Delhi District Court
Hamdard Public School vs M/S Edu Smart Services Pvt Ltd on 28 February, 2025
IN THE COURT OF MS. ANU GROVER BALIGA,
DISTRICT JUDGE (COMMERCIAL COURT-04),
SOUTH-EAST DISTRICT
SAKET COURTS, NEW DELHI
OMP No. 01/2019
HAMDARD PUBLIC SCHOOL VS. M/S EDU SMART SERVICES PVT. LTD.
In the matter of:
HAMDARD PUBLIC SCHOOL
Through its Principal
Farooq Ahmad Katoch
At : Bashat Chenani
District Udhampur
Jammu & Kashmir ......Petitioner
Versus
1. M/S EDU SMART SERVICES PVT. LTD.
Having registered office at :
L-74, Mahipalpur Extension,
New Delhi-110037. ......Respondent no.1
2. M/S EDUCOMP SOLUTIONS LTD.
Having its office at :
1211, Padma Tower-1,
5, Rajendra Palace,
New Delhi-110008. ......Respondent no.2
Date of institution : 24.12.2018
Date of reserving order : 27.02.2025
Date of pronouncement of order : 28.02.2025
ORDER
1. Vide the present order, I shall decide a petition filed under Section 34 of the Arbitration and Conciliation Act seeking to challenge the Arbitral Award dated 03.04.2017 passed by the learned Arbitrator, Sh. Pankaj Kumar.
OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 1 of 9 Digitally signed ANU by ANU
GROVER
GROVER BALIGA
BALIGA Date: 2025.03.03
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2. Briefly stated the material facts inter-alia asserted by the Petitioner in the present petition are as follows :-
(a) The Petitioner is a school running in Kashmir and the present petition is being preferred through its Principal, Sh. Farooq Ahmad Katoch.
(b) The representatives of Respondents had approached the Petitioner with a proposal to install and commence smart classes under their module called as Educlass Basic, Educlass Pro and Educlass Interactive at its premises.
(c) The Petitioner agreed to the proposal of the Respondents pursuant to which the Respondents through invoice no. ICHD/RET/11-12/00762 dated 24.08.2011 sent some goods to the Petitioner school to be installed for smart classrooms.
(d) The smart classrooms were however not
successful at the Petitioner school, and the
Respondents were requested to take their goods back. The Respondents agreed to collect the goods from the Petitioner school.
(e) On 29.09.2012, one Mr. Ramji Dass, Representative of the Respondents, received all the materials / goods of the Respondents from the Petitioner's school.
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GROVER BALIGA
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(d) No Agreement dated 06.05.2011, which
finds mention in the Arbitral Award and on the basis of which the arbitration proceedings were assertedly initiated by the Respondents was ever executed by the Petitioner and the Respondents have produced a forged Agreement before the Ld. Arbitrator.
(e) The Petitioner was never served with notice of the arbitration proceedings assertedly issued by the Respondents or the Ld. Arbitrator and the Petitioner became aware of the Arbitral Award only when the Respondents filed a petition for execution of the Arbitral Award.
3. In view of the aforementioned facts it has been contended that the Arbitral Award is liable to be set-aside. Ld. Counsel for the Petitioner has pointed out that the arbitral record reflects that there was no document placed before the Ld. Arbitrator, reflecting the service of the notice of the arbitration upon the Petitioner and yet the Ld. Arbitrator gave a finding that the Petitioner stood served. Ld. Counsel for Petitioner has also sought to contend that the address on which the notice of arbitration was assertedly dispatched was not even the correct address of the Petitioner. The contention therefore is that without informing the Petitioner, the Respondents malafidely appointed a Sole Arbitrator of their own choice and the said Arbitrator in a completely biased manner passed an ex-parte Award against the Petitioner. It is also the submission of Ld. Counsel that Respondents had taken loans from a consortium of Banks / Financial Institutions for the purposes of installation and commencing smart classes in various schools of the country, but that they OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 3 of 9 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:19:51 +0530 however diverted the said funds and also failed to repay the loans of the Financial Institutions / Banks. He further submits that when the said Financial Institutions preferred to file winding up petitions before the Delhi High Court and Hon'ble NCLT, the Respondents in order to prove that they had infact given loans to schools and had also recovered part of loan amounts resorted to manipulating forged records of asserted arbitral proceedings. He submits that even CBI has registered FIRs against the Respondents. A copy of one such FIR has been filed on record.
4. As per record, though no reply has been filed to the aforementioned petition till date, it appears that before the Ld. Predecessor of this Court written submissions were filed on behalf of Respondent No. 2 for dismissal of present petition on account of imposition of moratorium u/s 14 (1) (a) of the Insolvency & Bankruptcy Code.
