Weight Of Arbitration Award (Delivery) Cannot Be Just 55 Grams: Andhra Pradesh High Court

The bench of Justice R. Raghunandan Rao also held that an arbitral award passed in violation of Section 7 and 11 of the A&C Act would be a nullity. It held that in absence of an arbitration agreement, there cannot be any arbitration between the parties. Moreover, in absence of the consent of both the parties, an arbitrator cannot assume jurisdiction

Facts

The parties entered into a contract of service dated 07.05.2006 by which the petitioner was employed as a Steward in the airlines of the respondent/applicant. The contract was terminated vide notice dated 27.12.2009. Certain disputes arose between the parties when the petitioner claimed to have suffered injuries during the term of his employment for which he sought compensation.

The petitioner unilaterally appointed the arbitrator in the year 2017. The arbitrator partly allowed the claims of the petitioner and awarded a sum of Rs. 4 Crores as compensation vide an ex-parte award dated 20.08.2017.

The petitioner and the arbitrator had sent certain consignments to the respondent/applicant allegedly containing a copy of the award, however, the respondent/applicant denied having received any such award.

The respondent/applicant received a show cause notice dated 05.11.2018, issued by the erstwhile High Court at Hyderabad for the State of Telangana and the State of Andhra Pradesh in C.R.P.No.3897 of 2018 filed by the petitioner. Upon coming to know of this Award, the petitioner had addressed communications to the said sole Arbitrator who supplied a copy of the Award to the petitioner. Thereafter, the respondent filed ICOMA.O.A.No.2 of 2019, on 27.12.2018, under Section 34 of the Act.

Grounds of Challenge

The respondent/applicant challenged the award on the following grounds:

• The arbitral award is liable to be set aside as the parties did not have any arbitration agreement/clause between themselves, therefore, the award does not fulfil the requirement of Section 7 of the Act.
• The respondent/applicant did not receive any notice of arbitration or arbitral proceedings.
• The award is also violative of Section 11 of the Act as the only manner in which the arbitrator could be appointed in case of disagreement between the parties was by the High Court in exercise of its power under Section 11 of the Act and the High Court could not have assumed the jurisdiction as his appointment was non-est in law.
• The arbitrator has wrongly applied the Indian Law to the contract as the parties had specifically agreed to the application of laws of Dubai, UAE.

The petitioner objected to the maintainability of the petition on the following grounds:

• The petition is liable to be dismissed having been filed a long after the expiry of the limitation period given under Section 34(3) of the Act.
• The award was passed in the year 2017 and the petition was filed much later in the year 2019, therefore, the period of limitation had long expired when the petition was filed.
• The copy of the award was delivered to the petitioner on 0.08.2017 vide courier.
• The respondent/applicant cannot challenge an arbitral award de hors Section 34 of the Act.

Analysis by the Court

Firstly, the Court dealt with the grounds of absence of arbitration agreement and the method of appointment of arbitrator.

The Court held that the award was passed without there being an arbitration agreement between the parties. It held that agreement is sine qua non for arbitration to happen and in absence of it, there cannot be any valid arbitration. It observed that the petitioner has failed to bring on record any document which indicates that the parties had any arbitration agreement/clause between themselves.

Further, it held that the arbitrator could not have assumed jurisdiction merely because it did not receive any response from the respondent/applicant. It held that, on denial of the respondent/applicant to go for arbitration, the correct recourse for the petitioner was to file an application for appointment of an arbitrator, however, it did not approach the High Court but itself appointed the arbitrator, thus, the award has resulted in violation of Section 11 as well.

Next, the Court examined the objection regarding the expiry of limitation for filing the petition. The Court rejected the contention of the petitioner that the copies of the award was served on the respondent/applicant on 20.08.2017. It observed that as per the postal receipts from the same date the weight of the cover letter of the petitioner was merely 14 grams and the weight of the arbitrator's cover letter was only 55 grams. Further, the postal receipt does not mention the address to which it is delivered.

The Court held that the cover letters/consignments sent by the petitioner and the arbitrator do not inspire confidence as they weigh only 55 grams, and a cover containing the Award would weigh more than that.

Consequently, the Court held that the respondent/applicant became aware of the award only when the show cause notice dated 05.11.2018 was served on it and it then received a copy from the arbitrator, therefore, the petition was filed within the limitation period.

Accordingly, the Court set aside the arbitral award.

Case Title: SAMPATHRAO SUDHAKAR v. EMIRATES INTERNATIONAL AIRLINES, ICOMAOA No. 1&2 of 2019

Date. 05.08.2022

Counsel for the Respondent/applicant: Ms. Ritu Singhmann and Ms. T. Alekhya Reddy

Counsel for the Petitioner: Mr. Vedula Venkata Ramanna, Senior Advocate with Mr. Doddala Prudhvi Teja

Citation: 2022 LiveLaw (AP) 134 

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