Bangalore District Court
And The vs Damages Of Approximately Inr 16 Crores on 24 June, 2021
IN THE COURT OF LXXXV ADDL. CITY CIVIL &
SESSIONS JUDGE, AT BENGALURU (CCH-86)
THIS THE 24TH DAY OF JUNE 2021
PRESENT:
SMT. M. LATHAKUMARI. M.A., LL. M.,
LXXXV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com. A.P. No. 42/2021
BETWEEN:
ANHEUSER BUSH INBEV INDIA
LIMITED
Formerly known as Sabmiller
India Limited
Having its registered office at
Unit No. 301-302, Third Floor,
Dynasty Business Park, B Wing
Andheri Kurla Road, Andheri
(East), Mumbai - 400059.
And its Corporate Office at 6 th
Floor, Green Heart Building,
Mfar, Manyata Tech Park, Phase
IV Nagavara Village,
Bangalore - 560 045
: PETITIONER
(Represented by
Sri. J. Sagar - Advocate.)
AND
SCARPE MARKETING PVT LTD
302 & 305, Plot No.32-34 and 39-41,
KTC Illumination, Gafoor Nagar,
2
Com.A.P.No.42/2021
Madhapur,
Hyderabad (Telangana) - 500081.
: RESPONDENT
(Represented by Smt. Nitya
Kalyani, Advocate).
Date of Institution of the 07.04.2021
suit
Nature of the suit (suit on
pronote, suit for Arbitration Suit under
declaration & Possession, Arbitration Act
Suit for injunction etc.)
Date of commencement of
recording of evidence ---
Date on which judgment 24.06.2021
was pronounced
Total Duration Year/s Month/s Day/s
00 02 17
(M.LATHAKUMARI)
LXXXV Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This is a Petition filed by the Petitioner under Section 34 of the Arbitration & Conciliation Act, 1996 seeking to set aside the majority award dated 2.11.2020 passed by the Majority members of the Arbitral Tribunal in Arbitration Case No. 2161/2018 and to pass such order as this court deems fit proper to grant.
3Com.A.P.No.42/2021
2. The petitioner herein was respondent before the Arbitration Tribunal in Arbitration Case No. 2161/2018 and Respondent was the claimant.
3. The Brief facts of the petitioner's case is that the petitioner and the respondent were parties to a Customer Information and Service Provider Agreement dated 21.2.2012, hereinafter referred to as the CISP Agreement and same was subsequently amended on 3.6.2014 and 9.9.2015. The petitioner had terminated the CISP Agreement by its email dated 5.3.2018 by issuing termination notice. Consequently on 8.3.2018 the respondent herein invoked arbitration under CISP Agreement inter alia challenging the validity of the termination notice and seeking specific performance of the CISP Agreement. It is petitioner's further case that, after notice invoking arbitration, the respondent sought for specific performance of contract through its notice of arbitration and later amended his claim, also claimed damages alleging that termination of the CISP Agreement by the petitioner herein is illegal. The majority award has declared that the termination notice is bad in law and void ab initio and granted the respondent damages of approximately INR 16 crores and cost of approximately INR 2 Crores apart from rs 3,98,81,995/ towards outstanding invoices by award 4 Com.A.P.No.42/2021 dated 02.11.2020. The said award is in question in this petition. In para-7 and 8 of this petition, the petitioner has mentioned about the nature of its respondent company, about their business activity. In para-10 of the petition the scope of service under CISP Agreement has been narrated. The petitioner terminated the CISP Agreement by email dated 5.3.18. Under clause 10.4 of CISP Agreement, for any breach of CISP Agreement the petitioner is entitled to terminate the same without any prior notice. In para-35 of this petition, petitioner has mentioned about clause 10.4 of the CISP Agreement. It is petitioner's further case that, in view of termination notice, the respondent issued a notice dated 8.3.2018 invoking the arbitration clause (clause-16) for appointment of arbitrator for resolving the alleged dispute between the parties. It is further asserted that petitioner conducted the proceedings before City Civil Court, Bengaluru and status-quo order passed by the said court. The respondent also filed petition u/s 9 of the Act against the petitioner in Arbitration Application No. 77/2018 of 8.3.2018 seeking interim measures from the court concerned against the termination of the CISP Agreement by the petitioner alleging that same is wrongful termination. On 14.3.2018 status-quo order was granted by the court. It is further asserted that on 5.3.2019 court made an observation that the 5 Com.A.P.No.42/2021 respondent could always approach Arbitral Tribunal u/s 17 of the Act for interim reliefs that it sought and disposed of the petition by extending the interim order of status quo till the next immediate date of hearing before the Arbitral Tribunal. The petitioner further asserts that, the respondent filed its statement of claim on 24.8.2018 before the Arbitral Tribunal seeking an order declaring that the email communication dated 5.3.2018 purporting to terminate the CISP Agreement, the first addendum and the second addendum dated 19.3.2019, 29.5.2014 and 9.9.2015 respectively entered into between parties herein is illegal and void and against the terms of the covenants mutually agreed by the parties and also sought for an order declaring that the CISP Agreement, the first addendum and the second addendum entered into between the parties continues to remain fully operational between the parties. To issue of order directing the respondent to pay in full a sum of INR 11,89,05,886 towards outstanding invoices till date coupled with interest at a rate that the Tribunal deems fit. Further, sought for an order directing the respondent to pay to the claimant damages which shall be provided during the stage of evidence for their attempts at illegally terminating of the CISP Agreement and its addendums without cause and also to pay cost of arbitral proceedings as 6 Com.A.P.No.42/2021 quantified and such other reliefs as the Arbitral Tribunal deems fit to grant. The petitioner further asserts that he filed its statement of defence before the Arbitral Tribunal on 29.10.2018. On 24.2.2019 the respondent preferred an application u/s 23(3) of the Act for permission to amend the original statement of claim. Later the respondent withdraw the said application on 6.5.2019 and filed a fresh application under the similar provision on the same day. Said application was resisted by petitioner by filing its reply. On 28.5.2019 the learned arbitrator allowed the respondent's amendment application leaving open the issue of jurisdiction of the Tribunal. On 13.6.2019 the respondent filed its amended statement of claim under which the respondent sought for, to set aside the email communication dated 5.3.2018 purporting to terminate the CISP Agreement as wrongful, bad in law and against the terms of the CISP Agreement, directing respondent to pay in full a sum of Rs.43,94,06,164/- towards outstanding invoice due and payable as on the termination of CISP Agreement with interest at 18% p.a., until the date of actual payment by the petitioner herein and also sought for direction to the petitioner herein to pay the respondent who was a claimant before Arbitral Tribunal Rs.41,56,83,128/- towards the actual business loss of the claimant for the remaining 7 Com.A.P.No.42/2021 term of the CISP Agreement i.e., from 5.3.2018 to 30.8.2020 and also to pay the respondent herein damages to the tune of Rs. Five lakhs as compensation for the willful loss and damages caused as a result of the breach of the CISP Agreement along with cost of the arbitral proceedings and for such other reliefs as the Arbitral Tribunal deemed appropriate to grant in the ends of justice. The petitioner further asserts that in pursuance of amendment of the prayer he filed its amended statement of defence on 12.7.2019 before Arbitral Tribunal and the respondent herein filed its rejoinder on 27.7.2017.
