Delhi District Court
Sanjeev Kumar vs Jitendra Kumar Batra And Anr on 29 March, 2025
IN THE COURT OF DISTRICT JUDGE-04,
(PRESIDED OVER BY: ANIL CHANDHEL)
WEST DISTRICT, THC, DELHI
CNR NO. DLWT01-001147-2018
ARBTN NO. 12/2018
MR. SANJEEV KUMAR,
S/o Mr. M.P. Sharma,
R/o House No.-18, Extension 2-B,
Gali No.12, Nangloi,
Delhi-110041 ....OBJECTOR
Versus
1. MR. JITENDRA KUMAR BATRA,
S/o Mr. Khan Chand Batra,
R/o 42, Pocket 11A, Fourth Floor,
Panchsheel Enclave, Sector 23,
Rohini, Delhi-110085
2. MR. VIJAY GARG,
S/o Mr. C.D. Garg,
21, Block-D,
Pakha Road Institution Area,
Janakpuri,
New Delhi-110058. ...RESPONDENTS
OBJECTIONS UNDER SECTION 34 OF
THE ARBITRATION AND
CONCILIATION ACT, 1996 AGAINST
THE AWARD DATED 14.11.2017, PASSED
BY LD. SOLE ARBITRATOR MR. VIJAY
GARG IN ARBITRATION CASE NO. 01
OF 2015, TITLED AS, 'JITENDRA
KUMAR BATRA VS. SANJEEV KUMAR'.
________________________________________________________________
Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 1 of 42
ARBTN NO. 12/2018
DATE OF INSTITUTION : 05.02.2018.
JUDGMENT RESERVED ON : 28.03.2025.
JUDGMENT PRONOUNCED ON : 29.03.2025
Counsel for the Objector : Mr. Sudhir Anand, Advocate.
Counsel for the Respondent No.1: Mr. Vikrant Arora.
JUDGMENT
1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed to challenge the award dated 14.11.2017, passed by Ld. Sole Arbitrator Mr. Vijay Garg in Arbitration Case No. 01 of 2015, titled as, 'Jitendra Kumar Batra Vs. Sanjeev Kumar'. In terms of the impugned award dated 14.11.2017, the Ld. Sole Arbitrator directed the Objector to pay a sum of Rs.30,00,000/- (Rupees Thirty Lakhs Only) to the Respondent No.1, alongwith interest @ 9% per annum with effect from 01.07.2015. The Respondent No.1 is the only contesting Respondent in the present proceedings and the Respondent No.2 is the Ld. Sole Arbitrator, whose role in the proceedings was limited to filing of the Original record of Arbitral proceedings.
2. Arbitration Proceedings before the Ld. Sole Arbitrator:
It will be appropriate to recapitulate the Arbitration proceedings before Ld. Sole Arbitrator and the same are being summed up in brief in the paras stated hereinbelow:
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 2 of 42 ARBTN NO. 12/2018 2.1. The Objector and the Respondent No.1 entered into a Collaboration Agreement dated 25th October 2012, which contained the following Arbitration clause :
"20. That in case any dispute arises between both the parties regarding the terms and conditions of this Agreement then the same shall be referred and settled through a sole arbitrator Shri Vijay Garg, whose decision shall be file and binding upon both the parties, under Arbitration Act."
The Respondent No.1 invoked the arbitration clause and issued a notice dated 17.08.2015 to the Objector for invocation of Arbitration. The copy of the aforesaid notice was marked to the Ld. Sole Arbitrator Mr. Vijay Garg, who was requested to conduct the proceedings.
2.2. The Objector has issued a reply dated 22.08.2015 to the notice dated 17.08.2015, whereby he raised objections to the appointment of Arbitrator, by citing the grounds of bias as well as conflict of interest. A copy of the aforesaid reply dated 22.08.2015 was also marked to the Ld. Sole Arbitrator.
2.3. Ld. Sole Arbitrator, on 22.08.2015, issued notice to the parties for appearance before him on 12.09.2015. The aforesaid notice was sent to the Objector by speed post on 24.08.2015 at 17:06 Hrs., which is indicated from the copy of the postal receipt available in the case file. There is no ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 3 of 42 ARBTN NO. 12/2018 postal receipt of service of the aforesaid notice on the Respondent No.1.
2.4. The Objector appeared before the Ld. Arbitrator on 06.09.2015 and parties were directed to file their pleadings and also pay the fees of the proceedings and the matter was adjourned for 06.10.2015.
2.5. The Respondent No.1 filed the statement of claim on 01.10.2015. The facts, stated in the statement of claim, are briefly summed up in paras stated hereinbelow:
i. The Respondent No.1 is a renowned builder and the Objector is the owner of the Plot no. 18, Gali No., 12, Extension 2-B, Nangloi Delhi-110041 measuring 200 sq. yards. The Objector and the Respondent No.1 entered into a collaboration agreement dated 25.10.2012 for reconstruction of the aforementioned property in the shape of stilt parking, upper ground floor, first floor, second floor and third floor along with roof and lift.
ii. The parties agreed that the Respondent No.1 would be given an amount of Rs. 23,50,000/- along with one floor i.e. upper ground floor, in consideration for reconstruction of the property.
iii. The Respondent No.1 carried out the reconstruction ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 4 of 42 ARBTN NO. 12/2018 work, in terms of the Collaboration agreement except some finishing work which was going on as per the requirements of the Objector. However, the Objector shifted to the first floor of the property in July 2015, against the consent of the Respondent No.1, while the finishing work was still going on, which created inconvenience and hindrance in completion of the same.
iv. The Respondent No.1, on account of the paucity of funds and other personal reasons, had entered into an Agreement to Sell with one Mr. Satish Dabas for the sale of the Upper Ground Floor with the Respondent's permission. The aforesaid floor was to be transferred in favour of the Respondent No.1, in terms of the Collaboration Agreement. Accordingly, the Objector had executed the Sale Deed of the aforesaid floor, in favour of Ms. Sushila wife of Mr. Satish Dabas, as desired by the purchaser, for a total sale consideration of Rs.33,90,000/-. The Objector received the amount of Rs.30,00,000/- by way of cheques and Rs.3,90,000/- in cash.
v. Since, upper ground had fallen to the share of the Respondent No.1, in terms of the Collaboration Agreement, the amount received by the Objector, in the sum of Rs.3,90,000/-, was remitted by the Objector to the Respondent No.1. The Objector also ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 5 of 42 ARBTN NO. 12/2018 assured to remit/pay the remaining amount of Rs.30,00,000/-, upon the encashment of the cheques.
vi. The Objector turned dishonest subsequently and did not make payment of Rs.30,00,000/- as agreed, despite repeated requests and demands causing a stagnation in the entire finishing process. Thereafter the Objector started obstructing the Respondent No.1 and his labour from entering the premises, causing great harassment and hardships to the Respondent No.1 to carry out the remaining finishing work process.
vii. Since the Respondent No.1 served a legal notice dated 3rd August, 2015, which was not replied to despite service. The Respondent No.1 invoked the arbitration, in terms of collaboration agreement, by way of notice dated 17.08.2015.
viii. The Respondent No.1 has claimed recovery of Rs.30,00,000/- alongwith interest.
