been settled by the Apex Court in the case of Rajendra Pratap Singh
Vs. Rameshwar Prasad, 1998 (7) SCC 602 that merely because the
document shows only the signature of one of the parties, it is not
enough to conclude that the non-signing party has not joined in the
execution of the instrument. 

IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Revision No.1861 of 2009

 Sudhir Kumar  Vs  Sri Uma Shankar Pd. Gupta.

CORAM:  MR. JUSTICE V. NATH

Date: 20-07-2017
Citation: AIR 2017(NOC) 926 Pat

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Whether lease deed signed by one party is valid?

A close reading of the third paragraph indicates that there is no stipulation that the instrument must be signed by both parties. The requirement is that when the lease is made by a registered instrument, "such instrument shall be executed by both the lessor and lessee." What is underlined in it is that the creation of a lease is not a unilateral exercise of one of the parties but a bilateral endeavour of both the lessor and the lessee.

11. The word "execute" is given the meaning in Black's Law Dictionary as "to complete; to make; to sign; to perform; to do; to follow out; to carry out according to its terms; to fulfil the command or purpose of." In "Words and Phrases" (Permanent Edition) the word "execute" is given the meaning as "to complete as a legal instrument; to perform what is required to give validity to." An instrument is usually executed through multifarious steps of different sequences. At the first instance, the parties might deliberate upon the terms and reach an agreement. Next the terms so agreed upon would be reduced to writing. Sometimes one party alone would affix the signature on it and deliver it to the other party. Sometimes both parties would affix their signature on the instrument. If the document is required by law to be registered, both parties can be involved in the process without perhaps obtaining the signatures of one of them. In all such instances the instrument can be said to have been executed by both parties thereto. If the instrument is signed by both parties it is presumptive of the fact that both of them have executed it, of course it is only rebuttable presumption. Similarly if an instrument is signed by only one party it does not mean that both parties have not executed it together. Whether both parties have executed the instrument will be a question of fact to be determined on evidence if such a determination is warranted from the pleadings of the particular suit. Merely because the document shows only the signature of one of the parties it is not enough to conclude that the non-signing party has not joined in the execution of the instrument.

IN THE SUPREME COURT OF INDIA

S.L.P. (C) No. 15042 of 1998

Decided On: 28.10.1998

 Rajendra Pratap Singh Vs.  Rameshwar Prasad

Hon'ble Judges/Coram:

Saiyed Saghir Ahmad and K.T. Thomas, JJ.

Citation:1998 (7) SCC 602

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Whether foreign arbitration award is enforceable against non signatories to arbitration agreement?

Having dealt with the questions of law, I turn to the facts of
the present case. The Representation Agreements in force are signed
by   the   Director­Terry   L.   Peteete   for   and   on   behalf   of   the
applicant­Integrated   Sales   Services   Limited,   and   by   Rattan   Ram
Pathak, the   non­applicant No.3(i), in his capacity as the Managing
Director   of   the   non­applicant   No.1­DMC   Management   Consultants
Ltd., containing the clause of arbitration, making it subject to the laws
of State of Missouri, U.S.A.  Neither the non­applicant No.2­Arun Dev
s/o   Govindvishnu   Upadhyaya,   nor   the   applicant   No.3­Gemini   Bay
Transcription Pvt. Ltd., through its Directors­(i) Rattan Ram Pathak,
and   (ii)   Naresh   Kumar   Kopisetti,   have   signed   the   Representation

Agreements   in   force   in   their   individual   capacity.   Except   the
non­applicant No.2­Arun Dev s/o Govindvishnu Upadhyaya, none of
the other individual non­applicants in this application were joined as
the   party­respondents   in   the   dispute   before   the   International
Arbitration Tribunal.  The respondents before the said Tribunal were
DMC   Management   Consultants   Ltd.,   Arun   Dev   s/o   Govindvishnu
Upadhyaya,   Gemini   Bay   Consultants   Ltd.,   and   Gemini   Bay
Transcription Pvt. Ltd.  
35. The   non­applicant   Nos.2   and   3   have   neither   submitted
themselves   to   the   arbitration   nor   to   the   composition   of   the
International Arbitration Tribunal.  There did not exist or subsist any
arbitration agreement between the applicant and the non­applicant
Nos.2 and 3.   There is nothing in the Representation Agreements in
force, which permit the said Tribunal to exercise jurisdiction over the
non­signatories to it.   The invocation of the principle of lifting of
corporate   veil   and   holding   the   non­applicant   Nos.2   and   3   as
“alter ego” of the non­applicant No.1­Company and on the basis of it,
to hold them jointly and severally liable to pay the amount under the
award, is totally without jurisdiction and cannot be sustained.  Merely

because   the   non­applicant   Nos.2   and   3   have   participated   in   the
proceedings before the International Arbitration Tribunal, they cannot
be   estopped   from   raising   the   question   of   jurisdiction   of   the   said
Tribunal in response to the application under Section 49 of the said
Act.  The question of operating estoppel, acquiescence, surrender, etc.,
to the jurisdiction of the said Tribunal, does not at all arise.   The
award passed by the International Arbitration Tribunal, in the present
case, is, therefore, hit by the conditions in clauses (c), (d) and (e) of
sub­section (1) of Section 48 of the said Act.  The said award cannot,
therefore, be enforced in India against the non­applicant Nos.2 and 3
by making a decree of the Court.
36. Though   the   International   Arbitration   Tribunal   had   no
jurisdiction to invoke the principle of lifting of corporate veil and
holding   the   non­applicant   Nos.2   and   3   as   “alter   ego”   of   the
non­applicant   No.1­Company,   this   Court   is   competent   under
Section 49 of the said Act to go into all these aspects of the matter and
hold that the non­applicant Nos.1, 2 and 3 are jointly liable to pay the
amount covered by the award passed by the said Tribunal.  However,
the applicant has to make out such a case in the proceedings under

