Delhi District Court
Ms P. Laxmi vs Ms Jubilant Foodworks Ltd (Formely ... on 12 August, 2024
IN THE COURT OF Ms. NIRJA BHATIA
DISTRICT JUDGE (COMM. COURT-07) (DIGITAL),
SOUTH-EAST DISTRICT, SAKET COURT, NEW DELHI.
OMP (Comm) 31/2022
1. P. Lakshmi
W/o Mr. P. Venugopal Rao
R/o 8-1-329/1, Flat No. 602,
Violet Block, My Homes Rainbow
Apartments, Tolichowki, Hyderabad.
2. Ms. P. Madhulika
R/o 8-1-329/1, Flat No. 602,
Violet Block, My Homes Rainbow
Apartments, Tolichowki, Hyderabad.
3. Mr. P. Sandeep
S/o Mr. P. Venugopal Rao
R/o 8-1-329/1, Flat No. 602,
Violet Block, My Homes Rainbow
Apartments, Tolichowki, Hyderabad.
..... Petitioners
Vs.
1. M/s Jubilant Foodworks Ltd.
(formerly Domino's Pizza India Ltd.)
Having its registered office at
Plot No. 1A, Sector-16-A, Noida
and its Head Office at:
Logix Techno Park, 5th Floor,
Tower-D, Sector 127, Noida.
2. Ms. G. S. Jyothi
W/o Dr. G. M. Ravi,
R/o 8-1-329/1, Flat No. 602,
Violet Block, My Homes Rainbow
Apartments, Tolichowki, Hyderabad.
Digitally
..... Respondents
signed by
NIRJA
NIRJA BHATIA
BHATIA Date:
Date of Institution: 14.07.2022
Arguments concluded on: 25.07.2024
2024.08.12
16:32:47
+0530
Date of Judgment: 12.08.2024
P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 1 of 34
ORDER
I am called upon to decide the objection to award dated 30.11.2019 filed under Order 34 of Arbitration and Conciliation Act (hereinafter to be referred as "the Act").
2. Adverting to petitioner's assertions of perversity in award, it shall be useful to peruse the facts generating the reference.
3. Petitioners/ objectors were lessor of premises i.e. ground floor, shop No. 3, 4 and 5, situated at 8-1-329/1, My Homes Rainbow Apartments, Survey No. 15(P), Orange Block, Tolichowk, Shakipet Village, Hyderabad. The above shops with shop No. 2 was leased to respondent No. 1 vide registered lease deed dated 16.09.2009.
4. It is detailed that respondent No. 1 ( M/s Jubilant Foodworks Limited) approached the petitioners through an agency called 'Knight Frank India Pvt. Ltd' for letting of properties on lease for a period of 15 years.
5. The petitioner informed the respondent that the property was encumbered against a mortgage with Syndicate Bank . Despite the same, the respondent agreed to take the property on lease whereafter the premises were demised in its favour at initial monthly rent of Rs. 75,000/- from 09.11.2009 to 24.09.2012. However, parties entered in a supplementary lease deed on 11.02.2010 through which rent was reduced to Rs. 51,250/- with a provision for escalation @ 15% every three years as per the new agreement.
NIRJA BHATIA 6. The respondent took over the property to run their outlet Digitally signed by NIRJA of 'Domino's' having their registered and corporate office at BHATIA Noida.
Date: 2024.08.12 16:32:54 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 2 of 34
7. The scenario was turned on 05.07.2012 when officials of Syndicate Bank came to the property which was in possession of respondent No. 1 under lease and respondent No. 1 was handed over a letter of possession suggesting that petitioners had made default on which account the bank was attaching/ taking over the property, which was under mortgage.
8. Petitioners claim that respondent No. 1 without informing the petitioners "vacated" the property under lease. They also sent a notice dated 10.09.2012 asking the petitioner for compensation of losses suffered due to breach of terms and conditions. The aforementioned legal notice was followed up with other legal notices dated 20.03.2014 and 30.12.2014 and were replied by legal notice dated 10.09.2012 of petitioner.
9. Petitioners allege that the respondent No. 1 "Vacated" the premises and "terminated" the lease whereupon the respondent No. 1 must have invoked the arbitration under Section 11 of the Act before 04.07.2015 as it vacated the premises on 05.07.2012 and the notice of such invocation of arbitration must have been served upon the petitioner on or before 04.07.2015 i.e. within three years of occurrence of cause of action which must be deemed to have accrued on 05.07.2012 and since respondent No. 1 invoked arbitration on 08.09.2015, the claim agitated is barred by limitation.
10. Respondent No. 1 filed a petition before the Hon'ble High Court under Section 11(6) of the Act whereupon Sole Arbitrator NIRJA was appointed and respondent filed the statement of claim which BHATIA was delayed.
Digitally signed by NIRJABHATIA 11. Petitioners claim that they filed their statement of defence Date: 2024.08.12 16:33:11 +0530 alongwith annexures and Ld. Arbitral Tribunal was pleased to P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 3 of 34 frame issues on 07.05.2019, whereupon parties were examined and upon their addressing final arguments on 30.11.2019, the Ld. Sole Arbitrator allowed the claim petition and directed the petitioners to pay Rs. 34,06,787/- on account of loss towards fixtures and fittings, Rs. 82,68,877/- towards expenses for relocation of restaurant, Rs. 15,76,184/- towards security deposit and Rs. 2,62,512/- towards arbitration fee. The copy was served.
12. On above facts, the challenge on below ground is made:
(i) It is claimed that Ld. Tribunal failed to appreciate the delay in filing of the claim which was after a lapse of six years. Due to such lapse the claim was barred by limitation;
(ii) The Ld. Arbitral Tribunal did not appreciate the ruling of Panchu Gopal Bose Vs. Board of Trustees for Port of Calcutta, AIR 1994 SC 1615 and Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, AIR 1988 SC 1007.
