Full Judgment Text
2017:BHC-OS:1710-DB
(203)APPNo.3062006(J)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORIDNARY ORIGINAL CIVIL JURISDICTION
APPEAL No.306 OF 2006
IN
ARBITRATION PETITION NO.368 OF 2005
M/s.Jethmal Mulji Thakkar
having its office at Pimpalgaon
Baswant, District Nashik – 422 209. ... Appellant
V/s.
Maharashtra State Cooperative
Marketing Federation Ltd.,
a Cooperative Society having its
Registered Office at Kanmoor House,
Narsi Natha Street, Mumbai – 400 009. ... Respondent
.....
Mr.Milind Sathe, Senior Advocate with Mr.Kunal Kumbhat i/b.
Mrs.Sunanda R.Kumbhat, Advocate for the Appellant.
....
CORAM : ANOOP V. MOHTA J.
A.M.BADAR J.
th
DATED :8 FEBRUARY 2017.
ORAL JUDGMENT : (PER ANOOP V. MOHTA J.)
1 Called out from final hearing board.
2 The appellant has challenged the impugned order
Gaikwad RD 1/10
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(203)APPNo.3062006(J)
dated 07/03/2006 passed in Arbitration Petition No.368 of 2005
filed by respondent under Section 34 of the Arbitration and
Conciliation Act, 1996 (For Short, “the Arbitration Act”) whereby
challenge was to the award made by the sole Arbitrator dated
20/06/2005 thereby the respondent (the original petitioner)
directed to pay an amount of Rs.27,07,883/ being the amount of
brokerage on the sale effected by the claimant (appellant) as per
clause 13 of the Agreement. The learned Judge has set aside the
said Award by observing as under :
“9. It is thus clear that the cause of action had
accrued to the Respondent, on the Respondent own
showing, on 182000 and the reference was made on
2782003. Therefore, the reference was barred by the
law of limitation. The finding recorded by the
arbitrator that the claim is not barred by the law of
limitation, therefore, is patently erroneous and is liable
to be set aside.
10. As I find that the award is liable to be set aside as
it is barred by the law of limitation, I do not propose to
consider other grounds raised by the Petitioner.
11. In the result, therefore, the petition succeeds and
is allowed. The award impugned in the petition is set
Gaikwad RD 2/10
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(203)APPNo.3062006(J)
aside. The respondent to pay costs of this petition, as
incurred by the Petitioner, to the Petitioner.”
Therefore, this Appeal under Section 37 of the
Arbitration Act.
3 The basic events and factual background are as
under :
(a) On 12/01/2000, agreement was executed between the
Appellant and the Respondent whereby the Appellant was appointed as
agent called “Guarantee Broker” to sell onion on behalf of the
Respondent. Clause 13 provides for payment of commission. Clause 10
provides for arbitration. Clause 17 provides for accounts to be settled
and, inter alia provided that net sale proceeds will be arrived at
after deducting all expenses as per prevailing market practices
such as commission, freight, labour charges, market fees and other
expenses related to respective consignment.”
(b) During the month of January and February 2000, appellant
sold 1107 wagons of onions amounting to Rs.4,24,960.80 Quintals. On
02/05/2000, appellant requested the Respondent to finalise the accounts
and demanded commission of Rs.27,07,873/- on 10/05/2000. On
15/05/2000, the Respondent-Federation Officer informed the Head
Office that the sale price of onion sold has been received. On
14/07/2000, the Divisional Officer of Respondent informed the Head
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Office that entire sale price of onion sold by the Appellant has been
received, and gave his NOC for payment of commission to the
Appellant. On 01/08/2000, the Divisional Officer of Respondent wrote
to Head Office of Respondent that there was no objection for making
payment of commission to the Appellant. On 07/08/2000, the Appellant
demanded Rs.1,55,958/- for delayed return of bank guarantee / security
deposit. The appellant sent reminder dated 18/08/2000 for interest of
Rs.1.55 lakhs. On 29/09/2000, Respondent demanded interest from the
Appellant. On 03/10/2000, appellant was informed that the post dated
cheques of Rs.2 crores may be collected and the Appellant agreed to pay
interest on Rs.1,23,503/-. Respondent sent letter dated 24/11/2000 to
Appellant stating that Appellant’s account was debited for
Rs.1,75,076.40 towards shortfall in onion quantity. Respondent sent
another letter dated 29/11/2000 to Appellant debiting the Appellant’s
account for Rs.53,00,416/ stating that the said amount was
recoverable towards shortage of bags. This amount was debited to
appellant's account. The same would be recovered from the
brokerage payable to appellant. On 09/12/2000, a clarification to
the bag shortage given by the Appellant.
