Bangalore District Court
/ : Bengaluru Metropolitan vs M/S.Laqshya Media Pvt.Ltd on 19 November, 2019
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 19th day of November, 2019
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:123/2014
PLAINTIFF / : BENGALURU METROPOLITAN
PETITIONER CORPORATION
K.H.Road, Shanthi Nagar,
Bengaluru -560 027.
Reptd.by its Managing Director
through its Chief Law Officer.
/Vs/
DEFENDANT : M/S.LAQSHYA MEDIA PVT.LTD.,
RESPONDENT Having its Registered Office at
Laqshya House, Next to Rameshwar
Temple, Saraswati Baugh, Society Road,
Jogeshwari (East), MUMBAI - 400 060.
Having its Regional Office at
No.29/1, Second Floor,
Malik's Building,
Bowring Hospital Road,
Shivajinagar, Bengaluru -560 001.
Reptd. By its Chief Manager-
Mr.N.Ravi Reddy.
--
AS.123/2014
2
JUDGMENT
This suit is filed under Section 34 of the Arbitration and Conciliation Act, 1996, by Plaintiff/Petitioner for setting aside the arbitral award dated 11.08.2014 passed by sole Arbitrator, Sri.Justice V.Jagannathan, in AC.No.29/2014.
2) Plaintiff's case, in brief, is that, Plaintiff invited tenders for granting license for advertising on Buses operated by Plaintiff. Pursuant to finalization of the tender, Agreement dated 18.08.2008 came to be entered into between Plaintiff and Defendant, whereunder, Plaintiff granted license to Defendant to display advertisement on Volvo Buses. License fee agreed to be paid by Defendant is Rs.25,00,000/- per year per bus for the first lot of 10 Buses and Rs.18,26,000/- per bus per year for the second lot of 30 Buses. License was granted for six years commencing from 18.08.2008 till 17.08.2014.
AS.123/2014 3
3) It is stated that, Agreement executed between the parties contains terms and conditions, wherein, Clause 27 of Agreement contains that "the successful licensee shall have to obtain a certificate or permission or license as may be necessary or required from the concerned authorities of Central Government/State Government Local body for display of advertisement". As per Clause 27 of Agreement, Defendant was required to obtain license from RTA under Rule 127 of the Karnataka Motor Vehicles Rules, 1989. It is stated that, learned Arbitrator has not considered this aspect of the matter while passing the impugned award.
4) It is stated that, Defendant made a request on 04.10.2008 to provide concession in the matter of charging license fee and same was considered by Plaintiff from the date of request.
AS.123/2014 4
5) It is stated that, Agreement was terminated for non payment of license fee. However, Defendant raised dispute and impugned award dated 11.08.2014 came to be passed by learned Arbitrator.
6) Plaintiff has challenged the impugned award on the following grounds :
(1) Arbitral Tribunal erred in holding that Agreement dated 18.08.2008 is void ab-
initio in the absence of permission from RTA.
(2) Rule 127 of Karnataka Motor Vehicles Rules only regulates the procedure to be followed in displaying advertisement on the vehicles, which does not completely prohibits advertisements on the vehicles.
No permission was sought for by Defendant as per Clause 27 of Agreement from RTA, under such circumstance, it cannot be said that, Agreement entered into between the parties is void.
AS.123/2014 5 (3) Hon'ble High Court of Karnataka proceeded on mistaken impression of facts while passing orders in W.P.No.7759 and 7760 of 2010. Hon'ble High Court did not take notice of Clause 27 of Agreement. (4) Holding Issue No.1 in favour of Defendant by Arbitral Tribunal is without finding out whether Rule 127 of Karnataka Motor Vehicles Rules prohibits entering into agreement for advertisements on vehicles. Tribunal failed to take note of the fact that Rule 127 does not contemplate the prior permission being obtained for entering into advertisement agreement, under such circumstances, findings of learned Arbitrator that agreement is void ab-initio is vitiated and unsustainable in law. (5) Tribunal, while answering Issue No.2, 5 and 6 relating to computation of gestation period, recorded its findings erroneously on assumptions. In letter dated 03.11.2008, it is made clear that, license fee paid by Defendant for the period from 18.08.2008 to 30.09.2008 is accepted by Defendant AS.123/2014 6 and same is appropriated towards the license fee payable by Defendant up to 30.09.2008. Gestation was sought for, not from 18.08.2008. No refund was sought for with regard to license fee paid from 18.08.2008 to 30.09.2008. These aspects have not been taken note of by Arbitral Tribunal.
