Delhi District Court
Unison Hotels Limited vs Net4 Barter Private Limited on 9 September, 2025
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of the Case 2-5
4. Ground of Objection/Challenge 5-7
5. Reply of the Respondent 7
6. Arguments of the Petitioner 7-9
7. Arguments of Respondent 9-13
8. Appreciation of Arguments, Facts & Law 14-32
9. Decision 32
PULASTYA
PRAMACHALA
Digitally signed by
PULASTYA
PRAMACHALA
Date: 2025.09.09
15:38:52 +0530
OMP (COMM.) No.118/2019 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 32 Patiala House Court, New Delhi
OMP (COMM) No.118/2019
In the Matter of: -
UNISON HOTELS LIMITED
Earlier known as Unison Hotels Pvt. Ltd.
Plot No.2, Nelson Mandela Road,
Vasant Kunj, phase-II,
New Delhi-110070
(Through its Authorized Representative,
Rajesh Rustagi Group CFO & Company Secretary
Email id: [email protected]
...Petitioner
Versus
NET4 BARTER PRIVATE LIMITED
Having its office at
I-1805, ground Floor, Chitranjan Park,
New Delhi
....Respondent
Date of Institution : 06.07.2019
Arguments heard on : 01.09.2025
Decided on : 09.09.2025
Decision : Petition is Dismissed.
JUDGMENT
DESCRIPTION OF CASE
1. Petitioner i.e. Unison Hotels Limited, has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') for setting aside the impugned Award dated 11.04.2019 as passed by ld. Arbitrator. As stated in the petition, petitioner had received copy of the Award on 11.04.2019. Present petition was filed by the petitioner on 03.07.2019. Thus, the same is within limitation.
OMP (COMM.) No.118/2019 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.2 of 32 Patiala House Court, New Delhi
2. Brief facts of the case are that petitioner is a public limited company registered and incorporated under the Companies Act 1956 and is a leading business house engaged in business of Hotels, Restaurants and other connected public hospitality services. The respondent is also a private limited company incorporated under the Companies Act. An agreement dated 01.06.2002 was executed between the parties, whereby the petitioner herein agreed to offer rooms and other facilities through barter trade network of respondent against/in consideration of all barter purchases made by the petitioner. Respondent company served a notice dated 09.01.2006 upon petitioner, for recovery of the barter value and filed a civil suit for specific performance. The agreement had arbitration clause and on the basis of that clause, plaint in the said suit was rejected vide order dated 09.05.2007. Thereafter, arbitrator was appointed by Hon'ble Delhi High Court. Statement of claim was filed by the claimant/respondent herein before ld. Arbitrator. Petitioner also filed statement of defence with counter claim. However, ld. Arbitrator rejected counter claim of the petitioner, though he allowed one claim of the respondent, vide the impugned Award. Being aggrieved of the same, petitioner has filed petition in hand.
3. In the petition, petitioner has referred to the plea taken by respondent in the statement of claim. Plea of respondent were that as per agreement, all the transactions were to be on barter system between it and petitioner, without any exchange of money. The agreement was valid till 31.12.2003, which had been extended till 30.06.2004, vide petitioner's letter dated 29.07.2003. As per OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 32 Patiala House Court, New Delhi agreement the trade limit balance had to be utilized by either of the party before end of three months subsequent to the validity period of the said agreement, after which the balance was to lapse. It was further averred in the statement of claim that after entering the agreement, respondent (petitioner herein) started placing orders for purchase of goods through barter trade network w.e.f. July 2002 to 31.03.2004 and claimant opened a ledger account of the respondent wherein all purchase orders placed by the respondent including their value were debited in the ledger and all services/products offered by the respondent were credited. Ledger entries also indicated the transaction fees to which claimant was entitled by debiting the transaction fee due to crediting the fees so received. As per statement of claim, claimant averred that respondent initially confirmed and offered its rooms and services to the claimant's clients on a limited basis till February 2005 and thereby impliedly extended the validity of the agreement at least till February 2005. Further the petitioner knowingly evaded the confirmation and to offer Hotel rooms/other services, which it was contractually liable to give. As per Claimant, it faced such problems from the respondent since start of barter transaction and it supplied services worth value of Rs.34,73,662/- between July 2002 to June 2003, but in return received services worth Rs.4,01,244/-. Thereafter, claimant started requesting the respondent for extension of the agreement and it was got extended through extension letter till June 2004 with an understanding that in case rooms/services were denied, there would not be any outer limit date till this outstanding was not settled and OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 32 Patiala House Court, New Delhi the respondent would be obliged either to give rooms or compensate the claimant by way of case refund. As per claimant, at the close of the financial year 2004-05, there was an outstanding/debit of Rs.22,09,653.31 in the respondent's account towards the services and goods availed by it from the barter trade network of the claimant company and a barter value equivalent to a sum of Rs.22,09,653.21 was recoverable from the respondent.
