Delhi District Court
Avnessh Singh vs Aakash Educational Services Pvt. Ltd on 13 August, 2021
IN THE COURT OF SHRI MAN MOHAN SHARMA,
DISTRICT JUDGE (COMMERCIAL COURT)-06,
CENTRAL DISTRICT
TIS HAZARI COURTS, DELHI
IN THE MATTER OF :-
OMP (Commercial) No. 93/2019
Avnessh Singh
S/o Sh. Shitala Singh
R/o House No. B-9,
Barahuabhojpur,
Saray Murar Singh, Pratapgarh
Uttar Pradesh
....Petitioner
Versus
1. Aakash Educational Services Pvt. Ltd.
(A company incorporaed under the provisions
of the Companies Act, 1956)
having its registered office at
Aakash Towers, Plot No. 4,
Sector 11, Dwarka, New Delhi-110075
through its authorized representative.
2. Sh. S.C. Rajan
(Retrd.) Additional District and Sessions Judge
(Delhi)/ Sole Arbitrator
Aakash Educational Services Pvt. Ltd.
Chamber No. 488, Civil Wingh, Tis Hazar Courts,
Delhi-110054.
.....Respondents.
Date of Insitution : 21.09.2019
Date of Reserve of Judgement : 17.07.2021
Date of Judgment : 13.08.2021
JUDGMENT
1. The challenge in this petition under section 34 of the Arbi-
tration and Conciliation Act, 1995 (hereinafter 'the Act') is OMP (Commercial) No. 93/2019 Page No. 1 of 43 to an Award passed by the Ld. Sole Arbitral Tribunal on 21.10.2019.
Uncontroverted Facts
2. The uncontroverted facts are that the respondent no. 1 (here-
inafter 'the respondent') is an institute imparting education for the various competitive examination. The petitioner is an erstwhile Faculty Member of the respondent. He joined the services on 05.04.2012; served the respondent for more than five years, and lastly had been drawing salary @ Rs. 2,04,300/- per month. He tendered his resignation through email on 07.12.2017. Considering the resignation as de-hors the agreement contained in the "Service Rules Manual for the Employees as Faculty Members" the respondent did not accept it. Perturbed by the sudden resignation, the respon- dent invoked the arbitration. The petitioner remained ex- parte in the arbitration proceedings. The Award has been passed on 21.10.2019.
Relief under the Award
3. The Award grants a sum of Rs. 6,13,050/- (Rupees Six Lakhs Thirteen Thousand Fifty Only) to the respondent on account of damages towards breach of contract with interest @ 10% per annum from the date of the Award till realiza- tion. Litigation costs in the sum of Rs. 38,000/- (Rupees Thirty Eight Thousand Only) have also been awarded to the respondent.
Challenge to the Award
4. Aggrieved from the Award the petitioner has challenged the same by filing a petition under section 34 of the Act. On be-
OMP (Commercial) No. 93/2019 Page No. 2 of 43ing served the respondent contested the grounds of chal- lenge by filing a written reply.
5. Original record of the arbitration has been summoned and tagged with the petition.
6. I have heard the submissions advanced by Ms. Ankita Chaudhary, Ld. Counsel for the petitioner and by Shri Sagar S. Jaiswal, Ld. Counsel for the respondent.
7. Written submissions have been filed by the respective par-
ties on record. Case law has been cited in copious measure by the parties.
Arguments of the Petitioner
8. The petitioner has taken up a host of grounds to impugn the Award.
(i). Award hit by the Judgment of Vivek Rai
9. The first and foremost argument put forth by the Ld. Coun- sel for the petitioner is that the instant matter is squarely covered by the judgment passed by the Hon'ble High Court of Delhi in the case of Vivek Rai vs. Aakash Institute 2015 (149) DRJ 309 wherein it has been held as under:-
"11. Turning to the merits of the Award, the Court finds that the learned Arbitrator has simply gone by the clauses in the agreement and even without scrutinizing the calculation of the amount claimed by the Respondent, has awarded it in toto. The Court finds that this is a case where the Respondent is seeking to enforce terms and conditions of an agreement dated 1st March 2012 which are on the face of it opposed to public policy and clearly hit by Sections 23 and 28 of the OMP (Commercial) No. 93/2019 Page No. 3 of 43 Contract Act, 1872. In particular, the Court would like to refer to the following clause in the agreement:
...................................................
14. The above clauses appear to the Court to be wholly unconscionable and opposed to public policy and, therefore, hit by Sec-
tion 23 of the Contract Act. An award based on the above clauses which promise the Respondent to recover an uncon-
scionable sum would be clearly opposed to the public policy of India and likely to be interfered with under Section 34 (2) (b)
(ii) of the Act.
16. The above clauses clearly constitute an unconscionable restraint on the right of one of the parties to seek legal redress.
The clauses are hit by Section 28 of the Contract Act. What is even strange is that even a copy of the said agreement is not made available to the other party. The Pe-
titioner was only allowed to see/read the agreement. The Petitioner was required to contact the Centre Director with prior ap- pointment. In fact, it is the Petitioner's case that he was not even given a copy of the agreement.
17. It shocks the judicial conscience that the Arbitrator mechanically proceeded to pass an Award in favour of the Respon-
dent on the basis of the aforementioned patently illegal clauses of the contract. The Court is unable to sustain the im-
pugned Award of the learned Arbitrator.
Accordingly, the impugned Award is hereby set aside. The petition is allowed but in the circumstances with no order as to costs."
10. It has been submitted on behalf of the petitioner that in the above judgment, the Hon'ble High Court of Delhi has clearly observed that such clauses as mentioned above are OMP (Commercial) No. 93/2019 Page No. 4 of 43 against section 23 and 28 of the Indian Contract Act and therefore cannot be enforced. In this context, in the present case, the clauses of Service Rules Manual (Salary and Terms & Conditions) are exactly similar to the case of Vivek Rai (Supra). Moreover, the judgment of Hon'ble High Court of Delhi in Vivek Rai (Supra) is followed in as many as 29 cases by various Commercial Courts and the Arbitral Award has been set aside.