(6) No request was made to grant gestation period retrospectively and no request was made to refund the license fee paid up to 30.09.2008. Therefore, findings of the Tribunal that gestation is deemed to have been granted from 18.08.2008 is unsustainable in law.
(7) Tribunal has erred in holding that, in the matter of granting gestation to another advertiser, M/s.Ripple Media, who had entered into similar agreement with Plaintiff and whose agreement contains the very same clauses, was the subject matter of interpretation by Hon'ble High Court of Karnataka in W.P.No.33287/2010, whereunder, Hon'ble High Court of AS.123/2014 7 Karnataka was pleased to observe that, gestation period is from 01.10.2008 to 28.02.2009. Therefore, findings of the Arbitral Tribunal on Issue No.2, 5 and 6 are against Public Policy and opposed to principle of judicial consistency. For all these reasons, Plaintiff prays for setting aside the impugned award.
7) Defendant has marked appearance through its counsel and filed its written statement, wherein, it is stated that, learned Arbitrator ought to have been made as party to the present suit. Plaintiff has failed to do so, hence, petition is liable to be dismissed on this ground alone.
8) It is stated that, Plaintiff has failed to make out any grounds whatsoever under Section 34 of the Arbitration and Conciliation Act, 1996. Award is well reasoned without error. Allegations made by Plaintiff against award are vague and baseless.
AS.123/2014 8 Plaintiff has sought for re-examination of facts and re-appreciation of evidence, which is impermissible under the Act.
9) It is stated that, Plaintiff had issued tender vide Notification dated 27.07.2008 for grant of advertisement rights on 40 Vayu Vajra (Volvo) buses. Defendant was the successful bidder and accordingly, agreement dated 18.08.2008 was entered into between Plaintiff and Defendant containing terms and conditions. As per agreement, Defendant was awarded advertisement rights on the buses for a sum of Rs.25,00,000/- per bus per annum for 10 Buses and Rs.18,26,000/- per bus per annum for 30 buses. Security deposit of Rs.1,99,45,000/- and advance license fee of Rs.1,21,41,000/- were paid. Said agreement was rendered void due to lack of requisite permission from RTA. Initially, Plaintiff made an application to RTA and permission was granted for display of AS.123/2014 9 advertisements on Buses for a period of one year. RTA permission was valid up to 04.07.2009. After that, RTA resolved not to allow advertisements to be displayed on vehicles. In the absence of RTA permission, agreement was illegal, opposed to law and public policy and incapable of being performed. Unaware of lack of requisite permission from RTA by Plaintiff and due to hardship faced by Defendant, Defendant had approached Plaintiff in October, 2008 requesting for gestation period till 28.02.2009. Gestation period was extended by Plaintiff vide letter dated 12.12.2008 and Plaintiff agreed to grant gestation period from the date of agreement.
10) Defendant was entitled to refund of security deposit and advance license fee. Plaintiff neglected to refund the same. Even details of actual displays made on buses during gestation period was provided by Defendant. Aggrieved by arbitrary AS.123/2014 10 actions of Plaintiff, Defendant was constrained to approach Hon'ble High Court of Karnataka in Writ Petition Nos.7759 and 7760/2010. Hon'ble High Court of Karnataka was pleased to hold that, it was impossible to carry out the work under the contract in view of lack of RTA permission and agreement was void and Plaintiff could not forfeit the Security Deposit made by Defendant for the period for which Defendant has not carried out any advertisement. Plaintiff has failed to make any payment to Defendant as held in Writ Petitions, hence, arbitration proceeding was initiated and award came to be passed.