(c) Appellant requested to the Mananaging Director of the
Respondent on 14/11/2002 to refer the dispute to arbitration. On
27/08/2003, appellant again requested Managing Director of the
Respondent to refer the dispute to arbitration. Thereafter, on
18/09/2003, the appellant consented for the name of Arbitrator. In the
year 2003, Arbitration notice was given and on 20/02/2004, appellant
Gaikwad RD 4/10
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filed Statement of Claim. In 2004, respondent filed its reply and
counter-claim and the Appellant filed its written argument. On
20/06/2005, learned Arbitrator had awarded the Appellant’s claim. On
19/09/2005, Arbitration Petition No. 368/2005 was filed by the
Respondent. On 07/03/2006, Arbitration Petition was allowed by the
learned Single Judge.
(d) The learned Judge has, inter alia, held that the cause of
action arose on 1/8/2000 as the reconciliation report was made on that
day. The arbitration notice was given on 27/8/2003. The arbitration
proceedings are deemed to have commenced on 27/8/2003 and hence the
claim was barred by limitation. Hence the present Appeal.
4 In view of Clause 10 of the agreement dated
12/01/2002 in case of dispute, matter had to be referred to
arbitration. After reconciliation on 01/08/2000 pursuant to the
submissions of bills on 10/05/2000, the amount so claimed by the
appellant was accepted by the respondent, to be due and payable.
It was acknowledged and not denied in letter dated 29/11/2000.
5 The clarification so sought was also given by the
appellant. There was no payment received from the respondent,
therefore, on 14/11/2002, the appellant requested to the
respondent Managing Director to make the payment and/or refer
the dispute to arbitration. There was no response even after the
correspondences/communications and as there was no even denial
Gaikwad RD 5/10
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to the amount claimed. On 27/08/2003, the appellant again
requested the respondent Managing Director to refer the dispute
to arbitration. From the facts of background so referred above, if
there is no dispute and the denial to the amount so claimed and
demand is made from time to time, but has delayed the payment,
therefore, the request of 14/11/2002, in our view, should have
been treated as first communication to refer the dispute to
arbitration as contemplated under Section 21 of the Arbitration
Act. Merely because the appellant invoked at second time, by
communication dated 27/08/2003, that in no way be treated
and/or interpreted to mean that the earlier invocation of
arbitration clause was superseded and/or required to be
overlooked. Once the arbitration clause is invoked, the mandate
of Arbitration Act needs to be followed and noted by all the
concerned. Mere sending another notice in no way should have
been taken as foundation to deny the undisputed claims of the
appellant.
6 The learned Arbitrator, as appointed on 12/09/2003,
after considering the claim and counter claim and the material
placed on record including the written submissions filed, by
reasoned order dated 20/06/2005, specifically dealing with the
issue of limitation, has rightly recorded and granted the amount in
following terms :
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“1. The claim of the Claimants is partly allowed. The
Respondent Federation is directed to pay the interest
@ 12% p.a. on the Earnest Money deposit of
Rs.25,00,000/ for delayed period of 138 days to the
Claimants.
2. The Respondent Federation is also directed to
pay Rs.27,07,883.00 being the amount of brokerage on
the sale effected by the Claimants as provided in
Clause 13 of the Agreement.
