Jammu & Kashmir High Court - Srinagar Bench
Zaffar Abbas Din vs Nasir Hamid Khan on 16 March, 2023
Author: Moksha Khajuria Kazmi
Bench: Moksha Khajuria Kazmi
S. no. 70
Supplementary
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
-.-
Arb. P no. 6/2023
Caveat No. 195/2023
Zaffar Abbas Din
...Appellant(s)
Through:- Mr Shariq J Reyaz, Advocate
v.
Nasir Hamid Khan
...Respondents
Through:- Mr Z. A. Shah, Sr. Advocate with
Mr Tassaduq H. Khawja, Advocate
Coram:
Hon'ble Ms Justice Moksha Khajuria Kazmi, Judge
ORDER
16.03.2023 Appellant is challenging and seeking reversal/setting aside of the Arbitral award dated 21.01.2023, for short impugned award, passed by the learned Sole Arbitrator in an Arbitration matter titled Nasir Hamid Khan v. Zaffar Abbas Din with imposition of costs on the respondent inter alia on the grounds that the same suffers from patent illegality; is unsustainable in law being in contravention of the Contract Act (1977 Svt), the Specific Relief Act 1963 as well as the Transfer of Property Act (1977 SVT); is in conflict with the laws in vogue and the terms of the agreement that the parties have entered into in respect of the subject matter.
Since the other side is on caveat, therefore, no notice is required to be issued to the respondent.
Heard learned counsel for the caveator. The caveat is discharged.
The learned counsels for the parties were heard on the application grant of interim relief at length.
The learned Arbitrator while culminating the arbitration proceedings has passed the Award in the following manner:
"a) The agreement dated 04.05.2013 registered on 07.05.2013 in the peculiar circumstances shall be deemed renewed for another 5 years w.e.f. 07.05.2018 to 07.05.2023 carrying a similar renewal clause.Arb P. no. 6/2023 Page 1 of 5
b) Petitioner is held entitled to loss of stocks etc. worth Rs.
2,84,869.43 (Two Crores Eighty-Four Lakhs Eigh Hundred Sixty-Nine and Fourty-Three paisa)
c) Petitioner is also held entitled to loss of profits on business from 2019 to March 2023 amounting to Rs. 1,53,96,588 (One Crore Fifty-Three Lakhs Ninety-Six Thousand Five Hundred and Eighty-Eight)
d) The respondent is held entitled to 4% of the total sales for the years, 2019-20, 2020-21, 2021-22 and 2022-23 including the Financial Year 2018-19, in total amounting to Rs. 72,45,021.15 (Seventy-Two Lakhs Fourty-Five Thousand Twenty-One and Fifteen Paisa) Note: Financial Year 2022-23 is taken as a whole year though, 2 months' time is remaining, but is noticed that business afresh has to be established as the ground floor has already been ransacked, same will take time, therefore, on an average 4% to the respondent and average profits to the petitioner have been worked out.
e) Costs:
From the afore-stated reasons and circumstances, it is evident that it is the conduct including omissions and commissions attributable to the Respondent which has resulted in devasting the business prospect of the petitioner. The business of the petitioner, as indicated hereinabove has been progressing year by year, despite adverse law-and- order situations. The same has been halted by the conduct of the respondent, as a result whereof petitioner has not only suffered business losses but has been subject to mental agony and a prolonged litigative process. That apart petitioner has incurred legal fees and expenses, the fees of the Arbitrator and other expenses incurred in connection therewith, therefore respondent is liable to pay the costs to the petitioner as envisaged under Section 31A of the 'Act', which are quantified at Rs. 10 lakhs.
f) The petitioner shall be entitled to:
i. Loss of stocks = Rs. 2, 84, 869.43.
ii. Loss of profts = Rs. 1, 53, 96, 488
iii. Costs = Rs. 10, 00, 000.
iv. Total = Rs. 44, 883, 531. The
same amount is to be deducted by the amount to which the respondent is entitled i.e., Rs. = Rs. 72, 45, 021. Therefore, the total amount payable now to the petitioner by the Respondent = Rs. 3,76,38,510 (Three Crores Seventy-Six Lakhs Thirty-Eight Thousand Five Hundred and Ten).
g) Interest:Arb P. no. 6/2023 Page 2 of 5
The matter pertains to a commercial activity, in terms of Section 31 (7) (b) of the 'Act', interest @ 2% higher than the current rate of interest prevalent can be awarded but keeping in view the facts and circumstances, this Tribunal is inclined to award simple interest @ 12% per annum from the date of award till the payment to the petitioner."
