Full Judgment Text
Neutral Citation No: 2023:DHC:1987-DB
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 18.07.2022
Judgment pronounced on: 21.03.2023
+ FAO (OS) (COMM) 126/2021 and CM APPLs. 33734/2021 &
39310/2021
PRAGYA ELECTRONICS PVT. LTD. & ORS. ..... Appellant
Through: Mr Kirti Uppal, Sr. Adv. with Mr
Rohit Goel, Adv.
versus
COSMO FERRITES LTD. ..... Respondent
Through: Mr Bharat Chugh, Mr Abhishek Ghai
and Mr Shreyash Sharma, Advs.
CORAM:
HON'BLE MR JUSTICE RAJIV SHAKDHER
HON'BLE MS JUSTICE TARA VITASTA GANJU
[Physical Court Hearing/ Hybrid Hearing (as per request)]
JUDGMENT
TARA VITASTA GANJU, J.:
FAO (OS) (COMM) 126/2021 and CM APPL. 33734/2021 [Application
filed on behalf of the Appellant seeking interim relief] & CM APPL.
39310 / 2021 [Application filed on behalf of Appellant seeking
clarification/modification of order dated 28.09.2021]
1. The present Appeal under Section 13 of the Commercial Courts Act,
2015 read with Section 37 of the Arbitration and Conciliation Act,
1996 [hereinafter called “the Arbitration Act”] has been filed by the
Appellant impugning the Judgment dated 23.06.2021 passed by the
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learned Single Judge in OMP (COMM.) No. 71/2019 [hereinafter
called “Impugned Judgment”], whereby the learned Single Judge has
upheld the Arbitral Award dated 13.04.2016 [hereinafter called
“Arbitral Award”], and dismissed the Petition filed by Appellant
[hereinafter called “PRAGYA”] under Section 34 of the Arbitration
Act.
2. The Respondent [hereinafter called “CFL”] had filed a claim in the
sum of Rs.2,65,54,292/- along with interest against the PRAGYA for
failure to make payment under a Distributorship Agreement between
the parties. The Arbitral Tribunal passed the Arbitral Award directing
PRAGYA to pay a sum of Rs.38,77,423/- along with future interest at
the rate of 12.25% per annum from 13.05.2016 till the date of
payment (in case of failure by PRAGYA to pay the awarded amount
to CFL within one month).
3. By the Impugned Judgment, the learned Single Judge upheld the
Arbitral Award and dismissed the Petition under Section 34 of the
Arbitration Act filed by PRAGYA.
4. CFL had also filed a separate Petition under Section 34 of the
Arbitration Act challenging the Arbitral Award by way of OMP
(COMM.) No.350/2016. The challenge in that Petition was limited to
the extent of award of pre-reference and pendente lite interest on the
amounts awarded in favour of CFL. The learned Single Judge of this
Court, in OMP (COMM.) No.350/2016 has on 25.05.2017 allowed
the Petition filed by CFL and the Arbitral Award was set aside to the
extent of rejection of CFL‟s claim for pre-reference and pendente lite
interest. CFL was granted interest at the rate of 12.25% per annum
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from the date of invoices till the date of the Arbitral Award by the
Judgment dated 25.05.2017 . This Court was informed on 28.09.2021
that neither party has challenged this Judgment.
5. Briefly, disputes arose between CFL and PRAGYA in relation to non-
compliance of a non-exclusive Distributorship Agreement dated
01.04.2005 entered into between CFL and PRAGYA for supply of
Manganese Zinc Soft Ferrites to PRAGYA [hereinafter called “the
Agreement”]. Under the Agreement, PRAGYA placed purchase
orders on CFL for the supply of Manganese Zinc Soft Ferrites. The
parties had also entered into Annual Agreements for the years 2007,
2008 and 2009.
5.1 It is CFL‟s case that it supplied goods to PRAGYA against various
purchase orders over the period from 25.04.2009 to 10.06.2009, and
raised invoices in terms of the Agreement. CFL claimed that
PRAGYA failed and neglected to make payment in a sum aggregating
to Rs.54,14,934/- against the goods supplied.
