Delhi District Court
Hcl Technologies Ltd vs Sgs Tekniks Manufacturing Pvt Ltd on 3 August, 2024
DLND010026952020
IN THE COURT OF MRS VINEETA GOYAL,
DISTRICT JUDGE (COMMERCIAL-03),
PATIALA HOUSE, NEW DELHI
OMP (Comm) No.60 of 2020
CNR No.DLND01-002695-2020
In the matter of:
HCL Technologies Ltd,
D-5, Phas-I, Okhla Industrial Area,
New Delhi-110020
Also at: A-11, Sector 16, Gautam Budh Nagar,
Noida (UP)-201301. ........ Petitioner
Versus
SGS Tekiniks Manufacturing Pvt Ltd.
A-3, Infocity, Sector 34, Gurgaon-121001,
Haryana
Also at: F-225A, Sainik Farms,
New Delhi. ......Respondent
Date of institution of suit : 19.08.2020
Date of Judgment : 03.08.2024
Appearance : Ms. Kavita Sarin & Sh. Rajat Gava, Ld. Counsels
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2024.08.03
17:37:21 +0530
OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 1 of 46
for petitioner.
Sh. Sandeep Kumar Batra, Ld. Counsel for
respondent.
JUDGMENT
1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (in short 'the Act') filed by petitioner for setting aside arbitral award dated 24.12.2019 passed in case reference no. DIAC/2309/12-18 by Ld. Sole Arbitrator.
2. The respondent "SGS Tekniks Manufacturing Pvt Ltd." had invoked the arbitration agreement and preferred a claim of Rs. 12,27,431/- (Rupees Twelve Lacs Twenty Seven Thousand Four Hundred Thirty One Only) together with interest @ 24% per annum from the date of default i.e. 24.04.2016 till the payment against "M/s HCL Technologies Ltd.", the petitioner herein.
3. Brief facts leading to the case are as follows:
i. The petitioner is a Public Limited Company, duly incorporated under the Companies Act, 1956. The petitioner is an end to end service provider and a leading lane in the space of IT / IT enabled services. It manages Mission Critical IT Environment and addresses the IT Infrastructure Requirements for over 20 of the 100 fortune companies. Additionally, the petitioner caters to major industries including Automobiles, Banking, Chemicals, Energy (Oil & Gas) and Utility, Consumer Electronics, Financial Services, Digitally signed by VINEETA GOYAL VINEETA Date:
GOYAL 2024.08.03
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Health-care and Pharmaceuticals, Manufacturing, Media, Publishing and Entertainment, Retail, Telecom, Travel & Tourism and Logistic. The respondent is a company registered under The Companies Act, 1956. It is engaged in the business of providing Engineering Services.
ii. The respondent filed a Statement of Claim before the Ld. Arbitrator alleging that petitioner sub-contracted the part of the work allotted to it by Uttari Haryana Bijli Vitran Nigam and Dakshani Haryana Bijli Vitran Nigam for the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) in the State of Haryana to it. The petitioner awarded two Service Order(s) to the respondent as under:-
(a) Service Order bearing no. 5200042870 dated 18.03.2013 for Rs. 10,13,802/-.
(b) Service order bearing no. 52000447756 dated 02.07.2013 for Rs. 53,76,591/-
The respondent further alleged in the Statement of Claim that it has performed its part of agreement as per the specification mentioned in the Service orders and same was approved by the Uttari Haryana Bijli Vitran Nigam and Dakshani Haryana Bijli Vitran Nigam, as required in their service orders. After completing the service work, the respondent has raised the bills and submitted with the petitioner. Despite the work having been performed within time, the petitioner did not make the full payment as per Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:37:52 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 3 of 46 the service orders. Despite repeated reminders, the petitioner has not released the balance payment of Rs. 12,27,431/- (Twelve Lacs Twenty Seven Thousand Four Hundred Thirty One Only) to the respondent against the work done as per service order.
iii. On the other hand, the petitioner, in its Statement of Defence submitted that there is no dispute between the parties as regards service orders as referred in the Statement of Claim. The service orders relied upon by the claimant therein, were mutually foreclosed by the parties and as such there is no dispute, which can be adjudicated. The petitioner also alleged that the service orders in question are two separate and independent contracts that were issued for different works. The petitioner submitted that it was awarded two separate projects under the Re-structured Accelerated Power Development and Reforms Program (R- APDRP) in the State of Haryana by Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam (in short "DISCOM"). Pursuant to award of aforesaid projects, petitioner issued service order bearing no. 5200042870 dated 18.03.2013 to respondent for work of "Asset Mapping Consumer Index and Digitization". The total contact price was Rs. 10,62,600/- and the date of completion of scope of work was 31.12.2014. The payment were to be made on submissions of invoices against the Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:38:08 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 4 of 46 actual work, delivery as per the scope of work and in accordance with payment schedule on achievement of certain milestones. The final payment of 20% of total contract price arrived at based on actual quantities was payable after 90 days post "Go Live" achievements subject to the acceptance of service by the respondent and further upon approval by the concerned Discom. The petitioner also took the plea that another service order bearing no. 5200044756 dated 02.07.2013 to respondent for separate work i.e. GIS Survey. The total contract price was Rs. 51,83,154/- and the date of completion was 30.05.2014. This service order also contains terms of payment identical to service order no. 5200042870. According to the petitioner, since the very beginning, the respondent was unable to perform in accordance with contractual obligation and committed breach of guidelines. The petitioner notified its satisfaction and concerns to the respondent on several occasions especially through email dated 09.08.2013, 14.08.2013, 08.01.2014, 28.01.2014, 08.02.2014, 13.02.2014, 16.02.2014, 08.03.2014 & 26.04.2014.
However, the respondent did not bother to rectify. As the work progresses, the respondent raised certain invoices and same were honored by the petitioner as per the terms and conditions of service orders. However, as the respondent could not complete the work, the service orders were foreclosed and no service order no.5200050327 and Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:38:20 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 5 of 46 5200050347 were executed. The petitioner also made its best efforts to extend necessary cooperation to the respondent in performance of its contractual obligations. However, despite receiving all support, the respondent failed to execute service order no.5200050327 and 5200050347. Consequently, the petitioner was constraint to engage into the discussion and constraint to foreclose service order no. 5200050347 (old SO No. 5200044756) and same was acknowledged by the respondent. It is further alleged that due to non performance of contract by respondent, the petitioner suffered losses. Nevertheless, the service orders were foreclosed in full and final settlement of any claims of the parties and as such, there cannot be any valid dispute between the parties. Regarding service order no.5200050327, the respondent never performed the contract obligation, so no amount is payable. It is further alleged by respondent that respondent's entitlement to full contract price was inter alia dependent upon achieving GO- LIVE by it with approval of petitioner and the concerned Discom. Therefore, the respondent was not entitled for any amount as claimed by it in the statement of claim. Petitioner also alleged that respondent has failed to even remotely demonstrate the basis of claim for sum of Rs.12,27,431/- from the petitioner. It is for the respondent to provide full particulars of the work done by it, approval taken from petitioner / Discom in respect of such work and Digitally signed by VINEETA GOYAL VINEETA Date:
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the invoices raised in terms of respective service orders to support its claim. Absence of such material details establish the hollowness of the claim, which sans merits and liable to be rejected.
iv. The Ld. Arbitrator after considering the Statement of Claim, Statement of Defence, evidence and documents on record passed the award (hereinafter referred as impugned award) in favour of respondent allowing the claim and directing the payment of Rs. 19,17,431/- (Rs. 12,27,431/- against claims plus Rs. 5,40,000/- interest @ 12% per annum and Rs. 1,50,000/- towards cost along with interest @ 12% per annum).
