Madras High Court
Ecs Biztech Limited vs Redington (India) Ltd on 29 June, 2018
Author: Abdul Quddhose
Bench: Abdul Quddhose
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 29.06.2018
CORAM :
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
O.P.NO.866 OF 2017
ECS Biztech Limited
(Previously known as
ECS Biztech Private Limited)
Rep. by Mr. Vijay Mandora ...Petitioner
Vs
Redington (India) Ltd.,
rep. by Mr. S. Srinivasan
Senior Manager- Credit
Spl. Guindy House
No.95 Mount Road
Guindy, Chennai - 32. ...Respondent
Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the award passed by the Arbitral Tribunal dated 27.06.2017.
For Petitioner : Mr.P. Sidharthan
for M/s. V.E. Anish Kumar
For Respondent : Mr. S.S. Rajesh
ORDER
The instant petition has been filed under Section 34 of the Arbitration & Conciliation Act, 1996 challenging the award dated 27.06.2017 passed by the Arbitrator against the petitioner.
2. The facts leading to the filing of the instant petition are as follows :
The respondent sold and delivered Computer equipments to the petitioner, for which payments were not made by the petitioner to the respondent. Invoices contain Arbitration Clause. Invoices dated 26.04.2013 were raised by the respondent in favour of the petitioner, for recovery of Rs.44,40,594.80. According to the respondent, a balance of Rs.34,44,145/- is due and payable by the petitioner, after adjustment of the payments received by the respondent.
3. Despite several reminders, the petitioner failed to pay a sum of Rs.34,44,145/-, being the balance outstanding amount to the respondent. In accordance with the arbitration clause, the respondent appointed Mr. K. Balasubramanian, Retired District Judge as the sole arbitrator, to decide the dispute between the petitioner and the respondent, on merits. The sole arbitrator acted upon the reference and after issuing notice to both the parties, heard the dispute on merits and passed the Award dated 27.06.2017, in favour of the respondent, directing the petitioner to pay a sum of Rs.34,44,145/- , together with the interest at the rate of 18% per annum and costs. Aggrieved by the Arbitral Award dated 27.06.2017, the instant petition has been filed by the petitioner, under Section 34 of the Arbitration and Conciliation Act, challenging the said award.
4. Learned counsel for the petitioner submitted that sufficient opportunity was not given by the Arbitrator to the petitioner, for defending the claim made by the respondent. Learned counsel further submitted that there is a tripartite agreement, by which payment for the sale will have to be made only by the third party. According to the learned counsel for the petitioner, this fact is also known to the respondent. Despite knowing this fact, the respondent has made a claim against the petitioner without making the third party as a party to the claim. Learned counsel also submitted that the petitioner is not aware of the terms and conditions, contained on the reverse of the invoices. Learned counsel for the petitioner further submitted that sufficient opportunity was not given to the petitioner to cross examine the respondent as a witness in the arbitration proceedings. Eventhough under the Award, the Arbitrator has recorded that the petitioner failed to cross examine the respondent witness, the said statement according to the petitioner, is an incorrect statement. According to the petitioner, the petitioner was always insisting the Arbitrator to permit the petitioner to cross examine the respondent witness. Despite that, the Arbitrator did not provide any opportunity to the petitioner, to cross examine the respondent witness. Learned counsel wanted a direction from this Court to the Arbitrator, to place his records pertaining to the arbitration, which will reveal that the petitioner was not granted sufficient opportunity to cross examine the respondent witness. Learned counsel for the petitioner also requested this Court to issue direction to the Arbitrator to furnish copies of all the invoices marked before the Arbitrator as Exhibits C-3 series.
5. Therefore, the main ground for challenge to the impugned award is that no sufficient opportunity was given to the petitioner by the Arbitrator to defend the claim made by the respondent.
5. Per contra, Mr. S.S. Rajesh, learned counsel for the respondent drew the attention of this Court to the petition filed under Section 34 of the Arbitration and Conciliation Act, particularly paragraph 4.2 of the petition, which reads as follows :-
4.2. The petitioner, the respondent and Sai Infor System India Limited (hereinafter to be referred to as Sai Info SYSTEM' for short) were in effect the parties to a tripartite arrangement. Both the respondent, and Sai Infor System approached the petitioner for back to back order execution including purchase and payment of WIPRO computers and TFT Monitors for Sai Info System. The petitioner never received the goods from the respondent under invoices bearing No. U-259378 & U-259379 both dated 26.4.2013. The delivery was taken directly by Sai Info systems as per the instructions of the respondent. A copy of the invoice bearing No. U-259378 & U-259379 is annexed hereto and marked Annexure A and B respectively. The detailed e-mail communication exchanged between the petitioner, the respondent, and Sai Info systems is annexed herewith and collectively marked as Annexure-C. Despite due diligence, the petitioner was unable to produce the same before the learned arbitral tribunal. After drawing the attention of this Court to paragraph 4.2 of the petition, learned counsel for the respondent would submit that copies of all the documents, the petitioner is seeking from the Arbitrator are very much available with the petitioner, who has enclosed the same along with the petition filed under Section 34 of the Arbitration and Conciliation Act. The petitioner has filed Annexures along with the petition, which includes the invoices.