2.6. None appeared on behalf of the Objector on 06.10.2015. It is mentioned in the Order dated 6.10.2015 that Ld. Sole Arbitrator received a threatening call from Mr. Satish Dabas from the mobile No., registered in the name of Objector's father. The Arbitration file also contained an Original letter ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 6 of 42 ARBTN NO. 12/2018 dated 03.10.2015, signed by the Ld. Sole Arbitrator and written to the SHO Police Station, Nangloi, wherein it was stated that the Ld. Arbitrator received death threats to him and his family, from Mr. Satish Dabas, if he did not favour Mr. Sanjeev Kumar. The original letter is in the file and it is not evident, whether the same has been sent or not.
2.7. On 19.10.2015, the Objector filed an Application under Section 13 and 16 of the Arbitration and Conciliation Act, 1996 challenging the jurisdiction of Ld. Arbitrator. The Objector has raised allegations against the Ld. Arbitrator, citing the grounds of bias and conflict of interest. The aforesaid application was dismissed by Ld. Arbitrator in terms of an Order dated 19.11.2015 and the Objector was directed to file his statement of defence.
2.8. The Objector filed his statement of defence on 30.11.2015.
The Objector denied the averments of statement of claim. The facts stated in the statement of defence are being reproduced hereinbelow:
i. The execution of the collaboration agreement dated 25.10.2012 was not denied, however it is stated that the aforesaid agreement was entered through Mr. Vijay Garg, who was also the architect for the construction of the house, being subject matter of the dispute. It is stated that the Respondent No.1 and the Arbitrator played a fraud and got executed a custom made agreement, which favoured the interests of the ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 7 of 42 ARBTN NO. 12/2018 Respondent No.1. It is stated that the Objector had entered into the agreement at the instance of Mr. Vijay Garg, who assured that the construction will be raised with the best of materials and the project would be completed within the specific time.
ii. The Objector has cited various incidents wherein it was stated that the Respondent No.1 was short of funds and missed the deadline, despite the payment of the amount agreed in the agreement to sell. It is stated that the Objector was being promised by the Arbitrator about the completion of the work by the Respondent No.1 and both of the them extorted money without raising construction, in accordance with the agreement dated 25.10.2012.
iii. It is stated that the Objector had already paid more than Rs.25,00,000/- by January, 2014. It is stated that in June, 2014, the Respondents came up with the new scheme for sale of the upper ground floor and it was assured that the project would be completed with the money raised by selling the upper ground floor. It is stated that the deal of the first floor was done for Rs.75,00,000/- and the Respondent No.1 took Rs.20,00,000/- from Mr. Satish Dabas. It is stated that despite receiving the money, the Respondent No.1 was interested only in construction of upper ground floor ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 8 of 42 ARBTN NO. 12/2018 and was not interested in the construction of the remaining floor.
iv. It is stated that subsequently the Respondents made a promise to the Objector that at the time of final sale of upper ground floor, a sum of Rs.42,90,000/- , i.e., the sale consideration would be kept as a security by both of them. It is stated that in January, 2015 the sale deed of the upper ground floor was executed in the name of Ms. Sushma Dabas, under force and pressure of the Respondents, with the view to raise funds to construct the house. It is stated that a sum of Rs.12,90,000/- was given to Mr. Vijay Garg at his office in presence of Mr. Daulat Ram, one Mr. Satish Dabas and family members of the Objector and the remaining money was given to the Objector. It is stated that the Respondent No.1 was entitled to receive the upper ground floor only after completion of the complete work.
v. It is stated that subsequently, the Respondents started demanding more money for completion of the construction in the building. It is stated that the Objector has been cheated by the Respondents and the Respondent No.1 abandoned the building and the Respondent No.1 is not entitled to any further amount towards the first floor, as he has failed to complete the construction work in terms of the collaboration agreement dated 25.10.2012.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 9 of 42 ARBTN NO. 12/2018 vi. It is stated that the Objector has suffered huge losses, on account of the fraud of the Respondents and by non- completion of the construction work. It is stated that the Objector has made a complaint to the Police Station Nangloi. It is stated that the Arbitrator has always supported the Respondent No.1 and is acting in conspiracy with him and therefore is not entitled to legally competent to conduct the arbitration proceedings.
vii. It is stated that the oral agreement to sell the upper ground floor for completion of the construction was not part of the original collaboration agreement. It is stated that the Objector was forced to executed the sale deed as the Respondent No.1 has locked the premises and the Respondent No.2, i.e., the Arbitrator justified his act.
viii. It is stated that the Arbitrator has withheld cash payment received by him on 24.06.2015, which is reflected in the conversation recorded by the Objector and is presented in the form a CD along with the reply. It is stated that the conversations recorded in the aforesaid CD records the conduct of the Arbitrator and his incompetence to conduct the arbitral proceedings.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 10 of 42 ARBTN NO. 12/2018 2.9. Ld. Sole Arbitrator framed the following Issues on 04.01.2016:
i. Whether as per the contract between the parties claimant was entitled for the sale proceeds of the upper ground floor or not?
ii. Whether the sale proceeds are retained by the Respondents and as alleged claimant is entitled to recovery of the said amount of Rs.30,00,000/-?
iii. Whether the claimant is entitled to any interest on the said amount or not if yes that what rate and from which date?
iv. Whether the work was abundant by the claimants or he was refrained from completing the work by the Respondents?
2.10. The Respondent No.1 led his evidence and has only examined himself as a witness (CW-1). The Respondent No.1 reiterated the contentions of the statement of claim in his examination in chief. The Respondent No.1 has exhibited and relied upon the following documents in her examination-
in-chief:
i. Exhibit CW-1/1: Copy of the collaboration agreement dated 25.10.2012;
ii. Exhibit CW-1/2: Copy of the sale deed; iii. Exhibit CW-1/3: Copy of the agreement to sell.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 11 of 42 ARBTN NO. 12/2018 iv. Exhibit CW-1/4: Copy of the legal notice dated 03.08.2015;
v. Exhibit CW-1/5: Copy of the legal notice dated 17.08.2015;
vi. Collaboration agreement dated 25.10.2012.
The CW-1 was cross-examined by the Objector/ his Counsel and was discharged upon conclusion of his cross- examination.
2.11. The Objector lead his evidence and has examined two witnesses in support of his case. The Objector himself appeared as the RW-1 and reiterated the contentions of the statement of defence in his examination in chief. The Objector has exhibited and relied upon the following documents in her examination-in-chief:
i. Exhibit R-1(Colly): The pages of diary containing payment details (8 pages); ii. Exhibit R-2(Colly): Emails (6 pages); iii. Exhibit R-4: Estimates given by Mr. Vijay Garg (5 pages);
iv. Exhibit R-4: The Certificate under Section 65B.