v. Aggrieved by this, the petitioner challenged the impugned award on the ground that findings recorded by Ld.Arbitrator are perverse, contrary to the contract between the parties, pleadings and documents on record and opposed to public policy. The impugned award suffers from patent illegality on the basis of record and hence deserves to be set aside. vi. On behalf of respondent, it is submitted that it is settled preposition of law that a court shall not sit in appeal over the award of an arbitral tribunal by re-assessing or re- appreciating evidence of arbitral proceedings. An award can be challenged on limited grounds as mentioned in the Act. Therefore, in the absence of any such ground, it is not possible to re-examine the facts or evidence on record. It is Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:38:44 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 7 of 46 submitted that petitioner has wrongly alleged that the impugned award was illegal, contrary to applicable provisions of law against the terms of contract or fundamental of policy of Indian Law. It is submitted that impugned award cannot be equated with judgment of the court. Ld. Arbitrator has rightly appreciated all the arguments and judgments. The findings of Ld. Arbitrator does not suffer with any infirmity and based on the evidence and documents led and filed by the parties before the Ld. Arbitrator. It is also submitted that when two views prevail, the view taken by Arbitral Tribunal would be considered as a plausible view. Therefore, it is submitted that instant petition is liable to be dismissed for being devoid of merits.
4 I have heard arguments advanced by the ld. Counsels for the parties and gone through the arbitral record.
5 The first and foremost contention of the petitioner is that the Ld. Arbitrator has wrongly reached to a conclusion that respondent i.e. SGS Tecklings Pvt Ltd has locus standi to pursue the subject matter since it has acquired all the assets and liability of SGS Infotech Pvt Ltd., completely ignoring the fact that there was no privity of contract between the petitioner and the respondent; the respondent never invoked arbitration against the petitioner; despite the merger having taken place in 2012, SGS Digitally signed by VINEETA GOYAL VINEETA Date:
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Infotech has invoked arbitration in 2016; SGS Infotech was not in existence when it invoked arbitration against the petitioner and the respondent has never pleaded nor filed any document with respect to merger in arbitration proceedings, which amounts to the suppression of material fact.
6 Per contra, it is contended by the respondent that the petitioner never took such plea in its reply either before Hon'ble High Court of Delhi while appointing the Ld. Arbitrator nor later on. The respondent filed the petition u/s. 11 of the Act inter alia seeking appointment of an Arbitrator for adjudication of a dispute that has arisen between the parties in relation to service orders dated 18.03.2013 and 02.07.2013 placed by the petitioner on the respondent. The Hon'ble High Court of Delhi in para 3 of its order dated 06.12.2018 observed that :-
"as existing of arbitration agreement and due invocation thereof not denied by the respondent / petitioner (herein), the Court see no impediment in appointing a sole arbitrator for adjudicating the disputes that have arisen between the parties in relation to the aforesaid service orders".
7 Referring to the above, Ld. Counsel for the respondent urged that there is no infirmity in the findings given by the Ld. Arbitrator.
8 Perusal of the impugned award shows that Ld. Arbitrator after considering the relevant case laws put forth by the parties, rejected the petitioner's objection by a detailed observation, the relevant portion of the impugned award reads as under :-
Digitally signedVINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:39:07 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 9 of 46 "18 It has been argued on behalf of respondent that the claimant does not have locus standi to pursue the present case as it has no privity of contract with the respondent as the service orders were issued by the respondent to SGS Infotech Pvt. Ltd., and the arbitration for adjudication of disputes qua the service orders was also invoked by SGS Infotech Pvt. Ltd., vide letter dated
09.04.2016. The Statement of Claim has been filed by SGS Tekniks Manufacturing Pvt. Ltd., instead of SGS Infotech Pvt. Ltd. The change of entity has neither been pleaded, explained and argued by the claimant nor was evidence led in this regard. The judgment of Chandigarh High Court dated 02.08.2012 regarding merger of SGS Infotech Pvt. Ltd. with SGS Tekniks Manufacturing Pvt. Ltd. was neither pleaded nor filed with the Statement of Claim. It was further argued that merger had taken place way back in the year 2012. In the Statement of Claim it was not contended that abovementioned merger had ever taken place. HCL never gave consent for dispute resolution by Arbitration with the Claimant. In the notice invoking arbitration dated 09.04.2016 the claimant has failed to identify a written arbitration agreement executed between the Claimant and the Respondent in terms of Section 7 of the Act under which any and all disputes between the parties can be adjudicated. Moreover, the Claimant has failed to establish or never clarified as to whether the arbitration clause were assigned to the Claimant Company in terms of the provisions of scheme, which has not been placed on record of this Arbitral Tribunal. Therefore, the claimant company SGS Tekniks Manufacturing Pvt. Ltd., does not have any locus standi to pursue the present case.
19. In support of his arguments learned counsel for the respondent relied on an order dated 07.11.2019 in case C.R.P. 238/2018 & CM APPL. 46420/2018, titled Sakshi and Another Vs. Darshan Singh (deceased) THR LRS of, wherein Delhi High Court observed that :
"16. The exceptions to Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, as enumerated in Sub-section 3, are that where the person in whose name the property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family; or where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity.
17. Perusal of the plaint clearly shows that the case set up by the respondent is not that there was any Hindu undivided family in existence or that the parties were Digitally signed by VINEETA GOYAL VINEETA Date:
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coparcener in a Hindu undivided family or that the property was purchased in the name of Shri Surender Singh Kalsi or his wife as coparcener of the Hindu Undivided family or as trustees or in fiduciary capacity.
18. A Coordinate Bench of this Court in 'Surender Kumar Khurana vs. Tilak Raj Khurana & Ors., 2016 (155) DRJ 71 has held that 'joint C.R.P. 238/2018 Page 10 of 11 funds' or 'joint properties' are in law not equal to Hindu undivided family funds or Hindu undivided family properties or businesses and the joint funds is an expression which is not a law equal to joint Hindu family funds working together equivalent to existence of joint Hindu family.
19. Said Bench further held that specific and categorical averments have to be made with regard to the existence, creation and continuation of HUF and its properties.
20. In the present case, it is noticed that the respondent /Plaintiff had failed to even make an averment, leave alone prima facie substantiating, that there was any HUF ever created or in existence or continued and the properties subject matter of the Suit were purchased out of such HUF funds."
20. Learned counsel for the respondent further relied on a case, titled Delhi Iron and Steel Co. Ltd. Vs. U.P. Electricity Board and Ors., 2002 (61) DRJ 280: MANU/DE/0552/2000, wherein High Court of Delhi observed that :
"16. In Khardah Company Ltd. case (supra) almost a similar proposition of law cropped up for consideration before the Supreme Court. A pleas was taken that the agreement or contract for sale and purchase of the goods is personal in its character and is therefore not assignable. It was held that there can be nothing personal about such a contract as it is of no consequence to the buyer as to who delivered the goods. What is important to him is the goods delivered should be delivered and be in accordance with the specifications of the contract.
17. So far as the arbitration clause is concerned it was held that this contract is personal in its character and incapable of assignment on that ground. However it is a settled law that an arbitration clause does not take away the right of a party of a contract to assign it if it is otherwise assignable.
18. While distinguishing between two clauses of assignment the Supreme Court observed that a right of Digitally signed by VINEETA GOYAL VINEETA Date:
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obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. In other words, rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment either under the law or under an agreement between the parties.
