Delhi District Court
M/S Creat Ed Pvt. Ltd vs Poonam Mittal on 16 January, 2021
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (COMM.) No. 37/2018
M/s Creat Ed Pvt. Ltd.
Plot No. 4, Sector-11, Dwarka,
New Delhi-110075 ...Petitioner
vs
1. Poonam Mittal
R/o 214, SU Block, Pitampura,
New Delhi-110034
2. Mr. Amit Chadha,
4/43. Double Storey, Lajpat Nagar-IV,
New Delhi-110024 ....Respondents
Date of Institution : 30/11/2018
Arguments concluded on : 17/12/2020
Decided on : 16/01/2021
Appearances : Sh. Ashwani, Ld. Proxy Counsel for Sh. Vidur Sikka, Ld.
Counsel for petitioner.
Ms. Suruchi Mittal, Ld. Counsel for respondents.
JUDGMENT
1. Petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended) (herein after referred as the Act) seeking setting aside of the orders dated 26/09/2018 and 26/10/2018 of Ld. Sole Arbitrator Sh. Amit Chadha (Respondent no. 2) in case reference No. DAC/1899/01-18, titled Ms. Poonam Mittal vs M/s Create Ed Pvt Ltd. Vide order dated 26/09/2018, Ld. Sole Arbitrator had closed the right of the petitioner to file reply/statement of defence and counter claim. Vide order dated 26/10/2018, Ld. Sole Arbitrator had dismissed the application of petitioner dated 16/10/2018 for recalling of the order dated 26/09/2018.
2. The matter was referred to Delhi Arbitration Centre (in short DAC) on OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 1 of 12 petition under Section 11 of the Act bearing ARB.P. 821/2017 titled as "Poonam Mittal vs Create Ed Pvt. Ltd.", which was filed by the respondent no. 1 and decided vide consent order dated 19/01/2018 of Hon'ble Mr. Justice Navin Chawla of Delhi High Court.
3. Preliminary hearing was held on 01/02/2018 in DAC to make parties aware of the procedure and in terms of aforesaid order dated 19/01/2018 of High Court of Delhi. The respondent no. 1 filed her claim for illegal termination of Franchise Agreement by the petitioner for a sum of Rs 28,51,890/- and notices were sent to petitioner for filing the reply, however, no reply was filed by the petitioner.
4. Petitioner alleges to have received the copy of statement of claim with documents on 08/05/2018 from DAC via e-mail.
5. As per respondent no. 1, Rule 17.1 of the Delhi Arbitration Centre Rules 2018 inter alia provided that statement of defence shall be filed within 30 days of receipt of statement of claim and documents and on seeking extension within a further period of 30 days. Rule 17.2 of DAC Rules provided that failure to adhere to the 30 days time limit or extended time limit shall result in foreclosure of the right to file statement of defence, a plea of set off and/or counter claim. No reply or counter claim was filed within 30 days of receipt of statement of claim nor any extention as envisaged under Rule 17.1 of DAC Rules was sought for by the petitioner.
6. As per respondent no. 1, DAC issued letter dated 26/06/2018 waiving the right of the petitioner to file reply asking respondent no. 1 to pay the full arbitration fees as petitioner failed to do so, which was duly done by the respondent no. 1.
7. Without enclosing/filing any application for condonation of delay, the OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 2 of 12 petitioner filed its statement of defence and counter claim on 03/08/2018.
8. First hearing in arbitral proceedings was held on 19/09/2018 before Ld. Sole Arbitrator, who heard the parties on the point of limitation with respect to filing of the statement of defence and counter claim belatedly on 03/08/2018 without any application for condonation of delay and Ld. Sole Arbitrator kept the matter for orders and further proceedings on 26/09/2018.
9. Vide order dated 26/09/2018, Ld. Sole Arbitrator closed the right of respondent to file the statement of defence and counter claim. Petitioner being aggrieved with the impugned order dated 26/09/2018, preferred an application dated 16/10/2018 for recalling of order dated 26/09/2018. Ld. Sole Arbitrator dismissed the aforesaid application dated 16/10/2018 for recalling of order dated 26/09/2018 vide order dated 26/10/2018 in the third arbitral proceedings. The petitioner in the petition had put forth contention that the wife of the Counsel for petitioner, who was 8 months pregnant, was not keeping well, due to which Counsel for petitioner had to go to his native place and due to medical complications on 19/06/2018 the wife of the Counsel for the petitioner had to undergo the caesarean section. It is also the submission of the petitioner that application for condonation of delay in filing the reply to the statement of claim and counter claim was filed by the petitioner on 24/09/2018. The same did not find mention in the detailed order dated 26/09/2018 by Ld. Sole Arbitrator. Respondent no. 1 through Counsel had argued that the referred c-section was of wife of junior associate of main Counsel for petitioner and not of wife of Counsel for petitioner.