5.2 PRAGYA issued 9 cheques totalling to Rs.33,19,514/- as follows:
S. No. Cheque No. Date Amount (in Rs.)
1. 273502 30.06.2009 1,54,353/-
2. 273505 30.06.2009 2,36,530/-
3. 273503 30.06.2009 4,65,347/-
4. 273504 30.06.2009 3,70,641/-
5. 273510 07.07.2009 4,63,646/-
6. 273511 07.07.2009 4,49,777/-
7. 273512 07.07.2009 5,03,207/-
8. 273513 07.07.2009 2,78,064/-
9. 273509 07.07.2009 3,97,949/-
TOTAL 33,19,514/-
5.3 The aforesaid cheques were, however, dishonoured upon presentation.
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While PRAGYA claimed that the cheques were issued as security for
any payment due, CFL claimed that the cheques were issued by
PRAGYA in discharge of its outstanding dues.
5.4 In addition thereto, CFL also claimed an amount of Rs.1,27,24,521/-
on account of withheld “C” forms or for non-issuance of "C" forms
towards its liability to the Sales Tax Department.
5.5 By letter dated 28.08.2009, CFL terminated the Agreement and
requested PRAGYA to clear its outstanding dues and issue the “C”
forms. Since CFL failed to make the payment of its outstanding dues
or handover the “C” forms requested, the disputes between the parties
were referred to the arbitration of an Arbitral Tribunal comprising of a
Sole Arbitrator, Retired Justice V.P. Bhatnagar.
5.6 CFL filed a claim before the Arbitral Tribunal being:
(i) Claim in respect of payments due against supplies made under
Agreement to the sum of Rs.54,14,934/- along with interest at
the rate of 12.25% per annum; and
(ii) Delivery of “C” forms failing which sum of Rs.1,27,24,521/- or
such increased amounts as the Sales Tax Authorities may levy
thereon. The interest of the sales tax liability claim was claimed
at the rate of 18% per annum.
5.7 PRAGYA appeared before the Arbitral Tribunal and contested the
Arbitral proceedings. It was submitted by PRAGYA that the goods as
supplied by CFL were not in accordance with the Agreement and that
it received several complaints regarding breakage of the Manganese
Zinc Soft Ferrites components as supplied by CFL. It further
submitted that the cheques issued by PRAGYA were issued as a
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security and not in discharge of their outstanding liabilities and these
were wrongly deposited by CFL.
5.8 Detailed hearings were conducted by the Arbitral Tribunal. The
Arbitral Tribunal framed 23 issues in the matter and reached the
conclusion that PRAGYA had placed purchase orders for the goods in
question and that CFL had supplied those goods and raised invoices
against the supply. A special reference was made by the Arbitral
Tribunal to an email dated 10.07.2009 sent by CFL to PRAGYA
which stated that a total sum of Rs.54,14,934/- was outstanding
against supply of goods till 30.06.2009. This email was placed on
record by PRAGYA and the contents of this email had not been
denied in contemporaneous correspondence by PRAGYA.
5.9 The Arbitral Tribunal considered the evidence and material on record
to conclude that a sum of Rs.54,14,934/- was due and recoverable by
CFL against PRAGYA. The Arbitral Tribunal also held that
PRAGYA was entitled to the following credit:
(i) Credit for commission payable for certain sales
made to a third party entity called M/s COILS in
the month of June, 2009 (after deducting TDS);
Rs.1,14,279/-
(ii) Turnover Discount on Sales from April, 2009 to
June, 2009; and
Rs.12,05,434/-
(iii) Credit on account of commission on sales up to
Rs.4,02,798/-
28.08.2009.
Total [(i)+(ii)+(iii)] Rs. 17,22,511/-
5.10 After giving credit to PRAGYA in the sum of Rs. 17,22,511/-, the
Arbitral Tribunal awarded the sum of Rs.36,92,423/- to CFL
[Rs.54,14,934 – Rs. 17,22,511] along with future interest at the rate of
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12.25% per annum.
5.11 As discussed in paragraph 4 (supra), the claim of award of pre-
reference and pendente lite was initially rejected by the Arbitral
Tribunal but awarded to CFL by the learned Single Judge in OMP
(COMM.) No.350/2016 by its Judgment dated 25.05.2017.
5.12 During the course of arbitral proceedings, PRAGYA handed over the
“C” forms as requested to CFL. Thus, there was no further dispute
with respect to the “C” forms/other statutory forms, that remained for
adjudication.
5.13 Against the Arbitral Award, PRAGYA filed a Petition under Section
34 of the Arbitration Act, which was dismissed by the learned Single
Judge by the Impugned Judgment, which has led to the filing of the
present Appeal.