19. As observed above the petitioner had the liability to perform all contracts of Victor Cables and all benefits arising there from and liabilities there under in all or in any form. It does not mean that he had also the obligation to get the dispute settled by way of arbitration as agreed by Victor Cables. These are two different and distinguished liabilities. The former is assignable where the latter is not. Thus the undertaking by the petitioner that "all contracts of Victor Cables corporation and all benefits arising therefrom and liabilities there under in all or in any form shall be of the petitioner" was in the form of discharging all the liabilities of the Victor Cables and there was nothing personal about such contracts whereas clause of arbitration was personal in its character and was even otherwise incapable of assignment."
21. Ld. Counsel for the respondent further referred clause 15 of the Order dated 02.08.2012 passed by High Court for the States of Punjab and Haryana in C.P. No.36/2012 (O & M) in case titled Scheme of Amalgamation between SGS Tekniks Manufacturing Pvt. Ltd. and another AND SGS Holdings and Leasing Pvt. Ltd. and Another which run as under :
"15. For the reasons stated above and keeping in view the procedural requirements, as contemplated under section 391 to 394 of the Companies Act and the relevant facts and Rules and on due consideration of the reports of Regional Director, Northern Region, Ministry of Corporate Affairs and the Official Liquidator. The Scheme of Amalgamation of the Transferor Company No.1, 2 and 3 with the Transferee Company is hereby sanctioned and as a result thereto, the assets and liabilities of the Transferor Companies shall stand vested in the Transferee Company and the petitioner - Transferor Companies shall stand desolved without being wound up. 8.*** [Emphasis supplied]"
22. On the other hand it has been argued on behalf of the claimant that SGS Infotech Pvt. Ltd. was amalgamated with SGS Digitally signed by VINEETA GOYAL VINEETA Date:
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Tekniks Manufacturing Pvt. Ltd. and therefore SGS Tekniks Manufacturing Pvt. Ltd. or SGS Infotech Pvt. Ltd., has locus standi to invoke the arbitration clause and to get the present dispute adjudicated by this Arbitral Tribunal. He further argued that the claimant mentioned all the relevant facts and as the fact of amalgamation of SGS Tekniks Manufacturing Pvt. Ltd. with SGS Infotech Pvt. Ltd. was not in dispute, therefore this fact was not mentioned in the statement of claim.
23. On considering the rival contentions of Learned counsels for both the parties, this Arbitral Tribunal come to the conclusion that the arguments of Learned Counsel for the respondent that the claimant did not have locus standi to get the dispute between the parties adjudicated on invocation of arbitration by SGS Infotech Pvt. Ltd. is not convincing. The reasons which support this decision are first, that order dated 02.08.2012 passed by the High Court of Punjab and Haryana at Chandigarh in company petition no.36/2012 in a case titled Scheme of Amalgamation between SGS Tekniks Manufacturing Pvt. Ltd. & Anr. and SGS Holdings and Leasing Pvt. Ltd. & Anr., was proved by the parties as Ex.PW1/R1. This document was put to the CW1 by the respondent. Ld. Counsel for the respondent during arguments also placed photostat copy of abovementioned judgment. It has been clearly held by the Punjab and Haryana High Court that "the Scheme of Amalgamation of the Transferor Company No.1, 2 and 3 with the Transferee Company is hereby sanctioned and as a result thereto, the assets and liabilities of the Transferor Companies shall stand vested in the Transferee Company and the petitioner." In this manner the claimant i.e. SGS Tekniks Manufacturing Pvt. Ltd. acquired all the assets and liabilities of the SGS Infotech Pvt. Ltd. Therefore, it was entitled to invoke the arbitration clause and to get the dispute between the parties adjudicated upon by this Arbitral Tribunal.
24. Secondly, Section 58 of Indian Evidence Act provides that facts admitted need not be proved. The fact of amalgamation of SGS Infotech Pvt. Ltd. with SGS Tekniks Manufacturing Pvt. Ltd. was not in dispute. Therefore non-mentioning of these facts in the statement of claim by the claimant is not fatal to the case of the claimant.
25. The provisions of Section 58 of the Indian Evidence Act run as under :
"58, Facts admitted need not be proved- No fact needs to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:39:51 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 13 of 46 before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings;
provided that the court may, in its discretions, require the facts admitted to the proved otherwise than by such admission."
26. Lastly, the respondent in its reply dated 17.05.2016 Ex.PW1/9 to the notice of claimant dated 09.04.2016 nowhere pleaded that the claimant did not have locus standi due to the reasons pleaded by learned counsel for the respondent."
9 It is noted from the above that Ld. Arbitrator after considering the objection of the petitioner herein took note of the fact that since assets and liabilities of the transferor companies stand vested in the transferee company and the respondent herein, in this manner, acquired the assets and liabilities. Undoubtedly, in the terms of Section 7 of the Act, it is imperative that arbitration agreement between the parties should be in writing and it may be contained in a contract or it may be comprised in any other document, provided it satisfies the conditions that are stipulated in sub-Section (4) and (5) of Section 7 of the Act. Un-disputedly, the petitioner has not signed the service orders with the respondent but in the light of observations in case titled Amalgamation between SGS Tekniks Manufacturing Pvt. Ltd. & Anr. and SGS Holdings and Leasing Pvt. Ltd. & Anr., proved as Ex.PW-1/R-1, it has thus, become evident that respondent has stepped into the shoes of the SGS Infotech Pvt. Ltd., it stands substituted in its place. Moreover, Clause 13 of the Service Order(s) shows that purchase order shall be extended into and be binding upon the successors of the parties. Thus, in the wake of factual scenario, by Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:40:02 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 14 of 46 referring to the intention of the parties, it can be safely gathered from the communications in the form of notice dated 09.04.2016 Ex.PW-1/6 and reply dated 17.05.2016 Ex.PW-1/8 exchanged between the parties, the respondent invoked arbitration having stepped into the foot steps of SGS Infotech Pvt. Ltd. to whom the amount was due and payable as claimed by the respondent. There is no infirmity in the findings returned by the Ld. Arbitrator.
10 Adverting to the next contentions raised by the petitioner, it is the plea of the petitioner that respondent has filed one and a half page Statement of Claim without making necessary averments or referring to relevant documents to substantiate its monetary claim towards recovery of money from the petitioner. The Ld. Arbitrator erred in overlooking the fact that the invoices mentioned in paragraph 45 at page 45 of the award were neither pleaded nor filed in the subject arbitral proceedings and petitioner's witness was not even confronted with the said invoices. Despite the aforesaid, the Ld. Arbitrator drew an adverse inference against the petitioner on the ground that its witness could not deny the receipt of these invoices which is against the settled principles of natural justice. Reliance in this regard is placed on Bachhaj Nahar vs Nilima Mandal & Anr. 2008(17) SCC
491. In this regard, reference is also placed on Question No.30 put to the petitioner's witness, the objection taken by the petitioner's counsel, being overruled by the Ld. Arbitrator, the relevant extract is reproduced as under :-
Digitally signed by VINEETA VINEETA GOYAL
GOYAL Date:
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"Cross Examination of Shrejit Nair (RW1) Q30. Have the respondent company received the invoices no. J-/14-15?
J-023/14-15, J-022/14-15, J-021/14-15 and J-020/14-15? (Ld. Counsel for the respondent objected to on the ground that these invoices were not pleaded in the Statement of Claim. Their copies have also not been placed on the record. Heard. Objection is overruled.
Ans. I am not aware. The process for invoice submissions were clearly defined in the purchase order and I am not the concerned person to whom the invoices are required to be submitted."
11 Ld. Counsel for the petitioner further submitted that the ld. Arbitrator has erred in relying upon the evidence which is inadmissible under law. The Ld. Arbitrator failed to appreciate that neither the Statement of Account Ex.CW1/10 nor the summary Ex.CW-1/11 was either pleaded or filed with the Statement of Claim. The Ld. Arbitrator erroneously allowed the respondent to produce said documents during the cross-examination of CW-1. No opportunity whatsoever was granted to the petitioner to deal with aforesaid documents which is against the principles of natural justice.