The RW-1 was cross-examined by the Ld. Counsel for the Respondent No.1 and was discharged upon conclusion of his cross-examination. The Objector has examined Mr. Satish Kumar as RW-2. The RW-2 did not rely upon any document ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 12 of 42 ARBTN NO. 12/2018 in his examination in chief. The RW-2 was cross-examined by the Ld. Counsel for the Respondent No.1 and was discharged upon conclusion of his cross-examination.
2.12. Thereafter Ld. Sole Arbitrator heard the final arguments and passed the impugned award.
3. Grounds of Challenge/submissions of parties :
3.1. Ld. Counsel for the Objector has submitted that the appointment of the Arbitrator was unilateral and against the consent of the Objector and therefore, the proceedings conducted by the sole Arbitrator were non-est ab initio. It is submitted that there was serious conflict of interest, apparent on the face of the record and the Ld. Sole Arbitrator was completely biased against the Objector and Ld. Sole Arbitrator has acted as agent of the Respondent No.1. It is submitted that Ld. Sole Arbitrator has wrongly dismissed the application under Section 13 and Section 16 of Arbitration and Conciliation Act, 1996, without dealing with the grounds of the same and further decided the matter, by passing observation on merits in the aforesaid application. It is submitted that Ld. Sole Arbitrator has passed an award against the basic principles of law and ignored the relevant evidence and rendered findings without any evidence. It is submitted that the Ld. Sole Arbitrator has ignored the fact that the Respondent No. 1 has himself abandoned the work and therefore was not entitled to the consequence of the ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 13 of 42 ARBTN NO. 12/2018 completion of the work.
3.2. Ld. Counsel for the Respondent No.1 has submitted that the Arbitrator was a named Arbitrator in the agreement and the Objector did not have any right to object to his appointment. It is submitted that the Objector has levelled unnecessary allegations against the Arbitrator merely with the sole objective of derailing the proceedings. It is submitted that the Arbitrator has given fair hearing to the parties and rendered the findings on the basis of evidence led by the parties.
4. Conclusions on the Objections and Reasons for such Conclusions:
4.1. The Objector has raised two fold objections to the impugned award. The Objector has challenged the appointment as well as the competence of the Ld. Arbitrator to act as an Arbitrator. The Objector has also challenged the impugned award on its merits and the same is stated to be in conflict with the public policy. The aforesaid objections are being discussed in detail in the paras hereinafter:
4.2. Objection to the appointment and competence of the Ld. Sole Arbitrator:
4.2.1. The principal ground of challenge is the appointment of Arbitrator without consent of the Objector and his de-jure ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 14 of 42 ARBTN NO. 12/2018 ineligibility to act as an Arbitrator. It is submitted that the appointment of the Arbitrator was invalid and without the consent of the Objector. It is submitted that the Arbitrator was not fit to be an Arbitrator in the matter on account of his conflict of interest in the subject matter of proceedings as well as on the ground of apparent bias. The Objector has challenged the Order of dismissal of the Application under Section 13 and 16 of the Arbitration and Conciliation Act, 1996.
4.2.2. It is the contention of the Respondent No.1 that the arbitrator was a named arbitrator in the agreement and therefore, his appointment was valid and the Arbitrator has thus assumed jurisdiction in terms of the agreement between the parties and the arbitration has commenced prior to the amendment of 2015 and therefore, the appointment and competence can-
not be challenged.
4.2.3. The parties entered into the Collaboration Agreement dated 25.10.2012, which contained an arbitration clause. The clause 20 of the agreement is arbitration clause and the arbitration was agreed to be conducted by an Arbitrator named therein. Though the Objector has contended that the name of Arbitrator was left blank and was filled in subsequently, however in the cross-examination dated 07.09.2016 (page 226 of Arbitral Record), the Objector has admitted that Mr. Vijay Garg was named as an Arbitrator in Collaboration Agreement dated 25.10.2012, after the parties ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 15 of 42 ARBTN NO. 12/2018 have discussed and concurred on his name. The Ld. Arbitrator was thus a named arbitrator in the arbitration agreement and admittedly, the notice for invocation of the arbitration was issued on 17.08.2015, i.e., prior to the amendment of 2015 in the Arbitration and Conciliation Act, 1996. Therefore, the challenge to the competence of the Ld. Arbitrator has to be examined in view of the aforementioned facts.
4.2.4. It has been held in, "Ellora Paper Mills Ltd. v. State of M.P., MANU/SC/0008/2022: 2022:INSC:11 : (2022) 3 SCC 1", that a person falling within the purview of Section 12(5) is de-jure ineligible to be an arbitrator irrespective of the fact that the arbitration commenced prior to the amendment of 2015. The aforesaid proposition has further been recently followed by the Hon'ble High Court of Delhi in, "Isar Engineers Private Ltd. Vs. NTPC-Sail Power Company Ltd. (03.02.2025): 2025:DHC:658 MANU/DE/0575/2025"
and the relevant observations of the Hon'ble Court are being reproduced hereinbelow:
"12. The first question that arises for the consideration of this court is whether the unilateral appointment of Arbitrator done pre-amendment of 2015 can be challenged on the grounds of bias, partiality and lack of independence of the Arbitrator.
15. No doubt prior to the amendment of 2015, the fact that the named Arbitrator is an employee, could not ipso- facto be a ground for bias of the Arbitrator, as held in the judgment of the Hon'ble Supreme Court in Aravali Power Co. (P) Ltd. v. Era Infra Engg. Ltd., ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 16 of 42 ARBTN NO. 12/2018 MANU/SC/1139/2017:2017:INSC:894:
(2017)15SCC32, however the same also held that justifiable apprehension can be raised in case the person was the controlling or dealing authority with respect to the subject matter in dispute. The operative portion of the judgment reads as under:
"22. The principles which emerge from the decisions referred to above are:
22.1. In cases governed by 1996 Act as it stood before the Amendment Act came into force: 22.1.1. The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part.
There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate to the officer whose decision is the subject-matter of the dispute.
22.1.2. Unless the cause of action for invoking jurisdiction under Clauses (a), (b) or (c) of sub-section (6) of Section 11 of the 1996 Act arises, there is no question of the Chief Justice or his designate exercising power under sub- section (6) of Section 11.
22.1.3. The Chief Justice or his designate while exercising power under sub-section (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause.