4. Thereafter, petitioner herein filed counter claim denying the claim in toto on the grounds of claim being not maintainable being hopelessly time barred due to efflux of time; claim being filed without any cause of action. The case of the petitioner was that as per the agreement dated 01.06.2002, claimant (respondent herein) was to act only as a facilitator clearing house and third-party record keeper of trade transactions inter-se-members i.e. buyers and sellers, for buying and selling their respective goods and services on barter basis without exchange of money. In lieu of which, it was only entitled to the transaction fees @7.5% from the buyer members and admittedly nothing beyond that.
GROUNDS OF CHALLENGE
5. Aggrieved by the said Award, present objection petition has been filed by the petitioner mainly on following grounds: -
i. That ld. Arbitrator while passing the Award has misconducted himself and has exceeded his jurisdiction by ignoring the specific conditions of the contract and being guided by extraneous factors and conditions;
ii. That the impugned Award is illegal and untenable in law and shocks the conscience of the Court;
OMP (COMM.) No.118/2019 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.5 of 32 Patiala House Court, New Delhi
iii. That the impugned Award is based on surmises and
conjectures and is liable to be set aside;
iv. That ld. Arbitrator acted in a bias manner while passing the
impugned Award and did not act independently; v. That the impugned Award is erroneous as ld. Arbitrator has contradicted himself, whereby in view of the terms of the agreement wherein it was specifically stated that all claims would be settled through barter and further that the claimant was only a clearing house and third party record keeper, the claims on the basis of alleged balance trade units could not be subject to arbitration since the claims did not arise from the agreement nor the claims could be interpreted to be part of the agreement;
vi. That ld. Arbitrator failed to appreciate that the agreement clearly recorded that the respondent/claimant would not be responsible for any deficiency of service;
vii. That ld. Arbitrator while passing the Award failed to apply the provisions of Section 63 and 62 of the Indian Contract Act; viii. That ld. Arbitrator over looked the provisions of Section 73 of the Indian Contract Act and also Section 70 of the Indian Contract Act. The agreement was clear, and thus, any unwarranted interpretation of the clear terms reflects that the impugned Award is patently illegal and is liable to be set aside;
ix. That ld. Arbitrator erred in deciding the issue as to what is meant by arbitrable dispute and returned a finding unknown to law of Contract and Arbitration and Conciliation Act; x. That ld. Arbitrator erroneously held that the petitioner was liable to pay the amount towards negative barter units, when the agreement clearly provided for no payment in terms of money and all the units had to lapse after the expiry of the agreement or grace period of 90 days;
OMP (COMM.) No.118/2019 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.6 of 32 Patiala House Court, New Delhi
xi. That ld. Arbitrator being bound by the terms of the contract,
exceeded his jurisdiction by rewriting the entire contract; resulting in grave miscarriage of justice;
xii. That ld. Arbitrator erred in arriving at the conclusion that since the agreement allegedly continued till February 2005, therefore, the clause with respect to lapse of the barter units will not applicable and the same would be deemed to have been waived;
xiii. That ld. Arbitrator failed to take note of the evidence of CW-2 and CW-3 and wrongly applied in the facts of the case; xiv. That ld. Arbitrator wrongly returned a finding with regard to breach of agreement, when there was none.
xv. That the impugned Award was passed without appreciating the facts, law of the land, jurisdiction, arbitrability and scope of reference and impugned Award is vitiated since the same is patently illegal on the face of it; and xvi. That ld. Arbitrator completely misread the counter-claims and basis for the same, and rejected the claim of the petitioner. REPLY FILED BY THE RESPONDENT
6. Reply to the petition was not filed by the respondent.
ARGUMENTS OF THE PETITIONER
7. Ld. counsel for the petitioner argued on the lines of his petition. It was argued that ld. Arbitrator had exceeded the jurisdiction as per arbitration agreement. It was argued that ld. Arbitrator did not apply Section 70 and 73 of the Contract Act and failed to decide the issue of limitation. It was further argued that while deciding the claims of the respondent, ld. Arbitrator did not feel requirement of claim being part of contract, but to reject the counter claim of the petitioner, ld. Arbitrator stated that there was nothing in contract to OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 32 Patiala House Court, New Delhi support the claim.