12 Ld. Counsel for the petitioner further states that the document Ex.CW1/11 was not even in existence at the time of filing of the statement of claim, as admitted by the respondent in his cross examination. The relevant portion of the cross examination of CW1 is reproduced below for ready reference:
Cross Examination of Rajesh Mohan (CW1) Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:40:44 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 16 of 46 Q26. Is it correct that you have neither prepared nor participated in the preparation of the summary filed by you as Ex CW1/11?
Ans. Yes.
Q27. Can you show from the record that Ex CW1/11 was shared with the respondent?
Ans. No. Q28. Is it Correct that CW1/11 has not been pleaded by you in you claim statement or your affidavit of evidence? Ans. At the time of filing of my statement of claim this document was not in existence. The summary was prepared in the first week of November 2019. Same is my reply with regard to my affidavit of evidence.
029. Is it correct that CW1/11 has not been pleaded by you in your claim statement or your affidavit of evidence?
Ans. No. The documents were not attached. I do not recollect if the statement of claim in the above mentioned invoices were referred or not.
Q30. Is it correct that there is nothing on record to show that the invoices mentioned in Ex CW1/11 were submitted to the respondent at the relevant time?
Ans. Yes. It has not been filed on record.
Q32. Can you show from the record that EX CW1/10 was shared with the Respondent?
Ans. This document was given to the respondent only on previous date.
(Vol)-on demand.
13 Ld. Counsel after referring to the above, further urged that moreover, the respondent in para 8 of the reply filed to the present petition have explicitly admitted of have not having filed any supporting invoice or communication with respect to the claim. It is further submitted that the Ld. Arbitrator erred in allowing the claims filed by the respondent by merely relying upon the entries in the ledger account Ex.CW1/11. It is settled law that a party cannot rely on mere entries in the books of account in view of the clear language of Section 34 of the Evidence Act, 1872. It was the duty of the respondent to produce Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:40:56 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 17 of 46 documents/evidence in support of the entries and thereafter the entries could have been used as corroborative evidence. The respondent further failed to even file a supporting affidavit with the said document affirming the ledger to have been maintained in the regular course of business as mandatorily required by Section 34 of the Evidence Act. Reliance in this regard is placed in judgments in cases of PSA SICAL Terminal Pvt. Ltd. vs Board of Trustees - 2021 SCC Online SC 508 and CBI vs VC Shukla 1998 (3) SCC 410.
14 Ld. Counsel for the petitioner further submitted that there were discrepancies between the statement of account and summary of account submitted by respondent during cross- examination of CW-1. The claim and the award is based on summary of accounts Ex.CW-1/11 which is neither certified nor can be taken as account book in the eyes of the law. Few credit entry of Ex.CW-1/10 have not taken into account while preparing the summary of Ex.CW-1/11, basis which the award was passed. Ld. Counsel pointed out towards entry dated 08.08.2013, 10.03.2014 and 31.03.2015.
15 Ld. Counsel for the petitioner further contended that Ld. Arbitrator has wrongly put onus of proof upon the petitioner to prove in negative which is against the settled principle that party claiming has to prove in affirmative. It is submitted that Ld. Arbitrator has wrongly put onus and framed the issue as to Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:41:11 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 18 of 46 whether the claimant (respondent herein) did not complete the work as per service orders and if so, to what effect ? OPR Ld. Counsel thus, argued that aforesaid issue was wrongly framed by the Ld. Arbitrator with wrong onus on the petitioner. The petitioner in his statement of defence has categorically denied the work done by SGS Infotech Pvt. Ltd. whereafter service orders were foreclosed. Similarly, with regard to the second issue, whether the claimant does not raise any invoice bill for the work allegedly framed, and if so, to what effect ? OPR , although the onus of proof was on the respondent being the claimant to prove the invoices and completion of work order, the same was wrongly framed by the Ld. Arbitrator.
16 Ld. Counsel for petitioner further submitted that Ld. Arbitrator erroneously held that petitioner failed to prove that the respondent did not complete the work assigned to it as per service orders, since the petitioner had not issued any notice to the respondent under clause 23 of the service order or cancel or terminate the service order. Ld. Arbitrator also failed to appreciate that payments were to be made on submissions of invoices against the actual work, delivery as per the scope of work, and in accordance with the payment schedule on achievement of certain milestone which were duly admitted by the witness of the respondent in response to question No.42. Further the Ld. Arbitrator failed to appreciate that the respondent had to deliver the invoices, admittedly no invoice was ever delivered to the Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:41:23 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 19 of 46 petitioner and respondent failed to place on record any document to show that it reached at the stage of 'Go Live' as its work was accepted by the respondent as well as concerned DISCOM, which was the condition precedent for the final payment of the contract price. It was responsibility of the respondent to furnish work completion certification. Ld. Arbitrator further wrongly observed that no debit note was issued by the DISCOM or there was no litigation between the petitioner and DISCOM. Further that petitioner withheld the material documents, so adverse presumption was drawn in favour of the petitioner. It is also contended that Ld. Arbitrator has failed to appreciate that service order were revised by the petitioner and out of these two service order, one was paid by the petitioner and another was mutually foreclosed by the parties, as the balance was not completed by the respondent by the stipulated time. The Ld. Arbitrator has failed to appreciate the settled law that it was the respondent who has to prove its claim and instead of requiring the respondent to prove its case, the Ld. Arbitrator has placed onus upon the petitioner to prove that respondent was not entitled to receive its claim.
17 On the contrary, Ld. Counsel for respondent contended that the Ld. Arbitrator passed the impugned award, upon conducting the arbitration proceedings, considering the Statement of Claim and Statement of Defence presented by and on behalf of the parties, the relevant documents placed on record by the parties. He further states that an Arbitrator has wide powers, Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:41:34 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 20 of 46 while adjudicating arbitration proceedings. There is a deemed privilege of limited intervention of the courts and same has been reiterated by Hon'ble courts time and again. The court need not to examine the validity of the findings or the reasoning behind the findings given by an Arbitrator. While adjudicating a challenge u/s. 34 of the Act, the Courts must limit themselves to examine the award itself and not the facts of the case. A well reasoned and speaking award was passed by the Ld. Arbitrator and there in no infirmity in the impugned award.
18 It is relevant to refer to the existing position of law with respect to the scope of interference with an arbitral award.
19 It is well settled position that court does not sit in appeal over the Arbitral award and may interfere on the limited grounds as provided under section 34 of the Act. In catena of judgments, it was held that violation of Indian policy includes violation of interest of India, fundamental policy of Indian Law, conflicts with justice and morality and existence of patent illegality in the arbitral award. Further the concept of fundamental policy of India would mean adopting judicial approach as well as compliance with principles of natural justice and reasonableness. While adjudicating a challenge under Section 34 of the Act, it is to be borne in the mind of the Court that only an illegality which goes to the root of the matter and is apparent on the face of the record shall be considered a patent illegality and Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:41:48 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 21 of 46 would lead to an intervention by the Court. The Hon'ble Apex Court in landmark judgment of Patel Engg. Ltd. vs. North Eastern Electric Power Corporation Ltd., (2020) 7 SCC , construed the ambit of patent illegality as a ground for setting aside the arbitral award u/s. 34 of the Act and observes as under :-
"19. Pursuant to the recommendations of the Law Commission, the 1996 Act was amended by Act 3 of 2016, which came into force w.e.f. 23.10.2015. The ground of "patent illegality" for setting aside a domestic award has been given statutory force in Section 34(2A) of the 1996 Act. The ground of "patent illegality" cannot be invoked in international commercial arbitrations seated in India. Even in the case of a foreign award under the New York Convention, the ground of "patent illegality" cannot be raised as a ground to resist enforcement, since this ground is absent in Section 48 of the 1996 Act. The newly inserted sub-section (2A) in Section 34, reads as follows:-
"34. (2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award :
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence."