(iii) It is claimed that Ld. Tribunal failed to appreciate that the disputes governed by special statutes are outside the scope of the Act, since the subject matter involved in the instant case was outside the scope of the Act as the tenancy entered and created between parties would attract the provisions of Transfer of Property Act, the Tribunal erred in entering the reference.
(iv) It is claimed that the tribunal failed to assess the absence of any cause of action and did not appreciate that the claim preferred by respondent was of a nature not capable of settlement through arbitration.
NIRJA
(v) It is asserted that the respondent/ claimant approached the BHATIA tribunal with mala fide intention and concealed several facts. It is alleged that respondent No. 1 merely wanted to relocate their Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:33:20 +0530 outlet and escape the agreement entered by them through lease P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 4 of 34 deed, which intentions the Tribunal could not read and appreciate, that under Andhra Pradesh Prohibition Act, only symbolic possession of the property was to be handed over, where at its place the respondent gave away the actual physical possession of leased property to Syndicate Bank, without even informing or taking consent from the petitioner. It is claimed that respondent No. 1 being a tenant had the right to refuse the physical possession of the property to the bank.
(vi) It is alleged that the respondent No. 1 had lured the petitioner to enter in one sided agreement despite having knowledge of the charge created by the petitioner in favour of Syndicate Bank as security for availing facility. The petitioner was never given the chance to edit the lease deed as the petitioners were informed that the agreement was a general agreement and the encumberances with Syndicate Bank would not breach any of the clauses of the agreement.
(vii) It is claimed that the Ld. Tribunal failed to acknowledge the fact that the liability was on part of the respondent No. 1 to perform due diligence. The original documents of the property were deposited with the bank and the petitioner was not in possession of the original documents, despite which respondent never asked or questioned the petitioner regarding the whereabouts of original documents and despite having full knowledge regarding encumberance, misused the information by filing an illegitimate claim against the petitioners.
NIRJA (viii) It is claimed that the Ld. Arbitral Tribunal failed to BHATIA appreciate that the sale of outlet of respondent No. 1 had reduced Digitally signed by NIRJA BHATIA considerably after opening of two new outlets in the facility Date: 2024.08.12 which prompted the respondent to seek an escape of lease deed 16:33:27 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 5 of 34 as they wanted to shift their outlet due to which without informing or asking the petitioner, they handed over the physical property to the bank.
(ix) It is claimed that the Ld. Tribunal erred in relying upon the documents/ invoices filed by respondent No. 1 for the purposes of quantification of claim which could not have been relied upon as the respondent No. 1 was reflecting the expenses incurred on relocation of the outlet in Delhi whereas the outlet in question was located at Hyderabad, which showed that the documents were unreliable and since the award quantifies the claim while allowing the same to respondent to the extent of expenses incurred on relocation, the award suffers from illegality being arbitrary and devoid of any rationale.
(x) It is claimed that the award suffers from infirmity and is illegal as it does not appreciate that respondent No. 1 is not entitled to claim Rs. 34,06,787/- towards loss suffered on fixtures and fittings at the time of closing of their restaurant alognwith Rs. 82.68,877/- towards expenses incurred at the time of relocation of their restaurant and that respondent No. 1 is not entitled to arbitration fee from petitioner since they had not filed any counter-claim.
(xi) On above submissions, it was prayed that award be set-aside.
Response raised to the objections:
13. Reply is filed by the respondent (respondent No. 1) and it is asserted as below:
(i) Respondent asserts that at the time of entering into the NIRJA BHATIA agreement, the petitioners represented themselves as absolute owners and in possession of premises, registered in their favour.Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:33:35 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 6 of 34
Petitioners No. 1 to 3 had also represented that their individual and separate shops can be converted into one unit as per the business and space requirements of respondents.
(ii) The respondent had made clear to the petitioner that respondent No. 2 shall invest huge amount of money towards interiors, setting up of kitchen, advertisements, hiring employees and other capital expenditure to start its restaurant in premises.
(iii) At the time of letting of premises, the petitioners No. 1 to 3 and respondent No. 2 (proceeded exparte during arbitration proceedings) had represented to answering respondent that the premises is free from all kind of encumberance and no third party right in the premises is created in any manner which can be used and enjoyed by the respondent peacefully without any hindrance, whereupon the premises was taken on rent.
(iv) That upon the above assurance received from petitioner No. 1 to 3 and respondent No. 2, an amount of Rs. Six lacs was deposited with petitioner No. 1 to 3 and respondent No. 2 as interest free security as per clause 3 of the lease deed.
(v) The respondent relied on para 8 of lease deed and asserted that it was represented by petitioner No. 1 to 3 and respondent 2 that the premises is free from all kind of encumberance and they have not created any third party right. Upon above representation, the premises was taken on rent against lease deed dated 16.09.2009, whereafter respondent No. 1 incurred huge expenses by investing Rs. 60 lacs in setting up of their restaurant with brand name "Domino's" and started its operations. However, the peaceful possession of premises was interrupted NIRJA and forcibly taken over during the peak working hours of the BHATIA Digitally signed by NIRJA BHATIA restaurant by authorized officers of Syndicate Bank, Tolichowki Date: 2024.08.12 16:33:42 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 7 of 34 Branch, Hyderabad, through Advocate Commissioner appointed by the order of Ld. CMM passed in Cr. M. P. 1904/2016 filed by Syndicate bank. The possession was literally snatched from the respondent by the possession notice dated 05.07.2012 as per the provisions of SARFAESI Act.
(vi) Upon inquiries made, based on the contents of the possession notice dated 05.07.2012, it was revealed to respondent No. 1 that Syndicate Bank has taken the possession of premises on default of repayment of loan amounting to Rs. 2,66,08,108/- which was taken by the petitioners from Syndicate Bank. Petitioners No. 1 to 3 and respondent No. 2 had mortgaged shops No. 3, 4 and 5 being part of the premises as security against borrowing. It is claimed by respondent that had they been informed of aforementioned borrowings in advance, they may not have gone ahead with the lease transaction.
