Delhi District Court
Dsc Ltd vs Bajaj Electricals Limited on 26 July, 2024
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-01, SOUTH,
SAKET COURTS, DELHI
OMP (Comm) No. : 01/2023
CNR No. DLST01-000041-2023
In the matter of :-
DSC Limited
Through its Authorized Representative
Having its Registered Office at :
3rd Floor, E-9
South Extension - II,
New Delhi - 110049
............Petitioner
Vs.
Bajaj Electricals Limited
Through its Authorized Representative
Having its Registered Office at:
45/47, Veer Nariman Road
Mumbai, Maharashtra - 400001
Also At :-
5th Floor, DSM514-DSM521
DLF Tower, Shivaji Marg
New Delhi - 110015
..............Respondent
Date of institution of the petition : 02.01.2023
Date of final arguments : 05.07.2024 & 22.7.2024
Date of Order : 26.07.2024
ORDER
1. This order shall dispose off petition u/s 34 of Arbitration and Conciliation Act, filed by the petitioner seeking setting aside of impugned award dated 26.08.2022 passed by Ld. Arbitrator OMP (Comm) No. : 01/2023 1/20 and an application under section 34 (3) r/w section 34 (5) of Arbitration and Conciliation Act filed by respondent.
2. Facts giving rise to present petition are that petitioner company was awarded a contract by the National Highways Authority on Build, Operate and Transfer (BOT) basis in the State of Chattisgarh for (a) Raipur Expressway Operation, maintenance, rehabilitation and strengthning of existing 2-Lane Road and (b) Widenine of 4- Lane NH-6 (Aurang-Raipur Section) from 239 KM to 283 Km. Under the scope of the work of said contract, petitioner assigned to respondent/claimant the work pertaining to work order dated 04.12.2020 which was lateron amended vide Amended Work Order dated 26.05.2011. Additional Work Order dated 21.05.2012 was also assigned subsequently to the respondent by petitioner.
3. Dispute between the parties arose on account of respondent (who was claimant in arbitral proceedings) alleging some unpaid dues and making a claim for the same against the petitioner, which was objected by the petitioner. Arbitration proceedings were initiated. After conclusion of proceedings before the tribunal, award dated 26.08.2022 was passed by Ld. Arbitrator, which is under challenge before this court under section 34 of Arbitration and Conciliation Act.
4. With regard to application under section (34) (3) r/w section 34 (5) of Arbitration and Conciliation Act, it was submitted by Ld. Counsel for respondent that petition filed by petitioner seeking setting aside of arbitration award is barred by limitation since arbitral award is dated 26.8.2022 which as per own admission of the petitioner was received by it on the same date. The petition, therefore, could be filed only within three months of receipt of such OMP (Comm) No. : 01/2023 2/20 award, whereas the petition has been filed on 02.01.2023 which is beyond the permitted period of limitation.
5. On behalf of petitioner, it was submitted that the petition had been e-filed on e-filing portal on 26.11.2022 which was with the period of limitation. Registry of the court notified filing as 'pending for initial approval'. On 29.11.2022, following defects came to be marked by the Registry:
" Please annex CIS Format and Civil Checklist with Valuation of Suit and Caveat Information".
6. As submitted, the said defects were cured by 25.12.2022 and the petition was re-filed by the petitioner with the petition, then "pending acceptance" with the Registry and subsequent to scrutiny of the petition, same was accepted and formally registered on 02.01.2023. Ld. Counsel for petitioner referred to e-filing history of the present petition as downloaded from the Counsel's e-filing Account maintained at e-filing portal of Delhi District Courts, corroborating his submission with regard to the dates. Ld. Counsel for petitioner also referred to relevant clause of e-filing Rules which is reproduced herein :
" 3. Defective Pleading/Document: (a) Upon scrutiny, if any pleading
(s)/document (s) are found defective, the Deputy Registrar/Assistant Registrar, Incharge of the Filing Counters, shall specify the objection(s), a copy of which will be kept for the Court Record, and return for removal of objection (s) and re-filing within a time not exceeding 7 days at a time and 30 days in aggregate. On every re-filing caveat clearance shall be taken. In addition, the party must again serve the corrected copy upon the caveator (s) who had a valid caveat at the time of the first filing.