8. It was argued that the respondent was entitled to 7.5% transaction fee and the agreement was valid till 31.12.2003, extendable upto 3 months subsequent to end of validity period. It was argued that the as per agreement, all the payments for purchases and sales made by petitioner had to be settled in barter and there was to be no conversion of refunds or claims in cash under any circumstances. It was argued that under no circumstances and under no clause of the agreement, it could be stated that the agreement was to continue till the Trade Barter Units reached a figure of Zero. The agreed terms clearly reflected that whether negative balance or positive balance, the same was either to be used within 90 days from the expiry of the agreement or otherwise the same had to lapse. It was argued that the issues raised under the statement of claim, as disputes, were not arbitrable and that the validity of agreement had never been extended by the petitioner and the reliance on the letter dated 29.07.203 purportedly issued by Mr. Sunil Vohra was bad as the signatures of that person as available in the records were completely different from one contained in the alleged letter dated 29.07.2003. Affidavit to this effect was already filed. It was argued that the claimant failed to discharge obligation of promoting business and during cross-examination, the witnesses of claimant admitted the contentions raised by the petitioner herein. Ld. Counsel for the petitioner relied upon following judgments: -
1. Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49;
OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 32 Patiala House Court, New Delhi
2. PSA SICAL Terminals Pvt. Ltd. vs. Board of Trustees of V.O Chidambranar Port Trust Tuticorin, 2021 SCC OnLine SC 508;
3. Associated Engineering co. vs. Government of Andhra Pradesh and Ors., (1991) 4 SCC 93;
4. Delta International Limited vs. Shyam Sundar Ganeriwalla and Ors., (1999) 4 SCC 545;
5. MSK Projects (I) (JV) Ltd. vs. State of Rajasthan and Ors., AIR 2011 SC 2979;
6. Kailash Nath Associates vs. Delhi Development Authority, (2015) 4 SCC 136;
7. Kanchan Udyog Limited vs. United Spirits Ltd., (2017) 8 SCC 237;
8. Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677;
9. Transmission Corporation of Andhra Pradesh Ltd. And Ors. vs. M/s GMR Vemagiri Power Generation Ltd. and another, VI (2018) SLT 539.
10. General Manager (Northern Railway) and Anr. vs. Sarvesh Chopra, 2002 (4) SCC 45;
11. Airports Authoritiy of India vs. Hotel Leelaventure Ltd., 2016 (4) ARBLR 360 (Delhi);
12. Sharma and Associates Contractors (P) Ltd. vs. Progressive Constructions Ltd., (2017) 5 SCC 743;
13. State of Rajasthan vs. Nav Bharat Construction Company, (2006) 1 SCC 86;
ARGUMENTS OF THE RESPONDENT
9. On the contrary, ld. counsel for the respondent argued that this Court cannot sit in appeal and there cannot be indulging into factual dispute. It was argued that ledger account was being maintained by OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 32 Patiala House Court, New Delhi respondent and petitioner also relied upon the same in its Statement of Defence. Petitioner made counter claim relying upon the same Statement of Account. It was argued that ld. Arbitrator dealt with objection of limitation in para 36 and 77 of the Award. Ld. Counsel further argued that the agreement dated 01.06.2002 was entered into between the parties and by way of aforesaid agreement the petitioner became member of the barter network of the respondent. It was argued that upon expiry of the agreement, the parties were obligated to settle their negative/positive barter balance. The claim of the respondent pertained to the sum equivalent to the negative barter balance lying in the account of the petitioner, which it had failed to settle. Negative barter balance meant that petitioner had purchased more than what it sold on barter basis and the petitioner was obligated to offer/sell its services to the respondent and other members of the network equal the goods/services purchased by the petitioner from the network member on barter basis. It was argued that the claim of the respondent pertained to the monetary value of the negative barter balance of the petitioner as mentioned in the statement of account maintained by the respondent. As per respondent, ld. Arbitrator in the light of respondent's evidences, held that petitioner herein breached its obligations under the contract by refusing to provide its hotel services, which entitled the respondent to make its claim to money, hence, the same was awarded in favour of the respondent herein. It was further argued that ld. Arbitrator remained within the realm of the agreement and took a reasonable and plausible view of the terms of the contract OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 32 Patiala House Court, New Delhi and appreciated the terms of the agreement between the parties before passing the award. In support of her submissions, ld. counsel relied upon the judgment in the case Sangamner Blag Sahakari Karkhana Limited vs. M/s. Krupp Industries Limited, ATR 2002 SC 2221, wherein Hon'ble Supreme Court held that the arbitration agreement recorded between the parties was of widest amplitude wherein the expression such as 'arising out of" or 'in respect of" or 'in connection with' or 'in relation to' or 'in consequence of" or 'concerning' or 'relating to' the contract were interpreted and it was held that it was the substance of the claim made before the arbitration which had to be seen. It was held that the Court would not construe the nature of claim by adopting too technical an approach or by indulging into hair-splitting, otherwise the whole purpose behind holding the arbitration proceedings as an alternate to civil court's forum would stand defeated.
10. Hon'ble Supreme Court in the case of Associate Builders vs. Delhi Development Authority (2015) 3 SCC 49, held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. That the said view was also upheld in another case by the Supreme Court in Ssangyong Eingineering & Construction Co. Ltd. v/s. National Highways Authority of india, 2019 SCC OnLine SC 677.