(vii) It is alleged that the fact of demised property suffering an encumberance was deliberately concealed with mala fide intentions whereby the respondent No. 1 was induced to enter in the execution of lease deed as well as supplementary lease deed, which were based on false and fraudulent representations.
(viii) It is averred that respondent had asked the petitioners to hand over the peaceful possession of the premises back, but in vain, as petitioners No. 1 to 3 and respondent No. 2 never tried to get the possession of premises back to answering respondent. They were informed of their conduct which tantamounted to breach of terms and violation of conditions of lease deed, which the petitioners were legally and contractually bound to cure. NIRJA BHATIA (ix) As the respondent No. 1 was left without possession, legal Digitally signed by NIRJA notices dated 10.09.2012, 12.03.2014, and 30.12.2014 were BHATIA Date: 2024.08.12 16:33:48 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 8 of 34 served calling upon the petitioners to pay the damages against the losses suffered. The petitioners then replied through the replies dated 16.10.2012 and 12.01.2015 denying the liabilities and obligations.
(x) The respondent on loosing the possession of premises and being aggrieved by misconduct and breach of terms of lease also filed securitinization application bearing No. 316/2012, however, application was dismissed by DRT vide order dated 12.07.2013, which showed the efforts of answering respondent to secure its interest. It is averred that the respondent No. 2 had also not made any effort to stop the bank from taking possession of shop No. 2 even though it was not mortgaged to the bank as is evident by possession notice dated 05.07.2012 issued by Syndicate Bank.
(xi) Respondent No. 1 claimed that that it had received the notice dated 20.10.2014 from Syndicate Bank Tolichowki Branch, Hyderabad asking it to remove its remaining movables lying in the premises as the bank had decided to proceed with the sale of the premises to recover its outstanding and respondent No. 1 was given time till 05.11.2014 to remove the movables to avoid disposal by the bank.
(xii) It is claimed that on receipt of the notice of 20.10.2014, respondent No. 1 issued a legal notice dated 30.12.2014 to petitioners to indemnify it as agreed in lease deed for damages due to closure of its restaurant which was refused by the petitioners. It is averred that the petitioners were liable in terms of clause 9 to indemnify respondent No. 1 against any loss which part of the contract was not fulfilled by the petitioners and as the NIRJA BHATIA dispute arose in terms of the agreement, clause 8.2 of the lease Digitally signed by NIRJA BHATIA deed, the respondent No. 2 through its lawyer's notice dated Date: 2024.08.12 16:33:59 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 9 of 34 08.09.2015 invoked arbitration and Hon'ble Mr. Justice C. M, Nair was appointed as Arbitrator. The receipt of the aforesaid notice was acknowledged by the petitioners through their lawyer Sh. C. H. Shiva Reddy who sent the reply email dated 24.09.2015 wherein they disagreed for appointment of arbitrator and as the parties could arrive at an agreement on name of the arbitrator, an arbitration petition bearing No. RP No. 348/2016 titled as Jubilant Foodworks Pvt Ltd. Vs. G. S. Jyothi and others was filed before the Hon'ble Delhi High Court seeking appointment of sole arbitrator for adjudication of disputes between the parties in terms of the clause 8 of the lease deed, whereupon the Hon'ble Delhi High Court vide order dated 28.05.2018 was pleased to refer the matter to Hon'ble Tribunal of Justice S. S. Saroh. It is averred that Ld. Arbitrator after hearing the parties rightly observed that petitioners are liable to pay damages.
14. Para-wise reply is filed. Respondent No. 1 disputed the submissions para-wise and reasserted that at no stage, it was informed by petitioners that they have taken any credit facility for its business or kept the property i.e. shop No 3, 4, and 5, as security in lieu of the loan. He drew strength from clause 8 of the lease agreement, wherein such disclosure is carried by the petitioners specifically.
15. While replying to the grounds, the submissions were disputed. It is denied that the claim is barred by limitation and is stated that cause of action accrued in favour of the claimant on 12.01.2015 when the petitioner refused to make the payment of NIRJA BHATIA damages and on 24.09.2015 when the counsel for petitioners Digitally signed by NIRJA disagreed with the appointment of arbitrator.
BHATIA Date: 2024.08.12 16:34:07 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 10 of 3416. It is further denied that the scope of dispute is outside the ambit of the Act. It is asserted that the subject matter of the dispute is completely 'contractual' in nature and is competent to be resolved through arbitration as per the agreed terms and conditions of the lease agreement. It is denied that respondent No. 1 wanted to relocate their outlet and claim is merely a way to get out of the said lease deed. It is denied that respondent No. 1 handed over the possession as they wanted to see an escape from the lease fearing competition by opening of similar outlets. It is stated that the possession was snatched from respondent No. 1 by the bank against vacation notice dated 05.07.2012. It is further averred that the plea of the petitioners that respondent was suffering losses of profit having been reduced to a quarter due to opening of two new outlets is a false plea as the statement of account filed by the respondent reflects that outlet was running with good profits. Respondent claimed that while the award was passed on 30.11.2019, the present objections are filed on 12.07.2019 and are therefore badly time barred and must be rejected.
Note of the proceedings
17. The the present objections were filed on 14.07.2022. The respondent No. 1 was served, however, it was observed that respondent No. 2 was the co-owner of the demised property and at the instance of petitioners, the services of respondent No. 2 was dispensed with vide order dated 02.03.2023 of Ld. Predecessor, who was then pleased to take note that respondent NIRJA BHATIA No. 1 has been served on 27.02.2023. The appearance on behalf Digitally signed by NIRJA of respondent No. 1 had been caused, however, no participation BHATIA Date: 2024.08.12 16:34:13 +0530 is received.
P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 11 of 3418. Alongwith present objections, an application seeking condonation of delay in filing present objections toward is moved, however, Ld. Predecessor decided that the application be heard alongwith arguments on merits of present objections. Prior thereto, the submissions on the aspect of jurisdiction, as the valuation of the claim was alleged to be more than Rs. Two crores and limitation in view of the directions of Hon'ble Supreme Court in Suo Motu W. P. (C) No. 3 of 2020 were noted on record.
