Bombay High Court

About the Bombay High Court

The Bombay High Court is located in Mumbai in Maharashtra State.

It is one of the oldest High Courts of India.

It exercises jurisdiction over the States of Maharashtra and Goa, and the Union Territories of Daman and Diu and Dadra and Nagar Haveli.

The Court has Benches at Nagpur and Aurangabad Panaji, Goa.

The court has Original and Appellate Jurisdiction.

Appeals can be filed to the Supreme Court of India against the judgements of the Bombay High Court.

Judges

The Bombay High Court has a sanctioned strength of 94 judges (71 permanent, 23 additional).

As of 1st January 2018, the Court has 70 judges.

Chief Justice

Hon’ble Smt. V. K. Tahilramani is presently the Acting Chief Justice of the Bombay High Court.

Chief Justice Smt. V. K. Tahilramani took charge on 5th December 2017 from Justice Manjula Chellur who retired on superannuation.

Address, contact details

Address	The Registrar General Bombay High Court, Fort, Mumbai 400032.
Prothonotary and Sr. Master	A. M. Chandekar
Registrar (JudlI)	Ajit N. Mare
Phone	022 2261 7534
Website	http://www.bombayhighcourt.nic.in

Cause list

The Bombay High Court Cause List is published periodically.

The cause list specifies the matters which are to be taken up by the Benches of the High Court on a daily and weekly basis.

The details relating to the cause list and how to access it from the official website is explained in detail here.

Sitting List

The judges of the Bombay High Court are allocated matters depending on the sitting list.

The sitting list is prepared by the Chief Justice in consultation the senior judges.

The sitting list ensures that the judges are able to decide a variety of matters under various legislations such as income-tax, labour law, constitutional law, company law, public interest litigation etc.

Judgements online

All orders and judgements passed by the Bombay High Court can be accessed and downloaded in pdf format from the official website.

The important judgements are also reported in this website and are given below.

The matter come either before a single judge or a division Bench of two judges.

The judgement is normally written by one of the two judges of the Bench.

It is the established convention that all Benches are bound by the judgements of another coordinate Bench.

One Bench should not dissent or disagree with the view taken by another Bench because that would create confusion amongst the public as to the correct state of the law.

However, if a Bench feels strongly that a particular precedent is wrongly decided, it may refer the matter to the Hon’ble Chief Justice for forming a Full Bench or a Larger Bench to decide the issue and lay down the law.

Bombay high court Judgements

Bombay High Court Judgement On ‘Tareek Pe Tareek’ Adjournment | Heavy Costs Imposed

Posted on March 6, 2018 by staff

MASTI

In the latest judgement of the Bombay High Court in Ram Nagar Trust No.1 vs. Mehtab L Sheikh the Bombay High Court has come down heavily on the tendency of litigants to seek adjournments of hearings of their cases on frivolous grounds.

The Bombay High Court referred to this tendency of seeking adjournments as “Tareek pe Tareek’ as has been made famous in the blockbuster Bollywood movie ‘Damini’ in which Sunny Deol and Amrish Puri played the role of advocates.

The Court made it clear in the said latest judgement that there “No more adjournments”, and no more ‘tareek pe tareek’. Enough is enough.

That a Court will endlessly grant adjournments is not something that parties or advocates can take for granted. Nor should they assume that there will be no consequences to continued defaults and unexplained delay.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

SUIT NO. 2012 OF 2009

WITH

NOTICE OF MOTION NO. 1345 OF 2014

Ram Nagar Trust No.1 & Anr …Plaintiffs

Versus

Mehtab L Sheikh & Ors …Defendants

Mr KR Patel, with Prasad Shenoy, i/b Crawfor Bayley & Company, for the Plaintiffs.

Ms Gargi Bhagwat, i/b Divekar Bhagwat & Company, for Defendant No.1.

CORAM: G.S. PATEL, J

DATED: 27th February 2018

PC:-

1. Issues were framed on 26th September 2016 (KR Shriram J). The Plaintiffs were to file their list of witnesses, Evidence Affidavit and compilation by 24th October 2016. The 1st Defendant had already filed an affidavit of documents. The Plaintiffs state that their affidavit of documents was ready and would be filed in the registry. The matter was kept on 27th October 2016. On that date, the Plaintiffs applied for time to comply with these directions. The matter was stood over to 5th November 2016.

2. The Plaintiffs did nothing. Even today, they are in continued default. More than a year has passed. No application seems to have been made for an extension of time or for condonation of delay. Nothing at all has been filed.

3. Today, their advocate is instructed to ask for a week’s time to comply.

4. The application is opposed by Ms Bhagwat for the 1st Defendant, who submits this cannot be permitted for the asking, especially in a suit of 2009. There is no valid reason for noncompliance. At a minimum, the Plaintiffs should be put to terms.

5. I believe Ms Bhagwat is correct. There are only two options. If the Plaintiffs apply for extension of time, however brief, they must be put to terms or, alternatively, their case will be closed with everything that this implies, i.e., an immediate failure of the suit. The latter course is extreme. Therefore, the only question is what are reasonable terms to be imposed on the Plaintiffs.

6. I compute the delay from 25th November 2016 until today. This is a period of 450 days; possibly more, but not less. Costs must be imposed for each day’s delay. I do not think that, in this day and age, and especially in this city, costs of Rs.1000 per day are at all unreasonable. Anything less than that is illusory and meaningless and the time has gone when a Court could, would or should pick up some utterly random figure like Rs.5,000 or Rs.25,000, a number wholly without tether to the actual days of delay. Fixing ad hoc figures like this is counter-productive. Parties believe that even if the delay is inordinate, the costs of that delay will be negligible; and hence they continue to extend the delay. The costs must be real. They must be sufficient to convey the message that non-compliance with our orders brings consequences; that these consequences are inevitable and unavoidable; and the consequences are not some piffling trifle.

7. Computed at Rs.1000/- per day for each day’s delay for 450 days, the costs work out to Rs4,50,000/-. This amount of Rs.4,50,000/- will be paid to the 1st Defendant as costs by 7th March 2018 and time to complete the filing is, subject to payment of those costs, extended till that date. No filing is to be accepted in the registry unless there is proof of costs having been paid. It is made clear that if the costs are not paid or filings are not completed by that time, the Suit will stand dismissed without further reference to the Court.

8. At the request of the 1st Defendant, list the matter for compliance and directions on 8th March 2018 on the supplementary board.

9. At 3:00 pm, the matter is mentioned by the Plaintiffs again seeking a reduction in the order of costs. The application does not assist the Plaintiffs in any way. To the contrary. I am now told an Evidence Affidavit was ready earlier. It was never filed. It was not even served. No application was made to extend time or for leave to file beyond time.

10. Then I am told that the 1st Plaintiff is a public charitable trust and the suit is about land for an educational or charitable purpose. This is even more shocking. That a trust should be so utterly negligent about its own case is reason enough to warrant immediate action against the trustees and have every one of them removed. A public trust has a higher duty of care, not a lower one. Besides, this submission is utterly egregious: what am I being told? That because the 1st Plaintiff is a trust therefore a different standard applies? Before courts, all parties are exactly the same. We will make exceptions for the poor, the illiterate, the helpless. They will receive our protection. But educated trustees charged with a solemn fiduciary duty will not get a free pass only because they claim to espouse some worthy cause.

11. Worse yet: in November 2007, the 1st Defendant gave notice to the Plaintiffs’ Advocates pointing out non-compliance with Shriram J’s directions. The matter was listed before Dhanuka J. It did not reach. The Plaintiffs, despite this notice, and despite the matter being listed, did nothing. They even then did not serve any unaffirmed copies of their filings, nor did they seek leave to file them and have the delay condoned. They sat by. The delay is either deliberate or it is a result of gross negligence.

12. The Plaintiffs’ application now assumes that Court will continuously condone delays, that delays are par for the course. This is an assumption that we must be rid of immediately. For far too long we have been used to issuing directions without consequences for default, and for far too long Courts have assumed that condoning delay by saying this is a ‘final opportunity’ is sufficient. Clearly it is not. It is only when there is an order of the kind I have passed today that the defaulting party seems to get galvanized into compliance, and that we see, for the first time, some alertness. Parties and their Advocates will understand that what is issued with directions for filing is not a recommendation. It is an order of the Court. It does not give a party a choice. Compliance is mandatory, not optional. Shriram J’s orders cannot be treated with such contempt and disregard. It cannot be assumed that noncompliance with his, or any other, Court’s orders has no consequence. If there is a genuine reason to extend time, an application must be made to the Court and directions sought.

13. Let me put it plainly. No more adjournments. No more ‘tareek pe tareek’. Enough is enough. That a Court will endlessly grant adjournments is not something that parties or advocates can take for granted. Nor should they assume that there will be no consequences to continued defaults and unexplained delay.

14. This application at 3:00 pm is sufficient to warrant an increase in costs. For this once, I will not do so. I make it clear that in future cases, the daily delay cost rate will, on any such application for reduction, be doubled. As a matter of mathematical certainty, there is always near at hand the Fibonacci sequence of numbers. (G. S. PATEL, J)

CBDT Obligation To Disclose RTI Information Explained

Posted on March 5, 2018 by staff

MASTI

The latest judgement of the Delhi High Court in CENTRAL BOARD OF DIRECT TAXES versus SATYA NARAIN SHUKLA explains the law on the obligation of the CBDT to disclose information relating to verification of the affidavits filed by the Members of Parliament (MPs) and Members of Legislative Assembly (MLAs) disclosing their assets to the Election Commission.

The CBDT claimed that it is not required to disclose information because of the exclusion in Section 24(1) of the Right to Information Act, 2005. The CBDT also claimed that the said information is exempt from disclosure under the provisions of Section 8(1)(h) of the RTI Act.

The Delhi High Court upheld the contention of the CBDT on the basis that the information sought did not pertain to allegations of corruption.

It noted that the respondent had merely highlighted that the net wealth of certain MLAs and MPs had increased fivefold and the respondent had sought verification of the same in order to bring about a higher level of transparency. No specific or general allegations of corruption were advanced by the respondent.

The Court clarified that in the event any citizen was to make an allegation of corruption, the information as sought from the CBDT under the RTI Act would not be excluded from the scope of the Act.

THE HIGH COURT OF DELHI AT NEW DELHI

Judgment delivered on: 19.02.2018

W.P.(C) 5547/2017 & CM No. 23333/2017

CENTRAL BOARD OF DIRECT TAXES ….. Petitioner

versus

SATYA NARAIN SHUKLA ….. Respondent

Advocates who appeared in this case: For the Petitioner : Mr Ruchir Bhatia, Senior Standing Counsel with Mr Gurpreet Shah Singh, Dy. CIT (O&D), CBDT.

For the Respondent: Respondent in person.

CORAM:- HON’BLE MR JUSTICE VIBHU BAKHRU

JUDGMENT VIBHU BAKHRU, J

1. The petitioner (hereafter “CBDT”) impugns an order dated 29.05.2017 (hereafter “the impugned order”) passed by the Central Information Commission (hereafter “the CIC”) in a second appeal preferred by the respondent under Section 19(3) of the Right to Information Act, 2005 (hereafter “the Act”).

2. By the impugned order, the CIC has, inter alia, directed disclosure of the information sought by the respondent and photocopies of responses received from Director Generals of Income Tax (DGs) to CBDT’s letter dated 11.08.2015. According to CBDT, the said information is excluded from the scope of the Act as it emanates from the Directorate General of Income Tax (Investigation). The said office is placed in the Second Schedule of the Act and, thus, any information received from the said office is excluded from the purview of the Act by virtue of Section 24(1) of the Act. CBDT also claims that the said information is exempt from disclosure under the provisions of Section 8(1)(h) of the Act.

3. Briefly stated, the relevant facts necessary to consider the aforesaid controversy are as under:-

4. The respondent filed an application dated 16.11.2015 seeking the following information under the Act:-

“(1) Photocopies of the letters no. F. No. 282/4/2012-IT(Inv) dated 1.10.2013 and No. 282/04/2012-IT(Inv. V)/140 dated 9.7.2015. (2) Photocopies of the responses received from the DGs to the letter No. 282/4/012-IV (Inv. V)/192 dated 11.08.2015 from Shri Rajat Mittal, Under Secretary (Inv. V) CBDT.”

5. The Central Public Information Officer (CPIO) of CBDT responded to the petitioner”s application by a letter dated 28.12.2015. He did not provide the photocopies of the letters as sought for at point no.1 but briefly indicated the contents of those letters. Insofar as the information sought at point no.2 is concerned, the CPIO responded as under:-

“Since, the matter is under investigation, hence under the provisions of Section 8(h) of RTI Act, 2005 (Information which would impede the process of investigation or apprehension or prosecution of offenders) information cannot be provided at this stage.”

6. Aggrieved by the response of the CPIO, the respondent preferred an appeal under Section 19(1) of the Act before the First Appellate Authority (hereafter “the FAA”). The said appeal was disposed of by an order dated 11.02.2016, whereby the FAA directed the CPIO to provide photocopies of the relevant letters as requested by the respondent as per point no.1 of his application. In respect of the respondent”s request for responses received from the DGs to the letter dated 11.08.2015 is concerned, the FAA upheld the CPIO”s decision that the said information was exempt under the provisions of Section 8(1)(h) of the Act and, therefore, could not be provided at that stage. However, the FAA directed the CPIO to convey the outcome of the investigations once the same are concluded.

7. Aggrieved by the decision of the FAA rejecting the request for furnishing the responses received from the DGs, the respondent preferred a second appeal before the CIC. The said appeal was allowed by the impugned order and the CPIO was directed to supply the information sought for by the respondent.

8. The controversy relates to the verification of the affidavits filed by the Members of Parliament (MPs) and Members of Legislative Assembly (MLAs) disclosing their assets to the Election Commission. The respondent had submitted a list of MPs and MLAs whose assets have allegedly increased more than fivefold after the previous election (that is, during the term of their office as elected representatives after the previous election).

9. The said list of MPs and MLAs were forwarded to the DGs for verification. By a letter dated 11.08.2015, the following instructions were issued to the DGs with regard to the list of MPs and MLAs provided by the respondent:-

“The undersigned is directed to convey that any such case, featuring in the list that is yet to be verified, should be got verified urgently. A comprehensive report of the verifications done as per guidelines fixed by the Board may also be provided, if not done earlier. The report may be submitted within a month from the date of this letter in the annexed proforma. It is requested that the “Brief outcome” column must sufficiently record the outcome and the suggested course of action.”

10. The learned counsel appearing for CBDT submitted that CBDT could not be compelled to provide the photocopies of responses received from the DGs because: (i) the information sought for is exempted from disclosure by virtue of Section 8(1)(h) of the Act; and (ii) that any information from Directorate General of Income Tax (Investigation) is excluded from the purview of the Act by virtue of Section 24(1) of the Act.
11. Section 8(1)(h) of the Act reads as under:-

“8. Exemption from disclosure of information.– (1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen– xxxx xxxx xxxx xxxx (h) information which would impede the process of investigation or apprehension or prosecution of offenders.”

12. It is clear from the above that only such information which would (i) impede the process of investigation; (ii) impede the apprehension or prosecution of offenders, is exempted from disclosure by virtue of Section 8(1)(h) of the Act. In the present case, there is no material to indicate that any investigation is being conducted, which would be impeded by disclosure of the information sought for by the respondent. It is stated by CBDT that the Election Commission of India forwards the affidavits submitted by MPs and MLAs disclosing their assets for verification to CBDT. Such affidavits are forwarded by CBDT to the Directorate General of Income Tax (Investigation) for verification and the outcome of such verification is shared directly by the Directorate General of Income Tax (Investigation) with the Election Commission of India.

13. The petitioner further states that the verification exercise carried out by the Directorate General of Income Tax (Investigation) is only indicative in nature and any further action proposed under the Income Tax Act, 1961 has to be followed up by an assessment order, which is passed by the concerned assessing officers. The verification affidavits filed by the candidates cannot be equated with an investigation as referred to in Section 8(1)(h) of the Act. The process of investigation as contemplated under Section 8(1)(h) of the Act is one in the nature of a probe and an inquiry. Clearly, verification from records cannot be termed as an “investigation”.
14. Even if, it is assumed that the verification being conducted by the Directorate General of Income Tax (Investigation) is in the nature of an investigation, the same is no ground for denial of information. Only such information which impedes the process of investigation can be denied. Thus, it would be necessary for the CPIO to specify the CIC that: (a) the investigation was conducted or was proposed; and (b) the information sought would impede the process of investigation. It is apparent that in the present case, these conditions are not met. First of all, there is no assertion that any process of investigation is under way; and secondly, there is no material to indicate that disclosure of the information as sought would impede any such investigation.
15. The suggestion that the expression “process of investigation” includes within its ambit an assessment proceedings resulting in the assessment order is plainly unmerited. The assessment proceedings merely relate to scrutiny of the Income Tax Returns and an assessment income on tax payable by an assessee. Plainly, such proceedings do not take the colour of investigation.
16. The next question to be addressed is whether the information sought for by the respondent is excluded from the purview of the Act.
17. Section 24(1) of the Act reads as under:-

“24. Act not to apply to certain organizations.– (1) Nothing contained in this Act shall apply to the intelligence and security organisations specified in the Second Schedule, being organisations established by the Central Government or any information furnished by such organisations to that Government: Provided that the information pertaining to the allegations of corruption and human rights violations shall not be excluded under this sub-section: Provided further that in the case of information sought for is in respect of allegations of violation of human rights, the information shall only be provided after the approval of the Central Information Commission, and notwithstanding anything contained in Section 7, such information shall be provided within forty-five days from the date of the receipt of request.”

18. A plain reading of Section 24(1) of the Act indicates that the provisions of the Act would not be applicable to Intelligence and Security Organizations as specified in the Second Schedule. Further, any information received from such organizations falls under the exclusionary clause of Section 24(1) of the Act. CBDT is not one of the offices, public organizations which are specified under the Second Schedule; but, the Directorate General of Income Tax (Investigation) is. Thus, any information received from the Directorate General of Income Tax (Investigation) by any Public Authority would also fall within the exclusionary provisions of Section 24(1) of the Act. Indisputably, the information sought for by the respondent emanates from the Directorate General of Income Tax (Investigations) (various DGs who have called upon to submit a comprehensive report of verification). Thus, CBDT would be justified in denying such information to the respondent.

19. It was also contended by the respondent that since the information sought for by him related to allegations of corruption, the same falls within the exception to the exclusionary clause of Section 24(1) of the Act. The respondent is correct that by virtue of the first proviso to Section 24(1) of the Act, all information pertaining to allegations of corruption and human rights violations falls within the exception to Section 24(1) of the Act. In other words, notwithstanding that such information emanates from any of the organizations as specified under the Second Schedule of the Act, it is not excluded from the purview of the Act.
20. However, in the present case, it is difficult to accept that the information sought by the respondent pertains to allegations of corruption, as no such allegations have been made at any stage. The respondent had merely highlighted that the net wealth of certain MLAs and MPs had increased fivefold and the respondent had sought verification of the same in order to bring about a higher level of transparency. No specific or general allegations of corruption were advanced by the respondent.

21. Thus, it is not possible to accept that the information as sought for by the respondent falls within the purview of the Act even though it emanates from the organization which is placed in the Second Schedule.
22. In view of the above, the order passed by the CIC cannot be sustained and is, accordingly, set aside. However, it is clarified that in the event any citizen was to make an allegation of corruption, the information as sought by the respondent would not be excluded from the scope of the Act.

23. The petition and the pending application are disposed of. The parties are left to bear their own costs.

VIBHU BAKHRU, J FEBRUARY 19, 2018

S. 143(1)(a) Adjustment For Section 36(1)(viii) bad debts disallowance

Posted on February 26, 2018 by staff

MASTI

The latest Bombay High Court judgement considers whether an adjustment u/s 143(1)(a) of the Income-tax Act, 1961, relating to disallowance of the claim for bad debts under Section 36(1)(viii) in respect of a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under hire purchase finance agreements”.

In the judgement, the Bombay High Court has held that while mere making of provision for bad debts will not by itself (on application of amended law) entitle the party to deduction, yet it would be a matter where the assessee should be given an opportunity to establish its claim.

The Bombay High Court judgement holds that by producing its evidence of the manner in which it treated the provision of bad debts written off in accounts as well as in its Balance Sheet.

It is finally held in the judgement of the Bombay High Court that the disallowance cannot be made by intimation under section 143(1)(a) of the Act, as it requires that a party be given an opportunity to establish its claim before disallowing it. It would have been a completely different matter if the Apex Court had ruled that in no case can provision for bad debts be allowed as a bad debt under section 36(1)(vii) of the Act.

It was observed in the judgement by the Bombay High Court that the allowance of the claim of provision for bad debt is entirely dependent upon how it is reflected in the Balance Sheet and its accounts. Therefore, for the above purpose it is necessary that the party to be given an opportunity to establish its claim. Therefore, in the present facts, adjustment by way of disallowing deduction by intimation under section 143(1)(a) of the Act is not proper.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX REFERENCE NO. 25 OF 2000

Bajaj Auto Finance Ltd. .. Applicant
v/s.
Commissioner of Income Tax, Pune .. Respondent

Ms. Vasanti Patel for the applicant Mr. Charanjeet Chanderpal a/w Ms. Namita Shirke for the respondent CORAM : M.S. SANKLECHA & RIYAZ I. CHAGLA J.J.

Judgment Reserved on : 12th February, 2018.

Judgment Pronounced on : 23rd February, 2018. ORAL JUDGMENT : (Per M.S. Sanklecha, J.)

1. This Reference under Section 256(1) of the Income Tax Act, 1961 (the Act) at the instance of the applicant assessee seeks our opinion on the following question of law:-

(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the Assessing Officer was justified in making an adjustment u/s 143(1)(a) relating to disallowance of the claim for bad debts under Section 36(1)(viii) in respect of a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under hire purchase finance agreements”?

2. This Reference relates to Assessment Year 1993-94. The facts Uday S. Jagtap 1 of 15 25-2000-ITR-Judgment=.doc leading tot he present Reference as set out in the Statement of Case are as under :-

“2. The assessee company had debited in its profit and loss account a sum of Rs.1,69,37,818/- representing “provision for doubtful overdue installments under Hire Purchase Finance Agreements”. In its return of income, the assessee claimed the said provision as bad debts u/s 36(1)(vii) of the Income Tax Act. In the Notes on computation of total income submitted with the return, it was clarified that the said amount was claimed as a deduction, relying on the decision of the Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (130 ITR 95). The Assessing Officer disallowed the claim u/s 141(1)(a) on the ground that the amount represented mere provision for doubtful debts and, as such, could not be treated as bad debts. The assessee filed an application u/s 154 for deletion of the adjustment. It was contended before the Assessing Officer that the adjustment could not be made in respect of a provision for doubtful installments, as its allowability was a debatable issue. The Assessing Officer rejected the application u/s 154.

3. It was contended before the learned C.I.T.(A) that since the “provision for doubtful overdue installments under Hire Purchase Agreement” had been debited to the profit and loss account, the assessee should be treated to have satisfied the conditions laid down u/s 36(1)(vii) read with Sec.36(2). In this regard, reliance was placed on the decision in the case of Vithaldas H. Dhanjibhai Bardanwala V. Commissioner of Uday S. Jagtap 2 of 15 25-2000-ITR-Judgment=.doc Income Tax, (130 ITR 95 – Guj.) and Industrial Credit & Investment Corporation of India Ltd. V. IAG (32 ITD 315 – Bom.Trib). It was further contended that since the courts have held that once the condition for ‘writing off’ is satisfied and the concerned amount has been debited to the profit and loss account and credited to Bad Debt Reserve account, it was not necessary to actually write off the concerned bad debt in the ledger account of the concerned parties. In view of this, the question whether “provision for overdue installments” was an allowable deduction or not was a debatable issue and accordingly could not be made the subject matter of adjustment u/s 143(1)(a) of the Act. According to the assessee, since the Assessing Officer was not competent to examine the claim of deduction of ‘provision’ without conducting further enquiries in the matter, which was permissible only after issuing a notice u/s 143(2), he was not competent to issue intimation of adjustment and reject the assessee’s prayer made for rectification u/s 154.

4. Before the Tribunal, the same pleas were reiterated as had been made in the first appeal. Further reliance was placed upon the decision of the Bombay High Court in the case of Khatau Junkar Ltd. V. K.S. Pathania (196 ITR 55), decision of the Delhi High Court in S.R.F. Charitable Trust Vs. Union of India (193 ITR 95) and the decision of the Bombay High Court in Bank of America N.T. & S.A. Vs. Dy.CIT (200 ITR 739)

5. As against the above, it was submitted by the learned departmental representative that the assessee’s claim of deduction in respect of “provision for doubtful overdue Uday S. Jagtap 3 of 15 25-2000-ITR-Judgment=.doc installments under Hire Purchase Finance Agreements” was prima facie inadmissible on the basis of the information available in the return, accounts and documents within the meaning of clause (iii) of first proviso to claim (a) of sub-sec. (1) of sec. 143 and, therefore, the Assessing Officer was fully justified in issuing an intimation of adjustment. The assessee in fact had made a separate claim of deduction for an amount of Rs.47,42,762/- in respect of ‘bad debts’. This claim of bad debts appeared separately immediately after the claim of ‘provision for doubtful overdue installments under Hire Purchase Finance Agreements” in Schedule 10 of the assessee’s accounts for the year. Thus, according to its own showing of the assessee, the claim of deduction of Rs.1,69,37,818/- on account of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” was a distinct and separate item of deduction and was not treated as equivalent to a claim for bad debts. Elaborating his discussion, the learned departmental representative submitted that, firstly, the “provision for doubtful overdue installments” could not validly be held to be write off of irrevocable debts so as to be treated as bad debt. Secondly, this claim was not made with reference to any specific debts which were perceived to be bad debt. Rather, it was a provision of an ad-hoc nature and was part of the annual exercise which the assessee made in all the preceding years and the subsequent years. With a view to buttress his argument, the learned departmental representative referred to the annual reports and accounts of the assessee for the immediately preceding and subsequent years. In the Uday S. Jagtap 4 of 15 25-2000-ITR-Judgment=.doc accounts for all these years, the claim of deduction on account of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” had been reversed in the immediately succeeding year to the last rupee. In all these years, a separate claim of deduction had always been made in respect of the debts which were perceived as ‘bad debts’. According to the learned departmental representative, debiting the profit and loss account with the total amount of overdue installments under Hire Purchase Agreements and treating them collectively as doubtful debts and making provision for them could not be held to be equivalent to write off irrevocable debts as bad debts. In this connection, the learned departmental representative referred to the following decisions:-

(1) Kantilal Chimanlal Shah V. CIT(26 ITR 303 Bom).

(2) Sidhramappa Andannappa Manvi V.CIT(21 ITR 333 Bom.) (3) Jethabhai Hirji & Jethabhai Ramdas V.CIT(120 ITR 792.Bom.) (4) Jadhavji Narsidas & Co. V. CIT(47 ITR 411-Bom.) (5) CIT V. Pranlal Kesurdas (49 ITR 931 – Bom.)