(b) If the pleading (s)/document (s) are not taken back for removal of objection(s) within 30 days time allowed under sub-Rule (a), it shall be listed before the court for appropriate orders.
The 30 days' period for the purpose of (a) and (b) above, shall commence from the date when the Registry raises the objections on the pleading/document filed.
(c) If the pleading (s)/document (s) are filed beyond the time allowed OMP (Comm) No. : 01/2023 3/20 under sub-Rule (a), it shall be accompanied with an application for condonation of delay in re-filing".
7. Ld. counsel for petitioner also placed reliance upon Sravanthi Infratech Private Limited Vs. Greens Power Equipment (China) Co. Ltd. 2016 SCC Online Del 5645, Jay Polychem (India) Ltd. & Ors. Vs. S.E. Investment Ltd. 2018 SCC Online Del 8848 and Director-cum-Secretary, Department of Social Welfare Vs. Sarvesh Security Services Pvt. Ltd. 2019 SCC Online Del 8503.
8. It is considered that after receipt of copy of award, petition had been filed within the period of limitation before the Registry and thereafter petition was re-filed after curing the defects within the permitted time period. Though Ld. Counsel for petitioner concedes that the petition was filed on the last day of the ending of period of limitation and also the defects were cured at the fag end of the permitted period of limitation, however, submitted that there were voluminous records and pleadings and much of the time was consumed in preparation of the petition and to cure the defects. Nevertheless, filing of the petition and refiling of the same was within the period of limitation permitted under the Arbitration and Conciliation Act as well as further to cure the defects by the e-filing rules. Therefore, filing of the petition is held to be within the period of limitation. Application under section (34) r/w section 34 (5) of Arbitration and Conciliation Act accordingly stands dismissed.
9. Petitioner has challenged the award passed by Ld. Arbitrator mainly with regard to the findings of Ld. Arbitrator on limitation and ignoring of the vital evidence. With regard to aspect of limitation, it was submitted that in terms of own case of claimant/respondent herein, last invoice was raised in June 2012, vide letters dated 3.1.2015, 10.8.2016 and 28.11.2016, Interest OMP (Comm) No. : 01/2023 4/20 was also claimed from the same date, besides the own submission of claimant/respondent that payment was pending since last 30 months i.e. since middle of 2012. However the arbitration had been invoked after three years i.e. on 28.11.2016.
10. Ld. Counsel for petitioner referred to cross examination of CW1 with regard to the abovementioned letters whereby CW1 had admitted that interest had been computed w.e.f. June 2012 onwards. It was submitted that Ld. Arbitrator did not assign any reason to state that the last invoice was dated 07.03.2013 which was allegedly submitted by claimant/respondent vide letter dated 03.01.2015, though in the said letter dated 03.01.2015, claimant/respondent itself had sought to compute interest w.e.f June 2012 onwards. It was submitted that even if this alleged last invoice dated 07.03.2013 was to be considered, invocation of arbitration was yet much after three years.
11. With regard to the alleged acknowledgment of liability by respondent vide letter dated 27.11.2014, it was submitted that Ld. Arbitrator itself rejected the claimant's contention with regard to acknowledgment of liability vide said letter, however, erroneously accepted the extension of period of limitation by placing reliance upon judgment Geo Miller and Company Private Limited Vs. Chairman, Rajasthan Vidyut Utpadan Nigam Limited. It was submitted that Geo Miller Judgment was with reference to filing of application u/s 11 of Arbitration and Conciliation Act and the limitation for filing the application in the said section ought not to be confused or conflated with the limitation period applicable to substantiative claims. Ld. Counsel for respondent made following submissions while relying upon following judgments:
OMP (Comm) No. : 01/2023 5/20Bharat Sanchar Nigam Ltd. and Ors. Vs. Nortel Networks India Pvt. Ltd. (2012) 5 SCC 738:
" Limitation for filing application under section 11 arises upon failure to make appointment of arbitrator within a period of 30 days from issuance of the notice invoking arbitation. The said period of limitation cannot be confused or conflated with the period of limitation applicable to the substantive claims made in the underlying commercial contract, the two are necessarily distinct".