11) It is stated that, learned Arbitrator has not held that permission under Rule 127 was a pre- requisite for entering into agreement. However, any agreement under the Indian Contract Act requires to be lawful. Lack of RTA permission makes the agreement unlawful and impossible to be AS.123/2014 11 performed. Plaintiff's contentions are based on misinterpretation of the award and liable to be rejected. Gestation period was clearly contended by Defendant even before the Hon'ble High Court. Plaintiff is on the one hand contending that, all contentions were kept open by the Hon'ble High Court and on the other hand contends that the question of gestation period could not have been re-opened by the Tribunal. Plaintiff cannot approbate and reprobate. Figures regarding the actual advertisements made were provided to Plaintiff during the year 2009 and have not been controverted or challenged by Plaintiff at any stage. Arbitral Tribunal has rightly decided on the rate of interest to be 18% per annum. Same is supported by the Act and decisions of the Apex Court. Hence, prays for dismissal of the suit with costs.
AS.123/2014 12
12) Heard arguments of learned Counsels for Plaintiff and Defendant. Perused the written arguments and records.
13) Points that arise for my consideration are :
(1) Whether Plaintiff proves any of the grounds as enumerated in Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the impugned award?
(2) What Order?
14) My answer to above points are :
Point No.1 - In the Negative;
Point No.2 - As per final order, for the following :
REASONS
15) POINT NO.1 : This suit came to be filed by Plaintiff challenging the arbitral award dated 11.08.2014 passed by sole Arbitrator, whereby, learned Arbitrator was pleased to direct Plaintiff to pay a sum of 1,71,73,819/- towards due amount AS.123/2014 13 and Rs.1,96,17,370/- towards interest to Defendant.
16) Plaintiff's contention is that, Arbitral Tribunal has erred in holding that Agreement dated 18.08.2008 is void ab initio in the absence of permission from the Regional Transport Authority (for brevity 'RTA'). It is contended that, Rule 127 of the Karnataka Motor Vehicles Rules only regulates the procedure to be followed in displaying the advertisement on the vehicles. It no way prohibits advertisements on the vehicles. But Defendant was trying to take advantage of the resolution made by RTA rejecting the application. Rejection of application has nothing to do with Agreement dated 18.08.2008. No permission was sought for by Defendant as per Clause 27 of Agreement dated 18.08.2008 and under such circumstances, it cannot be said that contract entered into between the parties is void.
AS.123/2014 14
17) It is contended that, Hon'ble High Court of Karnataka, while passing order in W.P.No.7759 and 7760/2010, proceeded on the mistaken impression of facts, that permission was required to be obtained by Plaintiff without noticing Clause 27 of agreement. Arbitral Tribunal would not have decided Issue No.1 on the basis of observation made by Hon'ble High Court of Karnataka in para-6 of W.P.No.7759 and 7760/2010. It is contended that, Rule 127 of the Karnataka Motor Vehicles Rules does not contemplate prior permission being obtained for entering into the advertisement Agreement. Finding on Issue No.1 is not in consonance with the express provisions of the Contract Act. Unless it is held that contract itself was against the Public Policy, the agreement could not have been characterized as void. Hence, frustration of contract could not be inferred in this case.
AS.123/2014 15
18) On the other hand, Defendant contends that, Rule 127 of the Karnataka Motor Vehicles Rules mandatorily requires a permission to be sought thereunder. Lack of such a permission would make any advertisement carried out by Defendant on the buses illegal. Contentions of Plaintiff that Defendant is attempting to take advantage of lack of legal permission or that such lack of permission had nothing to do with the Agreement is absurd. Hon'ble High Court was pleased to hold that Agreement is void due to lack of permission. Plaintiff is attempting to argue on the face of the said order. Further, it is an admitted fact that, Plaintiff applied for licenses and permissions and that they were refused. When Plaintiff itself had undertaken the task of obtaining licenses, it cannot, now, contend that, Defendant ought to have applied for it and shift the burden to Defendant. Order of the Hon'ble High Court of Karnataka in W.P.No.7759 and 7760/2010 is final AS.123/2014 16 and binding on Plaintiff. Plaintiff is seeking to impugn the findings of the Hon'ble High Court of Karnataka before this court, which is entirely misconceived and untenable and it is untenable to contend that, even issues decided by the Hon'ble High Court are to be kept open and agitated before the Tribunal. Learned Tribunal has not held that the permission under Rule 127 was a pre-requisite for entering into agreements. However, any agreement under the Indian Contract Act, requires to be lawful. Lack of RTA permission makes the agreement unlawful and impossible to be performed. Plaintiff's contentions are based on misinterpretation of award and liable to be rejected.