19. Matter was then listed for arguments. Both the parties have made their submissions and have also filed their written submissions. I have heard the submissions and have carefully perused the written submissions as well as the material placed on record.
Gist of written submissions filed by objector
20. During the submissions, Ld. Sh. Rishi Kapoor, Counsel for the petitioner stressed that on 05.07.2012, respondent No. 1 handed over the vacant possession of the property without even informing the petitioners and thus terminated the lease, in view of which cause of action arose on 05.07.2012 and arbitration notice must have been issued on or before 04.07.2015. It is stated that the notice of arbitration was issued beyond three years of cause of action and hence, is time barred. It is claimed that law laid down in Panchu Gopal Bose Vs. Board of Trustees for Port of Calcutta (supra) and Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority (supra) is ignored while deciding NIRJA the claim. It is asserted that the dispute in the instant case is BHATIA outside the ambit of the Act and would fall within the domain of Digitally signed by NIRJA BHATIA Date: Transfer of Property Act. It was then stressed that the respondent 2024.08.12 16:34:24 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 12 of 34 intended to relocate. Petitioners alleged that as per Andhra Pradesh Prohibition Act, only the symbolic possession was to be handed over, however, the respondent handed over the physical possession without taking consent from petitioners. Respondent No. 1 is challenged towards his knowledge of charge created by petitioner in favour of Syndicate Bank towards security. The merit of the claim on account of relocation to Delhi is disputed and it is stated that the claim itself is to be questioned as the respondent was running its outlet in Hyderabad.
21. Ld. Counsel has relied upon the case law as below:
1. M/s B and T AG Vs. Ministry of Defence, (2024) 5 SCC 358;
2. M/s Arif Azim Co. Ltd. Vs. M/s Aptech Ltd., 2024 INSC 155;
3. State of Maharashtra Vs. M/s Hindustan Construction Company Ltd. (2010) 4 SCC 518;
4. ICICI Bank Ltd. Vs. Sidco Leathers Ltd. and ors. (2006) 10 SCC 452;
5. Sri Athelli Mallikarjun and ors. Vs. S. S. B. Constructions and anr., 2024 SCC OnLine TS 14; and
6. Fortune Builders Pvt. Ltd. Vs. Blue Star Ltd, 2022 SCC OnLine Del 975.
Gist of written submissions filed by respondent
22. Ld. Sh. Gyanesh Bhardwaj, Counsel for respondents has lent also lent its strength to the submissions made in reply to the objections and has relied on clauses 8 & 9 of the lease deed. It is denied that at any stage the respondent were informed of any encumberances. It is denied that proceedings before the Ld. Arbitrator were much delayed and the arbitrator could not have NIRJA BHATIA taken the proceedings further on account of its being barred of Digitally signed by NIRJA BHATIA Date: 2024.08.12 time. It is denied that any special law is attracted to the facts and 16:34:33 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 13 of 34 it is claimed that the dispute is arising out of contradictory application.
Discussions and Reasoning
23. The present objections are being moved from the provisions of Section 34 of the Act. The provisions is brought in and is excerpted for reference below:
34. Application for setting aside arbitral award.--
............................................................ (2) An arbitral award may be set aside by the Court only if-- (a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal 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 NIRJA arbitral procedure was not in accordance with the BHATIA agreement of the parties, unless such agreement Digitally signed was in conflict with a provision of this Part from by NIRJA BHATIA which the parties cannot derogate, or, failing such Date: 2024.08.12 16:34:50 +0530 agreement, was not in accordance with this Part; or
(b) the Court finds that--P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 14 of 34
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
24. The Hon'ble Supreme Court while dealing with aforementioned provision in Associate Builders Vs. DDA, (2015) 3 SCC 49; came to discuss in detail and decide the scope of aforementioned provision. The relevant observation are referred as below:
"Grounds on which arbitral award may be assailed Section 34 in conjunction with Section 5 of the Arbitration and Conciliation Act, 1996 (1996 Act) makes it clear that an arbitral award that is governed by Part I of the 1996 Act can be set aside only on the grounds mentioned under Sections 34(2) and (3), and not otherwise. It is important to note that the 1996 Act was enacted to replace the 1940 Arbitration Act in order to provide for an arbitral procedure which is fair, efficient and capable of NIRJA meeting the needs of arbitration; also to provide that BHATIA the Tribunal gives reasons for an arbitral award; to Digitally signed by NIRJA ensure that the Tribunal remains within the limits of Date: 2024.08.12 its jurisdiction; and to minimise the supervisory BHATIA 16:34:57 +0530 roles of courts in the arbitral process. (Paras 15 and
16).P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 15 of 34
Merits of arbitral award can be assailed only when it is in conflict with "public policy of India"
None of the grounds contained in Section 34(2)(a) of the A&C Act, 1996 deal with the merits of the decision rendered by an arbitral award. It is only when the award is in conflict with the public policy of India as prescribed in Section f 34(2)(b)(ii) of the A&C Act, 1996 that the merits of an arbitral award are to be looked into under certain specified circumstances. (Para 17) ONGC Lid. v. Saw Pipes Ltd., (2003) 5 SCC 705; P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594:
(2012) 1 SCC (Civ) 342; DDA v. R.S. Sharma and Co., (2008) 13 SCC 80, followed Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644; Hindustan g Zinc Ltd. v.
Friends Coal Carbonisation, (2006) 4 SCC 445; McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181; Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC 245; J.G. Engineers (P) Ltd. v. Union of India, (2011) 5 SCC 758: (2011) 3 SCC (Civ) 128; Union of India v. Col. L.S.N. Murthy, (2012) 1 SCC 718:
(2012) 1 SCC (Civ) 368, considered Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, (1986) 3 SCC 156: 1986 SCC (L&S) 429: (1986) 1 ATC 103; State of Rajasthan v. Basant Nahata, h (2005) 12 SCC 77, cited.