22.1.4. While exercising such power under sub-
section (6) of Section 11, if circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 17 of 42 ARBTN NO. 12/2018 ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else." (Emphasis Supplied)
16. In a similar matter of Ellora Paper Mills Ltd. v. State of M.P., MANU/SC/0008/2022 : 2022:INSC:11 : (2022) 3 SCC 1, wherein the Arbitral Tribunal was constituted unilaterally in 2001 (i.e. pre-amendment of 2015) and the arbitral proceedings were stayed till 2017, the Hon'ble Supreme Court while relying on the judgments of TRF Ltd. v. Energo Engg. Projects Ltd., MANU/SC/0755/2017 : 2017:INSC:577 : (2017) 8 SCC 377 and Bharat Broadband Network Ltd. v. United Telecoms Ltd., MANU/SC/0543/2019 :
2019:INSC:537 : (2019) 5 SCC 755 held that the amendment of 2015 will be applicable and the Arbitral Tribunal appointed unilaterally would have lost its mandate in terms of section 12(5) read with Seventh Schedule of the Arbitration and Conciliation Act, 1996. The operative portion of the judgment reads as under:
11.3. The learned counsel appearing on behalf of the respondent has also submitted that in the facts and circumstances of the case, the decision of this Court in Jaipur Zila Dugdh Utpadak Sahkari Sangh [Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. v. Ajay Sales & Suppliers, MANU/SC/0646/2021 : 2021:INSC:465 :
(2021) 17 SCC 248] is not applicable. It is submitted that in the said case, the arbitrator was appointed after amendment of the Arbitration Act, 2015. However, in the present case, the arbitrator was appointed approximately 20 years prior thereto and thereafter the arbitration proceedings commenced and even the appellant also participated. It is therefore contended that the amended Section 12(5) of the Arbitration Act which is brought in the statute by way of amendment in 2015 shall not be applicable retrospectively. It is submitted that Section 12(5) ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 18 of 42 ARBTN NO. 12/2018 of the Arbitration Act shall have to be made applicable prospectively.
12. We have heard the learned counsel for the respective parties at length. Having heard the learned counsel for the respective parties and on considering the impugned judgment and order [Ellora Paper Mills Ltd. v. State of M.P., MANU/MP/0906/2021] passed by the High Court, the short question which is posed for consideration of this Court is, whether, the Stationery Purchase Committee' Arbitral Tribunal consisting of the officers of the respondent has lost the mandate, considering Section 12(5) read with Seventh Schedule of the Arbitration Act, 1996. If the answer is in the affirmative, in that case, whether a fresh arbitrator has to be appointed as per the Arbitration Act, 1996'
13. It is not in dispute that the High Court earlier constituted the Arbitral Tribunal of Stationery Purchase Committee comprising of officers of the respondent viz. Additional Secretary, Department of Revenue as President, and : (i) Deputy Secretary, Department of Revenue, (ii) Deputy Secretary, General Administration Department, (iii) Deputy Secretary, Department of Finance, (iv) Deputy Secretary/Under Secretary, General Administration Department, and (v) Senior Deputy Controller of Head Office, Printing as Members.
14. It may be true that the earlier Arbitral Tribunal' Stationery Purchase Committee was constituted as per the agreement entered into between the parties. It is also true that initially the said Arbitral Tribunal was constituted by the High Court in the year 2001, however, thereafter Stationery Purchase Committee' Arbitral Tribunal could not commence the arbitration proceedings in view of number of proceedings initiated by the appellant. There was a stay ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 19 of 42 ARBTN NO. 12/2018 granted by the High Court from 4-5-2001 to 24- 1-2017 and thereafter in the year 2019, the present application was preferred before the High Court invoking Section 14 read with Sections 11 and 15 of the Arbitration Act, 1996 seeking termination of the mandate of the originally constituted Arbitral Tribunal and to appoint a new arbitrator.
16. As observed hereinabove, the Arbitral Tribunal' Stationery Purchase Committee consisted of officers of the respondent State. Therefore, as per Amendment Act, 2015 ' sub-section (5) of Section 12 read with Seventh Schedule, all of them have become ineligible to become arbitrators and to continue as arbitrators. Section 12 has been amended by the Amendment Act, 2015 based on the recommendations of the Law Commission, which specifically dealt with the issue of neutrality of arbitrators". To achieve the main purpose for amending the provision, namely, to provide for neutrality of arbitrators", sub- section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. In such an eventuality i.e. when the arbitration clause is found to be foul with the amended provision, the appointment of the arbitrator would be beyond the pale of the arbitration agreement, empowering the Court to appoint such an arbitrator as may be permissible. That would be the effect of the non obstante clause contained in sub-section (5) of Section 12 and the other party cannot insist upon the appointment of the arbitrator in terms of the arbitration agreement.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 20 of 42 ARBTN NO. 12/2018
17. It cannot be disputed that in the present case, the Stationery Purchase Committee' Arbitral Tribunal comprising of officers of the respondent State are all ineligible to become and/or to continue as arbitrators in view of the mandate of sub-section (5) of Section 12 read with Seventh Schedule. Therefore, by operation of law and by amending Section 12 and bringing on statute sub section (5) of Section 12 read with Seventh Schedule, the earlier Arbitral Tribunal' Stationery Purchase Committee comprising of the Additional Secretary, Department of Revenue as President, and: (i) Deputy Secretary, Department of Revenue, (ii) Deputy Secretary, General Administration Department, (iii) Deputy Secretary, Department of Finance, (iv) Deputy Secretary/Under Secretary, General Administration Department, and (v) Senior Deputy Controller of Head Office, Printing as Members, has lost its mandate and such an Arbitral Tribunal cannot be permitted to continue and therefore a fresh arbitrator has to be appointed as per the Arbitration Act, 1996.
20. In view of the above and for the reasons stated hereinabove, the impugned judgment and order [Ellora Paper Mills Ltd. v. State of M.P., MANU/MP/0906/2021] passed by the High Court is contrary to the law laid down by this Court in TRF [TRF Ltd. v. Energo Engg.
Projects Ltd., MANU/SC/0755/2017 :
2017:INSC:577 : (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72], Bharat Broadband Network [Bharat Broadband Network Ltd. v. United Telecoms Ltd., MANU/SC/0543/2019 :
2019:INSC:537 : (2019) 5 SCC 755 : (2019) 3 SCC (Civ) 1] and the recent decision of this Court in Jaipur Zila Dugdh Utpadak Sahkari Sangh [Jaipur Zila Dugdh Utpadak Sahkari Sangh Ltd. v. Ajay Sales & Suppliers, MANU/SC/0646/2021 : 2021:INSC:465 :
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 21 of 42 ARBTN NO. 12/2018 (2021) 17 SCC 248]. It is held that the earlier Arbitral Tribunal' Stationery Purchase Committee comprising of the Additional Secretary, Department of Revenue as President, and : (i) Deputy Secretary, Department of Revenue, (ii) Deputy Secretary, General Administration Department, (iii) Deputy Secretary, Department of Finance, (iv) Deputy Secretary/Under Secretary, General Administration Department, and (v) Senior Deputy Controller of Head Office, Printing as Members, has lost its mandate by operation of law in view of Section 12(5) read with Seventh Schedule and a fresh arbitrator has to be appointed under the provisions of the Arbitration Act, 1996. The impugned judgment and order [Ellora Paper Mills Ltd. v. State of M.P., MANU/MP/0906/2021] passed by the High Court is therefore unsustainable and deserves to be quashed and set aside."