" Citing reference to Geo Miller and owing to the vaccum in law to provide limitation under section 11 of A&C Act, 1996, the Apex court in the instant decision took note that courts have held limitation in the said case would be governed by Article 137 of the First Schedule to the Limitation Act, 1963.
Secunderabad Cantonment Board Vs. B. Ramachandraiah & Sons (2021) 5 SCC 705:
" Geo Miller lays down on the specific point as to when time begins to run for the purpose of filing an application under section 11 of Arbitration and Conciliation Act, 1996".
Enexio Power Cooling Solutions India Pvt. Ltd. Vs. Gita Power and Infrastructure Pvt. Ltd. and Ors. (2021) 6 MLJ 545 " Geo Miller judgment is in context of a request under section 11 of Arbitration and Conciliation Act, 1996 and a judgment must be seen to have decided exactly what it did and not the larger conspectus which it may deemed to have.
Only the period during which the parties were bona fide negotiating towards an amicable settlement at best, may be excluded for the purpose of computing the period of limitation for reference under section 11 of the Arbitration and Conciliation Act, 1996, and that too in cases where the entire negotiation history between the parties is specifically pleaded and placed on record.
It cannot be said that a special period of limitation has been carved out by the Apex Court in Geo Miller, in addition to what is already provided under the Limitation Act, 1963. The Geo Miller judgment cannot be read to have provided any more than what is already permissible in law".
Satyanarayan Rajaram Chinta & Ors. Vs. Marvel Realtors and Developers Ltd. and Ors. 2019 SCC Online Bom 2292:
" Claim of the party on merit being time barred cannot be confused from that of a section 11 of Arbitration and Conciliation Act, 1996 application being barred by limitation".OMP (Comm) No. : 01/2023 6/20
12. It was further submitted that even if Geo Miller Judgment was sought to be applied i.e. to exclude the period during which the parties were bonafidely negotiationg towards an amicable settlement for purposes of computing the period of limitation, the same would not come to the rescue of the claimant. At the outset, for the Doctrine of Breaking Point to be considered and applied, the entire negotiation history between the parties should be specifically pleaded and placed on record, whereas no such pleading is on record. Reliance was placed upon Enexio Power Cooling Solutions India Pvt. Ltd. Vs. Gita Power and Infrastructure Pvt. Ltd. and Ors. (2021) 6 MLJ 545.
13. It is further submitted that if the alleged letter dated 27.11.2014 was to be considered as the starting point of negotiations and claimant's alleged letter dated 03.01.2015 was to be considred as the breaking point of the negotiations, then the total period of negotiation, at best, would be 38 days. If these 38 days were to be execluded from the period between June 2012 (date of last invoice) to 28.11.2016 (date of invocation of Arbitration), even then the invocation is beyond the period of 3 years. Further, in para 19 of Affidavit of Evidence, it was stated by CW1 that petitioner would make payment which the claimant found subsequently to be an incorrect assurance. Ld. Arbitrator states that since the petitioner failed to make the payment, the claimant was compelled to send legal notice dated 20.09.2014, which as per Ld. Arbitrator was the breaking point. Therefore, as per the Ld. Arbitrator, for all practical purposes, the cause of action for filing the present claim arose on 20.09.2014, when the legal notice was sent by the claimant, and that the period of limitation is to be counted from 20.09.2014. Further para 19 of OMP (Comm) No. : 01/2023 7/20 Affidavit of Evidence of CW1 mentions no alleged period of negotiations between the parties, for it to be considered for purpose of exclusion from the period of limitation. The said para 19 is beyond pleading of the claimant itself and as such ought not to have been considered.
14. Reliance was placed upon Brij Prakash Gupta Vs. Ashwini Kumar 2020 SCC Online Del 1759 wherein it was observed that :
" 13. A conjoint reading of the above decisions shows that the legal position on affidavits in evidence being filed in lieu of oral examination-in- chid is as under:-
........................