(ii). Award hit by Rule 22 and 24 of the Fifth Schedule
11. Next, it is submitted that the objective of the Arbitration and Conciliation (Amendment) Act, 2015 is to make it more re- sponsive to its requirements and to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. These objec- tives have been bye-passed in the present case. In this case, the appointment of arbitrator has been hit by Rule 22 and 24 of the Fifth Schedule of the (Amendment) Act, 2015 for the reason that the Arbitrator has served the respondent com- pany in many matters which are as follows:-
S. No. Name of the Case in which OMP COMM.
the Arbitrator had acted as No.
such
1. Aakash Educational Services 107/2019 Pvt. Ltd vs. Vinay Kumar Pandey
2. Aakash Educational Services 112/2019 Pvt. Ltd vs. Pawan Kumar Saini OMP (Commercial) No. 93/2019 Page No. 5 of 43
3. Aakash Educational Services 122/2020 Pvt. Ltd vs. Ravi Bohra
4. Aakash Educational Services 109/2019 Pvt. Ltd vs. Kaveti Nagaraju
5. Aakash Educational Services 46/2021 Pvt. Ltd vs. Parul Khurana
6. Aakash Educational Services 09/2021 Pvt. Ltd vs. Promod Kumar Pandey
7. Aakash Educational Services 111/2019 Pvt. Ltd vs. Amit Dwivedi
8. Aakash Educational Services 110/2019 Pvt. Ltd vs. Himanshu Varsh-
ney
9. Aakash Educational Services 79/2019 Pvt. Ltd vs. Prashant Gautam
10. Aakash Educational Services 106/2019 Pvt. Ltd vs. Mohammed Khwaja
12. The Ld. Counsel for the petitioner took a strong exception to the point taken by the respondent in its reply to the peti- tion that the appointment of the same arbitrator in more than three matters does not render his appointment void and that at the most it merely raises a justifiable doubt which can be adjudicated looking at the conduct of the arbitrator and in support of this submission the respondent placed reliance upon the case of HRD Corporation vs. Gail India, 2018 (12) SCC 471.
OMP (Commercial) No. 93/2019 Page No. 6 of 4313. Ld. Counsel for the petitioner submitted that the Explana- tion 3 of Rule 34 of Fifth Schedule and Explanation 3 of Rule 19 of Seventh Schedule of the Arbitration and Concili- ation (Amendment) Act, 2015 clearly states that only in spe- cific kinds of Arbitration, such as maritime or commodities arbitration, it is permissible to draw arbitrators from a small, specialized pool. It has been nowhere stated that in educa- tional matters or service matters one can draw arbitrators from a small and specialized pool. Thus, the case of the re- spondent does come within the exception.
14. Stating that the judgment in HRD Corporation (supra) sup-
ports the case of the petitioner, Ld. Counsel for the peti- tioner placed reliance upon para 31 wherein it has been held as under:-
"31. It was then argued that under Explanation 3 to the Seventh Schedule, maritime or commodities arbitration may draw arbitrators from a small, specialized pool, in which case it is the custom and practice for parties to appoint the same arbitrator in different cases. This is in contrast to an arbitrator in other cases where he should not be appointed more than once. We are afraid that this argument again cannot be countenanced for the simple reason that Explanation 3 stands by itself and has to be applied as a relevant fact to be taken into account. It has no indirect bearing on any of the other items mentioned in the Seventh Schedule."
15. It is submitted that as per Arbitration and Conciliation (Amendment) Act, 2015, the Ld. Arbitrator has to give dec-
OMP (Commercial) No. 93/2019 Page No. 7 of 43laration under Section 12 of the (Amendment) Act, 2015. The impugned award is silent about any declaration given by the Ld. Arbitrator. The Arbitrator had himself admitting the fact that on 13.2.2018 he was offered and on 20.02.2018, he accepted the appointment i.e. within a week. This clearly shows that neither the petitioner was informed about the ap- pointment of arbitrator nor consent was taken from the peti- tioner for the said appointment. Such conduct on the part of Arbitrator clearly shows the bias and arbitrariness on his part.
16. The Arbitrator has given false declaration in violation of Section 12 of the (Amendment) Act, 2015 and he has eluded and evaded making any clear declaration about the cases in which he was nominated as the arbitrator by the respondent Aakash Educational Services. The Ld. Arbitrator has not given the details of the cases pending before him.
17. As per section 12 of the Arbitration and Conciliation (Amendment) Act, 2015 which says that "An arbitrator shall disclose in writing any circumstances......"
18. Ld. Counsel for the petitioner submits that in the Explana-
tion 1 - the grounds stated in Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. As per Rule 22 and Rule 24 of the Fifth Sched- ule the following are the disqualifications:-
"Rule 22: the arbitrator has within the past three years been appointed as arbitrator on TWO or more occasions by one of the OMP (Commercial) No. 93/2019 Page No. 8 of 43 parties or an affiliate of one of the parties; and Rule 24: the arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties or an affiliate of one of the parties."
19. Reverting to the Declarations dated 20.02.2018 and 21.07.2018 given by the Arbitrator under section 12 of the Act, Ld. Counsel for the petitioner argued that the Arbitrator has not given the details of other arbitration proceedings conducted by him on behalf of the respondent. The respon- dent cannot deny the fact that numbers of arbitration pro- ceedings were conducted by the same arbitrator and none of the claim petition filed by it was totally rejected by the same arbitrator. Even the original arbitral proceedings point out that Sole Arbitrator was dealing with at least ten or more ar- bitration proceedings on similar circumstances simultane- ously between the respondent and other employees who had resigned or left the service.
20. The amendments in section 12 of the Act became operative with effect from 23.10.2015. As such it was mandatory for the Arbitrator to make disclosure regarding his relations with the parties, any circumstances creating any doubt about his independence and impartiality, devotion of time, his qualification etc. before entering into the reference. An Ar- bitrator is bound to give such disclosure according to the form specified in the Sixth Schedule of the Act and the grounds mentioned in the Fifth Schedule are the guiding factors to determine whether any justifiable grounds exists regarding independence and impartiality of the arbitrator.
OMP (Commercial) No. 93/2019 Page No. 9 of 43Similarly, certain circumstances mentioned in the Seventh Schedule to the Act are also required to be disclosed by the Arbitrator to the parties. Non-compliance of the complete mandatory declaration makes the proceedings illegal and is sufficient to set aside the Award. On this aspect, reliance has been placed upon the judgment of Hon'ble High Court of Delhi in Alupro Building Systems Pvt. Ltd. vs. Ozone Over- seas Pvt. Ltd. reported as 2017 SCC OnLine Del 7228;MANU/DE/0495/2017. In this case, even one another single arbitration of the party taken by the arbitrator, which was not disclosed in the declaration, was found sufficient to set aside the award.
21. It has been submitted that if the judgment of Hon'ble High Court of Delhi in Dream Valley Farms Pvt. Ltd. vs. Religare Finvest Limited 2016 SCC online Del 5584 is taken into consideration, then also it emerges that submitting the decla- ration under Section 12 (1) of the Act is now mandatory for a person who is approached in connection with his possible appointment as an arbitrator with effect from 23.10.2015 and that declaration should be truthful and not misleading. Here in the present case the declaration is not complete at all, so the award is liable to be set aside.
22. It is submitted on behalf of the petitioner that choosing the same arbitrator again and again by the respondent no.1 Company for conducting hundreds of arbitration proceed- ings on its behalf, none of which had gone against respon- dent no.1 completely, has created a suspicious and doubtful circumstance in the mind of the petitioner, when it was not a OMP (Commercial) No. 93/2019 Page No. 10 of 43 special kind of arbitration requiring selection of the arbitra- tor only from a small and specialized pool. In fact the arbi- trator was imposed upon the petitioner and his choice was not taken by giving any option to select from a list of certain arbitrators. This lapse on the part of the respondent no.1 as well as not giving complete and full information by the arbi- trator, the proceedings conducted by him cannot be treated as valid and thus creates a sufficient ground to set aside the award without discussing anything on merits.
