- (1.) The petitioner has filed this application for setting aside of an award dated 8th May, 2014 passed by a sole Arbitrator. The award was passed in favour of the respondents. The principal grievance of the petitioners against the award appears to be that the award was passed on the basis of an agreement which is manufactured and forged. The said alleged agreement contains an arbitration clause. The petitioners never intended to enter into any arbitration agreement. The award passed is an unreasoned award. The Arbitrator appointed at the instance of the respondents was regularly representing the respondents in various proceedings.
(2.) The petitioners admit to have received a notice of arbitration on 3rd October, 2013 from the named Arbitrator. The petitioners alleged that the petitioners did not receive any copy of the statement of facts. The petitioners alleged that although they have received letters dated 3rd October, 2013 and 30th September, 2013 but the petitioners could not remember and or trace out any other letter wherefrom it could be ascertained that the statement of claim or minutes of the proceeding were communicated to the petitioners. The petitioners alleged that the agreement and the cheques relied upon by the respondents in the proceeding were issued in consideration of stock of paddy to be supplied to the petitioners by the respondents. The petitioners alleged that the respondents are supplier of paddy. The petitioner no.2 signed some cheques in the month of March 2013 with the object of handing over the same to one Mr. Manoj Kumar Patni and Sandip Kumar Patni being the suppliers and traders of the paddy in connection with an agreement arrived at between the petitioners and the persons named aforesaid. The petitioner no.2 signed few cheques with the intent to hand over the said cheques to Manoj and Sandip on 1st March, 2013 but they refused to receive those cheques on the ground that they had no stock of paddy as required by the petitioners at the relevant point of time and they assured the petitioners to receive those cheques subsequently as and when required amount of paddy was available with them. Thereafter, the said cheques were kept under lock and key in an almirah lying at the petitioners' office at Kharupetia. However, in the month of November, 2013 and subsequently in January and February, 2014 the petitioners received letters dated 19th November, 2013, 20th January, 2014 and 25th February, 2014 calling upon the petitioners to attend arbitration proceeding but for alleged non-supply of documents, the petitioners did not participate in the said proceeding. It is alleged that the respondents have initiated arbitration proceeding by practicing fraud upon the petitioners as also upon the Arbitrator by falsely representing that the petitioners are the investors of the company. The petitioners alleged that the petitioners had no business dealings with Ratan Lal Poddar.
(3.) The award holder on the other hand contends that the petitioners were aware of the existence of the agreement and have deliberately avoided the arbitration proceeding and at this stage the petitioners could not be heard to contend that there is no valid arbitration agreement. In the supplementary affidavit filed by the respondents, documents have been disclosed to show that letter of demand followed by the notice under Section 21 of the Arbitration and Conciliation Act, 1996, were issued and duly served upon the petitioners and it could not be contended at this stage that the petitioners had no notice of the said proceeding or that the agreement is forged. The letter of demand and the notice under Section 21 of the Act specifically refers to the agreement which is now sought to be challenged. Mr. Sarbapriya Mukherjee, learned Counsel appearing on behalf of the petitioner submits that in a proceeding for setting aside of the award, the petitioner can question the existence of the arbitration agreement and/or the agreement containing the arbitration clause. It is submitted that if the document is forged and fabricated it becomes an unenforceable agreement and any award passed on the basis of such document is void ab initio. It is submitted that the arbitrator is a creature of the agreement and having regard to the fact that the said agreement is forged and fabricated, the arbitrator could not have assumed jurisdiction on the basis of the said document and, accordingly, the said award is a nullity. According to the learned Counsel it matters little as to whether the petitioners have appeared before the Arbitral Tribunal and questioned its jurisdiction to arbitrate the dispute on the basis of the forged document and the right to question the validity of the agreement in this proceeding on the ground of fraud is not lost merely on the ground of nonappearance before the Arbitration. It is submitted that the document on which reliance was placed by the award holder refers to various cheques which are all "self" drawn cheques alleged to have been given as a security against the deposits. It is extremely unusual that "self" drawn cheques would be given by the petitioners as securities for alleged loan. The learned Counsel in support of the aforesaid submission has relied upon the following decisions:- i) Prasun Roy Vs. Calcutta Metropolitan Development Authority & Anr., 1987 4 SCC 217 ; ii) Inder Sain Mittal Vs. Housing Board, Haryana & Ors., 2002 3 SCC 175 Paragraph 12; iii) Surendra Kapoor Vs. Prabir Kumar, 2007 3 ArbLR 97 Paragraphs 5 and 6; iv) Mohinder Pal Singh VS. Northern Railway, 2008 1 ArbLR 363 Paragraphs 17 and 18; v) Drishticon Properties (P) Ltd. VS. Chopra Marketing Pvt. Ltd. & Ors, 2009 1 ArbLR 353; vi) Union of India Vs. Pam Development Pvt. Ltd.,2008 112 CalWN 162 ; vii) Centrotrade Minerals & Metals Inc. Vs. Hindustan Copper Ltd., 2006 11 SCC 245; viii) Great Eastern Energy Corporation Ltd. VS. Jain Irrigation Systems Ltd., 2012 1 CalHN 34 ; The learned Counsel has submitted that in a proceeding for setting aside of the award, the Court can look into the document and if required to determine the said issue by trial on evidence. It is submitted that the element of fraud goes to the root of the matter and vitiates the proceeding. The arbitrator has no jurisdiction to decide the issue relating to fraud and the Civil Court can only decide such issue. It is submitted that even if the petitioners may not have appeared before the Arbitral Tribunal but it is incumbent upon the Arbitral Tribunal to apply its mind and consider the evidence before arriving at a finding.;