19) On perusal of the award makes it clear that, to advert the contentions of the parties as to Agreement dated 18.08.2008 is void ab initio in the absence of permission from RTA, learned Arbitrator AS.123/2014 17 has framed specific Issue at Issue No.1. Issue No.1 as framed by learned Arbitrator reads thus :
" 1. Whether the Claimant had proved that the agreement dated 18.08.2008 between the parties is void ab-initio in the absence of permission from the RTA (Road Transport Authority)?"
20) Learned Arbitrator, having regard to observation made by the Hon'ble High Court of Karnataka in Ex.P.17 was pleased to hold that, in the absence of permission by RTA, the question of agreement being implemented does not arise. Findings of learned Arbitrator reads as follows :
" Issue No.1 - As regards the issue is concerned, the Claimant has admitted in the claim application itself that the agreement is void after 04.07.2009 and the observations of the Hon'ble High Court of Karnataka in the afore mentioned Writ Petitions order at Ex.P.17 also makes it clear that the Claimant's did not make any business after 04.07.2009 and even according to the BMTC the advertisement carried on upto the end of February 2009 only grant of permission for one year i.e., from 05.07.2008 to 04.07.2009 is also not in dispute between the parties. As such, from the document produced by both the sides and stand taken in the pleadings and the observation made by the Hon'ble High Court of Karnataka in Ex.P.17 leaves no doubt as to the agreement becomign illegal and opposed to law of public policy AS.123/2014 18 after 04.07.2009. The Hon'ble High Court of Karnataka has observed at Page 4 of its order at Ex.P.17 that the contract between the parties were incapable of performing after 04.07.2009. In the light of the aforesaid material on record, as far as this issue is concerned,Issue No.1 wil have to be answered in the Negative ."
21) It is relevant to mention observation made by the Hon'ble High Court of Karnataka in W.P.Nos.7759 and 7760/2010 at Ex.P.17. It reads as follows :
" Under Rule 127 of the Motor Vehicles Rules, 1989, the owner of the Motor Vehicle shall not display advertisement of motor vehicle except with the permission of jurisdictional Regional Transport Authority. The first respondent being the owner of the buses was to obtain such permission from the jurisdictional Regional Transport Authority. Accordingly, respondent No.1 made application to Regional Transport Authority in the case of Vayu Vajra buses and was accordingly granted permission for a period of one year i.e., from 5.7.2008 to 4.7.2009 as per Annexure-C. However, the permission granted as aforementioned, was not continued subsequently. The prayer for grant of permission for Suvarna buses seems to have been rejected by Regional Transport Authority in the month of September 2008 itself. The Regional Transport Authority as aforementioned refused to renew permission by passing resolution Annexure-F dated 4.9.2008 and by passing the order Annexure-H dated
19.6.2009. Thus, it is clear that the permission was granted in respect of Vayu AS.123/2014 19 Vajra buses only upto 4.7.2009. In the absence of the permission, agreement entered into between the parties could not be pursued, inasmuch as, such agreements became illegal and opposed to law of public policy after 4.7.2009. Since the contracts entered into between the parties were incapable of being performed after 4.7.2009, they should be treated as void ab-intio as per Section 56 of the Contract Act."
(underlined by me)
22) Hence, it is crystal clear that, learned Arbitrator was pleased to consider all aspects in a perspective manner and having due regard to materials placed before him, has held that, 'in view of refusal of permission by RTA, agreement entered into between Plaintiff and Defendant being incapable of performance and same is void ab- initio.'
23) Contentions as raised by Plaintiff is that, Rule 127 of the Karnataka Motor Vehicles Rules only regulates the procedure to be followed in displaying the advertisement on vehicles and it AS.123/2014 20 does not prohibit advertisements on vehicles itself. Further contention is that, unless it is held that contract itself was against to Public Policy, same could not have been characterized as void.