(iii). Party's Autonomy and fairness absent
23. It is further submitted that the petitioner had no say in the appointment of the Sole Arbitrator. No Panel of Arbitrators was prepared by the respondent and in this manner the Peti- tioner neither had any option nor any opportunity to finalize the name of the Sole Arbitrator. The name of the Arbitrator had been finalized by the respondent as per its choice and liking. The said Sole Arbitrator had been engaged by the re- spondent in many other similar matters involving the re- spondent and it gives rise to justifiable doubts as to his inde- pendence or impartiality. The non-disclosure of such an im- portant fact amounts to misconduct on the part of the re- spondent and the Arbitrator and prejudicially affected the rights and interests of the petitioner in the arbitration pro- ceedings.
24. In addition, it has been submitted that the Arbitration Agree-
ment is not valid under the law and the composition of the Arbitral tribunal or the arbitral procedure was not in accor-
OMP (Commercial) No. 93/2019 Page No. 11 of 43dance with the agreement of the parties. Moreover, it is in conflict with the fundamental policy of Indian law.
25. It is submitted that the conduct of the Sole Arbitrator raises doubt on his fairness. The Sole Arbitrator conducted the proceedings in a manner most prejudicial and adverse to the rights and interests of the petitioner and passed the im- pugned Award. The ex-parte award had been passed on 21.02.2019 but posted to the petitioner only on 17.06.2019 (page 16 of the Arbitral record), raising doubts vis-à-vis his conduct.
26. Ld. Counsel for the petitioner placed reliance upon TRF Ltd. vs. Energo Engineering Projects Ltd., 2017 (8) SCC 377and cited para 54 which goes as under:-
"54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be other- wise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual re- spectability. We are only concerned with the authority or the power of the Manag- ing Director. By our analysis, we are obli- gated to arrive at the conclusion that once the arbitrator has become ineligible by op- eration of law, he cannot nominate an- other as an arbitrator. The arbitrator be- comes ineligible as per prescription con- tained in Section 12(5) of the Act. It is in- conceivable in law that person who is statutorily ineligible can nominate a per- son. Needless to say, once the infrastruc- ture collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, OMP (Commercial) No. 93/2019 Page No. 12 of 43 once the identity of the Managing Direc- tor as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated."
27. It is submitted on behalf of the petitioner that the clause 47 of the Service Rules Manual is entirely one sided, preju- diced and contrary to the public policy. The Axiom "Nemo debet esse judex in propria causa" i.e. no one can be Judge in his own case has been relied upon to challenge the au- thority of the Chairman of the respondent to appoint an Ar- bitrator. As per the language of this clause, if any dispute arises relating to the contract, it shall be referred to the Sole Arbitrator appointed by the Chairman of M/S Aakash Edu- cational Services Ltd. meaning hereby that the sole arbitra- tor would be appointed by the respondent company in his own case. This clause itself shows that even if the arbitrator knows the respondent company/its directors, its sharehold- ers etc the same would not render him disqualified. Cer- tainly the Chairman/Managing Director would be interested in success of the arbitration proceedings in favour of the re- spondent. The appointment of unilateral arbitrator by the re- spondent, even on basis of arbitration clause of the agree- ment, is not legal and valid.
28. In this regard reliance has been placed upon decision of Hon'ble High Court of Delhi in case Proddatur Cable TV Digi Service vs. SITI Cable Network, 2020 SCC OnLine Del 350 : (2020) 267 DLT 51, in which it has been held that procedure laid down in arbitration clause cannot be permit- ted to override considerations of impartiality and fairness in OMP (Commercial) No. 93/2019 Page No. 13 of 43 arbitration proceedings. While rendering this judgment Hon'ble High Court of Delhi relied upon the decision of Supreme Court given in case of Perkins Eastman Architects vs. HSCC (India) 2019 (9) SCC Online SC 1517, wherein it is held that a person having an interest in the dispute or in the outcome or decision thereof must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint a sole ar- bitrator. On this aspect, reliance has also been placed upon Omcon Infrastructure Pvt. Ltd. vs. Indiabulls Investment Advisors Ltd. MANU/DE/1664/2020 in which the same view had been taken.
29. Thus, the Ld. Counsel for the petitioner argued that the re-
spondent, despite having such authority under arbitration clause of employment agreement, neither could appoint its own official nor any other person unilaterally an Arbitrator. Either the choice of the arbitrator should have been done jointly or at least by giving an option to the petitioner to choose anyone from the panel of arbitrators suggested by the respondent. In this regard reliance upon the decision of the Supreme Court given in case TRF Limited vs. Energo Engineering Projects Limited (2017) 8 SCC 377 has been reiterated.
(iv). Non-service of notice of Proceedings
30. Arguing that there had been no due service of the process upon the petitioner, the Ld. Counsel for the petitioner read OMP (Commercial) No. 93/2019 Page No. 14 of 43 form impugned award (page 4 of Arbitral Record) wherein it has been recorded, "Vide my notice dated 05.03.2018, I directed both the parties to appear before me on 15.03.2018..." and submitted that the Award/record is silent to this aspect whether notice dated 05.03.2018 was actually served upon the petitioner because the address of the peti- tioner is Village-Barahua Bhojpur, Post Saray Murar Singh, Pratapgarh, Uttar Pradesh-230001 and that it is very much within the knowledge of the respondent as well as in the knowledge of Ld. Arbitrator as can be seen from the copy of statement of claim filed by the respondent (page 32 of Arbi- tral Record) but the Ld. Arbitrator has not stated anything about the same. Further, the tracking report filed by the re- spondent as R1/B (page 55 to 58) clearly shows that it was not delivered to the petitioner. This clearly shows that the petitioner had not received notice invoking arbitration clause. It is also to be noted that at page 4 of Arbitral record in impugned award it has been stated that "intimation was also sent by the claimant vide notice for invoking dated 22.01.2018 in this regard to the respondent/petitioner herein,". However, despite having email address of the peti- tioner and correct postal address of the petitioner (page 68 of Arbitral Record), notice dated 22.01.2018 was not com- municated to the petitioner either through email or through postal means. The award is completely silent on the aspect if any email had been sent from the office of Arbitrator to the petitioner. Non service makes the entire arbitral proceedings vitiated. Ostensibly, the respondent in collusion with the Ar- bitrator had sent all communication to some wrong address OMP (Commercial) No. 93/2019 Page No. 15 of 43 proves their malafide intention to initiate arbitral proceed- ings and to get favorable orders from the Ld.Arbitrator.
31. It has been argued that the Order V Rule 10 of the Code of Civil Procedure provides that summon must be served by delivering a copy of the original summoning document pre- pared by the Judge to the respondent sealed with the court's seal and signature. The summons must be sent through reg- istered post such as India Post. The post office allows the sender to track the summons and the tracking receipt is re- quired to be produced before the court to prove that sum- mon was served successfully. Thus, online tracking system/report is sufficient to prove the service of notice as held in T. Surva Satish Vs. State Of Telangana, 2020 SCC Online TS 1452.
