Delhi District Court
Akshara Sree Model Up School vs M/S. Educomp Solutions Ltd on 15 October, 2018
IN THE COURT OF ANKUR JAIN: ADDL.DISTRICT
JUDGE-10 (CENTRAL): TIS HAZARI COURTS: NEW DELHI
Arbtn. No.54/17 (1693/17)
In the matter of:
Akshara Sree Model Up School
Ramajala Road, Adoni Kurnool,
Andhra Pradesh - 518302 .....Petitioner
Versus
1. M/s. Educomp Solutions Ltd.
Having office at
1211, Padma Tower-1
5, Rajendra Palace, New Delhi
2. Edu Smart Service Pvt. Ltd
Having its office at
L-74, Mahipalpur Extension
New Delhi - 110037
3. Mr. J. N. Yadav
sole arbitrator
chamber no. 427, Patiala House Court
New Delhi - 110001 .....Respondents
Petition filed on : 09.11.2017
Order reserved on : 04.10.2018
Order announced on : 15.10.2018
Petition U/s 34 of Arbitration & Conciliation
Act, 1996 against the exparte award dt.
29.02.2016.
Arbtn. No.54/17 (1693/17) Page no. 1
JUDGMENT:
01. By this judgment, I shall decide the objection petition filed U/s 34 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as Act) filed by the petitioner seeking setting aside of the exparte award dated 29.2.2016.
02. The brief facts of the case are that petitioner herein was a school running in a rural area of Adoni Kurnool District, Andhra Pradesh. Respondent no.1 and 2 herein lured this institution to start a Smart Class program. The petitioner and respondent no. 1 and 2 entered into an agreement under which respondent no.1 and 2 was to provide service of smart class program to the petitioner school. The respondent provided services for four months and petitioner made full and final payment through cheques. It is the case of the petitioner that respondents unilaterally appointed a arbitrator and raised a claim of Rs. 14,03,370/- along with interest, without adjusting payments made. Subsequently on 29.02.2016, an exparte award was passed. It is further stated that on 3rd October 2017 petitioner came to know about the award as Sh. Dwarakanath Chowdary, officer of the respondent approached the petitioner along with their counsel and asked them to make the payment in terms of the Arbtn. No.54/17 (1693/17) Page no. 2 said award. Hence the present petition was filed.
03. Notice of the objection petition was issued and reply was filed wherein the contents of the petition were denied and it was stated that there was no infirmity or illegality in the order passed by the Ld. Arbitrator. It was also stated that the grounds taken in the objection petition are not sustainable as the same were never taken before the Ld. Arbitrator and as such the petitioner has waived its right.
04. Ld. Counsel for the petitioner has argued that the award is liable to be set aside as no notice has been served upon the petitioner; secondly there is non compliance of Section 21 of Arbitration & Conciliation Act, 1996 and lastly there is non application of mind by the ld. Artbitrator. In support of his argument he had relied upon the judgments of Bhandari Udyog Ltd. Vs. Industrial Facilitation Council & Anr. Civil Appeal no. 2077/15 decided on 22.02.2015; G. E. Money Financial Services Pvt. Ltd. Vs. Subhadra Devi 2012 Law suit (Del.) 4200 and Alupro Building Systems Pvt Ltd. Vs. Ozone Overseas Pvt. Ltd. OMP 3/15 decided on 28.2.2017.
Arbtn. No.54/17 (1693/17) Page no. 3 05 On the other hand, ld counsel for respondent has argued that the present objection petition is barred by limitation and this court has no territorial jurisdiction to decide the petition.
06. I have heard the Ld. Counsels for the parties and perused the record carefully.
07. In order to appreciate the rival contention it is important to note under what circumstances, the court can intervene and set aside the award. The Hon'ble Supreme Court in ONGC Vs. Saw Pipes (2003) 5 SCC 705 has held that award could be set aside if it is contrary to:-
a) Fundamental policy of Indian law; or
b) the interest of India; or
c) justice or morality, or
d) in addition, if it is patently illegal.
08. In DDA Vs. R.S. Sharma (2008) 13 SCC 80 the Hon'ble Supreme Court summarized the law and held that:
a) An award, which is:-
(i) contrary to substantiate provisions of law; or
(ii) the provisions of Arbitration & Conciliation Act
Arbtn. No.54/17 (1693/17) Page no. 4
1996; or
(iii) against the terms of the respective contract; or
(iv) patently illegal or
(v) prejudicial to the rights of the parties is open to interference by the court under Section 34 (2) of the act.
b) The award could be set aside if it is contrary to:-
a) Fundamental policy of Indian law; or
b) the interest of India; or
c) justice or morality, or
c) The award could also be set aside if it is so unfair and
unreasonable that it shocks the conscience of the court.
d) It is open to the court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
09. Keeping in view these principle and the statutory provision it has to be seen whether the award can be set aside or not. Before considering the factual aspect, I shall consider the judgments relied by the counsel for the parties.
10. In Bhandari Udyog (supra) while relying upon the judgment of State of West Bengal & Anr. Vs. Arbtn. No.54/17 (1693/17) Page no. 5 Associated Contractors 2015 1 SCC 32; the Hon'ble Supreme Court observed that where the agreement between the parties restricted jurisdiction to only one particular court, that court alone would have jurisdiction. In G. E. Money (supra) the Hon'ble Delhi High Court set aside the exparte award on the ground that no notice was served upon the parties, therefore the arbitration proceedings cannot be sustained.