6. During the proceedings before this Court, PRAGYA filed CM APPL.
No. 39310/2021, wherein it stated that the amount due to CFL as on
October, 2021 was calculated as follows:
“i) Awarded amount by the
Ld. Sole Arbitrator Rs.36,92,423/-
ii) Interest @ 12.25% p.a. from
July, 2009 upto February, 2019
on Rs.36,92,423/- Rs.43,72,444/-
iii) Interest @ 12.25% p.a. from
March, 2019 upto October, 2021
on Rs.16,92,423/- Rs.5,52,858/-
iv) Ld. Sole Arbitrator Fee Rs. 1,85,000/-
v) Interest @ 12.25% p.a. from
Apr, 2016 upto October, 2021
on Rs.1,85,000/- Rs.1,24,643/-
Total Rs.89,27,368/-”
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6.1 CFL filed a reply to this Application, submitting that the aforesaid
calculations were incorrect and that an amount of Rs.1,15,03,798/-
was due to CFL as on October, 2021:
“Amount payable by the Appellants till 28.09.2021, i.e., the first
date of hearing of the instant appeal in terms of the arbitral award
dated 13.04.2016 and the judgment of this Hon’ble Court dated
25.05.2017
I. In terms of award dated April 13, 2016, the Respondent is entitled to
following:
Principal Amount Rs. 36,92,423/-
Towards Arbitration Fee plus actual
Rs. 1,85,000/-
expenses
Interest @12.25% p.a. on Rs. 36,92,423.00
Rs. 24,35,103/-
from 13.05.2016 to 28.09.2021
Interest @12.25% p.a. on Rs. 1,85,000.00
Rs. 1,22,004/-
from above stated dates to 28.09.2021
Sub-Total (I) Rs. 64,34,530/-
II. In terms of judgment dated 25.05.2017, the Respondent is entitled to
following:
Interest amount on Rs. 36,92,423.00 from
Rs. 30,54,721/-
the date of invoices till the date of award
dated 13.04.2016
Interest @12.25% p.a. on Rs. 30,54,721.00
Rs. 20,14,547/-
from 13.05.2016 to 28.09.2021
Sub-Total (II) Rs. 50,69,268/-
Grand Total (I + II) Rs. 1,15,03,798/-”
6.2 Prior to filing of the present proceedings, PRAGYA had deposited an
amount of Rs.20 Lakhs with the District Court [hereinafter called
“Executing Court”] on 07.03.2019. Thereafter, in partial compliance
with Order dated 28.09.2021 passed by a Coordinate Bench of this
Court, a further sum of Rs.67 Lakhs was deposited by PRAGYA with
the Registrar General of this Court. We are informed that
subsequently, this amount was remitted to the Executing Court by the
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Registry of this Court.
7. Both parties filed their written submissions in support of their case
and also addressed arguments in the matter.
8. It was submitted by Mr Kirti Uppal, learned Senior Counsel for
PRAGYA that the Arbitral Award passed by the Arbitral Tribunal is
not tenable in the eyes of law. It was argued that the Arbitral Award
has been typed on three different types of sheets by the Arbitral
Tribunal and each page of the Arbitral Award does not bear the
signature of the Arbitral Tribunal. It was further argued that the
Arbitral Tribunal decided Issues numbers 1, 2 and 14 without
discussing the reasons for the same, thereby, showing that the Arbitral
Tribunal had a pre-determined mind.
8.1 Learned Senior Counsel for PRAGYA has raised various additional
grounds in the Appeal. It was submitted that the learned Single Judge
and the Arbitral Tribunal failed to consider that evidence was led by a
witness who was neither the Director/Secretary nor the Principal of
CFL and hence, was not competent to depose on behalf of CFL. It
was submitted that Agreement was terminated by an officer of CFL
who was not authorized to terminate such Agreement.
8.2 It was further submitted that PRAGYA had filed a counter-claim
claiming a sum of Rs.2.5 crores inter-alia for non-payment of
commission, quality defects, loss sustained to breakage and loss due
to illegal termination of Agreement, which was dismissed by the
Arbitral Tribunal by wrongly relying upon the Annual Agreement for
the year 2009.