17. In the present case, in somewhat similar facts, the named Arbitrator entered into reference in 2011 and the petitioner repeatedly displayed its apprehension with the appointment of the Arbitrator, both pre and post commencement of arbitral proceedings. The petitioner approached the Hon'ble High Court of Orissa, Cuttack under section 11 of the Arbitration and Conciliation Act, 1996 to appoint an impartial and independent arbitrator since the named Arbitral was the authority dealing with the contract in question between the parties. The arbitration was initially kept in abeyance by the Hon'ble Orissa High Court vide order dated 05.10.2012 and it was only on 10.03.2017 that a clarification regarding no stay on arbitration was given by the court. Applying the dicta of Ellora Paper Mills Ltd. v. State of M.P., (2022), the named arbitrator could not have been permitted to continue, having become de jure ineligible under section 12(5) of the Arbitration and Conciliation Act, 1996.
19. In the present case, it is the General Manager/Business ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 22 of 42 ARBTN NO. 12/2018 Unit Head of the respondent company who was supervising the work in question and was directly involved in the execution of the work. It is the General Manager/Business Unit Head of the respondent company with whom the petitioner's had repeated meetings regarding the progress of the work and the authority that took the decision of termination of the contract. Hence, the apprehension that the Arbitrator would be biased and partial towards the respondent cannot be said to be an unjustifiable apprehension. In addition, the petitioner approached the High Court of Orissa, Cuttack immediately on getting to know about the appointment of the General Manager/Business Unit Head of the respondent company apprehending partiality and bias on part of the Arbitrator.
20. In view of the above discussion, the Impugned Award is liable to be set aside on this ground alone."
4.2.5. Therefore, even the named arbitrator, falling within the purview of under Section 12(5) of the Arbitration and Conciliation Act, 1996, in proceeding commencing prior to the amendment of 2015 is de-jure ineligible to act as an arbitrator in the matter, if he has played a substantive role in the matter and there appears to be reasonable apprehension about fairness. The challenge to the competence of Ld. Arbitrator is to assessed and examined in view of the law discussed hereinabove.
4.2.6. The Objector has challenged the competence of the Ld. Arbitrator on the ground that he was involved in the transaction and there was serious conflict of interest on the part of Ld. Arbitrator in relation to the subject matter of the ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 23 of 42 ARBTN NO. 12/2018 proceedings. It is submitted that the Ld. Sole Arbitrator was practically a witness of the dispute between the parties, at several stages and therefore, was unable to be a fair adjudicator. The Respondent No.1 invoked the Arbitration by issuing a letter dated 17.08.2015, which was replied by the Objector by reply dated 22.08.2015. In his reply, the Objector has levelled allegations against the Ld. Arbitrator and has stated that he was involved in the dispute between the parties in the substantive manner. It is stated that the collaboration agreement was entered through the Arbitrator. It is stated that the payments to the Respondent No.1 were made by the Objector at the insistence of the Arbitrator. It is stated that the contract was re-negotiated for raising the funds, at the instance of the Arbitrator. The copy of the aforesaid letter been marked to Ld. Arbitrator and the Original Speed and Courier receipt of the same are also available in the Arbitral record and in terms of Section 3 of the Arbitration and Conciliation Act, 1996, the aforesaid letter is deemed to be served. The Ld. Arbitrator has not taken note of the aforesaid reply, though the original reply is in the arbitration files.
4.2.7. Ld. Arbitrator proceeded with the matter, despite there being protest for his appointment by the Objector, in terms of reply dated 22.08.2015. Thereafter the Objector has also filed an application under Section 13 and Section 16 of the Act, 1996 and challenged the competence and jurisdiction of the Ld. Arbitrator. The averments of the Application under Section ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 24 of 42 ARBTN NO. 12/2018 13 and 16 of the Act, filed by the Objector, are being reproduced hereinbelow:
"1. It is stated that on 25.10.2012, Shri Jitender Batra entered into a collaboration agreement with the Respondent, the mediator Sh. Vijay Garg, (presently action as sole arbitrator) architect for the construction of House of the complainant.
2. It is stated that Shri Jitender Batra and Shri Vijay Garg (presently acting as sole arbitrator) conspired in a planned manner to cheat the Respondent. The collaboration agreement dated 25.10.2012 was drafted in planned manner and it was represented by Sh. Vijay Garg (presently action as sole arbitrator) that this agreement is merely a formality and to complete the construction, the respondent can trust on him as he is a relative of the one of the friend of the Respondent. In the collaboration agreement no Schedule of the payment in respect of schedule of work completion was mentioned. No penalty clause was mentioned and all these fats were intentionally and in a planned manner left to the discretion of Sh. Jitender Batra, only to give benefits to Sh. Jitender Batra. The Respondent entered into such type of agreement only on the assurances and representations of Sh. Vijay Gar (presently acting as sole arbitrator. It is pertinent to mention here that Sh. Vijay Garg also become Sole Arbitrator in the Agreement dated 25.10.2012.
3. The construction of the plot has to be completed with a period of 15 months i.e. till Feb.2014 and the quality of the construction was p to be marked as provided in the specification described in the annexure with in the collaboration agreement dated 25.10.2012. It is pertinent to mention her that Shri Jitender Batra and Sh. Vijay Gard ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 25 of 42 ARBTN NO. 12/2018 (presently acting as sole arbitrator) assured and promised to the Respondent that all the specification described in the annexure will be completed with the best quality of material and also assured that the project would be completed with in specified time.
4. It is stated that in Nov. 2012, the Respondent handed over the possession of the said property to Sh. Jitender Batra and shifted on a rented premises. On 16.12.2012, Sh. Jitender Batra received first installment of Rs.1,00,000/- from the Respondent. Sh. Jitender Batra stopped the construction many a time on the ground that he was short of funds and when the Respondent approached Sh. Vijay Garg (presently acting as sole arbitrator), he assured again and again to the Respondent not to worry as he will take care of the project and directed the Respondent to make payment to Sh. Jitender Batra to start the construction again and again. When the Respondent made complaints to Sh. Vijay Garg (presently acting as sole arbitrator) regarding the show process of construction, he assured again and again to trust on him.
5. It is stated that in Jan. 2014, Sh. Jitender Batra stopped the construction again. Till Feb.2014 when Sh. Jitender Batra was supposed to hand over the complete building as per the specification made the Collaboration Agreement to the Respondent, Sh. Jitender Batra had already taken more than 25 lac and in the name of construction he had completed only the basis structure with five lanters and when the Respondent made complaints to Sh. Jitender, Sh. Jitender Batra bluntly stated that he has no money to complete the project and do whatever. The Respondent was very shocked and surprised at the conduct of Sh. Jitender Batra as Sh. Jitender Batra and completed only the 30% of the complete project and the Respondent had already overspent on the basis of allurements and ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 26 of 42 ARBTN NO. 12/2018 assurances given by Sh. Vijay Garg (presently acting at sole arbitrator). Sh. Vijay Garg again assured to the Respondent that he will take care of the project and promised to sort out all the problems. It is pertinent to mention here that Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) directed the Respondent to make the direct payment to the labour and other persons also.
