Only if advocate on record indicates that personal allegations have been made against the members of the arbitral, they may be impleaded; or else, their names should be deleted: Madras High Court
The advocate on record must be enquired seeking to file a petition under Section 34 of the Act wherein the members of the arbitral tribunal have been impleaded as to whether any allegations of misconduct or the like have been levelled in the petition. Only then can their names be impleaded. If not, the names must be deleted. This was held by the two judge bench comprising of the Hon’ble Chief Justice Sanjib Banerjee and Hon’ble Justice Senthilkumar Ramamoorthy in the case of 3i Infotech Limited vs. P. Balasubramanian and Ors. [O.S.A.(CAD) No.38 of 2021] on the 26th of July before the Hon’ble High Court at Madras. The current case is the challenge under Section 37 of the Arbitration and Conciliation Act, 1996 to an order dated July 16, 2019 passed on a petition challenging an arbitral award rendered on June 10, 2015. The short grievance of the appellant lessee is that the arbitral award acknowledged that there was failure on the part of the lessors to mitigate the loss consequent on the breach by the lessee. The appellant submits that once such a finding was rendered, no damages on account of the perceived loss suffered could have been awarded in favour of the lessors. According to the appellant, the respondents herein were not entitled to mesne profits or damages during the period that the leasehold property remained unoccupied and idle, since the respondents had made no attempt to either take over possession thereof or to let out the property to any other and earn therefrom. According to the appellant, despite such aspect of the matter, which goes to the very root of the claim by the lessors in the arbitral reference, the arbitration court dealt with the challenge in a perfunctory manner and merely allowed the award to stand since a considered view was expressed by the arbitral tribunal. It was also observed that, there appears to be sufficient basis to the arbitral tribunal awarding damages since the lessors were not in a position to let out the premises in question as possession in respect thereof had not been made over by the lessee to the lessors till October 9, 2014. There is no merit in the appellant’s grievance that the arbitral tribunal or the court of the first instance had erred in such regard. As such, the challenges to the arbitral award and the impugned order stand repelled. The court herd the submissions of both the parties and observed that There was sufficient material for the arbitral tribunal to conclude that possession had, indeed, not been made over by the lessee to the lessors till or about October 9, 2014 and mesne profits were awarded till October 9, 2014. It is an entirely different matter that the arbitral tribunal did not award interest on the security deposit, though the security deposit had been withheld for an inordinate period of time. Merely because it is an interest-free deposit may not imply that the wrongful withholding of it would not make the person in receipt of the deposit liable for interest for the duration during which it is wrongfully withheld. It was also observed that, adjudicatory authorities are not sued unless direct allegations of misconduct are made against such authorities and precious time is wasted in issuing notices to arbitrators when such arbitrators are made parties to proceedings under Section 34 of the Act. Unless direct allegations of misconduct or the like are made against the arbitrators, it is quite unnecessary to implead the arbitrators and vex them with notices mindlessly issued by the department. The current rules also provide for the arbitrators not being impleaded.
O.S.A.(CAD) No.321IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 26.07.2021CORAM :THE HON BLE MR.SANJIB BANERJEE CHIEF JUSTICEANDTHE HON BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHYO.S.A.No.3213i Infotech Limited Tower No.5 3rd to 6th FloorsVashi Navi Mumbai 400 703... Appellant Vs1. P.Balasubramanian2. Prabhakar Jain3. Anitha Jain4. Raji Sawhney5. Kamini Sawhney Respondents 2 to 5 rep. by the Power of Attorney P.Balasubramanian as their power agent No.8(25) II Street DP Nagar Kotturpuram Chennai 600 085.6. Dr.Justice AR.Lakshmanan Former Judge Supreme Court of India 1G 1E Dev Regency No.11 First Main Road Gandhi Nagar Adyar Chennai 600 020.__________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.3217. Mr.Justice J.Kanakaraj Former Judge High Court of Madras No.7 3 Justice Ramanujam Road Chennai 600 041.8. Mr.Justice K.Mohanram Former Judge High Court of Madras No.3 2nd Cross Street Sivakamipuram Thiruvanmiyur Chennai 600 041... Respondents No.3212. The disputes between the parties pertain to a lease deed in respect of an immovable property at Prince Techno Park on the Old Mahabalipuram Road admeasuring 29 500 square feet.3. The short grievance of the appellant lessee is that the arbitral award acknowledged that there was failure on the part of the lessors to mitigate the loss consequent on the breach by the lessee. The appellant submits that once such a finding was rendered no damages on account of the perceived loss suffered could have been awarded in favour of the lessors.4. To an extent the appellant appears to be justified. Paragraph 21 of the arbitral award refers to Ex.C4 which is a letter dated March 9 2011 issued by the lessee to the lessors. The arbitral tribunal framed the relevant issue that fell for assessment in the following words:“The question is as to what is the damages for use and occupation for the period from 9.3.2011 when __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321Ex.C4 was written by the Lessee Respondent till 9.10.2014 when possession was actually taken.”The subsequent discussion at paragraph 21 of the arbitral award refers to a judgment reported at1 SCR 653let out the premises. The tribunal also noticed that there was no evidence to show what would have been the lease rent at the relevant point of time. The tribunal observed that there was no evidence that the property had been subsequently let out and presumed that the property had not been let out and was lying idle. There is sufficient basis to the appellant s assertion that despite __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321noticing