6. The Tribunal, after consideration of all the relevant facts and circumstances and the relevant provisions of law and the case law cited before it, came to be conclusion that on the basis of the return of income itself and the accounts and documents accompanying it, the claim of “provision for doubtful overdue installments under Hire Purchase Finance Agreements” was clearly distinct and separate from one of claim of bad debt and Uday S. Jagtap 5 of 15 25-2000-ITR-Judgment=.doc was prima facie inadmissible on its own tenor. The Assessing Officer was, therefore, justified in issuing an intimation of adjustment and rejecting the assessee’s application u/s 154. For the same reason, the learned CIT(A) was justified in dismissing the assessee’s appeal. The assessee’s appeal before the Tribunal was accordingly dismissed.”

6. Ms. Patel, learned Counsel appearing in support of the application submits as under :-

(a) relief / deduction of provision of bad debt claimed in the return of income cannot be disallowed by way of intimation under Section 143(1)(a) of the Act when the issue prima facie gives rise to a debatable issue;

(b) the claim for deduction of provision for bad debts under Section 36(1)(vii) of the Act was made on basis of the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala Vs. Commissioner of Income Tax, 130 ITR 95 as is evident from note in the return. Therefore, disallowance of a claim which has been allowed by High Court, would at the very least be a debatable issue;

(c) the words “prima facie inadmissible” found in clause (iii) of Section 143(1)(a) of the Act, has been construed by this Court in Khatau Junkar Ltd. Vs. K.S. Pathania, 196 ITR 157 to mean not available on the face of it i.e. where no further inquiry is necessary to Uday S. Jagtap 6 of 15 25-2000-ITR-Judgment=.doc hold so. However, when there is a different interpretation accepted by Court, then, adjustment under Section 143(1)(a) of the Act is not permissible. It would at the very least require giving an opportunity to the assessee to support his claim before disallowing the same.

(d) Instruction No.1814 dated 4th April, 2009 issued by the Central Board of Direct Taxes (CBDT) explains the scope of the word “prima facie disallowance” under Section 143(1)(a) of the Act as being different from a debatable issue. It clarifies that a debatable issue is one where a claim made by an assessee on the basis of a decision of a Court / Tribunal. A debatable claim cannot be disallowed by an intimation under Section 143(1)(a) of the Act; and

(e) the decision of the Apex Court in Vijaya Bank Vs. Commissioner of Income Tax, 323 ITR 166, also supports the view that at the relevant time, the issue of allowing provision for bad debts as a deduction under Section 36(1)(vii) of the Act is an debatable issue. Therefore, could not be dis-allowed by way of intimation under Section 143(1)(a) of the Act.

7. On the other hand, Mr. Chanderpal, learned Counsel appearing for the Revenue tendered written submissions on behalf of the Revenue making the following submissions :-

(a) That out of 8 issues raised by the Tribunal, only 3 major issues

can be inferred from the said 8 questions which are as under :-

“(a) Allowance of a provision for bad and doubtful debts.

(b) With regard to the above, the provisioning for doubtful debts on account of irrecoverably of outstanding interest income on loans being doubtful of recovery.

(b) There is no place for equity in fiscal laws. Therefore, mere provision would not make it bad debt as a provision lacks certainty. For the purposes of write off under Section 36(1)(vii) of the Act, there must be certainty of debt becoming irrecoverable. Thus, it is submitted that the view of the Tribunal is correct and the question as proposed should be answered in favour of the Revenue.

8. Before dealing with the rival contentions, it would be necessary to reproduce Section 143(1)(a) of the Act, at the relevant time which read as under :-

“143(1)(a) Where a return has been made under Section 139, or in response to a notice under sub-section (1) of section 142, –

(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be Uday S. Jagtap 8 of 15 25-2000-ITR-Judgment=.doc deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly ; and

(ii) if any refund is due on the basis of such return, it shall be granted to the assessee:

Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely :

(i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified;

(ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed:

(iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed ; ….

Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustment.

Provided ……”

9. The written submission as filed by the Revenue ignores the fact that only one question has been referred to us for consideration. The issue referred to us is in respect of applicability of Section 143(1)(a) of the Act to disallow a claim for provision for bad debt by intimation i.e. without calling upon the assessee to explain its claim. On this issue, the written submission proceeds on the basis that a plain reading of Section 36(1)(vii) of the Act would only mean an assured and / or certain irrecoverability of debt. Therefore, it is submitted that the Uday S. Jagtap 9 of 15 25-2000-ITR-Judgment=.doc intimation under Section 143(1)(a) of the Act cannot in the present facts be faulted. In fact, the written submissions states, “Litera Leges, certainty concept and on the concept that there is no equity on fiscal law irrespective of any judgment of any Hon’ble Court or Tribunal a go-by cannot be given to the aforesaid interpretations given in this written submission”. The above submission that decision of the Court and / or Tribunal interpreting a provision is to be ignored by the Assessing Officer, if accepted will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchal system of jurisprudence in our country.

10. The issue that arises for our consideration is whether an adjustment by intimation under Section 143(1)(a) of the Act can be made where the issue which arises for consideration is a debatable issue. In the present facts, the computation of total income submitted along with return indicates that claim for bad debts has been made by relying upon the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (supra)

11. However, the Assessing Officer completely ignored the note made Uday S. Jagtap 10 of 15 25-2000-ITR-Judgment=.doc by the applicant in its computation of return, indicating that the basis of claim for bad debts is the decision in Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (surpa). In the above case, even a provision debited to the profit and loss account was allowed as bad debts, where corresponding credit entires are posted in the bad debts reserve account. It held that is was not necessary to post credit entries in the ledger account of the concerned parties. It was on the basis of the aforesaid decision of the Gujarat High Court that the claim in respect of the provision for bad debts was made by the applicant assessee. Once, reliance is placed upon a decision of a Court and / or Tribunal to make a claim, then even if the Assessing Officer has a different view and does not accept the view, yet the claim itself becomes debatable. This is so laid down in Instruction No.1814 dated 4 th April, 1989 issued by the CBDT in respect of the scope of prima facie disallowance under Section 143(1)(a) of the Act. In fact, paragraph no.9 thereof provides that where a claim for deduction has been made on the basis of a decision of a High Court / Tribunal, then, even if there is contrary view expressed by another High Court and / or Tribunal or an appellate Authority, the issue itself becomes debatable. In such cases, no adjustment under Section 143(1)(a) of the Act is permissible. Thus, disallowance of a claim can be made only after hearing the assessee who has made the Uday S. Jagtap 11 of 15 25-2000-ITR-Judgment=.doc claim.

12. Further, our Court in Khatau Junkar Ltd. (supra) had while dealing with the word “prima facie inadmissible” in clause (iii) of Section 143(1)(a) of the Act has held that the word “prima facie” means on the face of it the claim is not admissible. It means the claim does not require any further inquiry before disallowing the claim. The Court observed that where a claim has been made which requires further inquiry, it cannot be disallowed without hearing the parties and / or giving the party an opportunity to submit proof in support of its claim. In the absence of Section 143(1)(a) of the Act being read in the above manner i.e. debatable issues cannot be adjusted by way of intimation under Section 143(1)(a) of the Act, would lead to arbitrary and unreasonable intimations being issued leading to chaos.

13. In the present facts, it is undisputed that the decision of Gujarat High Court was referred to in the computation of income. Thus, the Assessing Officer could not have disallowed the claim on a prima facie view that the same is inadmissible. In fact, there can be no dispute that even according to the Assessing Officer, the issue was debatable. This is evident from the fact when the applicant assessee had filed an Uday S. Jagtap 12 of 15 25-2000-ITR-Judgment=.doc application under section 154 of the Act for deletion of the adjustment made of provision of bad debts by intimation under Section 143(1)(a) of the Act, it was disallowed on the ground that it is a debatable issue. This itself would indicate that whether the claim of a provision for bad debts is deductible under Section 36(1)(vii) of the Act or not is debatable. Further, the above claim for deductions as made by the applicant was by following the decision of the Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (Supra). Thus, a debatable issue. Therefore, the same could not have been disallowed by way of an intimation under section 143(1)(a) of the Act.

14. We are conscious of the fact that Section 36(1)(vii) of the Act was amended by the Finance act, 2001 by insertion of Explanation to Section 36(1)(vii) of the Act w.e.f. 1 st April, 1989. We are also conscious of the fact that while disposing of a Reference under Section 256(1) of the Act, the question proposed for our opinion shall be answered taking into account the subsequent amendment to the law with retrospective effect, as they are clarificatory in nature.

15. In the aforesaid background, we find that the insertion done by Explanation to Section 36(1)(vii) of the Act (w.e.f. 1989) would arise Uday S. Jagtap 13 of 15 25-2000-ITR-Judgment=.doc for consideration while answering the proposed question in respect of Assessment Year 1993-94. The above amendment by addition of Explanation to Section 36(1)(vii) of the Act was a subject matter of consideration by the Supreme Court in Vijaya Bank (supra). In the above decision, the Court while applying the amended law, held that mere debit of a provision to the profit and loss account will not by itself be sufficient to constitute bad debts (write off). This must be accompanied by simultaneously also reducing the loans and advances from the asset side of the Balance Sheet. This would ensure that the amount shown as loans and advances (debtors) is net of the provisions made for bad debts.

16. Therefore, in the present facts, while mere making of provision for bad debts will not by itself (on application of amended law) entitle the party to deduction, yet it would be a matter where the assessee should be given an opportunity to establish its claim. This by producing its evidence of the manner in which it treated the provision of bad debts written off in accounts as well as in its Balance Sheet. Therefore, the disallowance cannot be made by intimation under section 143(1)(a) of the Act, as it requires that a party be given an opportunity to establish its claim before disallowing it. It would have Uday S. Jagtap 14 of 15 25-2000-ITR-Judgment=.doc been a completely different matter if the Apex Court had ruled that in no case can provision for bad debts be allowed as a bad debt under section 36(1)(vii) of the Act. The allowance of the claim of provision for bad debt is entirely dependent upon how it is reflected in the Balance Sheet and its accounts. Therefore, for the above purpose it is necessary that the party to be given an opportunity to establish its claim. Therefore, in the present facts, adjustment by way of disallowing deduction by intimation under section 143(1)(a) of the Act is not proper.

17. In the above view, the question as raised for our opinion is answered in the negative i.e. in favour of the applicant assessee and against the respondent Revenue.

18. The Reference is disposed of in the above terms. No order as to costs.

(RIYAZ I. CHAGLA, J.) (M.S. SANKLECHA, J.)

Law On Oppression Or Mismanagement U/s 397, 398 Companies Act

Posted on February 26, 2018February 26, 2018 by staff

MASTI

The latest Bombay High Court judgement in Abdul Wahid Abdul Gaffor Khatri vs. Safe Heights Developers Pvt. Ltd COMPANY APPEAL NO.22 OF 2013 explains the law on sections 397 and 398 of the Companies Act which deal with oppression of the minority and mismanagement.

The Bombay High Court has held in the judgement that it is well settled, as held, inter alia, by the Hon’ble Supreme Court in 1V.S. Krishnan & Ors .v. Westfort Hi-Tech Hospital Limited & Ors. and followed in 2Purnima Manthena & Anr. v. Renuka Datla & Ors that an Appeal under Section 10-F of the Companies Act, would lie only on a question of law.

It has been pointed out in the judgement of the Bombay High Court that Section 10-F expressly states that the Appeal will lie only on a question of law arising out of the order. It is further held by the Hon’ble Supreme Court that the CLB is the final authority on facts, unless, such findings are perverse, based on no evidence or are otherwise arbitrary.

The Bombay High Court judgement further emphasizes that it is further well settled that an order passed by the CLB under Sections 397 and 398 is a discretionary order as held by the Hon’ble Supreme Court in V. S. Krishnan (supra) and in 3Sangramsinh P. Gaikwad v. Shantadevi P. Gaikwad. Being a discretionary relief, the Appellate Court, i.e. the High Court ought not to interfere with the judg- ment or replace the same with its own exercise of discretion, particu- larly given the restrictive scope of Section 10-F.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

IN ITS COMPANY JURISDICTION

COMPANY APPEAL NO.22 OF 2013
IN
CLB/COMPANY PETITION NO.52 OF 2012

1) Abdul Wahid Abdul Gaffor Khatri )
Director, B/110,Jaan Mohmed Apartment )
Fairdeal Road, Off. S.V.Road, Jogeshwari )
(West) Mumbai-400 102 )

2) Abdul Aziz Mohd. Husain Qureshi )
Director, B-305, Basera Apartment )
FDC Road, Jogeshwari (West) )
Mumbai-400 102 )

3) Shahid Abdul Wahid Khatri )
B/110 Jaan Mohmed Apartment, )
Fairdeal Road, Off. S.V.Road, )
Jogeshwari (West), Mumbai-400 102 )….Appellants/
Org.Petitioners
V/s.
1) M/s.Safe Heights Developers Pvt. Ltd. )
Nirman House, L.P. Poddar Marg, )
College Road, Nasik-422 005, Maharashtra )

2) Ashutosh Jayant Joshi )
Additional Director, Bungalow No.35, )
Park Street, RSC 2, Sardar Patel Nagar, )
MHADA Versova, Andheri (West) )
Mumbai-400 053 )

3) Deepak Navnitray Mehta )
Director, Flat No.201, B/4, Sector-2 )
Shanti Nagar Mira Road (East), Dist.Thane )

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Pin Code : 401 107 )

4) Nemichand Lalitprasad Poddar )
Additional Director, Poddar House, Patil )
Colony Lane No.3, College Road, )
Nashik 422 005 )

5) Jaiprakash Sitaram Goel )
Additional Director, Shop No.302, 4th Floor )
Sun Mahu Commercial Complex, )
Pune-411 001, Maharashtra )

6) Mahendra Nemichand Poddar )
Director, Poddar House, Patil Colony, )
Lane No.3, College Road, Nashik-422 005 )

7) Vipul Nemichand Poddar )
Director, Poddar House Patil Colony )
Lane No.3, College Road, Nashik-422 005 )

8) Hitesh Nemichand Poddar )
Director Poddar House, Patil Colony )
Lane No.3, College Road, Nashik-422 005 )

9) Amit Jaiprakash Goel )
Director, 5, San Mahu Complex, )
Opp.Poona Club, Bund Garden Road, )
Camp, Pune-411 001 )

10) Atul Jaiprakash Goel )
Director, 5, San Mahu Complex )

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Opp. Poona Club, Bund Garden Road )
Camp, Pune-411 001 )

11) Rajesh Dhanji Savla )
Director, 102, Abhipsa Kamla Nehru Road )
No.2, Kandivli (West), Mumbai-400 067 )

12) Jayant Dattatraya Joshi )
Additional Director, Bungalow No.35, )
S.V.P.Nagar, Near Lokhandwala Complex )
Andheri (West) Mumbai-400 053 )….Original Respondent
Nos.1 to 12.
—-

Mr.Abhishek Khare a/w Ms.Prapti Kedia i/by Khare Legal Chambers for appellants.

Mr.Rohaan Cama i/by Hafeezur Rahman for respondent nos.1, 2, 4 to

12.

—-

CORAM : K.R.SHRIRAM,J

RESERVED ON : 14.2.2018
PRONOUNCED ON : 24.2.2018

Judgment :-

1 The present appeal has been filed under Section 10 F of

the Companies Act 1956 and impugns the order dated 18.12.2012 passed by the Company Law Board (CLB) in the petition filed by the appellants, inter alia, under Sections 397 and 398 of the Companies Act 1956 alleging oppression and mis-management on the part of respondent nos.2 to 10.

2 The brief facts as it appears from the appeal memo are as

under :-

(i) On 4.7.2005 respondent no.1 company was

incorporated. The authorized, issued and paid up equity share capital of respondent no.1-Safe Heights Developers Pvt. Ltd. (the Company) at the time of incorporation was Rs.2,00,000/- divided into 20,000 equity shares of Rs.10/- each. Appellant no.1 and appellant no.2 and respondent no.2 and respondent no.3 were the first directors and shareholders of the company at the time of incorporation and account was opened in the name of the company on 7.7.2005 with Samata Sahakari Bank Ltd. in which appellant no.1 and respondent no.2 were the signatories.

(ii) On 27.6.2006 an account was opened in the name of company with HDFC Bank, Goregaon branch in which appellant no.2 and respondent no.2 were joint signatories. Respondent no.2 resigned from office of director on 2.11.2006 which was accepted by Board and form 32 was filed accordingly with Registrar of Companies (ROC).

(iii)On 6.11.2006 an Extra-ordinary General Meeting was called in which the authorized capital of the company was increased from Rs.2,00,000/- to Rs.5,00,000/-.

(iv) On 14.3.2007 in another Extra-ordinary General Meeting the authorized share capital of the company was increased from Rs.5,00,000/- to Rs.55,00,000/-.

(v) On 3.9.2007 form 32 was filed by the company for appointment of respondent nos.3,4 & 5 as additional directors. On 3.9.2007 form no.2 was filed by respondent no.2 for allotment of 2,30,000 equity shares of Rs.10 each at par and 25,000 preference shares at par of Rs.10 each to himself.

(vi) On 3.9.2007 Resolution was passed by the company to shift the registered office of the company to a Fort office by filing form no.18. Thereafter registered office was shifted to Nasik.

(vii) On 7.9.2007 it is alleged by appellants that respondent no.2, to bring appellants share holding under minority, allotted 2,26,000 equity shares of Rs.10 each at premium of Rs.120 and 25,000 preference shares of Rs.10 each at par by filing form no.2 w.e.f 23.8.2007 to the family members and company in which respondent nos.4 & 5 were interested and this allotment was without any notice, meeting, knowledge and consent of Board of Directors. It is also alleged that on 15.12.2007 respondent KJ 6/33 CA22.13.doc no.2 again filed form no.2 for allotment of 24,000 equity shares of Rs.10 each at a premium of Rs.120 per share w.e.f. 22.9.2007 to one Geeta Constructions Pvt. Ltd. wherein respondent no.5 is an interested director.

(viii) On 5.11.2007, appellants caused a Show Cause Notice issued to respondent nos.2 & 3 calling upon them to explain their misconduct and activities detrimental to the interest of the company and to return the books of accounts, correspondence, original agreements, records and registers of the company.

(ix) On 7.11.2007 respondent no.2 replied stating that appellants had sold their stake in the Company and the matter was settled, with one Mr.Deepak M.Mehta, who was acting as mediator/escrow agent for the purpose. 3 It should be noted that the appellants’ counsel made oral submissions and followed it with 49 pages of written submissions. I have to note that the written submissions filed on behalf of appellants far exceed what was argued before the court and raises new points which were not pressed before the court. Reliance has been placed on several new judgments on points which were neither urged before the Company Law Board nor pressed before this Court when the matter KJ 7/33 CA22.13.doc was argued.

4 Broadly stated, the issues raised by the appellants were as under :-

(a) By a rights issue in 2007, the shareholding of the Petitioners had been diluted; allegedly no notices were given for the meetings pertaining to the rights issue;

(b) The Respondents had caused the registered office of the Company to be shifted on two occasions; allegedly no notices were given for the meetings pertaining to the shifting of the registered office; and

5 The CLB has analysed in detail the various submis- sions made by the Appellants, and after considering the factual matrix, the submissions made on both sides and the position in law, passed a detailed, comprehensive judgment dismissing the Petition, but directing the Respondents to buy out the Petitioners’ shareholding.

Limited Scope of Section 10-F

1. It is well settled, as held, inter alia, by the Hon’ble Supreme Court in 1V.S. Krishnan & Ors .v. Westfort Hi-Tech Hospital Limited & Ors. and followed in 2Purnima Manthena & Anr. v. Renuka Datla & Ors that an Appeal under Section 10-F of the Companies Act, would lie only on a question of law. Section 10-F expressly states that the Appeal will lie only on a question of law arising out of the order. It is further held by the Hon’ble Supreme Court that the CLB is the final authority on facts, unless, such findings are perverse, based on no evidence or are otherwise arbitrary.

2. It is further well settled that an order passed by the CLB under Sections 397 and 398 is a discretionary order as held by the Hon’ble Supreme Court in V. S. Krishnan (supra) and in 3Sangramsinh P. Gaikwad v. Shantadevi P. Gaikwad. Being a discretionary relief, the Appellate Court, i.e. this Court ought not to interfere with the judg- ment or replace the same with its own exercise of discretion, particu- larly given the restrictive scope of Section 10-F.

6. The Hon’ble Madras High Court in the case of 4M. Palanis- amy & Ors. v. S.V.T. Spinning Mills (P) Ltd &Ors. reiterated the 1 (2008) 3 SCC 363 2 (2016) 1 SCC 237 3 AIR 2005 SC 809 4 [2011] 101 CLA 346 (Mad.) KJ 9/33 CA22.13.doc aforesaid principles and held that as the CLB is the final authority on facts, while exercising powers under Section 10-F of the Act, the Hon’ble High Court ought not to re-appreciate the evidence analysed by the CLB. Reliance was placed on the judgment of the Hon’ble Andhra Pradesh High Court in D.Ramkishore Vs. Vijaywada Shavebrokes Ltd. (2008) 86 CLA 285 (AP) which in turn had relied upon various judgments of the Hon’ble Supreme Court to hold that there was no jurisdiction under Section 10-F to entertain an Appeal on the grounds of erroneous findings of fact, however gross the error may seem to be. It was further held by the Hon’ble Andhra Pradesh High Court that absent a conclusion that the judgment was not sup- ported by any evidence or that it was unreasonable and perverse, the decision of the CLB is final even though the Hon’ble High Court might not, on the same materials, have come to the same conclusion. 7 Shri Khare relied upon the judgment in 5Dale Carrington Invt Private Limited & Anr. v. P. K. Prathapan & Ors. to contend that the Hon’ble High Court could go into questions of fact. This con- tention is misplaced; in paragraph 36 of this judgment the Hon’ble Su- preme Court held that the judgment of the CLB “was given in a very cursory and cavalier manner” and that the CLB has not gone into the issues which were germane for the decision of the controversy in-

5 (2005) 1 SCC 212

volved in the case. This is not applicable to the detailed and compre- hensive judgment rendered by the CLB in the present case. 8 The Appellants’ submissions proceed on a fundamentally erroneous basis that the scope of this Court’s jurisdiction under Sec- tion 10-F is not limited to adjudication of questions of law arising out of the order, but also extends to questions of facts in certain circum- stances. This is a misreading of the judgments of the Hon’ble Supreme Court. It is clear that the scope of jurisdiction of this Court is restricted to a question of law and only if it can be held that a find – ing of fact is perverse and based on no evidence, then that perversity itself may be treated as a question of law. This is not to say that this Court would be required to minutely analyse the judgment of the CLB on all factual aspects and arrive at a conclusion that a particular fact ought to have been considered differently, or that some other conclu- sion ought to have been arrived at on the facts. This Court would tru- ly be required to assess the judgment of the CLB holistically to ascer- tain whether the judgment is based on no evidence and is therefore perverse. In the present case, under no circumstances can it be said that the judgment of the CLB is either perverse or cursory or based on no evidence. The Appellants are attempting to treat the present pro- ceedings as a First Appeal and are in effect seeking that this Court KJ 11/33 CA22.13.doc delve deeply into the facts and exercise its discretion to replace the discretionary judgment of the CLB. This is impermissible in law and is contrary to the judgments of the Hon’ble Supreme Court and High Courts which were cited on behalf of the Respondents. 9 In my view, the order of the CLB in the present case can in no circumstances be said to be either perverse, based on no evidence or arbitrary. The CLB has analysed the factual and legal position in depth and has arrived at a conclusion on facts that no case of oppres- sion and / of mismanagement has been made out by the Appellants. From paragraphs 23 to 45 of the judgment at pages 84 to 95, the CLB has analysed all the issues raised including but not limited to:

• service of notice by UPC (paragraphs 23 to 25); • the Appellants having exited the Company after receiving the loan amount given by them, (paragraph 25); • the rights issue and the reasons for the same being to in-

fuse funds into the Company (paragraphs 26 to 28); • shifting of the registered office (paragraphs 29-30); • termination of directorship being outside the ambit of sections 397 / 398 (paragraph 35);

KJ 12/33 CA22.13.doc • the Appellants having come with unclean hands and hav-

ing suppressed material facts (paragraphs 36 to 38); and • gross delay and laches in the Appellants’ having ap-

proached the CLB (paragraphs 39-40).

The above findings of fact cannot be interfered with by this Court in the exercise of the narrow jurisdiction under Section 10-F of the Companies Act, 1956.

10 Shri Khare submitted that there were various facts that the CLB, in the present case, ought to have noticed from the record but did not. Even if what Shri Khare says is correct, i.e., if it is the griev- ance of the Appellants that any material facts which were relied upon or any submission which was raised were not reflected in the judg- ment, it was incumbent upon the Appellants to draw the attention of the CLB to the same by filing a proper application for review or clari- fication. As held by the Hon’ble Supreme Court in 6Daman Singh v. State of Punjab, when no such application for review or clarification has been made, a party or its counsel is not entitled to submit to the superior court that a certain ground had been argued to which no ref- erence is found in the judgment.

Delay and Laches in filing the Petition

11. This Court, in the context of a similarly discretionary order un- der Section 111 of the Companies Act, 1956, in 7Sulochana Neelkanth Kalyani v. Takle Investments Co. & Ors., has held that exercise of such discretion could certainly be affected by inordinate and unexplained delay and laches and that any such delay may render granting of the relief inequitable, as there could be equities arising in favour of other parties as a result of such delay and also such delay may give rise to a case of acquiescence, waiver or estoppel. These aspects would be for the CLB to assess and would depend upon the facts and circumstances of each case.

12. In the Petition filed by the Appellants before the CLB, the Ap- pellants have set out the various acts, which according to them con- stituted oppression and mismanagement, including the rights issue and the shifting of the registered office. Thereafter it is the case of the Appellants that when they became aware of the purported conduct of Respondent Nos. 2 and 3 “then on 5th November 2007” they issued a show cause notice to Respondent Nos. 2 and 3. This show cause no- tice was followed by a letter on the same date addressed to Respond- ent Nos. 2 and 3. This letter was replied to by a letter dated 7 th 7 2016(4)Bom.C.R.272 KJ 14/33 CA22.13.doc November 2007 addressed by Respondent No. 3 setting out, inter alia, that the Appellants had exited the Company after accepting their loan, and that the registered office of the Company had been shifted . In response, the Appellants, through Appellant No. 2, addressed a let- ter dated 6th December 2007, inter alia, threatening that the Appel- lants would take necessary action under the provisions of the Com- panies Act. As per the stated case in the Appellants’ Rejoinder in the petition before CLB, the Appellants claimed that they conducted an ROC search and learnt of the acts of oppression and mismanagement in or about December 2007 – January 2008.

13. Pertinently, despite full knowledge from November 2007 – January 2008 of all the acts complained of in the Petition, no steps were taken by the Appellants to approach the CLB until July 2011 as noted by the CLB in paragraph 39 of the judgment. There was no ex- planation whatsoever from the Appellants to explain this significant delay aside from stating that they had preferred a representation to the Registrar of Companies. This explanation was rightly rejected by the CLB while noting that the reliefs which could be granted by the CLB could never have been granted by ROC, and therefore this could not be a reason for not approaching the CLB earlier.

