Bangalore District Court
Mantis Technologies Pvt Ltd vs Indorail Bus Travel Pvt Ltd on 29 June, 2024
KABC170003822024
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.A.P.No.27/2024
Dated on this 29th day of June 2024
Petitioner Mantis Technologies Private Limited,
Having its registered office at:
1137, CoWorks-01, Earthrise
11th Floor, S G Highway,
Makarba, Ahmedabad,
Gujarat-380015.
Represented by its
Authorized Personnel
Mr.Aurvind Lama.
(By Ms. Chetana, Advocate)
// versus //
Respondents 1. IndoRail Bus Travel Private Limited,
Having its office at:
Ground Floor, AMCO Tower,
Plot No.A-5, 6&7 Sector-9,
Gautam Buddha Nagar,
NOIDA, UP-201301.
Represented by its
Authorized Personnel
Mr.Gaurav Dhawan.
2. Shri. S. Rama Murthy,
District Judge (Retired)
Sole Arbitrator,
Arbitration & Conciliation Centre,
2
CT 1390_Com.A.P.27-2024_Judgment.doc
KABC170003822024
Domestic & International
Khanija Bhavan, III Floor,
East Wing, Race Course Road,
Bengaluru-560001.
(R.1 by Sri.Ayantika Mondal,
Advocate, R.2 - Arbitrator)
Date of Institution of suit : 03/02/2024
Nature of the suit : Management and
Consultancy
Agreement.
Date of commencement of :
recording of the evidence
Date on which the : 29/06/2024
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
00 04 26
JUDGMENT
This is a petition under section 34 of the Arbitration and Conciliation Act, filed by the Respondent before Learned Arbitrator, challenging the arbitral award passed by Respondent No. 2 herein, dated 7-10-2023, in AC 388 of 2022.
2. On issuance of notice of the present petition, the Respondent No. 1, who is the claimant before the learned arbitrator, has entered appearance through counsel and filed 3 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 detailed objections to the present petition. The notice to Respondent No. 2, who is the learned arbitrator, is dispensed with.
3. Thereafter, I have heard the arguments of both sides and perused the records of the case.
4. The only point that arises for my consideration is :-
Whether the impugned arbitral award dated 7- 10-2023, passed by Respondent No. 2 in AC 388 of 2022, calls for interference under section 34 of the Arbitration and Conciliation Act?
5. My answer to the above point is in the affirmative for the following :-
REASONS
6. The facts in brief which are necessary to be stated for the purpose of disposal of the present petition are that, the Respondent No. 1 herein [hereinafter referred to as the claimant], raised a claim against the Petitioner herein, on the ground that the parties had entered into Software License And Management Agreement, dated 8-02-2019, under which the inventory owned by claimant was flashed and displayed 4 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 on online portal maintained by Petitioner herein who sold the inventory of claimant to prospective buyers / travellers and collected money, but failed to deposit the collected money with the claimant to an extent of Rs. 30,16,126 and, since the said agreement between the parties contained Arbitration Clause, the claimant filed CMP 338 of 2021 before Hon'ble High Court of Karnataka for appointment of Arbitrator and in the said petition, Hon'ble High Court appointed Respondent No. 2 as the Learned Sole Arbitrator.
7. Before the Learned Arbitrator, the claimant filed claim petition for recovery of outstanding amount of Rs. 30,16,126 along with interest and Rs. 25,00,000 towards loss of business and Rs. 20,00,000 for harassment and mental agony. In the said arbitration proceedings, the Petitioner herein, who was the Respondent Before the Learned Arbitrator, was placed ex parte and the Learned Arbitrator has passed the impugned award directing the Petitioner herein to pay sum of Rs. 30,16,126 to the claimant along with interest at 6% per annum from November 2019 till realization.
5
CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024
8. Aggrieved by the said award, the Petitioner herein, who was the Respondent Before the Learned Arbitrator has filed the present petition to set aside the award under Section 34 of Arbitration and Conciliation Act.
9. At the outset, it is to be noted that the certified copy of the arbitral award produced along with the petition discloses that the award copy was received by the petitioner on 3-11- 2023 and therefore, the petition filed on 3-2-2024 is within three months from the date of receipt of arbitral award and therefore, the petition is within time under Section 34 [3] of the Act and therefore, requires consideration on merits.
10. In the present petition, the sole ground raised is under Section 34 [2] [a] [iii] of the Act, i.e., the impugned award is passed without giving proper notice of the arbitral proceedings. Since the only ground raised is violation of principles of natural justice on the ground that Petitioner was not given proper notice of arbitral proceedings, it is not necessary for this Court to go into the merits of the claim and the present petition has to be decided mainly by 6 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 looking into the order sheet of the Learned Arbitral Tribunal and related records regarding service of notice on Petitioner herein to determine whether the Petitioner was given proper notice of arbitral proceedings or not.