24) Rule 127(1) of the Karnataka Motor Vehicles Rules reads as follows :
" 127. Prohibition of painting or marking, etc.- (1) No advertising device, figure, or writing shall be exhibited on any transport vehicle save, as may be specified by the Regional Transport Authority by general or special order."
25) It is also relevant to extract Section 56 of the Indian Contract Act, 1872. It reads thus :
" 56. Agreement to do impossible act.- An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful.- A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non-performance of act known to be AS.123/2014 21 impossible or unlawful.- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise."
26) Rule 127(1) bars any advertising device, figure, or writing on any transport vehicle. If RTA permits by general or special order, then only it is permissible to display advertisement on vehicle. RTA specifically resolved to reject the application of Plaintiff seeking permission to display advertisement on vehicles. Under such circumstances, it cannot be said that, Rule 127 merely regulates the procedure to be followed in displaying advertisement on vehicles and it does not prohibit advertisement on vehicles. It was mandatory for Plaintiff to obtain permission from RTA under Rule 127 of the Karnataka Motor Vehicles Rules at the time of entering into Agreement for displaying advertisement on buses AS.123/2014 22 being the owner of buses. Even though agreement binds Defendant to seek permission from RTA to display advertisement on vehicles, it was the bounden duty of Plaintiff to obtain permission from RTA being the owner of buses. Having conceded the fact of mandates of Rule 127, Plaintiff had filed application for permission to display advertisement by Defendant and same got rejected; whether permission sought for by Plaintiff or Defendant, it makes no difference. Under Section 127 of the Karnataka Motor Vehicles Rules, it is mandatory to obtain permission before advertising device on vehicles.
27) Section 56 of the Contract Act specifically states that, a contract to do an act, which, after the contract becomes impossible, becomes void when the act becomes impossible. Second part of the Section makes it clear that, when one person has promised to do something which he knew, or AS.123/2014 23 with reasonable diligence, might have known and if the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss, which, such promisee sustains through the non-performance of the contract.
28) Here, in this case, under Rule 127 of the Karnataka Motor Vehicles Act, owner of the vehicle is entitled to apply for permission to display advertisement on vehicles. However, granting of permission is exclusively within the discretionary power of RTA. Plaintiff and Defendant entered into Agreement on 18.08.2008, whereunder, Plaintiff granted advertisement rights to Defendant on Buses for a sum of Rs.25,00,000/- per bus per annum for 10 Buses and Rs.18,26,000=00 per bus per annum for 30 Buses. Under the agreement, duty is cast upon Defendant to obtain permission from RTA for displaying advertisement on Buses AS.123/2014 24 operating by Plaintiff. Any how, at the time of entering into Agreement, Plaintiff had already applied for permission under Rule 127 before RTA for permission to display advertisement on buses and same was granted for one year and thereafter, further permission was rejected by RTA. After entering into agreement, RTA has rejected the application for seeking permission to display advertisement. Under such circumstances, it cannot be said that, Plaintiff had knowledge that, performance of the agreement becomes impossible, at the time of execution of agreement. Hence, it is clear that, performance of agreement becomes impossible only after rejection of application seeking permission to display advertisement. In that event, second part of Section 56 of the Contract Act is not applicable for granting compensation to the aggrieved party. One thing is clear that, agreement got entered into between Plaintiff and Defendant became void after AS.123/2014 25 rejection of permission by RTA. Under such circumstances, the person who received advantage under contract, that becomes void, is bound to restore it or to compensate the person from whom he received it under Section 65 of the Contract Act. Section 65 of the Contract Act reads thus :
"65. Obligation of person who has received advantage under void agreement, or contract that becomes void.- When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it."
29) Section 65 of the Contract Act deals with two situation. They are, agreement is discovered to be void or contract that becomes void. Under such circumstances, it is stated that, it is the bounden duty of the person who has received advantage under void agreement, or contract that becomes AS.123/2014 26 void to restore it, or to make compensation for it to the person from whom he received it.