8.3 Several additional objections were also raised against the Arbitral
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Award inter-alia stating that the evidence and documents were not
considered by the Arbitral Tribunal and that certain clauses of the
Agreement had been wrongly interpreted by the Arbitral Tribunal. It
was argued that the claim as filed by CFL was barred by limitation
and that the Arbitral Tribunal and the learned Single Judge did not
consider this aspect either. Various other issues were raised by
PRAGYA in respect of the deposition by witnesses during the
Arbitral proceedings as well.
9. On the other hand, learned counsel for CFL, Mr Bharat Chugh, argued
that the Courts, now, have a limited scope of judicial intervention into
the findings of Arbitral Tribunal on facts, merits, quality and quantity
of evidence and the scope for interference is even less in an Appeal
under Section 37 of the Arbitration Act. Reliance was placed on the
1
decision of the Supreme Court in Associate Builders v. DDA . It was
further submitted that the learned Single Judge went into some detail
on the factual challenges raised by PRAGYA and no fault with the
findings of the Arbitral Award was found by the learned Single Judge.
9.1 Learned Counsel for CFL further argued that where there are
concurrent findings in any award which have not been disturbed by
the Court in the objections preferred under Section 34 of the
Arbitration Act, the Appellate Court must be extremely cautious in
2
disturbing such findings. Reliance was placed on MMTC v. Vedanta
and UBV Infrastructure Ltd. v. National Highways Authority of
1 [2015] 5 SCC 739
2 2019 SCC Online SC 220
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3
India by the learned counsel for CFL.
9.2 On merits, it was pointed out by learned Counsel for CFL, that
PRAGYA‟s contentions were rejected by the Arbitral Tribunal and
the learned Single Judge considered these objections and rejected the
contentions as well. Additionally, each and every objection and
ground of challenge which have been raised in the present Appeal
were raised by PRAGYA in its Petition under Section 34 of the
Arbitration Act and that these said objections have been adjudicated
upon by the learned Single Judge.
9.3 More specifically, it was submitted by CFL that the objections raised
by PRAGYA in the present Appeal, are a reproduction of the grounds
raised by PRAGYA in its Petition under Section 34 of the Arbitration
Act all of which stood rejected by the learned Single Judge.
9.4 In addition, learned counsel for CFL further submitted that unless
there exists an error apparent on the face of the record, the Arbitral
Tribunal‟s interpretation and findings cannot be interfered with.
Reliance was placed on Dyna Technologies Pvt. Ltd. v. Crompton
4
Greaves Ltd. .
10. We have perused the record as produced before us and the contentions
of both the parties. Before we proceed further, we must remind
ourselves of the scope and ambit of this Court‟s interference in
proceedings under Section 37 of Arbitration Act.
11. The scope and ambit of a challenge under Sections 34 and 37 of the
3 2020 SCC OnLine Del 60
4
2019 SCC Online SC 1656
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Arbitration Act is no longer res integra . In a recent decision rendered
by the Supreme Court in the matter of PSA SICAL Terminals Pvt.
Ltd. v Board of Trustees of V.O. Chidambranar Port Trust
5
Tuticorin , the Supreme Court has reiterated its view, in MMTC
Limited case (supra), and held as follows:
“41. It will be relevant to refer to the following observations of this
court in the case of MMTC Limited (supra):
“11. As far as Section 34 is concerned, the position is
well-settled by now that the Court does not sit in appeal
over the arbitral award and may interfere on merits on
the limited ground provided under Section 34(2)(b)(ii)
i.e., if the award is against the public policy of India. As
per the legal position clarified through decisions of this
Court prior to the amendments to the 1996 Act in 2015 ,
a violation of Indian public policy, in turn, includes a
violation of the fundamental policy of Indian law, a
violation of the interest of India, conflict with justice or
morality, and the existence of patent illegality in the
arbitral award. Additionally, the concept of the
fundamental policy of Indian Law would cover
compliance with statutes and judicial precedents,
adopting a judicial approach, compliance with the
principles of natural justice, and Wednesbury
[Associated Provincial Picture Houses v. Wednesbury
Corpn., [1948]1K.B.223(CA)] reasonableness.
Furthermore, patent illegality itself has been held to
mean contravention of the substantive law of India,
contravention of the 1996 Act, and contravention of the
terms of the contract.
12. It is only if one of these conditions is met that the
Court may interfere with an arbitral award in terms of
Section 34(2) (b)(ii), but such interference does not
entail a review of the merits of the dispute, and is
limited to situations where the findings of the arbitrator
are arbitrary, capricious or perverse, or when the
conscience of the Court is shocked, or when the
illegality is not trivial but goes to the root of the matter.