11. If the order sheet of the Learned Arbitrator is looked into, it is seen that on 21-07-2023, the Learned Arbitrator has noted as follows;
"It is found that notice to Respondent is not sent to the address found in the cause title of the claim petition. On the other hand, it is said that Learned Counsel for Claimant had furnished two other addresses of the Respondent to which notice is to be sent, and accordingly Office has issued notices to the Respondent to the address so furnished by the Claimant at the time of filing of the claim petition. Both the notices are returned unserved.
In view of this, issue fresh notice to the Respondent to the address as found in the cause title mentioned in the claim petition. Notice may also be sent to the email address of Respondent that may be furnished by the Learned Counsel for the Claimant, returnable by 16-08-2023 at 3 pm."
12. On 16-08-2023, the Order Sheet reads as follows;
"Sri V. N. S. for Shri A. M. Learned Counsel for Claimant is present.7
CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 Respondent absent though served. Hence placed ex parte."
13. The Office note in the said Order Sheet dated 16-08- 2023 reads as follows;
"The Counsel for Claimant has filed memo on 24- 07-2023.
The Hon'ble Arbitrator its vide order dated 21-07- 2023, fresh notice issued to Respondent address mentioned in claim statement by speed post on 21- 07-2023 and 24-07-2023 and same notice was served on 1st address on 31-07-2023 and 2nd address served on 28-07-2023.
Posted for appearance of Respondent."
14. On plain reading of the Order of the Learned Arbitrator dated 21-07-2023, it is clear that, specific order was made to issue fresh notice to the Respondent to the address found in cause title of the claim petition. However, in the Office note dated 16-08-2023, it appears notice has been sent by speed post to two addresses. In order to understand which are those two addresses to which notice was sent, it is necessary to look into the memo dated 24-07-2023, which is referred to in the Office note dated 16-08-2023. The said memo is not available in the Arbitration Records secured from the Arbitration Centre, but a copy of the said memo is furnished 8 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 by Learned Counsel for Respondent No.1 herein, along with objections to present petition and it discloses that under the said memo, two addresses of Respondent [Petitioner herein] was furnished by the claimant. First address is the same address which is there in the cause title of the claim petition and which is also the address of petitioner mentioned in the present petition. The second address is 1st Floor, No.45, Gopalakrishna Complex, 3rd Residency Road, Ashok Nagar, Bangalore, Karnataka. As already noted, Supra, in the Office note dated 16-08-2023, it is stated that notice issued to both the addresses have been duly served on 31-07-2023 and 28- 07-2023, respectively. However, the Postal Acknowledgement Card is not available in the Arbitration Records, nor is certified copy of the same produced by the Respondent No.1 herein. Instead, what is available in arbitration records at page 16 to 19 are 2 "track consignments" downloaded from Website of Postal Department. The service of notice on Bangalore address is inconsequential because the specific order of the Learned Arbitrator was to issue notice to the address stated in the cause title of the claim petition, which is 9 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 No.1137, CoWorks 01, Earthrise, 11th Floor, SG Highway, Makarba, Ahmedabad, Gujarat. In respect of service on this address, Learned Counsel for Respondent No.1 herein [claimant] placed reliance upon tracking consignment found at page 16 of the arbitration records. The said tracking consignment reflects that item was delivered on 31-07-2023, which tallies with the office note stating that notice was delivered on the first address on 31-07-2023. However, on perusal of the said tracking consignment, nowhere does it state the address to which it was dispatched. It only shows that item was delivered at Manekbag SO. The name of the addressee or the full address of the addressee is not forthcoming from the said tracking consignment. No doubt, the consignment number is reflected but the corresponding speed post receipt is not available anywhere in the records to verify whether the said tracking consignment refers to notice issued to petitioner herein at the address stated in the claim petition. Therefore, at this stage, it appears without properly tallying the speed post receipt number with tracking consignment receipt number and without even waiting for the 10 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 postal acknowledgement to be returned, the Office of the Arbitration Centre, in a great hurry, depending on tracking consignment which does not reflect necessary details, has made endorsement in the order sheet dated 16-08-2023 about due service on Gujarat address of the respondent before the arbitral tribunal / Petitioner herein. In the present petition, at paragraph 10, a specific statement is made that the petitioner has not received any notice. In the face of the above discrepancy in the tracking consignment and the above error committed by the Office of the Arbitration Centre, the said contention of petitioner requires acceptance.