20 The Hon'ble Apex Court in State of Chattisgarh vs. Sal Udyog (P) Ltd., (2022) 2 SCC 275, considering the judgment passed in Ssangyong Engg. & Constructions Co. Ltd. vs. NHAI, (2019) 15 SCC 131, as well as Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49, held as under :-
"14. The law on interference in matters of Awards under the 1996 Act has been circumscribed with the object of minimising interference by courts in arbitration matters. One of the grounds on which an Award may be set aside is "patent illegality". What would constitute "patent illegality" has been elaborated in Associate Builders v. Delhi Development Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:41:57 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 22 of 46 Authority, where "patent illegality" that broadly falls under the head of "Public Policy", has been divided into three sub- heads in the following words:-
"...42. In the 1996 Act, this principle is substituted by the "patent illegality" principle which, in turn, contains three sub-heads:
42.1. (a) A contravention of the substantive law of India would result in the death knell of an Arbitral Award.
This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)(a) of the Act, which reads as under:
"28. Rules applicable to substance of dispute. - (1) Where the place of arbitration is situated in India-
(a) In an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;"
42.2. (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality - for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside.
42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:
"28. Rules applicable to substance of dispute. -
(1) - (2) *** (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction."
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do."
15. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:42:06 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 23 of 46 India (NHAI) 9, speaking for the Bench, Justice R.F. Nariman has spelt out the contours of the limited scope of judicial interference in reviewing the Arbitral Awards under the 1996 Act and observed thus :
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco expansion has been done away with. In short, Western Geco, as explained in paras 28 and 29 of Associate Builders, would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders.
35. It is important to notice that the ground for interference insofar as it concerns "interest of India"
has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders, as it is only such Arbitral Awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders, or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco, as understood in Associate Builders, and paras 28 and Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:42:16 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 24 of 46 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an Arbitral Award. Para 42.2 of Associate Builders, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders, while no longer being a ground for challenge under "public policy of India", Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:42:27 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 25 of 46 would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterized as perverse."
16. In Delhi Airport Metro Express Pvt. Ltd. (supra) referring to the facets of patent illegality, this Court has held as under:
"29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the Arbitral Award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An Arbitral Award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality."Digitally signed by VINEETA GOYAL
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21 Thus, in order to succeed in a challenge against an
award u/s. 34 of the Act, the petitioner must show that there is a patent illegality in the impugned award which goes to the root of the matter and is not an illegality of trivial nature. In absence of the same, the impugned award cannot be held to be against the public policy. Award could also be set aside if it is unreasonable that it shocks the conscious of the court and such award is opposed to public policy and is required to be adjudged illegal.
22 The Hon'ble Apex Court in ONGC Ltd. vs. Western GECO International, (2014) 9 SCC 263, elaborated upon the concept of fundamental policy of Indian Law and implication of its contravention u/s. 34 of the Act, and observed :
"35 What then would constitute the 'Fundamental policy of Indian Law' is the question. The decision in Saw Pipes Ltd. (supra) does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression "Fundamental Policy of Indian Law", we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the Fundamental Policy of Indian law. The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of Judicial approach in judicial and quasi judicial determination lies in the fact so long as the Court, Tribunal or the authority exercising Digitally signed VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:42:47 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 27 of 46 powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bonafide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a Court, Tribunal or Authority vulnerable to challenge.
36. In Ridge v. Baldwin [1963 2 All ER 66] , the House of Lords was considering the question whether a Watch Committee in exercising its authority under Section 191 of the Municipal Corporations Act, 1882 was required to act judicially. The majority decision was that it had to act judicially and since the order of dismissal was passed without furnishing to the appellant a specific charge, it was a nullity. Dealing with the appellant's contention that the Watch Committee had to act judicially, Lord Reid relied upon the following observations made by Atkin L.J. in [1924] 1 KB at pp. 206, 207: "Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority, they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs."
37. The view taken by Lord Reid was relied upon by a Constitution Bench of this Court in A.C. Companies Ltd vs. P.N. Sharma and Anr. (AIR 1965 SC 1595) where Gajendragadkar, C.J. speaking for the Court observed :
"In other words, according to Lord Reid's judgment, the necessity to follow judicial procedure and observe the principles of natural justice, flows from the nature of the decision which the watch committee had been authorised to reach under S.191(4). It would thus be seen that the area where the principles of natural justice have to be followed and judicial approach has to be adopted, has become wider and consequently, the horizon of writ jurisdiction has been extended in a corresponding measure. In dealing with questions as to whether any impugned orders could be revised under A. 226 of our Constitution, the test prescribed by Lord Reid in this judgment may afford considerable assistance."
38. Equally important and indeed fundamental to the policy of Indian law is the principle that a Court and so also a quasi-judicial authority must, while determining the rights Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:42:58 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 28 of 46 and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated 'audi alteram partem' rule one of the facets of the principles of natural justice is that the Court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the Court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian Law.
39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a Court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury's principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a Court of law often in writ jurisdiction of the Superior courts but no less in statutory processes where ever the same are available.
40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an arbitral tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest."
23 It is no more res integra that a possible view by the Arbitrator on the facts has necessarily to pass muster as the Ld. Arbitrator is the ultimate muster of quality and quantity of Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:43:08 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 29 of 46 evidence to be relied upon when he delivers his arbitral award. Further, while the quantum of evidence required to accept a claim may be a matter with the exclusive jurisdiction of the Arbitrator to decide, if there was no evidence at all and if the Arbitrator makes an award of amount claimed in the Statement of Claim, merely on the basis of claim statement without any thing more. However, where error of findings of fact having a bearing on the award is patent and is easily demonstrable without the necessity of weighing the various possible view points, the interference with award based on erroneous findings of the fact is permissible. Similarly, if an award is based applying a principle of law which is patently erroneous application of legal principal, the award could not have been made, such award is liable to be set award by holding that there has been legal misconduct on the part of the Arbitrator. It is only such arbitral award that shock the conscience of the court that can be set aside. An award can be set aside on the ground of patent illegality appearing on the face of the award and as such, which goes to the roots of the matter. There is an extent to the accountability put upon an arbitrator while passing an award. As per Section 31 of the Act, the Arbitrator deals not only to needs to adhere to and fulfill the requirements. Section 31(3) of the Act obliges the arbitral tribunal to state the reasons upon which it is based unless the parties have agreed that no reasons be given or the arbitral award is based on consent of the parties.
24 Keeping in mind the principles as laid down by Digitally signed by VINEETA GOYAL VINEETA Date:
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judicial precedents, the present case has to be examined.
25 The petitioner in the present case has pressed the objection to the impugned award on the ground of patent illegality, opposed to public policy and the impugned award has been passed by the Ld. Arbitrator without application of mind and a judicial approach, without observing the principles of natural justice.
