Madras High Court
M/S. Vishal Abikaran vs M/S. Nissan Motor India Private Limited on 15 September, 2021
Author: N.Sathish Kumar
Bench: N.Sathish Kumar
Arb.O.P.Nos.315 and 98 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 15/9/2021
CORAM
THE HONOURABLE Mr.JUSTICE N.SATHISH KUMAR
Arb.O.P.Nos.315 and 98 of 2021
Arb.O.P.No.315 of 2021
M/s. Vishal Abikaran
rep. By its Authorised Partner
Mr.Karan Rishi
NH 130 Raipur Road
Bodri, Bilaspur
Chattisgarsh 495 002. ... Petitioner
Vs
M/s. Nissan Motor India Private Limited
rep. By its Authorised Signatory
Mr.Jabarjeet Singh
Plot No.1 A, SIPCOT Industrial Park
Oragadam Mattur (PO)
Sriperumbudur
Kanchipuram (D)
Tamil Nadu. ... Respondent
and
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Arb.O.P.Nos.315 and 98 of 2021
Arb.O.P.No.98 of 2021
M/s. Nissan Motor India Private Limited
rep. By its Authorised Signatory
Mr.Jabarjeet Singh
Plot No.1 A, SIPCOT Industrial Park
Oragadam Mattur (PO)
Sriperumbudur
Kanchipuram (D)
Tamil Nadu. ... Petitioner
Vs
M/s. Vishal Abhikaran (A partnership firm)
rep. By its Authorised Partner
Mr.Karan Rishi
NH 130 Raipur Road, Bodri, Bilaspur
Chattisgarsh 495 002. ... Respondent
Prayer in Arb.O.P.No.315 of 2021: Arbitration Original Petition has been
filed under Section 34 (2) (b) (ii) & 2 A of the Arbitration and Conciliation
Act, 1996, to set aside the Majority Arbitration Award dated 19/10/2020
passed by the Arbitral Tribunal which has arisen out of the dispute between
the petitioner and respondent and allow the petitioner's claim petition.
Prayer in Arb.O.P.No.98 of 2021: Arbitration Original Petition has been
filed under Section 34 (2) (b) (ii) & 2 A of the Arbitration and Conciliation
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Arb.O.P.Nos.315 and 98 of 2021
Act, 1996, to set aside the impugned portion of the majority Arbitral Award
dated 19/10/2020 rendered by the learned Tribunal whereby the petitioner
was directed to pay a sum of Rs.10,00,000/- to the respondents as
compensation for the investments made with interest @ 18% p.a., w.e.f the
date of the award.
For petitioner ... Ms.Abitha Banu
for Mr.A.Damodaran
(in Arb.O.P.No.315 of 2021)
M/s.M.Velmurugan
Piyush Sharma
Shivam Chanana
(in Arb.O.P.No.98 of 2021)
For respondent ... M/s.M.Velmurugan
Piyush Sharma
Shivam Chanana
(in Arb.O.P.No.315 of 2021)
Ms.Abitha Banu
for Mr.A.Damodaran
(in Arb.O.P.No.98 of 2021)
------
COMMON ORDER
Challenging the majority award passed by the arbitral Tribunal, the petitioner/claimant has filed Arb.O.P.No.315 of 2021, challenging the portion of the award, in and by which the compensation of Rs.10 lakhs has been awarded, the respondent in Arb.O.P.No.315 of 2021 has filed Arb.O.P.No.98 of 2021.
3/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 2 . Since both the Arbitration Original Petitions are arising out of the same award, this Court is inclined to dispose of both the Arb.O.Ps by way of a common order.
3. The brief facts leading to the filing of the Arbitration Original Petitions are as follows:-
The petitioner and respondent had entered into a dealership agreement, on 14/2/2014, for a period of two years, for raising the Permanent 3 S (Sales, Service & Spares) facility in Bilaspur, Chattisgarsh, as per Nissan Standards. On expiry of two years, fresh agreement was signed, on 14/2/2016, by the petitioner and sent the same for signing of the respondent, but not received the signed agreement from the respondent before the expiry of the term of the dealership. The dealership arrangement between parties continued till final discontinuation from the respondent. The petitioner in respect of the expiry of term notice, dated 15/2/2018, sent various letters, raising their grievances, including the letters, dated 9/3/2018 4/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 and 2/4/2018. In the said letters, the petitioner had not only objected the termination of the dealership but also requested for payments against pending claims and for buying back the spares, accessories and vehicle stock.