3. As the aforesaid amount of brokerage to the tune
of Rs.27,07,883.00 has not been paid since 1.8.2000,
the Respondents are directed to pay the interest @
12% p.a. on the said amount of brokerage from
1.8.2000 till the date of payment.
4. In view of Clause 7 of the Agreement, the
Claimants are directed to pay the Federation interest of
Rs.1,23,503.00 as claimed by the Divisional Onion
Officer, Nasik towards delayed sale proceeds.
5. After adjusting the amount mentioned in Clause
4 above from the award, the Respondent Federation
shall pay balance amount of award as ordered
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(203)APPNo.3062006(J)
forthwith.”
7 The learned Single Judge, however, reversed the same
mainly on the ground of delay, basically on the foundation that
the claim so filed is beyond limitation as the appellant invoked the
arbitration only on 27/08/2003, and overlooked the notice dated
14/01/2002. We have gone through the reasons so given by the
learned Arbitrator and the documents placed on record by the
appellant. The learned Judge has, though referred communication
dated 14/11/2002, whereby the appellant requested to make the
payment and/or to invoke arbitration clause but not consider it.
Therefore, it is difficult to accept that case and the reasons to
dismiss the claims so awarded by the learned Arbitrator. It is
contrary to record and/or by overlooking the documents on
record. The order, therefore, so passed, in our view, is contrary to
record and not within the scope and power of the Court under
Section 34 of the Arbitration Act, as there was no perversity to
interfere with the reasoned Award.
8 The learned Senior Counsel appearing for the
appellant has placed on record a Supreme Court Judgment in
Shapoor Fredoom Mazda v. Durga Prosad Chamaria & Ors.
reported in AIR 1961 Supreme Court 1236 (V 48 C 221),
whereby the Apex Court has reiterated the basic principles of
“acknowledgment” and the aspect of jural relationship of debtor
Gaikwad RD 8/10
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and creditor and the effect of “admission” and importance of
surrounding circumstances to consider the documents of
acknowledgment and/or admission. We have gone even through
the documents placed on record. The learned Single Judge has
interfered with the findings of the facts so arrived at by the
Arbitrator by reappreciating the evidence and the ground of
limitation without giving no specific finding on the merits of the
matter. The reasons so given by the learned Arbitrator, while
passing the award on merits, therefore, in Appeal under Section
37 of the Arbitration Act, we have to reappreciate. We have
noted the correspondences and the evidence so placed on record,
whereby it is clear that the respondent, at no point of time, denies
specifically the liability/amount, so claimed toward the
commission. Nonpayment was the reason which compels the
petitioner to invoke the arbitration clause. The first invocation, in
our view, is well within the terms and conditions of the agreement
between the parties. Therefore, once the arbitration clause was
invoked, there was no reason for the learned Court to overlook the
same and to reject the claim based upon the second invocation.
9 Considering the totality of the matter, including the
material placed before the Arbitrator, specifically letters dated
01/08/2000, 24/11/2000 and 29/11/2000 and the reasons so
given by the learned Arbitrator, we are inclined to interfere with
the order passed by the learned Single Judge of dismissal of the
Gaikwad RD 9/10
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claim solely on the ground of limitation.
10 Therefore, for the reasons recorded above and as the
Order passed by the learned Single Judge is contrary to record and
illegal, we are inclined to set aside the same. The order passed by
the learned Arbitrator need to be restored accordingly.
11 Therefore, the order :
(i) The Appeal is allowed.
(ii) The impugned order passed by the learned Single Judge
dated 07/03/2000 is quashed and set aside.
(iii)The Award passed by the learned Arbitrator dated
20/06/2005 is restored.
(iv) The appellant's appeal is allowed.
(v) Arbitration Petition No.368 of 2005 is dismissed.
(vi) No costs.
(A.M.BADAR J.) (ANOOP V. MOHTA J.)