14. In the written submissions of the Appellants also, there is no cogent explanation for the Appellants’ delay in approaching the CLB. It is simply contended that the alleged acts of oppression were contin- uing and culminated in the removal of the Appellants as Directors in 2011. Firstly, from the record before the CLB, as reflected in the judgment, the only ground to justify the delay pressed before the CLB, and indeed before this Court in arguments, was that the Appellants were prosecuting proceedings before the Registrar of Companies. No case of continuous oppression and/or mismanagement appears to have been pressed before the CLB and certainly not before this Court and it is impermissible to seek to introduce a new case in Written Submissions, particularly one which is on a factual basis. Even other- wise, there is no justification for the gross delay in approaching the CLB, and the CLB in the exercise of its discretion has held that the de- lay was excessive. This exercise of discretion by the CLB ought not to be interfered with by this Court in its narrow jurisdiction under Sec- tion 10-F of the Companies Act, 1956.

15. Therefore, I find nothing wrong in the CLB concluding that on the ground of delay and laches alone, the Petition could have and ought to have been dismissed even without going into the allegations raised by the Appellants.

Unclean Hands

16 The CLB has, after a detailed consideration of the Appellants’

conduct, arrived at a finding of fact that the Appellants had sup- pressed material facts and had not come with clean hands, having in- dulged in various acts of misconduct as set out in the order, including running a parallel Board of Directors, holding meetings without any notice (as opposed to the Respondents having shown UPC records for service of notice for their meetings) and appointing / removing direct- ors at their whim. The CLB has rightly noted that a party seeking re- lief in an equitable jurisdiction must itself act equitably (i.e., a person who wants equity must do equity), and has arrived at a conclusion that the Appellants have not acted equitably. 17 In their submissions, the Appellants have sought to deflect atten- tion from their own defaults by alleging defaults on the part of the Respondents. The Appellants have not been able to deny the illegali- ties committed by them, but have simply alleged that the same yard- stick was not applied to the Respondents. This stand is factually in- correct in as much as the Appellants did not give any notice for their meeting, whereas the Respondents had given notice by UPC. Even otherwise, it is the Appellants who have approached the CLB in the exercise of its equitable jurisdiction, and it is the Appellants who must KJ 17/33 CA22.13.doc show that they have acted equitably and with clean hands. It is no an- swer to contend that their illegalities are justified by alleged illegali- ties on the part of the Respondents, which in themselves have been denied.

In these circumstances, on this ground also, I see no reason to interfere in factual findings of the CLB ON THE THREE ISSUES RAISED 18 As stated earlier, the Appellants had broadly raised three issues of alleged oppression and mismanagement. It should be noted that they are issues of fact which have been conclusively decided by the CLB and as held in M.Palanisamy & Ors. (supra), the CLB is the final authority on facts.

The rights issue of shares and the service of notices by UPC:

19 Respondents, in their Affidavit in Reply to the Company Petition have set out at length the sequence of events pertaining to the rights issue of shares, the funds raised by virtue of the rights issue and the details of service of notices for various meetings in this re- gard. The Respondents have also placed on record the relevant docu- ments in relation to the rights issue, including the UPC register for KJ 18/33 CA22.13.doc service of notices on Appellant Nos. 1 and 2. The UPC register admit- tedly bears a stamp sufficient for service upon both Appellant Nos. 1 and 2 and no other party has raised a grievance that notices were not served upon them.

20 A grievance was raised by the appellants that the UPC proofs at pgs. 351 and 354 appear to be identical. While this is purely a factual matter which ought not to detain this Court, the Appellants ought to have pointed out that the UPCs at pgs. 351 and 354 pertain to com- munications both dated 19th February 2007, and therefore potentially the same UPC proof would be sufficient if both communications were forwarded under the same UPC certificate and/or in the same packet. These are factual matters, which if had been pressed before the CLB would duly have been answered by the CLB after hearing both sides, but this aspect was not urged, as is apparent from the judgment of the CLB.

21 In this context, the CLB has rightly held on the basis of Section 53 of Companies Act, 1956, that there arises a rebuttable presumption that the documents were served on the Appellants under certificate of posting. As held by the Hon’ble Supreme Court in the case of V. S. Krishnan (supra) relying on the judgment of the Hon’ble Supreme KJ 19/33 CA22.13.doc Court in 8M. S. Madhusoodhanan v. Kerala Kaumudi Private Lim- ited, the burden was on the addressee, i.e., the Appellants herein, to rebut the statutory presumption and show that the notice had not been received by them. Admittedly in the present case no such at- tempt has been made by the Appellants to show that the notice was in fact not received by them. In the circumstances, it cannot be said that the CLB judgment is perverse or unreasonable or arbitrary on this score.

22 The Appellants have sought to rely upon certain judgments on the aspect of service of notice for meetings. Broadly stated, the said judgments only lay down the accepted proposition that notice of a meeting ought to be given to the shareholder / director. The said judgments have no application in the present case, as it is not the case of the Respondents that no notice was given, but in fact notices were sent by post under certificate of posting (UPC). As aforesaid, the re- buttable presumption under Section 53 having arisen, and having not been rebutted by the Appellants, the CLB has rightly held in favour of the Respondents in this regard. The judgments cited by the Appel- lants are dealt with hereunder:

(i) Dr. T. M. Paul v. City Hospital (Pvt.) Ltd. & Ors. This

judgment only states that notice of a meeting ought to be given under Section 286, with which principle there can be no dispute. However, in the present case CLB has ac- cepted that notices were in fact given under UPC.

(ii) Sri Parmeshwari Prasad Gupta v. The Union of India In this case, it was an admitted position that no notice was given to the director of the Company, which is com- pletely different from the facts of the present case.

(iii) Mr. Satish Kumar Singh v. Omkaleshwar Colonisers Private Limited – again this judgment only lays down the principle that notice must be served, which has been done in the present case;

(iv) 12M/s. Micromeritics Engineers Pvt. Ltd. & Ors. v. S. Mun usamy- in the facts of the case in question, there was no proof that the notice of the meeting was sent by post as held by the Hon’ble Madras High Court in the last sentence of paragraph 34. This is very different from the facts of the present case.

9 1998 SCC On Line Ker 367 10 (1973) 2 SCC 543 11 (217 SCC On Line NCLT 339 12 (2002-4-L.W.394) KJ 21/33 CA22.13.doc

(v) Malleswara Finance and Investments Co. P. Ltd. v.

Company Law Board and Others -in the facts of that case the CLB, after taking into consideration all the materials, held that there was no evidence of posting, which is oppos- ite to the factual finding in the present case.

(vi) M. S. Madhusoodhanan v. Kerala Kaumudi Private Lim ited (supra) – This judgment in fact aides the Respondents and has been followed in the context of Sections 397 / 398 in V. S. Krishnan’s case (supra) to hold that once a rebut- table presumption arises under section 53, the burden lies on the addressee, i.e., the Appellants herein to rebut the same.

Reliance was placed by the Appellants on paragraph 115 of M.S.Madhusoodhanan (supra) to contend that when the relationship between the parties was embittered the proof of service of notice by a certificate of posting must be viewed with suspicion. It is pertinent to note that in the present case, after the meeting of 14 th March 2007 as set out later, in which the Appellants have participated in raising the share capital, and until the issuance of the show cause notice on 5 th November 2007, (during which time the notices were sent by UPC) 13 (1994 SCC Online Mad 552) KJ 22/33 CA22.13.doc there is no record whatsoever to show that the relationships between the parties was in any manner embittered. During this period between March 2007 and November 2007 there was no embitterment whatso- ever and it was during this period that the rights issue took place cul- minating on 22nd September 2007, as also the shifting of the re- gistered office in April 2007 and July-August 2007. Hence, the notices sent for these meetings under UPC during this period, cannot possibly be required to be viewed with any suspicion on the ground of purpor- ted embitterment, or otherwise.

23 Before the CLB, the case of the Appellants was that the UPC no- tices were infirm and should not be relied upon because relations be- tween the parties were embittered. Before this Court, it was urged that the UPCs could not be relied upon in respect of Board Meetings and that the presumption under Section 53 applied to general meet- ings of the company. This contention is misleading. While Section 53 does raise a presumption in respect of notices for meetings of mem- bers of the company, under Section 286 of the Companies Act, 1956, there is no format provided for service of notices to Directors. The CLB has dealt with the argument which was urged, namely that the notice through UPC should not be presumed as sufficient proof of ser- vice; this argument of UPC notice for Board Meeting does not appear KJ 23/33 CA22.13.doc to have been urged before the CLB. Even otherwise, under Section 286 of the Companies Act, 1956 no specific mode of service is provid- ed for. The UPC proofs were duly produced before the CLB even for meetings of the Board of Directors, and there was nothing placed on record by the Appellants to show that they were either not available at the time when the notices were served or that they could not or were not in a position to receive the same. Even otherwise, the CLB has rightly held that after knowledge of those resolutions being passed by November 2007 – January 2008, no steps were taken by the Appel- lants to approach the CLB for redressal of their grievances for close to four years. On the contrary, the Appellants held their own meetings without even attempting to send notices thereof to the Respondents; what has weighed with the CLB therefore is the inequitable conduct on the part of the Appellants and this factual finding cannot to be in- terfered with.

24 Even otherwise, the rights issue having been done in the in- terest of the Company with a view to infuse funds into the Company, can under no circumstances be said to be an act of oppression. The Hon’ble Supreme Court in the case of 14Needle Industries (India) Limited v. Needle Industries Newey India Holdings Limited – relied upon in V. S. Krishnan (supra), has held that if the shares are issued in 14 AIR 1981 SC 1298 KJ 24/33 CA22.13.doc the larger interest of the Company and bonafide with a view to enable capital to be raised, the rights issue cannot be termed as oppressive. 25 In the present case, in the meeting of the Board of Directors held on 14th February 2007 and confirmed in an EGM held on 14 th March 2007 it was decided to raise the authorised share capital of the Company from Rs. 5,00,000/- to Rs. 55,00,000/-. The explanatory statement for the meeting held on 14 th March 2007, placed on record by the Appellants themselves , bearing Appellant No.1’s digital signa- ture, expressly records that the shareholding was being increased as the Company “wishes to enhance its current business greatly”, and that the present authorised capital of the Company was “very small and would be a constraint to the growth of the Company”. Admittedly, validity of these meetings which were referred to in paragraphs ii(a) and (b) of the Respondents’ Reply , and the Appellant Nos. 1 and 2’s presence have been accepted in paragraph 6 of the Appellants’ Rejoin- der .

26 The rights issue was thus obviously contemplated as being the avenue for increasing the funds of the Company and for the growth of the Company. The CLB has recorded a finding of fact (in paragraph

28) that the rights issue was necessary for the growth of the Company and therefore the action of issuing the shares could not be termed as KJ 25/33 CA22.13.doc oppressive to the Appellants and/or mismanagement of the affairs of the Company.

27 Pertinently, despite being party to the above meetings, at no point did the Appellants seek to subscribe to the rights issue, and did not even make such enquiries for several years prior to filing the present Petition. The reason for this was clearly because the rights is- sue which commenced from April 2007, was not of interest to the Ap- pellants, as the Appellants had received back the sum loaned by them to the Company to the tune of Rs.73,00,000/- . The Appellants had accepted back the loan as they did not desire to partake in the func- tioning of the Company.

28 The Appellants have no explanation for their having taken back their loan, save and except to contend that this was not reflective of their disinterest in the company. In this regard, the CLB has arrived at a finding of fact, based on the conduct of the Appellants and this finding ought not to be interfered with in exercise of jurisdiction un- der Section 10-F. As a matter of fact, after accepting their loan amounts back in or about March 2007, at no point did the Appellants write a single letter or demand to participate or show any interest in participating in the company until issuance of the show cause notice on 5th November 2007. If the Appellants truly desired to partake in KJ 26/33 CA22.13.doc the management of the company and felt that they had been wrongly prevented from doing so, any reasonable person would have ap- proached the appropriate forum, i.e., the CLB in 2007 itself. Howev- er, no such steps were taken by the Appellants until July 2011. 29 In the circumstances, even on merits it cannot be said that the rights issue was either oppressive or done behind the back of the Ap- pellants.

Shifting of registered office:

30 The Appellants have sought to raise certain factual contentions as to where the notices for the Registered Office shifting were posted from. These are all factual matters, which would turn on evidence as to where Respondent No.2 resided and where he posted the notices from. It is not necessary that the notices be posted only from the Post Office adjacent to the Registered Office of the Company. Be that as it may, this factual analysis is beyond the scope of this Court’s jurisdic- tion under Section 10-F of the Companies Act, 1956. 31 The Appellants raised a grievance that the registered office of the Company was shifted from Jogeshwari to Sir P. M. Road in April 2007 and thereafter from Mumbai to Nashik in July – August 2007.

32 It has to be noted that the jurisdiction of the ROC was not changed, and there was no prejudice whatsoever caused to the Com- pany by virtue of the change of the registered office. The sequence of events relating to the shifting of the registered office have been set out in paragraphs (i) to (iii) of the Reply filed by the Respondents in the CLB .

33 As laid down by the Hon’ble Supreme Court in 15Hanuman Prasad Bagri v. Bagress Cereals Private Limited, shifting of the re- gistered office by itself may not be a reason or a ground to be raised in a Petition under Sections 397 / 398 as long as the Company did not suffer much loss on account of the shifting and no case was made out to show that such exercise was undertaken to put oppressive pres- sure or pain upon the Petitioners. As in the case that was before the Hon’ble Supreme Court, there is nothing in the present case to show that any prejudice was/is caused to the Appellants or that any waste- ful expenditure amounting to mismanagement was incurred on behalf of the Company by shifting of the registered office. 34 Pertinently, it is the admitted position that the UPC amount paid was Rs.3/-. It is more than sufficient for service on Appellant Nos.1 and 2; the other Directors and Shareholders being part of the 15 [2001] 33 SCL 78 (SC) KJ 28/33 CA22.13.doc Respondent Group, may well have been served by other means – they have raised no objection as to service or receipt of the notices. Once again this aspect is purely factual and is being dealt with only in light of the contentions raised by the Appellants. The crucial factor re- mains that shifting of the Registered Office has caused no prejudice to the Company, and is not oppressive in the least. There is nothing to show that the shifting was done to prejudice the Appellants. 35 Thus this contention does not constitute oppression or misman- agement.

Directorial disputes 36 The Appellants have relied upon an RTI Application of 2012 to contend that no notice was received of the meeting for removal of the Appellants as Directors. It appears from the impugned judgment that this issue of the RTI Reply was not pressed before the CLB. Even oth- erwise, it is pertinent to note that in all the various allegations of not having received notice for various meetings, the Appellants have not sought to obtain any RTI on the delivery of notices for all the meet- ings which are the subject matter of dispute between 2007 and 2010, but have only purported to obtain an RTI for a meeting held in 2011. Be that as it may, the Appellants have been removed by resolutions KJ 29/33 CA22.13.doc and with appropriate Form 32’s filed, to the satisfaction of the ROC. It is nobody’s case that the ROC has thereafter raised any objections to the filing of the Forms or indeed to the manner of removal of the Ap- pellants.

37 As held by the Hon’ble Supreme Court in Hanuman Prasad Bagri v. Bagress Cereals Private Limited (supra) directorial disputes are bey- ond the jurisdiction of the CLB under Sections 397 and 398. Thus, the same cannot be raised before the CLB as rightly held by the CLB in paragraph 35 of the judgment.

38 Further the Company is not under any circumstances either a family company or a closely held quasi partnership, in which circum- stances potentially directorial disputes may be raised. The judgments relied upon by the Appellants in this regard will have no application to a company such as Respondent No.1. Further, it does not appear that this issue of ‘quasi-partnership’ was pressed before the CLB, and was not pressed in arguments before this Court. 39 The judgments placed in the Written Submissions, are, to a sub- stantial extent, on points not raised before the CLB or before this Court in the arguments canvassed by the Appellants. The said judg- ments pertain to several aspects which were neither pressed before the CLB or before this Court, and to the extent that the same are KJ 30/33 CA22.13.doc placed in reliance of a case not pressed before the CLB or this Hon’ble Court, the judgments ought to be disregarded. Nevertheless, the said judgments are broadly dealt with hereinbelow: 40 As regards 16Dushyant D.Anjaria Vs. M/s.Wall Street Finance Ltd. ; 17Yogendra Kumar Maheshwari Vs. Registrar of Companies; and 18P.Natarajan V/s. Central Government, of the Compilation are in cases which were not under Section 397/398. 41 As regards Dushyant D.Anjaria (supra), Yogendra Kumar (supra); P.Natarajan (supra) ; 19 Sishu Ranjan Dutta Vs. Bhola Nath Paper House Ltd.,; 20Harikumar Rajah V/s.Sovereign Dairy Ltd. (Mad) ; 21Hindusthan Co-operative Insurance Society Ltd. In re ; 22Sintex Industries Ltd., In re, pertain to appointment of (Addi- tional) Directors and the tenure thereof. The appointment and dura- tion of Directors is a matter beyond the scope of jurisdiction of the CLB, and in any case is not the grievance urged before this Court. 42 As regards 23Zora Singh V/s. Amrik Singh Hayer; 24Rajiv Ku- mar Singh V/s. Shree Narayan Developers P. Ltd. and Ors.;

Ashok Kumar and Ors. V/s. Shree Janki Cold Storage P. Ltd. and 16 2001(1)Mah. L.J.701 17 2011 SCC Online Gau 143 18 (2004) 1 CTC 340 19 (1983) 53 Comp Cas 883 20 (1999) 19 SCL 391 (Mad) 21 (1961) 31 Comp Cas 193 (Cal) 22 (2010)156 Comp Cas 367 23 (2009) 149 Comp Cas 328 (P&H) 24 (2010) 153 Comp Cas 370 (CLB) 25 (2010) 153 Comp Cas 222 KJ 31/33 CA22.13.doc Ors.; 26Swapan Dasgupta Vs. Navin Chand Suchanti, pertain to notices for meetings and the issue of UPC. This issue has been dealt with above. The judgments turn purely on the facts of their respective cases. In the present case, the CLB has arrived at a conclusion that the notices appear to have been served on the Appellants, and even in respect of the Board Meetings, it cannot be disputed that there are UPC proofs of the notices.

43 As regards Needle Industries India Ltd. (supra) ; 27Mrs.- Farhat Sheikh V/s. Esemen Metalo Chemicals Pvt. Ltd. ; 28Rashmi Seth V/s. Chemon India Pvt. Ltd. ; 29Ram Babu V/s. Target Con- structions Pvt. Ltd. and Ors. ; and 30Mrs.Gurpreet Gill V/s. Pump- kin Studio P. Ltd. & Ors., the same pertain to issue of shares. As set out earlier, the impending Rights Issue was to the knowledge of the Appellants; even otherwise, at no point had they sought to exercise their purported right of pre-emption as is now sought to be contended in the Appellants’ Written Submissions. The Appellants in fact had ac- cepted repayment of their loan by March 2007 and were clearly not interested in the functioning of the company. Pertinently, even after having full knowledge, as per their own case, in November 2007, the Appellants did not take steps to challenge the Rights Issue or to seek 26 (1988) 64 Comp Cas 562 (Cal) 27 (1996) 87 Comp Cas 290 CLB 28 (1995) 82 Comp Cas 563 (CLB) 29 (2009) 151 Comp Cas 71 (CLB) 30 (2010) 158 Comp Cas 195 (CLB) KJ 32/33 CA22.13.doc allotment of shares to them in the ensuing several years. In any event, the judgments relied upon take the position that if the Rights Issue is not bonafide but is only for the purpose of enabling a party to obtain a majority, then such action will constitute oppression; this is not so in the present case. The CLB has concluded that funds were re- quired for which the Rights Issue was carried out, and therefore it cannot be said that the same was not bonafide. 44 As regards 31Sanjay Paliwal and Anr. Vs. Paliwal Hotels Pvt. Ltd., ; 32Rajesh Patil V/s. Moonshine Films Pvt. Ltd. ; 33M.L.Arora V/s. Green Valley Frozen Food Ltd. & Ors. ; and 34A.Kalyani V/s. Vale Exports P. Ltd., the same pertain to the allegation of continuous oppression and mismanagement, to justify the delay in filing of the Company Petition. As set out above, the contention of continuous op- pression and mismanagement culminating in the removal of the Ap- pellants as Directors in 2011, was not the ground urged before the CLB to justify the delay. The ground urged was as to the pendency of proceedings before the ROC, and it is in that context that the CLB has rightly held that the explanation for the delay is unjustifiable. Even otherwise, the explanation given by the Appellants cannot be counte- nanced, as the events of which they complained, had to a material ex- 31 (2008) 141 Comp Cas 270 (CLB) 32 (2008) 141 Comp Cas 482 (CLB) 33 (2008) 142 Comp Cas 320 (CLB) 34 (2004) 119 Comp Cas 974 (CLB) KJ 33/33 CA22.13.doc tent, culminated in 2007 itself, and there is no justification for the de- lay in approaching the CLB.

45 In the circumstances, the Appeal ought to be dismissed as it does not give rise to any question of law. The factual findings are strictly matters which were within the province of the CLB. The CLB having exercised its discretion after analysing the evidence before it, this Court cannot to replace the discretionary order passed by the CLB with any contrary order.

46 Even otherwise, on the findings of delay/laches and unclean hands, the present Appeal ought to be dismissed as the CLB has rightly declined to exercise its equitable jurisdiction in favour of the Appellants.

47 As noted earlier, even on the merits, the Appellants’ case is un- tenable and contrary to the record.

48 No case of oppression or mismanagement has been made out, and the Appeal ought to be dismissed, with costs which is fixed in the sum of Rs.2 lakhs. Appellants to pay this amount within 4 weeks by way of cheque drawn in favour of the advocate on record for Re- spondents.

(K.R.SHRIRAM,J) KJ

Bombay High Court Judgement On Prevention of Food Adulteration Act, 1954

Posted on February 25, 2018 by staff

MASTI

IN THE HIGH COURT OF JUDICATURE AT BOMBAY,

NAGPUR BENCH, NAGPUR.

CRIMINAL APPEAL NO. 721 OF 2002

The State of Maharashtra,
through Mr. Jagdish Khushal Kamble,
Food Inspector, Food and Drug
Administration, M.S. Chandrapur,
Tahsil and District Chandrapur. …. APPELLANT

VERSUS

Mangala w/o Harishchandra Badkhal,
Aged about 28 years,
Occupation – Business,
Proprietor of M/s. Sweta Spices Industries,
Plot No.C-26, M.I.D.C., Chandrapur. …. RESPONDENT

______________________________________________________________

Smt. Mayuri Deshmukh, Additional Public Prosecutor for the appellant,
Shri R.R. Vyas, Advocate for the respondent.
______________________________________________________________

CORAM : ROHIT B. DEO, J.

DATE OF RESERVING THE JUDGMENT
: 10-10-2017
DATE OF PRONOUNCING THE JUDGMENT : 12-02-2018

JUDGMENT :

The State is in appeal challenging the judgment and order dated 24-6-2002 rendered by the learned Chief Judicial Magistrate, Chandrapur in Regular Criminal Case 251/1998, by and under which 2 apeal721.02 the respondent-accused is acquitted of offence under Section 7(i) read with Section 2(ia)(a) punishable under Section 16(1)(a)(ii), 7(v) read with Rule 44-AAA punishable under Section 16(1)(a)(ii) of the Prevention of Food Adulteration Act, 1954 (“Act” for short).

2. The prosecution case is thus :

Mr. M.S. Kembalkar, Food Inspector, Chandrapur accompanied by panch witness, Mr. Arun Meshram inspected the proprietary firm of the accused “M/s. Shweta Spices Industries”. Samples of black pepper were collected, one sample was sent to the Public Analyst, Public Health Laboratory, Nagpur for test and analysis on 28-11-1995 and the remaining samples were handed over to Local (Health) Authority and Assistant Commissioner, Food & Drug Administration, Chandrapur. The report of the Public Analyst, Public Health Laboratory, Nagpur dated 04-1-1996 was received on 10-1-1996. The said report states that the sample confirmed to the standards specified in the Prevention of Food Adulteration Rules, 1955 (“Rules” for short). Mr. M.S. Kembalkar requested the Local (Health) Authority and Assistant Commissioner Food & Drug Administration, Chandrapur to send the sample to another Public Analyst for test and analysis as is contemplated under Section 13(2-E) of the Act. The 3 apeal721.02 second sample was sent for testing and analysis through Public Health Laboratory, Pune and the report was received on 23-2-1996 stating that the sample was coated with mineral oil in contravention of Rule 44-AAA of the Rules.

The Food Inspector Mr. Kamble instituted Criminal Case 251/1998 before the learned Chief Judicial Magistrate, Chandrapur, and by the judgment and order impugned, the accused is acquitted on the ground that Clause A.05.17 of Appendix “B” to the Rules permits extraneous matter including dust, stalks, leafy matter and other foreign matter to the extent of 3% by weight. The learned Chief Judicial Magistrate has held that mineral oil is a foreign matter and unless it is established that the percentage of mineral oil in the black pepper exceeds 3%, contravention of Rule 44-AAA of the Rules is not proved.

3. Smt. Mayuri Deshmukh, learned Additional Public Prosecutor submits that the reason recorded by the learned Chief Judicial Magistrate is contrary to the statutory scheme. The submission is well merited. Rule 44-AAA of the Rules reads thus :

“44-AAA. No person shall sell or offer or expose for sale or have in his premises for the purpose of sale under any description, food articles which have been coated with mineral oil, except where the addition of mineral oil is 4 apeal721.02 permitted in accordance with the standards laid down in Appendix “B”.”

The statutory scheme is that no person shall sell or store in his premises for the purpose of sale black pepper which is coated with mineral oil, except where the addition of mineral oil is permitted in accordance with the standards laid down in Appendix “B”. The reliance placed by the learned Chief Judicial Magistrate on Clause A.05.17 of Appendix “B” is misplaced. The legislative intent is that use of mineral oil in black pepper is impermissible unless the use is specifically permitted. No provision is brought to my notice which specifically permits the use of mineral oil in black pepper. In the teeth of the specific provision, the learned Chief Judicial Magistrate committed a serious error of law in holding that mineral oil can be considered as “other foreign matter” and unless it is established that the percentage of the mineral oil exceeds 3%, contravention of Rules is not established.

4. However, notwithstanding the erroneous reason recorded by the learned Chief Judicial Magistrate, I am not inclined to allow the appeal. The record reveals that having received the first report on 10-1-1996, Mr. Kembalkar (P.W.2) requested the Local (Health) 5 apeal721.02 Authority and Assistant Commissioner, Food & Drug Administration, Chandrapur to send black pepper sample to another Public Analyst for test and analysis. Section 13 sub-section (2-E) of the Act reads thus :

“Section 13. Report of Public Analyst – (1) The Public Analyst shall deliver ………

(2-E). If, after considering the report, if any, of the Food Inspector or otherwise, the Local (Health) Authority is of the opinion that the report delivered by the public analyst under sub-section (1) is erroneous, the said Authority shall forward one of the Parts of the sample kept by it to any other public analyst for analysis and if the report of the result of the analysis of that part of the sample by that other public analyst is to the effect that the article of food is adulterated, the provisions of sub-sections (2) to (2D) shall, so far as may be, apply.”