26 The Arbitral Tribunal, while considering the dispute between the parties, had framed the following issues for consideration :-
(1) Whether the claimant did not complete the work as per service orders and if so, to what effect? OPR (2) Whether the claimant did not raise any invoice bill for the work allegedly performed and if so, to what effect? OPR (3) Whether separate arbitrations are required for separate work orders and if so, to what effect ? OPR (4) Whether statement of claim is silent on arbitration agreement and if so, to what effect ? OPR (5) Whether orders were mutually foreclosed by the parties leaving behind no dispute and if so, to what effect? OPR (6) Whether the claimant suppressed the material facts and if so, to what effect? OPR (7) Whether the statement of claim has not been signed and verified by the competent person on behalf of the claimant company and if so, to what effect ? OPR (8) Whether the claimant committed breaches of time line, specifications, terms and conditions of service orders and if so, to what effect ? OPR (9) Whether the claimant is entitled to the relief prayed for in the statement of claim?OPC (10) Whether the claimant is entitled to interest on the amount awarded. If so at what rate and for what period? OPC (11) Relief.Digitally signed
VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:43:27 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 31 of 46 27 After conclusion of the hearing in the arbitral
proceedings, the Ld. Arbitrator passed the impugned award on the issues framed. While deciding the issue no.1, whether the claimant did not complete the work as per service orders and if so, to what effect? OPR, the Ld. Arbitrator took note of the fact that the petitioner failed to prove that the respondent did not complete the work assigned to it as per the service order. The Ld. Arbitrator gave reason for arriving at this conclusion, firstly, that clause 23 of service order(s) provides that if vendor herein the claimant commits any default on material breach of covenant, the respondent herein (petitioner) shall give notice of 30 days to the defaulting parties and if the defaulting parties fails to cure the defects / defaults within the time frame allowed, the non-
defaulting party may, at its option, and in addition to any other remedy it may have available, cancel and terminate the purchase order. The Ld. Arbitrator after referring to the above clause returned the findings that petitioner herein has failed to place any such record to show that after service of 30 days notice to the respondent herein, it failed to cure the defects / defaults and consequently the service order / purchase order was terminated or canceled. The Ld. Arbitrator further noted that evidence on record has established that petitioner herein made last payment to the claimant therein on 12.09.2014 and the emails dated 14.08.2013, 09.08.2013, 08.01.2014, 20.01.2014, 08.02.2014, 13.03.2014, 16.02.2014, 08.03.2014 and 26.06.2014, were prior to the date of Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:43:37 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 32 of 46 last payment. The Ld. Arbitrator also observed that petitioner has withheld the material documents inspite of its obligations to place relevant documents on record so an adverse presumption is drawn in favour of the respondent and against the petitioner herein. The relevant paras are reproduced as under :-
"38. On considering the rival contentions of Learned counsels for both the parties, this Arbitral Tribunal is of the opinion that the respondent has failed to prove that the claimant did not complete the work assigned to it as per service orders referred to herein above. The reasons which support this decision are firstly, that clause 23 of the service order Ex.PW1/4 and Ex.PW1/5 provides that if vendor, herein the claimant commits any default or material breach of the covenant, the HCL, herein the respondent shall give notice of 30 days to the defaulting party and if the defaulting party fails to cure the defects / default within the time frame allowed, the non-defaulting party may, at its option and in addition to any other remedies, it may have available, cancel and terminate the purchase order. The respondent has failed to place any such record to show that after service of 30 days' notice to the claimant, it failed to cure the defects / default and consequently the service order / purchase order was terminated or cancelled.
39. Secondly, the evidence on record has established that the respondent made last payment to the claimant on 12.09.2014 as shown in Ex.RW1/C2. Email Ex. RW1/5 is dated 14.08.2013; Email Ex.RW1/4 is dated 09.08.2013; Email Ex.RW1/6 is dated 08.01.2014; Email Ex.RW1/7 is dated 20.01.2014; Email Ex. RW1/8 is dated 08.02.2014; Email Ex.RW1/9 is dated 13.03.2014; Email Ex.RW1/10 is dated 16.02.2014; Email Ex.RW1/11 is dated 08.03.2014; and Email Ex.RW1/12 is dated 28.06.2014. This has established that all the correspondence through these emails etc. was prior to the date of last payment.
40. Thirdly, RW-1 in his cross examination admitted that the claimant carried out work with regard to the amended purchase order.
41. Fourthly, as the respondent has withheld the material documents, so adverse presumption is drawn in favour of the claimant and against the respondent that the respondent did not take legal action as laid down in service orders particularly clause 23 thereof which could entitled the respondent to withhold the payment of the claimant.
42. Lastly, the principles of law laid down in case Silor Associates SA Vs Bharat Heavy Electricals Ltd. (Supra) ; Union of India Vs Digitally signed VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:43:46 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 33 of 46 Ibrahim Uddin And Another (Supra); and Sushil Kumar Vs. Rakesh Kumar (Supra) support the case of the claimant.
28 Further, while deciding issue no.2 i.e. whether the claimant did not raise any invoice bill for the work allegedly performed and if so, to what effect? OPR , while putting onus upon the petitioner herein, the ld. Arbitrator decided this issue against it and held that respondent herein submitted to the petitioner herein invoice bill for the work performed by it. The relevant extract of para 44, 45 and 46 of the impugned award are reproduced as under :-
"44. It has been argued on behalf of the claimant that claimant submitted all the invoices including the invoices as referred to in cross examination of RW-1.
45. On considering the rival contentions of Learned counsels for both the parties, this Arbitral Tribunal is of the opinion that the respondent has failed to prove that the claimant did not raise any invoice bill for the work perform by the claimant. The reasons which support this decision are firstly that RW1 in his cross examination admitted that he is not aware if the respondent company received the invoices nos. J-025/14-15, J-024/14-15, J- 023/14-15, J-022/14-15, J-021/14-15 and J-020/14-15. He did not know if the invoices nos. J-025/14-15, J-024/14-15, J- 023/14-15, J-022/14-15, J-021/14-15 and J-020/14-15 were submitted in the year 2014. He could not tell the name of concerned person who was required to receive the invoices from the claimant company. He admitted that the respondent company did not file on record ledger account or books of account of the respondent company related to the claimant company and the present dispute.
46. Secondly, the provisions of Section 114 (g) of the Indian Evidence Act provides benefit in favour of claimant and against the respondent as RW-1 could not deny receipt of abovementioned invoices. He even could not tell as to who was person / official responsible for receipt of invoices. In these circumstances, adverse inference is drawn in favour of claimant and against the respondent has to be drawn."Digitally signed by VINEETA GOYAL
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29 Further while deciding issue no.5, whether orders
were mutually foreclosed by the parties leaving behind no dispute and if so, to what effect? OPR, the Ld. Arbitrator, in para 54 returned the findings that petitioner herein has failed to prove any service order was mutually foreclosed. The reason for this decision is that arguments of the petitioner herein that amended service order no.5200050347 dated 05.03.2014 was mutually foreclosed by the parties vide email dated 25.09.2019 as per clause 19 of service order Ex.RW-1/3 is not convincing. The Ld. Arbitrator also returned the findings that petitioner herein has failed to prove on record any of the service order was foreclosed mutually in accordance with the provisions / terms and conditions of the service order. The Ld. Arbitrator decided the issue against the petitioner herein.
30 Further while deciding issue no.6, whether the claimant suppressed the material facts and if so, to what effect? OPR, the Ld. Arbitrator took note of contentions of the parties, and opined that although the facts as highlighted by the Ld. Counsel for the petitioner herein do not find mentioned in the Statement of Claim yet the Statement of Claim of the respondent herein is not liable to be rejected. Ld. Arbitrator rejected the contentions of the petitioner in this regard.