Section 49 of the said Act.   After going through the contents of the
application, I  do not  find that any such  case is made out  by the
applicant.   In  spite  of repeated queries, Shri Deven  Chauhan, the
learned Advocate for the applicant, makes a statement that this is not
the case with which the applicant has come forward before this Court
while invoking the jurisdiction under Section 49 of the said Act.  Had
such   a   case   been   made   out,   then   the   extent   of   liability   of   the
non­applicant   No.2,   being   the   Director   of   the   non­applicant
No.1­Company,   was   required   to   be   judged   on   the   basis   of   the
provisions   of   the   Companies   Act,   1956.     In   view   of   this,   the
non­applicant Nos.2 and 3 cannot be held in this proceeding jointly
liable to pay the amount covered by the arbitration award, along with
the non­applicant No.1­Company.
37. Shri   Deven   Chauhan   for   the   applicant   submits   that   the
non­applicant   Nos.2   and   3   were   made   parties   in   the   proceedings
before   the   International   Arbitration   Tribunal   in   their   individual
capacity and they are also made parties in the same capacity before
this Court.  The award passed against them is required to be executed
against them individually by attaching their properties if such occasion

arises.   In order to make the non­applicant Nos.2 and 3(i) and (ii)
individually or severally liable to pay the sum covered by the arbitral
award   in   question,   it   must   be   shown   that   they   have   signed   the
arbitration agreement as guarantors or sureties for the debts due or
recoverable   arising   out   of   or   in   connection   with   the   contract   in
question   against   the   non­applicant   No.1,   of   which   they   are   the
Directors.  In such an event, the liability of the guarantor or surety will
be co­extensive with that of the principal debtor, and consequently
their personal assets may be attached in execution of the decree.  This
is not the case with which the applicant has approached this Court
under Section 49 of the said Act.  Hence, the award passed in question
cannot be enforced against them by passing a decree.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
Misc. Civil Application No.1319 of 2015
Integrated Sales Services Limited,

V
 DMC Management Consultants Ltd.,

Coram : R.K. Deshpande, J.

Dated:  18th April, 2016
Citation: 2016(6) MHLJ195

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Whether non-Signatories are bound by Arbitration Agreement?

While interpreting an arbitration agreement, a bench comprising of Mohit S. Shah, CJ and M. S. Sonak, J held that in an agreement between two groups, group entities which are not signatories to the agreement may also be made party to the arbitration agreement if they are referred to in the contract.

In the present case, a joint venture company was set up by two groups through a joint venture agreement. Under the agreement, the definition of the appellant group included “such other entities controlled by him or his immediate relatives or his group companies directly or indirectly”. Similarly, the definition of the respondent group included “…and their immediate relatives taken together and such other entities controlled by them or their immediate relatives directly or indirectly”. Disputes arose between the parties when the appellant group alleged that the respondent group were carrying on a competitive business. The appellant group thus approached the Court to seek interim relief under Section 9 of the Arbitration and Conciliation Act, 1996.

The Court after listening to the arguments on both sides, observed that the joint venture agreement was entered into between the two groups and not between specific individuals or entities. Thus, the immediate relatives and the entities controlled by the respective groups were also held to be bound by the terms of the agreement. The Court also observed that the legislative intent of the Act was to encourage arbitration. Therefore it was held that the aforesaid principles were required to be applied to the agreement and the arbitration agreement therein.

The Court thus reiterated that an arbitration agreement ought to be construed in a broad and common sense manner and that the arbitration agreement should be interpreted having regard to words and phraseology therein and no term or phrase should be treated as meaningless, especially if they are consistent with the other parts of the agreement.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITON NO. 66 OF 2014
Rakesh S. Kathotia
vs.
Milton Global Ltd. & Ors.

CORAM : S.C. GUPTE, J.

PRONOUNCED ON: 02 JULY 2014

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Supreme court held that non-signatory parties to arbitration agreement can be subject to arbitration,

This landmark judgement will completely change the way in which international commercial arbitrations would now function. The Supreme Court of India was called upon to answer and interpret ‘the expression ‘person claiming through or under’ as provided under section 45² of the Arbitration and Conciliation Act, 1996 (“Act”).

The brief facts of the case is that there was a joint venture agreement (“the principal agreement”) between an American company (Capital Controls (Delaware) Company Inc.), an Indian company (Chloro Controls India Pvt. Ltd.) and the director of the Indian company (Mr. M.B. Kocha). The principal agreement also provided for several ancillary agreements required to be entered into between the Indian company, the group of companies to which the American Company belonged (the Severn Trent Group) and the director of the Indian company, amongst others. While the principal agreement contained an arbitration clause, a few of the ancillary agreements did not. Further, not all the Respondents in the original suit were parties to the arbitration agreement.

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