5
2021 SCC OnLine SC 508
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An arbitral award may not be interfered with if the
view taken by the arbitrator is a possible view based on
facts. ....
14. As far as interference with an order made under
Section 34, as per Section 37, is concerned, it cannot be
disputed that such interference under Section 37
cannot travel beyond the restrictions laid down under
Section 34. In other words, the Court cannot undertake
an independent assessment of the merits of the award,
and must only ascertain that the exercise of power by
the Court under Section 34 has not exceeded the scope
of the provision ...”
[Emphasis is ours]
11.1 Recently the Supreme Court, in UHL Power Co. Ltd. v. State of
6
H.P. , has further clarified the principles for the exercise of
jurisdiction under Sections 34 and 37 of the Arbitration Act as
follows:
“16. As it is, the jurisdiction conferred on courts under Section 34
of the Arbitration Act is fairly narrow, when it comes to the scope
of an appeal under Section 37 of the Arbitration Act, the
jurisdiction of an appellate court in examining an order, setting
aside or refusing to set aside an award, is all the more
circumscribed. In MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v.
Vedanta Ltd., (2019) 4 SCC 163:(2019) 2 SCC (Civ) 293], the
reasons for vesting such a limited jurisdiction on the High Court in
exercise of powers under Section 34 of the Arbitration Act have
been explained .....
17. A similar view, as stated above, has been taken by this Court in
K. Sugumar v. Hindustan Petroleum Corpn. Ltd. [K. Sugumar v.
Hindustan Petroleum Corpn. Ltd., (2020) 12 SCC 539], wherein it
has been observed as follows : (SCC p. 540, para 2)
“2. The contours of the power of the Court under
Section 34 of the Act are too well established to require
any reiteration. Even a bare reading of Section 34 of
the Act indicates the highly constricted power of the
civil court to interfere with an arbitral award. The
6
(2022) 4 SCC 116
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reason for this is obvious. When parties have chosen to
avail an alternate mechanism for dispute resolution,
they must be left to reconcile themselves to the wisdom
of the decision of the arbitrator and the role of the
court should be restricted to the bare minimum.
Interference will be justified only in cases of
commission of misconduct by the arbitrator which can
find manifestation in different forms including
exercise of legal perversity by the arbitrator …..”
[Emphasis is ours]
12. The record of the Arbitral Tribunal shows that the following 23 issues
were framed by the Arbitral Tribunal during the proceedings:
1) Whether the claimant supplied soft ferrites components worth
Rs.54.14,934/- to the respondents and the said amount has
become payable?
2) Whether the respondents issued 9 cheques totalling
Rs.33,19,514/- in favour of the claimant in discharge of their
part liability?
3) Whether the respondents withheld "C" forms in respect of
invoices raised by the claimant in the financial years 2007-08,
2008-09 and 2009-10 thereby creating sales tax liabilities of
Rs. 1,27,24,521/-?
4) Whether the claimant has withheld Form E-1 to the
respondents? If so, its effect?
5) Whether the respondents have taken proper legal course
regarding issuance of "C" forms? If so, its nature and effect?
6) Whether the respondents are liable to pay sales tax, penalty
and interest on account of non-supply of "C" forms? If so how
much?
7) Whether the claimant is entitled to recover interest at the rate
of 12.25% on the sum of Rs. 54,14,934/-? If so, for what
period and how much?
8) Whether the entire claim or any part thereof is within
limitation?
9) Whether the claim petition is not maintainable?
10) Whether the claim petition has been filed, signed and verify by
duly authorized persons? If not, its effect?
11) Whether the petition does not disclose any cause of action
against the respondents and merits rejection under Order VII,
Rule 11, CPC with costs?
12) Whether the arbitrator has no jurisdiction to try the present
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reference and the proceedings are against the principle of
natural justice and void ab initio?
13) Whether the claim petition is liable to be dismissed with costs
on account of objections raised by the respondents in para 8 of
the preliminary objections taken in the Reply to the claim
petition?
14) Whether the nine cheques were issued for security purpose in
good faith, as alleged? If so, its effect?
15) Whether the distributorship agreement has been validly
terminated?
16) What is the effect of the Hon'ble Delhi High Court Order dated
24.02.2011 on the present arbitration proceedings?
