1. By this petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (for short âArbitration Actâ?) the petitioners have impugned the arbitral award dated 17th July 2015 passed by the arbitral tribunal dismissing the claim filed by the petitioners. Some of the relevant facts for the purpose of deciding this petition are as under:
2. The petitioners were the original claimants whereas, the respondents were the original respondents in the arbitral proceedings. The petitioner no.1 is an association of persons consisting of Jain individuals situated at Nashik and is operative in Nashik. The respondent no.1 is a Federation of all the Jain groups located all over the world. The petitioner no.1 is also a Member of the respondent no.1. The respondent no.2 was the President of the respondent no.1 for the period 2014-15. The respondent no.3 was the Vice President of the respondent no.1 for the tenure of 2014-15. The petitioner no.2 is a Member of the petitioner no.1. The respondent no.1 is governed by its Constitution which is annexed at Exhibit-B to the petition.
3. The Managing Committee of the respondent no.1 as per its Constitution is as under:-
a) President.
b) President Elect-1.
c) President Elect-2.
d) Immediate Former President.
e) Vice President (total-5).
f) Vice President (Overseas).
g) Secretary General.
h) Secretary.
i) Joint Secretary.
j) Treasurer.
4. The tenure of the Managing Committee of the respondent no.1 is for one year commencing from 1st April of every year upto 31st March of next year and the elections are held every year. However, for the post of President and President Elect-1, no election was held. Every year, the current President Elect-1 automatically becomes the President of next coming year and the current President Elect-2 automatically becomes the President Elect-1 of next coming year.
5. It is the case of the petitioners that the petitioner no.1 had nominated its former President i.e. petitioner no.2 as its representative and accordingly, he was initially elected upon the Managing Committee as Vice President for 5 terms and for the year 2013-14 for the post of President Elect-2. It is also the case of the petitioner no.1 that for the year 2014-15, the petitioner no.2 thus automatically became the President Elect-1 and as per the Constitution and structure of the respondent no.1, the petitioner no.2 further automatically become eligible as President for the year 2015-16 starting from 1st April 2015 upto 31st March 2016.
6. It is the case of the petitioners that due to dirty politics played by the respondent nos.1 to 3 alongwith the other individuals and due to his dissatisfaction with the Managing Committee members, it became difficult for the petitioner no.2 to work peacefully as President Elect-1. On 21st August 2014, the petitioner no.2 tendered his resignation from the post of President Elect-1 to the respondent no.2 being the then President of the respondent no.1. It is the case of the petitioners that due to the said incident, all the other Committee members from Nashik region also tendered their resignations on the same day by writing separate letters. On 21st August 2014, totally 12 members had resigned from their respective posts. It is the case of the petitioners that all these resignations were received by the respondent no.1 immediately and till 9th November 2014, no action was taken upon the said resignations by the respondent no.1 and were not accepted. All such persons were working as the Managing Committee members on their respective posts.
7. It is the case of the petitioners that all such Managing Committee members, who had tendered their respective resignation, however, due to persistence of the community members and in view of the larger interest of the Jain community, all of them including the petitioner no.2 addressed a letter dated 7th November 2014 and withdrew their resignation. The respondent no.2 being the then President of the respondent no.1 was also informed about the withdrawal of such resignation by the petitioner no.2 and the other Committee members by personal hand delivery of the letter dated 7th November 2014 and also by e-mail.
8. On 9th November 2014, the Managing Committee members of the respondent no.1 had alleged to have held a meeting in which the resignation of the petitioner no.2 was accepted. In so far as the other seven Managing Committee members who had tendered the resignations along with the petitioner no.2 are concerned, their resignations were rejected.
9. The respondent no.2 by his letter dated 20th November 2015 informed the petitioner no.2 that his resignation had been accepted on 9th November 2014. It is the case of the petitioners that the respondent nos.1 and 2 did not send a copy of the Minutes of Meeting dated 9th November 2014 to the petitioners even till the proceedings were filed by the petitioners before the arbitral tribunal. Only during the course of the arbitral proceedings, the respondents had placed reliance on the said Minutes of Meeting. The petitioner no.2 vide his letter dated 2nd February 2015 made a grievance to the petitioner no.1 about acceptance of the resignation of the petitioner no.2.