31 Adverting to the findings of the Ld. Arbitrator qua issue no.8, whether the claimant committed breaches of time line, Digitally signed by VINEETA GOYAL VINEETA Date:
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specifications, terms and conditions of service orders and if so, to what effect? OPR, the Ld. Arbitrator after referring to the emails / correspondences observed that although there had been various communications between the claimant (respondent herein) and the petitioner (claimant therein) regarding the execution of work, the manner in which the work was carried out, pointing out of deficiency in carrying out the work yet there is no evidence on record which could show the deficiency was not met out and assigned work was not completed within the time frame. The Ld. Arbitrator relied upon ledger account of the respondent herein maintained by the petitioner Ex.RW-1/C-2 that last payment was made on 12.09.2014 and thereafter none of the email / communication sent by the petitioner to the respondent herein is of later period than 12.09.2014. The Ld. Arbitrator also took note of the fact that during cross-examination RW-1 admitted that respondent (claimant) carried on the work on fresh POs. DISCOM did not send any debit note and there was no litigation between DISCOM and the petitioner with regard to the work carried out by the respondent. Further, no legal notice was sent and no case has been instituted against the respondent for not completing the work in accordance with service order.
32 The Ld. Arbitrator after considering on record the findings given on aforesaid issues passed the impugned award that the respondent herein is entitled to get an amount of Rs.12,27,431/- from the petitioner herein as the petitioner has Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:44:15 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 36 of 46 failed to make the payment of this amount in spite of service of legal notice.
33 Perusal of the aforesaid findings shows that it is evident that the claim laid before the Ld. Arbitrator is based upon the amounts of invoices. Onus to prove to establish that the respondent is entitled for the amount as claimed from the petitioner is upon the respondent and it would not shift upon the petitioner unless respondent discharges its burden to prove its entitlement. The maxim Onus probandi incumbit ei qui dicit, non ei qui negat, the burden of proof rest on the one who says, not the one who denies. It is evident from the findings returned by the Ld. Arbitrator, the Ld. Arbitrator put onus to prove issue nos. 1, 2, 7, and 8 upon the petitioner and further relied upon cross- examination of RW-1 to arrive at the finding that the petitioner could not tell the name of the concerned person who was required to receive the invoices from the respondent herein. At this juncture, it needs to be highlighted that the respondent has filed summary ledger account statement Ex.CW-1/10 of the petitioner maintained by it for the period 01.04.2010 to 31.03.2015 and summary statement of petitioner Ex.CW-1/11 at the stage when cross-examination of CW-1 was concluded and respondent submitted that he wants to re-examine its witness CW-1 to clarify the question 23 and for that purpose he had brought aforesaid documents. As evident from the proceedings sheet dated 06.11.2019, the Ld. Arbitrator allowed the same and permission Digitally signed by VINEETA GOYAL VINEETA Date:
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was granted for re-examination of CW-1. It is undisputed fact that neither the respondent took averment in the plaint nor it led any evidence that entry in the books of accounts were regularly kept in the course of business. CW-1 is the attesting witness of the respondent. However, in the very first sentence of his cross- examination dated 13.11.2019, this witness stated in affirmative that he has neither participated nor prepared in the preparation of the summary Ex.CW-1/11. He also stated that he has neither participated nor prepared in the preparation of Statement of Account Ex.CW-1/10 filed by him. In view of this matter, the entries so recorded are not substantive piece of evidence in itself, until and unless such entries are duly pleaded and proved by leading cogent evidence. In these circumstances, irresistible conclusion can be drawn that the respondent has not sufficiently pleaded and proved its case and ld. Arbitrator committed an error while passing the impugned award on the basis of abovementioned documents which deserves to be set aside. The above find support from the judgment of Hon'ble Delhi High Court in LK Advani vs. CBI., 1997 (4) RCR (Criminal) 26 , interpreting the scope of Section 34 of the Act, 1872, held as under :-
"74. There is another aspect of the matter. It has been observed above that the entries in the books of account by themselves are not sufficient enough to fasten the liability on the head of a person against whom they are produced. They are not a substantive piece of evidence. The said entries in the books of account can be used only by way of corroboration to other pieces of evidence which is led by a party. Admittedly there is no evidence with the prosecution besides the alleged entries in the diaries and in the loose sheets as conceded by the learned Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:44:54 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 38 of 46 counsel for the C.B.I. Thus the alleged entries in the books of account by themselves are of no avail to the prosecution.
34 An authoritative pronouncement by the Hon'ble Supreme Court on the scope and interpretation of Section 34 of the Act of 1872 came in the case of Central Bureau of Investigation Vs. V.C.Shukla, 1998 AIR (SC) 1406. The relevant observations made by the Hon'ble Supreme Court, which can be gainfully followed in the present case, contained in para Nos. 16,17, 27 to 30 and 35 of the judgment, read as under:-:-
"16. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second park speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfill the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed.
17. 'Book' ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:-
"In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the movable in the sense of being undone and put together again. A collection of Digitally signed VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:45:04 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 39 of 46 papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book.............I think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S. 34."
xx xx xx
27. That brings us to the question whether it was 'regularly kept' so as to satisfy the last requirement of Section 34 to be admissible in evidence as a relevant fact. Mr. Altaf Ahamed submitted that the above question has got to be answered keeping in view the nature of business the Jain brothers were carrying on and that when MR 71/91 is Scanned in that perspective it is obvious that it was regularly kept. In refuting the above contentions Mr. Sibal relied upon $ 1550 of American Jurisprudence, proof of Facts (Volume 34, Second Series) wherein it has been observed that not merely regularity is required; the entry must have been fairly contemporaneous with the transaction entered. he also referred to $ 1526 of the same book which reads as under:
The entry should have been made at or near the time of the transaction recorded - not merely because this is necessary in order to assure a fairly accurate recollection of the of the matter, but because any trustworthy habit of making regular business records will ordinarily involve the making of the record contemporaneously. The rule fixes no precise time' each case must depend on its own circumstances."
(emphasis supplied) Mr. Sibal submitted that from a cursory glance of MR 71/91. It would be apparent that the entries therein were not contemporaneously made; and, on the contrary, they were made monthly which necessarily meant that those entries were made long after the dates the purported transactions of receipt and disbursement took place.
28. What is meant by the words 'regularly kept' in Section 34 came up for consideration before different high Courts; and we may profitably refer to some of those decisions cited at the Bar. In Ramchand Pitembhardar Vs. Emperor [19 Indian cases 534 it has been observed that the books are 'regularly Digitally signed VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:45:13 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 40 of 46 kept in the course of business' if they are kept in pursuance of some continuous and uniform practice in the current routine of the business of the particular person to whom they belong. In Kesheo Rao vs. Ganesh [AIR 1926 Nagpur 407] the court interpreted the above words as under:
"The regularity of which S.34 speaks cannot possibly mean that there is no mistake in the accounts, as that would make the section a dead letter; no accounts could be admitted in evidence till they had been proved to be absolutely correct, which is in itself an impossible task and also cannot be begun till they have been admitted in evidence. Regularly or systematically means that the accounts are kept according to a set of rules or a system, whether the accountant has followed the rules or system closely or not. Nor is there any thing in the section that says the system must be an elaborate or reliable one. Both those matters, the degree of excellence of the system and the closeness with which it has been followed, affect the weight of the evidence of an entry, not it s admissibility. The roughest memoranda of accounts kept generally according to the most elementary system, though often departing from its, are admissible in evidence, but would of course have no weight."
29. The view expressed by the Kerala High Court in Kunjamman Vs. Govinda Kurukkal [1960 kerala Law Times 184] in this regard is that the words 'regularly kept' do not necessarily mean kept in a technically correct manner for no particular set of rule or system of keeping accounts is prescribed under Section 34 of the Evidence Act and even memoranda of account kept by petty shopkeepers are admissible if they are authentic While dealing with the same question the Punjab & Haryana High Court observe in Hiralal Mahabir Pershad Vs. Mutsaddilal Jugal Kishore [(1967) 1 I. L. R P &: H 435] that the entries should not be a recital of past transactions but an account of transactions as they occur, of course, not necessarily to be made exactly at the time of occurrence and it is sufficient if they are made within a reasonable time when the memory could be considered recent.