11. It was also argued that Hon'ble Supreme Court in case of Associate Builders vs. Delhi Development Authority (supra) also held that the OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 32 Patiala House Court, New Delhi interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the court is shocked or when illegality is not trivial but goes to the root of the matter. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral Award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
12. Reliance was also placed on the judgment in Parsa Kente Collieries Limited vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited, (2019) 7 SCC 236, wherein it was held that an Arbitral Tribunal must decide in accordance with the terms of the contract. If an arbitrator construes a term of the contract in a reasonable manner and if such interpretation is possible or plausible interpretation, award cannot be set aside.
13. It was submitted that in case of P.R. Shah, Shares and Stock Brokers Pvt. Ltd. vs. B.H.H. Securities Pvt. Ltd. & Ors., 2012 (3) Mh.L.J. 737, it was held by the Supreme Court that the Court does not sit in appeal over the award of an arbitral tribunal by reassessing or re- appreciating the evidence and the award can be challenged only under the grounds mentioned in section 34(2) of the Arbitration & Conciliation Act, 1996 and in the absence of any grounds under the said provision, it is not possible to re-examine the facts to find out whether a different decision can be arrived at.
14. Supreme Court in the case of MMTC Limited v/s. Vedanta Limited, (2019) 4 SCC 163 held that the Court does not sit in appeal over the OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 32 Patiala House Court, New Delhi arbitral award and may interfere on merits on limited ground provided under Section 34(2) (b)(ii) i.e. if the award is against the public policy of India. It is only if one of these conditions set out in Section 34(2) (b)(ii) is met that the Court may interfere with an arbitral award under the said provision but such interference does not entail a review on the merits of the dispute and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse or when the conscience of the Court is shocked or when the illegality is not trivial but goes to the root of the matte:. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts.
15. Hon'ble Supreme Court in the case of Mcdermott International Inc. vs. Burn Standard Co. Ltd. and others, (2006) 11 SCC 181, held that the intervention of the Court under the provisions of the Arbitration Act, 1996 is envisaged in few circumstances, like in case of fraud or bias by the arbitrator, violation of natural justice etc. The Court cannot correct the errors of the arbitrators. It can only quash the award leaving the parties free to begin arbitration again if it is desired. It was held that "patent illegality" must go to the root of the matter. Public policy violation indisputably should be so unfair and unreasonable as to shock conscience of the Court.
16. In view of the aforesaid, respondent prayed that the present petition be dismissed with exemplary costs.
17. I have examined the rival contentions and the record of arbitration proceedings.
OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 32 Patiala House Court, New Delhi APPRECIATION OF ARGUMENTS, FACTS & LAW
18. The scope of enquiry under section 34 is restricted to consideration whether any one of the grounds mentioned in section 34 exists for setting-aside the Award. Section 34 of the Act reads as under: -
"34. Application for setting aside arbitral Award- (1) Recourse to a court against an arbitral Award may be made only by an application for setting aside such Award in accordance with sub- section (2) and sub- section (3).
(2) An arbitral Award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 32 Patiala House Court, New Delhi arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence."
19. The general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the Award which makes it unsustainable, is not to be set aside even by the Court, even if the Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the Award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the Award will OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 32 Patiala House Court, New Delhi not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the Award passed by the Arbitrator.
20. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the Award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterised as perverse. It was held that a finding based on no evidence at all or an Award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
21. Now coming to the case in hand, it is well evident on perusal of Award in question that ld. Arbitrator had framed several issues on the basis of rival contentions and he returned findings to all of those issues. In order to appreciate the contentions of the petitioner, it is appropriate to refer to those terms of the agreement, which have been heavily relied upon by the petitioner.
OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 32 Patiala House Court, New Delhi
22. It is mentioned in the agreement that: -
"**** all payments for purchases and sales made by the user from/to clients in the N4B Barter trade network would be on barter i.e. in kind and there would be no conversion of refunds or claims made in cash, under any circumstances (all debits and credits of either party will be offset in kind only) **** the trade units balance of the user, at the validity period, i.e., either positive-credit balance (where sales made by the user exceeds purchases) or negative-debit balance (where purchases made by the user exceeds sales) shall be utilized by the either party before the end of the three months subsequent to the end of the validity period after which the balances would lapse. **** Net4barter would act solely as clearing house & third party record keeper of trade transaction among its clients in the network. **** The agreement is valid till 31st December, 2003. **** N4B would be entitled to a 7.50% transaction fee, assessed on the value of purchases (net of applicable taxes) made by the user, this would be payable by cheque/bank draft only."
23. Ld. Arbitrator had framed first two issues in following terms: -
a) Whether the Claimant's claim is arbitrable or not? (OPP)
b) Whether the claim is not maintainable in view of preliminary objections in paras no. 1, 2 & 3 as contained in the reply/written-
statement of the respondent?