The Arbitral Tribunal has framed as many as 7 issues as mentioned in para-50 of this petition. The petitioner further mentioned in para-51 of this petition that on 18.10.2019 the respondent herein confirmed that it will not lead any oral evidence. Accordingly the petitioner herein also submitted before Arbitral Tribunal that it too would not lead oral evidence. The matter was thereafter listed for final arguments of the respondent on 8.12.2019 and 9.12.2019. In para-52 of this petition, the petitioner has mentioned that, in the meanwhile the petitioner and respondent filed their respective affidavit of admissions and denial documents. On 9.12.2019 respondent herein had filed 8 Com.A.P.No.42/2021 an affidavit along with certain additional documents when the matter was for final arguments. The petitioner further asserts that despite its objections the said documents of the respondent herein were taken on record. Following final arguments, the award was reserved on 15.8.2020 and thereafter as per the Arbitral Tribunal's order, the party submitted their written submissions on 5.9.2020. On 2.11.2010 the majority award that is the award in question was passed under which petitioner's termination notice was set aside holding that termination of the CISP Agreement to be bad in law and void ab-initio and held that, the respondent is entitled to a sum of Rs.3,98,81,995/- against the outstanding invoice in addition to an interest at 10% from the date on which the amount fell due till date of actual payment, a sum of Rs.16,04,41,281/- as damages for business loss with future interest at 10% from the date of award until date of actual payment, a sum of Rs.2,03,71,475/- as cost of the arbitration. Further, the respondent was awarded simple interest at the rate of 10% p.a., payable by the petitioner on the claims.
Aggrieved by this majority award the petitioner herein has filed this petition for the reliefs mentioned supra on the following grounds. The majority awards 9 Com.A.P.No.42/2021 has set aside the termination notice as bad in law and void ab-initio is in conflict with the public policy of India and vitiate by patent illegality. With regard to this ground the petitioner asserted that, it is settled law that termination of contract can be justified on the basis of any reason that existed at the time of termination, even if the reason is not specified in the notice of termination. In law it is irrelevant whether the party terminating had knowledge of the reason or not. Hence, the majority award has incorrectly concluded based on the respondent uncorroborated statements that both existence of reason and its knowledge are necessary to uphold termination. It is further contended that the majority award has set aside the termination notice by making an error of law apparent on the face of the award. In para-61 it is contended that reliance was placed to the submission of respondent herein and petitioner statement of defence, amended statement of defence and written submissions were not at all considered by the Arbitral Tribunal. In para-63 of the petition it is mentioned that the petitioner terminated the CISP Agreement due to the respondent's breach of the anti corruption clause. The tribunal ignored the settled position of law laid down by the Hon'ble Supreme Court in Maharashtra State Electricity Distribution Company Limited vs. Datar 10 Com.A.P.No.42/2021 Switchgear Ltd., 2018(3) SCC 133. It is further mentioned that the Arbitral Tribunal ignoring the settled position of law accepted the respondents contentions and held that to justify the termination the twin conditions of existence and knowledge have to be established. This observation of Arbitral Tribunal is an error of law apparent on the face of the majority award. The majority award is perverse and thus patently illegal. It is further contended that the respondent failed to cite any legal precedent in support of its argument either during the oral submissions or its written submissions, on the contrary petitioner cited above mentioned legal precedents and also highlighted settled position of law as laid down by the English Court of Appeals in Taylor vs. Oakes, Roncoroni and co., (1922) All ER Rep Ext 866, that termination of a contract can be justified on the basis of a reason which existed at the time of termination, whether the party terminating the contract was aware of it or not. It is further contended that the majority award has completely ignored the above settled position of law i.e., "if an employer dismisses an employee on an insufficient ground of dismissal, he is not precluded from setting up against a claim for damages, a sufficient ground for dismissal which in fact existed at the time of dismissal, whether he knew it or not. An employee who has been guilty of 11 Com.A.P.No.42/2021 embezzlement and is dismissed for impertinence is not entitled to damages if he proves that he was not impertinent, but admits that he had been guilty of embezzlement." It is further mentioned that even assuming that knowledge is required the petitioner herein had made on oath which fact was not rebutted by the respondent. The requirement to prove knowledge, if at all it exists, has been fulfilled. The dissenting Award found that "it is not possible to hold that there was no sufficient material with respondent or in the public domain which would attract the invocation of the Anti-Corruption Clause." The petitioner further contended that, it terminated the contract on the basis of clause 20 of the CISP Agreement and issued termination notice under clause 10.4 of the CISP Agreement and terminated the contract. The Anti- Corruption clause is unambiguous. The CISP Agreement does not require that the guilt of the respondent must first be established before the respondent is required to notify the petitioner of a Corruption Act or before the petitioner can terminate the CISP Agreement for the material breach. The corruption clause acts merely on being a suspected of or investigated for a Corrupt Act or similar conduct. The respondent was in violation of the Anti-Corruption clause. The reasoning of the majority view on the issues framed is based on hyperbolic and 12 Com.A.P.No.42/2021 impermissible in law to infer. The arbitration tribunal contended that the 2nd FIR is an after thought for the respondent and subterfuge to whitewash dubitable conduct of Mr. Sana and thirdly the FIR was subsequent to the date of termination. These reasons are based on the premise of guilt which is neither a contractual term nor the cause for invocation of Anti-Corruption clause. It is further contended that majority award construed the CISP Agreement in a manner that no fair-minded or reasonable person would; and has created a new contract between the parties unilaterally enforcing it on the petitioner. Reliance was placed by petitioner on the ground of patent illegality, the associated builders vs. DDA, (2015) 3 SCC 49, contended that in view of the legal principles laid down by Hon'ble Supreme Court in the said citation the majority award is liable to be set aside for having rendered findings which are infractions of fundamental notions of justice, and which ought to shock the conscience of this court and being perverse and patently illegal. It is also contended that the Arbitral Tribunal was neither called upon to or required to adjudicate whether or not Mr. Sana was guilty of having committed a Corrupt Act, the majority award is against the public policy of India and is vitiated by patent illegality because inter alia the claims of the respondent have been allowed despite there being no 13 Com.A.P.No.42/2021 supporting evidence. The petitioner submitted before the Tribunal that he had not sought any service from the respondent after October 2017 and thus no amount was due to the respondents in relation to any invoices. To substantiate its contentions, the respondent had produced copy of the extract of the ledger, copy of the email sent to the petitioner containing invoices and emails sent by the respondent to the petitioner between November 2017 and March 2018. in its affidavit of admission and denial of documents dated 6.12.2019, the petitioner had denied these documents. Inspite of the same, the majority award has incorrectly noted that the petitioner has not challenged or denied the veracity of these documents despite opportunity given in this regard. The businessman that is respondent herein has not lead any oral evidence before Arbitral Tribunal. It is the case of no defence. Inspite of the same the claim of the respondent came to be allowed without any evidence in support. This itself indicates that the majority award is clearly perverse and patently illegal. There is no evidence in support of the claim of the respondent herein. Inspite of noticing lack of