30. In our considered opinion to ascertain whether a book of account has been regularly kept the nature of occupation is an eminent factor for weighment. The test of regularity of keeping accounts by a shopkeeper who has dally transactions cannot be the same as that of a broker in real estates. Not Digitally signed VINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:45:23 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 41 of 46 only their systems of maintaining books of account will differ but also the yardstick of contemporaneity in making entries therein. We are, therefore, unable to subscribe to the view of Mr. Sibal that an entry must necessarily be made in the book of account at or about the time the related transaction takes place so as to enable the book to a pass the test of 'regularly kept'. Indeed the above Section ($ 1526) expressly lays down (emphasised earlier) that the rule fixed no precise time and each case must depend upon its own circumstances. Applying the above tests and the principles consistently laid down by the different High Court s(referred to above ) we find that Mr 71/91 has been regularly and systematically maintained. Whether the system in which the book has been maintained guarantees its correctness or trustworthiness is a question of its probative value and not of its admissibility as a relevant fact under Section 34.
35 The same question came up for consideration before different High Court on a number of occasions but to eschew prolixity we would confine our attention to some of the judgements on which Mr. Sibal relied. In Yesuvadiyan Vs. Subba Naicker [A. I. R. 1919 Madras 132] one of the learned judges constituting the Bench had this to say:
S.34, Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone be sufficient to charge any person with liability. That merely means that the plaintiff cannot obtain a decree by merely proving the existence of certain entries in his books of account even though those books are shown to be kept in the regular course of business. He will have to show further by some independent evidence that the entries represent real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any relevant facts which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true."
While concurring with the above observations the other learned Judge stated as under:
"If no other evidence besides the accounts were given, however strongly those accounts may be supported by Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:45:34 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 42 of 46 the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference to s.34, Evidence Act, be the basis of a decree." (Emphasis supplied)"
35 In case of Jai Ambe Industries vs. Garnet Speciality Paper Limited, MANU/GJ/0466/2022, Hon'ble High Court inter alia held that a ledger, though an account book, has no evidentiary value unless the entries made therein are proved by independent evidence, which in other words, would mean that there must be corroboration of entries which corroboration can be supplied by proving the transaction or by proving the entries in the daily casual or roznamcha. Without corroboration, entries in the ledger cannot be brought within the purview of the Section 34 of the Evidence Act, it was held therein that -
"1 the ledger by itself may not be the proof of transaction and no liability can be fastened on the basis of an entry in the ledger alone unless it is corroborated by some other evidence ; 2 Ledger can be taken into consideration and would become relevant u/s. 34 of the Indian Evidence Act only when there is corroborative evidence on record in support of the entries made therein or in support of transaction between the parties ; 3 That what form of evidence is to be led to corroborate the entries would largely depend upon the facts of each case. If the entries in the ledger are not denied by the defendant, it may not require any corroboration."
36 Reverting back to the facts of the present case and respectfully following the law laid down in the judgments, referred to hereinabove, the Ld. Arbitrator proceeded to pass the impugned award without appreciation of law and the same deserves to be set aside.
Digitally signed by VINEETA VINEETA GOYAL
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37 Apart from the above, it is also evident from the
perusal of the impugned award while deciding issue no.9, "whether the claimant is entitled to the relief prayed for in the Statement of Claim ? OPP', the Ld. Arbitrator returned the findings in para 73, same is reproduced as under :-
"73. As mentioned above, under issue no.1, it has been decided that the respondent has failed to prove that the claimant did not complete the work as per service orders; under issue no.2, it has been decided that the respondent has failed to prove that the claimant did not raise any invoice bill for the work performed by it; under issue no.3, it has been decided that separate Arbitrations for separate service orders were not required; under issue no.4, it has been decided that the statement of claim is not silent about the Arbitration Agreement; under issue no.5, it has been decided that none of the service order was mutually foreclosed by the parties in accordance with the terms and conditions of the service orders; under issue no.6, it has been decided that the respondent has failed to prove that the claimant suppressed the material facts in the statement of claim; under issue no.7, it has been decided that the statement of claim was signed and verified by the competent person on behalf of the claimant; and under issue no.8, it has been decided that the respondent had failed to prove that the claimant committed breaches of time line, specification, terms and conditions of service orders. All the evidence adduced by both the parties, as mentioned herein above, has been discussed in detail. There is admission on behalf of the respondent that two service orders were issued in favour of the claimant. The respondent has also admitted part of the payment as mentioned in Ex.RW1/C2. The respondent has also admitted that amended service orders were issued and the claimant also carried out the work in pursuance of the amended purchase order. Respondent has failed to plead or prove that payment in respect of work carried out in pursuance of amended purchase order was made to the claimant. CW-1 categorically stated that the claimant is entitled to get an amount of Rs.12,27,431/- (Rupee Twelve Lac Twenty Seven Thousand Four Hundred and Thirty One only) from the respondent as the respondent has failed to make payment of this amount in spite of the service of the legal notice. The Digitally signed by VINEETA GOYAL VINEETA Date:
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evidence of the respondent could not disprove / rebut the evidence of the claimant in that regard. Therefore, this Tribunal come to the conclusion that claimant is entitled to the relief claimed in the statement of claim. Accordingly, in view of the reasons, discussion and evidence on record particularly mentioned herein above, issue no.09 is decided in favour of the claimant and against the respondent and it is held that the claimant is entitled to the relief claimed in the statement of claim."
38 It is evident from the above that Ld. Arbitrator after referring to the findings recorded in the issues as well as the statement of CW-1 awarded the amount to the respondent. The Ld. Arbitrator has completely ignored that Ex.CW-1/11 apparently being the summary of accounts for the period 12.06.2013 to 01.09.2014 when compared with the account statement Ex.CW- 1/10 for the period 01.04.2010 to 25.03.2015, shows that two entries of the payment dated 06.08.2013 for Rs.4,67,192/- and dated 10.03.2014 for Rs.5,83,884/- do not find mentioned in the summary statement. No reasons has been mentioned by the Ld. Arbitrator for not considering the same. Further, the reconciliation of all the entries appearing in ledger account are of paramount importance before arriving at any conclusion about the claim. The Ld. Arbitrator has failed to appreciate the correctness and integrity in this regard.
39 In view of the above, there is substance in the submissions of the petitioner that Ld. Arbitrator has clearly proceeded to give perverse finding and failed to apply the fundamental principles of adjudication and decision making. The Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2024.08.03 17:46:06 +0530 OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 45 of 46 above finding does not reveal appreciation of evidence or material on record. It is no doubt that Ld. Arbitrator need not have given elaborate, comprehensive or extensive award/finding on the claim but the mere recording of reasons for the findings made was an indispensable requirement/action.
40 In the light of facts and the circumstances and the judgment cited above, in considered opinion of this court, the impugned award suffers from patent illegality, perverse and opposed to public policy.
41 Accordingly, in view of the discussions, as adumbrated above, the petition under Section 34 of the Act is hereby allowed. The impugned award dated 24.12.2019 is hereby set aside.
No order as to cost.
File be consigned to record room.
Digitally signedVINEETA by VINEETA GOYAL GOYAL Date: 2024.08.03 17:46:19 +0530 Pronounced in the open Court (VINEETA GOYAL) on this 03rd of August 2024 District Judge (Commercial-03) Patiala House, New Delhi OMP (Comm) No. 60 of 2020 HCL Technologies Ltd Vs. SGS Tekniks Manufacturing P Ltd Page 46 of 46