32. Concluding on the aspect, ld. Counsel for the petitioner submitted that this is a fit case for doctrine of Principle of Natural Justice, where it is the duty of the court to prevent miscarriage of justice, to secure justice and to give protec- tion against the arbitrariness. The question arises in such sit- uation that can something which is void ab-initio be allowed to continue.
(v). Signing on the Dotted Lines
33. Submitting on the merits of the case, the Ld. Counsel for the petitioner submitted that the petitioner had joined the claimant company as Assistant Professor Grade-I in Zool- ogy Department on 5.02.2012 for a period of two years. Though the said contract was signed but the service Rules Manual was never provided to the petitioner/non-claimant.
OMP (Commercial) No. 93/2019 Page No. 16 of 43No time was given to read or to go through the "Services Rules Manual for the employees". Till the date of filing of claim by the respondent the petitioner has not received the copy of Service Rules Manual.
34. The process of hiring new faculty as adopted by the respon-
dent was that the Managing Director/Authorized Senior Of- ficial of the respondent/claimant company had been sitting in front of him across the table and had engaged the peti- tioner/non-claimant in a discussion; another staff member had been standing near the petitioner/non-claimant and was turning the pages of the big docket and the petitioner/non- claimant was asked to sign at each and every page that the staff member was turning. After the signatures had been ob- tained on the docket containing numerous pages, the same was taken away by the said staff member.
35. It is clear the respondent has put forward an unreasonable clause which states that the petitioner shall work for mini- mum period of two years and clause 13(b) stating that after expiry of the said term the contract will be automatically re- newed for another two years and so on unless the contract is terminated by either parties to this agreement as per the pro- visions of manual. There will be no termination of contract through efflux of time. It is submitted that the above clause is quite unreasonable and is infringing the public policy and hampering the capacity of the person to work as the work environment is too restrictive.
36. The petitioner had never agreed to any clause of the Service Rule Manual of the respondent company. Even otherwise, OMP (Commercial) No. 93/2019 Page No. 17 of 43 the relation of the petitioner and the respondent is one of employer and employee, and in this situation one cannot imagine the employee refusing to sign the documents given by the employer. Moreover, the petitioner was compelled to sign a 'Joining Declaration' at the time of joining to bind the petitioner with the respondent in addition to the ultra-vires clauses of the Service Rules Manual. As the petitioner did not have any intention to sign such letter but for saving his job and for survival, he had to sign the same otherwise he would have lost his job and such tactics on the part of re- spondent show their mala-fide intentions towards their em- ployees.
37. The Arbitrator has simply gone by the clauses in the Service Rules Manual and the respondent is seeking to enforce terms and conditions of an agreement which is on the face of it opposed to the public policy and clearly hit by section 23 and 28 of the Contract Act. 1872. Various sub-clauses under Clause 14 of the Service Rules Manual read as under:-
"14(b) In the event an employee wishes to leave the services of Aakash Institute, Lucknow Centre, he/she is required to give notice in writing giving clear 3 months' time to AESL so that such period co−terminates with expiry of the aca- demic session. The said notice is required to be delivered to the Centre Director/Centre Manager by Regd.AD post or hand delivered but duly acknowl- edged to be received so that there would be ambiguity regarding the contents of your notice and its serving upon AESL. The notice for 3 months can be given only OMP (Commercial) No. 93/2019 Page No. 18 of 43 between 15th November to 28th Novem- ber in any year after completion of the ini- tial period of three years. If any employee gives notice at any time other than speci- fied, it will not be accepted and will be in- valid as per the terms between the above mentioned period, it will be assumed he/she is going to complete the coming next session.
................................................... 14(d) In case you are unable to adhere to the said mandatory notice period, you would be liable to pay to AESL
(i)a minimum pre−estimated and pre−de-
termined damage to the tune of double the gross salary for the deficient notice period or the remaining period of the academic year/contract period of three years, which- ever is higher e.g. if a person quits on 31st October of any given year after comple-
tion of three years, he/she will be required to pay 4 x 2 x Y rupees as damages to AESL (the value of Y will be gross monthly salary). Such liability would be automatically incurred once the breach is committed by the employee & no notice in this regard would be served upon you to claim the said pre− determined & pre−estimated damages. You would be severally liable to pay the same within (seven) days of your leaving. If AESL does not receive the payments within 7 days of leaving AESL shall have the right to recover the same along with interest @ Z p.a. through legal process (Z=PLR + 3%; where PLR is Prime Lending Rate of AESL.
(ii)The above damages are not punitive but only a part compensation for the huge loss of face, reputation, brand, equity, mind equity, future business losses due to your quitting without completing the aca- demic year & leaving the students in a OMP (Commercial) No. 93/2019 Page No. 19 of 43 lurch. The damages are payable at the sole discretion of Centre Director of the Insti- tute.
14(e) After the expiry of the initial & minimum contract period, this contract will continue subject to clause 13(b) above for another term of 3(three) years subject to the candidate being capable of rendering effective services.
14(f) Corollary of clause (13) and 14(a) if in the last year of the contract period or extension thereof at AESL, an employee does not submit his resignation between 15th February to 28th February, it will be assumed that he/she is willing to continue his/her job for another term of three years subject to the conditions contained in this manual."
14(g) You will submit two undated blank cheques in favour of AESL. You hereby authorize AESL for the filling up of the date and amount on the cheques and thereafter to encash the said cheques. In case of non−compliance of the contract terms contained in this manual, the cheques become payable immediately.
That the said cheques shall not be treated as a security cheques(s) for legal or any other purposes as it is issued by you in order to discharge of your liability which may occur on account of damages as mentioned under clause 14(d) of the agreement.
I, ................. undertake to keep sufficient balance in my bank account on which the above mentioned cheque are ......drawn to ensure the encashment of the said cheques. Cheque nos. are ......... In case, the above said cheque gets dishonoured on its presentation to the banker for the reason of insufficient funds, OMP (Commercial) No. 93/2019 Page No. 20 of 43 a/c closed, stop payment or any other reason, you shall be deemed to commit an offence u/s 138 of N.I. Act and the appropriate proceedings shall be initiated against you before the appropriate courts of law.
AESL is further authorized to take appropriate legal action to recover the balance amount if any. Wilful and intentional breach of this contract would attract liability upon the employee for compensatory & exemplary damages in addition to contractual liabilities mention in clause 14(d) and 14(k) and under any other provision of this manual."
14(h) In the event of your default, non−compliance or wilful breach of the contract or sudden termination of the contract and/or your leaving the institute without following the proper procedure, as laid down in this manual, and the employee's refusal to meet his/her obligation towards AESL in letter and spirit of the service rules and the matter becoming sub-judice, the employee shall be responsible for the entire litigation expenses including, arbitration proceedings, organizing hearing in the arbitration and other legal proceedings if any required to be initiated to facilitate arbitration proceedings. Needless to say, litigation expenses are subjective.
