Bombay High Court
Aero Club vs Solar Creations Pvt. Ltd on 21 January, 2020
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.977 OF 2016
ALONG WITH
ARBITRATION PETITION NO.978 OF 2016
Aero Club )
Acting through its authorised signatory )
Mr.Arvind Singh )
having its registered office at )
2168, Gurudwara Road, Karol Bagh, )
New Delhi 110005 ) .. Petitioner
Versus
Solar Creations Pvt. Ltd. )
A company incorporated under )
the Companies Act, 1956 having its office )
at 264, Geeta Niketan, 3rd Floor, )
Linking Road, Bandra (West), )
Mumbai. ) .. Respondent
---
Mr.Shailesh Shah, Senior advocate a/w Mr.Sushant Prabhune,
Mr.Mandeep Singh Vinaik, Ms.Poonam Lau and Ms.Geeta Mohanty
for the petitioner.
Mr.Prateek Seksaria a/w Mr.Prantik Majumdar, Ms.Sheeja John,
Mr.Rahul Theckedath, Mr.Aniket Kharote i/by M/s.M.P. Savla & Co.
for the respondent.
---
CORAM : R.D. DHANUKA, J.
RESERVED ON : 10th October 2019
PRONOUNCED ON : 21st January 2020
Judgment :-
. By these two petitions filed under Section 34 of the
Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act"), the petitioner has impugned the arbitral award dated 14 th December 2015 along with partial final award dated 5 th June 2015 passed by the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 2 arbp-977.16 wt 978.16.doc learned arbitrator allowing some of the claims made by the respondent. By consent of parties, both these petitions were heard together and are being disposed of by a common order.
2. The petitioner was the original respondent whereas the the respondent was the original claimant before the learned arbitrator. In this judgment, the parties are described as per their original status in the arbitration proceedings. Some of the relevant facts for the purpose of deciding these arbitration petitions are as under :-
3. The respondent was engaged in the business of designing, manufacturing, marketing, distribution and sale of garments, leather accessories and other related products. It was the case of the claimant that the claimant was entitled to shop nos.1 and 2, Linking Road, Khar (West), Mumbai- 400 056 and another shop at Senapati Bapat Marg, Lower Parel, Mumbai -400 013. By an Agreement entitled 'Agency Agreement' dated 20th May 2008, the respondent appointed the claimant as authorised agent of its products at Khar premises to establish and operate a Retail outlet and showroom in the said premises. The said agreement was for the term of 60 months ending on 20 th May 2013 on the terms and conditions recorded therein. (Hereinafter referred to as 'Khar Premises').
4. On 7th June 2008, the parties entered into another Agency ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 3 arbp-977.16 wt 978.16.doc Agreement in respect of Lower Parel Premises. The respondent appointed the claimant as an authorised agent of its products to establish and operate a Retail outlet and showroom from the said Lower Parel Shop.
5. Under clause 4 of the said Khar Shop Agency Agreement, it was provided that there would be a lock in period till 30 th November 2011. The tenure of the said agreement would be 60 months ending on 20th May 2013 or if earlier determined as provided by the said agreement. The respondent agreed to pay the claimant a Minimum Guarantee of Rs.16,65,000/- or 15% on net sales whichever is higher in respect of the Retail outlet within 12 days of the succeeding month subject to all statutory deductions. Under clause 5 of the said agreement, it was provided that any outstanding due to any reason shall amount to breach of trust and shall attract interest @24% p.a. Under clause 8 of the Agreement, it was provided that the said agreement will be renewed further for 5 years with the same terms and conditions if the authorised Agent is able to renew with its landlord.
6. Under clause 8, the claimant agreed to give an undertaking in writing to the respondent for the next 5 years that if the respondent breaks the agreement during the initial 43 months lock in period, the respondent would be liable to pay Minimum Guarantee Commission for the remaining period of the Agreement. But after the 60 months, it is ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 4 arbp-977.16 wt 978.16.doc only with the respondent to continue or not based on the profitability.
7. The respondent would also provide interest free refundable security deposit of Rs.84,00,000/- against its obligations to make up the assured minimum guarantee for 6 months in case of termination of the Agency Agreement by the respondent during the period of the Agreement. Clause 12 of the said agreement provided for the arbitration agreement for referring the disputes and differences between the parties to arbitration in accordance with the provisions of the Arbitration Act or any statutory modification of substitution thereof. Subject to aforesaid, the parties submitted to the exclusive jurisdiction of Courts at Mumbai.
8. It is the case of the claimant that the respondent paid the net amount to the claimant in accordance with the provisions of the said Khar Shop Agency Agreement for the period upto October 2008. The respondent by letter dated 4th November 2008, requested the claimant to reduce the minimum guaranteed amount to 50% in respect of the said Khar Premises Retail Outlet. The claimant however, did not accept the said proposal to reduce the minimum guarantee commission. It is the case of the claimant that the respondent unilaterally and wrongfully recorded that the claimant has agreed to reduce minimum guarantee commission to 50% and by letter dated 5 th December 2008 purported to forward two cheques each for Rs.6,43,856/- instead of for Rs.18,70,794/- each for the months of November and December 2008. ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 :::
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9. The claimant by its letter dated 8th December 2008 informed the respondent that reduction of minimum guarantee commission was not acceptable to the claimant. The respondent by letter dated 10th December 2008 addressed to their Manager at the said retail Khar Premises outlet forwarded a cheque for Rs.1,02,097/- drawn in favour of the claimant towards payment of Service Tax for the month of November 2008 as against Rs.2,05,794/-. The claimant by its letter dated 15th December 2008 to the respondent pointed out this fact. The respondent by letter dated 19th December 2008 to the claimant requested for a meeting. The respondent by its letter dated 3rd January 2009 forwarded a cheque for minimum guarantee commission for the month of January 2009 for the sum of Rs,6,43,856/- instead of Rs.18,70,794/-.
10. The claimant vide its letter dated 16th January 2009 pointed out that reduced payment was not acceptable to the claimant and informed that the claimant will be treating the said payment as part payment for the month of December 2008 and requested the respondent to release balance payment of minimum guarantee commission together with service tax for November and December 2008 immediately. The claimant vide its advocate's letter dated 29th May 2009 called upon the respondent to pay the sum of Rs.94,95,431/- for the period upto April 2009. The respondent by its advocate's letter dated nil in reply to the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 6 arbp-977.16 wt 978.16.doc said letter dated 29th May 2009 alleged that at a meeting held between the claimant and the respondent, it was mutually agreed that instead of minimum guarantee commission of Rs.16,65,000/-, the respondent should pay Rs.10,50,000/- per month.
11. The claimant vide its letter dated 7 th July 2009 denied all such allegations and invoked arbitration clause recorded in the said Khar Shop Agency Agreement and appointed an advocate of this Court as the sole arbitrator and called upon the respondent to accord their consent. The respondent by its letter dated 12th August 2009 alleged that a mutual agreement was arrived to reduce the monthly minimum guarantee commission. The respondent refused to accept the name suggested by the claimant as a sole arbitrator. The claimant vide its advocate's letter dated 13th August 2009 informed the respondent that the claimant was taking steps to file an application under Section 11 of the Arbitration Act for appointment of an arbitrator. The respondent unilaterally suspended operation of the said retail outlet on 22nd August 2009 and removed all the products/goods and also furniture and fixtures installed in the retail outlet.
12. The respondent vide its advocate's letter dated 27th August 2009 made various allegations and recorded that the claimant had allegedly asked the representative of the respondent at the showroom to vacate the said showroom and in view of the alleged threat on the pat of ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 7 arbp-977.16 wt 978.16.doc the claimant, the respondent allegedly vacated the showroom. By the said letter, the respondent purported to terminate the said Agency Agreement. The claimant vide its reply filed in the month of September 2009 denied the allegations made by the respondent in their letter dated 27 th August 2009.
13. This Court appointed a Senior Counsel of this Court as a sole arbitrator to adjudicate upon the dispute between the parties. Pursuant to the directions issued by the learned arbitrator, the claimant filed statement of claim on 13 th November 2010 against the respondent inter alia praying for an aggregate sum of Rs.12,19,86,457/- with interest @ 24% p.a. from the date of filing statement of claim till payment and/or realisation. The said claim was resisted by the respondent by filing written statement dated 8th December 2010. The respondent also filed counter claim against the claimant inter alia praying for a sum of Rs.3,16,06,316.50 with interest @15% p.a. from the date of filing counter claim upto the date of award and @18% p.a. from the date of award till payment. Both the parties led oral and documentary evidence before the learned arbitrator.
14. During the course of meetings, it was decided that the proceedings in respect of each reference i.e. in respect of 'Khar Retail outlet' and 'Lower Parel Retail outlet' to a limited extent would be split ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 8 arbp-977.16 wt 978.16.doc into two and that the learned arbitrator should pass a 'Partial Final Award' covering all issues which arise for consideration other than the final calculations and quantification of the amounts awarded (if any) to either party, together with interest thereon. Learned arbitrator accordingly made a 'Partial Final Award' on 5th June 2015 after framing 13 issues.