3. Irrelevant statements cannot be made and the affidavit cannot travel beyond the pleadings".
15. It was further submitted by Ld. Counsel for petitioner that reference to alleged legal notice dated 20.09.2014 for purpose of limitation is perverse and patently illegal. It was not pleaded by by the claimant that alleged negotiations took place till issuance of legal notice dated 29.09.2014. Rather, the claimant in para 17 of its SOC merely stated that upon the failure of the petitioner herein to make payment, the claimant served the legal notice dated 20.09.2014. It is settled position of law that no fresh period of limitation would arise simply because letters and reminders are sent. Reliance was placed upon Satender Kumar Vs. Municipal Corporation of Delhi & Anr. (2010) 168 DLT 15, wherein it was observed that:
" 18. ...................
(v) No fresh period of limitation can arise simply because letters and reminders are written time and again, attempting to keep the claim alive, although the claim by virtue of Article 18 of the Limitation Act, has become clearly time barred" Therefore, the alleged legal notice 20.09.2014 cannot be taken to give rise to a fresh period of limitation".OMP (Comm) No. : 01/2023 8/20
16. Ld. Arbitrator noted that the last invoice was dated 07.03.2013 Ex. CW1/22 which was again submitted to the petitioner herein vide letter dated 03.01.2015 and referred to Article 15 which prescribes limitation period of three years when the period of credit expires for the prices of goods sold and delivered, to be paid after expiry of fixed period of credit. Ld. Arbitrator noted the submission of claimant that the last invoice was dated 07.03.2013 and the payment was due as per clause 10 of the agreement from 06.09.2013. Notice for appointment of arbitration was sent on 10.08.2016, therefore the claim was within period of limitation.
17. With regard to the acknowledgment of liability vide letter dated 27.11.2014, Ld. Arbitrator though noted that the respondent/petitioner had denied about receipt of notice dated 20.09.2014 as well as sending of reply dated 27.11.2014 and also the receipt of letter dated 03.01.2015, albeit, held the receipt of notice and issuance of reply, by the respondent/petitioner. The contention that the claimant had not filed original receipts and postal AD Cards was dealt with the observation that there was no reason to doubt the photocopy of AD Cards and postal receipts placed on record due to non filing of the original AD Cards and Postal Receipts . Contention of respondent that no Delivery Report or Tracking Report was placed on record did not find favour with Ld. Arbitrator. Nevertheless, the letter dated 27.11.2014 allegedly issued by petitioner was held not amounting to acknowledgment of liability by Ld. Arbitrator.
18. The date relied upon by Ld. Arbitrator was the raising of last invoice dated 07.03.2013. However, Ld. Atbitrator while placing reliance upon Geo Miller and Co. Pvt. Ltd. Vs. Chairman OMP (Comm) No. : 01/2023 9/20 Rajasthan Vidyut Utpadan Nigam Ltd. , preferred to accord the exemption in favour of claimant, as the time period when parties were in negotiations has to be excluded, as cause of action could not accrue during this period. Ld. Arbitrator noted, as was held in the judgment (supra), that the court or tribunal has to see what is the breaking point when parties would have abandoned thier efforts at ariving at a settlement and contemplated referral of their dispute for arbitration. This breaking point would be taken as the date on which the cause of action accrues. In commercial disputes, mere failure to pay by a party does not given rise to a cause of action. The cause of action for recovery of money only arises when claimant asserts its claim and respondent fails to respond to such a claim.
19. Based upon the above, Ld. Arbitrator opined that respondent did not provide C-Forms to the claimant despite service of email dated 5.9.2014 and 25.11.2014. Ld. Arbitrator further noted that petitioner herein with malafide intention denied service of notice dated 20.09.2014, letter dated 27.11.2014 and reply dated 03.01.2015 because it was fully aware that these communications prove the breaking point. It was further noted that :
"since the amount was not paid, legal notice was duly served on
20.09.2014 and thereafter letters dated 27.08.2014 and 30.10.2014 were written to NHAI, letter dated 30.10.2014 was responded by the petitioner herein vide letter dated 27.11.2014 and that letter was respondend by claimant vide letter dated 03.01.2015. These were all breaking points. The respondent was under legal obligation to provide C forms but same was not provided despite emails dated 05.09.2014 and 25.11.2014. So for all practical purposes the cause of action for filing of the present claim arose on 20.09.2014 when the legal notice was sent by the claimant to the respondent and it finally arose on 27.11.2014 when respondent stated that nothing is due and rather took the plea for the first time that material was supplied belatedly and full quantity was not supplied and lot of the material was defective. Prior to that, there was not a single communication that the work was not completed by the claimant or that the material supplied was OMP (Comm) No. : 01/2023 10/20 defective or full material was not supplied. In the letter dated 27.11.2014, the respondent asked the claimant to revisit its accounts with a view to find out whether the respondent is liable to make any payment. The period of imitation is to be counter from 20.09.2014. It is to be counted from 25.11.2014 regarding non supply of C-Forms was sent. The legal notice for invocation of arbitration was sent on 28.11.2016. The same was very much within the limitation".