However, such expenses cannot be less than Rs.10,000/− per hearing either before the Court or before the arbitrator apart from the other expenses as elucidated above.
14(k) If employee commits any act of violation to the provision of clause 14(j) of the agreement, with intend to cause wrongful loss to AESL, shall be held OMP (Commercial) No. 93/2019 Page No. 21 of 43 liable to pay a fixed sum of Rs.2 lacs to AESL towards damages".
38. The clauses mentioned above is exactly similar as in the case of Vivek Rai (supra). These clauses clearly constitute an unconscionable restraint on the right of one of the parties to seek legal redress; therefore are hit by Section 23 and 28 of the Contract Act also. The important clauses of the al- leged Service Rules Manual are Clauses 13 (a), 13 (b), 14(b), 14(d), 14(g), 14(h), 14(j), 14(k), 38 and 49. As per sub-clause 14(g) regarding the undated signed cheque kept by the respondent company, the same is one of the black- mailing tactics by the respondent company. Every time a faculty member wants to resign and quit his job he is threat- ened by the respondent company that they will use the pre deposited undated but signed cheques.
39. It is submitted with regard to the clause 47 of the Rules that the same is totally one sided, prejudiced and contrary to public policy. "Nemo debet esse judex in propria causa - No one can be judge in his own case." As per the language of this clause even if the sole arbitrator is known to any of the director or shareholders and even if he had been dealing with the company or had occasion to deal with any matter of the agreement the same shall not render him disqualified. This clause itself shows that even if the arbitrator knows the respondent company/its directors, shareholders etc. the same would not render him disqualified.
40. If a faculty member wants to leave the company on 2 nd June (for instance), he will have to wait for a period of one year OMP (Commercial) No. 93/2019 Page No. 22 of 43 till May 31st of the next year to resign. Also the period of notice of two months has to co-terminus with the expiry of the academic session, meaning thereby if a faculty member serves a notice period any time after February in a year, then his notice period cannot co-terminate with the expiry of the academic session. Therefore, he cannot leave the company till the expiry of next academic i.e. 1 ½ years. No employer can wait for a new employee for a time period which is more than one year.
41. It is submitted that the respondent is liable for playing with the career of its students by transferring the faculty mem- bers in the mid of the session. This shows that the respon- dent is concerned only with the profit of its company and nowhere concerned about its student. Even otherwise, the relation of the petitioner and the respondent is one of em- ployer and employee, and in this situation one cannot imag- ine the employee refusing to sign the documents given by the employer.
Arguments of the Respondent
42. Shri Sagar S. Jaiswal, Ld. Counsel for the respondent had refuted the submissions made on behalf of the petitioner.
(i). Special Business Model of Respondent
43. He opened his argument on the premise of the special nature of the work of the respondent. He stated that while appreci- ating the case in hand, the foremost thing to be kept in mind is that the respondent is an educational institute and that it is engaged in the service of providing quality education to the OMP (Commercial) No. 93/2019 Page No. 23 of 43 students aspiring for the competitive examinations, which are conducted on yearly basis. The respondent institute has one of the largest student base in India and students from far-flung areas of the country approach the respondent insti- tute to obtain quality education. The remuneration paid by the respondent is one of the best in the industry. The respon- dent engages specialized faculties and pay them handsome salary. In the instant case the salary of the petitioner was Rs.2,04,300/- (Rupees Two Lakhs Four Thousand Three Hundred Only) per month.
44. The immediate resignation of the any member of the Fac-
ulty during the mid-session, without even serving the notice period, disastrously affects the interest of innocent students as the respondent has to arrange another qualified faculty member for the same which naturally takes some time and students are largely affected. Thus, in order to protect the in- terest of the students, the respondent institute had earlier im- posed the condition that a faculty member can resign only during a particular window which would be co-terminus with the academic session.
45. In the case in hand, the petitioner had left the respondent in-
stitute with immediate effect from 07.12.2017 without any prior notice and without even serving the notice period of three months. Immediate resignation of the petitioner has caused massive loss to the respondent in terms of education to the students and reputation of the respondent.
OMP (Commercial) No. 93/2019 Page No. 24 of 43(ii). Vivek Rai's Judgment not applicable
46. The allegation by the petitioner that he had not read the ser-
vice conditions at the time of joining is absolutely false. It is on record that the petitioner has himself given a "Personal Guarantee & Declaration" which has been attested by a No- tary Public (page 64 of the Arbitral Record) whereby the pe- titioner has stated that he has read and understood the terms and conditions of Service Rules.
47. Much reliance has been placed by the petitioner's counsel on the case of Vivek Rai vs. Aakash Institute 2015 (149) DRJ 309. In 2015, in the matter of Vivek Rai, OMP 561/2014, decided by the Hon'ble High Court of Delhi on 04.03.2015 the High Court of Delhi had rendered those clauses of contract being hit by Section 23 and 28 of Con- tract Act. Since the petitioner was appointed in the year 2012, therefore, the contract governing the petitioner's ser- vice had similar clauses, however, neither the respondent nor the impugned Award has pressed those conditions and the Award is not based on conditions as mentioned in Vivek Rai (Supra). Thus, the challenge to the present award, passed in the year 2018, cannot be based upon the judgment of Vivek Rai.
48. Respectfully submitted that the entire case of the petitioner is based on the Vivek Rai Judgment solely. However, it is submitted that in the present matter in dispute Vivek Rai Judgment is, howsoever, inapplicable. Attention of this court is drawn to para 11 of the Vivek Rai (supra) judgment wherein the Hon'ble High Court said that the Ld. Arbitrator OMP (Commercial) No. 93/2019 Page No. 25 of 43 has simply gone by the clauses in the agreement and even without scrutinizing has awarded the claim in toto. Further in para 14 of the same judgment, the High Court said that the clauses appear to be unconscionable and opposed to public policy and an award based on above clauses would be clearly opposed to public policy.
49. Attention of this Court is now drawn to the claims sought by the respondent before the Arbitrator which is on page 43 of the Arbitral Record wherein Claimant sought Rs.12,25,950/- towards damages along with interest whereas the Ld. Arbi- trator, who is a retired ADJ, has allowed the claim only par- tially and also provided the findings and reasoning on Page 11 onwards of the Award which is on page 13 of the Arbitral Record. The Award under Claim 1 states that certain clauses in whole in the Service Rules manual are against the public policy and therefore provided the damages to Respondent herein against the mandatory notice period of only three months only amounting to Rs.6,12,900/-.
50. The respondent-institute had also sought penal damages of Rs.2,00,000/- which is claim no. 2 (page 44 of Arbitral Record) which has been absolutely rejected by the Arbitra- tor (page 15 of the Arbitral Record).
51. The respondent also sought pendentlite interest of 12% per annum but the Arbitrator allowed the interest only @ 10% per annum. (page 14 of Arbitral Record). In these circum- stances, the allegation of the petitioner that the Award has been passed in mechanical manner is absolutely perverse as the bare reading of impugned Award would show the de-
OMP (Commercial) No. 93/2019 Page No. 26 of 43tailed reasoning and application of judicial mind in deciding the dispute between parties.