10. It has been argued for the petitioner that the impugned orders are liable to be set aside as they were passed by Ld. Sole Arbitrator without application of judicious mind, were so passed in mechanical manner, ignoring the precedents whereas the rules of procedures are handmaid of justice. Petitioner through Counsel seeks setting aside of the impugned orders.
OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 3 of 1211. Ld. Counsel for petitioner had relied upon the following precedents:
1. R.N Jadi and Brothers and Ors. Vs Subhashchandra, MANU/7775/2007;
2. Sangram Singh vs Election Tribunal, Kotah and Ors., MANU/SC/0044/1955;
3. Shreenath and Ors. Vs Rajesh and Ors., MANU/SC/0286/1998;
4. Delhi Development Authority vs Rajindra Properties and Industries, MANU/DE/9185/2007;
5. Kailash vs Nanhku and Ors., MANU/SC/0264/2005 and
6. Kusum vs Kanchan Devi and Ors., MANU/SC/0489/2005.
12. In filed reply and brief written submissions respondent through Counsel contended and argued that impugned orders were procedural orders and not an arbitral award for which remedy can be resorted under Section 34 of the Act and present petition is not maintainable. Also was argued that petitioner failed to make out any ground let alone 'sufficient cause' for either condonation of delay before Ld. Sole Arbitrator or in the present petition, whereas petitioner had concealed material facts with respect to first hearing conducted on 19/09/2018 before Arbitral Tribunal and came before this Court with unclean hands. Also was argued that as per Section 42 of the Act, since Ld. Sole Arbitrator was appointed pursuant to orders to Section 11 of the Act, the subsequent applications arising out of the agreement and arbitral proceedings were to be made in that Court and in no other court. Ld. Counsel for respondent also relied upon the case of ONGC Petro Additions Ltd. vs Tecnimount S.P.A. & Anr., OMP (Comm.) No. 196/2019 & I.A 7134/2019 decided on 01.07.2019, whereby Delhi High Court had clearly held that Section 34 petition would not lie against the procedural orders.
13. I have heard Sh. Ashwani, Ld. Proxy Counsel for Sh. Vidur Sikka, Ld. Counsel for petitioner; Ms. Suruchi Mittal, Ld. Counsel for respondents and perused their relied upon precedents as well as written arguments and records of the case as well as arbitral proceedings record and given my thoughtful consideration to the rival contentions put forth.
OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 4 of 1214. On behalf of petitioner it was argued that rules of procedure are the handmaids of justice and the language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. Also was argued that the Court must always be anxious to do justice and to prevent victories by way of technical knock-outs. Also was argued that principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. It was also argued that since processual laws are subservient to the substantive laws, unless the compelling language of a precessual law leaves no scope for a contrary interpretation, a processual law must be construed in a manner which subserves the purpose of the substantive law. It was argued that without taking into consideration the application for condonation of delay filed by petitioner on 24/09/2018, the impugned order dated 26/09/2018 was mechanically passed and subsequently the application for recalling of order dated 26/09/2018 was dismissed vide impugned order dated 26/10/2018. It was prayed for setting aside of the impugned orders.
15. In the case of R.N Jadi and Brothers and Ors. (supra), the subject matter was extension of time in filing the written statement in civil suit and the interpretation of Order VIII Rule 1 of The Code of Civil Procedure, 1908.
16. In the case of Sangram Singh (supra), the appeal was preferred against order of High Court rejecting the writ petition challenging adjudication of election petition under Section 100 of The Representation of the People Act, 1951.
17. In the case of Shreenath and Ors. (supra), the question raised was whether the third party in possession of a property claiming independent right OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 5 of 12 as a tenant not party to a decree under execution could resist such decree by seeking adjudication of his objections under Order 21 Rule 97 of The Civil Procedure Code?