10. The petitioners preferred an application on 19th February 2015 to the respondent no.1 and sought appointment of an arbitrator for resolving the dispute. The petitioner no.1 also addressed a letter on 4th March 2015 to the respondent no.1. The respondent no.1 through its Secretary General issued a notice and agenda dated 5th March 2015 calling for a meeting to be held on 11th March 2015 for deciding the subject of appointment of an arbitrator and for resolving the dispute in respect of the application dated 19th February 2015 made by the petitioners. A copy of such agenda was not furnished to the petitioners. It is the case of the petitioners that when the petitioner no.2 had gone to attend the meeting of another sister association i.e. Jain Social Groups Federation Foundation at the same venue and the same time, he came to know about such meeting.
11. The petitioner no.2 accordingly attended the said meeting at 12 noon on that day. In the said meeting, the said agenda was not discussed and arbitrator was not appointed by the respondent no.1. It is the case of the petitioners that the respondent no.1 issued another notice and agenda dated 5th March 2015 under the signature of the then President i.e. respondent no.2 which were received by the petitioner no.2 wherein it was stated that the respondent no.3 as the President of the respondent no.1 will address her welcome speech and an opening remark as a President for the year 2015-16 on 26th March 2015 at 6.00 p.m. alongwith the other matters at Hyderabad.
12. On 18th March 2015, the petitioner no.1 also preferred an Arbitration Case No.6 of 2015 in the Court of the Principal and District Judge at Nashik. The said application was opposed by the respondents by filing a reply dated 24th March 2015 on the ground that the resignation letter dated 21st August 2014 was already accepted and therefore, there was no question of withdrawing the resignation on 7th November 2014. The learned Principal and District Judge, Nashik however in view of Clause 29 of the Constitution of the respondent no.1 about jurisdiction to Court at Mumbai, by an order dated 25th March 2015, disposed of the said application and granted liberty to the petitioners to institute a case in appropriate Court.
13. The petitioners thereafter filed Arbitration Petition (L) No.553 of 2015 in this Court. On 27th March 2015, this Court granted ad-interim relief in favour of the petitioners directing that the respondent no.1 shall not administer an oath to the respondent no.3 and her team to take charge of the office of the President.
14. This Court by an order dated 23rd April 2015 disposed of the said Arbitration Petition (L) No.553 of 2015 and by consent of the parties, appointed an arbitrator with a direction to adjudicate the dispute and differences between the parties and to pass an award within one month from the date of the said order and continued ad-interim relief granted on 27th March 2015 in the meantime. The petitioners submitted their statement of claim before the learned arbitrator inter alia praying for various reliefs including for a declaration that the appointment of the respondent no.3 or any other person, except the petitioner no.2, as President of the respondent no.1 for the year 2015-16 with effect from 1st April 2015 onwards was ex facie illegal and void ab-initio and that the petitioner no.2 is the President of the respondent no.1.
15. The learned sole arbitrator rendered an award dated 5th May 2015 declaring that from 1st April 2015 upto 9th May 2015, the petitioner no.2 was the President of the respondent no.1 and from 10th May 2015 upto 31st March 2016, the respondent no.3 was the President of the respondent no.1. The learned sole arbitrator did not decide the controversy about the legality of the withdrawal and acceptance of the resignation of the petitioner no.2. The petitioners challenged the said award in this Court by filing the Arbitration Petition (L) No.952 of 2015. By an order dated 8th May 2015, this Court disposed of the said Arbitration Petition (L) No.952 of 2015 and the arbitral award dated 5th May 2015 was set aside and referred the dispute to a panel of three arbitrators.
16. The arbitral tribunal was directed to pass a fresh award without being influenced by the observations, findings and conclusion of the learned sole arbitrator rendered in the award dated 5th May 2015. The parties were granted liberty to file pleadings, documents and evidence in addition to earlier pleadings. This Court directed the arbitral tribunal to make an endeavour to pass an award within 60 days from the date of first meeting. This Court also continued the ad-interim relief granted on 27th March 2015 in the meantime and also for a period of four weeks from the date of declaration of the award. Both the parties filed their additional pleadings before the arbitral tribunal. The respondent no.1 also filed their affidavit-in-reply.
