M/S. CANARA NIDHI LIMITED versus M. SHASHIKALA AND OTHERS

Citation: [2019] 15 S.C.R. 637 · Decided: 23-09-2019 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
637
M/S. CANARA NIDHI LIMITED
v.
M. SHASHIKALA AND OTHERS
(Civil Appeal Nos.7544-7545 of 2019)
SEPTEMBER 23, 2019
[R. BANUMATHI AND A. S. BOPANNA, JJ.]
Arbitration and Conciliation Act, 1996– s.34 – Scope of –
Appellant advanced a loan of Rs.50,00,000/- to respondent no.1
– Respondent nos.2, 4 and 5-8 were the guarantors – Loan secured
by mortgage with deposit of title deeds and respondent no.1 is also
said to have executed a demand promissory note for repayment of
the loan – Arbitration clause in the agreement to resolve dispute
between the parties – Allegedly, respondent no.1 did not repay the
loan – Dispute referred to arbitration to the third respondent-
Arbitrator – Arbitrator inter alia directed the respondents to pay
Rs.63,82,802/- with interest – Respondent no.1 filed AS No.1 of
2008 u/s.34 in the Court of District Judge – Respondent nos.1 &
2 also filed application u/s.151, CPC to permit the respondents to
adduce evidence – Dismissed – High Court directed the District
Judge inter alia to allow respondent nos.1 & 2 to file affidavits of
their witnesses and further allow their cross-examination – On
appeal, held: Proceedings u/s.34 are summary in nature and not
in the nature of regular suit – Scope of enquiry in the proceedings
u/s.34 is restricted to a consideration whether any of the grounds
mentioned in s.34(2) or s.13(5) or s.16(6) are made out to set aside
the award – Grounds for setting aside the award are specific –
s.34 application will not ordinarily require anything beyond the
record that was before the arbitrator and cross-examination of
persons swearing in to the affidavits should not be allowed unless
absolutely necessary – In the present case, no ground was made
out as to the necessity/relevance of adducing evidence and what
was the nature of the evidence sought to be led by respondent
nos.1 & 2 – In the arbitration proceedings, the parties had
sufficient opportunity to adduce oral and documentary evidence
– Grounds urged in the application can very well be considered
by the evidence adduced in the arbitration proceedings and
considering the arbitral award – High Court did not keep in view
   [2019] 15 S.C.R. 637
637
A
B
C
D
E
F
G
H
638
SUPREME COURT REPORTS
[2019] 15 S.C.R.
that respondent nos.1 & 2 did not make out grounds that it was
an exceptional case to permit them to adduce evidence in the
application u/s.34 – Impugned judgment set aside – Order of the
District Judge dismissing the application u/s.151, CPC in AS No.1
of 2008, affirmed – District Judge to take up AS No.1 of 2008
and dispose of expeditiously, in accordance with law – Code of
Civil Procedure, 1908 – s.151 – High Court of Karnataka
Arbitration (Proceedings before the Courts) Rules, 2001 – r.4(b)
– Constitution of India – Arts. 226 and 227 – Arbitration and
Conciliation (Amendment) Act, 2019.
Arbitration and Conciliation Act, 1996 – s.34(5), (6) – Held:
By adding sub-ss.(5) & (6) to s.34, the Act has specified the time
period of one year for disposal of the application u/s.34 – Object
is to avoid delay and to dispose of the application expeditiously –
Arbitration and Conciliation (Amendment) Act, 2015.
Allowing the appeals, the Court
HELD: 1.1 The proceedings under Section 34 of the
Arbitration and Conciliation Act, 1996 are summary in nature.
The scope of enquiry in the proceedings under Section 34 of the
Act is restricted to a consideration whether any of the grounds
mentioned in Section 34(2) or Section 13(5) or Section 16(6) are
made out to set aside the award. The grounds for setting aside
the award are specific. It is imperative for expeditious disposal
of cases that the arbitration cases under Section 34 of the Act
should be decided only with reference to the pleadings and the
evidence placed before the arbitral tribunal and the grounds
specified under Section 34(2) of the Act. Rule 4(b) of High Court
of Karnataka Arbitration (Proceedings before the Courts) Rules,
2001, providing that all the proceedings of the Civil Procedure
Code shall apply to such proceeding/application filed under
Sections 14 or 34 of the Act insofar as they could be made
applicable are only procedural. [Paras 9, 10] [643-E-H; 644-A-
B]
1.2 After referring to the judgment in Fiza Developers, in
the impugned judgment, the High Court held that respondent
Nos.1 and 2 are to be afforded an opportunity to file their and
their witnesses’ affidavits in proof of their case to prove the
grounds set out in Section 34(2)(a) of the Act. After th

Excerpt shown. Read the full judgment & AI analysis in Lexace.