18. In the case of Delhi Development Authority vs Rajindra Properties and Industries (supra), it was the regular second apeal against dismissal of the first appeal against judgment and decree in civil suit, which was held time barred.
19. In the case of Kailash vs Nanhku and Ors. (supra), the Supreme Court interpreted the relevant provisions of The Representation of the People Act, 1951, Order VIII Rule 1 of The Code of Civil Procedure 1908 and the trial of an election petition.
20. In the case of Kusum vs Kanchan Devi and Ors. (supra), the subject matter of challenge in appeal before Supreme Court was the order of High Court with respect to non compliance with the requirments of Order VIII Rule 1 of the Code of Civil Procedure.
21. Arbitration is a private dispute resolution mechanism whereby two or more parties agree to resolve their current or future disputes by an arbitral tribunal, as an alternative to adjudication by the courts or a public forum established by law. Parties by mutual agreement forgo their right in law to have their disputes adjudicated in the courts/public forum. Arbitration agreement gives contractual authority to the arbitral tribunal to adjudicate the disputes and bind the parties.
22. Arbitration being a matter of contract, the parties are entitled to fix boundaries as to confer and limit the jurisdiction and legal authority of the arbitrator. An arbitration agreement can be comprehensive and broad to include any dispute or could be confined to specific disputes. The issue of OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 6 of 12 scope of arbitrator's jurisdiction invariably arises when the disputes that are arbitrable are enumerated or the arbitration agreement provides for exclusions as in case of 'excepted matters'. The arbitration agreement may be valid, but the arbitral tribunal in view of the will of the parties expressed in the arbitration agreement, may not have jurisdiction to adjudicate the dispute. The will of the parties as to the scope of arbitration is a subjective act and personal to the parties.
23. Arbitration Act has been enacted to promote arbitration as a transparent, fair, and just alternative to court adjudication. Public policy is to encourage and strengthen arbitration to resolve and settle economic, commercial and civil disputes. Amendments from time to time have addressed the issues and corrected the inadequacies and flaws in the arbitration procedure. It is for the stakeholders, including the arbitrators, to assure that the arbitration is as impartial, just, and fair as court adjudication.
24. An Arbitral Award can be set aside on the grounds set out in Section 34(2)(a), (b), (2A) of the Act. Appeals lie from the orders detailed in Section 37 of the Act.
25. Section 34 (1) (2), (2A) and 37 of The Arbitration and Conciliation Act, 1996 read as under:
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 7 of 12 thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 8 of 12 merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
..........................................................................................................
37. Appealable orders.-- (1)An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:--
(a) refusing to refer the parties to arbitration under section 8:
(b) granting or refusing to grant any measure under section 9:
(c) setting aside or refusing to set aside an arbitral award under section 34.
(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.--
(a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or
(b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court."
26. Section 2(1)(c) of the Act and the General Provisions of Chapter 1 of Part I of the Act make it abundant clear that "arbitral award" includes an interim award. Hon'ble Mr. Justice Sanjeev Narula in the case ONGC Petro Additions Ltd. (supra), inter alia held that though the arbitral tribunal while passing any procedural order may determine certain valuable rights of the parties but it does not mean that such determination renders an order to be an award within the meaning of Section 2 (1) (c) of the Act. The determination of a valuable right in any legal proceedings would not necessarily result in an immediate actionable right. In order to ascertain whether an order is an OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 9 of 12 interim award or partial award, the two most important factors that would weigh upon the Court are the concept of "finality" and "issue". If the nature of the order is "final" in a sense that it conclusively decides an issue in the arbitration proceedings, the order would qualify to be an interim award. The impugned orders determined of closing of the right to file the statement of defence/counter claim sought to be filed belatedly by the petitioner and the application for recalling such previous order. The impugned orders do not conclusively decide an issue or the subject matter of adjudication between the parties. The impugned orders are procedural orders passed by the arbitral tribunal. The impugned orders do not qualify either as arbitral award or an interim arbitral award to be impugned on the grounds, afore elicited in Section 34 (2)(a)(b) and 2A of the Act and also are not appealable orders in any appeal under Section 37 of the Act, as elicited in detail above.
27. The precedents relied upon by petitioner through Counsel embody facts and circumstances entirely different to the set of facts and circumstances of the case in hand; so neither they are applicable to the case in hand nor are of any help to the petitioner for getting the impugned orders set aside as an award under Section 34 of the Act.