15. No doubt, at paragraph 13 of the petition, the petitioner admits that the notice was served at the Bangalore address but claims that the Bangalore address is not that of the petitioner company but that of another separate company by name, Maven Tech Labs Pvt. Ltd. The only connection is that the director of the petitioner company is also a director of the said Maven Tech Labs Pvt. Ltd. However, service on said Bangalore address is inconsequential for two reasons. Firstly, 11 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 the Bangalore address is not stated in the cause title of claim petition and secondly, the specific order of the Learned arbitrator dated 21-07-2023 was to issue notice to the address stated in the cause title. Therefore, service on Bangalore address was inconsequential and superfluous. Therefore, the result of the above discussion is that, at this stage, on the basis of the material on record and particularly due to the fact that postal receipt and postal acknowledgement card is neither produced nor available in the records and the tracking consignment available in arbitral records does not reflect the address to which the notice was delivered or the name of the addressee to whom notice was delivered, serious doubt is raised in the mind of the court that, by inadvertence, the office of the arbitration centre has made a wrong entry regarding due service of notice on respondent before the arbitral tribunal. The Learned arbitrator, by relying upon the said erroneous endorsement made by the office, has placed the respondent [Petitioner herein] ex parte. Therefore, it follows that the petitioner herein was placed ex parte before the arbitral tribunal 12 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 without proper service of notice and therefore, it has to be concluded that Petitioner was not given proper notice of arbitral proceedings and therefore, the ground under Section 34 [2] [a] [iii] of the Act to set aside the impugned arbitral award is satisfied.
16. No doubt, as per the petition averments, the notice served to other company, namely Maven Tech Labs at Bangalore address was belatedly brought to notice of the petitioner, which resulted in the petitioner issuing email dated 29-09-2023 at 11.51 AM [produced at page 76 of present petition] to the office of the arbitration centre Bangalore, stating as follows;
"Respected Sir, We are based out of Ahmedabad and are unable to travel today due to Karnataka bandh declared today i.e. 29-09-2023.
Hence, we request you to kindly adjourn today's proceedings and provide us with a week's time so that we can make appropriate representation before your kind office.
We are in process of appointing a legal counsel and request the Hon'ble Arbitrator to provide us a week's time so that our legal counsel can file an application to set aside the ex parte order and also file our Statement of Defence on the next hearing date as set by the Hon'ble Arbitrator.13
CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 We deeply regret the inconvenience caused."
17. It is to be noted that this email is issued on 29-09-2023 at 11.51 am. On the said date the matter was posted before the Learned Arbitrator at 3 pm for affidavit evidence of claimant and also marking of documents. The office note in the order sheet dated 29-09-2023 reflects that, the said email has not been put up before the Learned Arbitrator. If the same had been put up, the Learned Arbitrator could have exercised discretion of granting time for appearance of the respondent. Since the said email was not put up, the Learned Arbitrator proceeded to record evidence of the claimant on said hearing date. Thereafter, on 5-10-2023, arguments have been heard and on 7-10-2023, the Arbitral Award has been passed.
18. The Learned Counsel for Respondent No. 1 herein [Claimant] vehemently argued that, even considering that notice of arbitral proceedings was not served on petitioner, at least the petitioner had knowledge of the arbitration proceedings on 29-9-2023 whereas the impugned award was 14 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 passed only on 7-10-2023 and, therefore, on this ground argued that the petitioner has been negligent and, therefore, cannot seek setting aside of the arbitral award. For this, the reply of Learned Counsel for Petitioner was that 29-9-2023 was Bangalore bandh and thereafter, followed by series of public holidays i.e. 30th was Saturday and 1st was Sunday and 2nd was Mahatma Gandhi Jayanthi and by the time the petitioner which is based in Gujarat could send local representative to the arbitration centre, the award was already passed. However, in my view, unless and until it is shown that the notice of arbitral proceedings was properly served on the petitioner, it is not possible to sustain the award only on the ground that the petitioner had sent email dated 29-09-2023 and on that ground to hold that petitioner had knowledge of the arbitration proceedings because the said email was neither put up before the learned arbitrator nor was any reply issued to the said email stating that the prayer for grant of one week's time has not been considered by the learned arbitrator. Therefore, when in the first instance the notice of arbitral proceedings was itself not served on the 15 CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 petitioner and when the award is passed within 8 days from 29-9-2023 on which email was sent by petitioner, the only conclusion to be drawn is that the petitioner never had proper notice of arbitral proceedings.
19. Therefore, in view of the above discussion, I hold that the petitioner has established, on the basis of the arbitral records, that petitioner was not given proper notice of the arbitral proceedings and, therefore, the impugned award is liable to be set aside under Section 34 [2] [a] [iii] of the Act. Accordingly, answering the point for consideration in the affirmative, I proceed to pass the following:-
ORDER The petition under Section 34 of the Arbitration and Conciliation Act is allowed.
Consequently, the impugned award dated 7- 10-2023 passed by Learned Sole Arbitrator, namely Respondent No. 2 herein, in AC 388 of 2022, is hereby set aside, by acting under Section 34 [2] [a] [iii] of the Arbitration and Conciliation Act.16
CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024 Considering the facts and circumstances of the case, there shall be no order as to cost.
Office to issue soft copy of this judgment to both sides, by email, if furnished.
[Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 29th day of June, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.17
CT 1390_Com.A.P.27-2024_Judgment.doc KABC170003822024