HEADS OF "PUBLIC POLICY OF INDIA"
1. Fundamental Policy of Indian Law
(i) Compliance with statutes and judicial precedents Violation of Indian statutes i.c. the award which is, on the face of it, patently in violation of statutory provisions cannot said to be in public interest.
award/judgment/decision is likely to adversely affect administration of justice and would be regarded as NIRJA being contrary to the fundamental policy of Indian BHATIA law. Furthermore, the binding effect of the judgment of a superior court being disregarded would be Digitally signed equally violative of the fundamental policy of Indian by NIRJA BHATIA Date: law. (Paras 27 and 17 to 19) 2024.08.12 16:35:09 +0530
(ii) Need for judicial approach P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 16 of 34 In every determination whether by a court or other authority that affects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a "judicial approach" in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the court the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi- judicial determination lies in the fact that so long as the court, tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bona fide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge. (Para 28) The juristic principle of a "judicial approach"
demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective. (Para 29) ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263: (2014) 5 SCC (Civ) 12, followed and elucidated
(iii) Natural justice compliance Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasi-judicial authority must, while determining the rights and obligations of parties NIRJA before it, do so in accordance with the principles of BHATIA natural justice. Besides the celebrated audi alteram Digitally signed by NIRJA BHATIA partem rule one of the facets of the principles of Date: 2024.08.12 natural justice is that the court/authority deciding the 16:35:18 +0530 matter must apply its mind to the attendant facts and circumstances while taking a view one way or the P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 17 of 34 other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law. The audi alteram partem principle which undoubtedly is a fundamental juristic principle in Indian law is also contained in Sections 18 and 34(2)(a)(iii) of the Arbitration and Conciliation Act.
(Paras 28 and 30) ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263: (2014) 5 SCC (Civ) 12, followed and elucidated.
(iv) Wednesbury reasonableness No less important is the principle now recognized as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available. (Para 28) The juristic principle of Wednesbury reasonableness is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation.
It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account NIRJA something irrelevant to the decision which it arrives BHATIA at; or Digitally signed by NIRJA BHATIA
(iii) ignores vital evidence in arriving at its decision, Date: 2024.08.12 such decision would necessarily be perverse.
16:35:25 +0530 (Para 31) P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 18 of 34 ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705:
ONGC Ltd. v. Western Geco Ltd., (2014) 9 SCC 263: (2014) 5 SCC (Civ) 12, followed and elucidated Excise und Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons, 1992 Supp (2) SCC 312, relied on Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223: (1947) 2 All ER 680 (CA), held, approved Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, considered II. Interest of India The next ground on which an award may be set aside is that it is contrary to the interest of India.
Obviously, this concerns itself with India as a member of the world community in its relations with foreign powers. (Para 35) III. Justice or Morality The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. (Para 36)
(i) Justice An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, say to Rs 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him Rs 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice". (Para 36)
(ii) Morality The other ground is of "morality". Just as the expression "public policy" also occurs in Section 23 of the Contract Act, 1872 so does the expression NIRJA "morality". Court has confined morality to sexual BHATIA morality so far as Section 23 of the Contract Act, Digitally signed 1872 is concerned, which in the context of an by NIRJA BHATIA Date: 2024.08.12 arbitral award would mean the enforcement of an 16:35:31 +0530 award say for specific performance of a contract P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 19 of 34 involving prostitution. "Morality" would, if it is to go beyond sexual morality necessarily cover such agreements as are not illegal but would not be enforced given the prevailing mores of the day. However, interference on this ground would also be only if something shocks the court's conscience. (Paras 37 to 39) Gherulat Parakh v. Mahadeodas Maiya, 1959 Supp (2) SCR 406: AIR 1959 SC 781. followed Anson: Law of Contracts. p. 222; Halsbury's Laws of England, 3rd Edn., Vol. 8, p. 138; Cheshire and Fifoot: Law of Contract, 3rd Edn., p. 279; Pollock and Mulla: Indian Contract Act, p. 157, considered IV. Patent Illegality The fourth head of public policy, namely, is patent illegality. It must be remembered that under the Explanation to Section 34(2)(b)(ii) of the 1996 Act, an award is said to be in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. This ground is perhaps the carliest ground on which courts in England set aside awards under English law. Added to this ground (in 1802) is the ground that an arbitral award would set aside if there were an error of law by the arbitrator. (Para 40) Champsey Bhara Co. v. Jivraj Balloo Spg. and Wvg. Co. Ltd., AIR 1923 PC 66: (1922-23) 50 ΤΑ 324 :
1923 AC 480: 1923 All ER Rep 235 (PC), relied on R.V. Northumberland Compensation Appeal Tribunal. 122: (1952) 1 KB 338 approved p Shaw, (1952) 1 AII ER 122: (1952) 1 KB 338(CA), approved.
Kent v. Elstob, (1802) 3 East 18: 102 ER 502; Hodgkinson v. Fernie, (1857) 3 CB (NS) 189: 140 ER 712; Jivraj Baloo Spg. and Wvg. Co. Ltd. v. Champsey Bhara and Co., ILR (1920) 44 Bom 780, cited In the 1996 Act, the principle stands as the "patent illegality" principle which, in turn, contains three NIRJA sub-heads:
BHATIA
(i) Contravention of substantive law of India Digitally signed by NIRJA A contravention of the substantive law of India Date: 2024.08.12 would result in the death knell of an arbitral award.
BHATIA Violation of Indian statutes i.c. the award which is, 16:35:38 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 20 of 34 on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice and would be regarded as being contrary to the fundamental policy of Indian law. Furthermore, the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is a really a contravention of Section 28(1)(a) of the 1996 Act. (Paras 42.1, 17 to 19 and 27)
(ii) Contravention of A&C Act, 1996 A contravention of the Arbitration Act itself would be regarded as a patent illegality-for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the 1996 Act, such award will be liable to be set aside. (Para 42.2)
(iii) Contravention of the terms of the contract In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. Thus, the third sub-head of patent illegality is really a contravention of Section 28(3) of the Arbitration Act. This contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do.