6. Learned counsel for the respondent, then drew the attention of this Court to page 8 of the Arbitral Award and submitted that the Arbitrator has given a clear finding that despite opportunities given to the petitioner to cross examine the respondent witness, the petitioner failed to make use of those opportunities. He further drew the attention of this Court to the relevant paragraph of the award, which reads as follows :-
This explanation of the respondent is of course, stoutly denied by the claimant in its rejoinder to the statement of defence. Apart from that, a cursory reading of the statement of defence itself shows that it is an unacceptable plea particularly when it falls short of any substantial evidence on the part of the respondent. They have not only furnished before this Tribunal any piece of material evidence which may clinch that issue in favour of the respondent but also have not cross examined C.W.1., atleast to extract some favourable answers in support of its claim regarding the involvement of the said third party company namely Sai Infosystem India Ltd., in this impugned transaction. Such cross examination of C.W.1 by the respondent side would have also thrown light over the fact whether the alleged blank cheque was actually issued by the respondent only as a security cheque or towards payment of dues as contended by the claimant. But no such cross examination was done here by the respondent. Learned counsel also drew the attention of this Court to the finding of the Arbitrator that the petitioner did not dispute the transaction with the respondent but has come forward with a different case that it is not the petitioner alone but another third party company namely, Sai Infosystem India Ltd., is also involved in the purchase and sales transaction in respect of the products supplied by the respondent. The Arbitrator has also recorded the fact that in the statement of defence filed by the petitioner before the Arbitrator, there is no dispute about the sale transaction and that the invoices were raised only in the name of the petitioner, namely, Ex.C-3.
7. From the materials available on record and after hearing the submissions made by the respective counsels, the following facts are made clear :
(a) There is no dispute with regard to the sale of goods to the petitioner by the respondent;
(b) It is not in dispute that the invoices were raised by the respondent only in favour of the petitioner;
(c) It is not in dispute that the payments are payable to the respondent under the invoices;
(d) It is not in dispute that the petitioner did not establish the existence of a tripartite agreement before the Arbitral Tribunal;
(e) It is not in dispute that in the proof affidavit filed by the petitioner before the Arbitrator, the date of the tripartite agreement was mentioned, when such document was filed before the Arbitrator ;
(f) It is not in dispute that there is a clear finding by the Arbitrator that despite opportunities given to the petitioner to cross examine the respondent witnesses, the petitioner did not make use of those opportunities ;
(g) The Arbitrator has passed a reasoned Award considering the pleadings and materials available on record; and the findings and conclusions are plausible conclusions ;
(h) The petitioner has also not produced any documentary or oral evidence to controvert the findings of the Arbitrator ;
8. From the above findings, it is clear that the petitioner has not made out any case for interference of the Arbitral Award, by this Court. The Arbitral Award dated 27.06.2017 does not suffer from any perversity or patent illegality. This Court cannot re-appreciate the evidence available with the Arbitrator who has arrived at a plausible conclusion since the scope of Section 34 of the Arbitration and Conciliation Act is limited.
9. The Hon'ble Supreme Court in a Catena of decisions starting from Renusagar Power Company Ltd vs. General Electric Company 1994 Supp (1) SCC 644 to the recent Associated Builders Vs DDA (2015) 3 SCC 49 has held only under the following grounds the Arbitrator Award can be challenged under Section 34 of the Arbitration and Conciliation Act:
(a) Procedure contemplated under Arbitration and Conciliation Act was not followed by the Arbitrator.
(b)The Arbitral Award is a non speaking Award.
(c)The Arbitrator has transgressed his jurisdiction.
(d)The Arbitral Award is in conflict with the public policy of India.
(iii)An award would be regarded as conflicting with the public policy of India if:-
(a) it is contrary to the fundamental policy of Indian law, or
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.
(iv)An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if
(a) it disregards orders passed by superior courts, or the binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a judicial approach, i.e.has not acted in a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or
(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v)Insofar the patent illegality has to go to the root of the matter. Trivial illegalities are inconsequential.
(vi) Additionally, an award could be set aside if
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or
(d) the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(f) the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the parties.
(vii) Perversity, as a ground for setting aside an arbitral award,has to be examined on the touchstone of the Wednesbury principle of reasonableness. It would include a case in which
(a) the findings, in the award, are based on no evidence, or
(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.
(viii) At the same time,
(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as perverse,
(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to re-assessment in judicial review over the award.
(ix)"Morality would imply enforceability, of the agreement, given the prevailing mores of the day. Immorality, however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.
10. The petitioner has not satisfied any of the grounds mentioned above. Therefore, this Court is of the view that there is no merit in the petition filed by the petitioner. Hence, this petition shall stand dismissed.
29.06.2018 avr ABDUL QUDDHOSE, J.
avr OP. No.866 of 2017 29.06.2018