4. The petitioner had filed Arbitration Application No.3479 of 2018. Vide, order, dated 19/6/2018, this Court had disposed of the application and ordered as follows:-
“NISSAN Motor India Private Limited, be and hereby restrained by an order of interim injunction till the matter is finally decided by the Arbitration Tribunal from terminating or discontinuing the dealership agreement between the applicant firm and the respondent.”
5. The petitioner had filed the Statement of Claim, dated 14/11/2018, before the Arbitration Tribunal and the respondent had filed their counter 5/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 reply, dated 11/1/2019, denying the claim of the petitioner, mainly on technical grounds. They have admitted one claim of Rs.2,87,918/- that has been eventually paid by the respondent under the interim order passed by the Tribunal.
6. Before the Tribunal, the respondent had filed the counter, denying all claims. Claimant had filed the rejoinder along with other documents.
7. On the side of the petitioner, C.W.1 has been examined, who has supported the entire claim of the petitioner/claimant and even in cross- examination, there was no material contradiction in his statements.
8. On the side of the respondent, R.Ws.1 and 2 have been examined. R.W.1 during cross examination has admitted that the petitioner's claim can be verified from the Dealer Management System (DMS) as long as the dealership is in operation. During cross examination, R.W.2 has admitted that the dealer data of operational dealers are available on the Dealer Management System as long as the dealership is operational and relying to 6/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 the questions placed before him, has admitted that the Dealer Management System controlled by respondent Company by nature is a communication and documentation portal which keeps on-line record of almost entire dealer activities including the day to day communications that was being jointly handled by the parties during the continuance of dealership.
9. The respondent has objected the claim of the petitioner on technical grounds. R.W.2 in his evidence has deposed that whatever claims were raised by the petitioner has been processed, as per the Company's policy and the terms of the Dealership agreement, but at no point of time, the respondent could substantiate its stand by furnishing any such document to show as to what were the claims and how much of the same were processed and paid or that the petitioner's claim were unfounded. Accordingly, claim was generally denied by the respondent. However, they admitted certain claims those have been granted during the proceedings itself.
10. As on 13/11/2018, the following are the undisputed claims:- 7/22
http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 S.No Heads Amount 1 Retail claims for FY 2014 - 2015 62,91,500/- 2 Retail claims for FY 2015 - 2016 48,32,926/- 3 Retail claims for FY 2016 - 2017 30,11,285/- 4 Retail claims for FY 2017 - 2018 18,02,537/- 5 ATL/BTL Activity claim upto FY 2014 - 16,34,715/- 15 6 ATL/BTL Activity claim upto FY 2015 - 11,63,921/- 16 7 ATL/BTL Activity claim upto FY 2017 - 3,37,966/- 18 8 Wholesale claim FY 2014 - 15 24,62,341/- 9 Redi Go Winner Claim 2016 - 17 2,87,918/- 10 Test Drive Vehicle Discount Claim 3,41,190/-
FY 2017 - 18 11 Unpaid GST (Goods & Sales Tax) 3,01,964/-
Implementation Support payable by NMIPL 12 Claims related with the schemes for 2,00,000/-
vehicle sold in June 2018
TOTAL 2,26,68,263/-
11. Apart from the above, the petitioner had claimed Rs.16,30,331/- for the losses on account of unsold vehicles; Rs.18,01,546/- for the loss on account of Demo vehicles; Rs.20,18,785/- for loss on account of unsold spares and accessories; Rs.12,47,251/- on account of signage & Retail visual identity ; Rs.43,76,903/- on account of utility of computer peripheral 8/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 and Rs.9,17,069/- on account of Furniture and Fixtures used in the showroom and workshop.
12. After discontinuation of the Dealership Agreement, Arbitration Proceedings were initiated. On the basis of the pleadings, the learned Arbitrator has framed the following issues:-
(i). Whether the claimant has proved that the discontinuation of Dealership by the respondent was arbitrary and unreasonable in terms of the Letter of Intent & Agreements between parties.
(ii). Is the claimant entitled to compensation for alleged discontinuation of Dealership Agreement by respondent. If so, to what extent?
(iii). Did the claimant make huge investments by way of showroom and workshop on account of Dealership Agreement with the respondent?
(iv). Whether the claimant has proved that the respondents are under an obligation to take back the unsold vehicles, unsold spares and service tools or reimburse the amount on that account to the claimant? 9/22
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(v). Whether the agreement dated 14/2/2016 was terminated or the same expired by efflux of time on 31/3/2018?