11. In Alupro Building (supra) it was held that provisions of Section 21 of the arbitration and conciliation Act is mandatory and any proceedings conducted without following the mandatory provision would be unsustainable in law.
12. The respondents have essentially raised two objections to the present petition; one that this court does not have the territorial jurisdiction and secondly the objections have been filed beyond the period prescribed under the Arbitration Act. Ld counsel for the respondent has argued that as per the agreement, only the courts at New Delhi i.e. Patiala House Courts would have the jurisdiction. In order to appreciate this contention, relevant portion of Clause 9.1 of the agreement dated 2.6.2011 is reproduced as under :
Arbtn. No.54/17 (1693/17) Page no. 6 "The venue for arbitration shall be at New Delhi and the language shall be in English. The courts in New Delhi shall have jurisdiction to entertain all disputes between the parties."
13. The bare perusal of this clause would show that only the courts situated at New Delhi would have the jurisdiction. The words New Delhi is not qualified with the words "only", "exclusively". Clause 9.5 reiterates that Courts at Delhi alone shall have sole and exclusive jurisdiction. It seems that the venue for arbitration was New Delhi but as such Delhi Courts had the jurisdiction to the exclusion of the Courts at Andhra Pradesh. Thus it cannot be said that the jurisdiction of this court is barred . The judgment Bhandari Udyog (supra) has clearly laid down that court within whose jurisdiction the proceedings have taken place would have the jurisdiction. The proceedings in the present case has taken place in Delhi. Therefore, this court has the territorial jurisdiction. Thus, the argument with regard to territorial jurisdiction is unsustainable and is liable to be rejected.
14. The next submission was with respect to the limitation , as per Section 34(3) of the Act, objection against the award has to be filed within 90 days from the date of receipt of the Arbtn. No.54/17 (1693/17) Page no. 7 award which may be extended by the Court for another period of 30 days but not thereafter. In the present case, the award is dated 29.2.2016. The postal receipts shows that it has been sent on 10.3.2016. The bare perusal of the postal receipt which has been placed on the record of arbitrator shows that the pin code which has been mentioned is 518000 and as per the agreement the pin code is 518302. Therefore, it cannot be said that the award was sent at the correct address. Moreover in Para 8 of the present petition, petitioner has taken a categorical stand as to how he derived the knowledge of the present award. It has been categorically stated that on 3rd October 2017 employee of the respondent along with the counsel had approached the petitioner. In reply thereto the respondent has admitted the contents by stating that it is a matter of record. There is a clear admission on the part of the respondent. The objection petitions were filed within 90 days from the said date. Therefore, the argument of ld. counsel for respondent thus does not hold any water and as such is liable to be rejected.
15. Now coming to the contention raised by the petitioner, I find merit in the argument of the ld. counsel for petitioner in as much as the notice of appearance which has been sent by Arbtn. No.54/17 (1693/17) Page no. 8 the Ld Arbitrator is again at the wrong address as the postal receipt would reveal that the same has been sent at the wrong pin code . As per the postal receipt, the same has been sent to the pin code 518001, which is not the pin code of the petitioner. Interestingly the first proceedings conducted by the arbitrator is on 22.09.2015 but nothing has been placed on record to show that notice was sent to the petitioner herein by the ld arbitrator for the said period.
16. The Hon'ble Delhi High Court in Alupro's case (supra) has categorically held that issuance of notice u/s 21 of the Act is mandatory and in case no notice is issued, the arbitration proceedings are non-est. It was further observed that requirement of receipt of notice by the respondent in terms of Section 21 of the Act is a condition precedent to the the commencement of the arbitration proceedings.
It was further observed that:
"27. Fourthly, even assuming that the Clause permits one of the parties to choose the arbitrator, even then it is necessary for the party making such appointment to let the other party know in advance the name of the person it proposes to appoint"
17. As per agreement between the parties, the respondent Arbtn. No.54/17 (1693/17) Page no. 9 was at liberty to appoint the sole arbitrator but no notice as stated above were issued, thereby violating the principal of natural justice . It was stated in the claim petition that Ex. CW 1 /4 dated 20.08.2014 is the notice U/s 21 of the Act. The perusal of the notice does not suggest that it can be terms as notice u/s 21 of the Act. The notice Ex. CW 1 /4 is a general notice, which talks about invoking of Arbitration Clause in the event of failure of the petitioner to make payment and also says the petitioner would be liable for criminal prosecution. Neither the name of the arbitrator has been mentioned nor it was shown that notice was received by the petitioner herein . No postal receipts were placed on record along with Ex. CW 1/ 4.
18. The respondent straight away appointed the arbitrator which had thus made the arbitration proceedings unsustainable in law. The ld. Arbitrator failed to take into consideration that vide Ex. CW 1/ 4 which is a legal notice dated 20.08.2014, a sum of Rs. 4,38,000/- was being claimed by the respondent herein from the petitioner and when the claim was filed, the amount jumped to Rs. 14,03,370/-. The only reason mentioned in the claim petition was that now entire installments are payable by the respondent which is Arbtn. No.54/17 (1693/17) Page no. 10 the sum claimed i.e. 14,03,370/-. The impugned award is unsustainable in law and is accordingly set aside.
19. File along with arbitration record be consigned to Record Room.
Announced in the Digitally signed
open Court on 15.10.2018 ANKUR by ANKUR JAIN
Date:
JAIN 2018.10.15
16:45:25 +0530
(Ankur Jain)
Addl. District Judge (Central)-10
Delhi
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