17. On 17th July 2015, the arbitral tribunal made an arbitral award and rejected the statement of claim filed by the petitioners. The said arbitral award is impugned by the petitioners in this petition on various grounds.
18. Mr.Karnik, learned counsel for the petitioners submits that there is no provision in the Constitution of the respondent no.1 regarding tendering and acceptance of the resignation. He submits that the petitioner no.2 as well as seven other Committee members had tendered their resignation to the respondent no.1 on 21st August 2014. He submits that the said resignation tendered by the petitioner no.2 and the seven other Committee members were not accepted by the respondent no.1 any time prior to 7th November 2014. He submits that vide letter dated 7th November 2014, the petitioner no.2 and the other seven Committee members withdrew their resignation with immediate effect. It is submitted by the learned counsel that the petitioner no.2 was informed for the first time by the respondent no.1 vide their letter dated 20th November 2014 that the resignation of the petitioner no.2 was accepted for the post of President Elect-1 with a great regret by the Office Bearers and Board of International Directors in the meeting held on 9th November 2014. The petitioner no.2 was also conveyed that as per the alleged desire of the petitioner no.2, the respondent no.1 has not accepted the resignation of the other members of the Committee. It was mentioned in the said letter that the resignation of the petitioner no.2 for the post of President Elect-1 was accepted but his active contribution for the enhancement of Jain Social Group movement would be highly appreciated. He submits that since the petitioner no.2 had already withdrawn his resignation vide letter dated 7th November 2014, the respondent no.1 could not have accepted the resignation of the petitioner no.2 dated 21st August 2014 after withdrawal of the said resignation and the same was improper and illegal.
19. It is submitted by the learned counsel for the petitioners that the respondent no.1 did not admittedly accept the resignation of the other seven Committee members in the said meeting which would indicate that the act of the resignation of the withdrawal was not an unilateral act and was required to be accepted or rejected subsequently by the respondent no.1 and until such decision was taken, the person tendering the said resignation enjoys the said post. The petitioners have referred to the judgment of the Supreme Court in the case of Power Finance Corporation Ltd. Vs.Promod Kumar Bhatia, reported in (1997) 4 SCC 280 as well as the judgment of the Division Bench of this Court in the case of Rakesh Rai Vs.M/s.National Aviation Company of India and Anr., decided on 8th July 2013 in Writ Petition No.287 of 2003.
20. Learned counsel appearing for the petitioners submits that the respondent no.3 could not have been appointed directly to the post of President Elect-1 in place of the petitioner no.2 and consequently to the post of the President. He submits that the appointment of the respondent no.3 was totally illegal. He submits that though in the impugned award, the arbitral tribunal has rendered a finding that in view of clauses 12(A) (iii) and 12(B)(v) of the Constitution of the respondent no.1-Federation, the respondent no.3 was not eligible for the post of President Elect-1 and thereafter to the post of President, the arbitral tribunal rejected the entire claim filed by the petitioners. He submits that the award shows patent illegality. Though the finding of illegal appointment of the respondent no.3 was rendered by the arbitral tribunal in the impugned award against the respondent no.3 and in favour of the petitioners, the entire claim of the petitioners came to be rejected illegally.
21. Learned counsel appearing for the petitioners also invited my attention to the agenda dated 27th October 2014 which reads thus:-
âto decide the situation on receipt of resignation of Shri Mohan Bagmar from the post of President Elect-1 and Office Bearers of Nashik Zone.â?
My attention is also invited to the Resolution dated 9th November 2014 passed by the respondent no.1 and in particular paragraph 4 thereof stating that âafter long discussion the resignation of Shri Mohan Bagmar, President Elect-1 has been accepted with great regret.â? In the said paragraph, it is also recorded that it is also decided that the resignations of other Office Bearers of Maharashtra Region Resignation have been not accepted and has given instruction to Maharashtra Region to restore original posts to all Office Bearers who have offered the resignation.â? It is submitted by the learned counsel for the petitioners that it is thus clear that the resignation of the petitioner no.2 was accepted for the first time only in the said meeting held on 9th November 2014 which was after withdrawal of such resignation of the petitioner no.2.