20. In judgment Geo Miller (Supra), it was observed that:
"The period during which the parties were bona fidely negotiating towards an amicable settlement may be excluded from the purpose of computing the period of limitation for reference to arbitration under the 1996 Act. However, in such cases, the entire negotiation history between the parties must be specifically pleaded and placed on record. The court upon careful consideration of such history must find out what was the " breaking point" at which any reasonable party would have abandoned efforts at arriving at a settlement and contemplated referral of the dispute for arbitration.This ' breaking point' would then be treated as the date of which the cause of action arises, for the purpose of limitation. The threshold for determining when such such a point arises will be lower in the case of commercial disputes, where the party's primary interest is in securing the payment due to them, than in family disputes where it may be said that the parties have a greated stake in settling the dispute amicably, and therefore delaying formal adjudication of the claim".
21. However, in the instant matter as rightly submitted by Ld. Counsel for petitioner there was no specific pleading or evidence placed on record with regard to parties negotiations history. Letters dated 20.9.2014, 27.11.2014 and reply dated 03.01.2015 though have been disputed by the petitioner, nevertheless these are the letters based upon which Ld. Arbitrator returned findings that parties were in process of amicable settlement.
22. Vide notice dated 20.09.2014, respondent had called upon the payment of Rs. 1968800/- and also for C-Forms for the financial years 2011-2012 . It was stated that failing which the claimant shall have to resort to the legal proceedings.
23. Vide reply dated 27.11.2014, claimant was informed that it was raising false and frivolous dispute of alleged non payment. In the reply, it was stated that:
OMP (Comm) No. : 01/2023 11/20" It is pertinent to mention that material was supplied belatedly and full quantity was never supplied. Further, lot of the materials supplied by you was defective. Because of all this, we have suffered huge losses. It is further stated that the work was not executed properly. Taking all this into account, nothing is legally due and payable to you. As a matter of fact, if we start calculating the losses suffered by us because of non-fulfillment of the terms and conditions of the work order (s) by your company, huge amount would befound to be recoverable from your company. In view of our long business association, we are presently not raising any claim against you. Should however, your company keeps on raising any ralse and frivolous claim, we will be forced to initiate appropriate proceedings against your company for compensation against the losses suffered by our company.
3. We would, therefore, suggest that you may kindly reconsider your accounts with a view to finding out as to whether our company is laible to make any payment to your company in spite of your company having caused huge losses to our company in view of non-fulfillment of the terms and conditons of the agreement as enumerated in paragraph 2 supra".
24. Vide letter dated 3.1.2015 in response to reply dated 27.11.2014, claimant refuted the allegations of the respondent/petitioner herein and called upon, for release of due payment from submission of their last invoice of June 2012 to December 2014, besides seeking the differece amount accrued due to non issuanc of C-Forms.
25. None of these letteres refer to or lead to inference with regard to parties entering into negotiations towards an amicable settlement, threfore, there was no question of any breaking point at which any reasonable party would have abandoned efforts at ariving at a settlement and contemplated referral of the dispute for arbitration. At the cost of repetition, it may be noted that all the letters issued by claimant were merely for demand of the alleged outstanding dues. Though sending of the reply dated 27.11.2014 and receipt of alleged response to notice dated 20.9.2014 is disputed by the petitioner. Nevertheless reply was merely the denial of the petitioner to the claim of the claimant giving rise to the dispute. So much so, it was not even the assertion of the claimant that it was involved in negotiations with OMP (Comm) No. : 01/2023 12/20 the respondent/petitioner herein, preceeding the notice dated 28.11.2016 for invocation of arbitration. Despite the blunt refusal of the petitioner with regard to any liability towards the claimant vide alleged letter dated 27.11.2014 followed by issuance of another notice dated 03.01.2015, the claimant issued legal notice for invocation of arbitration only on 28.11.2016 i.e. after a gap of more than one and half years.