17) Whether the respondents are entitled to recover
Rs.2,50,00,000/- or any other amount from the claimant on
account of the reasons given in para 14 of the counter-claim
including cross territory sales ?
18) Whether the respondents have not complied with the conditions
of the annual agreement dated 13.04.2009 and, therefore, are
not entitled to the recover any amount set up in their counter-
claim?
19) Whether the respondents are entitled to the claim interest on
Rs. 2,50,00,000/-. If so, how much?
20) Whether the respondents are entitled to reliefs (b) and (c)
stated in their counter-claim?
21) Whether the counter-claim does not disclose any cause of
action and is not maintainable?
22) Whether the counter- claim or any part thereof is within
limitation?
23) Whether the pleas set up by the respondents are false,
vexatious and frivolous to their knowledge and the claimant is
entitled to recover special costs? lf so, how much?
24) Relief"
12.1 The Arbitral Tribunal adjudicated upon each of these issues and gave
an award in the sum of Rs. 38,77,423/- in favour of CFL after dealing
with each issue in detail and appreciating the evidence produced by
CFL and PRAGYA, during the course of Arbitral proceedings.
13. A review of both the Arbitral Award and the Impugned Judgment
shows that the issues as set forth in paragraph 12 have been
adjudicated upon. These are briefly discussed below:
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13.1 The issue of supply of goods by CFL in the sum of Rs.54,14,934/- and
the nine cheques [details as set forth in paragraph 5.2 (supra)] which
are referred to as issue numbers 1, 2 and 14 have been clubbed
together and decided by the Arbitral Tribunal. Paragraph 26 to 29 of
the Arbitral Award discusses the findings of the Arbitrator on these
issues. The learned Single Judge relied on these findings and the
evidence before the Arbitral Tribunal to hold that the amounts
awarded to CFL were correctly awarded by the Arbitral Tribunal. So
far as it concerned the issue of nine cheques, it was held by the
Learned Single Judge while noting the decision of the Arbitral
Tribunal in paragraphs 26 to 29 as follows:
“47. From the above, it is seen that the learned Arbitrator had
relied upon Ex.C-5 to C-10, which are purchase orders, the
receipt of which has been admitted by RW-1 Sharad Gupta, in his
answers to question Nos. 28 & 85. He also relied on invoices
exhibited as C-11 to C-29 which have been confirmed by Sharad
Gupta in answer to question no. 40. The witness in reply to
question Nos. 48 and 86 stated that materials against the invoices
have been received. The learned Arbitrator has also relied on
receipt of the transport courier Ex.C-70 to C-79 and ledger
account of the petitioner maintained by the respondent for the
financial year 2009-2010 (Ex.C-110 and C-111). The learned
Arbitrator has held that the petitioner has not produced its own
documents in regard to the purchases. He also referred to a letter
dated July 10, 2009 of the respondent, as filed by the petitioner
wherein it is stated that outstanding amount against the supplies
till June 30, 2009 from the respondent to the petitioner was for
Rs. 54,14,934/-. It is his finding that no reply was sent by the
petitioner to the respondent to the said letter.
48. On the stand of the petitioner that cheques were issued
towards security, learned Arbitrator had relied on the e-mail
dated September 26, 2009 from RW-1 Sharad Gupta wherein he
requested for 15-18 days more to make the payment without
challenging the accuracy of the amount. On the difference in the
amount claimed by the respondent, learned Arbitrator held that
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there is no confusion in the evidence adduced by the respondent
as referred to above.”
[Emphasis is ours]
13.2 We find no reason to disagree with these findings.
13.3 So far as it concerns, issue numbers 3, 4, 5 and 6, as set forth in
paragraph 5.12 (supra) , the issue was resolved prior to the Arbitral
Award and did not require any adjudication.
13.3 The Arbitral Award decided issue number 7 by awarding only future
interest to CFL. However, upon Appeal by CFL, the learned Single
Judge by its judgment dated 25.05.2017 in OMP (COMM.) No. 350 of
2016, awarded CFL pre-reference and pendente lite interest at the rate
of 12.25% per annum. The issue of Award of pre-reference and
pendente lite interest has attained finality. So far as concerns future
interest, the issue was not pressed before this Court.