15. In the said Partial Final Award, in so far as the issue of jurisdiction of the learned arbitrator is concerned, since the respondent did not press the said issue, the learned arbitrator held that the said issue did not arise. The learned arbitrator held that the claimant had proved that the respondent had to pay minimum guarantee commission in terms of the Franchise Agreement and that the claimant was entitled to claim the same for the period upto August 2009. The claimant proved the breach of its obligations under the Franchise Agreement on the part of the respondent.
16. Learned arbitrator held that the claimant had proved that by way of damages, only upto the expiry of the lock in period and subject to the deductions set out the terms of the Franchise Agreement, the claimant was entitled to minimum guarantee commission in terms of the Franchise Agreement.
17. In so far as issue no.9 i.e. "Does the claimant prove that it ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 9 arbp-977.16 wt 978.16.doc is entitled to an award in the sum of Rs.12,19,86,457/- or any part thereof as claimed in the statement of claim?" is concerned, it is held by the learned arbitrator that the amount of award will be adjudicated upon after parties submit their calculations based upon the principles enumerated in the partial final award.
18. In so far as issue no.10 i.e. "Do the respondents prove that the respondents are entitled to an award for Rs.3,41,28,587.34/- or any part thereof as claimed in the amended counter claim?" is concerned, it is held by the learned arbitrator that the amount of security deposit would be adjusted against the amounts due to the claimant. The learned arbitrator awarded interest @24% p.a. as per clause 5(g) of the agreement in respect of minimum guarantee commission amounts due upto and till the date of invocation. It is further directed that post invocation, the claimant is awarded pendente lite and post award interest @18% p.a. Learned arbitrator directed the parties to submit their detailed calculations in that regard.
19. While answering issue no.12, the learned arbitrator clarified that the said partial final award was determining the issues set out therein. The quantification of the claims would be carried out on calculations being submitted by the parties thereafter based on the findings on the said 'partial final award' and after hearing submission thereon. ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 :::
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20. In so far as issue no.13 i.e. "What order as to costs?" is concerned, it is directed by the learned arbitrator that the same will be decided in the final award on quantification of the claims.
21. It is not in dispute that the original respondent has impugned the said partial final award dated 5th June 2015 for the first time along the arbitral award dated 14th December 2015 only on 5th August 2016.
22. Mr.Seksaria, learned counsel for the claimant invited my attention to the averments made in paragraph 2 in the Arbitration Petition No.978 of 2016 and also to the prayer clause (A) of the arbitration petition and would submit that the original respondent has not only impugned the arbitral award dated 14th December 2015 but also impugned the 'partial final award' dated 5th June 2015 in the said petition. He invited my attention to the said 'partial final award' dated 5 th June 2015 and the issues framed by the learned arbitrator in the said 'partial final award' and the calculations drawn on those issues decided in the said 'partial final award.'
23. Learned counsel for the claimant submits that the learned arbitrator has rendered the said 'partial final award' after recording detailed reasons and answered each of the issues framed which are ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 11 arbp-977.16 wt 978.16.doc referred to aforesaid save and except the issue in respect of liability of service tax and the quantification and adjustment/set off, if any. He submits that the said 'partial final award' dated 5 th June 2015 was served on the same date on the parties. The said 'partial final award' however, was challenged by the respondent (before the learned arbitrator) only on 2nd March 2016 and thus the challenge to the 'partial final award' dated 5th June 2015 is ex facie barred by limitation under Section 34(3) of the Arbitration Act.
24. Learned counsel placed reliance on Section 31(6) of the Arbitration Act which empowers the arbitral tribunal to make an interim award. He also placed reliance on the definition of the arbitral award under Section 2(1) (c) of the Arbitration Act which includes the interim award. He submits that to the extent, the said partial final award has finally determined the matters covered thereunder is a final award, though was made at an interim stage by consent of both the parties. Thus, the mere use of the expression "partial award" in place of an "interim award" by the learned arbitrator would not change the nature and/or the character of an award. The said interim award thus ought to have been challenged by the respondent herein under Section 34(1) within the time prescribed in Section 34(3) of the Arbitration Act and not having challenged the said 'partial final award' in respect of those issues which ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 12 arbp-977.16 wt 978.16.doc are conclusively decided by the learned arbitrator in the 'partial final award,' the said 'partial final award' has attained finality. In support of this submission, learned counsel placed reliance on judgment of the Supreme Court in the case of Mcdermott International Inc. Vs. Burn Standard Co. Ltd. & Ors., (2006) 11 SCC 181 and in particular paragraphs 68 and 70 thereof.
25. It is submitted by the learned counsel that the learned arbitrator in the said partial final award finally determined the issues and has already held that the respondent would be liable to pay the claimant minimum guarantee commission for the lock in period less the amount paid by the respondent towards minimum guarantee commission and security deposit and the amounts recovered by the claimant from third parties during the lock in period with interest. It is submitted by the learned counsel that the said award continues to have effect even after the subsequent final award which was delivered on 14 th December 2015. The partial final award is subsumed within the definition of an award under Section 2(1)(c) of the Arbitration Act and thus ought to have been challenged independently under Section 34 of the Arbitration Act. In support of this submission, learned counsel placed reliance on the judgment of the Supreme Court in the case of Indian Farmers Fertilizer Co-operative Limited Vs. Bhadra Products, (2018) 2 SCC ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 13 arbp-977.16 wt 978.16.doc 534 and in particular paragraphs 8, 9, 13 to 15 and 30 thereof.
26. It is submitted by the learned counsel that in the minutes of meeting dated 25th November 2014, it was clearly recorded by the learned arbitrator that the parties to the proceedings including the petitioner herein expressly agreed that the learned arbitrator shall first pass a 'partial final award' determining the liability of either parties i.e. claim/counter claim and once such liability is determined, the quantification of the liability so determined be passed in a subsequent award to be called Final Award. He submits that the learned arbitrator thus made the said 'partial final award' in accordance with the said procedure agreed by and between the parties and thus that part of the partial final award deciding various issues and not having challenged within the time prescribed under Section 34 (3) of the Arbitration Act has attained finality. Learned counsel placed reliance on Section 19(2) of the Arbitration Act and more particularly in support of his submission that the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting the proceedings.
27. Learned counsel for the claimant also placed reliance on the judgment of the Delhi High Court in the case of Jhang Cooperative Group Housing Society Ltd. Vs. Pt. Munshi Ram and Associates Pvt. Ltd., ILR (2013) II DELHI 1632 and in particular paragraphs 4, 6, 8, ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 14 arbp-977.16 wt 978.16.doc 11, 12 and 19 in support of the submission that 'partial final award' on various issues already decided therein being final in all respects and not having challenged within the time prescribed under Section 34(3) of the Arbitration Act has attained finality.
28. Learned counsel for the claimant invited my attention to the grounds raised in both the arbitration petitions made by the respondent before the learned arbitrator and by the petitioner in these two petitions and would submit that all the grounds of challenge raised in both these petitions are challenging the findings rendered and conclusions drawn by the learned arbitrator in the 'partial final award.' There are hardly any grounds challenging the arbitral award dated 14th December 2015.
29. Learned counsel for the claimant invited my attention to the paragraphs 23, 24, 30, 32, 35 to 37 of the 'Partial Final Award' and would submit that the learned arbitrator has finally determined the issue in those paragraphs that the respondent had agreed to pay minimum guarantee commission in terms of the Franchise Agreement and that the claimant is entitled to claim the same from the respondent for the period upto August 2009 and that the claimant was entitled to minimum guarantee commission only upto the termination of the contract and thereafter by way of damages upto the expiry of the 2 nd lock in period ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 15 arbp-977.16 wt 978.16.doc and subject to the deductions set out therein.
30. In so far as the counter claim made by the respondent is concerned, by the said 'partial final award,' the learned arbitrator specifically rejected the said counter claim while deciding the issue no.10 by holding that the respondent had failed to prove that they are entitled to recover an award for Rs.1,10,57,746.65/-.
31. Mr.Shah, learned senior counsel for the petitioner (original respondent in the arbitral proceedings) on the other hand, invited my attention to some of the issues framed by the learned arbitrator. He submits that by the said 'partial final award,' learned arbitrator has only decided certain issues which would be valid only till the final award is declared by the learned arbitrator and once the final award is rendered, the 'partial final award' is merged with the final award. No amount is quantified by the learned arbitrator in the said 'partial final award.' Only the issues were decided by the learned arbitrator in the said 'partial final award.' Whether the award rendered by the learned arbitrator is interim or final would be depended upon the form of an award.
32. Leaned senior counsel placed reliance on the judgment of the Supreme Court in the case Satwant Singh Sodhi Vs. State of Punjab & Ors., (1999) 3 SCC 487 and in particular paragraphs 2 and 6 thereof ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 16 arbp-977.16 wt 978.16.doc and would submit that if the interim award made by the learned arbitrator is intended to have effect only so long as the final award is not delivered, it will have the force of the interim award and it will cease to have effect after the final award is made.
33. Learned senior counsel for the respondent made an attempt to distinguish the judgment of the Supreme Court in the case of Indian Farmers Fertilizer Co-operative Limited Vs. Bhadra Products (supra) on the ground that in that matter, the learned arbitrator had decided the issue finally at the interim stage by rendering partial final award. The said judgment of the Supreme Court is thus distinguishable in the facts of this case.