evidence, the majority award considered the claim of the respondent and granting claim partly resulting in a windfall gain in favour of the respondent. Hon'ble Supreme Court in State of Rajasthan v. Ferro 14 Com.A.P.No.42/2021 Concrete Construction Ltd., (2009) 12 SCC 1 held that if there was no evidence at all and if the Arbitral Tribunal makes award of the amount claimed in the claim statement, merely on the basis of the claim statement in any manner, it has to be held that the award that account would invalid and hence contended that majority award is wholly illegal and unsustainable. It is further mentioned that the majority award has granted nominal damages without any basis without even there being any proof by awarding such nominal damages. The CISP Agreement does not provide for a genuine pre- estimated of damages that is liquidated damages. Hon'ble Supreme Court held that where actual damage or loss can be proved its proof is not dispensed with (Kailash Nath Associates vs. Delhi Development Authority and another (2015) 4 SCC 136). The majority award has granted nominal damages by ignoring only relevant evidence that was available. The majority award ought to be set aside under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, the respondent cannot claim loss of revenue as damages. The respondent is not at all entitled for loss of revenue. Despite accepting the petitioner's contention, the majority award found that the claimant would be entitled to the actual loss of revenue on the basis of clause 5.1 of the CISP Agreement. There was no proof 15 Com.A.P.No.42/2021 adduced in support of the respondents assertion of having incurred any performance expenditure. The majority award's quantification of damages is opaque and without reasons. The majority award has ignored relevant evidence in quantifying the damages. The majority awards failed to consider relevant evidence has resulted in perverse patent illegal award. The majority award has granted interest despite there being no such relief sought. Some of the claims made and considered by majority award is behind the scope of references of the tribunal. The respondent was fully aware that the petitioner had terminated the CISP Agreement ought to have raised all the claims and disputes in the statement claim and there was no reason for majority award to allow the amendment sought by the respondent herein. There are no reasons assigned as to how the majority award has made a determination that nominal damages can be awarded by the Tribunal. When there is no specific claim for the same and hence pray for set aside the majority award contending that same violates principles of natural justice, as petitioner was not provided an opportunity to present its case with regard to assessing the claim of the respondent. It is further contended that petitioner was not even heard on the nominal damages awarded, the meaning of nominal is very small. Such damages 16 Com.A.P.No.42/2021 are only awarded to recognize the fact that there is breach of a contract and not to compensate a party in any manner. To award a substantial sum of money and then hold that it is nominal is not merely contradictory but is also destructive of the very basis on which the award is made. The award therefore requires to be set aside and hence this petition.
4. Along with this petition, the petitioner also filed an application seeking to stay the operation of the majority award. On the date of hearing the respondent appeared through his counsel, time was granted to file objections of respondent, so as to consider the main petition itself on merits.
5. The respondent filed his objections to the petition filed by the petitioner u/s 34 of the Arbitration and Conciliation Act on 19.4.2021 contending that petitioner has not approached this court with clean hands and has filed the present petition on misleading averments only to avoid compliance of the majority award dated 2.11.2020 passed by the Arbitral Tribunal comprising of three judges of Hon'ble Supreme Court. In para-3 to 10 of its objections statement, respondent mentioned about its preliminary objection contending that the application as filed by the petitioner is behind the scope of purview of Sec.34 of the Act. It is settled position that 17 Com.A.P.No.42/2021 court must not substantiate interpretation as against the interpretation of the Arbitral Tribunal. The proceedings u/s 34 of the Act are summary in nature. Unless it is shown that the award passed by the Arbitral Tribunal is patently perverse or the award is based on an incorrect proposition of law, there is no reason to set aside the award of the Arbitral Tribunal and same is final. The Arbitral Tribunal is constituted by the parties as per their choice. Any such interference would amount to frustrating commercial wisdom behind opting for alternate dispute resolution. It is further mentioned that, it is not open to the court to re-examine and reappraise the evidence considered by the Arbitral Tribunal to hold that the conclusion reached is wrong. One of the objects of the Arbitration and Conciliation Act is to minimize the role of courts in the arbitration process. A perusal of the award makes it clear that the arbitrators of the majority award have dealt with all the issues at the time of arbitration hearing and there is nothing which may tantamount to any glaring procedural defect. In the present case, the dispute arised due to wrongful termination of the contract. The Arbitral Tribunal after considering the claims adjudicate on the issue of termination of the contract awarded the respondent outstanding dues, damages for wrongful termination and cost and there is no scope for this court 18 Com.A.P.No.42/2021 to interfere with the same. The respondent also discussed about brief facts of the case between the parties and also the proceedings before arbitration proceedings and contended that the grounds raised in the petition in the present application are devoid of merits. The petitioner unreasonably asserts that they did not have an opportunity to contest the award of nominal damages. Nominal damages is nothing but a compensation granted in favour of the aggrieved party to restore the wrong on account of breach of agreement to put the innocent party in a position as if the contract was performed and compensate to ensure its financial expectations are met with. Once the documents/ evidence was placed on record it was open to the Arbitral Tribunal to assess the same and come to a reasonable conclusion and the evidentiary value of the same and this court cannot interfere with the assessment of the Tribunal u/s 34 of the Arbitration And Conciliation Act 1996, even whether it disagrees with the same, provided it a reasonable interpretation, even if another interpretation of the same may have been possible. It is further contended that the petitioner claims that the award of granting nominal damages is un-intelligible whereas majority award while granting same has placed reliance on settled legal principles. The petitioner unreasonably asserts that no opportunity 19 Com.A.P.No.42/2021 has been provided to him while considering nominal damages. It is further contended that the grounds raised by the petitioner in this petition are devoid of any merits and same is not at all maintainable and pray for dismissal of this petition with cost for deliberately putting the respondent through another round of frivolous litigation and also sought for such other reliefs as this court deems fit to grant in the circumstances of this case.
6. At this stage it is necessary to mention the issues framed by Arbitration Tribunal on hearing the learned counsel for both parties on the draft issues, the arbitration tribunal framed following issues as under:-
(1) Whether the amendment of the Statement of Claim sought by the Claimant is permissible in law? If in the affirmative, whether this Arbitral Tribunal is vested with the jurisdiction to enter reference on the additional claims of the Claimant vide the amended Statement of Claim?
(2) Whether the Claimant proves that the email communication dated 5th March 2018 is tantamount to wrongful termination of CISP agreement in contravention of the terms of the CISP agreement and therefore, bad in law?
(3) Whether the Claimant is entitled to a sum of Rs.4,39,46,164/- payable by the Respondent towards outstanding 20 Com.A.P.No.42/2021 invoices due as on the date of purported termination of the CISP agreement along with the incremental interest till date of actual payment?
(4) Whether the Claimant is entitled to a sum of Rs.41,56,83,128/- payable by the Respondent towards actual business loss between 5 March 2018 and 30 August 2020 i.e., the reminder term of the CISP agreement from the date of purported termination of the same by the Respondent?