5. A learned Single Judge of this Court has observed in Shri Santoshkumr Ramchandra Rathi vs. State of Maharashtra, through Mr. S.P. Nandanwar, Food Inspector, Food and Drug Administration, Wardha reported in 2017 SCC Online Bom. 7457, thus :

“19. Sub-section (2-E) of Section 13 of the said Act, reads as under :

Section 13. Report of Public Analyst – (1) The Public Analyst shall deliver ………

(2-E). If, after considering the report, if any, of the Food Inspector or otherwise, the Local (Health) Authority is of the 6 apeal721.02 opinion that the report delivered by the public analyst under sub-section (1) is erroneous, the said Authority shall forward one of the Parts of the sample kept by it to any other public analyst for analysis and if the report of the result of the analysis of that part of the sample by that other public analyst is to the effect that the article of food is adulterated, the provisions of sub-sections (2) to (2D) shall, so far as may be, apply.

20. From the said provision, it is clear that the power is vested with the Local (Health) Authority to send other part of samples to any other Public Analyst for analysis.

21. Aforesaid provision of Sub-section (2-E) of Section 13 of the said Act opens with, if, after considering the report, if any, of the Food Inspector or otherwise, the Local (Health)Authority is of the opinion that the report delivered by the public analyst under sub-section (1) is erroneous, the said Authority can send the sample for re-analysis to any other public analyst.

22. Thus, for exercising powers under Sub-section (2-E) of Section 13 of the said Act, firstly there should be a report of a Public Analyst given under Sub-section (1) of Section 13 of the said Act and it should be before the Authority. Once that report is before the Local Health Authority and if the Authority is of the opinion that the report is erroneous, the said Authority can send the other sample for re-analysis.

23. In the present case, report Exhibit 36 of the Public Analyst at Nagpur was before PW2 the Assistant Commissioner, Food and Drugs Administration at Wardha Shri Baban Baburaoji Gayki on 19.9.1992. According to the evidence of Shri Baban Gayki, he decided to send report of the Public Analyst at Nagpur for showing Tea power is upto standard and genuine. Shri Baban Gayki is totally silent in his evidence that after perusing report Exhibit 36 of the Public Analyst at Nagpur, it was his opinion that the said report is erroneous.”

7 I am in respectful agreement with the afore reproduced observations of the learned Single Judge.

6. No evidence is adduced whatsoever, that the Local (Health) Authority was satisfied that the first report received is erroneous. In this view of the matter, and for reasons other than the reasons recorded by the learned Chief Judicial Magistrate, the accused is entitled to be acquitted of the offence under Section 7(i) read with Section 2(ia)(a) punishable under Section 16(1)(a)(ii), 7(v) read with Rule 44-AAA punishable under Section 16(1)(a)(ii) of the Act.

7. The appeal is without substance and is rejected.

JUDGE adgokar

Bombay High Court Judgement On Section 482 of the Code of Criminal Procedure

Posted on February 25, 2018 by staff

MASTI

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
: NAGPUR BENCH : NAGPUR.

CRIMINAL APPLICATION (APL) NO. 793 OF 2017

APPLICANT : Mr. Venu Srinivasan,
Chairman and Managing Director,
TVS Motor Company Limited,
At ‘Jayalakshmi Estates’, No. 29,
Haddowes Road, Chennai-600 006
(Tamil Nadu)

VERSUS

NON-APPLICANT : The State of Maharashtra,
At the instance of Shri D. P. Devle,
Inspector of Legal Metrology, Mangrulpir,
Mangrulpir Division, Tahsil Mangrulpir,
District Washim (Maharashtra)

———————————————————————————————-
Shri Sunil V. Manohar, Senior Advocate with Shri A.A. Naik,
Advocate for the applicant.
Shri Vinod A. Thakre, A.P.P. for the non-applicant/State.
———————————————————————————————-

CORAM : V. M. DESHPANDE, J.

DATE : FEBRUARY 12, 2018

ORAL JUDGMENT

Rule. Rule is made returnable forthwith. Heard finally with the consent of the parties.

2. Heard Shri Sunil V. Manohar, the learned senior counsel appearing with Shri Akshay A. Naik, the learned counsel for the 2 APL793.17.odt applicant and Shri Vinod A. Thakre, the learned Additional Public Prosecutor for the non-applicant/State.

3. The Rule is taken up for final hearing in view of the issuance of notice for final disposal by this Court on 22.11.2017 (Coram : A.S.Chandurkar, J.).

4. By the present application under Section 482 of the Code of Criminal Procedure, the applicant is praying for (1) quashing and setting aside the criminal complaint case being Summary Criminal Case No. 64/2013 pending on the file of learned Judicial Magistrate, First Class, Manora ; and (2) setting aside the impugned order of issuance of process dated 08.7.2016 passed by the learned Judicial Magistrate, First Class, Manora in the said criminal complaint case.

5. Shri Manohar, the learned senior counsel for the applicant submits that though, the product “Package of Valve Kit” is manufactured by the Company, the manufacturing company is not prosecuted in a criminal complaint. Further, according to his submission, the complaint viz-a-viz present applicant lacks the 3 APL793.17.odt assertion of material particulars to show that the applicant at the relevant time was in-charge of conduct of business or responsible for day to day affairs of the company. He, therefore, in view of the provisions of sub-clause(ii) of Clause (a) of sub-section 1 of section 49 of The Legal Metrology Act, 2009 (hereinafter referred to as “the Act of 2009” for the sake of brevity) submitted that the complaint cannot proceed against the present applicant. He also submitted that the order impugned, issuing the summons against the applicant, is a non-speaking order and therefore, cannot stand to the scrutiny of law. He relies on the judgment delivered by this Court in Criminal Application No. 1842/1996 (Charandas Vallabhdas Mariwala and others .Vs. State of Maharashtra) (Coram : V.M. Deshpande, J.) and submitted that the complaint be set aside.

6. Per contra, Mr. Thakre, the learned Additional Public Prosecutor for the State would submit that since there is no nomination, as contemplated in sub-section 2 of Section 49 of the Act of 2009, the present applicant is joined as an accused. He relies on a reported decision of this Court in 2016(1) All M.R. 681 in the case of Maruti Suzuki India Limited .vs. State of Maharashtra and others and submitted that the application be dismissed.

7. It would be useful to reproduce herein below the relevant provision of sub-sections (1), (2) and (4) of Section 49 of the Act of 2009 :

“49. Offences by companies and power of court to publish name, place of business, etc., for companies convicted.

(1) Where an offence under this Act has been committed by a company,

(a) (i) the person, if any, who has been nominated under sub-section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereinafter in this section referred to as a person responsible); or

(ii) where no person has been nominated, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company; and

(b) the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.

(2) Any company may, by order in writing, authorise any of its directors to exercise all such powers and take all such steps as may be necessary 5 APL793.17.odt or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Director or the concerned Controller or any legal metrology officer authorised in this behalf by such Controller (hereinafter in this section referred to as the authorised officer) in such form and in such manner as may be prescribed, that it has nominated such director as the person responsible, along with the written consent of such director for being so nominated. Explanation.–

Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.

(3) …….

(4) Notwithstanding anything contained in the foregoing sub-sections, where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to the neglect on the part of, any director, manager, secretary or other officer, not being a person nominated under sub-section (2), such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

6 APL793.17.odt

8. Section 49 of the Act of 2009 deals with the offence by the company and the powers of the Court to publish name and place of business etc. for companies convicted.

9. As per sub-section 2 of Section 49 of the Act, it is for the company to nominate or authorize any person by order in writing with all such powers and to take all such steps as necessary and expedient to prevent the commission by the company of any offence under this Act.

If a person is nominated under sub-Section 2 of Section 49 of the Act, then under sub-clause (i) of Clause (a) of sub-section (1) of Section 49, such person so nominated has to be held in-charge of and responsible to the company for the conduct of the business of the said company. Where no person has been nominated, every person, who at the time of the offence was committed, was in-charge of and was responsible to the company for the conduct of the business of the company, are responsible as per sub-clause (ii) of Clause (a) of Sub-section (1) of Section 49 of the Act of 2009.

10. A copy of the complaint is placed on record and it is at Annexure-G at page nos.43 to 47 in the compilation of the present 7 APL793.17.odt application.

11. The complaint is lodged in the Court of learned Judicial Magistrate, First Class, Manora, which was registered as Summary Criminal Case No. 64/2013 by complainant Shri D. P. Devade, who is the Inspector of Legal Metrology Division, appointed under Section 14(1) of Legal Metrology Act, 2009. His power to lodge the complaint are not in dispute.

12. According to the complaint, on 05.9.2012, the complainant took inspection at M/s Soham Automobiles, situated at Mangrulpir Road, Sambhaji Nagar, Manora, District Washim. That time, he noticed a product namely Package of Valve Kit kept for sale, on which M.R.P. was not printed as per Rule and therefore, there was violation of Section 18(1) of the Legal Metrology Act, 2009 read with Rules 6(1), 2(m) of Legal Metrology (Package Commodity) Rules, 2011, punishable under Section 38(1) of the Act of 2009. The complainant sent notice under Proforma ‘A’ to the company on 10.9.2012 and ultimately on 21.2.2013 he filed the complaint.

13. The cause title of the complaint reads as under :

COMPLAINT In the Court of Hon. J.M.F.C., Manora,

1. Name of the Shri D. P. Devade complainant and his O/o Inspector of Legal Metrology, address Chandak Building, Dargah Road, Mangrulpir Division, Mangrulpir, Tq. Mangrulpir, Dist. Washim

2. Names and Shri Venu Shrinivasan (M.D.) and other addresses of the of M/s TVS Motor Company Ltd. accused. Regd. Office : Jayalakshmi Estates, 5th floor, 8, Haddows Road, Chennai – 600 006.

Ph. No. 91043447 270059 E-mail : customercarepasrts@tvsmotorco. in.

Home Address :

Shri Venu Srinivasan, 03, Adyar Club Gate Road, R.A. Puram, Chennai, Pin. 600 028, T.N. (India)

14. Thus, from the cause title, it is clear that the complaint is lodged against the present applicant alone and though it stated “and others of M/s TVS Motor Company Ltd.”, the said TVS Motor Co. Ltd. is not made an accused nor the ‘others’ are specified as accused.

15. From the complaint itself, it is clear that the product in question is manufactured by the company as it could be seen from 9 APL793.17.odt the following averments made in paragraph 6 of the complaint, the relevant are produced herein below :

“6. Particular of offence : During General inspection on dated 05.9.2012 at M/s Soham Automobiles, Mangrulpir Road, Sambhaji Nagar, in front of Shivneri Servo Petrol Pump, Manora, Tq. Manora, Dist. Washim, Package of Valve Kit was kept for sale, manufactured by accused company, on which, M.R.P. was not printed as per Rule. Hence, violation of Section 18(1) of Legal Metrology Act, 2009 read with Rule 6(1), 2(m) of Legal Metrology (Package Commodity) Rules, 2011 punishable under Section 38(1). Hence, this office sent Proforma ‘A’ notice to said accused company on 10.09.2012 and accused company wanted the permission to inspect the seized package. This office gave the permission to physical inspection to accused company.”

16. Thus, from the aforesaid, it is clear that the product in question is manufactured by the company. Under the Act of 2009, a company can be prosecuted for any contravention of the Act or various Rules made thereunder. Therefore, it was obligatory on the part of the complainant to join the company as an accused. This non-joinder of the company as accused itself is fatal for the complainant.

17. Be that as it may. The complaint is totally silent in respect of the role of the present applicant. Further, the law in that behalf is well crystalized by the Hon’ble Apex Court in the case of Pepsico India Holdings Private Limited .vs. Food Inspector and another, reported in (2011) 1 SCC 176, more particulary in paragraph 50 of the said reported judgment. The said Supreme Court case was relating to the offence under Food Adulteration Act, 1954. The provisions of the Food Adulteration Act and the present Act of 2009 in respect of the offence by the companies are pari materia. In Pepsico India Holdings Pvt. Ltd.’s case cited supra, the Hon’ble Apex Court has observed that it is well established that in a complaint against a Company and its Directors, the Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day to day management or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company.

18. In addition to the aforesaid observations of the Hon’ble Apex Court, in the present case, the Company itself is not before the Court. The complaint is totally silent and is lacking from the material particulars so also the basic averment that the present applicant was in-charge of or was responsible person for conduct of the business of the said company. Therefore, the complaint, in view of the law laid down by the Hon’ble Courts and in Charandas Vallabhdas Mariwala’s case, cited supra, is required to be set aside.

19. So far as the Division Bench judgment of this Court in Maruti Suzuki India Ltd.’s case, relied on by the learned Additional Public Prosecutor for the State is concerned, the said case is distinguishable on the facts itself. In the said case, in spite of the authorization was given in sub-section 2 of Section 49 of the Act, all the Directors were joined as accused persons and therefore, while interpreting Section 49 of the Act of 2009, the Division Bench of this Court found that all the Directors need not be joined as the accused persons. However, in my view, the said judgment cannot come to the rescue of the learned Additional Public Prosecutor for the simple reason that in the present case, though, there is no nomination from the Company as contemplated under sub-section 2 of Section 49 of 12 APL793.17.odt the Act, at the same time the complaint is conspicuously silent in respect that the present applicant was in-charge of and was responsible for day to day business of the company. Therefore, sub- clause (ii) of Clause (a) of sub-section (1) of Section 49 of the Act cannot be pressed into service.

20. Further, the order of issuance of process is dated 08.7.2016. It reads as under :

O Issue summons to accused.

Sd/-

J.M.F.C, 08.07.16

21. Summoning of an accused in a criminal case is a very serious matter. The order impugned, in my view, shows that it is passed in most mechanical manner. The law in that behalf is well settled in Pepsi Foods Ltd. and another .vs. Special Judicial Magistrate and others, reported in (1998) 5 SCC 749 and in particular paragraph 28, which reads as under :

“28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to 13 APL793.17.odt support his allegations in the complaint to have the criminal law set into motion. The order of the magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. Magistrate has to carefully scrutinize the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicite answers to find out the truthfullness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

22. The order impugned completely fails to show what weighed in the mind of the learned Magistrate to issue process against the applicant. In that view of the matter, I am of the view that the applicant has made out a case in his favour. Consequently, I pass the following order :

ORDER

(i) The Criminal Application is allowed.

(ii) The impugned order dated 08.7.2016, passed by the learned Judicial Magistrate, First Class, Manora in Summary Criminal Case No. 64/2013, is hereby set aside.

(iii) The proceedings of Summary Criminal Case No. 64/2013, pending on the file of learned Judicial Magistrate, First Class, Manora are hereby quashed and set aside.

(iv) With this, the criminal application is allowed and disposed of. Rule is made absolute. No costs.

JUDGE Diwale

Bombay High Court Judgement On Workmen’s Compensation

Posted on February 25, 2018 by staff

MASTI

IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO.2021 OF 2010

01 Smt.Sangita Sharad Ahire,
age: 32 years, Occ: Household,

02 Ku.Shital Sharad Ahire,
age: 8 years, Occ: Education,

03 Chi. Avinash Sharad Ahire,
age: 7 years, Occ: Education,

04 Ku.Priyanka Sharad Ahire,
age: 5 years, Occ: Education;

Applicant no.1 is for herself and
the Natural guardian of Nos.2 to
4;
All are R/o Talwade, Taluka
Malegaon, District Nasik. Appellants

Versus

01 Dharma Ganpat Shirode,
age: major, Occ: Business,
R/o Talwade, Taluka Malegaon,
District Nasik.

02 The New India Assurance Company
Ltd., Manbhawan, Mahesh Nagar,
Shivaji Circle, Old Agra Road,
Malegaon, District Nasik, through
Branch Manager,
the New India Assurance Company
Ltd., Branch Office – Khandesh Mill
Complex, Jalgaon. Respondents

Mr.M.M.Bhokarikar, advocate for appellants.
Mr.N.N.Desale, advocate for Respondent No.1.
Mr.M.M.Ambhore, advocate for Respondent No.2.

::: Uploaded on – 16/02/2018 ::: Downloaded on – 17/02/2018 01:46:12 :::
{2}
fa202110.odt

CORAM : M.S.SONAK, J.

DATE : 14th February, 2018.

ORAL JUDGMENT :

1 This appeal was admitted on 25.10.2010. In the memo of appeal, following substantial questions of law have been stated, as arisen in the appeal:

(a) Whether the Hon. Commissioner for Workmen’s Compensation and Judge, Labour Court or any other court has discretionary power under Section 4, 4A to change the rate of interest including the date of its application, the amount of compensation and penalty thereon of its own?

(b) Whether the ascertainment of the date of payment regarding the ‘amount falls due’ can be changed by the Hon. Court and whether it is permissible as per the legislation?

(c) Whether the Hon. Commissioner for Workmen’s Compensation and Judge, Labour Court can ignore the provisions of the Evidence Act, 1872 regarding the provision of admission while deciding the case under the Workmen’s Compensation Act, 1923?

(d) Whether the Hon. Commissioner for Workmen’s Compensation and Judge, Labour {3} fa202110.odt Court may consider the provisions of the Motor Vehicles Act, 1988 considering the social approach and aspect of both the legislations, for the payment of higher amount of compensation in the accidental cases?

(e) Whether the decision is based on only surmises and conjuncture, whether it is against the statutory provisions of law and without jurisdiction?

2 Upon perusal of the impugned judgment and award as also the evidence on record, the Commissioner, for no apparent or valid reason, has restricted wages of the workman to Rs.2000/- per month and on the said basis, proceeded to determine the amount of compensation.

In this case, widow of the deceased workman, had deposed that he was employed as a driver with respondent no.1 and was getting salary of Rs.4000/- per month and a bhatta of Rs.60/- per day. The employer i.e. respondent no.1 has himself stepped into witness box and admitted that he was paying the workman salary of Rs.4000/- per month and bhatta of Rs.60/- per day whenever the workman used to go outstation. On behalf of the Insurance Company, no doubt, certain suggestions were put, both to the widow as well as to the employer, in response to the suggestions, the employer had stated that he was not maintaining any accounts.

Learned Counsel for the Insurance Company submits that from this, it is clear that there is no material on record in support of the claim that the workman was drawing salary of Rs.4000/- per month and bhatta of Rs.60/- per day.

{4} However, this is not acceptable. There is ample evidence on record which establishes that the workman was drawing salary of Rs.4000/- per month.

3 Insofar as bhatta is concerned, the employer has stated that the same was payable to the workman only when he was on outstation duty. There is no material on record as to the frequency of such outstation duty. In any case, taking into consideration Explanation II to Section 4(1) of the Employee’s Compensation Act,1923, where the monthly wages of a workman exceed four thousand rupees, his monthly wages for the purposes of computation of compensation in terms of sub-clauses (a) and (b) of Section 4(1) is deemed to be Rs.4000/- only. Therefore, in this case, wages of the workman can be taken at Rs.4000/- per month.

4 On the basis of school leaving certificate, the Commissioner has correctly determined age of the workman as 37 and consequently, relevant factor at Rs.192.14. Since, 50% of the wages have to be taken into consideration for multiplication with relevant factor, the compensation will have to be determined at Rs.2000/- x Rs.192.14 = Rs.3,84,800/-.

5 In this case, the Commissioner has awarded interest @ 6% p.a. and that too from the date of the impugned award. In terms of provisions of Section 4-A of the Employee’s Compensation Act, 1923, the compensation in terms of Section 4 is required to be paid as soon as it falls due. The compensation was due within one month from the date of accident. Since, in this case, the employer had knowledge of the accident, therefore, the compensation fell due {5} on 11.03.2003 since the accident took place on 11.02.2003.

This provision direct payment of simple interest @ 12% p.a. or at such higher rate, as may be specified by the Central Government, by notification in the Official Gazette. In this case, therefore, the Commissioner was not right in awarding 6% p.a. interest in place of 12% p.a. Such interest was required to be awarded not from the date of the award but from 11.03.2003, which was the date on which compensation fell due.

This is consistent with the law laid down by this Court in the case of Oriental Insurance Co. Ltd., Akola Branch Vs. Smt. Sunita wd/o Gajanan Kale and others, 2013 (5) ABR 831. Even the Hon’ble Supreme Court, in the case of Oriental Insurance Co.Ltd. Vs. Mohd. Nasir & another, AIR 2009 SC (Supp) 1619, has held that starting point for computing interest under the Workmen’s Compensation Act is not the date of the award, but when the amount fell due.

6 On the aspect of penalty, Section 4-A (3)(b) provides that where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall, if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent of such amount by way of penalty. The proviso states that the order of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.

7 Since, the Commissioner has not even adverted to the provisions of Section 4-A (3)(b) and failed to impose any penalty {6}
upon the employer, the omission is required to be corrected in this appeal. In Dattatraya Layappa Koli & others Vs. Maharashtra State Electricity Distribution Company, through Executive Engineer, 2010 (2) Bom.C.R. 51, this Court has held that grant of interest and penalty are statutory requirements and, therefore, omission to grant the same, can be corrected in the appeal under this Act.

8 Taking into consideration the proviso to Section 4-A (3)

(b), learned Counsel for the employer was afforded an opportunity to show cause as to why penalty should not be imposed on the employer. He submits that the vehicle in question was insured and, therefore, he was dependent upon the Insurance Company to assume the liability. He submits that in utmost good faith, he deposed in the proceedings and stated true and correct particulars as regards income of the deceased workman.

It is submitted that even the employer is an agriculturist and is not in a best financial position. He submits that taking into consideration all these factors, no penalty may be imposed upon the employer. The factors stated by the learned Counsel for the employer are no doubt factors which are required to be taken into consideration by way of mitigation.

Accordingly, in the facts and circumstances of the present case, it will be appropriate that the employer is required to pay an amount of Rs.25,000/- by way of penalty. The penalty amount will have to be paid by the employer himself. The Hon’ble Supreme Court, in the case of Ved Prakash Garg Vs. Premi Devi and others (1997) 8 SCC 1, has made it clear that the liability to pay the penalty cannot be placed upon the Insurance Company.

{7} This appeal is, therefore, partly allowed and disposed of by the following order:-

(A) The compensation amount is now determined at Rs.3,84,800/- and the Insurance Company is directed to pay the said amount after excluding the amount already paid, within a period of eight weeks from today, to the appellants;

(B) On the aforesaid amount, Insurance Company is also directed to pay interest @ 12% p.a. commencing from 11.03.2003 till the date of actual payment. In computing interest component, the Insurance Company can take proportionate credit for the amount already paid, however, since the amount, already paid, was on the basis that interest was @ 6% p.a., the Insurance Company is directed to pay the difference within eight weeks, since, now it is held that interest is to be levied @ 12% p.a.;

(C) The employer i.e. Respondent No.1 is directed to pay penalty of Rs.25,000/- (Rs.Twenty five thousand), within a period of eight weeks from today to the appellant. In case, such amount is not paid/deposited within a period of eight weeks from today, the same will carry interest @ 12% p.a.;

(D) The Insurance Company may either directly pay to the appellants or deposit the amount before the Commissioner, within eight weeks from today. If deposited, the appellants are permitted to withdraw the said amount unconditionally. Similarly, liberty is granted to Respondent No.1-employer to deposit the amount of penalty before the Commissioner.

{8} 10 Appeal is disposed of in aforesaid terms.

11 Pending Civil Applications, if any, do not survive and stand disposed of accordingly.

M.S.SONAK JUDGE

Bombay High Court Judgement Reg Reforms In Police Dept

Posted on February 25, 2018February 25, 2018 by staff

MASTI

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

BENCH AT AURANGABAD

SUO MOTO WRIT PETITION NO.7025 OF 2008

The Registrar,
High Court of Bombay,
Bench at Aurangabad.
…PETITIONER

VERSUS

1) The State of Maharashtra,
Through it’s Secretary,
of Home Department,
Mantralaya, Mumbai,

2) The Director General of Police,
Maharashtra State, Maharashtra.

…RESPONDENTS

…
Mr.S.L. Bhapkar Advocate appointed as Amicus
Curiae for Petitioner.
Mr.A.B. Girase, Government Pleader, for
Respondent Nos. 1 & 2.
…

CORAM: S.S. SHINDE AND
S.M. GAVHANE, JJ.

DATE OF RESERVING JUDGMENT : 14TH FEBRUARY, 2018 DATE OF PRONOUNCING JUDGMENT: 21ST FEBRUARY, 2018 wp7025.08 JUDGMENT [PER S.S. SHINDE, J.]:

1. The Division Bench of this Court (CORAM:N.V. DABHOLKAR AND N.D. DESHPANDE, JJ.), on 24th November, 2008, passed following order:

“1. Article appeared in daily Lokmat yesterday i.e. dated 23-11-2008 was brought to the notice of Registrar (Administration) of this Court, by Advocate Shri S.L. Bhapkar with a suggestion that it may be treated as public interest litigation and placed before appropriate Bench for suitable directions. Registrar has placed that Article before us with the permission of Senior Judge at the Bench. The Article throws lights upon shortcomings, with which the department is suffering and also plight of common individual employed in the department.

2. The news item highlights following defects-

I, Inadequacy of strength (only 137 policemen per 1,00,000 population).

II. Entire machinery is engaged in maintaining law and order and consequently compelled to be negligent towards investigation and Court attendance.

III. Practically each police station is required to maintain law and order over an area of 100 sq. mtrs. which is generally manned with only 50 police personnel.

3. Cases ending in acquittal because the investigating officers are over burdened with number of investigations and consequent failure to collect best possible evidence.

4. No separation of the department into Wings such as law and order, investigation and other duties, etc. We feel that some of the grievances expressed in the news paper article can also be experienced by others in daily life. Society has not flinched in putting unnecessary burden on the police machinery by going to all festivities, gatherings, morchas and protest, etc. With the passage of time, the notions of security have changed and police personnel are required to accord protection to VVIPs and VIPs and at times, even to witnesses, may be under the orders wp7025.08 of the Court, and therefore, a note is required to be taken of inadequacy of man power at the disposal of police force. Needless to say that one is required to agree that, with the pressure of work and with the chronology of priority, law and order, security, investigation and Court attendance, even the criminal law justice system suffers with inadequate assistance from police department and, therefore, we are inclined to take a note of the news paper article, treating the same as public interest litigation.

5. We appoint Advocate Shri S.L. Bhapkar, who has drawn our attention to the matter, as amicus curiae, to prosecute writ petition. We have, therefore, directed Advocate Shri Bhapkar to draft appropriate petition reciting State of Maharashtra, Secretary, Home Department and Director General of Police, as respondents. We have directed Government Pleader Shri N.B. Khandare to render necessary assistance in the form of statistical data, which demonstrates the inadequacies of the department and necessity for strengthening of the force either by addition to the man power or by addition of better equipment or by wp7025.08 reorganization of the force into branches etc. We expect Advocate Shri Bhapkar to file appropriate petition, by 19-12-2008. We also expect learned Government Pleader to keep Secretary, Home Department and Director General of Police, informed of our action of treating the matter as public interest litigation. We expect them to co-operate with the amicus curiae, by placing their difficulties before the Court. this need not be treated as ordinary litigation, wherein adversaries contest.