30) In Kuju Collieries Ltd. Vs. Jharkhand Mines Ltd. And Others [AIR 1974 SC 1892], wherein, it is held that :
" Index Note :- Contract Act (9 of 1872), S.65 - Scope of Section 65 -
Agreement void ab inito - Mining lease contrary to mineral regulations and void - Parties in pari delicto - Section 65 does not apply - Nor does Section 70 or 72. X-Ref:- Mines and Minerals (Regulation and Development) Act (53 of 1948), S.4 - Brief Note :- (A) Section 65 makes a distinction between an agreement and a contract. According to Section 2 of the Contract Act an agreement which is enforceable by law is a contract and an agreement which is not enforceable by law is said to be void. Therefore, when the earlier part of Section 65 speaks of an agreement being discovered to be void, it means that the agreement is not enforceable and is, therefore, not a contract. It means that it was void. It may be that the parties or one of the parties to the agreement may not have, when they entered into the agreement, known that the agreement was in law not enforceable. They might have come to know later that the agreement was not enforceable. The second part of the section refers to a contract becoming void. That refers to a AS.123/2014 27 case where an agreement which was originally enforceable and was, therefore, a contract, becomes void due to subsequent happenings. In both these cases, any person who has received any advantage under such agreement or contract is bound to restore such advantage, or to make compensation for it to the person from who he received it. But where even at the time when the agreement is entered into both the parties knew that it was not lawful and, therefore, void, there was no contract but only an agreement and it is not a case where it is discovered to be void subsequently. Nor is it a case of the contract becoming void due to subsequent happenings. Therefore, Section 65 of the Contract Act did not apply."
31) In the above judgment, the Hon'ble Supreme Court was pleased to distinguish Agreement and Contract, the two terms used in Section 65 of the Contract Act. It is distinguished that, in void agreement, the parties or one of the parties to the agreement may not have, when they entered into the agreement, known that the agreement was in law not enforceable. They might have come to know later that, the agreement was not enforceable. In a contract becoming void, in which, an agreement which was originally enforceable and AS.123/2014 28 which becomes void due to subsequent happenings, it is specifically held that, in both cases, any person who has received any advantage under such agreement or contract is bound to restore such advantage, or to make compensation for it to the person from whom he received it. Having regard to the factual matrix of the case, the Hon'ble Supreme Court was pleased to make it clear that, but where even at the time when the agreement is entered into, both the parties knew that it was not lawful, and therefore, void, there was no contract, but only an agreement and it is not a case where it is discovered to be void subsequently. Nor is it a case of the contract becoming void due to subsequent happenings, therefore, Section 65 of the Contract Act, did not apply.
32) From Section 65 of the Contract Act and legal dictum as laid down by Hon'ble Supreme AS.123/2014 29 Court, it is abundantly clear that, agreement and contract are two different phraseologies and both are not operating in the same sphere. Agreement, in which the parties might not have known that agreement was not enforceable when they had entered into such agreement and they might have come to know later that the agreement was not enforceable. However, an agreement which was originally enforceable is contract and it becomes void due to subsequent happenings. In simple way, it can be said that, all agreements are not contract, but all contracts are agreements. In both cases, the party, who is in advantageous position is bound to restore the other party from whom he received such advantages under the agreement. It is further clear that, at the time when the agreement is entered into, both the parties knew that it was not lawful, under such circumstances, Section 65 cannot be made applicable to enforce the rights of aggrieved party.
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33) In this case, Defendant contends that, being unaware of lack of requisite permission from RTA and due to hardship faced by it, it had approached Plaintiff in October, 2008 requesting for a gestation period till 28.02.2009 and during such gestation period, license fee would be payable on the basis of actual displays made on the buses. Per contra, Plaintiff contends that, findings of learned Arbitrator in coming to the conclusion of the gestation period is erroneous. No gestation period was extended from the date of agreement. Gestation period was granted from 01.10.2008 to 28.02.2009. It is contended that, arbitral Tribunal could not have ignored the findings of the Hon'ble High Court of Karnataka that, gestation period is from 01.10.2008 to 28.02.2009.