It appears that appellant is the owner of a five storied commercial building situated at Main Road Khanabal. The respondent has been running his business in the ground floor of the said building pursuant to an agreement entered into between the parties. During the currency of the agreement a dispute arose between the parties and in terms of the agreement the parties had to resort to the arbitration. In this connection, initially a petition under Section 9 of the J&K Arbitration and Conciliation Act, 1997, for short Act, was filed by respondent for grant of interim relief before the learned Principal District and Sessions Judge, Anantnag, which was dismissed in terms of order dated 07.02.2020. Subsequently, a petition under Section 11 (6) of the Act for appointment of Arbitrator was filed by the appellant bearing AP no. 08/2019 which was taken up for consideration along with Arbitration Appeal no. 04/2020 filed against the order dated 07.02.2020 of learned Principal District and Sessions Judge, Anantnag.
This Court in terms of order dated 24.09.2021, while holding that the case involves arbitral issues and needs to be referred to an independent arbitrator, appointed Hon'ble Mr Justice Mohammad Yaqoob Mir, Former Chief Justice of Meghalaya High Court as the Arbitrator to consider the issues involved notwithstanding the order dated 07.02.2020 passed on an application under Section 9 by the Principal District Judge, Anantnag.
The learned Arbitrator entered upon the arbitral proceedings and after taking into consideration all the material placed before him passed an Award dated 21.01.2023 which is impugned in the instant petition.
Learned counsel for the appellant submits that the impugned award being manifestly in contravention to the applicable law cannot be allowed to run to the prejudice of the appellant as the same is working harshly against the interests of the appellant. Learned counsel further submits that the learned Arbitrator has traversed beyond the scope of arbitration by granting the other side a relief which he was not entitled to and which was not even covered by the subject. Learned counsel further submits that the principles of grant of interim relief are favouring the appellant and in case the same is not granted it will put the Arb P. no. 6/2023 Page 3 of 5 appellant to an irreparable loss which cannot be compensated later on by any means whatsoever. In support of his submissions, the learned counsel referred to and relied upon the judgment delivered the High Court of Judicature at Bombay in case titled Kishore N Shah and others v. Urban Infrastructure Trustees Limited and others and Ecopack India Paper Cup Private Ltd., v. Sphere International reported as 2018 SCC online Bomb 540.
Learned senior counsel for the respondent, on the other hand, while defending the impugned award submits that the parties are bound by the terms of the Award and the learned Arbitrator has appreciated the facts of the case in conformity with the provisions of the Act. Learned senior counsel for the respondent submits that the matter in issue is governed by the provisions of the State Act of 1997, read with clause 13 of the Jammu and Kashmir Reorganization Act, 2019, (Removal of Difficulties Orders, 2019-2020).
Learned senior counsel further submits that the impugned award is a money decree, therefore, the appellant is required to deposit a security amount before the court if the court contemplates to pass any interim relief in the matter.
Considered the submissions made.
There is no dispute to the fact that agreement was made in terms of the Act of 1997, appointment of arbitrator and arbitration proceedings have been initiated and culminated in terms of the Act of 1997, as such, in terms of Clause 13 of the Jammu and Kashmir Reorganization Act, 2019 (Removal of Difficulties Orders, 2019-2020), the instant matter is covered under the provisions of the Act of 1997.
The Hon'ble Apex Court in case titled Hindustan Construction Company Ltd and another v. Union of India reported as 2020 (17) SCC 324, has held that the assumption that an arbitral award upon being challenge under Section 34 gets automatically stayed or suspended is wholly incorrect. It would be profitable to reproduce paragraphs 33 and 34 of the judgment supra herein, thus:
"33. To state that an award when challenged under Section 34 becomes unexecutable merely by virtue of such challenge being made because of the language of Section 36 is plainly incorrect. As has been pointed out hereinabove, Section 36 was enacted for a different purpose. When read with Section 35, all that Section 36 states is that enforcement of a final award will be under the CPC, and in the same manner as if it were a decree of the Court."Arb P. no. 6/2023 Page 4 of 5
Having heard learned counsel for the parties and gone through the material made available and on appreciating the law on the subject, the court is satisfied that the appellant has succeeded in making out a prima facie case for grant of ad-interim relief. However, since the impugned award is a money decree and in terms of the law laid down by the Hon'ble Apex Court, as taken note of hereinbefore, the impugned award deserves a conditional suspension. Accordingly, it is directed that the operation of the impugned award stay, till next date of hearing before the Bench, subject to the condition that Bank Guarantee of 25% of the total awarded amount is deposited by the appellant before the Registry of this Court, within a period of six weeks, accompanied with an undertaking that in the event he fails in the instant appeal, he shall be liable to satisfy the impugned award in its entirety.
List for consideration on 17.5.2023.
(Moksha Khajuria Kazmi) Judge SRINAGAR 16.03.2023 Amjad lone, Secretary Whether the order is speaking: Yes Arb P. no. 6/2023 Page 5 of 5