28. Section 42 of the Act inter alia provides that all subsequent applications arising out of the arbitration agreement and the arbitral proceedings necessarily are to be made in that Court where with respect to such agreement any application had been previously made and such subsequent application cannot be made in any other Court. Ld. Sole Arbitraror was appointed in terms of order dated 19/01/2018 of High Court of Delhi in petition under Section 11 of the Act bearing number ARB.P. 821/2017 titled "Poonam Mittal vs Creat ED Pvt. Ltd.
29. Arbitral proceedings record was sent to Court of Ld. Additional District Judge-04, (ADJ-04) New Delhi District by Ld. Sole Arbitrator with a covering OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 10 of 12 letter finding mention of it being addressed to Ld. ADJ-4 and being sent pursuant to notice dated 16/10/2019 of Ld. ADJ-04, New Delhi District. Supreme Court in the case of Union of India vs. Popular Constructions, (2001) 8 SCC 470 and in case of Consolidated Engineering Enterprises vs. Irrigation Department, (2008) 7 SCC 169 has held that Section 5 of the Limitation Act is not applicable to Section 34 (3) of the Arbitration and Conciliation Act, 1996 in view of express inclusion within the meaning of Section 29(2) of the Limitation Act, 1963. Supreme Court also held in the case of Simplex Infrastructure Ltd. vs Union of India, (2019) 2 SCC 455 that Section 5 of the Limitation Act 1963 has no application to an application challenging an arbitral award under Section 34 of The Act. Fact also remains that Section 43 (1) of the Act also provides that the Limitation Act 1963 shall apply to arbitrations as it applies to proceedings in Court. Accordingly, Section 14 of the Limitation Act provides for exclusion of time of proceeding bonafide in Court without jurisdiction. Arbitral proceedings record was requisitioned by my Ld. Predecessor, Presiding Officer of the Court of ADJ-04, New Delhi District and remained in the court after it was submitted with the afore elicited covering letter of Ld. Sole Arbitrator.
30. This matter was transferred to this Court from the Court of Ld. ADJ-04, New Delhi District on 27/01/2020. I was on medical leaves from 16/12/2019 till 13/03/2020. Due to outbreak of Covid-19 pandemic, the functioning of District Courts was suspended w.e.f. 23.03.2020 to 31.07.2020 by Hon'ble High Court of Delhi vide order(s) dated 23.03.2020, 25.03.2020, 15.04.2020, 02.05.2020, 16.05.2020,21.05.2020, 29.05.2020, 13.06.2020, 29.06.2020 and 13.07.2020. Hence, in compliance of said orders, the present matter was adjourned enbloc on the following dates viz,: 27/04/2020 and 19/06/2020. On 13/08/2020 and on subsequent dates of hearings, for one or other reasons, adjournments were sought and taken by one or the other Counsel for the parties and finally arguments were addressed on 17/12/2020. Thereafter from 25/12/2020 till 03/01/2021 the District Courts were closed due to winter vacations and OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 11 of 12 subsequent holidays, so the matter was fixed for orders for today i.e., 16/01/2021.
31. Since the impugned orders are neither arbitral award nor the interim arbitral award, there cannot possibly be any ground to challenge the same under Section 34 of the Act. In this fact of the matter relying upon law laid in the case of ONGC Petro Additions Ltd. (supra) by Delhi High Court, no premise is laid out in accordance with Section 34 of the Act to set aside the impugned orders. For the foregoing discussions, the petition is dismissed.
32. E-mail id of Ld. Sole Arbitrator be provided by the parties/Counsel to the dedicated e-mail id of this Court to facilitate sending of this judgment to Ld. Sole Arbitrator for obtaining the arbitral proceedings record from the Ahlmad against proper receipt at earliest. Besides that copy of short order be sent by post by Ahlmad to Ld. Sole Arbitrator to collect the arbitral proceedings record as aforesaid. Ahlmad is directed to hand over the arbitral proceedings record to Ld. Sole Arbitrator against proper receipt.
33. The parties are left to bear their own costs.
34. File be consigned to record room.
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
on 16th January, 2021. Patiala House Court, New Delhi.
(Deepika) OMP (COMM.) No. 37/18 M/s Creat Ed Pvt. Ltd. Vs Poonam Mittal & Anr. Page 12 of 12