22. Learned counsel for the petitioners submits that in the letter of the respondent no.1 dated 20th November 2014, the respondent no.1 has referred to the resignation letter dated 21st August 2014 and withdrawal email dated 7th November 2014 which clearly indicate that the respondent no.1 had already received email of 7th November 2014 withdrawing the resignation dated 21st August 2014. He submits that the respondent no.1, however, in the said letter alleged that there was a subsequent telecommunication between the parties and in view thereof, the respondent no.1 had accepted the said resignation of the petitioner no.2 dated 21st August 2014 in the meeting held on 9th November 2014.
23. Learned counsel for the petitioners invited my attention to the affidavit-in-reply filed by the then Secretary General of the respondent no.1 before the arbitral tribunal accepting the fact that even after withdrawal of the resignation of the petitioner no.2, the Board of Directors had accepted by majority the resignation after two days which was done inadvertently. In the said affidavit-in-reply, it was admitted that the issue of withdrawal of the resignation was considered in the meeting held on 11th March 2015 and after a long discussion, it was decided by all the members present in the said meeting that in order to strengthen the Jain Social Group movement the matter should be referred to four former Presidents to take the appropriate and necessary decision about the subject within one week. However, since no appropriate and necessary decision was taken by those members within one week, the petitioners approached this Court. In paragraph 5 of the affidavit-in-reply, it was stated that the respondent no.1 was not denying any of the claims of the petitioners which were rightful under the Constitution and, therefore, whatever decision taken by the arbitral tribunal would be acceptable by the respondent no.1.
24. It is submitted that though the said affidavit-in-reply was filed by an authorised representative and the then Secretary General of the respondent no.1 before the arbitral tribunal, the arbitral tribunal considered the affidavit-in-reply dated 12th June 2015 filed by one Mr.Haresh Vora, purportedly representing the respondent no.1 whose term as President for the year 2014-15 had already come to an end. He submits that the arbitral tribunal could not have ignored the affidavit-in-reply already filed by the respondent no.1 which was forming a part of the record and could not have considered the second affidavit-in-reply which was inconsistent with the stand already taken by the respondent no.1 in the earlier affidavit-in-reply which was filed through the Secretary General, the authorised representative of the respondent no.1.
25. Dr.Saraf, learned counsel appearing for the respondents, on the other hand, submits that since there was no provision in the Constitution of the respondent no.1 to accept the resignation tendered by any members, the said resignation immediately came into effect upon receipt of such resignation by the respondent no.1. He submits that merely because the respondent no.1 passed a separate Resolution which was in subsequent point of time after purported withdrawal of such resignation of the petitioner no.2, the same was of no consequence. The act of withdrawal of the resignation of the petitioner no.2 was an unilateral act and thus the same came into effect immediately upon the petitioner no.2 tendering such resignation. Learned counsel submits that the arbitral tribunal has already considered this issue at length by considering the provision of the Constitution of the respondent no.1 and the award thus cannot be interfered with by this Court under Section 34 of the Arbitration Act. He submits that the impugned award is in consonance with the principles of the law laid down by the Supreme Court in the case of Moti Ram Vs.Param Dev and Anr., reported in AIR 1993 SC 1662 and in particular paragraphs 15, 20 and 21 thereof.
26. Reliance is also placed on the judgment of this Court in the case of Prakash Mahadeo Khot and Ors. Vs.Maruti Dadu Khot and Ors. reported in 2005(4) Bom.C.R. 568. He submits that if the resignation is a bilateral act in the sense that an acceptance of the resignation is necessary before it is effective, than only the person tendering resignation can withdraw it before its acceptance. The petitioner no.2 could not have withdrawn such resignation under the Constitution of the respondent no.1 as the said act was unilateral act and thus came into force immediately. The respondent no.1 was not required to take any action on such resignation letter.