26. It is also well settled law that mere issuance of legal notice calling upon the other party to clear the outstanding dues does not given rise to fresh period of limitation. Considering the same, the cause of action which had accrrued in favour of claimant was at the most in the year 2013 i.e. on 07.03.2013, if not the date of last invoice of June 2012, in terms of own mention of the claimant in notice dated 20.09.2014. With calculation of period of limitation based upon accrual of cause of action dated 06.09.2013 in terms of own submission of Ld. Counsel for claimant before Ld. Arbitrator, after accord of the period of credit, notice for invocation of arbitration was sent only on 28.11.2016 which was beyond the expiry of period of limitation of three years.
27. As noted by Ld. Arbitrator, Claimant had averred that it had invoked arbitration vide letter dated 10.8.2016. Ld. Arbitrator further noted that perusal of letter dated 10.8.2016 shows that by way of this letter the claimant had not invoked the arbitration and had rather stated that if its alleged dues are not cleared, then it would seek to initiate legal proceedings which could be either by way of court proceedings or arbitration. Arbitration was invoked only vide letter dated 28.11.2016. By virtue of letter dated 28.11.2016, claimant invoked arbitration OMP (Comm) No. : 01/2023 13/20 and also nominated and mentioned the particulars of Arbitrator, and therefore, Ld. Arbitrator also noted that for all practical purposes, the arbitration was invoked not vide letter dated 10.8.2016 and rather it was invoked vide letter dated 28.11.2016.
28. Similarly claimant had called upon the petitioner to provide C-Forms for the financial year 2011-2012 vide alleged emails dated 5.9.2014 and 25.11.2014 and thereafter vide alleged notice dated 20.9.2014 and 3.1.2015. It was submitted by Ld. Counsel for petitioner that as per the alleged stateement filed alongwith SOC, the said alleged invoice concerning claim of C- Forms was dated 29.4.2012. On the similar analogy that the issuance of letters, reminders or the legal notice does not extend the period of limitation or give rise to fresh cause of action, the claim with regard to issuance of C-Forms was also beyond the period of limitation.
29. Ld. Arbitrator also noted that invocation of bank Guarantee in year 2019 gave the fresh cause of action. It was also noted by Ld. Arbitrator that admittedly no notice was given before invoking the bank guarantee nor any notice was given stating therein that work was not done according to the agreed quality, with further observation that the claimant was not required to file separate claim for invoices, claim for C-Forms or regarding invocation of bank guarantee.
30. Contention of Ld. Counsel for petitioner is sustainable that the invocation of bank guarantee would not come to the rescue of the claimant so as to bring the alleged claim for invoices including the claim towards non issuance of C-Forms within period of limitation as the invocation of arbitration and appointment of sole arbitrator did not concern the claimant's OMP (Comm) No. : 01/2023 14/20 claim towards the bank guarantee amount, all of which were much prior to the encashment of the Bank Guarantee in the year 2019. Therefore, grievances if any, as regards encashment of bank guarantee, could not be the subject matter of adjudication in the arbitral proceedings .
31. Ld. Counsel for respondend submitted that the appointment of Arbitrator was dated 07.12.2018 followed by another order for appointment of Arbitrator dated 3.5.2019. Statement of claim was filed on 17.06.2019 which included the claim of respondent pertaining to encashment of bank guarantee by the petitioner. Petitioner had encashed the bank guarantee on 26.4.2019. It was further submitted that the petitioner did not challenge the existence of cause of action in favour of respondent pertaining to the encahsment of bank guarantee before Ld. Arbitrator, therefore, there was fresh cause of action on 26.4.2019 to make the statement of claim after the encashment of bank guarantee by the petitioner.
