Delhi District Court
M/S Alankit Assignments Ltd vs Sh. Pritpal Singh on 4 April, 2015
IN THE COURT OF SHRI RAJ KUMAR: ADDL. DISTRICT
JUDGE09: TIS HAZARI COURTS : DELHI
Arbtn No. 237/14 (Old Arbtn No. 348/07)
Unique Case ID No. 02401C0641222007
M/s Alankit Assignments Ltd.
205208, Anarkali Complex,
Jhandewalan Extension,
New Delhi110055. ........... Petitioner/Objector
VERSUS
1. Sh. Pritpal Singh
WZ44/2, Krishna Puri,
Gali No. 16, Tilak Nagar,
New Delhi110018.
2. Mrs. Lakshmi Swaminathan
Sole Arbitrator
National Stock Exchange of India Ltd.
Thapar House, Western Wing,
Mezzanine Floor, Janpath Lane,
124, Janpath, Cannaught Place,
New Delhi110001. .........Respondents.
Date of institution of the petition : 06.07.2007
Date on which order was reserved : 10.03.2015
Date of decision : 04.04.2015
Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 1/10
OBJECTION PETITION U/S 34 OF THE ARBITRATION &
CONCILIATION ACT, 1996 AGAINST AWARD DATED 31.03.2007
JUDGMENT
The present petition U/s 34 of the Arbitration and Conciliation Act, 1996 has been preferred by the applicant/ petitioner/ objector against the award dated 31.03.2007 passed by the respondent no. 2 in favour of the respondent no. 1.
2. The facts, in brief, leading to the filing of the aforesaid petition by the objector/ petitioner are that the respondent no. 1/ claimant filed a claim petition on the ground that he was maintaining a Trading Account No. JP038 with the applicant/ petitioner. It was further alleged that he had purchased 10600 shares of Himachal Futuristic Ltd., but when in April 2006, he requested the applicant to transfer his shares to his Demat Account, the petitioner neglected to do so and as a result thereof, he was prevented from making profits when the prices of the shares of the said company were rising. It has been further asserted by the respondent no. 1/ claimant that 8011 shares were belatedly transferred by the applicant/ petitioner on 31.05.2006 about which, he learnt from NSE's letter on 09.06.2006. It has been further asserted that on 09.06.2006, the price of the shares had come down to Rs. 22.05 per share, whereas, on 04.05.2006, he had sold 1411 shares of Himachal Futuristic Ltd. @ 45.45 Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 2/10 per share. It has been further alleged by the respondent no. 1 that he had suffered loss of Rs. 27.45 per share on 8011 shares of the said company. It has been further alleged by the respondent no. 1 that the petitioner/ applicant had neglected to act on his instructions to sell 800 shares of Himachal Futuristic Ltd., which they belatedly sold on 05.10.2006, instead of 11.05.2006, when the prices had fallen considerably and as such, the respondent no. 1/ claimant suffered losses on account thereof.
3. The aforesaid claim of the respondent no. 1 was contested by the applicant/ petitioner on various grounds, but the Ld. Arbitrator i.e. the respondent no. 2 passed an award dated 31.03.2007 in favour of the respondent no. 1.
4. Now, the said award has been challenged by the petitioner/ applicant on the ground that the Ld. Arbitrator erred in relying upon the alleged instructions of the respondent no. 1/ claimant for transfer of the shares given by email ID, which was not registered with the petitioner/ applicant. It has been further asserted by the petitioner in the present petition that the Ld. Sole Arbitrator passed the award on account of hypothetical and speculative losses. It has been further argued that the respondent no. 1/ claimant failed to prove the actual loss suffered by him and as such, no award could have been passed in his favour. It has been further asserted by the applicant/ petitioner that while giving instructions for the transfer of his shares, the respondent no. 1 had not settled the Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 3/10 account with the applicant/ petitioner and the shares of the respondent no. 1/ claimant were lying with the applicant as security for the outstanding dues. It has been further asserted that even otherwise, the award dated 31.03.2007 passed by the Ld. Sole Arbitrator is opposed to public policy of India and the same is liable to be set aside. It has been prayed that the award dated 31.03.2007 passed by the Ld. Sole Arbitrator be set aside.