. Authenticated copy allowed for the use of either party.”

2. Thus, this Court has taken suo moto cognizance of a news published in Daily Lokmat on 23rd November, 2008, in respect of deficiencies in relation to crime investigation at the hands of the police department and inadequacy of infrastructure as well as paucity of police personnel, which has adversely affected the quality of investigation and having an impact on wp7025.08 law and order situation. Therefore, as per the directions given by this Court a Suo Moto Writ Petition has been filed by learned Amicus Curiae Mr. Bhapkar.

3. Thereafter, from time to time, affidavits in replies were filed by the Respondents trying to show that the police department is taking effective steps to address the concern expressed by this Court in its order dated 24th November, 2008.

4. While hearing this Petition on 10th November, 2017, this Court noticed that several issues of public importance which are raised in the Petition, are not replied by the Respondents. This Court in the said order dated 10th November, 2017, has also made reference to the directions issued by the Supreme Court in the case of Prakash Singh and others vs. Union of India and others, 1 1 2006(8) SCC 1 wp7025.08 and also in the case of Vineet Narain and others vs. Union of India and another2.

5. Pursuant to said order, detail affidavit on behalf of the State of Maharashtra has been filed on 9th January, 2018. Paras 5, 6 and 7 of the said affidavit read as under:

“5. I say and submit that as per report dated 1st January, 2017 of Bureau of Police Research and Development, Ministry of Home Affairs, Government of India regarding policemen per lakh population of all States/UTs in India, the population of State of Maharashtra is 12.09 Crores and sanctioned strength of police personnel is 2,20,126 and according to this report the police personnel per lakh population in the State of Maharashtra is 182. As per abovesaid report the State of Maharashtra is having highest police personnel per lakh population among the most populated States of the Country. Also with respect to the jurisdiction of Aurangabad Commissionerate, Aurangabad city has got a population of 2 1998(1) SCC 226 wp7025.08 16.56 lakhs and sanctioned strength of Police Personnel for Aurangabad Commissionerate is 3730 which comes to 225 police personnel per lakh population of the city.

6. I say and submit that in consideration withs the present population of the State, the Government of Maharashtra has sanctioned total 12043 posts of police personnel vide Government Resolution dated 4th March, 2014 and 20th November, 2014.

7. I say and submit that the State Police force has got a total of 2,20,100 posts of police personnel out of which 2,,07,568 posts have been filled up and total 12,532 posts are vacant. Out of these vacant posts recruitment of total 5265 posts of police constables is under process through the Police Recruitment Examination

– 2017. Further in case of total 3149 vacant posts of Police Sub Inspectors, Maharashtra Public Service Commission has declared the final result on 5th May, 2017 for recruitment of total 828 posts and accordingly appointment of selected candidates is underway and further recruitment of total 322 posts of Police Sub Inspectors is under process at the wp7025.08 level of Maharashtra Public Service Commission. Also the requisition letter for recruitment of total 1400 posts of Police Sub Inspectors has been sent to Maharashtra Public Service Commission.

In order to fill up the vacant posts from the rank of Superintendent of Police to Director General of Police, the meeting of Scrutiny Committee was organized on 6th December, 2017 and the said vacant posts will be filled soon.”

6. Therefore, it appears from the aforesaid portion of the reply that State Government has taken maximum possible efforts/ steps to recruit number of police personnel all over the State of Maharashtra. During the course of hearing of this Petition, learned Government Pleader, on instructions, submits that in this respect if further steps are needed, the Government will take effective steps.

7. So far as the modernization of the police wp7025.08 force is concerned, Para 8 of the reply reads thus:

“8. I say and submit that Government of Maharashtra has taken effective steps for modernization of police force details of which are as follows:-

Modernization of Police Forces Scheme.

I The Modernization of Police Forces Scheme is introduced by Government of India (GoI) since the year 2000-01 wherein, GoI contributes funds along with respective State Governments, in share ratio.

II Until the year 2011-12, the share pattern was 75:25 i.e. Central share 75% and State share 25% respectively. Since the year 2012-13 the share pattern is now in 60:40 ratio.

III Under the scheme, the funds are allocated and utilized by the State Government for the components namely:- Construction of Residential and Non- residential Buildings, Mobility, Equipments, Communication, Arms and wp7025.08 Ammunitions and Training.

IV Since last five years, the total amount of Rs.12068 Cr. has been utilized by GoM out of which, for Construction of Residential and Non-residential Buildings Rs.12.72 Cr. for Mobility Rs.8.26 Cr., for Equipments Rs.46.77 Cr., for Communication Rs.34.44 Cr., for Arms and Ammunitions Rs.15.90 Cr. and for Training and other purposes Rs.2.59 Cr. have been spent.

V. Megacity Policing is a part of Modernization of Police Forces Scheme. Under the Megacity Policing, GoI has sanctioned a total plan of Rs.229.00 Cr. in two phases for city of Bruhanmumbai. In phase I, the GoI has approved plan of Rs.57.00 Cr. in which the central share is of Rs.45.00 Cr. and the respective State share is of Rs.12.00 Cr. The amount Rs.45 Cr. has been released by GoI to GoM in the year 2015-16 and same has been spent for the equipments purchased by Commissioner of Police, Bruhanmumbai.”

8. In respect of modernization of police force also, the Government Pleader submits that it wp7025.08 is an ongoing process and if some steps are remained to be taken, the same will be taken in future by the Government of Maharashtra.

9. Detail reply has been filed in respect of weapon policy of Maharashtra State Police. The reply is filed in respect of ‘finger print bureau’ and steps taken by the State Government in that behalf. There is also reply in respect of ‘Computerization’, with respect of ‘Automated Multi-Modal Biometric Identification System, with respect to ‘Dog Squad Policy’ and with respect to ‘Crime Criminal Tracking Network and System Project’. There is detail reply about improving method of investigation, wherein it is stated that police training for various ranks is organized at four levels and there is also provision with respect to Fire-Arms Training. Therefore, prima facie it appears that the Government of Maharashtra has improved substantially the methods of investigation. In respect of modern technique wp7025.08 in police investigation, the steps taken are mentioned in Para 29 to 33 of the reply.

10. Learned Government Pleader appearing for the State submits that the Government of Maharashtra is committed to ensuring the autonomy and independence of the police force and providing necessary infrastructure to the police stations in the State.

11. Upon careful perusal of various replies filed on behalf of the State and particularly the reply filed on 9th January, 2018, we are of the opinion that the concern expressed by this Court in the order dated 10th November, 2017 has been addressed by the State Government. Apart from it, the statement is made on behalf of the State of Maharashtra that the State Government has taken effective steps to make compliance of the directions issued in the case of Prakash Singh and others vs. Union of India and others, cited supra, wp7025.08 and also in the case of Vineet Narain and others vs. Union of India and another, cited supra. So far as the directions issued by the Supreme Court in the case of Prakash Singh and others vs. Union of India and others, cited supra, and in the case of Vineet Narain and others vs. Union of India and another, cited supra, if there is non-compliance by the State Government, the State Government would be answerable before the Supreme Court. There is also order passed by the Bombay High Court at Principal Seat on 25th November, 2016 in the Public Interest Litigation No.25 of 2014 (Association for aiding Justice vs. Union of India and others), expressing the concern about not taking effective steps by the State to comply the directions issued in the case of Prakash Singh and others vs. Union of India and others, cited supra. In Para 3 of the said Judgment the Court has taken the note of affidavit filed on behalf of the Government of Maharashtra and ultimately the Public Interest Litigation came wp7025.08 to be disposed of at the Principal Seat of the Bombay High Court. Para 4 of the said Judgment dated 25th November, 2016, reads thus:

“4) According to learned counsel for the petitioner, the amendment brought to the existing Act deals with the organization of police other than the police working in the metropolitan city. Therefore there is disparity between the same cadre of police officers who work in the city and who work outside the metropolitan city. If by amendment now proposed or as brought to be in the new amended Act creates such disparity, we are afraid, it becomes service matter which cannot be entertained in a public interest litigation. If any of the police personnel are aggrieved by such alleged disparity so far as their services and the benefits attached to the service, they are always at liberty to approach the court in their individual capacity seeking redressal of their grievances.”

12. Keeping in view the detail affidavit filed by the Government of Maharashtra on 9th wp7025.08 January, 2018 and also discussion in foregoing paragraphs, in our opinion further continuation of the Writ Petition is not necessary. As assured by the Government Pleader/ Public Prosecutor while arguing for the State, the State Government has assured that the State Government will continue to take steps, if already not taken, in future so as to address the concern expressed by this Court through various orders passed from time to time.

13. In that view of the matter, we dispose of this Writ Petition, however with a note of caution to the Respondent State that the State Government shall continue to endeavour to take the effective steps even in future in relation to the issues crop-up in the present Writ Petition.

14. With the above observations and directions, the Writ Petition stands disposed of. Rule made absolute in above terms.

wp7025.08

15. Since, Mr. S.L. Bhapkar, learned counsel is appointed as Amicus Curiae to prosecute the cause in the Suo Moto Petition, his fees be paid as per the schedule of fees maintained by the High Court Legal Services Sub-Committee, Aurangabad. [S.M. GAVHANE, J.] [S.S. SHINDE, J.] asb/FEB18

Bombay High Court Judgement Reg section 34 (5) of the Arbitration & Conciliation Act, 1996

Posted on February 25, 2018 by staff

MASTI

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL JURISDICTION

COMMERCIAL ARBITRATION PETITION NO.434 OF 2017

WITH
NOTICE OF MOTION NO.488 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.434 OF 2017

Global Aviation Services Private Limited, )
A Company incorporated under the )
Companies Act, 1956 having its registered )
Office at NKM International House, 6th )
Floor, B.M. Chinai Marg, 178, Backbay )
Reclamation, Mumbai – 400 020. )
)
Presently at G-A, Ground Floor, Pil Court, )
Sherbanoo Co-Operative Housing )
Society Limited, 111, Maharshi Karve )
Road, Marine Lines, Mumbai – 400 020. ) …Petitioner
) …Ori.Claimant

….Versus….

Airport Authority of India )
A Body Corporate constituted by Central )
Government under Airport Authority Act, )
(55 of 1994), having its office at )
Safdarjung Airport, New Delhi – 110 003 ; )
)
And having its Regional Office at the )
Regional Executive Director, Western )
Region, Airports Authority of India, )
Mumbai, C.S.I. Airport, Mumbai – 400 099. ) …Respondent

WITH
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017

WITH
NOTICE OF MOTION NO.690 OF 2017
WITH
NOTICE OF MOTIONNO.165 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017

Ganesh Benzoplast Limited )
A Public Limited Company incorporated )
under the Companies Act, 1956 and )
having its registered Office at 1st Floor, )
Dina Building, 53, Maharshi Karve Road, )
Marine Lines, Mumbai – 400 020. ) …Petitioner

….Versus….

Bharat Petroleum Corporation Limited )
A Public Limited Company incorporated )
under the Companies Act, 1956 and )
having its registered Office at 4 & 6, )
Currimbhoy Road, Ballard Estate, )
Mumbai – 400 001. ) …Respondent

WITH
ARBITRATION PETITION NO.159 OF 2017

B. M. Chapalkar & Sons …Petitioner
V/s.
Union Of India …Respondent

WITH
COMMERCIAL ARBITRATION PETITION NO.173 OF 2017

Mumbai Metropolitan Region Development Authority …Petitioner
V/s.
M/s Patel Engineering Ltd. …Respondent

WITH
ARBITRATION PETITION NO.230 OF 2017

Vijay Shree Pal Sharma …Petitioner
V/s.
M/s. L & T Finance Ltd. …Respondent

WITH
ARBITRATION PETITION NO.232 OF 2017

Vijay Shree Pal Sharma …Petitioner
V/s.
M/s. L &T Finance Ltd. …Respondent

WITH
ARBITRATION PETITION NO. 413 OF 2017

Union Of India Through Controller Of Stores …Petitioner
V/s.
Union Roadways Corporation …Respondent

WITH
ARBITRATION PETITION NO.448 OF 2017

SMC Global Securities Ltd. …Petitioner
V/s.
Iqbal Hussain Bhati …Respondent

WITH
ARBITRATION PETITION NO.976 OF 2016

Haresh N. Awatramani & Anr. …Petitioner
V/s.
The Saraswat Co-operative Bank Limited & Ors. …Respondents

WITH
ARBITRATION PETITION NO.399 OF 2017

MIRC Electronic Limited …Petitioner
V/s.
M/s.Power Plaza …Respondent

::: Uploaded on – 21/02/2018 ::: Downloaded on – 22/02/2018 02:10:17 :::
carbp434-17

WITH
ARBITRATION PETITION NO.484 OF 2017

JM Financial Services Ltd. …Petitioner
V/s.
Gouri Arvind Kapoor …Respondent

WITH
ARBITRATION PETITION NO.614 OF 2017

Iqbal Hussain Bhati …Petitioner
V/s.
SMC Global Securities Ltd. & Anr. …Respondents

WITH
ARBITRATION PETITION NO.624 OF 2017

Bharat Sanchar Nigam Limited …Petitioner
V/s.
Trimax IT Infrastructure & Services Limited …Respondent

WITH
ARBITRATION PETITION NO.655 OF 2017

Reshma Rejendra Desai & Anr. …Petitioners
V/s.
L And T Finance Limited …Respondent

Mr.Shyam Mehta, Senior Counsel with Mr.Hitesh Mutha, Mr.Sumit
Raghani, Ms.Dimple Majithia, Ms.Dipika Bhateja i/b Agrud Partners
for the Petitioner in CARBP No.434 of 2017.

Mr.Sagar Kasar, with Mr.Amol Wagh and Ms.Sheha Sanap for the
Petitioner in ARBP No.159 of 2017.

Ms.Sapna Rachure i/b T.N. Tripathi & Co. for the Petitioner in ARBP
No.976 of 2016.

Mr.A.S. Daver with Mr.Anuj Jaiswal, Mr.Nirav Shah, i/b Little & Co. for
the Petitioner in CARBP No.173 of 2017.
Mr.Pawan Pandey i/b Clayderman & Co. for the Petitioner in ARBP
Nos.230 of 2017 and 232 of 2017.

Mr.Sanjay Jain with Mr.Aniketh Nair and Ms.Apoorva Gupta i/b
Mr.Mustafa Motiwala for the Petitioner in CARBP No.236 of 2017.

Mr.C.N. Chavan for the Petitioner in ARBP No.399 of 2017.

Mr.Prakash Shah with Mr.Santosh Mungekar, Mr.Rohin Shah for the
Petitioner in ARBP No.448 of 2017 and the Respondent No.1 in
ARBP No.614 of 2017.

Mr.Simil Purohit i/b M/s Purohit & Co. for the Petitioner in ARBP
No.484 of 2017.
Mr.Iqbal Hussain Bhati – Petitioner Present in Person in ARBP
No.614 of 2017.
Mr.Shriram Kulkarni with Mr.Sachin Chavan, Ms.Megna Pujari and
Ms.Madhu Deshmukh for the Petitioner in ARBP No.624 of 2017.

Mr.Paras Vira i/b Mr.Anand Kate for the Petitioner in ARBP No. 655
of 2017.

Ms.Lopa Munim with Mr.Sanish Mathew i/b Rajesh Kothari & Co. for
the Respondent in CARBP No.434 of 2017.

Mr.T.J. Pandian for the Respondent in ARBP No.159 of 2017 and the
Petitioner in ARBP No.413 of 2017.

Mr.Bhupesh Samant for the Respondent No.1 in ARBP No.976 of
2016.

Ms.Sumi Soman i/b Mr.Priyanka Pawar for the Respondent in
CARBP No.173 of 2017.

Mr.Anand Poojary with Ms.S.I. Joshi and Ms.Nikita Pawar, Ms.Jalpa
i/b S.I. Joshi & Co. for the Respondent in ARBP Nos.230 of 2017, 232
of 2017 and 655 of 2017.

Mr.Girish Agarwal for the Respondent in ARBP No.413 of 2017.

Mr.Anil Balani for the Respondent in ARBP No.484 of 2017.

Mr.Ashish Kamat with Mr.S. Banerjee i/b Mr.Rajesh Gaikwad for the
Respondent in ARBP No.624 of 2017.

Mr.Pankaj Savant, Senior Advocate, a/w. Mr.Sandeep Aole, Mr.Saket
More,Mr.Subit Chakrabarti, Mr.Vishesh Kalra, Ms.Neha Joshi,
i/b.Vidhi Partners for the Respondent in CARBP No.236 of 2017.

CORAM : R.D. DHANUKA, J.

RESERVED ON : 25TH JANUARY, 2018 PRONOUNCED ON : 21ST FEBRUARY, 2018 ORDER :-

1. The respondents in all these petitions have raised a preliminary issue of maintainability of these petitions on the ground that no notice under section 34 (5) of the Arbitration & Conciliation Act, 1996 has been issued by the petitioners to the respondents before filing these arbitration petitions and thus the petitions are liable to be dismissed on that ground itself. In view of this preliminary objection raised by the respondents, learned counsel appearing for the parties have addressed this Court on this issue at this stage at great length, which is being considered by this Court by passing a common order in the aforesaid matters.

2. The questions that arise for consideration of this Court are :-

i). If the notice invoking arbitration agreement is issued prior to 23rd October, 2015, whereas the impugned award is rendered after 23rd October, 2015 and if the arbitration agreement contemplate that the parties would be governed not only by the provisions of the Arbitration & Conciliation Act, 1996, but also any statutory modification thereof or repeal thereto, the carbp434-17 provisions inserted by the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such proceedings filed after 23rd October, 2015 or not ?

ii). If there was no agreement between the parties that that the parties would be governed by not only the provisions of the Arbitration & Conciliation Act, 1996 but also any statutory amendment thereto or repeal thereto and the notice was issued prior to 23rd October, 2015 but the arbitral award is rendered after 23rd October, 2015, whether provisions of the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such arbitral proceedings commenced prior to 23rd October, 2015 ?

iii). If the arbitral notice was issued prior to 23rd October, 2015 and the the arbital award was rendered prior to 23rd October, 2015 however the arbitration petition is filed after 23rd October, 2015 whether the provisions of the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such pending petitions ?

iv) Even if the parties would be governed by the
provisions of the Arbitration & Conciliation (Amendment) Act, 2015 depending upon the facts and circumstances of each case, whether issuance of prior notice under section 34(5) by the petitioner upon the respondent before filing the arbitration petition under section 34 is mandatory or directory carbp434-17 and the consequence, if any, for non-compliance of such prior notice ?

3. The petitioner in Commercial Arbitration Petition No.434 of 2017 began the arguments on these issue first and thus the facts in the said arbitration petition which are relevant for the purpose of deciding these preliminary issues raised by the respondents are summarized in this order.

4. The respondents had invited the bids for setting up flying schools at 11 airports all over India including two at Surat Airport. The final bid of the petitioner was accepted by the respondents. The petitioner accepted all the terms and conditions of the allotment letter sent by the respondents. The respondents issued a modification by a letter of allotment to the petitioner on 28 th March, 2008. The petitioner accepted the terms and conditions of the letter of allotment as well as modification thereto on 4th April, 2008. The dispute arose between the parties.

5. On 28th February, 2011, the petitioner issued a notice invoking arbitration agreement to the respondents to settle the claims between the parties. The petitioner sent a reminder to the respondents on 7th April, 2011 and once again called upon to appoint a sole arbitrator. On 5th January, 2012, the respondents issued a notice of termination of agreement. The petitioner filed an application under section 11 of the Arbitration & Conciliation Act, 1996 for seeking an appointment of a sole arbitrator. On 4 th December, 2012, the learned designate of the Hon’ble Chief Justice of this Court disposed of the said Arbitration Application No.67 of 2012 and carbp434-17 referred the disputes between the parties by appointing a sole arbitrator. On 12th April, 2017, the learned arbitrator rendered an award thereby rejecting the claims made by the petitioner and partly allowing the counter claim made by the respondent. Being aggrieved by the said award, the petitioner herein lodged this arbitration petition under section 34 of the Arbitration & Conciliation Act, 1996 on 11 th July, 2017 which was taken on file on 21st August, 2017.

6. Sections 34 (5) and 34(6) were inserted by the Arbitration & Conciliation (Amendment) Act, 2015 dated 31st December, 2015 with effect from 23rd October, 2015 (for short the said “Amendment Act”) which read thus :-

“(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.”

7. Learned counsel for the respondents raised a preliminary objection that since the petitioners had not issued prior notice to the respondents of filing this application under section 34 of the Arbitration & Conciliation Act, 1996, this application could not have been filed by the petitioner before issuance of such prior notice and thus the arbitration petition under section 34 is not maintainable and deserves to be dismissed on that ground alone. It is also urged by the respondents in their brief preliminary objection raised at the threshold carbp434-17 that the said provision is mandatory and not directory. In view of this preliminary objection raised by the respondents through their respective counsel, I have heard the learned counsel for the parties on these preliminary objections.

8. Mr.Mehta, learned senior counsel for the petitioner in Commercial Arbitration Petition No.434 of 2017 submits that the notice invoking arbitration agreement was admittedly issued by the petitioner on 28th February, 2011, which was immediately received by the respondent. The respondent did not agree to the appointment of any arbitrator. The petitioner had thus filed an arbitration application under section 11(6) of the Arbitration & Conciliation Act, 1996 before this Court in the year 2012. He submits that the then designate of the Hon’ble Chief Justice by an order dated 4 th December, 2012 had appointed a former Judge of this Court as a sole arbitrator and referred the disputes between the parties to the arbitration of the learned arbitrator. He submits that in view of the petitioner invoking arbitration agreement as far back as on 28 th February, 2011, the arbitral proceedings had already commenced upon receipt of the said notice invoking arbitration agreement by the respondent which was much prior to insertion of section 34(5) of the Arbitration & Conciliation Act, 1996 in section 34 which was inserted with effect from 23rd October, 2015.

9. It is submitted by the learned senior counsel that merely because the arbitral award came to be rendered on 12th April, 2017 i.e. after the said provision of section 34(5) was inserted in section 34, the said provision under section 34(5) cannot be made applicable to the arbitral proceedings which had commenced prior to 23 rd carbp434-17 October, 2015. He submits that merely because this arbitration petition was filed after the said provision of section 34(5) was inserted, the said provision cannot be made applicable to the arbitration application filed under section 34 of the Arbitration & Conciliation Act, 1996. The Court has to consider whether the arbitral proceedings had already commenced prior to 23rd October, 2015 or not and not as to when the arbitration petition under section 34 was filed by the petitioner challenging an award arising out of such arbitral proceedings which had commenced prior to 23rd October, 2015.

10. Learned senior counsel placed reliance on section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 which reads thus :-

“26. Act not to apply to pending arbitral proceedings. – Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”

Section 85 of the Arbitration and Conciliation Act, 1996 reads thus :-

“85. Repeal and saving :-

(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.

(2) Notwithstanding such repeal, –

carbp434-17

(a) the provisions of the said enactments shall

apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;

(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.”

11. Learned senior counsel placed reliance on clause 20 of the agreement entered into between the parties which recorded the arbitration agreement, which is extracted as under :-

“20. All disputes and differences arising out of or in any way touching or concerning this Agreement (except those the decision whereof is otherwise herein before expressly provided for or to which the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 and the rules framed thereunder which are now in force or which may hereafter come into forces are applicable shall be referred to the sole arbitration of a person to be appointed by the chairman of the Authority on in case the designation of Chairman is changed or his office is abolished by the person for the time being entrusted, whether or not in addition to other functions with the functions of the Chairman. Airports Authority of India, by whatever designation such person may be called and if the arbitrator so appointed and willing to act, to sole arbitration of some other person to be similarly appointed and willing to carbp434-17 act as such arbitrator. It will be no objection to any such appointment that the arbitrator so appointed is a servant of the Authority and that he had to deal with the matters to which this Agreement relates and that in the course of his duties as such servant of Authority he had expressed views on all or any of the matters in dispute or difference. The award of the arbitrator so appointed shall be final and binding on the parties. The Arbitrator may with the consent of the parties extend from time to time then time for making the publishing the award.”

12. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH vs. Steel Authority of India Limited, (1999) 9 SCC 334 and in particular paragraphs 2, 4, 5, 7, 12, 13, 22, 23, 25, 27, 28, 30, 32 and 33. He also placed reliance on the judgment of this Court in case of The Board of Trustees of the Port of Mumbai vs. M/s.Afcons Infrastructure Limited, (2016) SCC OnLine Bom. 10037 and in particular paragraph 289. He submits that since in the arbitration agreement recorded in clause 20 of the License Agreement dated 6th June, 2008, the parties had not agreed that the parties will be also bound by the provisions of any statutory amendment to the Arbitration & Conciliation Act, 1996 or any repeal thereto section 34(5) of the Amendment Act, which is brought into effect with effect from 23 rd October, 2015 cannot apply to the arbitral proceedings commenced prior to 23rd October, 2015.

13. Learned senior counsel for the petitioner also placed reliance on the judgment of the Supreme Court in case of Milkfood Limited vs. GMC Ice Cream (P) Limited, (2004) 7 SCC 288 and in particular paragraphs, 2, 8, 9, 10, 22, 47, 50, 51, 54, 57 and 90 to buttress his argument that the arbitral proceedings had commenced carbp434-17 in view of the notice issued under section 21 of the Arbitration & Conciliation Act, 1996. He submits that in the said judgment, the Supreme Court had considered the issue as to whether the provisions of the Arbitration Act, 1940 shall apply or the provisions of the Arbitration & Conciliation Act, 1996 would apply to the pending arbitral proceedings.

14. Mr.Mehta, also invited my attention to the judgment delivered by a learned single Judge of this Court in case of M/s.Rendezvous Sports World vs. The Board of Control for Cricket in India, (2016) SCC OnLine 6064 and in particular paragraphs 10, 11, 12, 17 and 20 to 23. He submits that the second part of section 26 of the Amendment Act does not provide that it would apply to the arbitral proceedings commenced earlier and prior to the amendment having brought into force. He submits that since the rights had been accrued in favour of the petitioner under the unamended provisions of the Arbitration & Conciliation Act, 1996, the same cannot be taken away impliedly or explicitly by virtue of insertion of section 34(5) by the Amendment Act with effect from 23rd October, 2015. He submits that the arbitration proceedings in Court cannot be considered as continuation of the arbitral proceedings before the learned arbitrator.

15. It is submitted that in the judgment of this Court in case of M/s.Rendezvous Sports World (supra), learned single Judge has interpreted section 36 of the Amendment Act and not the rights of the parties under sections 34 and 37 of the Act. He submits that in any event the said judgment was not dealing with section 34 of the Arbitration & Conciliation Act, 1996 which section is invoked by the carbp434-17 petitioner for challenging the impugned award. In support of this submission, learned senior counsel invited my attention to paragraphs 46, 49, 52, 53, 56 to 58, 62, 65, 66, 67 and 78 of the said judgment in case of M/s.Rendezvous Sports World (supra) and would submit that paragraphs 22(5) and 32 of the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) have not been considered by the learned single Judge of this Court in the said judgment of M/s.Rendezvous Sports World (supra).