34. In so far as the judgment of the Delhi High Court in the case of Jhang Cooperative Group Housing Society Ltd.(supra) relied upon by the learned counsel for the claimant is concerned, he invited my attention to the paragraphs 4 to 6 of the said judgment and would submit that in the said matter, the parties had carried out joint measurement and had agreed to pay undisputed amount to the partied entitled to receive such amount. He submits that the facts before the Delhi High Court were totally different and thus the said judgment would not assist the case of the claimant.
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35. Learned senior counsel for the respondent invited my attention to Issue Nos.8 and 9 framed by the learned arbitrator and would submit that though the learned arbitrator had held that the claimant had proved that they are entitled to minimum guarantee commission in terms of the Franchise Agreement from the respondent for the balance period between September 2009 and May 2013 while deciding the issue no.9, learned arbitrator has held that the amount of award will be adjudicated upon after the parties submit their calculations based upon the principles enumerated in the said award. He strongly placed reliance on the judgment of this Court in the case of Commissioner, Kolhapur Municipal Corporation and Anr. Vs. Fairdeal Constructions through its proprietor K.N. Jyotinadran & Anr., 2008 (1) Bom C.R. 403 and in particular paragraphs 2 to 10 and 14 and would submit that where an award is for the payment of money, it should contain a direction that a sum determined therein should be paid. Such type of 'partial final award' rendered by the learned arbitrator in this case was not capable of being executed because of there being no direction to pay any sum of money to the claimant.
36. It is submitted that the respondent could not have challenged the said 'partial final award' under Section 34(1) of the Arbitration Act at that stage. The said 'partial final award' was not an award which can ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 18 arbp-977.16 wt 978.16.doc independently stand and would be executable and thus the respondent rightly challenged the said 'partial final award' along with the arbitral award dated 14th December 2015 when the said partial final award is merged with the arbitral award dated 14th December 2015.
37. Mr.Seksaria, learned counsel for the claimant in rejoinder on the preliminary issue raised by the claimant once again invited my attention to the paragraphs 8, 9 and 15 of judgment of the Supreme Court in the case of Indian Farmers Fertilizer Co-operative Limited Vs. Bhadra Products (supra) would submit that the Hon'ble Supreme Court specifically and conclusively held in the said judgment that there can be one or more interim awards, prior to a final award, which conclusively determine some of the issues between the parties, culminating in a final arbitral award which ultimately decides all remaining issues between the parties. It is submitted that in the said judgment, the Hon'ble Supreme Court has held that an interim award or partial award is a final award on matters covered therein made at an intermediate stage of the arbitral proceedings. He submits that the Hon'ble Supreme Court in the said judgment has held that as the learned arbitrator has disposed of one matter between the parties i.e. the issue of limitation finally, such award is an "interim award" within the meaning of Section 2(1)(c) of the Arbitration Act and being subsumed within the expression "arbitral award" therefore, could have been challenged under Section 34 of the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 19 arbp-977.16 wt 978.16.doc Arbitration Act.
38. Learned counsel for the claimant strongly placed reliance on paragraphs 35, 45 and 68 to 70 of judgment of the Supreme Court in the case of Mcdermott International Inc. Vs. Burn Standard Co. Ltd. & Ors. (supra) and would submit that an interim award in terms of the said provision is not one in respect of which a final award can be made, but it may be a final award on the matters covered thereby, but made at an interim stage. It is final in all respects with regard to disputes referred to the arbitrator which are subject matter of such award.
39. Learned counsel for the claimant distinguishes the judgment of this Court in the case of Commissioner, Kolhapur Municipal Corporation and Anr.(supra) on the ground that in the said judgment, this Court had rendered a finding that the arbitrator did not intend to give a final direction of payment by the interim award. He submits that in the 'partial final award,' learned counsel had recorded an agreement between the parties during the course of the meeting that the proceedings in each reference, to a limited extent would be split into two and that the Arbitral Tribunal should pass a 'Partial Final Award' covering all issues which arise for consideration other than the final calculations and quantification of the amounts awarded (if any) to either party, together with interest thereon.
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40. It is submitted by the learned counsel for the claimant that even in the arbitration petition, it is not the case of the petitioner (original respondent) that the said 'partial final award' dated 5 th June 2015 was not an arbitral award within the meaning of Section 2(1)(c) of the Arbitration Act but has impugned the said 'partial final award' under Section 34(1) of the Arbitration Act.
41. In so far as the merit of claims awarded by the learned arbitrator is concerned, both the parties through their learned counsel have argued without prejudice to the rival submissions on the issue of limitation in respect of the 'partial final award' raised by the claimant. Mr.Shah, learned senior counsel for the respondent in the arbitral proceedings invited my attention to the Agency Agreement dated 20 th May 2008 between the parties in respect of Khar Shop premises and would submit that the provisions in the Agency Agreement in respect of Khar Shop Premises and the Lower Parel Shop Premises are identical. He submits that under the said Agency Agreements, the claimant had approached and had desired to be appointed as authorised agent of the products for the purpose of establishing and operating a Retail outlet and showroom in the said premises by the petitioner (original respondent) on the terms and conditions set out thereon.
42. It is submitted that the said agreement was for the term of ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 21 arbp-977.16 wt 978.16.doc 60 months ending on 20th May 2013 or earlier determined as provided by the said agreement. There was a lock in period provided in the said Agreement till 30th November 2011. He also relied upon Clause 4, 5(g), 6(k), 6(s), 8, 12.2 of the Agreement. He submits that the claimant had refused to run the said outlet though was appointed as an authorised agent. The said outlet is thus actually run by his client. The respondent had paid certain amount to the claimant. In the month of August 2009, his client vacated the said premises. He invited my attention to some of the paragraphs of the Statement of Claim filed by the claimant regarding the minimum guarantee commission and agency commission. It was not the case of the claimant that the amount was genuine pre-estimate compensation or was in the nature of liquidated damages. The claimant had claimed those amounts as debt.
43. Learned senior counsel placed reliance on the deposition of Mr.Deven Mukhi, one of the Directors of the claimant and in particular paragraphs 29 and 30 deposing that the respondent was liable to pay to the claimant minimum guarantee commission in respect of the said Khar Premises Showroom for the entire period of 60 months and quantified a sum of Rs.5,32,66,081 as on 30th October 2010 with interest. He invited my attention to the cross examination of the said witness recorded in question nos.6 to 12 and would submit that the said witness admitted ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 22 arbp-977.16 wt 978.16.doc that there was an oral agreement in respect of some of the obligations before the parties. He also relied upon the answer of the said witness to question nos.14, 16 to 20 and 32 to 37 and would submit that the said witness admitted that there was a slight variation in terms of the contract. It is submitted by the learned senior counsel that the learned arbitrator has totally overlooked and ignored various admissions made by the witness examined by the claimant. He invited my attention to the findings rendered by the learned arbitrator in paragraphs 17 and 19 thereof.
44. Learned senior counsel for the respondent invited my attention to the cross examination of the witness examined by the claimant and in particular paragraphs 68 to 71, 83 to 86, 96, 101, 107 and 151 and would submit that the learned arbitrator overlooked the part of the cross examination of the witness examined by the claimant. He submits that various findings rendered by the learned arbitrator on quantification of claim is totally perverse and is contrary to the principles of law laid down by the Supreme Court. The claimant had not made out any case for claiming damages in the pleadings or in the evidence before the learned arbitrator. Two agreements of French Corporation were placed on record showing payment of rent much less than what was considered by the learned arbitrator in the impugned award. He submits ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 23 arbp-977.16 wt 978.16.doc that even if the claim made by the claimant is to be considered in the nature of liquidated damages, the same was required to be proved. Learned arbitrator however, has converted the case of debt into liquidated damages. No evidence was led by the claimant for Rs.16.65 lakhs per month as liquidated damages. Learned arbitrator has awarded various amounts towards liquidated damages without the claimant having proved the liquidated damages.
45. Learned senior counsel strongly placed reliance on the judgment of the Supreme Court in the case of Kailashnath Associates Vs. Delhi Development Authority & Anr., (2015) 4 SCC 136 and in particular paragraphs 43.1 and 43.2 and would submit that what would be the reasonable compensation in the facts of this case was also not proved by the learned counsel before the learned arbitrator. He placed reliance on the judgment of the Delhi High Court in the case of Manju Bagal Vs.Magpie Retail Ltd., (2011) 161 Comp Cas 382 (Del) and in particular paragraphs 1, 10 and 13 and would submit that the claim for damages is not only required to be pleaded specifically but also proved. The claimant however, failed to plead and to prove claim for damages made before the learned arbitrator. Learned arbitrator however, totally ignored this aspect and has awarded substantial amount of claim for damages.
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ppn 24 arbp-977.16 wt 978.16.doc 46. Learned senior counsel for the petitioner (original
respondent) placed reliance on the judgment of Division Bench of this Court in the case of Raheja Universal Pvt. Ltd., Mumbai Vs.B.E. Billimoria & Co. Ltd., Mumbai, 2016 (5) Mh.L.J. 229 and in particular paragraphs 6, 9 and 10 thereof. He also placed reliance on the judgment of this Court in the case of Reliance Media Works Limited Vs. B.R. Films, 2018 Supreme (Mah) 923 and in particular paragraphs 125, 126 and 132 and would submit that learned arbitrator has decided contrary to the principles of law laid down by this Court in the aforesaid two judgments. He submits that the findings recorded by the learned arbitrator in paragraphs 17 and 18 of the impugned award are totally perverse.