Gaikwad RD 10/10
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORIDNARY ORIGINAL CIVIL JURISDICTION
APPEAL No.306 OF 2006
IN
ARBITRATION PETITION NO.368 OF 2005
M/s.Jethmal Mulji Thakkar
having its office at Pimpalgaon
Baswant, District Nashik – 422 209. ... Appellant
V/s.
Maharashtra State Cooperative
Marketing Federation Ltd.,
a Cooperative Society having its
Registered Office at Kanmoor House,
Narsi Natha Street, Mumbai – 400 009. ... Respondent
.....
Mr.Milind Sathe, Senior Advocate with Mr.Kunal Kumbhat i/b.
Mrs.Sunanda R.Kumbhat, Advocate for the Appellant.
....
CORAM : ANOOP V. MOHTA J.
A.M.BADAR J.
th
DATED :8 FEBRUARY 2017.
ORAL JUDGMENT : (PER ANOOP V. MOHTA J.)
1 Called out from final hearing board.
2 The appellant has challenged the impugned order
Gaikwad RD 1/10
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(203)APPNo.3062006(J)
dated 07/03/2006 passed in Arbitration Petition No.368 of 2005
filed by respondent under Section 34 of the Arbitration and
Conciliation Act, 1996 (For Short, “the Arbitration Act”) whereby
challenge was to the award made by the sole Arbitrator dated
20/06/2005 thereby the respondent (the original petitioner)
directed to pay an amount of Rs.27,07,883/ being the amount of
brokerage on the sale effected by the claimant (appellant) as per
clause 13 of the Agreement. The learned Judge has set aside the
said Award by observing as under :
“9. It is thus clear that the cause of action had
accrued to the Respondent, on the Respondent own
showing, on 182000 and the reference was made on
2782003. Therefore, the reference was barred by the
law of limitation. The finding recorded by the
arbitrator that the claim is not barred by the law of
limitation, therefore, is patently erroneous and is liable
to be set aside.
10. As I find that the award is liable to be set aside as
it is barred by the law of limitation, I do not propose to
consider other grounds raised by the Petitioner.
11. In the result, therefore, the petition succeeds and
is allowed. The award impugned in the petition is set
Gaikwad RD 2/10
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aside. The respondent to pay costs of this petition, as
incurred by the Petitioner, to the Petitioner.”
Therefore, this Appeal under Section 37 of the
Arbitration Act.
3 The basic events and factual background are as
under :
(a) On 12/01/2000, agreement was executed between the
Appellant and the Respondent whereby the Appellant was appointed as
agent called “Guarantee Broker” to sell onion on behalf of the
Respondent. Clause 13 provides for payment of commission. Clause 10
provides for arbitration. Clause 17 provides for accounts to be settled
and, inter alia provided that net sale proceeds will be arrived at
after deducting all expenses as per prevailing market practices
such as commission, freight, labour charges, market fees and other
expenses related to respective consignment.”
(b) During the month of January and February 2000, appellant
sold 1107 wagons of onions amounting to Rs.4,24,960.80 Quintals. On
02/05/2000, appellant requested the Respondent to finalise the accounts
and demanded commission of Rs.27,07,873/- on 10/05/2000. On
15/05/2000, the Respondent-Federation Officer informed the Head
Office that the sale price of onion sold has been received. On
14/07/2000, the Divisional Officer of Respondent informed the Head
Gaikwad RD 3/10
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(203)APPNo.3062006(J)
Office that entire sale price of onion sold by the Appellant has been
received, and gave his NOC for payment of commission to the
Appellant. On 01/08/2000, the Divisional Officer of Respondent wrote
to Head Office of Respondent that there was no objection for making
payment of commission to the Appellant. On 07/08/2000, the Appellant
demanded Rs.1,55,958/- for delayed return of bank guarantee / security
deposit. The appellant sent reminder dated 18/08/2000 for interest of
Rs.1.55 lakhs. On 29/09/2000, Respondent demanded interest from the
Appellant. On 03/10/2000, appellant was informed that the post dated
cheques of Rs.2 crores may be collected and the Appellant agreed to pay
interest on Rs.1,23,503/-. Respondent sent letter dated 24/11/2000 to
Appellant stating that Appellant’s account was debited for
Rs.1,75,076.40 towards shortfall in onion quantity. Respondent sent
another letter dated 29/11/2000 to Appellant debiting the Appellant’s
account for Rs.53,00,416/ stating that the said amount was
recoverable towards shortage of bags. This amount was debited to
appellant's account. The same would be recovered from the
brokerage payable to appellant. On 09/12/2000, a clarification to
the bag shortage given by the Appellant.