(5) Whether the Claimant is entitled a sum of Rs.5,00,00,000/- payable by the respondent towards compensation for willful loss and damage in consequence of the purported breach of CISP agreement?
(6) Are parties entitled to any interest on claims, if so, at what rate and for what period?
(7) Are either or both parties entitled to any costs?
7. On the basis of above issues, the majority award in question has been passed.
SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR PETITIONER:
The learned counsel for petitioner Sri. Dyan Chinnappa submits that respondent herein referred the dispute to Indian Council of Arbitration. On his 21 Com.A.P.No.42/2021 submission of claim to Indian Council of Arbitration (ICA), ICA asked for reply from the petitioner herein.
Initially the respondent sought for the relief of specific performance before ICA and as per clause 16 of the CISP agreement and Indian Council of Arbitration referred the claim to the Arbitral Tribunal. On such reference the respondent filed amendment application before the Arbitral Tribunal seeking to amend the prayer column and claimed for damages. Whereas the arbitration clause is limited , so also Arbitral Tribunal jurisdiction except the claims referred to ICA, the Tribunal has no other authority to consider other claims of the respondent. Inspite of petitioner's objection to the amendment application filed by the respondent and inspite of respondent had no locus standi to file such amendment petition before Arbitral Tribunal and it was his duty to refer such further claim sought by way of amendment again to the ICA and ICA in Delhi was under
obligation to consider and sent the same to Arbitration after seeking reply from the petitioner herein. Inspite of violation of this procedure mentioned under clause (16) of the CISP Agreement, the majority award allowed the amendment and answered Issue No.1 framed with regard to amendment of the statement of claim sought by the respondent in his favour by holding that same is permissible in law. By relying upon the citation of 22 Com.A.P.No.42/2021 Hon'ble Apex Court in State of Goa vs. Praveen Enterprises (2012) 12 SCC 581, arbitration not at all considered the principles laid down by Hon'ble Supreme Court in this decision. The learned counsel further states that the respondent made claim for recovery of money under some invoices and non-payment of the amount. Inspite of no oral evidence lead by respondent herein the arbitration tribunal considered the claim and held that petitioner shall make payment for the period 5.3.2018 to 2020 and awarded the nominal damages Rs.16,04,41,281/- awarded as nominal without basis.
Tribunal also awarded Rs. Two crores cost without there being any document. Award is against to public policy. The learned counsel placed reliance on citations (2019) 15 SCC 131, 2019(20) SCC 1 contended that Hon'ble Supreme Court in these citations has clearly held when interference is necessary and contended that it is unintelligible award. Award headed by patent illegality. It is further submitted that while considering the nominal damages only provided to be given the respondent has relied upon document No.16 before arbitration tribunal which provided for general figure. Finding of learned arbitrator is neither's case, the balance sheet produced before the court was not at all considered and thereby Tribunal ignored vital documents. In the majority award the Arbitral Tribunal 23 Com.A.P.No.42/2021 though said that nominal damages will be awarded later awarded amount for business loss. Mechanism of calculation of such amount i.e., Rs.16,41,00,000/- and odd is not made known to anybody and nobody knows the mechanism of calculation. Though u/s 18 of the Arbitration & Conciliation Act, 1996 opportunity must be given to each party, no opportunity given to petitioner herein against said calculation to present his defence. In this regard, the learned counsel placed reliance upon the citation of Hon'ble Apex Court in State of Rajastan vs. Ferro Concrete Construction Pvt., Ltd., (2009) 12 SCC 1 while narrating the observations of Hon'ble Supreme Court made in para-52, 53, 54 and 55 of the judgment, the learned counsel argued that if there was no evidence at all and if the arbitrator makes an award of the amount claimed in the claim statement based on the claim statement such award would be invalid and makes the award wholly illegal and unsustainable and asserted that it is an unintelligible award. Further, the learned counsel placed reliance on the citation of Patel Engineering Ltd., Vs. North-Eastern Electric Power Corporation Limited and contended that arbitrators have come to their own calculation which is nobody's case which is against to natural justice. Further asserted that arbitration tribunal considered clause 5(1) of the original agreement while calculating nominal 24 Com.A.P.No.42/2021 damages/business laws at page 122 of its award whereas clause 5.1 came to be amended by an addendum and hence clause 5.1 relied upon by the Arbitration Tribunal is not in existence though said clause 5.1 stood replaced during 2015 the Arbitration Tribunal has considered earlier 2012 agreement clause itself by looking at a wrong clause, rather clause which did not exist, the award has been passed. The citation relied upon by majority award are all in respect of liquidated damages and not for nominal damages. Further, it is submitted that the arbitration tribunal while considering the legality of the termination of the agreement, observed that in the termination, there is no mention about the FIR and not at all considered principles laid down by Hon'ble Supreme court in the case of Juggilal Kamlapat vs. Pratapmal Rameshwar. In this citation, though Hon'ble Supreme Court observed that even if basis of any ground is not mentioned in the ledger same can be explained at later stage. However, Arbitration Tribunal not considered the said principles of Hon'ble Supreme Court. Nominal award should be symbolic in Beebcon Engineers Pvt., v/s. BHEL at para- 11 Hon'ble Supreme Court awarded Rs.50,000/- towards nominal damages against claim of Rs.10,00,000/- and tribunal unable to explain as to on what basis awarded the amount and Tribunal awarded for business loss and 25 Com.A.P.No.42/2021 not for nominal damages. Further, while considering Issue No.7 cost of Rs.2,03,00,000/- awarded without any documents and in the absence of any evidence. Even Arbitral Tribunal has considered Issue No.3 which is in respect of claim of respondent herein for invoices without any substantial document. Inspite of submission of denial affidavit with regard to document No.4 same has been considered has admitted document. Initially claim was for specific performance and later the entire dispute itself is converted as for damages ,as per clause 16 of the agreement party shall refer the dispute to ICA and such referred dispute shall be referred to Arbitral Tirbunal by ICA, the Tribunal has no jurisdiction to consider the amendment application. Question of jurisdiction in this regard is required to be considered by this court separately. There is an error apparent on record, award is against the public policy an amount awarded without recording any oral evidence and also without there being any substantial documents and hence pray for set aside the impugned award.
SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR RESPONDENT:
The learned counsel for respondent Sri. Salman Khurshid rebutted that the award in question is fairly 26 Com.A.P.No.42/2021 straight forward award and petitioner is making sound complicated. Arbitral Tribunal while considering the first issue with regard to its jurisdiction placed its reliance on the citation Goa vs. Praveen Enterprises of Hon'ble Supreme Court and observed that the principles rather helpful to the respondent. Admittedly there is no excepted matter in the agreement. Reference has made under clause 16 of the agreement. In the said clause there is reference about damages and hence it is crystal clear that there is no impediment for respondent herein who was a claimant before the Arbitral Tribunal to claim damages. When clause 16 of the CISP agreement itself would permit to include damages. In view of the same subsequently amended reference. Even as per the Rule 41 of Indian Council Arbitration same is permissible. It is further canvassed that minority view though disagree not stated that majority award is perverse. Minority view is nothing but a possible view and same cannot be ground as set out in Section 34 of the Arbitration and Conciliation Act. It is also mentioned that, although Civil Procedure Code and Evidence Act not strictly applicable to arbitration procedure, Specific Relief Act is strictly applicable. As per Section 21(2) and Sec. 21(v) of Specific Relief Act unless we claim damages there is no scope to award the same. All that respondent has done is complied the provisions of Section 21 of the 27 Com.A.P.No.42/2021 Specific Relief Act which made him to amend its prayer since otherwise the same is excluded. It is further contended that, in the initial E-mail correspondence between the parties there was no ground indicated why contract has been terminated. They only able to ascertain vaguely, due to subsequent development in the proceedings u/s 9 of the Arbitration Act. In the statement of defence there was no mention of the ground which are now mentioned in this arbitration petition. The Tribunal observed that knowledge has to be established for termination of the contract at the time of termination itself. If such knowledge came into existence after termination of the contract same cannot be considered as ground for termination . This observation cannot be pushed as perverse. Even in Juggilal Kamlalpath case it is held that knowledge is necessary. That is why petitioner placed his reliance on Nune Shivayya's case. Even in this case it is not told that knowledge is not necessary. Tribunal has come to conclusion that FIR was subsequent to 5.3.2018 and thereby held that termination of contract is illegal and there is no scope for interference for this court u/s 34 of the Arbitration & Conciliation Act. Further, if there is no evidence then obviously it is perverse. Whereas evidence in the form of material available before the Arbitration Tribunal was considered. According to 28 Com.A.P.No.42/2021 petitioner since documents denied the same cannot be considered without evidence, whereas Evidence Act and also CPC does not apply to arbitration proceedings technically. Inspite of Arbitration Tribunal provided an opportunity to file affidavit of admission and denial at subsequent stage, petitioner has not specifically denied certain documents. Since both sides said no oral evidence documents on record were considered.
Though there is reference about wrong clause 5.1 in the award, tribunal calculated at the rate of Rs.5.50/- per case and Rs.7/- per case. Invoices produced in respect of Issue No.3 are taken cognizance of, certain invoices that were excluded due to objections raised at the time of arguments by the petitioner herein before Arbitration Tribunal. Whereas with regard to other invoices no objections raised even at the time of arguments. It is further contended that, there was much argument on clause 5.1 as already amended whereas Tribunal rejected the growth of 15% p.a., as claimed and considered only 10%, even figures were considered as Rs.5.50/- and Rs.7/- per case as per the amended clause. When such being the case question of arbitration tribunal relied upon earlier clause 5.1 does not arise. From the calculation it cannot be said that wrong figures were considered. Nominal damage was always be considered on broad principles to put the 29 Com.A.P.No.42/2021 person in the same position as if contract not breached. Petitioner reads nominal as symbolic which is not correct. If a party failed to prove actual loss entitled for nominal damages. Further, no case falls on the ground of cost and only Hon'ble Apex Court can reverse the cost imposed or enhance the same and this court cannot interfere with the same. Nominal damages means what would be just. If claimant was unable to lead oral evidence there was no impediment for respondent to establish his defence by leading his evidence. Though wrong clause is mentioned in the award figures not taken from the erlier agreement clause 5.1. Under such circumstances same does not amount to error apparent on the face of record. Tribunal is not bound by CPC or Evidence Act and bound by Section 19(4) of the Arbitration and Conciliation Act. There is absolutely no grounds made out by the petitioner to set side the award or for the interference of this court. Hence, pray for dismissal of this petition.
8. On hearing the learned counsel for both parties on the respective claims, now the point that arise for my consideration are as under:
30Com.A.P.No.42/2021 (1) Whether the grounds agitated by the petitioner is covered by any of the grounds set out under S.34 of the Arbitration and Conciliation Act of 1996?
(2) What order?
9. My finding on point no.1 : In the negative and point No.2 as per final order for the following REASONS
10. Issue No. 1: - The first and foremost ground canvassed by learned counsel for petitioner is with regard to entertainment of amendment application by the arbitratal tribunal. It is the specific contention of the learned counsel for petitioner that, initially claim was made for specific performance and later by way of amendment respondent claimed damages. Arbitration tribunal not considered the principles laid down by Hon'ble Supr eme Court in the matter of State of Goa vs Praveen Enterprises reported in 2012 (12) SCC 581 relied upon by the petitioner. Whether this ground can be considered as impugned award contravene the public policy or same amounts to patent illegality, is a point to be considered at this stage . Mere non consideration of a particular citation produced by the party cannot by itself makes an award unfair/unreasonable, as long as Arbitral Tribunal has not 31 Com.A.P.No.42/2021 disregarded order of superior courts. The learned counsel for petitioner contended that the respondent challenged the validity of the termination notice and invoked arbitration on 08.03.2018 seeking specific performance of the CISP agreement as well as payment towards unpaid invoices along with interest @ 18%, later amended the claim and sought for damages for loss of revenue to an extent of Rs.41.00 crores and another Rs.5.00 crores towards damages of loss of reputation and also sought for cost. It is further contended that, there was no scope for respondent to file such amendment application before Arbitration Tribunal and claimant required to submit such claims to Indian Council of Arbitration. Whereas this contention taken by petitioner is contrary to the provisions of Sec.23(3) of Arbitration and Conciliation Act, 1996. under this clause unless otherwise agreed by the parties, either party may amend or supplement his claim or defense during the course of the Arbitral proceedings, unless the Arbitral Tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. Further as per rule 41 of Indian Counsel of Arbitration Rules of Domestic Commercial Arbitration and Conciliation, amendments of the claim, defense statement, counter claim or reply submitted to the Arbitral Tribunal must be 32 Com.A.P.No.42/2021 formulated in writing by the party so desiring. The Arbitral Tribunal will decide whether such amendments should be allowed or not.
11. Further the party making such additional claim / counter claim shall deposit the entire fees payable in respect of such increase of additional claim as set out in the schedule of fees in Rule 31(2). Hence, if once Arbitral Tribunal is constituted, there is no necessary for the parties to submit their addition claims if any to the Indian Council of Arbitration and it is for the arbitrators to decide the same. Further as per clause 16 of the CISP agreement which is in respect of arbitral clause parties are at liberty to refer the dispute arising between them or connected herewith or incidental their to. Hence, the contention that Arbitration Tribunal had no jurisdiction to consider amendment of the statement of claim sought by the claimant i.e. respondent herein and an issue relating to jurisdiction goes to the root of the matter and thereby impugned award is required to be set aside, cannot be accepted. Further, orders on amendment application i.e. IA No.2 dated 28.05.2019 is an order rendered by all the three learned arbitrators. On going through the said order on IA.No.2 it is clear that after giving an opportunity to the petitioner herein to submits its reply to the amendment application, after 33 Com.A.P.No.42/2021 considering the rival submissions made by learned counsels for the parties, the claimant was permitted to file the consolidated claim petition with a direction to deposit additional fee if any as per ICA rules. Hence, the Arbitration Tribunal has not violated any statute while allowing the said amendment application filed by the respondent. Under such circumstances finding of Arbitral Tribunal on issued No.1 is well within the their jurisdiction and hence there is no scope for interference by this court under Sec.34 (2) (V) (b) (ii) of Arbitration and Conciliation Act, 1996.