32. In terms of record, though the respondent has included the claim pertaining to encashment of bank guarantee in the statement of claim, however as on date of issuance of notice i.e. 28.11.2016 invoking the arbitration clause, bank guarantee had not been encashed. Limitation period to file the claim had already expired prior to 28.11.2016. Apparently, encahsment of bank guarantee was not within the period of limitation entitling the respondent to consider the same as fresh cause of action to file the statement of claim pertaining to invoices for which petitioner had invoked the arbitration. This court finds strength in the submission of Ld. Counsel for petitioner that respondent could have invoked arbitration subsequent to encashment of bank OMP (Comm) No. : 01/2023 15/20 guarantee which could be considered different cause of action but cannot be included and considered to extend the already expired period of limitation.
33. Besides the above noted, Ld. Counsel for petitioner also raised objection with regard to vital evidence ignored by Ld. Arbitrator. It was submitted that claimant had relied upon multiple number of invoices all of which were not bearing seal and stamp of the petitioner herein, however, Ld. Arbitrator returned the findings that there was no practice that the invoices were to bear the seal and stamp of the petitioner which factum was not considered relevant at all. It was further submitted that the alleged invoices were at variance with the rates mentioned in the work orders. Besides that, the payment was required to be made on recept of the bills after approval/certified by Engineer- In-Charge. Invoices further were to be prepared on the basis of measurements and the payment was payable after ' Installation Testing and Commissioning of the Complete Highways System", besides upon issuance of 'Completion Certificate'. Petitioner has disputed receipt of many of the invoices which were not even bearing receiving of the petitioner and as admitted by CW1 these invoices were allegedly raised after receiving confirmation, however, the said confirmations were not placed on record, Certified measurements were not on record, proof of inspection and testing, completion certificate were also not on record. Ld. Arbitrator, nevertheless, accepted the claim of the claimant, based upon the issuance of notice by claimant which was not responded by petitioner and held that 'therefore, the contents of the said letter were deemed to be admitted'. The claimant is required to establish its own case irrespective of the reply having OMP (Comm) No. : 01/2023 16/20 not been sent by the petitioner as non response of the alleged legal notice ipso facto cannot be considered as proof of contents of the same. Reliance was placed upon Harish Mansukhani Vs. Ashok Jain RFA No. 4/2008 wherein it was noted that:
" 22. No doubt, not responding to a legal notice is a piece of evidence wherefrom an adverse inference can be drawn against the noticee. But, the said adverse inference is no more than presumptive evidence which by its very nature is weak evidence. Where the totality of the evidence weights in favour of the perios issuing the notice, non response to a notice by the noticee can be put in the scales to reassure the court that contemporaneously the noticee kept silent evidencing a kind of acquiescence. But, the quality of evidence led to prove the case positively and its probative value has always to be kept in mind and given primarcy.
23. A plaintiff has to prove his case and stand on his own legs........
24. The evidence led by the plaintiff is shaky. The variance between what the plaintiff pleaded and attempted to prove is a serious infirmity in the case of the plaintiff. Unfortunately, the learned Trial Judge has eschewed reference to the quality of the evidence led; the variance between pleading and proof; as also has ignored certain essential features of the evidence to which we have referred to in our decision, thereby rendering the imugned judgment and decree liable to be reversed".
34. It was submitted by Ld. Counsel for petitioner herein that the finding of Ld. Arbitrator is perverse that "there is no practice that the invoices have to bear the seal and stamp of the petitioner herein or that the factum of invoices not bearing the seal or stamp of the petitioner herein not being relevant at all". Observation of Ld. Arbitrator was quoted that " the respondent could have examined any witness to prove that the invoices were not received. Further that the respondent could have placed on record the invoices to show that all the invoices for which payment had been made were bearing the seal of the respondent". Contention of Ld. Counsel for petitioner herein is appreciable that onus to prove above noted was upon the claimant/respondent herein which had not been shifted upon the petitioner herein, therefore, there could not have been any adverse inference of non production of documents against the petitioner.