(vi). Whether the claims are barred by limitation?
(vii). Has the claimant proved that it suffered damages as claimed in para 25 of the claim statement?
(viii). To what reliefs are the parties entitled.
13. After considering the various clauses and contract, Minority Member Tribunal had passed the award as follows:-
(i). Respondent is directed to pay the claimant a sum of Rs.3,45,99,757/- as compensation with interest at the rate of 18% p.a., with effect from April 1, 2018. The respondent after making the payment awarded shall be entitled to take back the workshop tools, unsold vehicles and unsold spares/accessories etc., from the claimant.
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(ii). Respondent is also directed to pay the claimant a sum of Rs.15,00,000/- towards lumpsum cost of the arbitral proceedings including the travel and legal expenses etc., with interest @ 18% p.a., from the date of commencement of the arbitral proceedings.
Whereas the Majority Member of Arbitral Tribunal, passed the following award:-
“1. Under the above circumstances, we do not think that the claimant is entitled to any relief except the expectation of Dealership for atleast 10 to 15 years as discussed by us earlier. We have held that the sum of Rs.10 lakhs would be adequate compensation for the investments made by the claimant. This is the only relief that can be afforded to the claimant.
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2. We do not think we can award any interest in favour of the claimant. So far as the cost of Arbitration is concerned, we are of the opinion that it would be proper to direct the parties to bear their respective costs.”
14. Heard Mrs.Abitha Banu for Mr.A.Damodaran, learned counsel for the petitioner and Mr.M.Velmurugan, Piyush Sharma and Shivam Chanana for the respondent in Arb.O.P.No.315 of 2021.
15. It is the contention of the learned counsel appearing for the respondent that the respondent had objected the claim of the petitioner on technical grounds. Whenever the claim was raised by the petitioner, as per the Company's policy and the terms of the dealership agreement, but at no point of time, the respondent could substantiate its stand by furnishing any such document to show as to what were the claims and how much of the same were processed and paid or that the petitioner's claim were unfounded. 12/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021
16. Learned counsel appearing for Nissan Motor India Private Limited, respondent in O.P.No.315 of 2021 has relied on the following judgments:-
(i). The Project Director, National Highways No.45 E and 220, National Highways Authority of India V. M Hakeem & Another {SLP (Civil) No.13020 of 2020}
(ii). Oil and Natural Gas Corporation Ltd Vs. Saw Pipes Ltd (2003) 5 Supreme Court Cases 705
(iii). Nabha Power Limited (NPL) Vs. Punjab State Power Corporation Limited (PSPCL) and Another (2018) 11 Supreme Court Cases 508
(iv). Dyna Technologies Pvt Ltd Vs. Crompton Greaves Ltd (2019) 20 SCC - 1
(v). R.S.Jiwani, Mumbai Vs. IRCON International Ltd., Mumbai 2010 (1) Mh.L.J 13/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021
(vi). Manilal Ramjibhai Chaudhary Vs. State of Gujarat through Executive Director, Gujarat Minerals and Another (2013 SCC Online Guj 2213).
17. Whereas the learned counsel appearing for the petitioner submitted that the minority award was passed, after considering the entire aspect and awarded compensation on various heads. Hence, it is her contention that the Court can take into consideration of the minority award and allow the Arbitration Original Petition No.315 of 2021 by confirming the award passed by the minority award, considering the fact that the dealership agreement was discontinued.
18. To substantiate her case, learned counsel appearing for the petitioner, in Arb.O.P.No.315 of 2021, relied upon the judgment of DAKSHIN HARYANA BIJI VITRAN NIGAM LTD Vs. NAVIGANT TECHNOLOGIES PVT LTD (2021 SCC Online SC 157). 14/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021
19. Heard the arguments advanced on either side and perused the entire materials available on record.
20. The entire dispute is with regard to the expiry of dealership agreement. Though it is the contention of the learned counsel for the petitioner that the dealership is meant for a minimum period, they had invested Rs.10.50 crores on building. By efflux of time, the agreement had come to end on 31/3/2018 and there is no automatic renewal clause. Therefore, notice of termination was not required as no termination was involved. Initially, the petitioner had quantified the claim amount as Rs.11.56 crores, but later, he has brought down to Rs.3,70,93,751/-. The learned Arbitrators, after considering the various correspondences found that the dealership has not been cancelled rather it is only expired has not been renewed after a specific period.