12. Further, the learned counsel for petitioner relied upon two citations of Hon'ble Supreme Court with regard to when interference is necessary. Firstly he placed reliance on Delhi Development Authority case reported in 2015 (3) SCC 49 and contended that in para 30, 31 Hon'ble Supreme Court has discussed about the principles of the audi alteram partam and also Sec.18 and 34 (2) (a) (iii) of the Arbitration and Conciliation Act and also contended that the decision which is based on no evidence or ignores vital evidence in arriving at its decision such decision would be perverse. I have carefully scrutinized this judgment of Hon'ble Apex Court. In para 33 of this judgment Hon'ble Apex Court observed as under;
34Com.A.P.No.42/2021 "33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award thus award based on little evidence or an evidence which does not measure of in quality to a trained legal mind would not be held to be invalid on this court. Once it is found that arbitrators approach is not arbitrary or capricious, then he is the last word on facts".
13. Further, the learned counsel for petitioner also placed reliance on National Highway Authority of India case reported in 2019 (15) SCC 131 and stated that Hon'ble Apex Court has explained the grounds of challenge under Sec.34 (2) (a) (iii). In this citation Hon'ble Apex Court observed that, when the conscience of the court is shocked by interaction of fundamental notions or principles of justice, under such exceptional circumstances the ground pertaining to public policy of India can be applied. By relaying upon these citations, the learned petitioner counsel contended that there was 35 Com.A.P.No.42/2021 no oral evidence laid by the claimant / respondent herein to substantiate his claim .In his 20 years of rich experience he has not come across circumstances like this where contentions of claimant was excepted without even their being the oral evidence and Arbitral Tribunal neither followed the Civil Procedure Code nor the Indian Evidence Act and nobody knows what is the formula applied by the Arbitration Tribunal before arriving at certain amount and that apart no opportunity has been given to respondent to hear on such claim and hence contended that this is nothing but unintelligible award. With these contentions of learned petitioner counsel and also with the principles laid down by Hon'ble Supreme Court in the decesion mentioned supra in background, now let me consider whether it is necessary for Arbitration Tribunal to follow procedural laws like the Civil Procedure Code or The Indian Evidence Act. In this regard it is necessary to go through the provisions of Sec.19 of the Arbitration and Conciliation Act which read as under;
"Sec.19. Determination of rules of procedure.-
(1) The Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).36
Com.A.P.No.42/2021 (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings.
(3) Failing any agreement referred to in sub- section (2), the Arbitral Tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.
(4) The power of the Arbitral Tribunal under sub- section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.
14. This provision establishes that the Arbitration and Conciliation Act itself is a self contained code and a complete answer for all matters relating to arbitration. It excludes the applicability of general law procedures. In Centro Trade Minerals and Metals Inc., v/s Hindustan Copper Limited 2006 (11) SCC 245 case, Hon'ble Apex Court gave beneficial features of the Arbitration and Conciliation Act as follows;
"(i) Fair resolution of a dispute by an impartial tribunal without any unnecessary delay of expenses
(ii) Party autonomy is paramount subject 37 Com.A.P.No.42/2021
(iii) The Arbitral Tribunal is enjoined with a duty to act fairly and impartially.
15. The object of the Arbitration and Conciliation Act is to provide a speedy and alternative solution to the dispute and avoid protraction of litigation. The provisions of the Act have to be interpretated accordingly. The Arbitral Tribunal can conduct the proceedings in the manner it considers appropriate. In the order sheet dated 27.07.2019 of arbitration tribunal it is mentioned that ,"the learned counsel for the parties filed their draft issues. Heard the learned counsels for the parties with regard to framing of issues and issues are framed'". On that day as many as 7 issues were framed as mentitioned supra by Arbitration Tribunal and parties are directed to file their respective affidavits of admission / denial within two weeks after serving the copies on either side. As per order sheet dated 18.10.2019 it is mentioned that 'the claimant will not lead oral evidence ,the respondent counsel therefore submits that the respondent also will not lead oral evidence'. If claimant not choose to lead any evidence, that will not bar the respondent i.e., the petitioner herein to lead evidence to substantiate his defense. Further he had an opportunity even to summon the claimant and examine him on his behalf. It is the 38 Com.A.P.No.42/2021 respondent who has chosen not to lead evidence by submitting that he will not lead oral evidence before the Arbitral Tribunal.Hence the petitioner now estopped from canvassing before this court that he was not given an opportunity of being heard or it is a case of no evidence. At the instance of learned counsel for both parties the Arbitration Tribunal on that day listed the matter for final arguments.
16. Further, as per order sheet dated 09.12.2019 it is mentioned that the claimant has produced copy of the application filed by the petitioner herein under Sec.9 of the Arbitration and Conciliation Act in case No.44/2019 and said application was taken on record with the consent of learned counsel for respondent i.e., the petitioner herein. In para 2 of the order passed on the same date i.e., 09.12.2019 Arbitral Tribunal consisting of three arbitrators have mentioned that "the learned counsel for the claimant has undertaken to file an affidavit along with authenticated copies of documents no.4, 12, 15 and 16 mentioned in the affidavit of admission / denial of documents filed by the respondent along with supporting documents the copy of the affidavit and the authenticated copy of documents shall be furnished to the respondent counsel. The respondent counsel has objected for filing these 39 Com.A.P.No.42/2021 documents belatedly. The Tribunal has considered these objections in the background of Sec.18 and 27 of the Arbitration and Conciliation Act, 1996. Tribunal overruled the objection and permit the claimant counsel to file the same after serving the copies to the respondent counsel by 10.12.2019". It is further mentioned that the respondent counsel is permitted to file objections if any to the documents that will be filed as stated above by 07.01.2020 and reply there to, if any within two weeks thereafter. Admittedly, petitioner has not filed any objection to the documents 4, 12, 15 and 16 later produced by the claimant before Arbitral Tribunal. The learned counsel for petitioner contended that on earlier occasion similar photocopy documents were filed and he had already denied those documents by filing their affidavit of admission and denial. However, it is crystal clear that after order dated 09.12.2019 respondent choose not to question those documents inspite of providing an opportunity by Arbitral Tribunal. The very same documents which were considered as 4a, 12a, 15a and 16a by the Arbitral Tribunal in its award. Admittedly, said subsequent documents not at all denied by the respondent before the Arbitral Tribunal and Tribunal relied upon those documents. Under these circumstances the respondent before Arbitral Tribunal i.e., the petitioner herein having 40 Com.A.P.No.42/2021 not utilize the opportunity given to it, now cannot contend that he was not being heard or Arbitral Tribunal was very unfair.