5. In the aforementioned written submissions it has been narrated on behalf of Respondent No. 2 that the Hon'ble NCLT has initiated Corporate Insolvency Resolution Process (CIRP) with regard to Respondent No. 2 and that vide order dated 30.05.2017 moratorium has been declared u/s 14 (1) (a) of the Insolvency & Bankruptcy Code.
6. Apparently it is on the basis of aforementioned written submissions that no effective proceedings were being held by the Ld. Predecessor of this Court. Ld. Counsel for Petitioner has submitted that though the written submissions were filed only on behalf of Respondent No. 2, as on the date of the filing of the present petition admittedly insolvency proceedings were also pending against Respondent No. 1. He further submits that the question whether or not the bar imposed u/s 14 (1) (a) of the Insolvency & Bankruptcy Code applies to a petition u/s 34 of the Arbitration and Conciliation Act was pending OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 4 of 9 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:19:58 +0530 before the Hon'ble Delhi High Court in another case and that therefore the counsels for the parties in the present case had requested the Ld. Predecessor of this Court to adjourn the matter till the said issue was decided by the Hon'ble Delhi High Court. He however has now informed this Court that the aforementioned issue has become irrelevant for the decision of the present petition for now the insolvency proceedings initiated against both the Respondents stand terminated. He has placed on record the copies of orders dated 25.04.2023 and 09.10.2023 which reflect that the insolvency proceedings stand terminated and revival plans for both the Respondents stand approved by the Hon'ble NCLT and that no moratorium is now in operation. Ld. Counsel for Petitioner has therefore submitted that this petition be continued with.
7. It is relevant to mention herein that the said information was given to this Court by Ld. Counsel for Petitioner on 10.02.2025. On the said date one Proxy Counsel Ms. Aprita Bhattacharya had joined the Court proceedings through VC and had submitted that she and her senior one Sh. Devender Kejriwal have been engaged by the Respondents and that the vakalatnama of the said Counsels will be filed during the course of the day and that they would make their submissions on the present petition on 22.02.2025. However, none appeared on behalf of the Respondents on 22.02.2025, 27.02.2025 or even today. As such, this Court hereby takes notice of the copies of orders placed on record by the Ld. Counsel for Petitioner which reflect that insolvency proceedings stand terminated against both the Respondents. In view of the said orders clearly there cannot be any bar with the continuation of the present petition. In a case titled and reported as Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184, the Hon'ble Supreme Court was dealing with the maintainability of a suit filed by an unregistered partnership firm. In the said case, the Hon'ble Supreme Court interalia held as follows :-
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"29. We, prima facie, find substance in what is contended by Dr. Singhvi for the respondent. It is obvious that even if the suit is filed by an unregistered partnership firm, against a third party and is treated to be incompetent as per Section 69 sub-section (2) of the Partnership Act, if pending the suit before a decree is obtained, the plaintiff puts its house in order and gets itself registered the defect in the earlier filing which even though may result in treating the original suit as still born, would no longer survive if the suit is treated to be deemed to be instituted on the date on which registration is obtained. If such an approach is adopted, no real harm would be caused to either side. As rightly submitted by Dr. Singhvi that, Order 7 Rule 13 of the CPC would permit the filing of a fresh suit on the same cause of Action and if the earlier suit is permitted to be continued it would continue in the old number and the parties to the litigation would be able to get their claim adjudicated on merits earlier while on the other hand if such subsequent registration is not held to be of any avail, all that would happen is that a fresh suit can be filed immediately after such registration and then it will bear a new number of a subsequent year. That would further delay the adjudicatory process of the court as such a new suit would take years before it gets ready for trial and the parties will be further deprived of an opportunity to get their disputes adjudicated on merits at the earliest and the arrears of cases pending in the court would go oh mounting."
In the present case also it is sought to be argued by the Respondents that as on the date of the filing of the present petition, it was not maintainable in view of the moratorium declared by the Hon'ble NCLT in the insolvency proceedings initiated against both the Respondents. In view of the judicial dicta referred hereinabove, this Court is of the considered opinion that now that the insolvency proceedings stand terminated and the moratorium stands lifted, the defect in the earlier filing no longer survives. To direct the OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 6 of 9 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:20:14 +0530 Petitioner to file a fresh petition u/s 34 of the Arbitration and Conciliation Act would only further delay the adjudicatory process of the Court and would lead to multiplicity of litigation. This Court therefore holds that there is now no bar in continuation of the present petition.
8. Coming now to the merits of the present petition, though as narrated hereinabove there are various grounds on which the aforementioned Award has been challenged by the Petitioner, Ld. Counsel for the Petitioner, Sh. Amandeep Singh has submitted before this Court that the Arbitral Award in the present case is liable to be set aside on one main ground itself namely that it has been passed by an Arbitrator who was unilaterally appointed by the Respondent, DDA. In support of this contention, Ld. Counsel for the Petitioner has relied upon the following judgments:-
• TRF Ltd. vs. Energo Engg. Projects Ltd., (2017) 8 SCC 377. • Perkins Eastman Architects DPC vs. HSCC (India) Ltd. AIR 2020 SC 59.