OMP (Comm) No. : 01/2023 17/2035. It was submitted that though Ld. Arbitrator noted that provisions of Evidence Act and CPC are not applicable to arbitral proceedings, however, the position of law that principles of Indian Evidence Act as also the Code of Civil Procedure alongwith principles of natural justice apply to arbitral proceedings and that an Arbitral Tribunal cannot consider unproved documents which are inadmissible in evidennce. Reliance was placed upon Bombay Slum Redevelopment Corporation Limited Vs. Samir Narain Bhojwani 2019 SCC Online Bom 1853, wherein it was observed that:
"172. Though, the arbitral tribunal is not bound by the provisions of the Evidence Act, Principles of Natural Justice applies even in the arbitral proceeding. The Learned arbitrator cannot consider an unproved documents, which is inadmissible in evidence. This Court in case of ONGC Limited after adverting to the judgment of Supreme Court in case of Bareilly Electricity Supply Co.. Ltd. Vs. The Workmen (1971) 2 SCC 617, Judgment of Supreme Court in case of Narbada Devi Gupta Vs. Birendra Kumar Jaiswal (2003) 8 SCC 745 and judgment of Division Bench of this court in case of Biwater Penstocks Ltd. Vs. Municipal Corporation of Gr. Bombay 2011 (3) Mh. L.J. 706 has held that though the arbitral tribunal is not bound by the Civil Procedure Code, 1908 and Indian Evidence Act, 1872, the arbitral tribunal is still bound by the principles of Indian Evidence Act, 1872 and Code of Civil Procedure, 1908 and also the principles of natural justice. The principles of law laid down by this court in case of ONGC Limited and the aforesaid three judgments referred to and relied upon by this court, squarely apply to the facts of this case. In my view, the learned arbitrator by reliying upon the unproved disputed documents has committed a gross violation of principles of natural justice and principles of Indian Evidence Act and thus the claim for damages awarded by the learned Arbitrator based on those uproved disputed documents deserves to be set aside on this ground also".
36. Ld. Counsel for respondent submitted that while deciding a petition or application for setting aside the award, the court is not required to review the merits of the dispute. The award shall not be set aside merely on the ground of an erroneous application of law or by re-appereciation of evidence.
OMP (Comm) No. : 01/2023 18/2037. Ld. Counsel for respondent placed reliance upon Steel Authority of India Vs. Gupta Brother Steel Tubes Ltd. Civil Appeal No. 5241 of 2002 wherein following was noted:
" 26. It is not necessary to multiply the references. Suffice it to say that the legal position that emerges from the decisions of this court can be summarised thus:
(i) In a case wheren an arbitrator travels beyond the contract, the award would be without jurisdiction and would amount to legal misconduct and because of which the award would become amenable for being set aside by a court.
(ii) An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by courts as such error is not an error on the face of the award.
(iii) If a specific question of law is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law does not make the award bad on its fact.
(iv) An award contrary to substantiative provision of law or against the terms of the contract would be patently illegal.
(v) Where the parties have deliberately specified the amount of compensation in express terms, the party who has suffered by such breach can only claim the sum specified in the contract and not in excess thereof. In other words, no award of compensation in case of breach of contract, if named or specified in the contract, could be awarded in excess thereof.
(vi) If the conclusion of the arbitrator is based on a possible view of the matter, the court should not interfere with the award.
(vii) It is not permissible to a court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings".
38. It is correct that Scope of jurisdiction under section 34 of the Arbitration Act is limited and is not open for appellate analysis. The court cannot sit in appeal while adjudicating a challenge to an Award. In terms of well settled law, the arbitral awards should not be interfered with, in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. The courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer OMP (Comm) No. : 01/2023 19/20 to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
39. Nevertheless, the claim of the claimant/respondent herein made before Ld. Arbitrator was barred by limitation as well as the petitioner has been able to establish on record that the vital evidence had been ignored by Ld. Arbitrator. The impugned award, therefore, suffers from patent illegality. Resultantly, the award being unintelligible cannot be sustained and is accordingly set aside. Present petition filed by petitioner is allowed. Parties are at liberty to take legal recourse available to them. File be consigned to record room.
Announced in the open (SAVITA RAO)
court on this 26th day DISTRICT JUDGE
of July 2024 (COMMERCIAL COURT)-01
(SOUTH) SAKET COURTS,DELHI
OMP (Comm) No. : 01/2023 20/20