(iii). Narrow scope of section 34 petition
52. It has been submitted that the Hon'ble Supreme Court of In-
dia in umpteen number of cases has time and again repeated that the scope of judicial interference in deciding section 34 petition is very narrow and the Court must take the approach towards protecting the Award rather than setting it aside. Reference is drawn to Dyna Technologies Pvt. Ltd. Vs. Crompton Greaves Ltd.; 2019 SCC Online SC 1656. The Court clearly stated that the under Section 34 the Courts do not have Appellate jurisdiction and courts must look for an interpretation which would sustain the Award and not set it aside. In Para 27 it is further said that the Court must not in- terfere with an Award merely because alternative view on facts and contract exist.
"26. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated OMP (Commercial) No. 93/2019 Page No. 27 of 43 by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.
27. Moreover, umpteen number of judgments of this Court have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."
53. Thus, the judicial interpretations propagate that the ap-
proach ought to be to protect the award and not to set aside in a causal manner. The Courts must respect the finality of award and party autonomy.
54. In State Trading Corporation of India Limited vs. TOEPFER International Asia Limited; (2014) SCC Online Del 3426 it has been held in para 18 that "If we were to start analyzing the contract between the parties and interpreting the terms and conditions thereof and which will necessarily have to be in the light of the contemporaneous conduct of the parties, it will be nothing else than sitting in appeal over the arbitral award and which is not permissible."
55. The Hon'ble High Court of Delhi in Mahanagar Telecom Nigam Ltd. v/s M/S Gaurav Enterprises; FAO (OS) (Comm) 175 of 2018 on 25.09.2018; reference is drawn to Para 18, the Court said that finding of fact as well as of law by the OMP (Commercial) No. 93/2019 Page No. 28 of 43 Arbitrator is ordinarily not amenable for interference u/s 34 even if there are errors, whether factual or legal, which stops short of perversity.
"18. Also, the scope of this court is limited with regard to Section 34 and 37 of The Arbitration and Conciliation Act, 1996. The position of law stands crystallized today, that findings, of fact as well as of law, of the arbitrator/Arbitral Tribunal are ordinarily not amenable to interference either under Sections 34 or Section 37 of the Act. The scope of interference is only where the finding of the tribunal is either contrary to the terms of the contract between the parties, or, ex facie, perverse, that interference, by this Court, is absolutely necessary. The Arbitrator/ Tribunal is the final arbiter on facts as well as in law, and even errors, factual or legal, which stop short of perversity, do not merit interference under Sections 34 or 37 of the Act..."
56. It is submitted on behalf of the respondent that the petitioner has raised the argument during oral submissions that Section 34(2)(a)(ii) mentions about the term Arbitration Agreement, hence, this Court has jurisdiction to interfere with the Con- tract but humbly submitted that argument of petitioner is to- tally misconceived as Arbitration Agreement as defined un- der section 7 of the Act which clearly states that it merely means the Arbitration Clause in an agreement or the sepa- rate Arbitration Agreement and not the entire contract be- tween the parties. Section 34(2) Explanation 2, the Act itself provides that the Courts shall not entail a review on the mer- its of dispute.
OMP (Commercial) No. 93/2019 Page No. 29 of 43Appointment of Arbitrator in more than 3 Cases
57. Hon'ble Supreme Court in HRD CORPORATION vs. GAIL INDIA 2018 (12) SCC 471 has held that merely appoint- ment of an Arbitrator in more than three cases does not ren- der subsequent appointment as void rather it merely raises a justifiable doubt and that can be adjudicated by the previous conduct of the Arbitrator and the Arbitration material placed on record. In the present matter the Ld. Arbitrator's subse- quent appointment was upheld by the Supreme Court. The Court further said that Schedule V of the Act merely raises doubts and does not make an Arbitrator ineligible ipso facto. That in this respect, it is pertinent to note that the Ld. Arbi- trator in his Disclosure as per Section 12 of the Act, dated 20.02.2018, declared that at the time of the appointment in the present case, the Ld. Arbitrator had only three ongoing arbitrations (page 90 of the Arbitral Record).
58. It has been argued that the Ld. Arbitrator has been a retired District and Sessions Judge. Allegations against the arbitra- tor qua his impartiality and unbiased approach is completely unwarranted. It is evident from the award that Ld. Arbitrator has not allowed total claim of the Respondent. That Respon- dent claimed damages to the tune of Rs.14,25,950/- along with interest @ 12 percent P.A. However, Ld. Arbitrator has only awarded claim of Rs. Rs.6,12,900/- along with interest of 10% PA.
OMP (Commercial) No. 93/2019 Page No. 30 of 4359. The case of Sudesh Prabhakar and Ors. vs. EMAAR Con- structions Pvt. Ltd. [2018 (2) Arb. LR 538 (Delhi)] has been relied upon by the respondent stating that the Hon'ble High Court of Delhi, while relying on HRD Corporation (supra), has held that even an arbitrator who has been appointed on two or more occasions by a party or its affiliates in the past three years, may yet not be disqualified and also that the Ld. Arbitrator has decided batch of matters concerning similar question of law, that would not amount to disqualification under Schedule Five. The High Court under para 11 of the judgment held as under:
"11. A reading of the above judgment would show that the Supreme Court has held that the disqualification contained in item 22 and 24 is not absolute and even an Arbitrator who has been appointed on two or more occasions by the parties or affiliates in the past three years, may yet not to be disqualified on showing that he was independent and impartial on the earlier two occasions. In any case, distinction has to be drawn between ineligibility to be appointed as an Arbitrator for the reason contained in the Seventh Schedule of the Act and the reasons which may give rise to justifiable doubts as to their independence or impartiality as contained in Fifth Schedule of the Act. Where Seventh Schedule gets attracted, party may straightway approach the Court under Section 14 of the Act, however, in cases of Fifth Schedule, such doubts as to independence or impartiality have to be determined as a matter of fact in the facts of the particular challenge made by the Arbitral Tribunal under Section 13 of the Act. If a challenge is not OMP (Commercial) No. 93/2019 Page No. 31 of 43 successful, and the Arbitral Tribunal decides that there are no justifiable doubts as to the independence or impartiality of the arbitrator/arbitrators, the Tribunal must then continue the arbitral proceedings under Section 13(4) and make an award. It is only after such award is made, that the party challenging the arbitrator's appointment on grounds contained in the Fifth Schedule may make an application for setting aside the arbitral award in accordance with Section 34 on the grounds on which such party had sought to challenge the authority of the arbitrator."
Appreciation of Arguments
60. I have considered the submissions advanced at Bar. I have also considered the case law cited by the parties in the text and context of the facts of the present case with due reverence.
61. In this matter, on the one hand the respondent has taken an exception to petitioner impugning the "Service Rules Manual for the Employees as Faculty Members" on the ground that the scope of the proceedings under section 34 of the Act has a limited scope and ambit, but it has sailed in the same boat while dwelling into the narrative of the business model of the respondent. The respondent has dwelled at length into the nature of cut-throat competition which it as an educational institution faces from its rivals; an emotional cord in the name of the interest of the students has been touched and an attempt has been made to justify the agreement between the petitioner and the respondent.