47. Learned senior counsel invited my attention to the affidavit in lieu of examination in chief filed by the petitioner's witness Mr.P.K. Sharma (original respondent) and also his cross examination and answer to question nos.54, 55, 57, 71 and 72. It is submitted that there was hardly any cross examination of the said witness by the claimant's counsel. The evidence led in the examination in chief of the said witness was not shattered in the cross examination. The findings rendered by the learned arbitrator on interpretation of Sections 91 and 92 of the Evidence Act, 1972 are totally perverse. All negotiations between the parties were ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 25 arbp-977.16 wt 978.16.doc prior to the execution of the Agency Agreement.
48. In so far as the claim for interest awarded by the learned arbitrator is concerned, learned senior counsel placed reliance on the judgment of the Supreme Court in the case of State of Rajasthan & Anr.Vs. Ferro Concrete Construction Private Limited,(2009) 12 SCC 1 and would submit that the learned arbitrator could not have awarded interest under the provision of the Interest Act to the claimant.
49. Learned senior counsel placed reliance on the judgment of the Supreme Court in the case of Vendanta Limited Vs. Shenzen Shandong Nuclear Power Construction Company Limited, 2018 AIR (SC) 4773 and in particular paragraph 11 and would submit that the Supreme Court had considered interest @9% p.a. as reasonable rate of interest. Learned arbitrator however, has awarded interest at much higher rate.
50. It is submitted by the learned senior counsel that the learned arbitrator had rejected the counter claim made by his client merely on the ground that his client had waived its right to make any such claim against the claimant. He submits that there was no proof of such alleged waiver on the part of his client. Issue of waiver was not required only to be pleaded but has to be proved. He submits that even on the question of quantum meruit, learned arbitrator was bound to consider the claim ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 26 arbp-977.16 wt 978.16.doc of his client. His client had produced necessary vouchers and proof of payment made by his client in support of his counter claim made by his client. His client has incurred substantial amount of expenses which ought to have awarded by the learned arbitrator.
51. Mr.Seksaria, learned counsel for the original claimant in reply invited my attention to the grounds raised in the arbitration petition and would submit that the none of the grounds raised in the arbitration petition are relatable to the final award dated 14 th December 2015 but are relatable only to the 'partial final award' dated 5 th June 2015. He submits that there is difference between plea of error of jurisdiction and error within the jurisdiction of the learned arbitrator. Ground (A) raised in the arbitration petition is thus totally devoid of merit. He submits that Ground (B) raised by the petitioner impugning the award relating to damages on the ground that the said award is contrary to the principles of law laid down by the Supreme Court in the case of Kailashnath Associates (supra).
52. It is submitted that Grounds (C), (D) and (E) relate to the counter claim which were already rejected by the learned arbitrator in the 'partial final award' and cannot be allowed to be raised in this arbitration petition in view of the said challenge to the 'partial final award' having been barred by limitation. He submits that all other grounds raised by the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 27 arbp-977.16 wt 978.16.doc petitioner seeking re-appreciation of the findings of facts cannot be raised under Section 34 of the Arbitration Act.
53. In so far as the rate of interest awarded by the learned arbitrator is concerned, it is submitted by the learned counsel that the contract provided for interest @24% p.a. whereas the learned arbitrator has awarded interest @18% p.a. which is reasonable. The Arbitration Agreement in this case was invoked prior to the amendment of Section 31(7)(b) of the Arbitration Act which is amended with effect from 23 rd October 2015 and thus such amendment would not apply to the facts of this case. It is the discretion of the learned arbitrator to award rate of interest at a reasonable rate and once the learned arbitrator having exercised such discretion, this Court cannot interfere with such discretion exercised by the learned arbitrator under Section 31(7) of the Arbitration Act. Learned counsel invited my attention to paragraphs 29, 30, 34 and 35 of the statement of claim filed by his client. His client had claimed interest @24% p.a. The entire claim is made under Clause 8 of the Agency Agreement which provided for minimum guarantee commission payable by the petitioner to his client.
54. Learned counsel for the claimant invited my attention to the findings rendered by the learned arbitrator in paragraphs 23 to 26 of the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 28 arbp-977.16 wt 978.16.doc impugned award and would submit that it was the contention of the petitioner herein before the learned arbitrator that the nature of the claim made by his client was in the nature of liquidated damages. Learned arbitrator after considering the submission of both the parties and on interpretation of provision of the said Agency Agreement has rendered a finding of fact that the last period of claim by the claimant was penal in nature. Learned arbitrator has thus rightly awarded the difference between the minimum guarantee commission and the amount claimed by the claimant by moulding the relief.
55. Learned counsel for the claimant relied upon the judgment of the Supreme Court in the case of H.P. State Electricity Board Vs. R.J. Shah & Company, (1999) 4 SCC 214 and in particular paragraphs 20 and 21 and would submit that even if the learned arbitrator has committed any error in awarding any claim, such error is within the jurisdiction of the learned arbitrator and thus cannot be interfered with by this Court. The interpretation of the learned arbitrator is a possible interpretation and thus such possible interpretation cannot be substituted by another possible interpretation by this Court. The onus was on the petitioner to prove that the liquidated damages was exorbitant. He submits that the entire award rendered by the learned arbitrator awarding claim for liquidated damages was in conformity with the law laid down ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 29 arbp-977.16 wt 978.16.doc by the Supreme Court in the case of Kailashnath Associates (supra).
56. Learned counsel for the claimant submits that the learned arbitrator has recorded findings after considering the evidence led by the parties and has held that the claimant had already proved loss suffered by it. This Court cannot re-appreciate such findings of facts being not perverse. The petitioner has failed to discharge the burden. He submits that learned arbitrator has rightly held that upto the lock in period, clause provided for minimum guarantee commissioner was not in terrorem.
57. Leaned counsel for the claimant placed reliance on the judgment of the Delhi High Court in the case of Gail (India) Limited Vs. Punj Lloyd Limited, 2017 SCC OnLine Del 8301 and would submit that the fact that a sum of money is payable on breach of contract is described by the contract as "penalty" or "liquidated damages" is relevant but not decisive as to categorization."
58. Leaned counsel for the claimant invited my attention to the cross-examination of the witness examined by the respondent and in particular to his reply to question nos.47, 49, 84, 86 to 88 and would submit that the said part of the cross-examination was clearly in favour of his client. Learned arbitrator rightly appreciated the evidence led by ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 30 arbp-977.16 wt 978.16.doc both the parties and has rightly awarded claim made by his client.
59. Learned counsel for the claimant invited my attention to the letter dated 19th December 2008 from the respondent to the claimant requesting for reduction of monthly charges and would submit that in the said letter, while requesting the claimant to reduce monthly charges, the respondent had admitted that the said reduction of monthly charges would cause loss to the claimant. He submits that learned arbitrator in the facts and circumstances of this case, after recording detailed reasons in the 'partial final award' rightly rejected the counter claim made by the petitioner.
60. Learned counsel for the claimant placed reliance on the judgment of the Supreme Court in the case of Construction and Design Services Vs. Delhi Development Authority, (2015) 14 SCC 263 and in particular paragraphs 2, 14 to 16 and would submit that learned arbitrator has allowed the claim for compensation in conformity with the said judgment of the Supreme Court which has construed in Section 74 of the Contract Act, 1872. He submits that Supreme Court in the said judgment has held that when the highest limit is stipulated instead of a fixed sum, in the absence of evidence of loss, part of it can be held to be reasonable compensation and the remaining by way of penalty. The party complaining of breach can certainly be allowed reasonable ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 31 arbp-977.16 wt 978.16.doc compensation out of the said amount if not the entire amount. If the entire amount stipulated is genuine pre-estimate of loss, the actual loss need not be proved. Burden to prove that no loss was likely to be suffered is on the party committing breach.
61. Leaned counsel for the claimant placed reliance on the judgment of the Supreme Court in the case of Ssangyong Engineering & Construction Co. Ltd. Vs. National Highways Authority of India (NHAI), 2019 SCC OnLine SC 677 and in particular paragraphs 21, 22, 35, 41, 42, 58, 59 and 69 and would submit that the findings of facts rendered by the learned arbitrator being not perverse cannot be interfered with by this Court under Section 34 of the Arbitration Act.
62. Mr. Shah, learned senior counsel for the respondent in rejoinder submits that the impugned award rendered by the learned arbitrator is not rendered in accordance with the principles of law laid down by the Supreme Court in the case of Kailashnath Associates (supra) while awarding claim for damages. He placed reliance on paragraphs 343.2 to 43.7 and 44 in support of this submission.
63. It is submitted by the learned senior counsel that the claimant had not pleaded that the claim made by the claimant was in ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 32 arbp-977.16 wt 978.16.doc the nature of liquidated damages. No evidence was led by the claimant to show any such loss caused to the claimant because of the alleged breaches committed by the petitioner. The claimant also did not prove that the minimum guarantee commission amount mentioned in the agreement was a genuine pre-estimate and reasonable amount of compensation. In the year 2010, the claimant had given the property on lease @Rs.9 to Rs.10 lakhs and thus the minimum guarantee commission mentioned in the agreement @Rs.16,65,000/- could not be reasonable or pre-estimate genuine and reasonable compensation. Though the figures of compensation available on record were showing much less than Rs.16,65,000/-, learned arbitrator has considered the said amount as reasonable compensation based on the minimum guarantee clause in the Agency Agreement. He submits that since the loss was capable of being proved, learned arbitrator could not have awarded minimum guarantee commission amount to the claimant.
