Case Note & Summary
The judgment concerns two arbitration petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an ex-parte arbitral award dated 24th September, 2013. The petitioner, M/s. Auto Craft Engineers, a partnership firm, had entered into a leave and licence agreement with the respondent, Akshar Automobiles Agencies Private Limited, on 16th March, 2009, for a portion of property admeasuring 20,000 sq. ft. in Thane. The petitioner deposited Rs.25 lacs as security deposit. The agreement had a locking period of 12 months. The petitioner alleged that the premises were not vacant as they were occupied by a previous licensee, M/s. Global Gallarie, and that the petitioner never occupied the premises. The respondent claimed that the petitioner breached the agreement and terminated it, leading to arbitration. The arbitrator passed an ex-parte award allowing the respondent's claims. The petitioner contended that it did not receive proper notice of the arbitration proceedings and was denied an opportunity to present its case. The court examined the procedural history and found that the arbitrator had issued notices to the petitioner at an incorrect address, and there was no evidence that the petitioner received the notice. The court held that the ex-parte award was passed in violation of principles of natural justice and set it aside, remanding the matter back to the arbitrator for fresh consideration after giving both parties an opportunity to be heard.
Headnote
A) Arbitration Law - Setting Aside Ex-Parte Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Natural Justice - The court considered whether an ex-parte award passed without proper notice to the petitioner violated principles of natural justice. The court held that the arbitrator failed to ensure that the petitioner received notice of the arbitration proceedings, and thus the award was set aside. (Paras 1-31) B) Leave and Licence Agreement - Security Deposit - Breach of Contract - The dispute arose from a leave and licence agreement where the petitioner deposited Rs.25 lacs as security. The respondent claimed breach and termination, leading to arbitration. The court did not decide on merits but focused on procedural irregularity. (Paras 3-5)
Issue of Consideration
Whether the ex-parte arbitral award dated 24th September, 2013 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the petitioner was not given proper notice of the arbitration proceedings and was thus denied an opportunity to present its case.
Final Decision
The court set aside the ex-parte arbitral award dated 24th September, 2013 and remanded the matter back to the arbitrator for fresh consideration after giving both parties an opportunity to be heard.
Law Points
- Section 34 of the Arbitration and Conciliation Act
- 1996
- Natural Justice
- Ex-parte Award
- Notice of Arbitration Proceedings
- Setting Aside Arbitral Award