24. Petitioner herein took following plea in paras 1, 2 & 3 of the Statement of Defence: -
1) That the claims of the claimant as framed in the present form are not maintainable and tenable in the eyes of law because of the fact that those are hopelessly time barred and beyond the scope of the contract and agreement dt. 01.06.2002 signed OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 32 Patiala House Court, New Delhi between the parties, which admittedly lapsed on 31.12.2003.
Hence, the claims are liable to be dismissed with exemplary cost on this ground alone.
2) That the contract is solely and wholly on the basis of Barter that is in kinds and there would be no conversion or refunds or claims made in cash under any circumstances as specifically and categorically agreed between the parties while entering into the said contract, which was admittedly valid till 31.12.2003. Hence, the claims of amounts by the claimant are not maintainable at all and liable to be rejected.
3) That in light of the specific agreement in the said contract with regard to trade units balances of the users whether positive or negative shall be utilized by the members of the claimant before the end of three months period of the contract after which the balance should lapse. Hence by any stretch of imagination, no claims on whatsoever account it may be, is maintainable against any of the users after lapse of the said grace three months period after validity of the contract period and thus the alleged claims of the claimant are not maintainable and therefore liable to be dismissed with exemplary cost on this ground also.
25. The findings given by ld. Arbitrator on afore-said first two issues did not mention anything about the limitation, which led the petitioner to argue that Award is bad for such omission. However, if I look into the aforesaid pleading of the petitioner, which was filed OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 32 Patiala House Court, New Delhi by petitioner before ld. Arbitrator, I find that the pleading is completely silent in respect of any factual matrix or basis to claim that claims of the respondent were time barred. It is half sentence pleading in para 1 of the preliminary objections, which has been relied upon by the petitioner. Apparently, such plea was taken in the form of giving a decision, rather than explaining the basis behind such plea. In the initial part of the pleadings, petitioner had taken similar kind of plea in different manner. Petitioner pleaded that "the claimant filed the suit bearing CS (OS) No. 2362/2006 for specific performance and recovery instead of invoking the arbitration clause as there was no arbitrable disputes between the parties at the end of the expiry of the limitation period on 31.12.2006". Petitioner also pleaded that "It is not out of place to mention that the legal notice dated 06.04.2007 sent for appointment of an arbitrator was beyond the period of limitations and that too was pre matured as***". These pleadings were not in respect of claims being time barred, hence could not be of any significance, for deciding the aspect of claims being time barred. Petitioner has failed to show as to on what basis such preliminary objection was taken before ld. Arbitrator. In such circumstances, naturally there could not be anything for ld. Arbitrator also to discuss on the point of limitation. Hence, I do not find any merit in such objection of the petitioner.
26. Petitioner has very strongly pleaded that there was nothing in the agreement for any payment in cash because whole system was based on barter. Same stand was taken by petitioner before ld. Arbitrator repeatedly. It is worth to refer to observations and OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 32 Patiala House Court, New Delhi findings given by ld. Arbitrator, while dealing with such plea of the petitioner. Relevant part from his findings is as follows: -
"36. Looking to the facts and circumstances of this case, where the rights of the floater of this barter scheme and also of the members have been restricted to limited areas, a serious question would pop up as to in a situation where one or more members after termination/expiration of the agreement, failed to meet the call and demands of the members holding positive barter balances, then, where these asking members will go if somehow the exiting member manages to let a period of 90 days to slip away to the disadvantages of the positive barter unit holder/s. I feel this cannot be and this would never be treated to be such an intent of this barter agreement."
27. The last line of afore-said observations of ld. Arbitrator would show that he had actually been looking into intent behind the agreement between the parties, rather than creating new terms of contract between the parties. In the agreement, there is clause to mention that no cash payment was contemplated therein. However, it has to be appreciated that such clause was there, to define the kind of transactions between the members of the barter system. The agreement otherwise does not mention any condition/term in explicit manner, to deal with situation involving deliberate inaction on the part of any member/user to provide the services/goods against demand raised by fellow user through the respondent. However, apparently it can never be objective of any law to let breach of contract go without any remedy. So, the intent behind the agreement had to be ascertained keeping in view the kind of arrangements entered into by the parties, including petitioner herein. In such situation, the interpretation made and intent behind contract OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 32 Patiala House Court, New Delhi as inferred by ld. Arbitrator, cannot be taken as going against the conditions of the contract between the parties. Thus, argument of petitioner that ld. Arbitrator acted against the terms of the contract or that he created new terms of contract, are not based on correct appreciation of Award in question.