16. Mr.Mehta, learned senior counsel also invited my attention to the judgment delivered by the learned single Judge of this Court in case of Enercon GmbH vs. Yogesh Mehra & Ors., 2017 SCC OnLine Bom. 1744 and in particular paragraphs 29, 36 and 45. He submits that in that case the arbitration petition was filed admittedly under section 34 after 23rd October, 2015 and thus that judgment would not assist the case of the respondent and is clearly distinguishable in the facts of this case.

17. Learned senior counsel placed reliance on the judgment delivered by the Delhi High Court in case of Ardee Infrastructure Private Limited vs. Ms.Anuradha Bhatia, (2017), SCC OnLine Del.6402 and in particular paragraphs 24 to 33 and would submit that the Delhi High Court had taken a different view than the view taken by the Calcutta High Court. Learned single Judge of this Court in case of Enercon GmbH vs. Yogesh Mehra & Ors. (supra) did not agree with the views expressed by the Delhi High Court in the said judgment in case of Ardee Infrastructure Private Limited (supra). Learned senior counsel placed reliance on the judgment of the Delhi High Curt in case of Ministry of Defence, Government of India. vs. carbp434-17 Cenrex Sp.Z.O.O. & Ors., (2015) SCC OnLine Del. 13944 and would submit that in the said matter, the arbitration petition was already filed before 23rd October, 2015. Reliance was placed on paragraph 25 of the said judgment. Learned senior counsel distinguished the judgment in case of Duro Felguera, S.A. vs. Gangavaram Port Ltd., (2017) 9 SCC 729 on the ground that in that matter the proceedings had commenced after 23rd October, 2015.

18. In his alternate submission, it is submitted by the learned senior counsel that section 34(5) and 34(6) have to be read together. He submits that the purpose and intent of the legislation in inserting section 34(5) and (6) in section 34 by virtue of the provisions of the Amendment Act was that the proceedings filed under section 34 shall be heard expeditiously. He submits that the period of one year is contemplated for the disposal of the application under section 34 from the date of service of notice under the provisions of section 34(5). He submits that section 34(5) refers to issuance of notice and does not provide the mode and manner of service of notice. Whether a copy of the arbitration petition is also required to be served upon the respondent or not is also not provided in the said provision. He submits that the said provisions also do not provide for any consequences in case of any default for not issuing the notice under section 34(5) before filing of the arbitration petition or if the arbitration petition is not disposed of within one year from the date of service of the notice under section 34(5).

19. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Vidyawati Gupta & Ors. vs. Bhakti Hari Nayak & Ors., (2006) 2 SCC 777 and in particular paragraphs carbp434-17 16, 22, 49, 51 and 52. He also placed reliance on the Bombay High Court (Original Side) Rules and more particularly Rule 803-B and would submit that the said provision also provides for issuance of a notice to the respondent before admitting the petition to obviate the delay on account of the Court notice.

20. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480 and in particular paragraphs 41 and 42. He also placed reliance on the judgment of the Supreme Court in case of Topline Shoes Limited vs. Corporation Bank, (2002) 6 SCC 33 and in particular paragraphs 5, 8 and 11 in support of his submission that the provisions under section 34(5) cannot be construed as mandatory but has to be considered as directory. He submits that no specific right is created in favour of the respondent even if no prior notice before filing of the arbitration petition under section 34 is issued to the respondent. The said provision is not a penal provision. It is submitted that the rules framed by this Court and more particularly Rule 803-B substantially protects the interest of the respondent.

21. Learned senior counsel placed reliance on the judgment of the Madras High Court in case of M/s.Jumbo Bags Limited vs. The New India Assurance Co. Ltd., (2016) 2 LW 769 and in particular paragraph 20. He submits that in the said judgment, the Madras High Court has considered the amended section 11(6-A) of the Amendment Act and had held that section 26 makes it quite clear that unless the parties agree, the provisions of the principal Act would continue to apply and those provisions would be applicable only to carbp434-17 the arbitral proceedings commenced on or after 23rd October, 2015.

22. Learned senior counsel placed reliance on the judgment of the Kerala High Court in case of Shamsudeen vs. Shreeram Transport Finance Co. Ltd. & Ors., 2017 (2) KLJ 24 and in particular paragraph 8 in which it has been held that if the parties do not agree otherwise, if the arbitration proceedings had already commenced before 23rd October, 2015, section 34(5) of the Amendment Act has no application to such a situation and thus such requirement prescribed under section 34(5) would not be complied with by the petitioner.

23. Mr.Shyam Mehta, learned senior counsel for the petitioner in Arbitration Petition No.434 of 2017 distinguished the judgment of Patna High Court in case of Bihar Rajya Bhumi Vikas Bank Samiti Bihar vs. State of Bihar & Others, delivered on 28th October, 2016 in Letters Patent Appeal NO.1841 of 2016 on the ground that the Patna High Court has not considered that no consequences/effect of non-compliance of the procedure prescribed under section 34(5) is considered by the Patna High Court in the said judgment. He also invited my attention to paragraphs 57, 59, 78 and 82 of the said judgment.

24. Mr.Sanjay Jain, learned counsel appearing in the Commercial Arbitration Petition No.236 of 2017 adopts the submissions of Mr.Mehta in Commercial Arbitration Petition No.434 of 2017 and made various additional submissions on the preliminary issues.

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25. Learned counsel invited my attention to the report of the Law Commission of India dated 5th August, 2014 suggesting various amendments to the Arbitration and Conciliation Act, 1996 and more particularly the Note in respect of section 34(5) which provides that the said provision has been included to streamline the process and to cut-short the long delays which accrued due to issue of Court notice. He submits that the interpretation of a provision has to be done to achieve the object of the enactment i.e. to avoid delays involved in the service of notice by the Court. The object is not to prevent the petition being filed. The interpretation has to be textual as well as contextual i.e. purposive interpretation.

26. Section 34(5) does not prescribe the nature of the notice or the contents of the notice and the said provision is vague. He also placed reliance on section 34(6) which was also inserted by the said Amendment Act and would submit that if the provision of section 34(5) is read with section 34(6), a party could issue and serve a notice on the 1st day of service of the award and file a petition under section 34 on the 120th day. In such a situation, the period available to the Court to dispose of the section 34 petition would be only 8 months which could not have been an intention of the legislature.

27. It is submitted by the learned counsel that section 34(5) of the Act does not provide for any consequences of non compliance and leaves the consequences of non compliance to the discretion of the Court. He submits that the Arbitration and Conciliation At, 1996 contains several provisions which provides consequences of non compliance thereof. There are several other provisions where no consequences are provided for non compliance thereof. He submits carbp434-17 that the legislature thus where it wanted certain consequences to follow has prescribed such consequences in case of non compliance of such provisions. The intention of the legislature in not providing for any consequences is deliberate such that the equity jurisdiction of the Court or the discretion of the Court is not affected or curtailed in any manner. This omission to provide consequences has also to be seen in the light of the object to be achieved which is to ensure that the respondent immediately gets notice of filing of the petition or the intended filing of the petition and save him from expenses of prosecuting remedies as if a challenge under section 34 has not been laid.

28. It is submitted by the learned counsel that the right to challenge an award is a vested right. It vests on the date of commencement of arbitral proceedings in accordance with section 21 of the Act. He invited my attention to the judgment of this Court in case of M/s.Rendezvous Sports World vs. Board of Control for Cricket in India dated 8th August, 2016 in Chamber Summons No.1530 of 2015 and more particularly paragraphs 50 and 53. He submits that the rights of the petitioner as prevailing on the date of commencement of arbitral proceedings in the present case was prior to 23rd October,2015. Such right did not have any such pre- conditions. An impediment now created by section 34(5) cannot affect the vested right. Though processual in nature, an impediment which affects a vested right, has to be treated as prospective and cannot be given a retrospective effect. He placed reliance on section 6 of the General Clauses Act and would submit that the said provision clearly protects rights already vested and accrued in favour of any party which cannot be taken away by any amendment or a repeal carbp434-17 unless it is so provided in such amendment.

29. It is submitted by the learned counsel that the Arbitration and Conciliation Act, 1996 is a completed code qua arbitral proceedings. The Act clarifies that the arbitral tribunal shall not be bound by the provisions of the Civil Procedure Code, 1908 or the Evidence Act, 1872. The Code of Civil Procedure, 1908 is however applicable to the proceedings under the Arbitration and Conciliation Act, 1996 in Court. The Code of Civil Procedure, 1908 gives ample powers to the Court to dispense with the requirement of notice or to waive the same in appropriate matters under section 151 or to extend the time to issue the notice under section 148. The Arbitration Act recognizes party autonomy.

30. It is submitted by the learned counsel that section 26 of the Amendment Act permits parties to agree “otherwise”. The respondent by not objecting and by not issuing a notice under section 34(5) has agreed otherwise. The petitioner has served the notice along with copy of the arbitration petition upon the respondent on 18th April, 2017 and has complied with or in any event substantially complied with the requirement under section 34(5) of the Arbitration Act. It is submitted by the learned counsel that the respondent can also waive a notice as required under section 34(5). Section 4 of the Arbitration and Conciliation Act, which provides for a waiver are applicable to the facts of this case. He submits that the respondent did not object to the filing of the petition for want of prior notice under section 34(5) when the petitioner had applied for condonation of delay by filing a notice of motion and when the same was argued by the petitioner.

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31. It is submitted that the petitioner in this case has also filed a notice of motion inter-alia praying for a declaration that the petitioner has complied with section 34(5) of the Arbitration Act. No affidavit in reply is filed by the respondent to the said notice of motion till date. He submits that the respondent has also filed an arbitration petition without issuing any notice under section 34(5) of the Arbitration Act to the petitioner.

32. Learned counsel for the petitioner invited my attention to section 34(6) of the Arbitration and Conciliation Act, 1996 and would submit that there is no consequence provided in the said provision also, if the application challenging an impugned award under section 34 is not disposed of within a period of one year from the date of effecting service of the notice referred in section 34(5). He also placed reliance on section 11(13) of the Arbitration and Conciliation Act, 1996 and would submit that even the said provision contemplates disposal of proceedings under section 11(6) of the Arbitration and Conciliation Act, 1996 within 60 days from the date of service of notice on the opposite party. He submits that the said provision also does not provide for any consequence if the said application is not disposed of within 60 days from the date of service of the notice on the other side.

33. Learned counsel for the petitioner also placed reliance on sections 8(1), 16(2), 25(a) and 34(3) and would submit that those provisions clearly provides for consequences of not complying with those provisions which consequences are absent in section 34(5) and 34(6) in those newly added provisions. Learned counsel appearing for the petitioner placed reliance on following judgments :-

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a). Judgment of this Court in case of Ashraf Ahmed vs. The Municipal Corporation of Greater Bombay in First Appeal No.292 of 1999,

b). Judgment of this Court in case of Macquire Bank Ltd. vs. Shilpi Cable Technologies Ltd. In Civil Appeal No.15135 of 2017,

c). Judgment of Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480,

d). Central Bank of India vs. Femme Pharma Ltd. & Ors., AIR 1982 Bom. 67,

e). Thirumalai Chemicals Ltd. vs. Union of India & Ors., 2011 6 SCC 739,

f). M/s.Babbar Sewing Machine Company vs. Trilok Nath Mahajan (1978) 4 SCC 188,

g). State of Goa vs. Western Builders, (2006) 6 SCC 239,

h). Raptakos Brett And Co. Ltd. vs. Ganesh Property, AIR 1998 SC 3085, and

i). Rohanlal Kuthalia & Ors. vs. R.B.Mohan Singh Oberoi, (1975) 4 SCC 628.

34. Learned counsel submits that if the consequence is not carbp434-17 provided for compliance of any particular provision, such provision has to be construed as directory and not mandatory. Such provision can be also waived. He also placed reliance on the Bombay High Court (Original Side) Rules and more particularly Rule 227 providing for six months time for issuance of notice by the Court in arbitration matters. He also placed reliance on section 80 of the Code of Civil Procedure, 1908 and section 527 of the Mumbai Municipal Corporation Act, 1882.

35. It is submitted by the learned counsel that section 34(5) only refers to issuance of prior notice and does not contemplate filing of the arbitration application impugning an arbitral award after service of the notice to the other party whereas section 34(6) contemplates period of disposal of arbitration application within one year from the date of service of notice upon other party. He submits that in view of such conflicting provision, the Court can compute disposal of the arbitration application from the date of filing petition or from the date of issuance of the Court notice. He submits that thus the notice contemplated under section 34(5) has to be considered as directory and cannot be considered as mandatory.

36. Mr.Jain, learned counsel for the petitioner submits that section 26 of the Amendment Act does not apply to the pending arbitral proceedings as on 23rd October, 2015. He led emphasis on the words “nothing contained in this Act shall apply to the arbitral proceedings commenced in accordance with the provisions of section 21 of the Principal Act before commencement of this Act”. He submits that the phrases ” commenced” and “arbitral proceedings” used in the said section 26 are only to identify the beginning point of the carbp434-17 proceedings to which the amendment will not apply. The commencement of proceedings is identified as it is well settled principle of law that when the proceedings are to be governed and decided in accordance with law prevalent on the date of institution of the proceedings. He submits that the beginning point “commencement of the arbitral proceedings” is equated to the institution of the proceedings in Court.

37. It is submitted that the phrase “date of commencement of the arbitral proceedings” is a legal fiction and on the date of commencement there are in fact no arbitral proceedings instituted. A request for reference of disputes to arbitration is the date of commencement of the arbitral proceedings. It is submitted that the phrase “arbitral proceedings” is not a stand alone phrase but it is in conjunction with the words “commenced in accordance with section 21”. Arbitral proceedings commences on such notice, irrespective of whether the reference is ultimately made to the arbitral tribunal or not. It only seeks to identify the date of commencement and not the nature of the proceedings to which it applies. It sets a time line i.e. starting line. He submitted that the amended provisions inserted by the said Amendment Act thus would apply to those arbitral proceedings where a notice under section 21 is issued after 23 rd October, 2015.

38. Learned counsel refers to the phrase “arbitral proceedings” in various provisions of the Arbitration & Conciliation Act, 1996 and more particularly in sections 9, 13, 16, 17, 21, 22, 27, 29, 29-A, 30, 31, 31-A, 32, 34, 38 and 77. He submits that the intention of the legislature is thus clear that if the notice invoking arbitration carbp434-17 agreement is issued prior to 23rd October, 2015, then all such matters would be governed by the provisions under the Arbitration & Conciliation Act, 1996 and not by the provisions of the Amendment Act.

39. It is submitted that even in those cases where the notice invoking the arbitration agreement is issued after 23 rd October, 2015 and the arbitral proceedings have commenced after that date, insofar as the provisions under section 34(5) and 34(6) of the Arbitration & Conciliation Act, 1996 inserted by the Amendment Act is concerned, the same being directory and not mandatory, all such arbitration petitions filed without issuing such notice prior to the date of filing of the arbitration petition cannot be dismissed on that ground. It is submitted that section 26 of the Amendment Act does not refer to two different sets of the arbitral proceedings i.e. (i) before the arbitral tribunal and another before the Court.

40. Mr.S.S. Kulkarni, learned counsel appearing for the petitioner in Arbitration Petition No.624 of 2017 placed reliance on the Law Commission Report and would submit that the said report also does not state whether the provisions of section 34(5) and 34(6) are mandatory or directory though has described some of the other provisions as mandatory. He placed reliance on section 34(2) of the Arbitration & Conciliation Act, 1996 and would submit that the powers of the Court under such provision is not circumscribed by the provision under section 34(5) and are not subject to such provisions. Section 34(5) cannot be read in isolation but has to be read in that context. Section 34(1) confers substantive right on a party to challenge an arbitral award. Section 34(5) provides merely for a carbp434-17 notice which is by way of an intimation. No format of any such notice is contemplated under the said provision. Even if an oral intimation is issued to the other side, that may be sufficient. He submits that section 34(5) is procedural in nature and thus the petitioner can always amend the grounds before the petition is filed. The petitioner is not required to serve any proceedings along with notice. Section 34(5) is totally silent about the mode and manner of effecting the service of notice.

41. Learned counsel then placed reliance on section 34 (6) and would submit that even if an arbitration petition filed under section 34 is not decided within one year from the date of service of notice under section 34(5) of the Act, the Court does not cease to loose powers to decide such petitions and does not become functus officio. The Court has to make an endeavor to decide such arbitration petition within one year from the date of service of notice under section 34(5) and thus such provisions have to be construed as directory and not mandatory. Learned counsel placed reliance on the dictionary meaning of the term “notice prescribed in Law of Lexicon. He also placed reliance on section 12(2) of the Bombay Rent Control Act, 1947 and submits that the Courts have construed the said provision as mandatory after considering the wordings and the legislative intent for providing such provision. He submits that section 34(5) cannot be compared with section 12(2) of the Rent Act. The said powers under section 34(5) does not fatter upon the powers under sections 34(1) and 34(2) of the Act. Learned counsel cited the judgment of the Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480 and in particular paragraphs 23 to 28. It is submitted that even if a notice under section 34(5) is not issued prior carbp434-17 to the date of filing of the arbitration petition, substantive remedy of the aggrieved party cannot be taken away under section 34(1).

42. Learned counsel for the petitioner placed reliance on the judgment of the Supreme Court in case Parasramka Commercial Company vs. Union of India, 1969 (2) SCC 694 and in particular paragraph 5 in support of his submissions that even if a notice is issued by the petitioner to the respondent post filing of the petition, it would amount to substantial compliance of provisions of section 34(5) and the purpose of such notice would be served.

43. Mr.Pujari, learned counsel appearing for the respondent in Arbitration Petition No.238 of 2017 placed reliance on the unreported judgment delivered on 25th October,2013 in First Appeal No.302 of 2013 in which this Court had considered section 164 of the Maharashtra Co-operative Societies Act in support of the submission that since prior notice before filing arbitration petition was not issued by the petitioner in the said Arbitration Petition No.238 of 2017, the petition is not maintainable and deserves to be dismissed on that ground alone. He submits that the said provision under section 34(5) is mandatory and not directory. He also placed reliance on the judgment of this Court reported in 76 Company Cases 244 (Bom.) in support of this submission.

44. Ms.Munim, learned counsel appearing for the respondent in Commercial Arbitration Petition No.434 of 2017 on the other hand submits that by virtue of insertion of section 34(5) and 34(6) of the Amendment Act, the Arbitration & Conciliation Act, 1996 is not repealed. The Ordinance did not contain any saving provision. The carbp434-17 arbitration ordinance was converted into the Amendment Act with insertion of section 26 as a saving section.

45. It is submitted that there is no period prescribed under section 34(5) for issuance of prior notice before filing an arbitration petition challenging the award. The legislative intent of issuance of such prior notice is for expeditious disposal of the arbitration proceedings. She submits that if section 34(5) and 34(6) are construed by this Court as directory and not mandatory, the whole purpose and legislative intent of expeditious disposal of the arbitration proceedings would be frustruted. It is submitted that the provisions of section 3(5) and 34(6) cannot be read in isolation but have to be read with section 34(1) and section 34 (2). Section 34(5) cannot be made otiose by declaring it as directory. The notice period is not required to be excluded by computing the period of limitation under section 34(3).

46. Learned counsel invited my attention to the averments in the Commercial Arbitration Petition No.434 of 2017 and would submit that the notice invoking arbitration agreement was issued by the other party on 20th February, 2011. The award was rendered by the learned arbitrator on 12th April, 2017. On 5th June, 2017, the learned arbitrator passed an order under section 33 of the Arbitration & Conciliation Act, 1996. The arbitration petition was filed on 11 th July, 2017. She submits that admittedly the arbitral award is rendered after 23 rd October, 2015 and the arbitration petition also came to be filed after 23rd October, 2015. She strongly placed reliance on the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and in particular paragraphs 10, 11, 21, 25 to 28, 33, 34, 52, 53, 57, 58 and 78 and also in case of Enercon GmbH (supra) and in particular carbp434-17 paragraphs 24, 28, 32, 38, 40 and 44 in support of her submission that though the notice invoking arbitration agreement was given prior to 23rd October, 2015 and the award was rendered after that date, all the arbitration petitions challenging such award would be governed by section 34(5) and 34(6) to be read with section 34(1) and those provisions thus will have to be complied with. She submits that there are two sets of arbitral proceedings contemplated under section 26 of the Arbitration & Conciliation Act, 1996 i.e. one before the arbitral tribunal and another in Court post award.

47. Learned counsel placed reliance on the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) and submits that the phrase “in relation to the arbitral proceedings” cannot be given a narrow meaning to mean only the pendency of the arbitration proceedings before the learned arbitrator but would also cover the proceedings before the Court. She submits that saving section thus becomes exhaustive and takes within fold two different types of proceedings arising out of the Arbitration & Conciliation Act, 1996. Section 6 of the General Clauses Act becomes applicable. She submits that by all necessary implication, the amendments introduced by the Amendment Act will apply to the proceedings other than the arbitral proceedings even though the said proceedings may have commenced prior to 23rd October, 2015. She submits that this Court has already held in the said judgment in M/s.Rendezvous Sports World (supra) that the object of the amendment to section 26 can be fulfilled only by holding the saving section 26 exhaustive. It is submitted by the learned counsel that this Court in case of Enercon GmbH (supra) has also dealt with the effect of section 26 of the Amendment Act.

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48. It is submitted that in view of the fact that the arbitration petition has been filed after Amendment Act came into force and in view of the fact that the saving clause 26 does not save post arbitral proceedings under section 34 from the application of the Amendment Act, the mandatory provisions of section 34(5) will be applicable to this matter and the petitioner not having complied with this mandatory requirement, the arbitration petition deserves to be dismissed, as not maintainable. She submits that issuance of a notice is a sine qua non before filing of a challenge petition. It is submitted that section 34(1) clearly provides that a recourse to Court against an arbitral award may be made only by an application for setting aside such an award in accordance with sub-sections 2, 3 and 5. A petition which is not in compliance of the requirement of section 34 is not valid and is not maintainable. She led emphasis on the word “shall” used in section 34(5) and would submit that the said word would clearly indicate that the petition itself could be filed only after compliance of the mandatory notice and not otherwise.

49. Learned counsel placed reliance on the judgment of the Supreme Court in case of Union of India & Ors. vs. A.K. Pandey holding that it is the duty of the Courts of justice to try to get the real intention of the legislature by considering the whole scope of the statutes. She placed reliance on the words “an application under section 34(1) shall be disposed in any event within a period of one year from the date of such notice referred to in sub-section 5 is served”. She submits that the word “only” is an exclusive word and indicates the legislative intent that the section is mandatory. She placed reliance on section 25 of the Law Commission Report in carbp434-17 support of this submission.

50. Learned counsel placed reliance on section 11(13) of the Arbitration & Conciliation Act, 1996 and would submit that in the said provision, a mandate is provided that the High Court or the Supreme Court as the case may be shall decide an application as expeditiously as possible and an endeavor shall be made to dispose of the matter within a period of 60 days from the date of service of the notice on the opposite parties. The words “in any event” are not used in the said provision, whereas such words are used in section 34(6) of the Amendment Act. She submits that the effect of section 34(5) is clearly to impose a bar against the institution of the application under section 34(1) and the same is the only legislative purpose and intent to dispose of the challenge applications within a period of one year from issuance of the notice impugning an award.

51. Learned counsel for the respondent placed reliance on the judgment of the Supreme Court in case of Sharif-ud-Din vs. Abdul Gani Lone, AIR 1980 SC 303 and would submit that in the said judgment, it is held by the Supreme Court that whenever a statute prescribes that a particular act is to be done in a particular manner and also lays does failure to comply with the said requirement, leads to specific consequence and it would be difficult to hold that the requirement is not mandatory. She also placed reliance on the judgment of the Supreme Court in case of Union of India vs. Popular Construction Company, (2001) 8 SCC 470 and in particular paragraph 12. She also placed reliance on the judgment of the Supreme Court in case of Bihari Chowdhary & Anr. vs. State of Bihar & Ors., (1984) 2 SCC 627 and would submit that since the carbp434-17 language used in section 34(5) is clear and unambiguous, it is the duty of the Court to give effect to such legislative intent and has to construe such provisions strictly.

52. Learned counsel also placed reliance on the following judgments :-

i). The judgment delivered by the National Company Law Appellate Tribunal, New Delhi in case of Seema Gupta vs. Supreme Infrastructure India Ltd. & Ors. in Company Appeals (AT) (Insolvency) No.53 of 2017,

ii). The judgment delivered by the National Company Law Appellate Tribunal in case of Era Infra Engineering Limited vs. Prideco Commercial Projects Pvt. Ltd. in Company Appeals (AT) (Insolvency) No.31 of 2017,

iii). The judgment of the Supreme Court in case of State of Kerala vs. M.S. Mani & Ors. in Contempt Petition (Civil) No.280 of 1999,

iv). The judgment of the Supreme Court in case of Yogendra Pratap Singh vs. Savitri Pandey & Anr. in Criminal Appeal No.605 of 2012 and another connected matters,

v). The judgment of the Supreme Court in case of M/s.Shreeram Finance Corporation vs. Yasin Khan & Ors., AIR 1989 SC 1769, carbp434-17

vi). The judgment of the Supreme Court in case of Sharif-ud- Din vs. Abdul Gani Lone, AIR 1980 SC 303,

vii). The judgment of the Supreme Court in case of M/s. Raptakos Brett & Co. Ltd. vs. Ganesh Property, AIR 1998 SC 3085,

viii). The judgment delivered by the Division Bench of the Patna High Court delivered on 28th October, 2016 in Letters Patent Appeal No.1841 of 2016 in case of Bihar Rajya Bhumi Vikas Bank Samiti, Bihar – Jharkhand vs. The State of Bihar & Ors.

53. Learned counsel for the respondent makes an attempt to distinguish the judgment of this Court in case of The Board of Trustees of the Port of Mumbai (supra) on the ground that the said judgment is in conflict with the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra). Learned counsel distinguished the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) on the ground that the question for consideration of the Supreme Court in the said judgment was of the construction of section 85(2)(a) of the Arbitration & Conciliation Act, 1996. Learned counsel for the respondent also makes an attempt to distinguish the judgment of the Supreme Court in case of Milkfood Limited (supra) on similar ground.

54. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Vidyawati Gupta & Ors. (supra) and would submit that section 34(5) in this case being mandatory, non-compliance of such mandatory provision would carbp434-17 render the proceedings non-est in the eyes of law. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Kailas vs. Nanhku & Ors. (supra) on the ground that prior notice contemplated under section 34(5) is an integral part of the application under section 34 touching to the maintainability of the application itself and not a procedure in the facts before the Supreme Court in the said judgment while considering the provisions of Order VIII Rule 1 of the Code of Civil Procedure.

55. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Topline Shoes Limited (supra) on the ground that the object of the amendment to the Principal Act, 1996 was by virtue of the amendments to section 34(5) read with section 34(6) so as to fix the time frame for disposal of the challenge petitions filed under section 34 so that the award creditor will not be deprived of the fruits of the award. Learned counsel for the respondent distinguished the judgment of the Madras High Court in case of M/s.Jumbo Bags Limited (supra) on the ground that the said judgment is contrary to the judgments of this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra)

56. Learned counsel for the respondent distinguished the judgment of the Kerala High Court in case of Shamsudeen vs. Shreeram Transport Finance Co. Ltd. & Ors., (supra) on the ground that the said judgment is contrary to the principles laid down by this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra).