64. It is submitted by the learned senior counsel that even though his client walked out within lock in period, his client was not required to prove the minimum guarantee commission amount payable to the claimant. Burden of proof was on the claimant to prove that the minimum guarantee commission amount mentioned in the agreement was a genuine pre-estimate and reasonable amount of compensation. ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 :::
ppn 33 arbp-977.16 wt 978.16.doc
65. In so far as the interest awarded by the learned arbitrator @18% p.a. is concerned, it is submitted by the learned senior counsel that rate of interest awarded by the learned arbitrator is totally exorbitant and could not have been awarded at such rate.
66. Learned senior counsel for the petitioner once again relied upon the judgment of the Supreme Court in the case of Satwant Singh Sodhi Vs. State of Punjab & Ors. (supra) and would submit that interim award rendered by the learned arbitrator is merged with the final award. Leaned arbitrator has only rendered findings given in the partial final award except rejecting the counter claim made by the petitioner. Such findings would merge with the final award and was not capable of being executed independently. He submits that due to representation made by the claimant, the petitioner has agreed to pay the said amount of Rs.16,65,000/- towards minimum guarantee commission.
67. In so far as the evidence of RW-3 examined by the respondent is concerned, it is submitted by the learned senior counsel that the said witness was absent in the meeting between the parties held in Delhi. He deposed about such meeting in the evidence. Learned arbitrator has totally ignored such part of the evidence in the impugned ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 34 arbp-977.16 wt 978.16.doc award.
68. In so far as the rejection of counter claim made by the learned arbitrator is concerned, it is submitted by the learned senior counsel that the said counter claim was made for seeking reimbursement of the expenses incurred by the petitioner due to breach of the obligations on the part of the claimant. The claimant did not run the said shop and thus the petitioner was required to run the said shop and incurred various expenses which were required to be reimbursed by the claimant to the petitioner.
69. Learned senior counsel distinguished the judgment of the Supreme Court in the case of Construction and Design Services Vs. Delhi Development Authority (supra) relied upon by the learned counsel for the claimant on the ground that the facts before the Supreme Court were totally different. It was held that the loss has to be assumed in case of public utility which was not the situation in this case.
70. Learned senior counsel distinguished the judgment of the Delhi High Court in the case of Gail (India) Limited Vs. Punj Lloyd Limited (supra) on the ground that in that matter, the facts before the Delhi High Court were different. Leaned senior counsel submits that there is no dispute about the proposition of law that the learned arbitrator ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 35 arbp-977.16 wt 978.16.doc has power to interpret the terms of the contract and if such interpretation is possible interpretation, the same cannot be substituted by another possible interpretation. He submits that in this case, learned arbitrator has awarded claim based only on assumption and not based on the evidence or by interpretation of terms of the contract.
71. Mr.Seksaria, learned counsel for the claimant submits that the petitioner had raised a plea before the learned arbitrator in the written arguments that the claim for damages made by the claimant was in the nature of the liquidated damages for the entire period. The counsel for the respondent had asked questions to the witness examined by the claimant on the quantification of loss in the cross-examination. He submits that learned arbitrator has only allowed part of the claim made by the claimant which claim is reasonable in the facts and circumstances of this case and do no warrant any interference.
72. Learned counsel for both the parties jointly submitted that the facts in both these petitions are identical and thus the judgment of this Court on the basis of the facts and submissions made by the learned counsel in Arbitration Petition No.977 of 2016 would apply to the Arbitration Petition No.978 of 2016. Statement is accepted.
REASONS AND CONCLUSIONS :-
73. I shall decide whether the arbitration petition impugning the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 36 arbp-977.16 wt 978.16.doc 'partial final award' dated 5th June, 2015 on 2nd March, 2016 is barred by limitation prescribed under section 34(3) of the Arbitration Act or whether the said 'partial final award' dated 5 th June, 2015 was not final and had merged with final award dated 14 th December,2015 and could be challenged together within three months from the date of service of the signed copy of the final award dated 14th December,2015 or not.
74. A perusal of the minutes of the 21 st meeting held on 31st October,2014 by the learned arbitrator indicates that in the previous meeting, the respondents were directed to verify the calculations submitted by the claimants and the submissions recorded therein inter alia for the purposes of checking their mathematical accuracy. The respondents were required to communicate their calculations to the claimants on or before 14th October,2014. There was delay on the part of the respondents in submitting their calculations and the same was submitted only on 30th October,2014.
75. There were substantial differences in the figures submitted by the respondents and the claimants particularly regarding to aggregate Minimum Guarantee Commission payable during the duration of the entire contract as well as in the lock in period. The learned arbitrator accordingly directed the claimants to prepare a reconciliation statement in respect of their calculations with those of the respondents within period ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 37 arbp-977.16 wt 978.16.doc of two weeks from the date of the said directions. In paragraph (5) of the minutes of the said meeting held on 31st October,2014, it was recorded that the claimants had concluded its arguments. The respondents also concluded its arguments on all the points other than reconciliation exercise which was to be carried out. The matter was accordingly adjourned to 25th November, 2014 for conclusion of the arguments.
76. A perusal of the minutes of the 22nd meeting held on 25th November 2014, indicates that the parties had exchanged various calculation sheets to admit, to arrive at an agreed figure in respect of the quantification of claimant's claim based upon the various alternatives. The parties however failed to arrive at any such agreed figure. In the said minutes of the meeting, learned arbitrator recorded that the parties had agreed that the Arbitral Tribunal ought to have initially passed a 'partial interim award' determining the liability if any of either parties. Once the liability is determined, the calculations of the liability including quantification of the amount, award could be worked out between the parties (final) award quantifying the amounts award (if any) thereafter be passed.
77. In paragraph (3) of the said minutes of the meeting, it was recorded that the parties had agreed to the two stage procedure and as ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 38 arbp-977.16 wt 978.16.doc such the procedure in the facts and circumstances of the case would be more convenient as well as would avoid of any quantification errors in the final award to be passed. Learned arbitrator was also of the opinion that such procedure should be followed. The learned arbitrator accordingly by consent of parties concluded the proceedings in respect of the either parties and recorded that the parties would be given the notice to make submissions on the basis of such award in the calculation to be held thereafter which would primarily concern the brief mathematical calculations for quantification of the amount, if any, be awarded.
78. On 5th June, 2015, the learned arbitrator informed the parties that the 'partial final award' could be ready by 4.00 p.m. and requested to depute their representative with an authority letter to collect the awards. The learned arbitrator directed the parties to comply with the directions contained in those awards and informed the parties that the proceedings for quantification of the awarded claims and the issues re-service tax shall be decided after 25th June, 2015. The respondent through their e-mail dated 20th June, 2015 requested the learned arbitrator to grant 15 days time to submit the calculations as mentioned in last paragraph of the award dated 5th June, 2015.
79. The claimant vide their advocate's letter dated 21st July, 2015 ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 39 arbp-977.16 wt 978.16.doc to the learned arbitrator and to the respondent's advocate conveyed that the calculation in respect of the amount due to the claimant based on the conclusions/findings recorded in the partial final award were already submitted under the cover of letter dated 22nd June, 2015. The respondent however had not submitted any calculation till the date of addressing the said e-mail. The claimant requested the learned arbitrator to fix further proceedings at any day convenient to the learned arbitrator.
80. On 13th August,2015, the learned arbitrator fixed the date of meeting on 3rd September 2015 for arguments on the final award i.e. the calculations in respect of the amounts due to the claimant based on the conclusions/findings recorded in the 'partial final award'. The learned arbitrator gave last opportunity to the respondent to submit their say on the calculations by 25th August 2015. Learned counsel for the respondent vide his e-mail dated 20th August 2015 requested for postponement of the hearing fixed by the learned arbitrator to 7th, 10th, 11th, 14th and 15th September 2015.
81. Several e-mails were addressed by the claimant's counsel to the learned arbitrator and the respondent's counsel for fixing an early date of hearing. The learned arbitrator by his e-mail dated 14th October,2015 fixed the date of hearing on 30th October 2015. the learned arbitrator held ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 40 arbp-977.16 wt 978.16.doc a meeting dated 30th October,2015 and recorded that the 'partial final award' was collected by the representative of the respondent on 5 th June, 2015. It was recorded that in the said meeting dated 30 th October,2015, the respondent through their advocate had stated that it would not be appropriate for the respondent to submit any calculations since they were disputing their liability under the 'partial final award'. It was stated that no submission on the quantification of the claims made by the claimant was therefore being made.
82. The learned arbitrator made it clear to the advocate for the respondent that they could always make submissions on the calculations/ quantifications of the amounts due under the 'final partial award' as well as in respect of the question of reimbursement of service tax, without prejudice to their rights and contentions including the right, if any, to challenge the final partial award. The learned advocate for the respondent however stated that they would not be making any submissions on the calculations submitted by the claimant as recorded in their advocate's letter dated 30th October,2015.