(c) Appellant requested to the Mananaging Director of the
Respondent on 14/11/2002 to refer the dispute to arbitration. On
27/08/2003, appellant again requested Managing Director of the
Respondent to refer the dispute to arbitration. Thereafter, on
18/09/2003, the appellant consented for the name of Arbitrator. In the
year 2003, Arbitration notice was given and on 20/02/2004, appellant
Gaikwad RD 4/10
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filed Statement of Claim. In 2004, respondent filed its reply and
counter-claim and the Appellant filed its written argument. On
20/06/2005, learned Arbitrator had awarded the Appellant’s claim. On
19/09/2005, Arbitration Petition No. 368/2005 was filed by the
Respondent. On 07/03/2006, Arbitration Petition was allowed by the
learned Single Judge.
(d) The learned Judge has, inter alia, held that the cause of
action arose on 1/8/2000 as the reconciliation report was made on that
day. The arbitration notice was given on 27/8/2003. The arbitration
proceedings are deemed to have commenced on 27/8/2003 and hence the
claim was barred by limitation. Hence the present Appeal.
4 In view of Clause 10 of the agreement dated
12/01/2002 in case of dispute, matter had to be referred to
arbitration. After reconciliation on 01/08/2000 pursuant to the
submissions of bills on 10/05/2000, the amount so claimed by the
appellant was accepted by the respondent, to be due and payable.
It was acknowledged and not denied in letter dated 29/11/2000.
5 The clarification so sought was also given by the
appellant. There was no payment received from the respondent,
therefore, on 14/11/2002, the appellant requested to the
respondent Managing Director to make the payment and/or refer
the dispute to arbitration. There was no response even after the
correspondences/communications and as there was no even denial
Gaikwad RD 5/10
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(203)APPNo.3062006(J)
to the amount claimed. On 27/08/2003, the appellant again
requested the respondent Managing Director to refer the dispute
to arbitration. From the facts of background so referred above, if
there is no dispute and the denial to the amount so claimed and
demand is made from time to time, but has delayed the payment,
therefore, the request of 14/11/2002, in our view, should have
been treated as first communication to refer the dispute to
arbitration as contemplated under Section 21 of the Arbitration
Act. Merely because the appellant invoked at second time, by
communication dated 27/08/2003, that in no way be treated
and/or interpreted to mean that the earlier invocation of
arbitration clause was superseded and/or required to be
overlooked. Once the arbitration clause is invoked, the mandate
of Arbitration Act needs to be followed and noted by all the
concerned. Mere sending another notice in no way should have
been taken as foundation to deny the undisputed claims of the
appellant.
6 The learned Arbitrator, as appointed on 12/09/2003,
after considering the claim and counter claim and the material
placed on record including the written submissions filed, by
reasoned order dated 20/06/2005, specifically dealing with the
issue of limitation, has rightly recorded and granted the amount in
following terms :
Gaikwad RD 6/10
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“1. The claim of the Claimants is partly allowed. The
Respondent Federation is directed to pay the interest
@ 12% p.a. on the Earnest Money deposit of
Rs.25,00,000/ for delayed period of 138 days to the
Claimants.
2. The Respondent Federation is also directed to
pay Rs.27,07,883.00 being the amount of brokerage on
the sale effected by the Claimants as provided in
Clause 13 of the Agreement.