57. Insofar as the judgment delivered by a single Judge of the carbp434-17 Patna High Court in case of Bihar Rajya Bhumi Vikas Bank Samiti (supra) is concerned, it is submitted by the learned counsel for the respondent that the said judgment is overruled by the Division Bench of the Patna High Court. Insofar as the judgment of the Himachal Pradesh High Court dated 24th August, 2016 in case of M/s.Madhava Hytech Engineers Pvt. Ltd. vs. The Executive Engineers and Anr. In OMP (M) No.48 of 2016, delivered on 24th August, 2017 is concerned, learned counsel for the respondent distinguished the said judgment on the ground that the said judgment has dealt with an application under section 14 of the Limitation Act and the facts before the Himachal Pradesh High Court in the said judgment were totally different and are distinguishable in the facts of this case.

58. Mr.Ashish Kamat, learned counsel appearing for the respondent in Arbitration Petition No.624 of 2017 adopted the submissions made by Ms.Munim, learned counsel for the respondent in Commercial Arbitration Petition No.434 of 2017 and would submit that the object and purpose of introducing the section 34(5) and 34(6) is expeditious disposal of the arbitration petitions challenging an arbitral award. Such provisions are mandatory in its nature. The arbitration petition challenging the arbitral award can be filed only post issuance of such mandatory notice. The obligation to issue such notice is on the party who seeks to challenge an arbitral award. The duty is cast on the office of the Court to ensure that due compliance of such mandatory notice is made by the petitioner before filing of the arbitration petition under section 34.

59. It is submitted by the learned counsel that section 34(5) provides for an implied consequence of non-compliance of issuance carbp434-17 of the mandatory notice. Though there is no specific consequence provided in section 34(6), if such arbitration application is not disposed of within one year from the date of service of the notice under section 34(5) upon the respondent, the period of one year may be curtailed and such arbitration petition has to be disposed of by the Court within the balance period left after service of such notice upon the respondent. He submits that a party who deliberately delays filing of the petition cannot be benefited. Even if the provisions of section 34(6) is not mandatory, the provisions of section 34(5) is mandatory.

60. Mr.Jain, learned counsel for the petitioner in Commercial Arbitration Petition No.236 of 2017 in rejoinder placed reliance on paragraph 289 of the judgment of this Court in case of The Board of Trustees of the Port of Mumbai (supra) and distinguished the judgment of this Court in case of M/s.Rendezvous Sports World (supra) by placing reliance on paragraphs 45, 62, 65, 66 and 78 and would submit that in the said judgment, learned single Judge of this Court has only decided the said matter based on the applicability of section 36 of the Arbitration & Conciliation Act, 1996. In support of this submission, he invited my attention to the paragraphs 10 to 12, 26, 27, 46, 52, 58 and 59 of the said judgment. He submits that in the said judgment, the learned single Judge has not based her decision on construing section 26 of the Amendment Act but the entire judgment is based on the issue involved in the said judgment about the applicability of section 36 in the pending arbitration petitions prior to 23rd October, 2015. He once again led emphasis on paragraph 22(5) of the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra). He submits that the right to file an application under section 34 of the Arbitration & Conciliation Act, carbp434-17 1996 had accrued in favour of the petitioner when the petitioner had invoked the arbitration agreement by issuing a notice and when the same was received by the other side in view of section 21 of the Arbitration & Conciliation Act, 1996. He submits that at the most, the Court can construe that the requirement of notice under section 34(5) introduced by the Amendment Act would provide an additional condition and not mandatory condition.

REASONS AND CONCLUSIONS :

61. Since the main arguments are advanced by the learned counsel for the parties in Commercial Arbitration Petition No.434 of 2017 and Commercial Arbitration Petition No.236 of 2017, I shall briefly indicate the admitted facts which are relevant for the purpose of deciding the legal issues raised by the respondent in these batch of petitions.

62. Insofar as Commercial Arbitration Petition No.434 of 2017 is concerned, the petitioner had issued a notice invoking arbitration clause on 28th February, 2011. On 4th December, 2012, the learned designate of the Chief Justice appointed the sole arbitrator in an application filed by the petitioner under section 11(6) of the Arbitration & Conciliation Act, 1996. On 23 rd October, 2015, the Amendment Act came into effect. On 12th April, 2017, learned arbitrator made an award i.e. after the Amendment Act came into force. On 21 st August, 2017, the petitioner filed this arbitration petition. The respondent has raised a plea in the affidavit in reply dated 5th October, 2017 about the maintainability of this petition in view of non-issuance of prior notice by the petitioner under section 34(5) of the Amendment Act.

63. Insofar as Commercial Arbitration Petition No.236 of 2017 carbp434-17 is concerned, the petitioner had issued a notice invoking arbitration agreement on 14th June, 2014. Learned arbitrator accepted his nomination and entered upon the reference on 7 th August, 2014. Learned arbitrator made an award on 25 th November, 2016. The petitioner filed this arbitration petition on 12 th April, 2017. The respondent has raised an objection about the maintainability of this petition on the ground that the notice under section 34(5) of the Amendment Act has not been served upon the respondent before filing this petition across the bar.

64. On perusal of the aforesaid admitted facts, it is clear that in both these matters the arbitration agreements were invoked much prior to 23rd October, 2015. The arbitral awards are delivered by the Arbitral Tribunal after 23rd October, 2015. Both the Arbitration Petitions have been filed under section 34 of the Arbitration & Conciliation Act, 1996 after 23rd October, 2015.

65. Insofar as Commercial Arbitration Petition No.434 of 2017 is concerned, the arbitration agreement is recorded in clause 20 of the agreement dated 6th June, 2008 between the parties to this petition. The arbitration agreement does not provide that in case of any dispute arising between the parties in future under the said arbitration agreement, the parties will be governed not only by the provisions of the Arbitration & Conciliation Act, 1996 but also by any statutory repeal thereto or any amendment thereto.

66. Insofar as Commercial Arbitration Petition No.236 of 2017 is concerned, the arbitration agreement is recorded in clause 25 of the Terminalling / Handling Services Agreement dated 5 th August, carbp434-17 2011. The arbitration agreement provides that the provision of the Arbitration & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under the said provision.

67. By section 27 of the Amendment Act, the Arbitration and Conciliation (Amendment) Act, 2015 is repealed. Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Section 43 of the Arbitration and Conciliation Act, 1996 provides that for the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section

21.

68. The Supreme Court in case of Thyssen Stahlunion GMBH (supra) has construed section 85(1)(a) of the Arbitration and Conciliation Act and has held that the provisions of Arbitration Act, 1940 shall apply in relation to the arbitral proceedings which are commenced before coming into force of the Arbitration and Conciliation Act, 1996. Supreme Court has held that in the cases where arbitral proceedings have commenced before coming into force of the New Act (1996 Act) and are pending before the Arbitrator, it is open to the parties to agree that new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act carbp434-17 comes into force.

69. It is held that once the arbitral proceedings have commenced, it cannot be stated that right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act that some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force. If narrow meaning of the phrase “in relation to arbitral proceedings” is to be accepted, it is likely to create great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the New Act. An interpretation which leads to unjust and inconvenient results cannot be accepted. A foreign award given after the commencement of the new Act can be enforced only under the new Act.

70. The Supreme Court held that the provisions of the old Act shall apply in relation to the arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties and (2) new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The old Act will apply to whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word “to” could have sufficed and when the legislature has used the expression “in relation to”, a proper meaning has to be given. It is held that the first limb of section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the carbp434-17 award under that Act. Multiple and complex problems would arise if the award given under the old Act is said to be enforced under the new Act. Both the Acts are vastly different to each other. It is held that when arbitration proceedings are held under the old Act, the parties and the arbitrator keep in view the provisions of that Act for the enforcement of the award. In paragraph (32) of the said judgment, it is held that it is not necessary that for the right to accrue that legal proceedings must be pending when the new Act comes into force. To have the award enforced when arbitral proceedings commenced under the old Act under that very Act is certainly an accrued right.

71. This Court in case of The Board of Trustees of the Port of Mumbai vs. Afcons Infrastructure Limited (supra) has considered a situation where notice invoking arbitration agreement was issued much prior to 23rd October, 2015. The arbitral award was rendered prior to 23rd October, 2015. The arbitration petition was filed in the year 2012 and was pending till 23 rd December, 2016. There was no provision in the arbitration agreement that the parties would be governed by not only the provisions of the Arbitration and Conciliation Act, 1996 but also by the statutory amendment or repealed thereto. This Court accordingly held that since the notice invoking arbitration agreement was issued prior to 23rd October, 2015, the provisions of amended section 34 brought into effect on 23rd October, 2015 would not be applicable to the facts of this case.

72. In case of Padmini C. Menon vs. Vijay C. Menon & Ors. in Arbitration Petition No.9 of 2015 in its judgment delivered on 10th January,2018, this Court held that in view of there being an agreement between the parties that the parties would be governed carbp434-17 not only by the Arbitration and Conciliation Act, 1996 but also statutory amendment or repeal thereto, though the arbitration proceedings had commenced prior to 23rd October, 2015, the amendment inserted in section 11 as section 11(6-A) would be applicable to the parties though the arbitration application filed by the applicant in the year 2015 was pending in this Court on 23 rd October, 2015 and thereafter this Court after adverting to section 85(2)(a) and section 26 of the Amendment Act has held that section 26 of the Amendment Act is an non-obstante provision. If the parties agree that the provisions contained in the said Amendment Act shall also apply to the arbitral proceedings commenced in accordance with the provisions of section 21 of the Arbitration & Conciliation Act, 1996, the said amended provision would apply to such proceedings commenced earlier, otherwise the Amendment Act shall apply in relation to the arbitral proceedings on or after the date of commencement of the Amendment Act.

73. This Court held that in view of section 26 of the Amendment Act and in view of the specific agreement between the parties that the disputes will be settled not only in accordance with the provisions of the Arbitration & Conciliation, Act, 1996 prevailing on the date of the execution of the said agreement but also any statutory modifications thereof, Amendment Act would apply even if arbitral proceedings had commenced prior to 23rd October, 2015. It is held that section 11(6-A) of the Amendment Act thus would apply to the parties. This Court also followed the earlier two judgments of this Court in case of M/s.Amisha Buildcon Pvt. Ltd. vs. Jidnyasa Co- op. Housing Society Ltd., 2016 SCC OnLine Bom. 5234 and in case of Vipin Bhimlal Shah vs. Slum Rehabilitation Authority in carbp434-17 Arbitration Application No.251 of 2015 delivered on 12 th October, 2017 holding that the provisions of Amendment Act would apply in view of such agreement between parties. This Court also adverted to the judgment of Supreme Court in case of Duro Felguera vs. Gangavaram Port Ltd., (2017) 9 SCC 729 in which the Supreme Court had held that the parties would be governed by the amended provisions under section 11(6-A) of the Amendment Act and also to the several judgments of various High Courts taking a similar view. In my view, the principles laid down by the Supreme Court in the said judgment would apply to the facts of this case. I am respectively bound by the said judgment.

74. In my view, the principles laid down by the Supreme Court in case of Thyssen Stahlunion GMBH (supra) and judgments of this Court in case of The Board of Trustees of the Port of Mumbai vs. Afcons Infrastructure Limited (supra) and Padmini C. Menon vs. Vijay C. Menon & Ors. (supra) would apply to the facts of this case. I am respectively bound by those judgments.

75. A perusal of section 26 of the Amendment Act of 2015 clearly indicates that unless the parties otherwise agree, no provisions of the Amendment Act would apply to arbitral proceedings commenced in accordance with the provisions of section 21 of the Arbitration and Conciliation Act, 1996 prior to 23rd October, 2015. It also makes it clear that the provisions of Amendment Act shall apply in relation to the arbitral proceedings commenced on or after the date of commencement of the Amendment Act. It is thus clear that if in an arbitration agreement is entered into prior to 23rd October, 2015, and the parties had agreed that the parties would be governed not only by carbp434-17 the provisions of the Arbitration and Conciliation Act, 1996 but also by statutory amendment thereto or repeal thereto and if the notice invoking arbitration agreement under section 21 is received by the other party prior to 23rd October, 2015 when the arbitral proceedings contemplated under section 21 is commenced, the party will be governed by not only the provisions of Arbitration and Conciliation Act, 1996 but also by the statutory amendments thereto or repeal thereto and not otherwise.

76. If however there was no such agreement between the parties to apply the provisions of statutory amendments or repeal to the Arbitration and Conciliation Act, 1996 and the arbitral proceedings have commenced prior thereto 23rd October, 2015 by virtue of section 21 of the Arbitration Act, such arbitral proceedings will be governed by the provisions of the Arbitration and Conciliation Act, 1996 before its amendment brought into effect by Amendment Act w.e.f. 23rd October, 2015 irrespective of the fact that the award is rendered after 23rd October, 2015 or that the arbitration petition challenging an award is pending as on 23rd October, 2015 or filed thereafter.

77. In my view, since the arbitral proceedings commences on receipt of the notice invoking arbitration agreement by the other party as contemplated under section 21 read with section 43 of the Arbitration and Conciliation Act, 1996, if such notice is received by the other side after 23rd October, 2015, the provisions of the Amendment Act would apply to such matters. The parties cannot agree that they will not be bound by the provisions of the Amendment Act.

78. The respondent has strongly placed reliance on the carbp434-17 judgment delivered by a learned Single Judge of this Court in case of M/s.Rendezvous Sports World (supra) and also on the judgment delivered by another learned Single Judge of this Court in case of Enercon GmBH (supra). Learned counsel appearing for the parties have dealt with both these judgments threadbare for consideration of this Court in support of their rival submissions.

79. Insofar as the judgment M/s.Rendezvous Sports World (supra) is concerned, chamber summons was filed by the original petitioner who had filed application under section 34 of the Arbitration Act inter-alia praying for dismissal of the application for execution of the arbitral award filed by the judgment debtor. The arbitral awards in that matter were made on 22nd June, 2015, 22nd June, 2015 and 28th January, 2015 respectively. Arbitration petitions were filed on 16th September, 2015 challenging the arbitral awards. One of the arbitration petition was admitted on 19th October, 2015. The question that arose before this Court in the said matter was whether in respect of those awards which were delivered prior to 23rd October, 2015 and the arbitration petitions also having been filed prior to 23rd October, 2015, those awards would become enforceable only if and when those petitions under section 34 were refused and not otherwise. A question was also before this Court that if Amendment Act is held applicable, whether after expiry of three months of the arbitral award, it becomes enforceable in accordance with the provisions of Code of Civil Procedure, irrespective of fact whether challenge has been filed under section 34 of the Act or not.

80. This Court recorded that there was no dispute between the parties as regards the specific meaning of the term arbitral carbp434-17 proceedings under the Arbitration Act. This Court also recorded that there was no dispute between the parties that the first part of section 26 carries restrictive meaning that the proceedings before the arbitral tribunal which proceedings get terminated on passing of the final award. It is held that by necessary implication, the saving section becomes exhaustive i.e. it takes within it’s fold all different types of proceedings arising out of the Arbitration Act. It is thus clear that in that judgment, there was no contest between the parties that the first part of saving section 26 carries restrictive meaning that the proceedings before the arbitral tribunal which proceedings get terminated with passing of the final award. The parties in that proceedings also did not dispute that the section 26 was consisting of two parts i.e. the arbitral proceedings before arbitral tribunal which are terminated by virtue of an order under section 32(1) and another arbitral proceedings before Court of law.

81. This Court held that if use of the verb “has been” is held to be in “present perfect tense”, section 36 of the Arbitration Act will be applicable not only to cases where a petition under section 34 of the Arbitration Act is filed after 23rd October, 2015 but also to cases where a petition has been filed before 23rd October, 2015. It is held that all the applications under section 34 pending in the Court for consideration will attract section 36(2) of the Amended Act. It is held that the vested right of the award-debtor under section 34 of the Arbitration Act is unaffected by the amendment to section 36 of the Arbitration Act. It is held that by the amended section 34 of the Arbitration Act, the shadow or impediment on the enforceability of the arbitral award has been removed to enable a successful claimant to enforce the arbitral award, unless the award-debtor obtains an order carbp434-17 of interim stay from the Court under section 36(3) of the Arbitration Act. The lifting of this shadow or impediment, on the enforceability of the arbitral award operates only in future i.e. after 23rd October, 2015 on the basis of an existing state of affairs, even if the award was passed or the petition under section 34 of the Arbitration Act was filed before 23rd October, 2015. The Amended section 36 of the Arbitration Act cannot be said to operate retrospectively, its operation is prospective in nature. This Court accordingly dismissed the chamber summons inter-alia praying for dismissing of the execution application.

82. A perusal of the judgment rendered by this Court in case of M/s.Rendezvous Sports World (supra) indicates that this Court has held in the said judgment that right vested in the party under section 34 of the Arbitration and Conciliation Act is unaffected and not taken away by the amendment to section 36 of the Arbitration Act. A vested right available to the award-debtor would be only in the matter of challenge to the arbitral award which had remained intact. It is held that section 36 of the Arbitration Act pertains only to the enforcement of an award and its executability. The original section 34, imposed a disability on the award-holder in executing the award during pendency of the challenge to the award. It is held that the right to interim relief cannot be a vested or accrued substantive right. The disability imposed on the award-holder under original section 36 was absolute. It is thus clear that even in the said judgment, it is held by this Court that insofar as right of an aggrieved party to challenge an arbitral award is concerned, the said right is a vested right accrued to him which is not affected by section 36 by virtue of insertion of such amendment by the Amendment Act.

carbp434-17

83. This Court in the said judgment in case of

M/s.Rendezvous Sports World (supra) held that the parties in that case were ad-idem and both the parties had agreed that the term ‘arbitral proceedings’ referred in section 26 of the Amendment Act refers to two separate arbitral proceedings i.e. one before the arbitral tribunal before rendering of an award and another before this Court of law after rendering of an award. In these proceedings however Mr.Jain learned counsel for the petitioner had strenuously urged before this Court that the term ‘arbitral proceedings’ used in section 26 of the Amendment Act referred to only one arbitral proceedings which commences upon receipt of notice invoking arbitration agreement under section 21 of the Arbitration Act and not two separate stages of arbitration proceedings i.e. one before the arbitral tribunal and another before this Court. In my view, he rightly placed reliance by the term ‘arbitral proceedings’ referred by the legislature in various sections and more particularly sections 9, 13, 16, 17, 21, 22, 27, 29, 29A, 30, 31, 31A, 32, 34, 38 and 77. In section 31A(1)(IV) of the Arbitration Act, the Court as well as the arbitral tribunal are empowered to award cost based on the expenses incurred in connection with the arbitral and Court proceedings.

84. The aforesaid provisions would clearly indicate that the term ‘arbitral proceedings’ referred is only one arbitral proceedings which commences by virtue of the receipt of notice under section 21 of the Arbitration Act by the other party. The arbitral proceedings commences even before a statement of claim is filed or even before appointment of an arbitral tribunal. In my view, the arbitral proceedings referred in section 26 of the Amendment Act and under carbp434-17 various provisions of Arbitration Act referred to aforesaid cannot be construed as proceedings before Court or cannot be construed as two separate proceedings at two different stages i.e. one which commences on receipt of notice invoking arbitration agreement under section 21 and another before a Court i.e. at the stage of challenging an award or otherwise.

85. In my view, a plain and simple interpretation of section 26 of the Amendment Act on conjoint reading with other provisions of the Arbitration Act referred to aforesaid wherein the term ‘arbitral proceedings’ are referred would clearly indicate that the provisions in the Arbitration and Conciliation Act prior to the provisions of Amendment Act having been brought into effect would apply to all the arbitral proceedings wherein a notice invoking arbitration agreement under section 21 was received by the other party prior to 23 rd October, 2015 and the provisions of the Arbitration Act duly amended by the Amendment Act would apply to all the arbitral proceedings which have commenced after 23rd October, 2015 by virtue of a receipt of notice invoking arbitration agreement by other party in view of section 21 of the Arbitration and Conciliation Act, 1996. The phrase “the date of commencement of the arbitral proceedings” is a legal fiction and has to be read in conjunction with the words “commenced in accordance with section 21”.

86. The judgment of this Court in case of M/s.Rendezvous Sports World (supra) thus to this extent does not support the case of the respondent but supports the case of the petitioner that the right to challenge an arbitral award is vested in favour of the aggrieved party and cannot be taken away by virtue of an amendment.

carbp434-17

87. The Supreme Court in case of Aravali Power Company Pvt. Ltd. vs. M/s.Era Infra Engineering Ltd., 2017 SCC OnLine 1072 has considered the applicability of the Amendment Act in a matter where notice invoking arbitration agreement was issued prior to 23rd October, 2015. During the pendency of the arbitral proceedings, section 12 of the Arbitration and Conciliation Act, 1996 was amended by the same Amendment Act. The respondent before the Supreme Court had invoked the amended provisions during the pendency of the arbitration proceedings before the learned arbitrator and had raised objection that the learned arbitrator was disqualified being an employee in view of the amendment to section 12(1) read with 7th Schedule. The respondent had also filed an application under section 14 seeking termination of the mandate of the learned arbitrator. High Court had entertained such application filed by the respondent before the learned arbitrator and the petitioner before the High Court. Supreme Court has reversed the said view of the High Court and has categorically held that in pre-amendment cases, the law laid down in Northern Railway Administration’s case must be applied and not otherwise.

88. It is held by the Supreme Court in that case governed by 1996 Act after the Amendment Act has come into force that if the arbitration Clause finds foul with the amended provisions, the appointment of the Arbitrator even if apparently in conformity with the arbitration Clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible. The procedure as laid down in unamended section 12 mandated disclosure of circumstances likely to give rise to carbp434-17 justifiable doubts as to independence and impartiality of the Arbitrator. Supreme Court accordingly interfered with the order of the High Court exercising jurisdiction in that case and held that the High Court ought not to have interfered with the process and progress of the arbitration. The principles laid down by the Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra) squarely applies to the facts of this case. This judgment of the Supreme Court is delivered after the date of delivery of the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and in case of Enercon GmBH (supra). This Court while delivering these judgments did not have benefit of the judgment of Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra).

89. In my view, the judgment of this Court in case of M/s.Rendezvous Sports World (supra) holding that there are two stages of arbitral proceedings referred in section 26 of the Amendment Act is based on the consensus of the parties and even otherwise contrary to the judgment of Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra). I am bound by the judgment of Supreme Court.

90. In case of Voestalpine Schienen GmbH vs. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665, the Supreme Court has considered a different situation where the notice invoking arbitration agreement was issued after 23rd October, 2015 and the arbitral proceedings had commenced after Amendment Act came into force. The appointment of the arbitrator was not in conformity with section 12(1) of the Amendment Act Supreme Court interfered with such appointment by applying the provisions of the Amendment Act, 2015. The Supreme Court distinguished the judgments delivered prior to the carbp434-17 said amendment to the facts of that case before the Supreme Court in view of the admitted fact that the notice invoking arbitration agreement was issued after 23rd October,2015.

91. This judgment of the Supreme Court is adverted to by the Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra) and was distinguished on the ground that in that matter, the notice under section 21 of the Arbitration Act was issued prior to 23rd October,2015. In my view the principles of law laid down by the Supreme Court would apply to the facts of this case to a situation where the notice under section 21 is issued after 23 rd October, 2015 thereby arbitral proceedings having commenced after 23rd October,2015. It is thus clear beyond reasonable doubt that if the notice under section 21 to invoke arbitration agreement has been received prior to 23rd October, 2015, the arbitral proceedings had commenced prior to 23rd October, 2015 and thus the provisions of the unamended Arbitration and Conciliation Act, 1996 would continue to apply to such proceedings before the arbitral tribunal as well as before Court and not the provisions of the Amendment Act. This Court in case of M/s.Rendezvous Sports World (supra) and in case of Enercon GmBH (supra) did not have benefit of the judgment of Supreme Court in case of Voestalpine Schienen GmbH (supra).

92. This Court in case of Marwadi Shares & Finance Ltd. vs. Miral Kanaksinh Thakore & Anr. (2014) 1 Bom.C.R. 481 has considered the amendment in the bye-laws and the regulations of Bombay Stock Exchange Limited which were amended during the pendency of the arbitral proceedings before the arbitral tribunal and by virtue of such amendment, the power to condone the delay in filing carbp434-17 the arbitration petition before the appellate bench was taken away. This Court after adverting to various judgments of the Supreme Court, including the judgment in case of Garikapati Veeraya vs. N. Subiah Choudhry, AIR 1957 SC 540 held that the rights and remedies accrued to the petitioner and subsequent rights and/or remedy in filing the proceedings before the superior Court or the appellate forum would continue and cannot be divested by the amendment unless it is shown clearly intended by the amendment to make it applicable with retrospective effect. It is held that the petitioner in that matter had filed the proceedings before the learned arbitrator. The right of filing an appeal against the impugned award, if any, and a right to file an application for condonation of delay on showing sufficient cause on the date of filing of the original proceedings would be continued.

93. It is held that the petitioner had vested right to impugn the arbitral award rendered by the sole arbitrator along with an application for condonation of delay in the event of delay by showing sufficient cause. The day on which the impugned award was rendered by the learned sole arbitrator, there was no amendment to bye-law 2 and the regulations of the Bombay Stock Exchange thereby taking away the powers of the appellate bench to condone the delay. This Court held that in such a situation section 6(e) of the General Clauses Act, 1897 would be attracted. This Court accordingly has set aside the order passed by the appellate bench of the Bombay Stock Exchange and directed that the appellate bench to hear the application for condonation of delay.

94. In this case also, it is not the case of any of the parties that section 34(5) an 34(6) inserted by the Amendment Act would be carbp434-17 applicable with retrospective effect. Even otherwise the intent of the legislation while inserting these two provisions does not indicate that the said provisions are brought into effect with retrospective effect. In my view, when the arbitration proceedings commenced in view of the notice issued by the petitioner under section 21 much prior to 23rd October, 2015 and since at that point of time, the petitioner was not required to issue any prior notice to the respondent before filing of the arbitration petition under section 34, merely because the award is rendered after 23rd October, 2015 and the petition is filed after the said amendment, the conditions imposed in section 34(5) and 34(6) cannot be made applicable to such matters where the arbitral proceedings had commenced much prior to the date of the amendment.

95. In my view, the parties would be governed by the right and remedy available to the parties existing on the date of invoking the arbitration agreement and not on the date of the award or on the date of filing of the arbitration petition unless the legislature so specifically provided for a different remedy or the conditions introduced by invoking such remedy in law with retrospective effect. In my view, section 34(5) and 34(6) thus cannot be pressed in the service by the respondent to deprive the petitioner of filing a petition challenging an award in such matters without issuing any prior notice to the respondent. In my view, the right of challenging the award under section 34 is a vested right to impugn the arbitral award which cannot be taken away by such amendment under section 34(5). The principles laid down by this Court in case of Marwadi Shares & Finance Limited (supra) applies to the facts of this case. In view of section 6(e) of the General Clauses Act, 1897, the parties who had carbp434-17 invoked the arbitration agreement prior to 23rd October, 2015, would be continued to be governed by the provisions applicable on the date of invocation of such arbitration agreement and not on the date when the arbitral award is rendered or when the arbitration petition challenging an arbiral award is filed.