21. Clause 18 of the contract makes it very clear that upon termination of the agreement either by respondent or dealer for any reason, or expiration of the agreement, the dealer shall cease to be an Authorised 15/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 Dealer and Dealer shall immediately discontinue the distribution and sale of products as an authorised dealer. Learned Arbitral Tribunal, after considering the various Clauses in the agreement, found that there is no deemed provision or extension of dealership agreement between the parties.
22. Though the learned Arbitrator has found that Clause 5 of the agreement clearly state that the Dealership facilities shall be satisfactory in space, appearance and layout and the dealer has to maintain these items at his own expense and held that petitioner is not entitled to claim any compensation However, observed the money spent on the repair works which are meant to attract customers and such buildings may not be useful for other purposes and therefore, awarded Rs.10 lakhs, as compensation.
23. Agreement between the parties expired on 31/3/2018. The petitioner in Arb.O.P.No.315 of 2021 as a dealer was bound to share the details of the Dealer's Inventory of Products by 30th April 2018. As per Clause 18 d of the Dealership Agreement, the petitioner did not share any inventory with the respondent.
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24. There is no evidence on record to show that the building was built in such a manner which are unfit to be used for any other purpose. In the absence of any evidence on record, such finding that building will not be useful for any other purpose and awarding compensation at the rate of Rs. 10 lakhs and mere opinion of the Tribunal without any evidence is nothing but perversity. Therefore, merely on the basis of some equity such compensation ought not to have been awarded by the Tribunal, unless the parties have expressly authorised the Tribunal to decide the issue on equity. Awarding such compensation on equity is violation of Sub clause 2 of Section 28 of the Arbitration and Conciliation Act, and the same reads as under:-
“The arbitral tribunal shall decide ex aequo et bono or as amicable compositeur only if the parties have expressly authorised it to do so.”
25. Further, it is to be noted that the majority decision Tribunal has specifically recorded the finding in paragraph 7 of the award that the 17/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 claimant admitted that they have rented out the building with effect from 13/8/2018 for a monthly rent of Rs.4,12,500/-. Having recorded such finding of the Tribunal that building may not be useful for any other purpose is nothing but goes to the root of matter and falls within the ambit of perversity and liable to be interfered.
26. In Ssangyong Engineering and Construction Co. Ltd., v. National Highways Authority of India (NHAI) [(2019)5 MLJ 7 (SC)] in paras 24 and 30 the Honourable Supreme Court has held as follows:
24. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the “most basic notions of morality or justice”. This again would be in line with paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
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1. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.
27. Having regard to the above judgment and a settled position when the award was passed merely on the basis of some assumption is nothing but perverse and the same is liable to be set aside. Since the particular award can be severable, the Court can set aside the portion of the award and 19/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 the Hon'ble Apex Court in DYNA TECHNOLOGIES PRIVATE LIMITED Vs. CROMPTON GREAVES LIMITED {(2019) 20 Supreme Court Cases 1}, has held that requirements of a reasoned order are that the reasons should be proper intelligible and adequate and the Court, while exercising jurisdiction under Section 34 of the Act has to adjudicate the validity of an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration.
28. In view of the above settled position, portion of the majority award granting Rs.10 lakhs as compensation alone is set aside.
29. As far as the minority award is concerned, before taking the decision to discontinue the dealership, the respondent has neither took the consent of the petitioner nor estimated the financial impact of the discontinuation of the claimant. The learned Arbitrator has not even took note of the contractual terms agreed upon between the parties. Merely because the contract was not renewed, it cannot be said that such discontinuation ought not to have been done. Therefore, this Court is of the 20/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 view that minority award is against the very contractual terms and beyond the terms of contract.
30. Be that as it may. The very finding of the majority arbitral tribunal, on appreciation of all evidence shows that there was no evidence of huge investment of more than Rs.11 crores. In such a view of the matter, this Court, as discussed above, the majority award, awarding Rs.10 lakhs, is liable to be set aside.
31. In the result, O.P.No.98 of 2021 is allowed and 315 of 2021 is dismissed.
15/9/2021 mvs.
Index:Yes/No Internet: Yes/No Speaking/Non-speaking order.
21/22 http://www.judis.nic.in Arb.O.P.Nos.315 and 98 of 2021 N.SATHISH KUMAR,J mvs.
Pre-delivery common order in Arb.O.P.Nos.315 and 98 of 2021 15/9/2021 22/22 http://www.judis.nic.in