34) Having gone through the contention of the parties, it is clear that, agreement becomes incapable of performance due to denial of granting AS.123/2014 31 permission by RTA. In this background, advantage received under agreement is bound to be restored to Defendant subject to deductions for availing services of Plaintiff by Defendant. However, Plaintiff contends that, gestation period was granted from 01.10.2008 till 28.02.2009. On the other hand, Defendant contends that, gestation period is from the date of agreement till 28.02.2009. Learned Arbitrator has framed specific Issues at Issues No.2 and 6 regarding this aspect of the matter. Issues No.2 and 6 read thus :
" 2. Whether it is proved by the Claimant that the 'gestation period' was to commence from the date of agreement i.e, 18.08.2008 till 28.02.2009?
6. Whether it is proved by the Respondent that the 'gestation period' was granted only from 01.10.2008 till 28.02.2009 and as such the claim now made is unsustainble in law?"
35) Learned Arbitrator, having placed reliance on Ex.P.12 to P.15, was pleased to hold that, gestation period was from 18.08.2006 till 28.02.2009.
AS.123/2014 32 Findings of learned Arbitrator at Para 24 read as follows :
"24. Thus, it is clear from the correspondence between the parties and the contents of Ex.P9 referred to above that the gestation period was from 18.08.2008 till 28.02.2009. The order of the Hon'ble High Court of Karnataka in W.P.No.33287 of 2010 dated 04.07.2014 referred to by the learned counsel for the Respondent is in my opinion not applicable to the facts and circumstances of the present case and more particularly in view of the specific stand taken by the Respondent in Ex.R8."
36) On perusal of the order passed in W.P. No.33287/2010 filed by one M/s.Ripple Media makes it clear that, the Hon'ble High Court of Karnataka, having regard to the submissions of the parties, was pleased to observe that, 'gestation period' is granted from 01.10.2008 to 28.02.2009 and Petitioner would undertake that he would not approach the arbitration. Learned Arbitrator, while answering issues regarding gestation period observed that, order of the Hon'ble High Court of Karnataka in W.P.No.33287/2010 is not applicable to the facts and circumstances of the present case.
AS.123/2014 33 It is to be noted that, present case is arising out of arbitral proceeding which took place between Defendant and Plaintiff. M/s.Ripple Media as shown in W.P.No.33287/2010, who took the lis to the Hon'ble High Court has nothing to do with this case. Learned Arbitrator, having regard to this factual aspect of the matter, has held that, order in W.P.No.33287/2010 is not applicable to the present facts of the case. Factual findings arrived at in a case which is totally unconnected to case on hand, cannot be relied upon at the instance of the parties and in that view of the matter, it can be said that, gestation period as alleged and denied by the parties is pure question of facts and findings thereon are based on materials placed before learned Arbitrator. Under such circumstance, this Court remains abstain from interfering with the factual findings of learned Arbitrator, who is the final judge to the quality and quantity of evidence.
AS.123/2014 34
37) In Associate Builders Vs. Delhi Development Authority [(2015) 3 Supreme Court cases 49] the Hon'ble Supreme Court was pleased to caution in applying principle of Public Policy Test and held that :
"It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. "
38) Here, in this case, learned Arbitrator, after deducting license fees payable for the gestation period, awarded balance amount received under Agreement towards security deposit and advance license fees to Defendant with pendent lite interest. No patent illegality can be ascertained in awarding balance amount by learned Arbitrator and same is AS.123/2014 35 within the purview of Section 65 of the Contract Act, under which, if agreement is discovered to be void or contract becomes void, the person, who received advantages under the agreement is bound to restore it to the person from whom he received it. Award can be set aside on the grounds as enumerated in Section 34 of the Arbitration and Conciliation Act. Here, Plaintiff has failed to make out any of the grounds as enumerated in Section 34 of the Act. Award passed by learned Arbitrator is based on reasons, there is no scope to interfere with the reasoned award; accordingly, I answer Point No.1 in the negative.
39) POINT NO.2 : In view of the foregoing discussion and answer to Point No.1, I pass the following :
ORDER (1) Suit filed by Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996, for setting AS.123/2014 36 aside the arbitral award dated 11.08.2014 passed by learned sole Arbitrator in AC.No.29/2014; is hereby dismissed.
(2) No order as to costs.
[Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open Court, on this the 19th day of November, 2019.] [RAMA NAIK] VI Addl.City Civil & Sessions Judge Bengaluru City.