(Para 42.3) ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; NIRJA McDermott International Inc. v. Burn Standard Co. BHATIA Ltd., (2006) 11 SCC 181; MSK Projects (1) (JV) Digitally signed Ltd. v. State of Rajasthan, (2011) 10 SCC 573:
by NIRJABHATIA (2012) 3 SCC (Civ) 818; Rashtriya Ispat Nigam Ltd. Date: 2024.08.12 v. Dewan Chand Ram Saran, (2012) 5 SCC 306; 16:35:45 +0530 SAIL v. Gupta Brother Steel Tubes Ltd.. (2009) 10 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 21 of 34 SCC 63: (2009) 4 SCC (Civ) 16; Sumitomo Heavy Industries Ltd. v. ONGC Ltd., (2010) 11 SCC 296:
(2010) 4 SCC (Civ) 459, followed and elucidated Pure Helium India (P) Ltd. v. Oil and Natural Gas Commission, (2003) 8 SCC 593; D.D. Sharma v.
Union of India, (2004) 5 SCC 325; Gobardhan Das v. Lachhmi Ram, AIR 1954 SC 689: Thawardas Pherumal v. Union of India, AIR 1955 SC 468; Union of India v. Kishorilal Gupta & Bros., AIR 1959 SC 1362; Alopi Parshad & Sons Ltd. v. Union of India, AIR 1960 SC 588; Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 C SC 214; Renusagar Power Co. Ltd. v. General Electric Co., (1984) 4 SCC 679; Kwality Mfg. Corpn. v. Central Warehousing Corpn., (2009) 5 SCC 142: (2009) 2 SCC (Civ) 406, relied on Caution in applying all the above Heads/Sub-heads of Public Policy Test It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. (Paras 32 to 34 and 52) Kuldeep Singh v. Commr. of Police, (1999) 2 SCC 10: 1999 SCC (L&S) 429; P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594: (2012) 1 SCC (Civ) 342, relied on"
25. Observing upon the facts in hand, the objector has attempted to assail the award on multiple grounds and has NIRJA BHATIA asserted that the award suffers from perversity. Though the objector has not efforted to spell out under which domain of Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:35:52 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 22 of 34 Section 34(2) & (3) of the Act the award is alleged to be perverse. However, having regard to grievance towards the Ld. Arbitrator ignoring his plea and allowing the claim of the respondents in as much as entertaining delayed and belated objections after almost a lapse of six years in order to grant relief and claiming that the principle of Audi Artem Partum have also suffered at the hands of such dealing of Ld. Arbitrator who ignored even the settled principles of law and case law including that of Panchu Gopal Bose (supra) besides the assertions of arbitrating upon on unarbitrable dispute claiming that contract between the parties was arising out of special provisions of law in present case Andhra Pradesh Prohibition Act etc.
26. It shall at this stage be useful to observe that the Ld. Arbitrator during the proceedings enumerated the following issues, informing and laying clearly before parties including objector, the scope of assessment under the award. There is no dispute to the issues which were framed on 07.05.2019 and are detailed for reference:
1. Whether the claimant is entitled to the claims along with damages and costs of the proceedings as made in the petition? OPC
2. Whether the claims made by the claimant are barred by limitation? OPR
3. Whether the claims as made are outside the purview of arbitration? OPR
4. Relief.
27. The fact that this Court can only have a limited scope to observe upon the award as mandated by Hon'ble Supreme Court NIRJA in Associate Builders Vs. DDA, (2015) 3 SCC 49, the nature of BHATIA Digitally signed objections is now asserted herein below to take note as whether by NIRJA BHATIA Date: 2024.08.12 16:36:00 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 23 of 34 any violation to the provisions under Section 34 of the Act in which the present objections are filed is made.
28. Objector had challenged the scope and jurisdiction of Arbitration. In view of law laid down in Vimal Kishor Shah Vs. Jayesh Dinesh Shah (Supra). However, the law above is taken note by Hon'ble Arbitrator who discarded the reasoning behind above case law while rendering decision upon the facts in issue, and held that facts under under the cited law were not applicable .
The facts were distinguished since the specific provisions of the Trust Act, 1882 which governed the aforementioned case law specifically provided to confer jurisdiction on Civil Courts for deciding the dispute under Trust Act.
29. Ld. Arbitrator relying on Booz Allen & Hamilton Inc. Vs. SBI Home Finance Limited, (2011) 5 SCC 532, observed that Hon'ble Supreme Court has decided as below:
"The well-recognised examples of non-arbitral disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matter; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."
30. The Arbitrator further observed that the present dispute of parties is governed by a contract i.e. lease deed dated 16.09.2009, NIRJA clause 8 of which provides for dispute resolution through BHATIA Digitally signed by NIRJA BHATIA arbitration. The relevant provision in the lease was noted which Date: 2024.08.12 16:36:07 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 24 of 34 provided for arbitration as a mode of dispute resolution and is reproduced as below:
"8) The LESSORS doth hereby represent, declare, confirm and warrant to the LESSEE as follows:-
i) There is no impediment/s whereby the LESSORS are restrained from entering into this Lease Deed.
ii) The LESSORS are the absolute co-owners, seized and possessed of the said premises.
iii) Other than the LESSORS no other party or persons or entity has any right, title or interest in respect of the said premises.
iv) The LESSORS have not committed or omitted any act, deed, matter or thing whereby its right or title in respect of the said premises is lessened or encumbered in any manner and the said premises is free from all encumbrances and the LESSORS have not created any third party rights in respect of the said premises."
31. It be observed that the Arbitration Act u/s 2(b) defines the arbitration agreement as below:
2. Definitions.--(1) In this Part, unless the context otherwise requires, ............................................................
...................