6. It is stated that in June, 2014, Sh. Jitender and Sh.
Vijay Garg (presently action as sole arbitrator) again planted a new scheme to raise the funds in the name of selling the Upper Ground Floor, which Sh. Jitender Batra would get after the completion of the project. Sh. Vijay Garg (presently action as sole arbitrator) in very planned, calculated and conspired manner made this proposal to the Respondent and his family as Sh. Jitender Batra was short of funds and allurements assured that the project will be completed with the money raised by selling the Upper Ground Floor. The Respondent and his family could not anticipate the conspiracy hatched by Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) and having no other option, the Respondent acceded to this demand on the basis of the assurances give by Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator).
7. The deal of the First floor was done at Rs.
75,00,000/- and Sh. Jitender Batra took Rs. 20,00,000/- as an advance from Sh. Satish Dabas, the proposed buyer of the Upper Ground Floor. There after Sh. Jitender Batra gain started the work, but to the shock and surprise to the Respondent that he was started the work in the Upper Ground Floor only. When the Respondent made complaint to Sh. Jitender Batra, he represented that he will complete the upper ground floor and if the Respondent disturb him he ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 27 of 42 ARBTN NO. 12/2018 threatened to go to Court. The Respondent having no other alternative approached the Sh. Vijay Garg (presently action as sole arbitrator) again and again to take his problem. Sh. Vijay Gar (presently action as sole arbitrator) assured that you will enter the premises before Dewali this year i.e. 2014. Even thereafter the work had been stopped so many time.
8. The complainant made huge and cry to Sh. Vijay Garg (presently action as sole arbitrator) about the conduct of Sh. Jitender Batra, Sh. Vijay Garg (presently action as sole arbitrator) always used to give false and fabricated allurement and assurances and always try to justify Sh. Jitender Batra. When the Respondent told Sh. Vijay Garg (presently action as sole arbitrator)that he had already failed to all his promises and assurances, he again taken the Complainant in confidence by saying that at the time of final sale, the entire rest money of sale proceedings i.e. sum of Rs. 42,90,000/- would be kept as a security by both of us i.e. the Respondent and Sh. Vijay Garg (presently action as sole arbitrator).
9. In the month of July, 2015, the sale deed of the upper ground floor was done by the Respondent in the name of wife Sh. Satish Dabas and a sum of Rs. 12,90,000/- was given to Sh. Vijay Garg (presently action as sole arbitrator) as his office at Plot No. 21, Block, D Pankha Road, Industrial Area Janak Puri, New Delhi-58 in the present of Sh. Daulat Ram, one Shri Jain, Sh. Satish Dabas, father and younger brother of the Respondent along with the Respondent himself. And the rest of money was given to the Respondent in the form of two cheques.
10. Immediately thereafter, Sh. Vijay Garg (presently action as sole arbitrator) start demanded money from the Respondent as received by him to start the construction and always insisted to give money ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 28 of 42 ARBTN NO. 12/2018 in advance out of funds with the Respondent. When the Respondent asked Sh. Vijay Garg (presently action as sole arbitrator) that 12,90,000/- is already with you and no work was started except the plaster of the four wall Sh. Vijay Garg (presently action as sole arbitrator) bluntly stated and forget about Rs. 12,90,000/- and if I (Respondent) want to get my work complete, provide funds immediately. The Respondent sated that he ready to provide funds as the payment is a security for the construction, but Sh. Vijay Garg (presently action as sole arbitrator)has not given any explanation in regarding the payment of Rs. 12,90,000/- and directed the Respondent to release the payment, if you (Respondent) wants to get the work start again or go to any Supreme Court or any Court or file any case and you (Respondent) can not complete the work.
11. Sh. Jitender Batra used degraded/low quality of material in the construction as promised in the detailed specification and assured by Shri. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) and thereby, cheated the Respondent. It can be seen from the naked eyes that the quality of work done is law and degraded one.
12. Sh. Jitender Batra, threatened in different manners that construction of the Respondent's house will not complete as the Court procedure take many decade in solving the cases and the Respondent having no other option he acceded the illegal demands of Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator).
13. Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) humiliated harassed the Respondent and degraded the reputation of the family of the Respondent.
14. By the acts, deeds, representations, allurements ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 29 of 42 ARBTN NO. 12/2018 and assurances of Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator), the Respondent had suffered huge financial loss as the Respondent lost more than Rs.30 lac and one floor of the house and in the name of construction, he got the upper two floors in unfurnished and rought position and the quality of work at the parking area at ground floor and at the first floor is very poor in nature. Whole conduct of Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator), shows that they are in habit of winning over the confidence of people on the basis of allurements, false and fabricated promises and cheat them in a very planned and conspired manner.
15. Both Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) are liable to be prosecuted for fraud, cheating, misappropriation, criminal breach of trust, threatening, defaming and harming the reputation of the Respondent and his family. On 23.08.2015, the Respondent made complaint to the S.H.O. PS Nangloi and on 26.08.2015 to the ACP concern. The Respondent having no other option has to file criminal case against Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) which fixed for today i.e. 03.11.2015. Both Sh. Jitender Batra and Sh. Vijay Garg (presently action as sole arbitrator) has already appeared at the Police Station Nangloi in connection with the above criminal case.
16. Sh. Jitender Batra send a legal notice dated 17.08.2015 on the false and manipulated facts. By this notice dated 17.08.2015, Sh. Jitender Batra showed his intention to revoke the alleged arbitration clause. The Respondent replied this legal notice along with legal notice dated 22.08.2015 and a copy of the same was also send to Sh. Vijay Garg (Now Sole Arbitrator). It was specifically mentioned that Sh. Vijay Garg (Now ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 30 of 42 ARBTN NO. 12/2018 Sole Arbitrator) is your person (of Sh. Jitender Batra) and Sh. Vijay Garg (Now Sole Arbitrator)always supported Sh. Jitender Batra and Sh. Vijay Garg (Now Sole Arbitrator) acted in conspiracy with Sh. Jitender Batra and as such Sh.
Vijay Garg is not a fit person to be in Arbitrator. The copy of the reply cum legal notice dated 22.08.2015was sent to Sh. Jitender Batra and Sh. Vijay Garg (Now Sole Arbitrator) through Whatsapp and also through speed post.
