Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO No. 324/2017
st
% 1 August, 2017
NOIDA CYBER PARK PVT. LTD. ..... Appellant
Through : Mr. P. P. Malhotra, Senior
Advocate with Ms. Mamta
Tiwari, Mr. Vijay Kumar and
Mr. Anshul Rawat, Advocates
versus
BHAYANA BUILDERS PVT. LTD. ..... Respondent
Through : Mr. Saurabh Kirpal and
Mr. Nishant Nigam, Mr. Mohit
Mahla and Mr. Yashvardhan
Bandi, Advocates
CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
CAV No. 689/2017
Since counsel for the caveator has entered appearance, the
caveat stands discharged.
CM Nos. 27232/2017 & 27233/2017
Exemptions allowed subject to all just exceptions.
CMs stand disposed of.
FAO No. 324/2017 Page 1 of 9
FAO No. 324/2017
1. This first appeal under Section 37 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as „the Act‟) impugns
the judgment of the Court below dated 30.03.2017 whereby the
objections filed by the appellant/objector under Section 34 of the Act
have been dismissed.
2. Objections were filed by the appellant against the Arbitral
Award of the Arbitrator dated 27.08.2016. By the Award dated
27.08.2016 the Arbitration Tribunal allowed certain claims of the
respondent/claimant in terms of paras 120 and 121 thereof and which
paras read as under:-
“120. Final relief :-
i. Claim No.1 Rs. 25 lacs
ii. Claim No. 2 Rs. 6,28,336.88
iii. Claim No. 3 Rs. 5,28,458/-
iv. Claim No. 4 Nil
v. Claim No. 5 6% p.a.
vi. Claim No. 6 Rs. 4 lacs
Total Rs. 40,56,794.88
vii. Stamp Duty Rs. 4,100/-
Grand Total Rs. 40,60,894.88
121. In view of the above I hereby pass award in favour of the claimant
and against the respondent for Rs.40,60,894.88 (Rupees Forty Lacs Sixty
Thousand Eight Hundred and Ninety Four and Eighty Eight Paise) with
interest @ 6% per annum from September, 2010 till realization of the
awarded amount.”
3. The subject Award dated 27.08.2016 was passed as there
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arose disputes between the respondent/claimant/contractor and the
appellant/owner with respect to construction of an IT Park at C-28 and
29, Sector-62, Noida, U.P. Parties entered into a contract in this
regard dated 28.02.2007 which was a contract for a sum of Rs. 31
crores with completion period being of 12 months. As per the
respondent/claimant, it completed the entire contract and a virtual
completion certificate was issued by the Project Manager of the
appellant on 26.08.2008. As per the contract, out of each bill, 5% of
the amount of each bill was to be withheld as retention amount. 50%
of this retention amount was to be paid to the respondent/contractor
within 30 days of giving of the virtual completion certificate and the
remaining 50% of the retention money was payable after the expiry of
12 months defect liability period. The basic claim filed by
respondent/contractor in the arbitration proceedings was with respect
to the return of the second part of 50% of the retention amount
payable after 12 months defect liability period.
4. There are three main issues which have been urged before
this Court on behalf of the appellant/objector. First issue argued is
that the amount awarded to the extent of award of interest and costs is
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against the contract and once the Award is against the terms of the
contract, the Award is argued to be ex facie illegal and liable to be set
aside. The second issue which was argued is that the claim petition
filed by the respondent/claimant was time barred. The third issue
which is argued is in relation to the second issue of the claim petition
being time barred inasmuch as it is argued that the Arbitration
Tribunal as also the court below has wrongly taken the reply given by
the appellant to the winding up petition filed by the respondent in the
Company Court as an acknowledgment of liability, whereas there was
no acknowledgement of liability but there was only acknowledgement
of appellant having with it 50% of the retention amount.
5. On the first aspect as to the Award being against the
contract by granting interest for pre-litigation period the appellant
relies upon Clause 30.1 of the contract. The respondent in reply relies
upon Clause 118.3 of the contract. These two clauses read as under:-
“30.1 No interest shall be payable on any money due to the Contractor
against earnest money, security deposit, interim or final bills or any other
payments due under this contract.”