(b) "arbitration agreement" means an agreement referred to in section 7"
32. The comprehensive definition of Section 2(b) is to be observed through Section 7, which is enumerated as below:
"7. Arbitration agreement.--(1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise NIRJA between them in respect of a defined legal BHATIA Digitally signed relationship, whether contractual or not.by NIRJA BHATIA Date: 2024.08.12 16:36:13 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 25 of 34
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in--
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes anarbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
33. The reading of Section 2(b) and Section 7 of the Act leads to an interpretation that arbitration agreement must normally be understood as "any Agreement" and has to satisfy the ingredients which requisite parties must be ad item or at consensus to perform or refrain from, an act or duty against a valid and lawful consideration. Any such agreement when enforceable by law in the event of breach would be called a contract (Ref.: Section 2 of the Contract Act).
34. Hence, it is the enforceable nature of an agreement that makes it a binding contract (Section 2 h). Wherever, an agreement confers the parties to choose the mode of NIRJA enforceability of an agreement through arbitration, in the event of BHATIA its breach, it be called an arbitration agreement provided it is Digitally signed writing. Though the most commonly used mode of enforcement by NIRJA BHATIA Date: 2024.08.12 16:36:37 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 26 of 34 is through adjudication as a default system for resolving disputes, in specific situations parties themselves are empowered. As is envisaged by Legislature which has thought of providing alternative dispute resolution mechanism, such as Arbitration and has formalised it through Arbitration Act of 1996 where the parties can keep their 'lis' out of the adjudicatory framework and decide on the dispute through a chosen 'third party' such as an arbitrator or conciliator.
35. However, not all disputes may be fit for decisions by parties themselves. Such disputes as those where an element of mens rea is involved or such dispute which by inherent nature are unfit for decision by or through the parties involved in decision making are kept out of such mode. Some of which instances are elaborated in Booz Allen & Hamilton Inc. (supra) and are enumerated as disputes pertaining to guardianship, matters of insolvency and winding up as well as those falling in purview of tenancy protected under statute.
36. It is pertinent to take note that any law capable of restricting right of parties must be read conservatively and a Restrictive Interpretation must be applied (Maxwell Interpretation of Statutes 12th Edition). Applying the above principles to interpret the observations made in Booz Allen & Hamilton Inc. (supra), the same are meant to protect the tenants against forceful evictions, where the tenant enjoys 'statutory protection' against eviction. The facts in hand do not suggest the application of any such protection made available through NIRJA statutory provision governing the relationship of objector and BHATIA respondent in this case which is purely demonstrated duly Digitally signed through lease agreement itself which is an agreement out of own by NIRJA BHATIA Date: 2024.08.12 16:36:44 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 27 of 34 violation of both sides and is of contractual nature. In such circumstances, the assertion that the dispute was not arbitrable being governed by special provision is to be discarded.
37. It be further observed that while challenging the issue of subject matter being not arbitrable, the objector is intending to impinge the provision of referral provided under lease agreement and is stated as clause 8.2, which for reference is reproduced as below:
"8.2 In any case of dispute or difference arising out of or in relation to this lease deed, then the same shall be resolved and settled with the provisions of the Arbitration & Conciliation Act 1996, or any statutory modification or re-enactments thereof. The place arbitration shall New Delhi."
The above is providing the mode of dispute resolution between the parties as being arbitration.
38. However, the objector cannot seek to rescind only one of the terms of the agreement, while rest of the agreement terms have been acted upon and fulfilled, without seeking to challenge the virus of the entire agreement and getting it declared null and void as one clause of the agreement cannot be tricked to seek what is not achievable otherwise. In circumstances above, the averrment, that the arbitrator has arbitrated a non-arbitral matter finds no merit or logic.
39. The other assertion raised is qua limitation, challenging the maintainability of the claim as it is stated that claim in question has been filed much after the period of limitation provided for referral.
40. The aforementioned issue has also been discussed and has NIRJA been dealt with in detail by the arbitrator on merits. It is to be BHATIA Digitally signed by NIRJA BHATIA noted that scope of Section 34 is limited to probe the merits of Date: 2024.08.12 16:36:52 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 28 of 34 decision. Ld. Counsel for objector claimed that the arbitrator erred in opining the maintainability of the claim and ignored that mere extension of letters etc., is not sufficient to extend the time. Reliance is placed on B and T AG Vs. Ministry of Defence, (2024) 5 SCC 358. However, it is sufficient at this stage to observe that while alleging the delay/ limitation, the objector alleged that the factum of property under mortgage with the Syndicate Bank was within the knowledge of the respondents who willingly agreed to take the premises on rent and thus, must be willing to face the consequences of such encumberance. For which reason, the objector is reading the date of 05.07.2012 as the date of computation of limitation. It is intended to be argued that since the encumberance was made known, the subsequent ejectment from the property at first should not have given a cause of action to the respondents, in the first place and secondly, if it is competent to give the cause, it does not lie with respondent, but the same lies with the objector who has been deprived of possession by respondents who handed over the possession to bank during the process of proceedings being carried under SARFAESI Act without asking the objectors. In continuation, it is averred that the said ejectment at the end of Syndicate Bank must not have been dealt with surprise by the respondents who should have immediately started counting the limitation from the said date of ejectment as a cause of action. On the face of it, the implications of both the pleas are contradictory.
41. While the bare perusal of the lease agreement clearly shows that the objector did not disclose any encumberance in the NIRJA first place, claiming anything other than what is reproduced in BHATIA writing by way of an agreement is also barred under the Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:36:59 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 29 of 34 provisions of Section 91 and 92 of Evidence Act. This being so, even if the property was mortgaged and encumbered with the bank, the respondent held no obligation against the bank. The cause of action of dispossession at the hands of third party would not give a cause of action against the objector automatically unless and until the restoration of possession by the objector i.e. the lessor is declined or refused or in alternate the breach is uncompensated.