17. Further the learned counsel contended that Arbitral Tribunal while assessing nominal damages later considered the same as revenue for business loss and also relied upon a clause not in existence in the agreement i.e., clause 5.1 of CSIP agreement dated 21.03.2012, though same has been amended by 2nd addendum to the CSIP agreement dated 09.09.2015. Even this contention raised by petitioner is not correct. Though Arbitration Tribunal extracted the clause 5.1 dated 21.03.2012, it has applied payment in accordance with clause 5.1 mentioned in the 2 nd addendum agreement. Hence, it cannot be said that majority award has been rendered without reasons or applying the wrong clause.
18. Now let me consider issue related to awarding of nominal damages. Admittedly, the claimant by way of amendment sought for Rs.41.00 crores towards damages and another Rs.5.00 crores towards loss of reputation etc., claimant / respondent has produced certain invoices before Arbitration Tribunal. The learned counsel for petitioner admits that there is no guidelines 41 Com.A.P.No.42/2021 to calculate nominal damages. According to him nominal damages means a symbolic amount. Admittedly the Arbitration Tribunal framed specific issue at issue No.4 and considered whether claimant is entitled to a sum of Rs.41,56,83,128/- payable by the respondent towards actual business loss between 05.03.2018 and 30.08.2020. In pursuance of this issue petitioner herein being the respondent was very much aware that the tribunal is calculating the amount payable after termination of the contract till the date of validity . If claimant is unable to establish the actual cost by placing the materials, there was no impediment for respondent to submit his own memo of calculation. He being party to the CSIP agreement also owns a duty in assisting the Arbitral Tribunal to arrive at a just conclusion. Whereas petitioner has not made any such effort before Arbitral Tribunal. Further, learned counsel for petitioner contended that majority award awarded cost of Rs.2,03,71,475/- and there is no basis for it. However, this court has no power to interfere with the cost awarded. Even otherwise on the ground of cost, this court cannot come to the conclusion that award is perverse, oppose to public policy. Under such circumstances there is absolutely no ground for this court to interfere on the basis of cost only. At this stage it is necessary to place reliance on the citation relied 42 Com.A.P.No.42/2021 upon by learned counsel for the respondent in Trimble Mobility Solutions India Vs Hindustan Petroleum Corporation, Arb. petition No.1225 of 2012 of Hon'ble Bombay High Court order dated 25.09.2018. In this citation the contention of the appellant that there was error apparent on the face of the award in as much as there was no evidence on record to support award is to be scrutinized. While considering this contention Hon'ble High Court observed that "it is true that no document was proved strictly in accordance with the principles laid down in the Evidence Act before the Arbitrator. But it should be noted that various documents were produced before the Arbitrator in support of the case of the respondent and there was ample evidence for the Arbitrator to act upon. It is true that evidence in accordance with the provisions of the Evidence Act was not proved or tendered before the Arbitrator. The Evidence Act does not apply to arbitration as is evident from Section 1 of the Evidence Act, 1872. The question of legal or admissible evidence, in our opinion, did not arise, but undoubtedly there was evidence before the Arbitrator on the basis whereof the Arbitrator could come to his finding as he has done. Even on the case on hand , there exist a class in the agreement ie clause 5.1 and that apart previous year growth statistics also produced by 43 Com.A.P.No.42/2021 claimant. Further petitioner and respondent were in commercial relationship since 21.03.2012 to 05.03.2018. Petitioner having availed the services was also very much aware of the amount paid by him for the previous years to the respondent. It is probable that he also maintains detail accounts in this regard. He had no difficulty to submit those documents before Arbitration Tribunal. Whereas petitioner has not made any such effort. This conduct on part of petitioner only probabalises that, petitioner intentionally with hold the relevant documents. As I have already stated the learned arbitrators have provided opportunity to both parties to submit their objections if any or counter documents. It is further contended that income tax documents produced before the Arbitral Tribunal were not considered. However, that itself cannot be considered as ground under Sec.34 (2)(b)(ii) of the Arbitration and Conciliation Act.
19. With the above discussions in background now let me scan through various citations relied upon by the petitioner and respondent and the ratio laid down by the Hon'ble Apex Court and other High Courts in those decisions: -
44Com.A.P.No.42/2021
(a) The first citation in this regard is ONGC vs. Saw Pipes (2003) 5 SCC 705. In this decision Hon'ble Supreme Court held that an award contrary to substantive provisions of law or the provisions of the Arbitration and Conciliation Act or against the terms of the contract held would be patently illegal and hence would be subject to interference u/ 34 (2)(a)(v) of Arbitration and Conciliation Act, 1996. Whereas in the case on hand, none of these grounds are made out by the petitioner. The contention of the petitioner that no oral evidence was done and the Arbitral Tribunal has not applied either Civil Procedure Code or the Indian Evidence Act, is already considered by this court. Since in an arbitration proceedings as per Sec.19 referred supra Arbitral Tribunal shall not be bound by the Code of Civil Procedure or the Indian Evidence Act, 1872.
Further, it is not the case of the petitioner that the award is contrary to the contract. Hence, the principles laid down by Hon'ble Supreme Court in this case is not applicable to the case on hand.
(b) Secondly the petitioner relied on Maula Bux vs. Union of India 1969(2) SCC 554. In this citation, Hon'ble Supreme Court deals with deposit of earnest money and forfeit of the same and breach of contract. Whereas the facts and circumstances in this case are 45 Com.A.P.No.42/2021 entirely different from the facts and circumstances in the case on hand and in this case there is neither deposit of any money nor forfeit of the same has been questioned. Accordingly this citation is also not helpful to the petitioner.
(c) Third decision is Kailash Nath Associates vs. Delhi Development (2015) 4 SCC 136. In this citation Hon'ble Supreme Court observed that u/s 74 of the Specific Relief Act proof of loss or damage is not dispensed with under S. 74. However, where damage or loss is difficult or impossible to prove, court can award reasonable compensation for the said loss and damage. However, the learned counsel for petitioner concedes that there is no definite formula available to calculate either nominal damages or reasonable compensation for loss or damage. Under these circumstances even this citation is not of any help to petitioner herein.
(d) Fourth citation is Kanchan Udyog Limited v. United Spirits Limited (2017) 8 SCC 237. Even in this citation Hon'ble Supreme Court discussed about Section 73 of the Specific Relief Act and observed that award of damages for reliance loss should not amount to windfall of a party who breached contract and also held that both expectation loss and reliance loss cannot be 46 Com.A.P.No.42/2021 claimed together. In the case on hand, admittedly the respondent claimed Rs.41 crores by way of damages. Rs.4,39,46,164/- towards outstanding invoices due. Another Rs.5,00,000/- towards compensation for wilful loss and damage in consequence of breach of CISP agreement. The Arbitral Tribunal in all awarded Rs.3,98,81,995/- towards outstanding invoices Rs.16,04,41,281/- towards damages for business loss and Rs.2,03,71,475/- towards cost. In the absence of specific formula available to calculate damages for business loss same cannot be considered as exorbitant even otherwise Tribunal has calculated the same relying upon the material available before it and hence even this decision will not help the petitioner so as to set aside the award in question.
(e) Fifth decision is State of Rajasthan vs. Ferro Concrete Construction Private Limited. This decision has already been considered and discussed by this court supra.