3. As the aforesaid amount of brokerage to the tune
of Rs.27,07,883.00 has not been paid since 1.8.2000,
the Respondents are directed to pay the interest @
12% p.a. on the said amount of brokerage from
1.8.2000 till the date of payment.
4. In view of Clause 7 of the Agreement, the
Claimants are directed to pay the Federation interest of
Rs.1,23,503.00 as claimed by the Divisional Onion
Officer, Nasik towards delayed sale proceeds.
5. After adjusting the amount mentioned in Clause
4 above from the award, the Respondent Federation
shall pay balance amount of award as ordered
Gaikwad RD 7/10
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(203)APPNo.3062006(J)
forthwith.”
7 The learned Single Judge, however, reversed the same
mainly on the ground of delay, basically on the foundation that
the claim so filed is beyond limitation as the appellant invoked the
arbitration only on 27/08/2003, and overlooked the notice dated
14/01/2002. We have gone through the reasons so given by the
learned Arbitrator and the documents placed on record by the
appellant. The learned Judge has, though referred communication
dated 14/11/2002, whereby the appellant requested to make the
payment and/or to invoke arbitration clause but not consider it.
Therefore, it is difficult to accept that case and the reasons to
dismiss the claims so awarded by the learned Arbitrator. It is
contrary to record and/or by overlooking the documents on
record. The order, therefore, so passed, in our view, is contrary to
record and not within the scope and power of the Court under
Section 34 of the Arbitration Act, as there was no perversity to
interfere with the reasoned Award.
8 The learned Senior Counsel appearing for the
appellant has placed on record a Supreme Court Judgment in
Shapoor Fredoom Mazda v. Durga Prosad Chamaria & Ors.
reported in AIR 1961 Supreme Court 1236 (V 48 C 221),
whereby the Apex Court has reiterated the basic principles of
“acknowledgment” and the aspect of jural relationship of debtor
Gaikwad RD 8/10
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(203)APPNo.3062006(J)
and creditor and the effect of “admission” and importance of
surrounding circumstances to consider the documents of
acknowledgment and/or admission. We have gone even through
the documents placed on record. The learned Single Judge has
interfered with the findings of the facts so arrived at by the
Arbitrator by reappreciating the evidence and the ground of
limitation without giving no specific finding on the merits of the
matter. The reasons so given by the learned Arbitrator, while
passing the award on merits, therefore, in Appeal under Section
37 of the Arbitration Act, we have to reappreciate. We have
noted the correspondences and the evidence so placed on record,
whereby it is clear that the respondent, at no point of time, denies
specifically the liability/amount, so claimed toward the
commission. Nonpayment was the reason which compels the
petitioner to invoke the arbitration clause. The first invocation, in
our view, is well within the terms and conditions of the agreement
between the parties. Therefore, once the arbitration clause was
invoked, there was no reason for the learned Court to overlook the
same and to reject the claim based upon the second invocation.
9 Considering the totality of the matter, including the
material placed before the Arbitrator, specifically letters dated
01/08/2000, 24/11/2000 and 29/11/2000 and the reasons so
given by the learned Arbitrator, we are inclined to interfere with
the order passed by the learned Single Judge of dismissal of the
Gaikwad RD 9/10
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claim solely on the ground of limitation.
10 Therefore, for the reasons recorded above and as the
Order passed by the learned Single Judge is contrary to record and
illegal, we are inclined to set aside the same. The order passed by
the learned Arbitrator need to be restored accordingly.
11 Therefore, the order :
(i) The Appeal is allowed.
(ii) The impugned order passed by the learned Single Judge
dated 07/03/2000 is quashed and set aside.
(iii)The Award passed by the learned Arbitrator dated
20/06/2005 is restored.
(iv) The appellant's appeal is allowed.
(v) Arbitration Petition No.368 of 2005 is dismissed.
(vi) No costs.
(A.M.BADAR J.) (ANOOP V. MOHTA J.)
Gaikwad RD 10/10
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