“118.3 The arbitrators shall have the power to award interest on any sum
awarded pursuant to the arbitration proceedings and such sum shall carry
interest, if awarded, at the rate of six (6) month LIBOR (London Interbank
Offered Rate) plus 5% per annum until the actual payment of such
amounts.”
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6. It is argued on behalf of the appellant that the harmonious
meaning of both the provisions will mean that Arbitrator can only
grant pendent lite and future interest but cannot grant interest with
respect to the pre-litigation period.
7. In my opinion, so far as grant of interest for pre-litigation
period is concerned, I need not go into this aspect in detail inasmuch
as I have held in the judgment in the case of Union of India vs. N. K.
Garg Company, 2015 (224) DLT 668 that a clause in a contract which
bars payment of interest is illegal and is hit by Section 23 of the Indian
Contract Act, 1872 and, therefore, such a clause has to be ignored and
interest granted to a person whose moneys are illegally retained by the
guilty party.
8. At this stage, learned counsel for the respondent before
this Court has taken this Court to para 120 of the Award and it is seen
that as per the total amount awarded under the Award there is no pre-
litigation interest awarded. This has been pointed out to the learned
senior counsel for the appellant who concedes to this position.
Therefore no argument remains with respect to alleged illegality in
grant of pre-litigation interest in as much as no pre-litigation interest
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has been given by the Award.
9. On the aspect of award of costs to the
respondent/claimant the counsel for the respondent/claimant agrees
that this award of costs be set aside in view of Clause 118.4 of the
contract. Ordered accordingly.
10. On the second aspect of the claim petition filed by the
respondent being time barred, it is seen that the respondent relies upon
its communications dated 20.09.2010 and 28.09.2010 which are said
to have been served upon the appellant. As per Section 21 of the Act,
arbitration commences on receipt of a notice invoking arbitration. The
issue before the Arbitration Tribunal was that whether notices dated
20.09.2010 and 28.09.2010 were served upon the appellant.
Arbitration Tribunal in this regard has given detailed findings in paras
46 to 52 of the Award and as per which discussion and conclusion,
Arbitration Tribunal has found that the notice Exhibit C-7 dated
20.09.2010 is duly sent to the appellant company by registered post
and, therefore, there is presumption of service under Section 27 of the
General Clauses Act, 1897. The Arbitration Tribunal also holds that
this notice Exhibit C-7 dated 20.09.2010 is also additionally served
FAO No. 324/2017 Page 6 of 9
upon C&MD of the appellant and it cannot be held that merely
because the notice is sent to Logix Cyber Park, it was not received by
the appellant inasmuch as another letter Exhibit C-9 shows that at this
address itself appellant has been receiving notices. The relevant paras
of the Award, being paras 46 to 52, read as under:-
“46. The question is whether invocation notice dated 20.09.2010 sent
by the claimant by speed post reached the respondent or not. This notice
was sent to the respondent as its two addresses at New Delhi and NOIDA
for appointment of sole arbitrator after mutual consent as provided in the
agreement to adjudicate the claims set forth in the said notice. A copy of
the notice dated 20.09.2010 along with speed post‟ receipts is Exhibit C-7.
47. This notice Ex. C-7 dated 20.09.2010 is addressed to Sh. Shakti
Nath Ji C&MD at the following two addresses:-
1. Noida Cyber Park Pvt. Ltd.
18, Kotla Lane, Lower Ground Floor,
Rouse Avenue, New Delhi-110002.
2. Logix Cyber Park
th
A4-5, 4 Floor,
Sector-16,
Noida.
48. In so far as the first address of Mr. Shakti Nath is concerned, the
same is correct with its correct pin code. The postal receipt i.e. the speed
post receipt for notice at this address appears at page 340. The address as
well as the pin code of Mr. Shakti Nath is correct. There is thus due
presumption of service of notice dated 20.09.2010 Ex. C-7 at Rouse
Avenue, New Delhi address. The invocation was annexed with the
statement of claim.