(f) Sixth decision is Arjun Panditrao vs. Kailash Kushanrao (2020) 7 SCC 1. This decision deals with Sec. 65(B) of the Evidence Act and how electronic documents can be produced in court and proved. Whereas parties litigated before Arbitral Tribunal and 47 Com.A.P.No.42/2021 not the court. The contention that Arbitral Tribunal is also a court cannot hold any water as long as arbitral proceedings are conducted in accordance with law of Arbitration and Conciliation Act 1996 which is a complete code by itself more particularly the provisions of Sec. 19 of the said Act discussed supra. Accordingly even the principles laid down by Hon'ble Supreme Court in this citation with regard to electronic record is not of any help to petitioner. Further, petitioner has not objected the documents subsequently produced inspite of providing an opportunity to him by arbitration tribunal.
(g) Seventh decision is Beebcon Engineers v. BHEL (2005) SCC Online Del 1321. This decision is in respect of tenders invited by BHEL for designing tanks for Thermal Power Station. In this citation at para-12 Hon'ble Supreme Court observed that once the arbitrator comes to the conclusion that there was complete lack of evidence then no amount should have been awarded as damages under this head and thereby set aside the finding of the arbitral with regard to claim No.4. In the case on hand, the Arbitral Tribunal relied upon the documents produced by the petitioner provided an opportunity to the respondent to submit his counter objections to the additional claim by way of 48 Com.A.P.No.42/2021 memo of calculation and after hearing both counsels on the same passed an award holding that the petitioner has committed breach of contract. The court should not interfere with an award merely because another view of facts and interpretation of contract exists or possible, when a Judge dealing with the petition u/s 34 of the Arbitration and Conciliation Act, 1996. Hence, this citation is also not helpful to petitioner herein.
(h) Eighth decision is judgment of our own Hon'ble High Court reported in ILR 2008 Kar 1304. In this citation Hon'ble Supreme Court considered the claim for damages and awarded Rs.25,000/- as just and reasonable amount towards damages. In para-13 of this judgment Hon'ble High Court extracted the meaning of nominal damages. In this case the damages of Rs.50,000/- with interest awarded by trial court has been questioned and Hon'ble High Court of Karnataka awarded compensation amount of Rs.25,000/- as damages. The learned counsel for the petitioner concedes that even in this citation there is no reference about any formula to calculate the nominal damages and same is nothing but a just and reasonable amount.
(i) Ninth citation is Delhi Development Authority case which has already been discussed supra. So also 49 Com.A.P.No.42/2021 National National Highway Authority of India and Dyna Technologies Pvt., Ltd. Further, Nune Shivayya vs. Maddu Ranganayakulu is also considered by this court in its discussion above.
20. On the other hand, the learned counsel for respondent relied upon following decisions:-
(1) Hon'ble Supreme Court reported in 1970 (2) SCC 861 State of Orissa vs. Kalinga Construction Company Pvt., Ltd. In this citation Hon'ble Supreme Court held that while considering suit to set aside the award revaluation of evidence is not permissible.
(2) Narayan Prasad Lohia Vs. N. Kunj Kumar Lohia reported in (2002) 3 SCC 572. In this decision Hon'ble Supreme Court observed that: -
"Where parties had appointed two arbitrators to resolve their differences, had participated in the arbitral proceedings and an award was then passed, held on facts, objections of respondents 1 and 2 that arbitration by two arbitrators was not permitted under S. 10 that therefore the award was unenforceable and not binding, would be deemed to have been waived - High Court erred in allowing their applications and setting aside the award."
In the case on hand, petitioner has questioned the majority award and the error apparent on the face of 50 Com.A.P.No.42/2021 the award has not been established by the petitioner herein. With these principles of Hon'ble Supreme Court and Hon'ble High Court both counsels concedes that while considering petition u/s 34 of the Arbitration and Conciliation Act this court cannot re appreciate the evidence and cannot interfere with an award merely because another view of facts and interpretation of contract is possible. Court has to examine whether the grounds urged are available under subsection 2 sub- section 2(a) of Sec. 34 of the Arbitration and Conciliation Act, 1996. Whereas my discussion supra establishes that there is absolutely no such grounds made out by the petitioner. It is not the case of petitioner that he was not present before Arbitral Tribunal. On the other hand, the order sheet of Arbitral Tribunal establishes that on each and every hearing date sufficient opportunity was provided to both parties herein and matter was considered at their convenience. Under such circumstances the petitioner had no impediment to place his evidence before Arbitral Tribunal. If respondent failed to lead oral evidence, that will not discharge the petitioner herein from his obligations. Petitioner having terminated the contract and having knowledge about the consequence of breach of contract or the termination of contract would have lead his evidence or summon the respondent 51 Com.A.P.No.42/2021 himself and examine him before the Arbitral Tribunal. Having participated in the arbitration proceedings throughout, the petitioner now cannot contend that, he has not been heard about amount of damages calculated by the Tribunal and the same is exorbitant. It is not a case of no evidence at all. The learned majority arbitrators have considered the documents on record given an opportunity to both the parties to file their affidavit of admission or denial after framing the issues as mentioned above. Even issues came to be framed after considering the draft issues furnished by both parties. After hearing both parties on merits an award in question has been passed. Since issues were framed by the Arbitral Tribunal well in advance based on the contentions of parties, petitioner was very much aware of the amount of damages considered by the Arbitral Tribunal. This court cannot reassess or re-appreciate the evidence or the documents placed before Arbitral Tribunal. An arbitration suit filed before this court being summary procedure in nature, in the absence of any ground in the sec.34(2) of the Arbitration and Conciliation Act, 1996, it is not possible to re-examine the facts to find out whether a different decision can be arrived at. All these circumstances only establishes that there is no latches on the part of the learned arbitrators nor the impugned award is contrary to the 52 Com.A.P.No.42/2021 public policy. Accordingly, I have answered Issue No.1 in the Negative.
21. Issue No.2 :- As I have stated the Arbitration and Conciliation Act itself is a self contained code and a complete answer for all matters relating to Arbitration. Proviso to Sec.34 (2-A) makes it mandatory 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. Accordingly and in view of my finding on Issue No.1, I proceed to pass the following Order.
ORDER
The Arbitration Petition filed by
the petitioner u/s 34 of the
Arbitration and Conciliation Act, 1996 seeking to set aside the Majority Award dated 2.11.2020 passed by the Majority members of the Arbitral Tribunal in Arbitration Case No. 2161/2018 is dismissed with costs.
(Dictated to the Judgment Writer, transcribed by him, verified and pronounced virtually on 24th day of June 2021).
(M.LATHAKUMARI) LXXXV Addl. City Civil & Sessions Judge, Bengaluru.
53
Com.A.P.No.42/2021
The Judgment is
pronounced virtually. The
operative portion of the
Judgment is as follows :-
ORDER
The Arbitration Petition
filed by the petitioner u/s 34 of
the Arbitration and
Conciliation Act, 1996 seeking
to set aside the Majority
Award dated 2.11.2020
passed by the Majority
members of the Arbitral
Tribunal in Arbitration Case
No.2161/2018 is dismissed
with costs.
LXXXV ACC & SJ, B'LURU.