28. Petitioner has also raised argument that to allow claim of respondent, ld. Arbitrator went beyond the contract and he did not look for any enabling clause in the agreement. But, while dismissing the counter claim of the petitioner, ld. Arbitrator cited the reason as absence of any clause in the contract. Ld. Counsel for petitioner alleged that such approach of ld. Arbitrator shows bias on his part. To appreciate such arguments, I shall again refer to relevant part of the observations made by ld. Arbitrator, which are as follows: -
"If some asking member with a positive unit balance is made to wait under guise of promises then on the last day of expiry, he is told that his positive unit balance has lapsed, then, a serious thought would want to know as to what should, under the circumstances, a victim of this strange phenomena would do. The answer here would be, as was contended by the claimant's ld. cl. that he would find his remedy and relief in demanding money straight or through process of law. Now, would arise another question as to who can take the matter to the legal threshold- here, obviously, in these circumstances, certainly not remaining normal, the organiser of the barter group would be under a liability to answer the asking members and, compensate him, and at the same time, it would be his right to legally pursue the recovery from the defaulting members under the applicable terms of the agreement/arbitration clause.******* It would now become a serious query as to where from and why this dispute has cracked in? The answer has to be- it's a child of this agreement and nothing else.*******Next part of this OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.21 of 32 Patiala House Court, New Delhi arbitration clause-"or in relation thereto" again vividly makes the present dispute fall in the ambit of the arbitration clause, and in simple words, we can strongly say that the current dispute is fully covered under the arbitration clause. Regarding maintainability of the claim, we will have to view the facts that transactions entertained or availed by the respondent upto nearly end of Feb. 2005, continued and thus, the agreement clause about lapse of positive barter units would cease to have any effects on the agreement- as any forfeiture right, if at all available with the respondent- stood waived and gave new lease of life to the claimants right to ask for the value of negative barter units which stood due against the respondent. I may add here that alleged letter Ex. CW1/4 for extension of time is just being overlooked and ignored. In the light of the claimant's evidence through CW-2 & CW-3 and documents Ex. CW1/6 to CW1/14, we do see that respondent was unwilling to provide hotel facilities/services to the claiming members of the barter group and thus, it entitles the claimant to ask the respondent to pay for the negative barter balance standing against it."
29. Above-mentioned observations show that ld. Arbitrator on the basis of evidence on the record, was convinced that petitioner herein had deliberately not provided services against demand made by other users. Thus, it was a case of breach of contractual obligations on the part of petitioner. This court is not supposed to make reappraisal of evidence, to return a factual finding regarding deliberate omissions on the part of petitioner. Thus, right of the respondent herein, was recognised on the basis of interpretation of the intent behind the contract and on the basis of contractual obligations breached by the petitioner.
30. On the other hand, while rejecting counter claim of the petitioner, ld. Arbitrator mentioned that there was no clause in the agreement, OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.22 of 32 Patiala House Court, New Delhi which required the respondent to promote the brand or business of the petitioner. It is worth to mention here that petitioner based his counter claim to seek return of Rs. 8,96,246/-, which according to petitioner, was value of services provided after expiry of the agreement as a gesture of goodwill. It is also worth to mention that for making this claim, petitioner relied upon the statement of account as filed by respondent. Thus, on one hand petitioner had been taking stand that under no circumstances, any cash payment could be contemplated under the contract between the parties. While on the other hand, petitioner itself demanded return of value of services provided after 31.03.2004 in cash. Ld. Arbitrator rightly observed in the Award that such claim made by petitioner itself supported the claim of respondent to seek value of negative barter units in cash. At the same time, I am also in agreement with the reasoning given by ld. Arbitrator to distinguish between basis of right to claim, as made by petitioner and respondent. Right of respondent was based on breach of the agreement containing the arbitration clause. However, it was petitioner, who sought to read a new clause (without there being any such clause in the agreement) in the contract to allege that respondent did not promote his business and to allege that respondent was liable for loss to the petitioner. Apparently, there was no such obligation undertaken by the respondent in the contract, and hence, ld. Arbitrator rightly rejected claim of petitioner.
31. Thus, the reasons given by ld. Arbitrator in the Award, are not of such nature, which can be termed as completely perverse or to shake OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.23 of 32 Patiala House Court, New Delhi the conscience of the court. Court is not expected to go deep into validity of reasoning given by Arbitrator. In the case of OPG Power Generation Private Limited v. ENEXIO Power Cooling Solutions India Private Limited and Anr., (2025) 2 SCC 417, while dealing with scope to interfere on the basis of reasoning and interpretation of terms of contract, Hon'ble Supreme Court observed as under: -
"80. We find ourselves in agreement with the view taken in Dyna Technologes, as extracted above. Therefore, in our view, for the purposes of addressing an application to set aside an arbitral award on the ground of improper or inadequate reasons, or lack of reasons, awards can broadly be placed in three categories:
(1) where no reasons are recorded, or the reasons recorded are unintelligible;
(2) where reasons are improper, that is, they reveal a flaw in the decision-making process; and (3) where reasons appear inadequate.
81. Awards falling in Category (1) are vulnerable as they would be in conflict with the provisions of Section 31(3) of the 1996 Act. Therefore, such awards are liable to be set aside under Section 34, unless:
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under Section
30.