49. In so far as the second address of Sh. Shakti Nath Ji as shown in
notice Ex. C-7, it is of “Logix Cyber Park”. Ld. Sr. Counsel Mr. A. K.
Singla submitted that Logix Cyber Park is no legal identity. The question
is whether Noida Cyber Park Pvt. Ltd. Is also known as “Logix Cyber
Park”. In fact the name of the building is “Logix Park”. The question is
whether notice addressed to Sh. Shakti Nath Ji at Logix Cyber Park A4-5,
th
4 Floor, Sector-16, Noida would have reached him. In this connection I
may refer to letter Ex. C-9 of Mr. G. Sundrani Team Leader of Gherzi
Eastern Limited sent to the Director Project of the claimant with copy to
GM/Corporate (Logix Park, A-4 & 5, Sector-16, Noida). It does seem that
the letter even without being addressed to the company Noida Cyber Park
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Pvt. Ltd. can reach it even if it is sent in the name of building i.e. Logix
Park.
50. Ld. Sr. Counsel for the respondent however submits that the
postal receipt which is shown at the top of Ex. C-7 as Ex. C7/A shows that
it was sent to S. Nath at Pin Code-201001 whereas the actual pin code of
Noida is 201301. It is correct that the actual pin code of Noida is not
shown on the speed post stamp receipt. However, it cannot be presumed
that if correct address is mentioned by a party for Noida, U.P., it may not
reach there only because the postal authority has shown wrong pin code on
the postal stamp.
51. I now come to further notice dated 28.09.2010 Ex. C-17 given by
the claimant company in continuation of their previous notice dated
20.09.2010 requesting for appointment of arbitrator after mutual
consultation. This notice is also sent to Sh. Shakti Nath C&MD of the
respondent company at the same two addresses on which notice dated
20.09.2010 was sent. The said notice Ex. C-17 appears at page 341. The
postal stamps however show correct pin codes i.e. pin code 110020 for
Delhi address and pin code 201000 for Noida. That however does not
mean that if the envelopes show the correct address of the addressee, the
postal article will not reach the addressee only because pin code on the
postal stamp is incorrectly printed. I may also add that the address of
Rouse Avenue, New Delhi written by the claimant company on the
envelope contains the correct pin code i.e. 110002. Hence, I hold that
even the additional notice dated 28.09.2010 was also served upon Mr.
Shakti Nath C&MD of the respondent company.
52. There is due presumption of the receipt of letter under Section 27
of the General Clauses Act 1897. Section 27 of General Clauses Act, 1897
reads as under:-
“27. Meaning of service by post. Where any [Central Act] or
Regulation made after the commencement of this Act authorizes or
requires any document to be served by post, whether the expression
serve or either of the expressions give or send or any other expression
is used, then, unless a different intention appears, the service shall be
deemed to be effected by properly addressing, pre-paying and posting
by registered post, a letter containing the document, and, unless the
contrary is proved, to have been effected at the time at which the letter
would be delivered in the ordinary course of post.”
(underlining added)
11. The law is well settled that the court hearing objections
under Section 34 of the Act does not sit as an appellate court to re-
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apprise findings of facts and conclusions arrived at by the Arbitration
Tribunal. Once the findings and conclusions of the Arbitration
Tribunal are one possible and plausible finding and conclusion and
such finding and conclusion is not in any manner grossly illegal or
perverse, the court hearing objections under Section 34 of the Act will
not substitute its view for that of the Arbitration Tribunal.
12. In view of the detailed discussion and finding of
Arbitration Tribunal contained in paras 46 to 52 of the Award, in my
opinion no valid objections can be raised under Section 34 of the Act
to question the service of the notices dated 20.09.2010 and 28.9.2010.
13. The third issue, in my opinion, need not be commented
upon by this Court once the second issue has been decided in favour
of the respondent/claimant and against the appellant/objector.
14. In view of the above discussion, there is no merit in the
appeal. Dismissed.
AUGUST 01, 2017 VALMIKI J. MEHTA, J
SR
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