OMP (Commercial) No. 93/2019 Page No. 32 of 4362. There is a saying in French "À bon chat, bon rat" which means "to a good cat, a good rat". The expression comes from the fact that cats are experts at chasing rats, but rats are experts at avoiding cats. This tug of war is perennial in nature. While in rule of the nature or the rule of the jungle the dictum may be "survival of the fittest". But in a society, governed by the rules of law, the weak ought to be saved from the tyranny of the mighty so the rule changes to "protection of the weakest". The various provisions of the Contract Act are a testimony to this.
63. Sometimes there could be an apparent conflict between the economics and the law. However, the economics and law are not the antithesis of each other and cannot live in a state of divorce for a long time, in a society governed by the rule of law. The respondent may talk at length of its business model and argue all facts and fallacies. Similarly, the petitioner may call each and every clause of the "Service Rules Manual for the Employees as Faculty Members" as antithesis of the principles of fairness or equity. That is another matter that both the parties have reaped fruits under the said agreement and the grapes turned sour only when the parties parted ways, and when the acts of petitioner were branded as omissions by the respondent. Prior to that the going had been good for the past five years.
64. This Court must be conscious of the fact that it is not the entire "Service Rules Manual for the Employees as Faculty Members" which is under challenge before it as propounded by the petitioner. This Court must also be conscious of the OMP (Commercial) No. 93/2019 Page No. 33 of 43 fact that it is not the business model of the respondent that is a point of consideration before it. The Ld. Counsel for the parties have articulated their arguments to project their respective picture, while at the same time challenging if the same attempt is made by the adversary. It is necessary for this Court to come out of the mist that has been created and focus on the real nature of dispute before it and not to be swayed by the camouflage that has been created. If the Court goes into this realm, it amounts to falling into the trap laid and going beyond the scope and ambit of the section 34 of the Act.
65. Thus, this Court is not to examine the entire "Service Rules Manual for the Employees as Faculty Members" being in consonance with law or whether the business model of the respondent necessitated it.
66. This Court is concerned only with the aspect if the impugned Award is valid or invalid on the touchstone of the various grounds provided under section 34 of the Act. Any inquiry beyond that would be doing offence to the clear mandate of the statute and the legal jurisprudence that has developed on the subject. Therefore, I subscribe to the argument of the defendant that a challenge under Section 34 of the Act has a narrow compass.
67. It is in this understanding of the statutory and case law, the impugned Award has to be examined. In the legal jurisprudence that has developed around the subject, I am conscious that a challenge under section 34 of the Act is not akin to an appeal and that it has a narrow scope. In this OMP (Commercial) No. 93/2019 Page No. 34 of 43 backdrop, I shall endeavour not to be way-laid by any such argument, be that of the petitioner or the respondent, which has tendency to derail this focused approach to the examination of the impugned Award.
68. The principles that govern the appointment of an arbitrator and taking up of a cause by him have their roots in equal treatment of parties and respecting the autonomy of the parties. Thus, it is incumbent upon the Arbitrator, who has been approached with a request to act as such, to give a declaration vis-à-vis any facts that raise a justifiable doubt as to his impartiality etc. This is the mandate of section 12 of the Act. Explanation 1 of the section 12 (1) highlights that the grounds stated in the Fifth Schedule shall guide in the endeavour. Explanation 2 appended to this provision states that the declaration be in the form specified in the Sixth Schedule. The purpose of this exercise is to give as much information to the parties as possible so that they can take an informed decision whether to accept the Arbitrator or to challenge his taking up the dispute for adjudication. Thus, keeping in view the language used in this provision, the Legislative intent is clear that there must be fair and complete disclosure. The list of factors given in Fifth Schedule is ostensibly illustrative and not exhaustive.
69. Of course, the Legislature has taken cognizance of the fact that in some specific areas of dispute like maritime or commodities matters there may be only a few persons available to act as arbitrator, so the rule of not more than three matters has been made inapplicable there. However, OMP (Commercial) No. 93/2019 Page No. 35 of 43 the instant dispute is not covered in the exceptions as it is a general nature of dispute pertaining to service agreement and consequential damages etc.
70. "Caesar's wife must be above suspicion", goes the adage.
Thus, while making a declaration as envisaged under section 12 of the Act, it is incumbent upon the Arbitrator not only to follow the letter of the law but also to follow the spirit of the law. The terminology used in section 12 (1) Explanation 1 is that the grounds stated in the Fifth Schedule are 'guide'. The jurisprudence that has developed on this subject is that the disclosure should be maximum and all the facts which may have a tendency to question the fairness of the Arbitrator or which give rise to any justifiable doubts about his impartiality ought to be disclosed. Thus, mere compliance with the letter of law is not sufficient, there must be full compliance with the spirit of law.
71. The Ld. Arbitrator has been found wanting on this aspect. A bare perusal of his declaration dated 20.02.2018 and 21.07.2018 shows that it conceals more than it reveals. He has given a declaration that he has only three ongoing arbitration cases, however he did not append the list or details of these cases with him. The petitioner has pointed out as many as ten cases of the respondent handled by the same Ld. Arbitrator to which no demur has been made in the course of the arguments. The declarations of the Ld. Arbitrator as regards any case involving the respondent or disputes of similar nature as the present involving the OMP (Commercial) No. 93/2019 Page No. 36 of 43 parties with which the respondent has similar juristic relationship is conspicuous by absence.
72. The purpose of the declaration as envisaged under section 12 of the Act is to grant an opportunity of introspection to the arbitrator to dwell into his consciousness and to fathom out any circumstance which may give rise to any justifiable doubts as to his impartiality. Such information may not be available in the public domain and thus the Legislature in its wisdom has put the onus on the Arbitrator himself. He is thus the fountainhead of this declaration and generator of the relevant information. As the bias is a state of mind and only the Arbitrator best knows his state of mind and the factors that influence the same. Bias is subtle and direct evidence of the same cannot ordinarily be found. The disclosure, therefore, ought to be as much and as fair as possible. It must be such that the parties concerned can inquire or investigate into the same. Thus, mere stating the number of cases to be three but not accompanied with the list of cases handled by the Ld. Arbitrator conceals more than it reveals.
73. An Arbitrator, as per the section 19(1) of the Act is not bound by the strict rules of Code of Civil Procedure or the Evidence Act. However, the procedure adopted by it must be fair and non-partisan and while adopting its procedure it can take a cue from the Code of Civil Procedure or the Evidence Act. I will consider this aspect while considering the service of summons aspect to which a challenge has been made by the petitioner. Service of summons, in my OMP (Commercial) No. 93/2019 Page No. 37 of 43 view, is an important facet of the principles of natural justice enshrined in the rule of audi-alteram-partum i.e. hear the adversary.