13.4 On the issue of the claims being beyond limitation, raised as issue
number 8, the Arbitral Tribunal had held that since there was a
running account and a business relationship between the parties, the
claims of CFL were within limitation. It further held that the goods in
issue were sold even in June, 2009 and hence, the statement of claim
filed in August, 2010 was well within limitation. For ready reference,
paragraph 34 of the Arbitral Award is reproduced below:
"34. The material consisting of soft ferrites was sold to the
respondents during the month of June 2009. The Statement of
Claim was filed on 29.08.2010. Obviously, the notice for referring
the dispute to the arbitration was given much earlier. The parties
were having a running account by the very nature of their mutual
business relationship. Therefore, there appears no ground
whatsoever to raise an objection of the claim being time barred by
limitation. Holding that it is within limitation, the issue No. 8 is
decided in favour of the claimant. "
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This finding of the Arbitral Tribunal has been affirmed by the
learned Single Judge and we agree as well.
13.5 Issue number 10 concerning the competence of the authorized
representative, has been dealt by the Arbitral Tribunal in paragraph 36
to 38 of the Arbitral Award. The learned Single Judge in paragraph 36
& 37 of the Impugned Judgment found no infirmity with the same by
taking into account the Power of Attorney dated 06.11.2007 executed
on the authorized representative by the Executive Director of CFL.
Therefore, even this objection does not hold water.
13.6 Issue number 11, as to whether the Claim Petition did not disclose any
cause of action, was decided against PRAGYA by the Arbitral
Tribunal [reference is made to paragraph 39 of the Arbitral Award].
The same was correctly sustained by the learned Single Judge in the
Impugned Judgment as being without merit.
13.7 Issue numbers 12, 13 and 16 were also clubbed together by the
Arbitral Tribunal and disposed of. The learned Single Judge of this
Court in a Petition under Section 11 of the Arbitration Act
[Arbitration Petition No. 201/2010] by an Order dated 24.02.2011
appointed an Arbitral Tribunal with the consent of CFL and
PRAGYA to adjudicate the disputes amongst them. Reference in this
regard is made in paragraph 40 of the Arbitral Award which held that
this issue does not survive and hence, was not pressed by the parties
and disposed of accordingly.
13.8 The Arbitral Tribunal has discussed issue number 15 relating to the
Distributorship Agreement and its termination, in great detail after
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referring to and relying upon the evidence placed before it by
PRAGYA and CFL. The Arbitral Tribunal held that the
Distributorship Agreement stood validly terminated on 28.08.2009.
This finding of the Arbitral Tribunal has been affirmed by the learned
Single Judge in paragraph 60 and 61 of the Impugned Judgment. We
find no infirmity with the same.
13.9 Issue numbers 17 to 22 relate to PRAGYA‟s contention that its
counter claim in the sum of Rs.2.5 crores has not been considered by
the Arbitral Tribunal and the counter claims maintainability. The
Arbitral Award and the learned Single Judge while relying on the
evidence led by the parties found that the counter claim was inter-alia
based on the handwritten annual agreement dated 13.04.2009. The
Arbitral Tribunal found that PRAGYA failed to lead evidence with
respect to its counter claim and hence, it was held that it was not
entitled to any amounts. The learned Single Judge reproduced the
findings of the Arbitral Tribunal being in agreement with his
conclusions. We find no reason to disagree with the conclusions as
reached by the Arbitral Tribunal and the Learned Single Judge.
14. Certain additional objections were raised by PRAGYA in its Petition
under Section 34 of the Arbitration Act filed before the learned Single
Judge which are dealt with below.
14.1 The contention of PRAGYA that the Arbitral Award was typed on
three different sheets with different fonts and furthermore, every page
of the Arbitral Award was not signed by the Arbitral Tribunal is
totally misconceived. There is no such requirement of an Arbitral
Award being signed on every page by an Arbitrator nor is there any
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mention of typing on sheets and fonts etc. in the Arbitration Act.
14.1.1 Section 31 of the Arbitration Act that sets out the „ Form ‟ and
„ Content ‟ of an Arbitral Award, reads as follows:
“ 31. Form and contents of the Arbitral Award -
(1) An arbitral award shall be made in writing and shall be
signed by the members of the arbitral tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings
with more than one arbitrator, the signatures of the
majority of all the members of the arbitral tribunal shall be
sufficient so long as the reason for any omitted signature is
stated.
(3) …….
(4) …...
(5) After the arbitral award is made, a signed copy shall be
delivered to each party…..”
14.1.2 The learned Single Judge, in Paragraph 34 and 35 of the Impugned
Judgment has in this regard, additionally held:
“34. Having heard the learned counsel for the parties and perused
the record, at the outset, I intend to deal with the submission of Mr.