27. In so far as the submission of the learned counsel for the petitioners that the learned arbitrator could not have considered the second affidavit-in-reply filed by the then President of the respondent no.1 is concerned, he submits that since the earlier affidavit-in-reply/statement of defence filed by the Secretary General of the respondent no.1 who was not an authorised representative, the arbitral tribunal was justified in relying upon the second affidavit-in-reply of the respondent no.1.
28. In so far as the submission of the learned counsel for the petitioners that the arbitral tribual having rendered the finding against the respondent no.3 and in favour of the petitioners to the effect that the appointment of the respondent no.3 was illegal and the arbitral tribunal having rejected the claim filed by the petitioners is concerned, he submits that the said finding of the arbitral tribunal is totally perverse and contrary to the Constitution of the respondent no.1. He submits that since the entire claim made by the petitioners came to be rejected by the arbitral tribunal, the respondents could not impugn that part of the award by filing a petition under Section 34 of the Arbitration Act. He submits that his clients have no objection if only that part of the arbitral award is set aside by this Court. Learned counsel appearing for the petitioners did not agree to this suggestion and submits that said finding in favour of the petitioners cannot be set aside in view of the respondents not having challenged the same.
29. In his rejoinder submission, the learned counsel for the petitioners distinguishes the judgments relied upon by the learned counsel for the respondents on the ground that in this case, the resignation was a bilateral act which has been established in view of the fact that the issues regarding letter of the resignation tendered by the petitioner no.2 as well as the letter of withdrawal of the resignation were discussed and were subject matter of agenda in the meeting held on 11th March 2015 and after detailed discussion, the resignation of the petitioner no.2 was subsequently accepted in the said meeting. He laid emphasis on the fact that the respondent no.1 refused to accept the resignations of other seven members in the said meeting which also would indicate that the resignation was not an unilateral act but was a bilateral act. Learned counsel for the petitioners submits that none of the judgments relied upon by the learned counsel for the respondents would assist the case of the respondents but would assist the case of the petitioners.
REASONS AND CONCLUSIONS:-
30. There is no dispute that in the Constitution of the respondent no.1, there was no provision for tendering resignation by any of the members or acceptance thereof by the respondent no.1. It is also not in dispute that the petitioner no.2 had tendered resignation on 21st August 2014 which was received by the respondent no.1. There is no dispute that the petitioner no.2 had withdrawn the said resignation by his email dated 7th November 2014 which was received by the respondent no.1. A perusal of the record indicates that alongwith the petitioner no.2, other seven members also had tendered their respective resignation on 21st August 2014. All such seven members had withdrawn their resignations letters vide email dated 7th November 2014 duly received by the respondent no.1 on the same day.
31. A perusal of the Minutes of Meeting dated 9th November 2014 and notice and agenda of the said meeting clearly indicates that the respondent no.1 had proposed to take decision on the resignation of the petitioner no.2 and other seven members in the said meeting. A perusal of the Minutes of Meeting clearly indicates that the International Directors of the respondent no.1 who were present in the said meeting had long discussion on the resignation of the petitioner no.2 and only after such a long discussion, the resignation of the petitioner no.2 had been accepted and that also with a great regret. The said Resolution further indicates that the resignation of the other seven members had not been accepted in the said meeting. In my view, it is thus clear beyond reasonable doubt that the resignation of the petitioner no.2 and the other seven members were not accepted prior to the date of the said meeting held on 9th November 2014. It is also clear beyond reasonable doubt that before such decision was taken by the respondent no.1 in the said meeting held on 9th November 2014, the petitioner no.2 as well as the other seven members had already withdrawn their respective resignation.
32. In my view, in view of the subsequent action on the part of the respondent no.1 i.e. by placing the resignation in agenda for having discussion thereon in the meeting and thereafter having lengthy discussion on the said resignation in the said meeting, it is clear that issue of resignation is not an unilateral act but was a bilateral act. In my view, it is not the case of the respondents that there was any provision in the Constitution that the resignation tendered by any member would come into effect immediately upon the receipt thereof by the respondent no.1 and is not required to be accepted. In my view, the judgment of the Supreme Court in the case of Moti Ram Vs. Param Dev and Anr. (supra) and the judgment of this Court in the case of Prakash Mahadeo Khot and Ors.(supra) would not assist the case of the respondents but would assist the case of the petitioners.