17. It was also specifically mentioned in reply cum legal notice dated 22-.08.2015 that the new agreement regarding the sale of First Floor between Sh. Jitender Batra, Sh. Vijay Garg (Now Sole Arbitrator), Respondent and Sh. Satish Dabas was not part of Agreement dated 25.10.2012 and as such the Arbitration Clause in the agreement dated 25.10.2012 could not be starched to this new agreement as such Sh. Vijay Garg (Now Sole Arbitrator) is not competent to initiate Arbitration Proceedings is regard of this new agreement.
18. Sh. Vijay Garg (Now Sole Arbitrator) has embezzled a sum of Rs.12,90,000/- given by the Respondent to you Sh. Vijay Garg (Now Sole Arbitrator) for the construction of his house and in spite of various demands for the release the payment of Rs. 12,90,000/-, Sh. Vijay Garg (Now Sole Arbitrator) never accounted for or reference the same.
19. In the given premises of the facts and circumstances you Sh. Vijay Garg (Now Sole Arbitrator) is not a competent person to decide the present statement of claim for the recovery of Rs.36,75,000/- filed on behalf of the claimant Sh. Jitender Batra.
4.2.8. In terms of the above-mentioned allegations, the Objector has attributed a role to Ld. Arbitrator from the stage the ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 31 of 42 ARBTN NO. 12/2018 execution of the collaboration agreement itself. The allegations are specific and are enormous. The allegations against the Arbitrator are not only limited to mere mediation in the dispute, but are in the nature of being in control of the entire controversy. The Objector even claims to have paid Rs.12,90,000/- in cash to the Arbitrator, in relation to dispute in question. The Respondent No.1 has filed a reply to the application and stated that the Ld. Arbitrator did not have any role in the transaction. At the same time, it is stated by the Respondent No.1 that the Ld. Arbitrator was not in collusion with the Respondent No.1, which was evident from the fact that since the date of collaboration agreement, the Objector himself sought intervention of Ld. Sole Arbitration even on petty issues, which were duly sorted out by the Ld. Sole Arbitrator.
4.2.9. Ld. Sole Arbitrator has dismissed the Application vide an Order dated 21.11.2015 and operating part of the Order is being reproduced hereinbelow:
"12. I have gone through the records and am of the view that the allegations qua the Sole Arbitrator (i.e., the undersigned) are false, baseless and afterthought being leveled by the respondent only after service of the legal notice dated 17.08.2015 upon the respondent in order to avoid the payment in respect of the Sale Consideration admittedly received by the respondent qua the portion which has fallen to the share of the Claimant as per the Collaboration Agreement.
13. Further, the disputes so raised by the Claimant ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 32 of 42 ARBTN NO. 12/2018 have arisen out of the Collaboration Agreement dated 25.10.2012, since the portion sold i.e. the upper floor of the property of the respondent has come to the share of the Claimant and he admittedly was entitled to receive the Sale Consideration, which was otherwise being received on sale of the said portion by the respondent being the recorded owner and admittedly had to remit it to the claimant herein. The Claimant is seeking the recovery by way of the present claim qua the sale consideration of the said portion which he is entitled as per the collaboration agreement dated 25.10.2012, as such the Sole Arbitrator herein is fully entitled to arbitrate the disputes between the parties as mutually agreed and appointed by consent of the parties under the collaboration agreement dated 25.10.2012. The application of the respondent is hereby dismissed."
4.2.10. An Order passed under Section 13 and 16 of the Arbitration and Conciliation Act, 1996, dismissing an application for challenge to jurisdiction is not appealable under Section 37 of the Act of 1996 and only course available to party aggrieved is to challenge the same, within the scope of the challenge to the award, under Section 34 of the Arbitration and Conciliation Act, 1996. Therefore, the Objector has assailed the aforesaid Order within the scope of the present petition.
4.2.11. This Court is unable to appreciate the reasons and conclusions of Ld. Arbitrator as the Ld. Arbitrator has given conclusive finding on the fact about the rights and entitlements of the Claimant. There was no statement of ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 33 of 42 ARBTN NO. 12/2018 defence and the entire observations proceed on the basis of admission of the parties and source of such admission has not been stated in the Order. Ld. Sole Arbitrator does not deal with the allegations of being part of the transaction and brushes them aside by terming them an attempt to defeat the rights of the Claimant.
4.2.12. One more aspect, which is worth noticing here is that there are serious allegations levelled by the Ld. Sole Arbitrator upon the Objector and his witness, prior to filing of the Application under Section 13 and Section 16 of the Arbitration Act, 1996. The Arbitration file contains an Original letter dated 03.10.2015, signed by the Ld. Sole Arbitrator and written to the SHO Police Station, Nangloi, wherein it was stated that the Ld. Arbitrator received death threats to him and his family, from Mr. Satish Dabas, if he did not favour Mr. Sanjeev Kumar. The original letter is in the file and it is not evident, whether the same has been sent or not. It is mentioned in the Order dated 6.10.2015 that Ld. Sole Arbitrator received a threatening call from Mr. Satish Dabas from the mobile No., registered in the name of Objector's father. It is also mentioned that the Objector has filed a criminal case and the statement of the Ld. Arbitrator and the parties were recorded in the police station. The Objector and Ld. Sole Arbitrator seems to engaged in criminal complaints and cases against each-other, though the relevant details of the aforesaid cases is not on record.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 34 of 42 ARBTN NO. 12/2018 4.2.13. Even though if the allegations of the Objector are treated to be exaggerated and all of acts, attributed to the Arbitrator may not have been proved, still the previous involvement of the Ld. Arbitrator with the parties and dispute, is evident from the evidence recorded in the matter. The cross- examination of the Respondent No.1, i.e., CW-1 dated 02.03.2016 (page 168 of Arbitral record) is relevant in this regard and the relevant part of the same is being reproduced hereinbelow:
"14. When last you contacted Mr. Sanjeev for doing work?
Ans. On Sunday, sometime in July 2015 at Mr. Vijay Garg's residence in Rohini.
15. Why you went to Sh. Vijay Garg's house? Ans. For meeting with Mr. Sanjeev Kumar.
16. Meeting in what regard?
Ans. For payments and resumption of construction work at the site.
25. I put to you that Sh. Sanjeev used to you email to your as well as to Vijay Garg regarding the payments made by him to different persons.
Ans. Yes, the amount were all accounted for between us."
The aforesaid cross-examination clearly indicates that the parties have been mediating and renegotiating the terms between them through the Ld. Sole Arbitrator. Ld. Sole Arbitrator is aware of the e-mail and claim of payment by the Objector. The Cross-examination of Objector, i.e., RW-1 ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 35 of 42 ARBTN NO. 12/2018 23.09.2016 (at page No.236 of the Arbitral Record) is also relevant and the same is being reproduced hereinbelow:
"Q.: Is it correct that Mr. Vijay Garg always heard your complaints and resolved the same in reference to the collaboration agreement?
Ans.: Yes it is correct to say that I was always heard and got the problems resolved but always we are put to obliged the same to get the work done because our problem was that the work was not getting done and all the time I used to convey the same to Mr. Vijay Garg as the claimant always says he is not having funds to complete/start the work. The same I convey and same was again put to us that if we want to get the work started then gave some amount to start the work again."