Rohit Goel that the award passed by the learned Arbitrator is
liable to be set aside as it is in violation of Chapter XI of the CPC
which deals with Judgments / Decrees; it does not bear signatures
on each and every page and the award is typed in three different
fonts on three different types of sheets.
35. In this regard, I may state that reference as made to OMP
(COMM) 71/2019 Page 14 of 39 Chapter XI is an error. It appears
reference was intended to Part I of the CPC wherein Section 33
refers to a Judgment and a Decree. Mr. Goel has not qualified his
submission as to how the Award is in violation of that provision. In
so far as his contention that the learned Arbitrator has not signed
each and every page of the Award, he has not pointed out any
provision which contemplates so. Even the plea of Mr. Goel that
the award is typed in three different fonts shall not make the award
invalid. Again he has not submitted any rule / law in support of his
submission. This plea of Mr. Goel is rejected.”
14.2 The objections raised by PRAGYA in the present proceedings, that
the authenticated statement of accounts were not produced and the
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statement of account being admitted despite PRAGYA‟s objection, is
misconceived. The Arbitral Tribunal has relied upon the statement of
accounts and the invoices as produced by CFL. These invoices were
never contested by PRAGYA. The same has also been appreciated in
the Impugned Judgment exhaustively.
15. The learned Counsel for CFL has vehemently argued that the
objections and grounds were previously raised before the learned
Single Judge and adjudicated upon. We find ourselves in agreement
with the learned Counsel for CFL. The objections and grounds raised
by PRAGYA before this Court are mostly a reproduction of the
grounds/objections raised before the Arbitral Tribunal and the learned
Single Judge. Thus, adjudication thereupon has already taken place by
two forums.
16. In exercise of powers under Section 37 of the Arbitration Act, the
scope of interference of the Courts is narrow. The law is no longer res
integra. Where the Arbitrator has assessed the evidence and material
placed before him while considering the objections to the Award, the
Court does not sit as a Court of Appeal or re-appreciate and re-assess
the evidence. Unless there is a patent illegality or perversity,
interference by the Court is not warranted. Merely because another
view is possible, the Court will not interdict the Award. The Courts
should only interfere if such Award “ portrays perversity
unpardonable” under Section 34 of the Arbitration Act . Reference is
made to the Supreme Court‟s decision in the Dyna Technologies case
(supra) where it has been held as follows:
“24. There is no dispute that Section 34 of the Arbitration Act
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limits a challenge to an award only on the grounds provided
therein or as interpreted by various courts. We need to be
cognizant of the fact that arbitral awards should not be interfered
with in a casual and cavalier manner, unless the court comes to a
conclusion that the perversity of the award goes to the root of the
matter without there being a possibility of alternative
interpretation which may sustain the arbitral award. Section 34 is
different in its approach and cannot be equated with a normal
appellate jurisdiction. The mandate under Section 34 is to respect
the finality of the arbitral award and the party autonomy to get
their dispute adjudicated by an alternative forum as provided
under the law. If the courts were to interfere with the arbitral
award in the usual course on factual aspects, then the commercial
wisdom behind opting for alternate dispute resolution would stand
frustrated.
25. Moreover, umpteen number of judgments of this Court have
categorically held that the courts should not interfere with an
award merely because an alternative view on facts and
interpretation of contract exists. The courts need to be cautious
and should defer to the view taken by the Arbitral Tribunal even
if the reasoning provided in the award is implied unless such
award portrays perversity unpardonable under Section 34 of the
Arbitration Act.”
[Emphasis is ours]
17. In view of the foregoing discussion, and being of the opinion that the
view taken by the Arbitral Tribunal as upheld by the learned Single
Judge, is certainly a possible view based on facts in relation to the
merits of the disputes, we find no ground to interfere in the Arbitral
Award and/or the Impugned Judgment as no infirmity or illegality
exists in the Impugned Judgment that would merit our interference
under Section 37 of the Arbitration Act.
18. The Appeal is accordingly dismissed. The pending Applications are
also dismissed. Parties are left to bear their own costs.
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19. The Registry is directed to send a copy of this Judgment to the
Executing Court where the Execution Petition is pending.
TARA VITASTA GANJU, J
RAJIV SHAKDHER, J
MARCH 21, 2023/ ha/r/SA
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