5. Reply to the objections of the petitioner has been filed on record by the respondent no. 1 stating therein that the applicant has not come to the Court with clean hands and the objection petition of the applicant is based upon distorted and incorrect version of the facts. It has been further alleged by the respondent no. 1 that the applicant, in the capacity of a Trading Member, has committed fraud, cheating, blackmailing and unfair trade practices against the respondent no.1. It has been further alleged that all the requests of the respondent no. 1 were ignored by the applicant pertaining to the transfer of his shares on illegal grounds. It has been further stated by the respondent no.1 that all the pleas, which have been taken by the applicant/ objector in the present petition stand already dealt with by the Ld. Arbitrator and the same have already been rejected by the Ld. Arbitrator while passing the award dated 31.03.2007. It has been further stated that the present petition is liable to be dismissed on the ground that the applicant had written a letter dated 28.04.2006 to the respondent no. 1 admitting the email message dated Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 4/10 15.04.2006 of the respondent no.1. It has been prayed that the objection petition of the applicant be dismissed with costs.
6. Ld. Counsel for the petitioner/ objector has relied upon the judgement cited as 144(2007) DLT 659 titled as Indian Oil Corporation vs. M/s Lloyds Steel Industries Ltd. wherein, it has been held that :
"Arbitration and Conciliation Act, 1996 -
Sections 34, 34(2)(b) - Contract Act, 1872 - Sections 73, 74
- Liquidated Damages - Award of validity Delay in execution of contract - Time, essence of contract - Pre condition not fulfilled - No specific provision in contract that time would be essence of contract - No provision in contract for grant of provisional extension - Delay in execution of project attributable to both parties - Because of delay on part of respondent, petitioner had not suffered any loss - That damages could not be claimed unless loss was proved - Arbitrator rightly held that action of petitioner in imposing liquidated damages was illegal and unjustified - It is only when there is loss suffered and once that is proved, it is not for Arbitrator or Court to examine actual extent of loss suffered once there is preestimation thereof - Section 74, Contract Act does not confer special benefit upon any party, Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 5/10 i.e. petitioner in this case - In case when party complaining of breach of contract has not suffered legal injury in sense of sustaining loss or damages, there is nothing to compensate him for, nothing to recompense, satisfy, or make amends - If liquidated damages are awarded to petitioner even when petitioner has not suffered any loss, it would amount to 'unjust enrichment', which cannot be countenanced and has to be eschewed - There is no question of suffering any other loss by petitioner and award on this aspect calls for no interference - Interest awarded by Arbitrator reduced to 12% from 24% p.a. having regard to facts and circumstances of case & prevailing market rates."
7. On the other hand, Ld. Counsel for the respondent no. 1/ claimant has relied upon the judgement cited as 2006 (90) DRJ 46 titled as GE Capital Transportation Financial Services Ltd. vs. South Asian Enterprises Ltd. & Ors. wherein, it has been held that :
"Arbitration & Conciliation Act, 1996, Section 34 - Application seeking to set aside Award - Scope of Objections - Court does not exercise appellate jurisdiction over the Award of Arbitrator - Arbitrator not shown to have Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 6/10 acted contrary to public policy or in breach substantive provision of law - Objections to the award rejected."
8. I have carefully gone through the entire material available on record and heard the rival submissions of Ld. counsels for both the parties.
9. The first contention of the applicant/ objector/ petitioner in the present petition U/s 34 of the Arbitration and Conciliation Act, 1996 is that the respondent no. 1 failed to give any instructions through the registered email ID and as such, the reliance placed by the Ld. Sole Arbitrator i.e. the respondent no. 2 upon the email messages, which were sent by the respondent no. 1 is wrong and contrary to the facts on record.