the ratio decidendi in the Supreme Court judgment of Murlidhar Chiranjilal the arbitral tribunal may not have applied the dictum to the facts. According to the appellant the respondents herein were not entitled to mesne profits or damages during the period that the leasehold property remained unoccupied and idle since the respondents had made no attempt to either take over possession thereof or to let out the property to any other and earn therefrom.6. According to the appellant despite such aspect of the matter which goes to the very root of the claim by the lessors in the arbitral reference the arbitration court dealt with the challenge in a perfunctory manner and merely allowed the award to stand since a considered view was expressed by the arbitral tribunal.7. In a sense the award of damages by way of mesne profits for the relevant period appears to contradict the earlier finding of the arbitral tribunal in the same paragraph to the effect that the claimants or the lessors had taken no steps to mitigate the loss by __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321seeking to let out the property to some other. However the arbitral tribunal has referred to the letter dated March 9 2011and the award of damages appears to be founded on such letter though the issue has not been discussed in greater detail to indicate why the dictum in Murlidhar Chiranjilal was inapplicable and the lessors entitled to mesne profits for the relevant period nonetheless.8. It is for such purpose that the primary document referred to at the relevant portion of the arbitral award has been looked into though it must be said that a court in seisin of a challenge to an arbitral award does not re appraise the evidence. Indeed it was necessary to look into the document since there is an earlier finding of the arbitral tribunal at paragraph 18 of the award to the effect that the possession of the relevant premises had not been made over by the lessee to the lessors “on 30.9.2010 or 9.3.2011 or on any other date.” The letter dated March 9 2011 issued by the lessee claimed that the lease had expired by efflux of time on September 30 2010 and that the lessee had “already vacated and handed over the premises on September 30 2010.” Apart from the __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321fact that the arbitral tribunal found as a matter of fact that possession of the leasehold premises had not been made over by the lessee to the lessors it is also evident from the following passage in the letter of March 9 2011 that the lessee purported to exercise lien over the leasehold premises till such time that the interest free security deposit furnished by the lessee to the lessors was refunded:“We by our letter dated August 05 2010 have already informed you of our intention to vacate the premises on September 30 2010 however till date you have not refunded the balance amount of interest free refundable security deposit. Thus we hereby call upon you all to refund us the interest free refundable security deposit amount as mentioned below along with penal interest ...”9. There was sufficient material for the arbitral tribunal to conclude that possession had indeed not been made over by the lessee to the lessors till or about October 9 2014 and mesne profits were awarded till October 9 2014. It is an entirely different matter that the arbitral tribunal did not award interest on the security __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321deposit though the security deposit had been withheld for an inordinate period of time. Merely because it is an interest free deposit may not imply that the wrongful withholding of it would not make the person in receipt of the deposit liable for interest for the duration during which it is wrongfully withheld.10. Accordingly there appears to be sufficient basis to the arbitral tribunal awarding damages since the lessors were not in a position to let out the premises in question as possession in respect thereof had not been made over by the lessee to the lessors till October 9 2014. There is no merit in the appellant s grievance that the arbitral tribunal or the court of the first instance had erred in such regard. As such the challenges to the arbitral award and the impugned order stand repelled.11. There is one aspect of the matter that is of crucial importance and must be recorded here. It is elementary that adjudicatory authorities are not sued unless direct allegations of misconduct are made against such authorities and precious time is __________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321wasted in issuing notices to arbitrators when such arbitrators are made parties to proceedings under Section 34 of the Act. Unless direct allegations of misconduct or the like are made against the arbitrators it is quite unnecessary to implead the arbitrators and vex them with notices mindlessly issued by the department. The current rules also provide for the arbitrators not being impleaded.12. As a matter of practice without it being set down as a practice direction as such the department is requested to enquire of advocate on record seeking to file a petition under Section 34 of the Act wherein the members of the arbitral tribunal have been impleaded as to whether any allegations of misconduct or the like have been levelled in the petition. A written reply may be sought to cover e filing of petitions under Section 34 of the Act. It is only if advocate on record indicates that personal allegations have been made against the members of the arbitral tribunal or allegations of misconduct or the like have been included in the petition that the members of the arbitral tribunal may be impleaded or else their names should be deleted.__________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.32113. As a first therefore the names of the arbitrators needlessly impleaded herein stand deleted.14. O.S.A.(CAD) No.321 is dismissed by not interfering with the judgment and order under appeal dated July 16 2019. Consequently C.M.P.No.106521 is closed. There will be no order as to costs. (S.K.R. J.)26.07.2021 Index : YessasiTo:The Sub Assistant Registrar Original SideHigh Court Madras.__________https: www.mhc.tn.gov.in judis O.S.A.(CAD) No.321THE HON BLE CHIEF JUSTICEAND SENTHILKUMAR RAMAMOORTHY J.(sasi) O.S.A.No.321 26.07.2021__________