82. Awards falling in Category (2) are amenable to a challenge on ground of impropriety or perversity, strictly in accordance with the grounds set out in Section 34 of the 1996 Act.
83. Awards falling in Category (3) require to be dealt with care. In a challenge to such award, before taking a decision the Court must take into consideration the nature of the issues arising between the parties in the arbitral proceedings and the degree of reasoning required to address them. The Court must thereafter carefully peruse the award, and the documents referred to therein. If reasons OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.24 of 32 Patiala House Court, New Delhi are intelligible and adequate on a fair reading of the award and, in appropriate cases, implicit in the documents referred to therein, the award is not to be set aside for inadequacy of reasons. However, if gaps are such that they render the reasoning in support of the award unintelligible, or lacking, the Court exercising power under Section 34 may set aside the award. Scope of interference with the interpretation/construction of a contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with the terms of the contract. In a case where an Arbitral Tribunal passes an award against the terms of the contract, the award would be patently illegal. However, an arbitral Tribunal has jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties including correspondences exchanged, circumstances of the case and pleadings of the parties. If the conclusion of the arbitrator is based on a possible view of the matter, the Court should not intefere. But where, on a full reading of the contract, the view of the Arbitral Tribunal on the terms of a contract is not a possible view, the award would be considered perverse and as such amenable to interference. Whether unexpressed term can be read into a contract as an implied condition
85. Ordinarily, terms of the contract are to be understood in the way the parties wanted and intended them to be. In agreements of arbitration, where party autonomy is the grund norm, how the parties worked out the agreement, is one of the indicators to decipher the intention, apart from the plain or grammatical meaning of the expressions used.
86. However, reading an unexpressed term in an agreement would be justified on the basis that such a term was always and obviously intended by the parties thereto. An unexpressed term can be implied if, and only if, the court finds that the parties must have intended that term to form part of their contract. It is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.25 of 32 Patiala House Court, New Delhi to them. Rather, it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, although tacit, forms part of the contract.
87. But before an implied condition, not expressly found in the contract, is read into a contract, by invoking the business efficacy doctrine, it must satisfy the following five conditions:
(a) it must be reasonable and equitable;
(b) it must be necessary to give business efficacy to the contract, that is, a term will not be implied if the contract is effective without it;
(c) it must be obvious that "it goes without saying";
(d) it must be capable of clear expression;
(e) it must not contradict any terms of the contract."
32. In the case of Ssangyong Engineering and Construction Company Limited (supra), Supreme Court dealt with law after amendment of Arbitration Act in 2015 and observed as follows: -
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders, i.e., the fundamental policy of Indian law would be relegated to the "Renusagar"
understanding of this expression. This would necessarily mean that the Western Geco expansion has been done away with. In short, Western Geco, as explained in paras 28 and 29 of Associate Builders, would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders.
37. Insofar as domestic awards made in India are concerned, an OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.26 of 32 Patiala House Court, New Delhi additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A)."
33. In the present case, I do not find any ground to raise fingers over the reasoning as well as interpretation of intent behind the contract, as given by ld. Arbitrator. The given interpretation of intent behind the OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.27 of 32 Patiala House Court, New Delhi contract is very much a plausible interpretation. Any other interpretation could lead to unjust enrichment by a member, giving him liberty to deliberately skip his part of obligation to provide the services in return to services availed by him, under guise of time bound use of barter units. That certainly could not have been intended by the parties while entering into the agreement in question. The act of petitioner to provide services up to February, 2005, is in fact indicative of acknowledgment on the part of petitioner of his obligation to provide services in return to such demand made earlier but not entertained by it. The plea of petitioner of providing such services subsequently just as a gesture of goodwill, is nothing but a moonshine stand.
34. The judgments cited by both the parties subscribe to same view in respect of guiding legal principles for interference with an arbitral award. After amendment in the Arbitration Act in the year 2015, the scope of interference is more specified in law, which was summed up by Hon'ble Delhi High Court also in the case of National Highway Authority of India v. Unitech-NCC (JV), 2025 SCC OnLine Del 4280, in the following manner: -
"12. I proceed, therefore, to distil some of the relevant principles that emerge from the decisions cited supra.
13. The principles that emerge From the decisions cited earlier, the following principles emerge:
(i) An arbitral award cannot be interfered with on grounds not envisaged by Section 34(2) or (3) of the 1996 Act.
(ii) Section 34 jurisdiction is not appellate. Interference with arbitral awards is generally proscribed, and is to be limited to rare OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.28 of 32 Patiala House Court, New Delhi and exceptional cases.
(iii) Interference on the ground that another, more appropriate and perhaps better, view, different from that adopted by the arbitrator, is possible, is impermissible.
