Sanchayita Lahkar

The High Court of Karnataka set aside an order passed by the District Court, Madikeri, on the ground that the court failed to summon arbitration records before adjudicating an application under Section 34 of the Arbitration and Conciliation Act, 1996. The Single Bench of Justice Hanchate Sanjeevkumar held that the District Judge ought to have verified whether notice was duly served on the respondent and whether jurisdiction was properly established. The matter was remanded for fresh consideration with directions to complete proceedings within six months.

The matter arose out of arbitral proceedings initiated by a company, the appellant, against the borrower—respondent no. 1—for alleged default under a hire purchase agreement. The arbitration was conducted in Manipal under clause 22(a) of the agreement. An award was passed in A.P. No. 246/1999 in favour of the appellant. In response, the borrower filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, before the District Judge, Madikeri, challenging the award. The District Court, by order dated 17 July 2012, set aside the arbitral award as against respondent no. 1.

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The appellant filed the present appeal, asserting that the District Court at Madikeri lacked territorial jurisdiction to entertain the application under Section 34, as the agreement specified that the arbitration would be conducted within Udupi District. It was further argued that the entire transaction occurred in Udupi, and therefore, the competent court was within that jurisdiction. The appellant also contended that arbitration records demonstrated compliance with service requirements and that the arbitral award was rendered properly.

In response, the counsel for the respondents submitted that respondent no. 1 was a resident of Kodagu-Madikeri District, which vested jurisdiction in the District Court there. It was also argued that the respondent had not received notice of the arbitral proceedings and was thereby deprived of an opportunity to participate. The appointment of the sole arbitrator was also challenged on the ground of non-compliance with the law.

The appellant placed the arbitration records before the High Court during the appeal proceedings. These records included copies of notices and service endorsements. The High Court, upon examining the submissions and records, focused on the procedural steps followed by the District Judge prior to setting aside the award.

The High Court recorded that the District Judge had failed to summon the arbitration records before deciding the Section 34 application. It was noted that certain notices had been returned with endorsements, including “addressee left” and “addressee refused.” The judgment stated: “There is no mention that the District Judge has summoned the arbitration records to find out whether notice was served on respondent No.1 or not.”

The Court observed that the arbitral record was essential for determining whether service of notice had been duly effected. It stated: “Since the same was essential for the purpose of adjudication of the matter, the District Judge ought to have summoned the arbitration records and ought to have considered whether the notice was served or not.”

Regarding jurisdiction, the High Court clarified that a proper determination was required based on the arbitration agreement and residence of the parties. It directed that the District Judge should “decide whether he is having jurisdiction to entertain the Arbitration Suit under Section 34 of the Act, 1996 filed before the District Court in Kodagu Madikeri District and whether the appointment of sole Arbitrator is in accordance with law.”

The Court did not express any opinion on the merits of the arbitral award or the application under Section 34 but instead directed a de novo adjudication following due verification of facts and procedural compliance.

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The Court allowed the appeal and set aside the order dated 17 July 2012 by remanding the matter to the District Court at Kodagu, Madikeri for fresh consideration in accordance with law. It directed the concerned District Judge to dispose of the matter within six months from the date of receipt of a copy of the order. The records submitted by the appellant before the High Court were ordered to be returned for presentation before the District Court. Both parties were directed to appear before the District Court, Kodagu, Madikeri on 7 April 2025, and the District Judge was instructed to conclude the proceedings within six months from that date.

Advocates Representing the Parties

For the Appellant: Sri. Pundikai Ishwara Bhat, Advocate
For the Respondents: Sri. M H Haneef, Advocate

Case Title: M/s. Maharashtra Apex Corporation Ltd v. Sri. P.K. Mohammed and Others
Neutral Citation: 2025:KHC:9796
Case Number: MFA No. 11925 of 2012
Bench: Justice Hanchate Sanjeevkumar

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