74. I have considered the aspect of service of petitioner (non claimant) in the aribtration proceedings. The initial notice dated 22.01.2018 sent by the respondent/claimant to the petitioner/non claimant has mentioned his address of Pratapgarh, Uttar Pradesh as well as email address. It also mention another address of the petitioner/non claimant of Munirka village, New Delhi. When the reference has been undertaken by the Sole Arbitral Tribunal. The notice dated 05.03.2018 has only one courier receipt attached to it (on page no. 89 of the Arbitral record) but there is no acknowledgment or report of service. Similarly, the notice dated 28.03.2018 has only one postal receipt of Delhi address of the petitioner but again there is no report/acknowledgment of service. The notice dated 21.07.2018 has annexed to it, two courier receipt bearing different addresses of Varanshi (page no. 86 ) but there is no report of acknowledgment of service.
75. In the minutes of proceedings dated 15.03.2018, it has been recorded that none appeared for the petitioner herein. However, the minutes of proceedings is silent about in what manner the process has been served upon the petitioner herein. The minutes of proceedings dated 10.04.2018 also sails in the same boat. It does not record the basis for coming to a conclusion that the petitioner herein has been duly served. It appears that the proof of sending the notice OMP (Commercial) No. 93/2019 Page No. 38 of 43 through speed post/courier has been deemed to be the proof of service.
76. Vide minutes of proceedings dated 28.07.2021, the Ld. Arbitrator has allowed an application under Section XVII of the Act for appoint a Local Commissioner for effecting the service of process upon the petitioner herein. The Ld. Counsel for the petitioner has drawn an exception to the same stating that such a procedure is unknown to law. I do not subscribe to this agreement. There is nothing wrong in this procedure and the Local Commissioner so appointed is in fact akin to a Process Server. The Ld. Arbitrator acted upon the report of the Local Commissioner and took the notice of the refusal of process by the petitioner herein and on no appearance having been caused by the petitioner herein, he was proceeded as ex-parte. I do not find any shortcoming in the conduct of arbitration proceedings on this count. Prima facie, the petitioner herein was given sufficient notice of the arbitration proceedings and he neglected the same at his own peril.
77. However, non joining the proceedings despite due service by the petitioner herein does not create any fetters in his right to impugne the Arbitral Award.
78. Ld. counsel for the respondent has taken an objection that the case of the petitioner is not covered by the judgment of Vivek Rai (supra) as the facts of the said case are quite different from the facts of the present case and that the award under challenge in the said case was a non speaking award. As per him, the case in hand is clearly OMP (Commercial) No. 93/2019 Page No. 39 of 43 distinguishable from the case of Vivek Rai (supra). The award under challenge in the present proceedings is a speaking award and the claim of the respondent herein has only been partly allowed and that too on the lower side than claimed.
79. I have considered this submissions. The judgments of the Superior Courts are cited and binding upon the Courts lower in hierarchy on the basis of the declaration of law propounded in them and not on the basis of the facts that were under consideration in the said judgment. Thus, the law propounded in the Vivek Rai judgment is binding upon this Court and has to be considered while appreciating the facts and evidence in the matter.
80. A look at the impugned award goes to show that the claim no. 1 of the respondent herein in the sum of Rs. 14,25,950/- on account of breach of clause no. 14 (b) of the "Service Rule Manual of the Employees" has been disallowed. It is pertinent to mention here that page no. 3 of "Service Rule Manual of the Employees" is not therein in the arbitral record. After page no. 2 (on page no. 53 of the arbitral record) there is page no. 4 (on page no. 54 of the arbitral record). It is not understood from what source the Ld. Arbitrator has "perused" the clause no. 14 (b) or for that matter, the clause no. 14 (d) (i) & (ii) of the manual as the relevant page is missing. Only a small portion of the clause no. 14 (d) (ii) appear on page no. 4. Thus, it is left to guess work how the Ld. Arbitrator was able to read and OMP (Commercial) No. 93/2019 Page No. 40 of 43 understand these clauses when they were conspicuous by absence in the abritral record.
81. Though, the Ld. Arbitrator has considered the claim of Rs.
14,25,950/-, there is no discussion/reasoning regarding the allowing the claim to the extent of Rs. 6,12,900/- and denying the rest of the claim. It appears that the finding has been given without dwelling into the legal basis on which the claim has been partly allowed and partly rejected. Without reading the clauses no. 14 (b) or 14 (d) (i) & (ii) of the manual how the Ld. Arbitrator has been able to appreciate the true import of the agreement is not decipherable. Similarly, though the claim no. 2 records the interest @ 18% per annum at one place/heading and @ 12% per annum in the discussion, no reason has been given to award the interest @ 10% per annum.
82. Though on the face of it because of its verbosity, the award appears to be a speaking award but it is sans any reasoning or discussion of the points by which the conclusion to award or disallow a claim or interest has been arrived at.
83. There is no material or explanation on record as to why after passing the award on 21.02.2019, the Ld. Arbitrator put the same in postal transmission to the petitioner herein as late as 17.06.2019. Though, on a stand-alone basis, it may be inconsequential but in juxtaposition with the other facts it may be a pointer to the aspect of justifiable doubt as to the impartiality of the Ld. Arbitrator as one of the subtle circumstances.
OMP (Commercial) No. 93/2019 Page No. 41 of 4384. In the complete analysis of the case, the Ld. Arbitrator was bound to take cognizance of the various clauses of the "Service Rule Manual of the Employees" and to come to a conclusion that the same were duly supported by the law of the land and were not opposed to or in contravention of the fundamental policy of the Indian Law. This aspect has not been examined at all by the Ld. Arbitrator, which it was obliged to examine in the wake of the judgment of Vivek Rai (supra) and jurisprudence evolved on this aspect in a catena of case law.
85. From the above discussion, it emerges that the declaration by the Ld. Arbitrator could not rule out the circumstances giving rise to justifiable as to his independence or impartiality and that this goes to the root of the matter and compromised the integrity and efficacy of the arbitration proceedings. Further, the impugned award is in contravention of fundamental policy of the Indian Law.
86. Consequently, the impugned award dated 21.02.2019 is liable to be set aside. Therefore, the petition under Section 34 of the Arbitration and Conciliation Act-1996 is allowed and the impugned award dated 21.02.2019 is set aside.
87. Parties shall bear their own costs of litigation.
88. In compliance of the provisions of the Order XX Rule 1 of the Code of Civil Procedure (as amended up-to-date by the Commercial Courts Act, 2015) a copy of this judgment be issued to all the parties to the dispute through electronic mail, if the particulars of the same have been furnished, or otherwise.
OMP (Commercial) No. 93/2019 Page No. 42 of 4389. This judgment be also uploaded on the website of the Delhi District Court forthwith.
90. File be consigned to the Record Room.
Digitally signed by MANMOHANAnnounced in the open court MANMOHAN SHARMA SHARMA Date:
on 13.08.2021 2021.08.13
14:45:25 +0530
(Man Mohan Sharma)
District Judge (Commercial Court)-06
Central District, Tis Hazari Courts,Delhi OMP (Commercial) No. 93/2019 Page No. 43 of 43