83. The learned arbitrator accordingly considered the calculations submitted by the claimant through its advocate. The learned arbitrator clarified that the security deposit ought to be adjusted ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 41 arbp-977.16 wt 978.16.doc immediately against the outstanding dues as on the date on which the respondent vacated the Khar showroom i.e. August 2009 and the balance, if any, should be adjusted in the following months. The claimant agreed to make those changes. The learned arbitrator also made it clear that the minimum guarantee commission was held to be payable only upto the lock-in period, which was held to be upto 30th November,2011 and no claim for the period 1st December,2011 to 19th December, 2011 was payable as per 'partial final award'. The learned arbitrator directed the claimant to make necessary corrections in that regard.
84. Insofar as the issue of service tax is concerned, the learned arbitrator recorded that the claimant had accepted that it would not be making any further claims in respect thereof i.e. over and above the amount already paid by the respondent. In paragraph (8) of the said minutes of the meeting, the learned arbitrator recorded that in absence of any submissions being urged by the respondents or any co-operation on their part, no further discrepancies/errors were noticed. The learned arbitrator accordingly directed the claimant to submit revised calculations based upon the clarifications issued by the learned arbitrator by 2 nd November, 2015 with the copies to be marked to the respondent. The learned arbitrator gave last opportunity to the respondent to point out errors, if any, in the mathematical calculations to be submitted by the claimants latest by 12.00 noon on 4th November 2015. On 4th ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 42 arbp-977.16 wt 978.16.doc November,2015, similar directions were issued by the learned arbitrator also in respect of the Parel showroom. The learned arbitrator closed the proceedings for award.
85. On 14th December,2015, the learned arbitrator informed the learned advocates for the parties that the awards in two matters were ready and requested to depute their authorized representatives with identity card to collect the two awards.
86. It is thus clear that the said partial final award was rendered by the learned arbitrator by consent of both the parties in the minutes of the meeting held on 25th November,2014. The learned arbitrator thereafter gave opportunity to both the parties to file their respective calculations. Though the claimant filed its calculation before the learned arbitrator with a copy served upon the respondent, the respondent did not file its calculation. Only in the meeting held on 30 th October,2015, the respondent submitted common letter dated 30th October,2015 stating that it was not appropriate for the respondent to submit any calculation since they were disputing their liability under 'partial final award'. The learned arbitrator has recorded that the copy of the 'partial final award' was collected by the representative of the respondent on 5 th June, 2015. It is thus clear that only for the first time on 30 th October,2015 i.e. after expiry ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 43 arbp-977.16 wt 978.16.doc of three months from the date of receipt of the signed copy of the 'partial final award', the respondent raised an issue that they were disputing their liability under the 'partial final award' and thus were not making any submission on the calculations/quantifications of the amount due under the said 'partial final award' and also in respect of the reimbursement of the service tax and did not submit any quantification made by the claimant.
87. Though the learned arbitrator directed the respondent to make submission on calculation/quantification of the amount due under the 'partial final award' as well as in respect of the question of reimbursement of service tax, without prejudice to their rights and contentions including the right, if any, to challenge the final partial award, the respondent refused to make any submission on the calculations submitted by the claimant. It is an admitted position that though the respondent expressed their desire to dispute their liability under the partial final award on 30th October,2015, the respondent did not challenge the said partial final award till 2nd March,2016 when for the first time the said 'partial final award' was challenged along with the final award dated 14th December,2015.
88. The next question that arises for consideration of this court is ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 44 arbp-977.16 wt 978.16.doc whether such 'partial final award' was final in respect of the issue determined by the learned arbitrator in the said 'partial final award' and if respondent was aggrieved by the said 'partial final award' dated 5 th July, 2015, whether the respondent ought to have challenged the said 'partial final award' independently under section 34 of the Arbitration Act or not within the time prescribed under section 34(3) thereof.
89. A perusal of the 'partial final award' clearly indicates that the parties had already concluded their arguments on all the issues other than the reconciliation exercised which was to be carried out in respect of the calculations and reimbursement of service tax. At that stage in the meeting held on 25th November,2014, the parties agreed that the Arbitral Tribunal ought to have initially passed the partial interim relief before the liability, if any, of the either parties was determined and calculation including the quantification of the amount, if any, could be worked out between the parties in (final) award thereafter.
90. A perusal of the 'partial final award' clearly indicates that the learned arbitrator had framed 11 points for determination based on the pleadings of the parties. The parties had already led oral and documentary evidence. While deciding points for determining nos. 2, 3, 5, 6 and 7, after considering the oral and documentary evidence and after ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 45 arbp-977.16 wt 978.16.doc interpreting the terms of the agency agreement, the learned arbitrator held that the respondent was not entitled to terminate the agency agreement during the lock in period and was liable to pay the minimum guarantee commission atleast for the relevant lock in period of the agreement, if it exited the same during the said lock in period.
91. It is held by the learned arbitrator that the respondent continued to occupy the premises after expiry of the first lock in period and did not give the notice of termination of six months during the said second lock in period of 24 months got automatically triggered and the respondent was locked in to the agreement till June 2011. The learned arbitrator held that in view of the fact that a minimum guarantee commission was prescribed irrespective of the quantum of sales, it was not open for the respondent to seek reduction in the monthly minimum guarantee commission on account of lesser sales than anticipated whatever the reason may be for the same. It is held that there was no written document signed by the parties wherein they had agreed to any such reduction. In paragraph (22) of the said 'partial final award', it is held by the learned arbitrator that the counter claim of the respondent for loss of profits would necessarily have to be dismissed. The respondent would be entitled to adjustment of the security deposit towards payment of the outstanding minimum guaranteed commission/and/or other ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 46 arbp-977.16 wt 978.16.doc amounts awarded thereunder.
92. The learned arbitrator thereafter decided whether any part of such agency agreement was penal in nature or not. The learned arbitrator held that the claimant had proved the loss caused to it by leading evidence by CW-1. The loss caused to the claimant would necessarily be the loss of commission/profits from the utilization of the Lower Parel showroom for the balance period of the 2nd lock in period of the agreement. After the lock in period, the respondent was entitled to terminate the agreement by giving 6 months notice and the same would be calculated at the rate of Rs.4,57,000/- per month with additional service tax and escalations as provided in the agreement, being the minimum guaranteed commission for the said period. Learned arbitrator clarified that the same was subject to mitigation of the said loss on account of any income that the claimant may have generated from utilization of the said premises by itself and/or by letting the same out to a third party during the original tenure of the agreement. It is held that the respondent would be entitled to a credit in the amount recovered by the claimant for utilization of the premises by a third party.
93. It is held by the learned arbitrator that the respondent had failed to prove that the representations were made and the assurances were given by the claimant as alleged in paragraph 2(iii) (a) to (e) of the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 47 arbp-977.16 wt 978.16.doc written statement. The claimant has proved that the respondent had taken over the obligations to run the showroom under the agreement dated 7th June, 2008. The claimant had proved that the respondent had agreed to pay minimum guarantee commission in terms of the franchise agreement and that the claimant was entitled to claim the same from the respondent for the period upto August 2009 and even thereafter by way of damages during the second lock in period.
94. Learned arbitrator held that the respondent had failed to prove that the claimant had agreed for reduction of the minimum guarantee commission to 50% with effect from November 2008. The claimant had proved the breach of its obligations under the franchise agreement on the part of the respondent. The respondent had failed to prove that the respondent was entitled to terminate the agency/franchise agreement on account of the breach of its obligations by the claimant. The claimant proved that they are entitled to minimum guarantee commission in terms of the franchise agreement from the respondent only upto the termination of the contract and thereafter by way of damages upto the expiry of the second lock in period and subject to the deductions set out in the said award. Insofar as the entitlement of the claimant to an award for Rs.3,15,21,746/- quantified in the statement of claim is concerned, the learned arbitrator had held that the amount of the award ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 48 arbp-977.16 wt 978.16.doc will be adjudicated upon after parties submit their calculations based upon the principles enumerated in the said 'partial final award'.
95. Insofar as point no.10 is concerned, learned arbitrator held that the respondent had failed to prove that they are entitled to award of Rs.1,10,57,746.65 or any part thereof as claimed in the counter claim. It is held that the amount of security deposit would be adjusted against the amounts due to the claimant. Insofar as point no.11 is concerned, the learned arbitrator held that the claimant was entitled to interest at the rate of 24% per annum as per clause 5(g) of the agreement in respect of the minimum guarantee commission amounts due upto and till the date of invocation. Post invocation the claimant was awarded pendente lite and post award interest at 18% per annum. Insofar as point no.12 is concerned, learned arbitrator made it clear that the said 'partial final award' was determining the issues set out therein. The quantification of the claims would be carried out on calculations being submitted by the parties thereafter based on the findings therein and after hearing submissions thereon.
96. It is clear that both the parties understood that the said 'partial final award' was final in all respect insofar as the issues already determined by the learned arbitrator in the said 'partial final award' ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 49 arbp-977.16 wt 978.16.doc rendered by consent of both the parties. The respondent had categorically mentioned in their letter dated 30 th October,2015 that they were disputing their liability under the 'partial final award'. There is thus no substance in the submission of the learned senior counsel for the respondent that the said 'partial final award' dated 5th June, 2015 was not final in respect of the issues already determined in the said 'partial final award'.