96. The Supreme Court in case of Milkfood Limited (supra) has construed section 21 as well as section 85(2)(a) of the Arbitration & Conciliation Act, 1996 and also the provisions of section 37(3) of the Arbitration Act, 1940. It is held by the Supreme Court that the service of notice and/or issuance of request for appointment of an arbitrator in terms of the arbitration agreement must be held to be determinative of commencement of the arbitral proceedings. The Supreme Court adverted to the judgment in case of Thyssen Stahlunion GMBH (supra) and has held that the judgment in that case itself is an authority for proposition that in relation to the domestic arbitration proceedings, commencement thereof shall co- incide with the service of request / notice.

97. It is held by the Supreme Court that the commencement of the arbitration proceedings for the purpose of limitation or otherwise is of the Court’s conscience. If a proceeding commences, the same becomes relevant for many purposes including that of limitation. In paragraph 70 of the said judgment, it is held that those arbitral proceedings which were commenced before coming into force of the 1996 Act are saved and the provisions of the 1996 Act would apply in relation to the arbitral proceedings which commenced on or after the said Act came into force. Even for the said limited purpose, it is necessary to find out as to what is meant by commencement of carbp434-17 arbital proceedings for the purpose of the 1996 Act wherefor also necessity of reference to section 21 would arise. In my view, the principles laid down by the Supreme Court in case of Milkfood Limited (supra) would squarely apply to the facts of this case.

98. The reference to “arbitral proceedings” in section 26 of the Amendment Act refers to such proceedings at two different stages i.e. one before the Amendment Act came into effect and another after such amendment came into force i.e. after 23rd October, 2015. It is thus clear beyond reasonable doubt that the term “arbitral proceedings” referred in section 26 is one and the same proceedings which commences upon receipt of notice under section 21 by the other party and does not refer to two separate arbitral proceedings i.e. one before the arbitral tribunal and another before the Court of law. Section 21 of the Arbitration & Conciliation Act, 1996 does not apply to proceedings in Court. Arbitration proceedings in Court does not commence upon receipt of notice under section 21 of the Arbitration & Conciliation Act, 1996 by the other party. In my view, the intention of the legislature is very clear in this respect.

99. The date of filing of the arbitration petition under section 34 of the Arbitration & Conciliation Act, 1996 before 23 rd October, 2015 or after such date is not relevant for the purpose of deciding whether the parties will be governed by the provisions of the Arbitration & Conciliation Act, 1996 before insertion of the amendments by the Amendment Act or not.

100. This Court even today deals with the matters under section 30 of the Arbitration Act, 1940 in respect of which notice for carbp434-17 appointment of an arbitrator under section 37(3) of the Arbitration Act, 1940 was issued prior to the provisions of the Arbitration & Conciliation Act, 1996 came into effect. All such matters where the arbitral proceedings commenced under the provisions of Arbitration Act, 1940 are continued to be governed by the provisions of the said Act though an arbitration petition challenging the award under section 30 of the Arbitration Act, 1940 is filed after the Arbitration & Conciliation Act, 1996 came into force.

101. The Supreme Court in case of Andhra Pradesh Power Coordination Committee & Ors. vs. Lanco Kondapalli Power Ltd. & Ors., (2016) 3 SCC 468 has held that the notice of arbitration amounting to initiation of the arbitral proceedings as contemplated under section 21 of the Arbitration & Conciliation Act, 1996.

102. This Court in case of Board of Trustees of Jawaharlal Nehru Port Trust vs. Three Circles Contractors, (2015) SCC OnLine Bom. 951 has held that as the arbitration proceedings commences in respect of the disputes which are referred in the notice invoking the arbitration agreement on the date on which such notice is received by the respondent, limitation in respect of such disputes stops.

103. Insofar as the submission of the learned counsel for the respondent that the judgment of this Court in case of M/s.Rendezvous Sports World (supra) applies to the facts of this case and is binding on this Court is concerned, even in the said judgment, this Court has held that the Amendment Act does not repeal section 34. This Court in the said judgment has categorically carbp434-17 held that the vested right available to the award debtor would be only in the matter of challenge to the arbitration award which has remained intact and such right is unaffected by the amendment to section 36 of the Arbitration & Conciliation Act, 1996. In my view, Mr.Jain, learned counsel for the petitioner is right in his submission that impediment created by section 34(5) i.e. for issuance of prior notice before filing of the arbitration application cannot affect the vested right prescribed under section 34(1) of the Arbitration & Conciliation Act, 1996.

104. In this case, the petitioner had already served a copy along with a copy of the arbitration petition upon the respondent on 18 th April, 2017 i.e. after filing of the arbitration petition. In my view, learned counsel is right in his submission that the principles under section 4 of the Arbitration & Conciliation Act, 1996 are applicable to the present situation and issuance of such notice can also be waived by the respondent under section 4 of the Arbitration & Conciliation Act, 1996. The respondent in that matter has also filed a arbitration petition without issuing the notice under section 34(5) to the petitioner.

105. I shall now deal with the second issue arising in these matters as to whether the compliance of the requirement of prior notice contemplated under section 34(5) before filing an arbitration application under section 34(1) is mandatory or directory.

106. The Law Commission of India in its report dated 5 th August, 2014 had suggested various amendments to the Arbitration & Conciliation Act, 1996. Insofar as Note on section 34(5) in the said report is concerned, it is mentioned that the said provision of section carbp434-17 34(5) has been included to streamline the process and to cut short the long delays which occurs due to issuance of the notice.

107. Chapter XLIII-A of the Bombay High Court (Original Side) Rules provides for the rules relating to the Arbitration & Conciliation Act, 1996. It provides for the mode of application, contents of the petition and also provides for notice of filing an application to the persons likely to be affected. Rule 803-E provides that upon any application under the Act, the Judge in Chambers shall, if he accepts the petition, direct notice thereof to be given to all persons mentioned in the petition and to such other persons as may seen to him to be likely to be affected by the proceedings, requiring all or any of such persons to show cause, within the time specified in the notice, why the relief sought in the petition should not be granted. The said rules framed by this Court are statutory rules.

108. Rule 803-B clearly provides that save as otherwise provided in the said rules, all applications under the Arbitration & Conciliation Act, 1996 shall be made by the petitioner and shall be placed on board for admission after prior notice to all parties concerned. The Judge, may consider the admission of the Petition in exercise of his discretion even though no such notice is served on the other side. The Judge may admit or reject the Petition or pass such other orders thereon as he may deem fit. It is thus clear that all the respondents are required to be served with a copy of notice before the arbitration petitions are heard for admission. The recommendation of the Law Commission of India, in the said report that the purpose of introducing section 34(5) is to streamline the process and to cut short the long delays which accrued due to issuance of Court notice is carbp434-17 taken care of.

109. It is the practice of this Court not to hear any arbitration petition unless a copy of notice and the papers and proceedings are first served upon the opponents. Section 34(5) does not contemplate that after the prior notice is served, the petitioner is not required to serve the notice along with papers and proceedings upon the other party before the matter is heard for admission.

110. This Court in case of Ashraf Ahmed vs. The Municipal Corporation of Greater Bombay in First Appeal No.292 of 1999 has construed the requirement of notice under section 527 of the Mumbai Municipal Corporation Act and the consequence of non-compliance thereof. It is held that all the object of the notice under section 527 of the said Act is to give sufficient time to the Bombay Municipal corporation and/or its authorities to consider the prayer for redressal of the plaintiff’s grievances without resorting to any litigation. It is always open to the Bombay Municipal Corporation and/or its concerned authorities to waive the notice under section 527 of the Act or they may be estopped by conduct from pleading the want of notice. It is held that where the Bombay Municipal Corporation fails to raise a specific plea for want of notice at the earliest, by its conduct it may be estopped from pleading the want of notice at a later stage.

111. The Supreme Court in case of Macquire Bank Limited vs. Shilpi Cable Technologies Limited in Civil Appeal No.15135 of 2017 after adverting to the earlier judgment in case of Surendra Trading Company vs. Juggilal Kamalapat Jute Mills Company Limited & Ors. in Civil Appeal No.8400 of 2017 held that the carbp434-17 procedural provision cannot be stretched and considered as mandatory, when it causes serious general inconvenience. The Supreme Court also adverted to the earlier judgment in case of Mahanath Ram Das vs. Ganga Das, (1961) SCR 763 and held that such procedural orders, though peremptory are in essence in terrorem, so that dilatory litigants might put themselves in order and avoid delay, they do not, however, completely estop a Court from taking note of events and circumstances which happen within the time fixed.

112. This Court in case of Central Bank of India vs. Femme Pharma Limited & Ors., AIR 1982 Bom. 67 has construed the powers of Court under Rule 227 of the High Court (Original Side) Rules, 1980 and Rule 220(4) of the High Court (Original Side) Rules, 1957 and has held that though the suit is placed on board for dismissal, under the old Rules of 1957, the discretion of the Court was limited to sufficient cause being shown and if sufficient cause is not shown, the suit has to be dismissed. However, under the Rules of 1980, it only provides for a suit to be placed on board for dismissal but is silent on what happens thereafter. The new Rules of 1980 provides a wider discretion than before and the Court is not bound to dismiss the suit.

113. A perusal of section 34(5) read with section 34(6) of the Amendment Act makes it clear that even if prior notice is not given to the other party by the petitioner of filing an application under section 34 challenging an award and even if such application filed under section 34 is not decided by the Court within one year from the date of service of the said notice under section 34(5), no consequence of carbp434-17 such default is provided therein. Section 34(5) also does not provide the mode and manner of such service. Whether a copy of the arbitration petition along with annexures proposed to be filed also is required to be served along with such notice or not is not contemplated in the said provision.

114. The said provision also is silent on the issue i.e. if there are office objections raised by the office of this Court and if the petitioner is required to make any changes in the petition in the format or in the contents of the petition for the purposes of removal of such objections raised by the office, whether the petitioner is required to issue a fresh notice along with the papers with the corrections in the petition or not. Section 34(6) provides that such petition has to be disposed of within one year from the date on which the notice referred to in sub section 5 of section 34 is served upon the other party. If after giving the notice on the first day itself upon the receipt of the signed copy of the award from the arbitral tribunal,if the petitioner issues such notice as referred to in sub section 5 of section 34 and does not file the petition for the next three months or even within 30 days after expiry of three months and if filed within the time prescribed under section 34(3), the petition remains in the office objections for another six months, an application filed under section 34(1) obviously cannot be disposed of within a period of one year from the date on which a notice referred to in sub section 5 of section 34 is served upon the other party.

115. No consequence is provided in section 34(6) also if the arbitration petition is not disposed of by the Court within one year from the date of service of notice under section 34(5) of the carbp434-17 Amendment Act. For this reason also, I am of the view that the provisions of section 34(5) and 34(6) cannot be construed as mandatory but has to be construed as directory. In my view, the requirement of the notice under section 34(5) of the Amendment Act is procedural in nature and not a substantive provision. The compliance of such procedural provision without providing any consequences in case of defiance thereof thus cannot be construed as mandatory and has to be construed as directory. Even if a notice is not given prior to the date of filing of the petition, the right of challenging an award vested in section 34 of the Arbitration & Conciliation Act, 1996 cannot be taken away.

116. No substantive right is created on the other party even if such prior notice is not issued by the petitioner of filing the arbitration petition as contemplated under section 34(5) of the Amendment Act. If the arguments of the respondent is accepted, the Court has to dismiss such arbitration petitions which are filed without issuing prior notice under section 34(5) of the Amendment Act. The consequence of the petitioner not issuing such prior notice before filing of the arbitration petition would be serious and would amount to taking away the vested and substantive right available to the petitioner to impugn the arbitral award within the time prescribed under the Act. The procedure prescribed under section 34(5), can in my view be complied with even after the arbitration petition is filed by the petitioner under the said provisions or in accordance with the provisions of the High Court (Original Side) Rules.

117. The Supreme Court in case of Thirumalai Chemicals Limited vs. Union of India & Ors. (2001) 6 SCC 739 has held that carbp434-17 the procedural law established a mechanism for determining those rights and liabilities and a machinery for enforcing them, the same cannot be called a substantive right and an aggrieved person cannot claim any vested right. It is held that unless the language used plainly manifests in express terms or by necessary implication a contrary intention, a statute divesting vested rights is to be construed as prospective. A statue merely procedural is to be construed as retrospective and a statue which while procedural in its character, affects vested rights adversely, is to be construed as prospective.

118. In my view, Mr.Mehta, learned senior counsel and Mr.Jain, learned counsel have rightly contended that issuance of such notice under section 34(5) is a requirement however, not mandatory. The discretionary power is given to the Courts to look into the facts in each case and decide if the same has to be made mandatory or not. If the provision of section 34(5) is construed as mandatory, it would take away the discretionary powers from the Court. Any strict interpretation of such procedural provision will cause inconvenience to the parties and would result in lengthening the procedure and defeating the entire purpose of the Act itself. High Court (Original Side) Rules already provides sufficient protection to the other party for issuance of a notice before the matter is heard by the Court with a view to obviate any delay in the matter.

119. The Supreme Court in case of M/s.Babbar Sewing Machine Company vs. Trilok Nath Mahajan, (1978) 4 SCC 188 has held that the order for dismissal ought not be made under Order XI Rule 21, unless the Court is satisfied that the plaintiff wilfully withheld information or documents and the defence be struck out in case of carbp434-17 the defendant and placed in the same position as if he had not defended the suit. It is held that under the said provision, it is only when the default is wilful and only as a last resort that the Court should dismiss the suit or strike out the defence by exercising such power.

120. The Supreme Court in case of State of Goa vs. Western Builders, (2006) 6 SCC 239 has held that by virtue of section 43 of the Arbitration & Conciliation Act, 1996, Limitation Act, 1963 applies to the proceedings under the Act of 1996 and the provisions of the Limitation Act can only stand excluded to the extent wherever different period has been prescribed under the Act of 1996. It is held that since there is no prohibition provided under section 34, there is no reason why section 14 of the Limitation Act should not be read in the Act of 1996, which will advance the cause of justice. It is held that if the statute is silent and there is no specific prohibition then the statue should be interpreted which advances the cause of justice.

121. In my view since there is no consequence provided in section 34(5) as well as section 34(6) for non-compliance of the requirement mentioned therein, the Court has to balance the situation and exercise its discretionary power to permit the petitioner to issue notice along with papers and proceedings upon the other party even after the petition is filed to avoid any delay in disposal of such application. In my view section 34(5) cannot be equated with section 80 of the Code of Civil Procedure, 1908. In view of the fact that now by virtue of the amendment to section 36, merely upon filing of the arbitration application for challenging an award under section 34, there is no automatic stay, the petitioner who challenges the arbitral carbp434-17 award by filing an application under section 34 would not wait and would not cause any delay by not issuing notice upon the other party to obviate any situation of execution of award under the provisions of the Code of Civil Procedure, 1908. For this reason also, I am of the view that the requirement under section 34(5) has to be construed as directory and nor mandatory.

122. The Division Bench of this Court in case of Bankay Bihari G. Agrawal & Ors. vs. M/s.Bhagwanji Meghji & Ors., (2001) 1 Mh.L.J. 345 while construing the order 37 Rule 2 of the Code of Civil Procedure, 1908 has held that merely because the defendant fails to appear or file his Vakalatnama or fails to obtain leave to defend the suit, the suit cannot be decreed if the Judge is satisfied that there is no cause of action at all disclosed in the plaint. It is this wide discretion of the Court which has been expressly recognized in Rule

221. It it held that notwithstanding the somewhat peremptory phraseology used in Order 37, Rule 2(2), suggesting that no such discretion is vested in the Court, there is always vested in the Court the judicial discretion to permit a plaintiff to take advantage of the summary procedure or to relegate him to the normal remedy of a regular suit. It is held that mere failure of the plaintiff to take out a Summons for Judgment within six months after the filing of the plaint would not justify granting of unconditional leave to defend the suit.

123. The Supreme Court in case of Vidyawati Gupta & Ors. (supra) has construed the provisions of section 26(2) and Order 4 Rule 1, Order 6 Rule 15(4) and Order 7 Rule 1 to 8 as amended from 1st July, 2002 and has held that those provisions are procedural and directory and thus non-compliance thereof did not automatically carbp434-17 render the plaint non-est and was curable. The principles laid down by the Supreme Court in the said judgment would apply to the facts of this case.

124. The Supreme Court in case of Topline Shoes Limited (supra) construed the provisions of section 13(2)(a) of the Consumer Protection Act, 1986 by which time limit was prescribed for filing of version of the opposite party and has held that the said provision is directory and not mandatory. The Supreme Court in the said judgment held that the intention to provide a time frame to file reply, is really meant to expedite the hearing of such matters and to avoid unnecessary adjournments to linger on the proceedings on the pretext of filing reply. The provision, however, as framed, does not indicate that it is mandatory in nature. In case the extended time exceeds 15 days, no penal consequences are prescribed therefor. The period of extension of time “not exceeding 15 days”, does not prescribe any kind of period of limitation. The Supreme Court accordingly held that the provision appears to be directory in nature. It is held that the provision is more by way of procedure to achieve the object of speedy disposal of such disputes. But it falls short of creating any kind of substantive right in favour of the complainant by reason of which the respondent may be debarred from placing his version in defence in any circumstances whatsoever.

125. In section 34(5) also, no consequence is provided in the event of the petitioner not issuing any prior notice before filing of the arbitration petition under section 34 to the respondent. Similarly, there is also no consequence provided in section 34(6), if the Court is not able to dispose of the arbitration petition under section 34 within one carbp434-17 year from the date of service of notice contemplated under section 34(5) upon other party. The purpose and the legislative intent of inserting those provisions is the speeder disposal of the proceedings and not to penalise the petitioner for non-compliance of the procedure which is directory. Powers of the Court under section 34(5) are not circumscribed by powers under section 34(2).

126. The Madras High Court in case of M/s.Jumbo Bags Limited (supra) has construed the provisions of section 11(6-A) which is also inserted by the Amendment Act and after considering the fact that the notice invoking arbitration agreement was issued prior to 23rd October, 2015 and after adverting to the judgment of the Supreme in case of Milkfood Limited (supra) held that the amended provisions under section 11(6-A) would not come into play in that case. In my view, the principles laid down by the Madras High Court would clearly apply to the facts of this case. I am in complete agreement with the views expressed by the Madras High Court in the said judgment.

127. The Kerala High Court in case of Shamsudeen (supra) has considered the provisions of section 34(5) inserted by the Amendment Act and has considered the fact that the notice invoking arbitration agreement was issued much prior to 23rd October, 2015 and accordingly held that section 34(5) of the Amendment Act has no application to the facts of that case and thus the petitioner was not required to comply with the provisions of section 34(5). The facts before the Kerala High Court are identical to the facts of this case. The principles laid down by the Kerala High Court in the said judgment would squarely apply to the facts of this case. I am in carbp434-17 complete agreement with the views expressed by the Kerala High Court in the said judgment.

128. The judgments of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. vs. Ganesh Property (supra), in case of State of Maharashtra vs. Hindustan Construction Company (supra), in case of Roshanlal Kuthalia & Ors. vs. R.B. Mohan Singh Oberoi (supra) and in case of Snehadeep Structures Private Limited vs. Maharashtra Small – Scale Industries Development Corporation Limited (supra) also would assist the case of the petitioner.

129. The Supreme Court in case of Thirumalai Chemicals Limited (supra) has held that the right of appeal conferred under section 19(1) of the FEMA is a substantive right. Unless the language used plainly manifests in express terms or by necessary implication a contrary intention, a statute divesting vested rights is to be construed as prospective and a statue which is procedural in its character and affects vested rights adversely is to be construed as prospective. The principles of law laid down by the Supreme Court in the said judgment are applicable to the facts of this case.

130. Insofar as the judgment delivered by the Division Bench of the Patna High Court in case of The Bihar Rajya Bhumi Vikas Bank Samiti, Bihar – Jharkhand (supra) relied upon by the learned counsel for the respondent is concerned, a perusal of the said judgment clearly indicates that the Patna High Court in the said judgment has not dealt with the judgments of the Supreme Court holding that if the notice under section 21 is received by other party carbp434-17 prior to 23rd October, 2015, the provisions of the unamended Arbitration & Conciliation Act, 1996 would be applicable to the parties, whereas if such notice is received after 23rd October, 2015, the parties will be governed by the provisions of Amendment Act. The Patna High Court has also not considered the issue that there is no consequence provided in section 34(5) and 34(6) of the Amendment Act in the event of non-compliance of the said provisions. The Bombay High Court (Original Side) Rules specifically provides for issuance of notice by the petitioner upon the other party before the matter is heard by the Court. The judgment of the Patna High Court is thus clearly distinguishable and would not assist the case of the respondent.

131. The Supreme Court in case of Ananthesh Bhakta & Ors. vs. Nayana S. Bhakta, (2017) 5 SCC 185 has construed section 8(2) providing that the Judicial authorities shall not entertain the application or referring the disputes to arbitration unless the said application is accompanied by the original arbitration agreement or duly certified copy thereof and held that section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under section 8(1) unless it is accompanied by the original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the court is considering the application shall not entail rejection of the application under section 8(2). The Supreme Court refused to accept the contention that the said application filed under section 8(1) was not maintainable since the same was not accompanied by the original arbitration agreement or certified copy thereof.

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132. It is thus clear that though the words used in section 8(2) of the Arbitration & Conciliation Act, 1996 that the Judicial authorities shall not entertain the application which is without accompanying the requisite documents, the Supreme Court has not dismissed such application and has held that such documents can be filed and considered even at the stage of considering the application. In my view, this judgment would also support the case of the petitioner that sections 34(5) and 34(6) are directory and not mandatory. The principles laid down by the Supreme Court in the said judgment would apply to the facts of this case. I am respectfully bound by the said judgment.

133. Insofar as the submission of the learned counsel for the respondent that if section 34(5) is considered as directory, the entire purpose of the amendments would be rendered otiose is concerned, in my view, there is no merit in this submission made by the learned counsel for the respondent. Since there is no consequence provided in the said provision in case of non-compliance thereof, the said provision cannot be considered as mandatory. The purpose of avoiding any delay in proceeding with the matter expeditiously is already served by insertion of appropriate rule in Bombay High Court (Original Side) Rules. The Court can always direct the petitioner to issue notice along with papers and proceedings upon other party before the matter is heard by the Court for admission as well as for final hearing. The vested rights of a party to challenge an award under section 34 cannot be taken away for non-compliance of issuance of prior notice before filing of the arbitration petition.

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134. Insofar as the judgment of the Supreme Court in case of Union of India vs. Popular Construction Company Limited (supra) relied upon by the learned counsel for the respondent is concerned, the Supreme Court in the said judgment has construed sections 5 and 29(2) of the Limitation Ac, 1963, and also section 34 of the Arbitration & Conciliation Act, 1996. It is held by the Supreme Court that in view of section 29(2) of the Limitation Act, 1963, the period prescribed for limitation under section 34(3) of the Arbitration & Conciliation Act, 1996 would apply. The expression “but not thereafter” described in section 34(3) is interpreted by the Supreme Court and it is held that the Arbitration Act being a self-contained Code, the Court has no power to condone delay beyond the period of 30 days and that also provided sufficient cause is shown. The judgment of the Supreme Court in case of Union of India (supra) is clearly distinguishable and would not assist the the case of the respondent.

135. Insofar as the judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) is concerned, the Supreme Court in the said judgment has construed section 69(2) of the Partnership Act, 1932 and has held that the said provision with regard to an unregistered firm is a penal provision and has to be strictly construed. In my view since under section 34(5) of the Amendment Act, no consequence is provided, the said provision cannot be considered as a penal provision and cannot be construed strictly. Section 34(5) and the Arbitration & Conciliation Act, 1996 cannot be equated with section 69(2) of the Partnership Act. The judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) thus would not assist the case of the respondent. The judgment of carbp434-17 this Court in First Appeal No.302 of 2013 and reported in 76 Company Cases, 244 (Bom.) also would not assist the case of the respondent.

136. Insofar as the submission of the learned counsel for the respondent that the effect of section 34(5) is clearly to impose a bar against the institution of an application under section 34(1) and thus the same should be construed as mandatory and not directory is concerned, on plain reading of section 34(5), it is clear that there is no clear bar provided under the said provision for not accepting the arbitration petition filed under section 34 on record unless a notice to other party is issued by the petitioner before filing of such petition. I am not inclined to accept the submission of the learned counsel for the respondent that the judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) would assist the case of the respondent and not the case of the petitioner. If section 34(5) is considered as mandatory and if a petition filed before issuance of such notice is dismissed on the ground of non-compliance, whether period taken in pursuing such petition has to be excluded under section 14 of the Limitation Act, 1963 would also be a relevant factor.

137. Insofar as the other judgments referred to and relied upon by the learned counsel for the petitioner referred to aforesaid, which are sought to be distinguished by the learned counsel for the respondent is concerned, in my view, learned counsel for the respondent could not distinguish any of those judgments. This Court has already dealt with those judgments in great detail in the earlier paragraphs of this judgment and are found clearly applicable to the facts of this case and assist the case of the petitioner.

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138. The conclusion drawn by this Court in this judgment is summarized as under :-

a). If notice invoking arbitration agreement is received by other party prior to 23rd October, 2015, the arbitration proceedings would commence prior to 23rd October, 2015. The provisions of the Arbitration & Conciliation Act, 1996 in force prior to 23 rd October, 2015 would be applicable to such matters for all the purposes.

b). If notice invoking arbitration clause is received by other party after 23rd October, 2015,the parties will be governed by the provisions of the Arbitration & Conciliation (Amendment) Act, 2015 for all the purposes.

c). The date of filing of the arbitration petition under section 34(1) of the Arbitration & Conciliation Act, 1996 is not relevant for the purpose of deciding the applicability of the provisions of the Arbitration & Conciliation Act, 1996 i.e. pre-amendment or post amendment.

d). The expression “arbitral proceedings” described in section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 refers to two different periods i.e. (i) before 23rd October, 2015 and (ii) after 23rd October, 2015. The expression “in relation to the arbitral proceedings” provided in section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 does not refer to the arbitral proceedings in Court. The expression “in relation to the arbitral proceedings” prescribed in section 26 has to be read with section 21 of the carbp434-17 Arbitration & Conciliation Act, 1996.

e). Even in those cases where the notice invoking arbitration agreement under section 21 is received by other party after 23rd October, 2015, the provisions under section 34(5) and 34(6) are directory and not mandatory. The Court has ample power to direct the petitioner to issue notice along with papers and proceedings upon the respondent after the petitioner files the arbitration application under section 34(1) and before such petition is heard by the Court at the stage of admission.

f). The questions framed in the earlier part of the judgment are answered accordingly. The office is directed to place all the arbitration petitions in which an issue as to whether the provisions of section 34(5) and 34(6) of the Arbitration & Conciliation (Amendment) Act, 2015 are mandatory or directory on board for admission on 28 th February, 2018.

(R.D. DHANUKA, J.)

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