33. In my view, since the resignation was a bilateral act, the respondent no.1 having accepted it after withdrawal of such resignation by the petitioner no.2, the action on the part of the respondent no.1 in accepting such resignation was illegal and was of no effect. The impugned award shows patent illegality in rejecting the contention of the petitioners and in accepting the contention of the respondents by treating such resignation as an unilateral act and totally overlooking subsequent admitted events having taken place. It is not the case of the respondents that the resolution passed by the respondent no.1 is illegal. The alleged telecommunication between the parties referred in the letter dated 20th November 2014 of the respondent no.1 was neither proved before the arbitral tribunal by the respondent no.1 nor the arbitral tribunal has considered such alleged telecommunication in the impugned award. Be that as it may, the said letter of the respondent no.1 alleging that resignation of the petitioner no.2 was accepted in view of alleged telecommunication would also indicate that till such alleged telecommunication, the respondent no.1 had not accepted such resignation and the said resignation had not come into effect immediately.
34. A perusal of the impugned award indicates that though the arbitral tribunal has rendered a finding in favour of the petitioners and against the respondent no.3 to the effect that the appointment of the respondent no.3 was illegal, the arbitral tribunal did not grant prayer (b) of the statement of claim. In my view, since the arbitral tribunal had come to the conclusion that the appointment of the respondent no.3 itself was illegal, the arbitral tribunal ought to have granted relief in terms of prayer clause (b) of the statement of claim. The award shows patent illegality and non-application of mind on the part of the arbitral tribunal and clear perversity.
35. A perusal of the record also indicates that though the respondent no.1 had already taken a particular stand in the arbitral proceedings by filing an affidavit-in-reply through the Secretary General of the respondent no.1 who was admittedly holding the said post and was authorised representative of the respondent no.1, the arbitral tribunal overlooked the averments made in the affidavit-in-reply and considered the affidavit-in-reply filed by Mr.Haresh Vora who was not even the President of the respondent no.1 on the date of filing of the affidavit-in-reply. The respondents could not demonstrate as to why the Secretary General of the respondent no.1 was not authorised by the respondent no.1 to file such affidavit. In my view, the arbitral tribunal has totally overlooked and ignored the affidavit-in-reply already filed by the respondent no.1 in the impugned award.
36. In my view, there is no merit in the submission of the learned counsel for the respondents that merely because the respondent no.1 had considered the resignation of the petitioner no.2 after receipt of the letter dated 7th November 2014 purporting to withdraw the said resignation dated 21st August 2014 and passing a Resolution after such withdrawal is of no consequence. It is not disputed by the respondents that the resignation tendered by other seven members on 21st August 2014 along with the petitioner no.2 and withdrawn on the same day i.e. on 7th November 2014 though came into effect upon tendering such resignation, the respondent no.1 could still reject such resignation subsequently. In my view, the respondent no.1 could not take different stand in respect of resignation of the petitioner no.2 than what was taken in respect of other seven committee members whose resignations were rejected. The fact that these resignations were placed for discussion and for acceptance itself presupposes that the same did not come into effect when tendered by the petitioner no.2 and other seven committee members.
37. In view of the respondent no.1 refusing to accept the resignations of other seven members subsequently in the said meeting held on 9th November 2014 would clearly indicate that the said resignations did not come into effect immediately upon tendering the same by the petitioner no.2 as well as by the other seven members. It is not the case of the respondent no.1 that the resignations of the other seven Committee members were wrongly refused in the said meeting held on 9th November 2014. The stand taken by the respondent no.1, in my view, shows inconsistency and belies the fact that the issue of resignations was a bilateral act.
38. In my view, the findings of the arbitral tribunal in the arbitral award in so far as the appointment of respondent no.3 is concerned has achieved finality and cannot be set aside.
39. I therefore pass the following order:-
(a) The arbitral award dated 17th July 2015 passed by the arbitral tribunal annexed at Exhibit A to the petition is set aside except the finding in so far as the appointment of respondent no.3 is concerned;
(b) Arbitration Petition No.1351 of 2015 is allowed in aforesaid terms;
(c) There shall be no order as to costs.