4.2.14. The above-mentioned cross-examination indicate that the Ld. Arbitrator was not only privy to the bare facts of the case, but also to the role being played by the parties, the payments being made by the parties and difficulties being faced by the parties. The parties were meeting under his aegis for renegotiating and he was being informed by the Objector, with regard to payments made to the Respondent No.1. The Arbitrator is thus a relevant witness of the facts pertaining to present case as to who was responsible for the breach of the agreement.
4.2.15.The Ld. Sole Arbitrator is privy to the dispute between the parties and participated in the resolution of the same previously and he is witness of the fact with regard to conduct/misconduct of parties, which creates serious conflict ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 36 of 42 ARBTN NO. 12/2018 of interest in his role as an arbitrator, in view of the personal knowledge of the dispute in question. The proceedings suffer from bias on the face of it, which is evident from the Order passed on the Application under Section 13 and 16 of the Act. Ld. Sole Arbitrator easily falls within categories of 1, 2, 4 , 8 and 16 under Seventh Schedule of Act of 1996. Moreover the apprehension of bias becomes more than reasonable, when the Arbitrator and the party contesting in the arbitration are agitation criminal complaints/cases against each other.
4.2.16. Therefore, the Ld. Sole Arbitrator has wrongly rejected the application under Section 13 and Section 16 of the Act of 1996 and he was de-jure ineligible to act as an Arbitrator between the parties, with regard to dispute in question on account his previous involvement, as discussed hereinabove. Therefore, the award passed by the Ld. Sole Arbitrator is not sustainable and deserves to be set aside on this ground alone.
4.3. Objection to award on Merits:
4.3.1. It has been held by the Hon'ble Supreme Court of India in "Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd.: 2021(5)ARBLR1(SC)" that an award is patently illegal if the Arbitrator takes a view, which is not possible or renders conclusion without evidence and in ignorance of vital evidence. The relevant observations of the Hon'ble Court are being reproduced hereinbelow:
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 37 of 42 ARBTN NO. 12/2018 "25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'.
What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award Under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a Clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'."
If the conclusions rendered by the Ld. Sole Arbitrator are examined on the touchstone of above-mentioned principles, the award in question is patently illegal.
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 38 of 42 ARBTN NO. 12/2018 4.3.2. The admitted case of the parties is that the Respondent No.1 agreed to raise construction in the property of the Objector and the same was agreed to be converted to multiple floors, i.e., stilt parking, upper ground floor, first floor, second floor and third floor with roof rights. It was agreed that the Objector will pay a sum of Rs.23,50,000/- to the Respondent No.1. It was agreed that the Respondent No.1 will complete the construction within 15 months from 22.11.2012. It was agreed that the Respondent No.1 will raise the aforesaid construction/structure at his costs and expenses. It was agreed that the Respondent No.1 shall remain entitled to upper ground floor and 25% share in the stilt parking. Therefore, if the collaboration agreement dated 25.10.2012 is read in totality, the entitlement of the Respondent No.1 for the upper ground floor arises upon completion of the construction from ground floor till fourth floor.
4.3.3. The Respondent No.1 had initiated the arbitration proceedings for recovery of Rs.30,00,000/-, which was stated to be received by the Objector towards the sale of the upper ground floor. The Respondent No.1 has been exhaustively cross-examined on the aspects of incomplete construction. The Respondent No.1 has admitted that he did not have funds for completing the construction. The Respondent No.1 has multiple times been asked to produce the details and documents of the construction, carried out by him. However the Respondent No.1 does not divulge the ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 39 of 42 ARBTN NO. 12/2018 extent and details of the construction carried out by him, which could have supported his case. The Respondent No.1 has admitted that the Objector has made payment of Rs.23,50,000/- to him.
4.3.4. Ld. Arbitrator has concluded that the Respondent No.1 admitted to have not completed the entire work, however the Objector has not shown the quantum of unfinished work and therefore the Respondent No.1 was entitled to Rs.30,00,000/-. The aforesaid finding is completely unsustainable as once the Respondent No.1 himself admits to have not completed the construction, he becomes dis-entitled for the prayer of recovery. The entitlement of the Respondent No.1 to claim the money on account of sale of the upper ground floor is contemporaneous with the obligation of completing the construction. In order to seek the recovery or enforce the right in the first floor, the Respondent No.1 should have ideally filed an action for specific performance of the collaboration agreement, by showing his readiness and willingness to fulfill his part, instead initiating an action for recovery.
4.3.5. The Respondent No.1 has admitted in cross-examination dated 09.03.2016 (Page 180 of the Arbitral record) that he has received Rs.20,00,000/- on account of deal of the Upper Ground Floor. The Respondent No.1 has further admitted in same cross-examination (page No.181 of the arbitral record) that Mr. Satish Dabas has given to him and the Objector ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 40 of 42 ARBTN NO. 12/2018 Rs.75,00,000/-. The aforesaid facts have been stated in the statement of defence, however the Respondent No.1 has not stated anything in the statement of claim about the aforesaid amounts received on account of the deal with regard to upper ground floor. In case of incomplete construction, if the Respondent No.1 intended to raise a proportionate claim for recovery, then the burden of proof was upon him to show as to what an extent he completed the construction and how much proportionate amount he would be entitled towards the same. The Respondent No.1 has also to account for the amount, which he had already received. The Respondent No.1, in any case, is not entitled to entire upper ground floor or entire sale consideration of the same, without first fulfilling his own obligation, i.e., without completing the construction. Ld. Arbitrator has framed the Issues in the matter and has not rendered any findings on any of them. Therefore, this Court finds the view taken by the Ld. Sole Arbitrator is not a possible one, in view of the facts of the case and the Ld. Sole Arbitrator has rendered the aforementioned conclusions by ignoring vital evidence in the matter. Therefore, the impugned award is liable to be set aside on the ground of patent illegality.
5. Order:
Accordingly, in terms of the discussion/reasons stated hereinabove, the present petition/objections under Section 34 of the Arbitration & Conciliation, 1996 is allowed and the award dated 14.11.2017, passed by Ld. Sole Arbitrator Mr. ________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 41 of 42 ARBTN NO. 12/2018 Vijay Garg in Arbitration Case No. 01 of 2015, titled as, 'Jitendra Kumar Batra Vs. Sanjeev Kumar', is set aside. The files be consigned to the record room after due compliance.Digitally signed by
ANIL ANIL CHANDHEL
CHANDHEL Date: 2025.03.29
17:06:26 +0530
Announced in the open Court (ANIL CHANDHEL)
today on 29th of March, 2025 DISTRICT JUDGE-04
WEST DISTRICT
THC/DELHI/29.03.2025
________________________________________________________________ Sanjeev Kumar vs. Jitendra Kumar Batra & Anr. Page No. 42 of 42 ARBTN NO. 12/2018