• Dharma Partisththanam vs. M/s Madhok Construction Pvt. Ltd. AIR 2005 SC 214.
• Alupro Building Systems Pvt. Ltd. vs. Ozone Oversees Pvt. Ltd. 2017 (162) DRJ 412.
• Union of India vs. Tecco Trichy Engineers And Contractors AIR 2005 SC 1832.
• Soya Finance Pvt. Ltd. vs. Tirupati Paper Mills Pvt. Ltd. and Others 106 (2003) DLT 653.
• Dhembla Enterprises vs. Chelsea Products & Ors., 2002 (suppl.) ARBLR584 (Delhi).
9. In the present case, the relevant Clause of the agreement between the parties, in pursuance to which the Arbitrator in the present case came to be appointed is reproduced as below :-
Clause 8.1 If any dispute or difference of any kind whatsoever arise between the parties in connection with or arising out of this Agreement or any part thereof, such dispute OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 7 of 9 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:20:21 +0530 or difference shall be referred to an acceptable sole arbitrator under the provisions of the Indian Arbitration and Conciliation Act, 1996, or any enactment or modification there under. The sole arbitrator shall be appointed by party A. The venue for arbitration shall be at New Delhi and the language shall be English subject thereto, the courts in New Delhi shall have jurisdiction to entertain all requests for interim measures and reliefs, and disputes, appeals, etc between the parties.
The parties hereby waive any right to claim the jurisdiction of any other Court on the ground that the choice of venue is onerous or otherwise inconvenient to them.
10. Clearly, the aforementioned Clause gives the sole authority to the Respondents herein to unilaterally appoint an Arbitrator and therefore in view of the law laid-down by the Hon'ble Supreme Court in the Judgments relied upon by the Ld. Counsel for Petitioner, the Award given by the Sole Arbitrator in the present case is to be held as nonest and without jurisdiction.
11. This Court is also satisfied that despite the fact that the present petition has been filed on 03.01.2019 and the Arbitral Award sought to be challenged is dated 03.04.2017 the present petition cannot be dismissed on the ground of being time barred, in view of the law laid-down by the Hon'ble Delhi High Court in the case titled and reported as Telecommunication Consultants India Ltd. v. Shivaa Trading, 2024 : DHC : 3094. In the said case before the Hon'ble Delhi High Court, a similar contention had been taken on behalf of the Respondent namely that the Petition u/s 34 of the Arbitration and Conciliation Act filed beyond the period of 120 days should not be allowed to succeed. Dealing with the said contention, the Hon'ble Delhi High Court held that since the order passed by the Ld. Arbitrator was without jurisdiction and is therefore nonest and void ab-initio, the same can be challenged at any stage. In particular OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 8 of 9 ANU Digitally signed by ANU GROVER GROVER BALIGA Date: 2025.03.03 BALIGA 15:20:29 +0530 in para no. 27 it has been observed as follows :-
"27. There also cannot be any cavil with the proposition of law that a defect of jurisdiction, which renders a decision void, can be challenged at any stage, since such defect strikes at the very foundation of the power of the court or tribunal to decide a dispute."
12. In view of the aforementioned judicial dicta it is to be held that the present case cannot be dismissed on the ground that it is time barred and it is to be held that the Award given by the Ld. Sole Arbitrator in the present case is nonest and void ab-initio. Even otherwise, the Respondents have failed to bring on record any material to sufficiently prove that the Petitioner was made aware of the Arbitration Proceedings either by them or the Ld. Arbitrator. In such view there are no grounds for this Court to doubt the assertion of the Petitioner, on oath, that it became aware of the Arbitral amount only when the Respondents filed a petition for execution of the Arbitral Award and received a copy of the Award only on 24.09.2018. The present petition having been filed on 24.12.2018 has been filed within 90 days thereof is therefore within limitation.
13. In view of the discussion hereinabove, the award challenged in the present case therefore is liable to be set aside. As such, the present petition filed under Section 34 of the Arbitration and Conciliation Act stands allowed and the Arbitral Award dated 03.04.2017 passed by the learned Arbitrator Sh. Pankaj Kumar stands set aside.
14. This file be consigned to Record Room after due compliance.
Digitally signed by ANU ANU GROVER
GROVER BALIGA
Announced in the open court BALIGA
Date: 2025.03.03
15:20:36 +0530
on 28th February, 2025. (Anu Grover Baliga) District Judge (Commercial Court-04) South-East/Saket Court New Delhi OMP (COMM) No 01/19 Hamdard Public School Vs. M/s EDU Smart Services Pvt. Ltd. & Anr. Page 9 of 9