97. In my view, in the said partial final award, the learned arbitrator had already determined various issues including rejection of counter claim and also the entitlement of the respondent to adjust the security deposit made by the respondent against the amounts due to the claimant. The respondent did not even challenge that part of the award thereby rejecting the counter claim made by the respondent. Under section 2(1) (c) of the Arbitration Act, the arbitral award includes interim award. Under section 31(6) of the Arbitration Act, it is provided that at any time during the arbitral proceedings, Arbitral Tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award. It is not the case of the petitioner (original respondent) that the parties had not agreed before the learned arbitrator to make the 'partial final award' on all the issues excluding the issue of calculation of the amount claimed by the either party and re-imbursement of service tax.
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98. In my view, the period of limitation for challenging the 'partial final award' which has determined the matter with respect to which the Arbitral Tribunal could make a final arbitral award would commence under section 34(3) of the Arbitration Act from the date on which a copy of such 'partial final award' duly signed by the learned arbitrator was received by a party. In this case, there was no application made by the respondent under section 33(1) for correction of the award. A copy of the 'partial final award' was admittedly received by the respondent on 5th July, 2015 itself from the learned arbitrator. The issues which are already decided by the learned arbitrator in the said 'partial final award' thus attained finality upon expiry of the period of limitation prescribed under section 34(3) of the Limitation Act.
99. A perusal of the grounds raised in the arbitration petitions clearly indicates that the petitioner (original respondent) has impugned the said 'partial final award' and seeks adjudication on merits. In paragraph (10) of the arbitration petition, it is averred by the petitioner (original respondent) that a copy of the final award was received on 6 th January,2016. The petitioner however has challenged both the arbitral awards in the same arbitration petition which was admittedly lodged only on 2nd March,2016. In my view, the limitation for impugning the 'partial final award' dated 5th July, 2015 would not be extended till a copy of the ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 51 arbp-977.16 wt 978.16.doc final award was served upon the respondent by the learned arbitrator.
100. There would be separate cause of action for impugning the 'partial final award' which has determined various issues finally and in impugning the final award which in this case was only quantifying the claims made by the claimant and the respondent. The petitioner thus could not have challenged the 'partial final award' along with final award since the limitation for impugning the partial final award dated 5 th July, 2015 had already expired within three months from the date of service of signed copy of the said 'partial final award' from the learned arbitrator by the respondent.
101. Supreme Court in case of Indian Farmers Fertilizer Co- operative Limited (supra) after construing section 2(c) and 31(6) held that the jurisdiction of the arbitrator to make an interim arbitral award on any matter with respect to which it may make a final arbitral award. The expression "matter" is wide in nature, and subsumes issues at which the parties are in dispute. It is held that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award. In an appropriate case, the issue of more than one award may be necessitated on the facts of each case. However, by dealing with the matter in a piecemeal fashion, what ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 52 arbp-977.16 wt 978.16.doc must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. It is held by the Supreme Court in the said judgment that there can be one or more interim awards, prior to a final award, which conclusively determines some of the issues between the parties, culminating in a final arbitral award which ultimately decides all remaining issues between the parties. In my view, in the final arbitral award, the remaining issues which were not finally determined in the 'partial final award' have been determined.
102. In the said judgment, Supreme Court adverted to an earlier judgment in case of McDermott International Inc. versus Burn Standard Co. Ltd., (2006) 11 SCC 181. In the said judgment of McDermott International Inc. (supra) it was held that the interim award is final in all respect with regard to the dispute of the arbitration which are subject matter of such award. Some arbitrators instead and in place of using the expression "interim award" use the expression "partial award". By reason thereof the nature and character of an award is not changed. It is held that it is clear that an interim award or partial award is a final award on matters covered therein made at an intermediate stage of the arbitral proceedings. In the said judgment, in case of Indian Farmers Fertilizer Co-operative Limited (supra) the Supreme Court held that the learned arbitrator had disposed off one matter between the parties i.e. ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 53 arbp-977.16 wt 978.16.doc issue of limitation finally. The award was an interim award within the meaning of section 2(1)(c) of the Arbitration Act and being subsumed within the expression "arbitral award" could, therefore, be challenged Under Section 34 of the Act.
103. The Supreme Court also adverted to its earlier judgment in case of National Thermal Power Corporation Ltd. Versus Siemens Atkeingesellschaft, (2007) 4 SCC 451 in which it was held by the Supreme Court that where a counter claim is referred to and dealt with and a plea that the counter claim does not survive in view of the settlement of disputes between the parties earlier arrived at is accepted, it could not be held to be a case of refusal to exercise jurisdiction by the Arbitral Tribunal. Same is the position when an Arbitral Tribunal finds that a claim was dead and was not available to be made at the relevant time or that the claim was not maintainable for other valid reasons or that the claim was barred by limitation. They are all adjudications by the Tribunal on the merits of the claim and in such a case the aggrieved party can have recourse only to Section 34 of the Arbitration Act and will have to succeed on establishing any of the grounds available under that provision.
104. In my view, the principles of law down by the Supreme ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 54 arbp-977.16 wt 978.16.doc Court in case of National Thermal Power Corporation Ltd. (supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment. Mr. Seksaria, learned counsel for the claimant is right in his submission that the 'partial final award' has attained finality in all those points for determination which are already conclusively decided by the learned arbitrator in the said 'partial final award' and thus if the respondent was aggrieved by the said 'partial final award', the respondent ought to have challenged the same within a period of three months from the date of receipt of the signed copy of the said 'partial final award' and not along with the final award. In my view, the challenge to the said 'partial final award' dated 5th June, 2015 passed by the learned arbitrator is barred by the limitation prescribed under section 34(3) of the Arbitration Act. The arbitration petition to this extent insofar as partial final award is concerned has attained finality.
105. Delhi High Court in case of Jhang Cooperative Group Housing Society Ltd. (supra) has held that the interim award is an award as defined under Section 2(1)(c) of the Arbitration Act and thus a recourse to a Court against the said award had to be made within the period of 3 months or the condonable period of 30 days as stipulated in Section 34(3) of the Arbitration Act. It is held that once the arbitrator returns the finding that delay in completion of the work was contributable to the appellant therein and that the rescission and termination of the contract was illegal ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 55 arbp-977.16 wt 978.16.doc and more so since those findings were not challenged by making a recourse against the interim award, the findings arrived at by the learned arbitrator in respect of the claims dealt with by the leaned arbitrator in the final award cannot be said to be erroneous and the learned single Judge had rightly declined to interfere with the same. In my view, the principles laid down by the Delhi High Court in the said judgment would apply to the facts of this case.
106. In this case, the learned arbitrator by consent of parties had rendered 'partial final award' on several issues including the issue arising out of counter claim. The respondent had submitted its calculation based on the said 'partial final award'. The petitioner though refused to submit its calculation on the ground that the 'partial final award' was disputed by them, the petitioner did not challenge the said 'partial final award' within 3 months from the date of service of a signed copy of a said 'partial final award' from the learned arbitrator. In my view, the learned arbitrator thus rightly considered those findings rendered and the conclusion drawn in the 'partial final award' as conclusive for the purpose of quantification of the claims made by the respondent. I am in respectful agreement with the views expressed by the Delhi High Court in case of Jhang Cooperative Group Housing Society Ltd. (supra). The petitioner could not point out any calculation error in the final award.
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107. In so far as the submission of Mr. Shah, learned senior counsel for the respondent that the findings rendered by the learned arbitrator in the said 'partial final award' on certain issues would be valid only till the final award was declared or that the 'partial final award' is merged with the final award and thus could be challenged along with final award is concerned, in my view there is no merit in this submission of the learned senior counsel. In paragraphs 23, 24, 30, 32 and 35 to 37 of the said 'partial final award', the learned arbitrator had already determined various issues finally including the issue that the respondent had agreed to pay minimum guaranteed commission in terms of the Franchise Agreement and dismissing the counter claim made by the respondent final determination of those issues.
108. The parties had agreed to the procedure under Section 19(2) of the Arbitration Act to be followed by the learned arbitrator in rendering a 'partial final award' under Section 31(6) of the Arbitration Act on various issues. Those issues have been determined by the learned arbitrator after considering all the submissions, the evidence produced on record and the pleadings after recording detail reasons on each of those issues.
109. In so far as the submission of the learned senior counsel for the respondent that the respondent could not have challenged the said ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 57 arbp-977.16 wt 978.16.doc partial final award as the same was allegedly not executable is concerned, the same is contrary to the principles of law laid down by the Supreme Court in case of Indian Farmers Fertilizer Co-operative Limited (supra), in case of Mcdermott International Inc. (supra) and judgment of Delhi High Court in case of Jhang Cooperative Group Housing Society Ltd. (supra).
110. In so far as the judgment of this Court in case of Commissioner, Kolhapur Municipal Corporation and Anr. (supra) relied upon by the learned senior counsel for the respondent is concerned, the learned arbitrator had passed an order upon recording a statement made by the applicant that the respondent is entitled to receive certain amounts. There was no interim award or 'partial final award' in that matter before this Court in the said matter. Be that as it may, this Court in the said judgment did not have benefit of the judgment of Supreme Court in case of Indian Farmers Fertilizer Co-operative Limited (supra) and in case of Mcdermott International Inc. (supra). The said judgment relied upon by the learned senior counsel for the respondent is thus clearly distinguishable in the facts of this case and would not assist the case of the respondent.