42. In core of the dispute lies the breach of the lease agreement dated 16.09.2009. It is a bipartite agreement and Syndicate Bank is not a party to the said agreement. The dispossession at the hands of Syndicate Bank would not be a sufficient cause to construe that the respondent will never gain possession as the objector were well within their domain to bring corrections to the order of default which could have led the status quo ante to 05.07.2012. It is needed to be taken into account that the respondents made efforts by calling upon the objector and as stated specifically on refusal of objections took recourse to addressing the breach by seeking enforcement. It is also needed to be taken note that while keeping the property mortgaged, gave no right to objector to commit default in payment to bank from it secured loan for its own benefit. The objector by no virtue or strength could have imagined the consequences of their default against the advantage drawn by them be suffered by a third party alien to any such arrangement. The pleas raised during the arguments, are suggestive of sheer brazenness with which the NIRJA element of trust under the agreement is ignored. The objector BHATIA cannot be permitted to take advantage of its own wrongs.
Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:37:06 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 30 of 3443. Moreover, the objector while raising the above plea conveniently claimed the proceedings of formal nature undertaken by respondent as 'correspondence'. The objector ignored that respondent filed the plea before DRT which does not fall in category of exchange of letters. Moreover, after the efforts for impleadment were rejected, the respondent was called upon to vacate fully by removing its articles in 2014 by bank, which was on strength of Court's order and authority and cannot be brushed of as mere exchange of letters and reminders. In which case, the law relied upon is not applicable to facts in hand.
44. While numerous other pleas have been raised alleging that the respondents has approached the Tribunal with mala fide intentions and had no cause of action so much so that the respondent has been blamed for complying with the directions of Court in handing over the possession and held responsible by not giving symbolic possession, suggesting the respondent to act contrary to the directions of the Court and similar like pleas, none of them find any merit under any of the provisions of Section 34 (2) & (3) of the Act.
45. While providing reasons upon the pleas/ counter-pleas, it is now appropriate to observe upon the decision on application made over to this Court by the objector seeking condonation of delay of "two days" in filing the present objections. It is claimed that the objections have been filed with a 'little' delay, attributable to error in server as the objector was processing the objections in the evening of 31.05.2022 itself, however, since the server would not upload via e-filing portal which led to delay to NIRJA two days. It is asserted that the delay was unintentional and since BHATIA Digitally signed the Court is competent to condone the delay even after 90 days, by NIRJA BHATIA Date: 2024.08.12 16:37:14 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 31 of 34 the present being delayed by only two days, is condonable. Reliance is then made on judgments of Rajesh Kumar Aggarwal and ors. Vs. K. K. Modi, (2006) 4 SCC 38 and Pirgonda Hongonda Patil Vs. Shidgonda Patil, AIR 1957 SC 363.
46. Reply to the application is filed and it is alleged that the grounds are frivolous. While denying the contents of para 5 to 7 of the application, the applicant is challenged on his averrment that delay is only of two days. The respondent states that the award is passed on 30.11.2019 whereas the present petition was filed on 12.07.2022.
47. At the outset, it be observed that the entire application is silent qua the date of the award and its receipt with objector. The record suggests the filing of present petition on 14.07.2022, whereas the award that has been proposed to be impugned was made on 30.11.2019. The applicability of law laid in Suo Motu W. P. (C) No. 3 of 2020, the limitation is exempted only w.e.f 15.03.2020 to 28.02.2022. However, the limitation available with the objector expired even prior to 15.03.2020. In place of showing any plausible reason for falling in extension after February 2020, the objector straightaway claims refuge under Suo Motu (supra), though as no such liberty is demonstrated. The provisions of Section 34(3) of the Act settle the period of limitation and provides another 30 days only in 'very' exceptional cases. In order fall in scope of 30 days, after lapse of original period of 90 days, respondent must explain the cause withholding him to take requisite recourse within 90 days and that such ground was compelling enough for Court to exercise its discretion in its favour.The Hon'ble Supreme Court in Dakshin NIRJA BHATIA Haryana Bijli Vitran Nigam Limited Vs. Navigant Technologies Digitally signed by NIRJA BHATIA Date: 2024.08.12 16:37:21 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 32 of 34 Pvt. Ltd., (2021) 7 SCC 657, has furthered the above view and has also relied upon UOI of India Vs. Tecco Trichy Engineers & Contractors, AIR 2005 SC 1832. The observations are noted as below:
"............................................................ ............................................................. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings."
48. Last but not the least, I advert to discuss the issue of pecuniary jurisdiction, which is averred by respondents. Though this plea is not made part of written submissions, it is asked to be observed upon. Ld. Sh. Gyanesh Bhardwaj claimed that since the valuation of the subject matter exceeds the quantum of Rs. Two crore, this Court holds no jurisdiction to render any decision. However, the proceedings show that the Ld. Counsel being himself aware of lack of merit of his plea did not process for its decision, which must have been done at the initial stage to avoid the wastage of time and bringing any decision to futility if such a plea would have been escouting merit. The award against which the claim is raised is for Rs. 1,82,51,848/- alongwith interest @ 18%. The attention is hence brought to settled case law as per which while taking into account the valuation, the quantum of NIRJA BHATIA interest is not to be treated inclusive of specified value as is held Digitally signed by NIRJA BHATIA in Simentech India Private Limited vs Bharat Heavy Electricals Date: 2024.08.12 16:37:47 +0530 P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 33 of 34 Limited, O.M.P. (COMM) 348/2022, DOD 12.01.2024. Moreover, the constant submission to treat the matter as appeal also seems to be occasioned of misreading of provisions of Section 34 as Section 37 of the Act providing for appeal. In which background, the submissions Ld. Sh. Gyanesh Bhardwaj are to be observed as meritless to above extent.
49. In background of complete discussions, the present objections filed under Section 34 of the Act stands rejected with no order to cost.
50. File be consigned to Record Room after completion of necessary formalities. Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2024.08.12 16:37:52 +0530 Announced in open Court (Nirja Bhatia) today on 12th August, 2024 District Judge (Comm. Court) (Digital-07) South-East, Saket Court, New Delhi P. Lakshmi Vs. Jubilant Foodworks Ltd. Page 34 of 34