10. It has to be seen that there is a letter dated 28.04.2006 on record of the file of the Ld. Arbitrator, wherein, email message dated 15.04.2006 of the respondent no. 1 has been specifically mentioned by none other, but the petitioner itself. It has to be further seen that in the said letter dated 28.04.2006 of the petitioner/ objector, it has been mentioned that the respondent no. 1 was also trading in the account of his son Sh. Hardeep Singh with Client Code JH 024 and the respondent no. 1 was asked to favour by adjustment of the dues outstanding therein. The e mail message dated 15.04.2006 of the respondent no. 1 is also there on record. Perusal of the said email message clearly states that the Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 7/10 petitioner/ objector was asked by the respondent no. 1 to transfer his 9000 shares of Himachal Futurist to his demat account of Stock Holding Corporation of India. Perusal of the said email message further stipulates that the respondent no. 1 asked the petitioner to transfer the shares immediately and send a confirmation mail.
11. Now, perusal of the award dated 31.03.2007 passed by the Ld. Arbitrator reveals that the Ld. Arbitrator has categorically relied upon the abovesaid letter dated 28.04.2006 of the petitioner. The Ld. Arbitrator has further held that the plea of the applicant to the effect that the applicant had never asked to clear the dues of his son, could not be accepted in view of the contents of the letter dated 28.04.2006. To my mind, the applicant cannot be allowed to argue, at this stage, that the e mail message dated 15.04.2006 was not received by the applicant and the same was not considered by the applicant because the same was sent through unregistered email ID in the light of the letter dated 28.04.2006. I have no hesitation to hold that the Ld. Arbitrator has rightly placed reliance upon the contents of the letter dated 28.04.2006, which is on the letterhead of the applicant/ petitioner/ objector.
12. The next contention of the applicant/ objector is that the suffering of the actual loss was not proved before the Ld. Arbitrator by the respondent no. 1 and the award dated 31.03.2007, which has been passed by the Ld. Arbitrator, is based on speculative losses and not on Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 8/10 actual losses.
13. There cannot be any deviation from the proposition of the law as contained in the authorities, which have been relied upon by both the Ld. Counsels for the parties. But, it has to be seen that the Ld. Arbitrator has categorically observed in the orders dated 31.03.2007 that without loosing much time, the respondent no. 1 complained to the NSE and on receipt of NSE's letter dated 20.05.2006, the applicant had then transferred 8011 shares of Himachal Futuristic Ltd. and 11 shares of Vikas Metal in the respondent no. 1's account with Stock Holding Corporation of India on 31.05.2006. The Ld. Arbitrator has further observed that the applicant had transferred the shares, apparently after receiving NSE's letter and as such, it could not be inferred that the loss calculated by the respondent no. 1 was merely hypothetical or non existing. The Ld. Arbitrator has based his findings upon the verification done from the record of the NSE to the effect that the rate of Himachal Futuristic Ltd. on 11.05.2006 varied from Rs. 40.15 P to a high of Rs. 42.80 and on 05.10.2006, from Rs. 26.85 to Rs. 27.90. The interest has been awarded by the Ld. Arbitrator @ 10% simple per annum.
14. In the light of the abovesaid discussion, I am of the opinion that the contention of the applicant to the effect that the findings of the Ld. Arbitrator are based upon speculative loss and not on actual loss, cannot be accepted. To my mind, the findings recorded by the Ld. Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 9/10 Arbitrator are neither perverse, nor opposed to public policy.
15. In nutshell, in the light of the abovesaid discussion, to my mind, the present petition U/s 34 of the Arbitration and Conciliation Act, 1996 is absolutely devoid of any merits and the same is hereby dismissed.
16. The file of the Ld. Arbitrator be sent back to the Ld. Arbitrator immediately by the Ahlmad after compliance of necessary formalities.
File be consigned to Record Room after due compliance.
Announced in the open court (RAJ KUMAR)
on this 04th day of April, 2015. ADJ09 (Central)
Tis Hazari Courts, Delhi.
Arbtn No.237/14 (Old Arbtn No. 348/07) Page No. 10/10