111. In so far as the judgment of this Court in case of Harinarayan G. Bajaj v/s. Sharedeal Financial Consultants Pvt. Ltd. ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 :::
ppn 58 arbp-977.16 wt 978.16.doc and another, 2003(4) Bom.C.R. 139 relied upon by the learned senior counsel for the respondent is concerned, in the said matter before this Court, the petitioner had impugned a decision/order passed by the learned arbitrator in an application filed under Section 27 of the Arbitration Act for seeking assistance of Court in taking evidence. The learned arbitrator had held that the applicant had not brought out any evidence to establish that documents sought for were necessary to prove the case against the broker. The learned arbitrator accordingly rejected the said application filed under Section 27 of the Arbitration Act. The said decision/order of the learned arbitrator was challenged under Section 34 of the Arbitration Act by contending that the said decision/order was an award with expression includes an interim award.
112. This Court in the said judgment held that every order or decision is not an award and order or decision in the course of proceedings which are continuing and in respect of which no remedy is provided under the Act could not normally be challenged while challenging the order under Section 34, provided the challenge was available under Section 34(2) of the Arbitration Act. It was held that the order rejecting the application under Section 27 was a decision and/or order and was not an interim award and thus it would be open to the petitioner if finally aggrieved by an award to challenge the award in which the said order had merged under Section 34(2) of the Arbitration ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 59 arbp-977.16 wt 978.16.doc Act. In my view, the said judgment would not even remotedly apply to the facts of this case.
113. In the facts of this case, the parties had agreed that the learned arbitrator shall pass a 'partial final award' in respect of various issues at the stage when the parties had already concluded all their submissions on all the issues which were determined by the learned arbitrator in the said 'partial final award' except the issue of quantification which the parties had agreed to furnish after such 'partial final award' was rendered by the learned arbitrator.
114. In my view, the issues already decided by the learned arbitrator in the 'partial final award' dated 5 th June, 2015 had subsumed within the expression "arbitral award" under Section 2(1)(c) of the Arbitration Act and therefore could have been challenged under Section 34 of the Arbitration Act within the time prescribed under Section 34(3) of the Arbitration Act.
115. A perusal of the grounds raised in the arbitral petition filed by the petitioner (original respondent) clearly indicates that most of the grounds in the petition are relating to the challenge to the 'partial final award' which 'partial final ward' had already attained finality. In view of the petitioner not having challenged the said 'partial final award' within ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 60 arbp-977.16 wt 978.16.doc the time prescribed under Section 34(3) of the Arbitration Act, this Court thus cannot decide the validity of the said partial final award in these two arbitration petitions.
116. In so far as the submission of the learned senior counsel for petitioner (original respondent) that the claims made by the claimant were not proved before the learned arbitrator and in support of such plea reliance was placed on portion of the oral evidence led by both the parties is concerned, in my view since the both the arbitration petitions are barred by limitation under Section 34(3) of the Arbitration Act on the issues already rendered under the said 'partial final award' no such challenge is now permissible.
117. Be that as it may, the learned arbitrator has considered the documentary and oral evidence led by both the parties and has applied the principles of law laid down by the Supreme Court in case of Kailashnath Associates (supra). The learned arbitrator has not allowed the entire claim as made by the claimant. The learned arbitrator has divided the claims in three parts. The learned arbitrator had already rendered a finding in the 'partial final award' that the claimant had proved that the respondent had to pay minimum guaranteed commission in terms of the Franchise Agreement and that the claimant was entitled to claim the same from the respondent for the period upto August 2009 and even thereafter by way of ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 61 arbp-977.16 wt 978.16.doc damages during the second lock in period. The respondent had failed to prove that the claimant had agreed to reduction of the minimum guaranteed commission to 50%. In the said 'partial final award', the learned arbitrator also had rendered a finding that the claimant had proved the breach of its obligation by the respondent under the said Franchise Agreement. Such findings of fact not being perverse cannot be interfered with in these petitions filed under Section 34 of the Arbitration Act.
118. In so far as the submission of the learned senior counsel for the petitioner (original respondent) that though it was not the plea of the claimant that the claim was in the nature of liquidated damages, the learned arbitrator considered the claim as liquidated damages is concerned, a perusal of the record indicates that the petitioner (original respondent) itself had urged before the learned arbitrator across the bar and also in the written arguments that the claim made by the claimant was in the nature of liquidated damages. The learned arbitrator accordingly considered part of the claim as liquidated damages and allowed the reasonable compensation after applying the principles of law laid down by the Supreme Court in case of Kailashnath Associates (supra). In my view, the judgment of Supreme Court in case of Kailashnath Associates (supra) would assist the case of the claimant and not the petitioner (original respondent). Similarly the judgment of Division Bench of this ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 62 arbp-977.16 wt 978.16.doc Court in case of Raheja Universal Pvt. Ltd., Mumbai (supra), judgment delivered by a single Judge of this Court in case of Reliance Media Works Limited (supra) also would not assist the case of the petitioner (original respondent) and would assist the case of the claimant.
119. Learned senior counsel during the course of the argument placed reliance on various parts of the oral evidence led by both the parties and would submit that on the basis of such evidence, the learned arbitrator could not have allowed the claim in favour of the claimant. In my view this Court cannot re-appreciate the oral and documentary evidence appreciated by the learned arbitrator. It is not the case of the petitioner that any vital evidence led by the respondent has been overlooked by the learned arbitrator. The learned arbitrator has interpreted the terms of the agreement entered into between the parties which interpretation is a possible interpretation and thus cannot be substituted by another possible interpretation by this Court.
120. In so far as the submission of the learned senior counsel for the petitioner (original respondent) that the learned arbitrator could not have awarded interest @ 24% p.a. upto the date of invocation of the Arbitration Agreement and @ 18% p.a. for the pendente lite period and post award is concerned, learned senior counsel for the petitioner does not dispute that the agreement entered into between the parties provided for ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 63 arbp-977.16 wt 978.16.doc payment of interest @ 24% p.a. and more particularly in clause 5(g) of the Agreement. The learned arbitrator in this case has awarded interest @ 24% p.a. on the installments of minimum guaranteed commission prior to the invocation of Arbitration Agreement in terms of clause 5(g) of the Agreement. Learned arbitrator has awarded interest @ 18% p.a. on the principal amount of Rs.3,92,51,369/- for the pendente lite period and post award. Since, the learned arbitrator has allowed interest upto the date of notice invoking Arbitration Agreement at the agreed rate by and between the parties that part of the arbitral award cannot be interfered by this Court.
121. In so far as the judgment of Supreme Court in case of State of Rajasthan & Anr. (supra) relied upon by the learned senior counsel for the petitioner (original respondent) is concerned, the Supreme Court in the said judgment had considered the matter under the provisions of Arbitration Act, 1940. Be that as it may, the learned arbitrator under Section 31(7) of the Arbitration and Conciliation Act, 1996 has powers to award interest at such rate as it deems reasonable on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and on the date on which the award is made, unless otherwise agreed by the parties. However, under Section 31(7)(a), the learned arbitrator is empowered to award the interest at such rate as it deems reasonable.
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122. In my view, the interest awarded by the learned arbitrator @ 18% p.a. for the pendente lite period and upto the date of payment or realization is exorbitant. I am inclined to accept the submission of the learned senior counsel for the petitioner (original respondent) that the learned arbitrator could have awarded interest at the reasonable rate and in this case @ 9% p.a. for the pendente lite period and future interest by relying upon the principles of law laid down by the Supreme Court in case of Vendanta Limited (supra). The principles laid down by the Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. (supra) relied upon by the learned counsel for the claimant in support of the submission that the findings of fact rendered by the learned arbitrator being not perverse cannot be interfered with by this Court under Section 34 of the Arbitration Act would apply to the facts of this case. None of the findings rendered by the learned arbitrator are perverse or shows patent illegality and thus no interference with any of the findings of fact is warranted except in respect of the rate of interest for the pendente lite period and future interest.
123. I therefore pass the following order:-
(a) Impugned Arbitration Awards both dated 14th December, 2015, which are subject matter of the Arbitration Petition Nos. 977 of 2016 and 978 of 2016 are partly modified as under :-
(i) Arbitration Petitions are dismissed, in so far as 'partial final ::: Uploaded on - 21/01/2020 ::: Downloaded on - 22/01/2020 02:29:35 ::: ppn 65 arbp-977.16 wt 978.16.doc awards' both dated 5th June, 2015 made by the learned Arbitrator are concerned.
(ii) The rate of interest awarded by the learned Arbitrator @ 18% p.a. for pendente lite period and future interest is reduced to 9% p.a. Rest of the Arbitration Awards both dated 14th December, 2015 are upheld.
(iii) Arbitration Petition Nos. 977 of 2016 and 978 of 2016 are partly allowed in aforesaid terms.
(iv) No order as to costs.
(R.D. DHANUKA, J.)
124. Learned counsel for the petitioner seeks stay of the enforcement of the order passed by this Court today. Learned counsel for the respondent opposes the application for stay. The respondent has already withdrawn 50% of the amount deposited by the petitioner on furnishing the bank guarantee. The said bank guarantee is in force till August 2020. The respondent shall not apply for cancellation of the said bank guarantee for a period of four weeks from today.
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