(iv) There can be no interference with factual findings of an arbitral tribunal, unless they are perverse. A possible view by the arbitrator, on the facts, has to be respected. The arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon.
(v) "Perversity" exists where-
(a) the arbitral tribunal ignores or excludes relevant material, or
(b) the arbitral tribunal takes into consideration irrelevant material, or
(c) the finding is so outrageously in defiance of logic as to suffer from the vice of irrationality.
(vi) If there is no evidence, or the evidence is thoroughly unreliable in the sense that no reasonable person would act on it, there is perversity. Where there is some acceptable evidence on record, on which the arbitral tribunal relies, the conclusion would not be perverse.
(vii)The Section 34 Court cannot look into the merits of the dispute.
(viii) An award is in conflict with the public policy of India if it:
(a) is patently violative of a statutory provision, or
(b) reflects an approach by the arbitral tribunal which is not judicial, or
(c) has been passed in violation of the principles of natural justice, or
(d) is patently illegal, which would include a case in which
(i) the award is in patent contravention of applicable substantive law, or
(ii) the award patently breaches the 1996 Act, or OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.29 of 32 Patiala House Court, New Delhi
(iii) the award militates against the interests of the nation, or
(iv) the award is shocking to the judicial conscience, or
(v) the award ignores the specific terms of the contract, which would not include a case of mere erroneous contractual interpretation, unless the error of interpretation was fundamental, as in Ssangyong Engineering, which resulted in the award being contrary to the "most basic notions of justice", which shocked the judicial conscience, in which the arbitral tribunal substituted a clause in the contract with another.
(ix) The Court cannot interfere with an arbitral award on the ground that it does not do justice, in the opinion of the Court, as that would require examination of the merits of the dispute, which is proscribed.
(x) Infraction of fundamental policy of Indian law includes a law meant to serve public interest or public good. Mere infraction of the municipal laws of India does not render the award violative of the fundamental policy of Indian law.
(xi) An arbitral award infracts the fundamental policy of Indian law if it contravenes all or any of the fundamental principles which provide a basis for administration of justice and enforcement of law in the country. This would include, for example,
(a) violation of the principles of natural justice,
(b) disregarding orders of precedentially superior Courts, or their binding effect, or
(c) violating laws linked to public good or public interest.
(xii) "Justice" is nothing more or less than exact conformity to some obligatory law.
(xiii) "Morality" includes agreements which cannot be enforced given the prevailing mores of the day. That said, an arbitral award can be set aside on the ground that it is contrary to the most basic concepts of morality only if it shocks the judicial conscience of the Court.
OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.30 of 32 Patiala House Court, New Delhi
(xiv) An unreasoned award is patently illegal.
In the matter of interpretation of contractual covenants by the arbitral tribunal, the following principles apply:
(a) An interpretation which is completely unacceptable, in that it is one which no fair-minded or reasonable person would take, merits interference. If the arbitrator adopts a view which is not a possible view, it merits interference. An impossible view is one which no reasonable body of persons could possibly have taken.
(b) The arbitral tribunal, being a creature of the contract, cannot travel beyond it.
(c) An arbitral tribunal cannot rewrite the contract, or substitute one clause with another.
(d) An arbitral tribunal cannot foist, on a party, a covenant which is not to be found in the contract and is not binding on it.
(e) An arbitral tribunal cannot proceed ex debito justitiae, de hors the contract.
(f) The arbitral tribunal must also take into account the usages of trade applicable to the transaction, while interpreting the contract.
(g) An arbitrator has the jurisdiction to interpret a contract having regards to its terms and conditions, conduct of the parties including correspondences exchanged, circumstances of the case, the manner in which the parties worked out the contract, and pleadings of the parties. Thus viewed, if the interpretation accorded by the arbitrator to the contract is based on a possible view, the Court would not interfere.
(h) An unexpressed term can also be read into an agreement if such a term was always and obviously intended by the parties thereto. It must be a term which goes without saying, which is necessary to give business efficacy to the contract and which, although tacit, forms part of the contract. It must, however,
(a) be just and equitable,
(b) be necessary to give business efficacy to the contract, in that, if the contract is effective without it, the term will not be implied, OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.31 of 32 Patiala House Court, New Delhi
(c) be obvious, in that it "goes without saying",
(d) be capable of clear expression, and
(e) not contradict any term of the contract."
DECISION
35. On complete reading of the Award in question and after examining the grounds raised by petitioner to challenge this Award on the parameters of above-mentioned legal principles and in view of observations made herein-above, I do not find any ground to interfere with the Award in question. Hence, petition is dismissed. File be consigned to Record Room after due compliance.
Digitally signed by PULASTYA PRAMACHALAPULASTYA PRAMACHALA Date:
2025.09.09 15:39:00 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, th 9 Day of September, 2025 Patiala House Court, New Delhi OMP (COMM.) No.118/2019 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.32 of 32 Patiala House Court, New Delhi