Delhi District Court
Ingram Micro India Pvt Ltd vs Pioneer Enterprises (I) on 21 October, 2021
In the Court of Shri Sanjiv Jain, District Judge,
(Commercial Court-03), Patiala House Courts New Delhi
OMP (Comm) No. 129/2019
Ingram Micro India Pvt Ltd
Godrej I. T. Park, B-Block,
5th Floor, Pirojshanagar L.B.S.
Vikhroli West, Mumbai. .... Petitioner
versus
Pioneer Enterprises (I)
C-7 & G-3, Shadipur Metro Station,
New Delhi. ....... Respondents
Date of institution : 15.07.2019 Date of reserving judgment : 24.09.2021 Date of decision : 21.10.2021 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called the 'Act') challenges the award dated 15.04.2019 passed by the Arbitrator Sh. Krishna Chandra Dubey, whereby, a sum of Rs. 14,81,745/- along with interest @ 12% per annum was awarded in favour of the respondent and against the petitioner.
Brief facts:
2. The facts leading to this petition are that the petitioner is OMP Comm No. 129/2019 Page No.1 of 40 the part of a multinational conglomerate having expertise in technology solutions, mobility, cloud and supply chain solutions, distributions etc. It distributes the products received from the manufacturers / OEM / vendors in the original manufacturer packing. It had been dealing with the respondent since 2001 for the sale and distribution of the products. It used to raise the invoices and had maintained a ledger account of the respondent. The terms & conditions stipulated in the invoices are as under:
"Acceptance of Goods & Services under this invoice or making part or full payment against this invoice or only acknowledgment of this invoice is treated as acceptance of the terms & conditions printed overleaf and acceptance of sales terms & conditions of Ingram Micro.....".
Products under warranty will be either repaired or replaced at Ingram Micro India Limited (IMIL) sole discretion and according to the standard warranty policy of the manufacturer.
Customer are required to approach the ASP's for those products for which manufacturers are supporting directly.
3. It is alleged that the respondent regularly defaulted in making payments against the invoices towards the products supplied by the petitioner and the cheques issued by the respondent got dishonored time & again. As on 12.02.2013, Rs. 23,92,400.24 remained as outstanding. After much insistence, the respondent issued two cheques for Rs. 9,04,025.25 and Rs. 7,11,655.30, total amounting to Rs. 16,15,680.55 assuring that the cheques on presentation would be honoured. It also assured that the balance payment of Rs. 7,77,219.69 would be made OMP Comm No. 129/2019 Page No.2 of 40 soon. However, one of the cheques for Rs. 9,04,025.25 got dishonored, when presented on 15.02.2013 and a sum of Rs. 16,81,744.94 remained outstanding for payment. It then sent an email dated 02.05.2013 requesting the respondent to clear the outstanding dues but the respondent vide mail dated 02.05.2013 for the first time imputed the allegations that it has supplied the fake and expired products to it. It is stated that before the mail dated 02.05.2013, there was no complaint from the respondent about the supply of fake, spurious and duplicate products. It is stated that this issue was also raised by the respondent with the manufacturer HP and the mails used to be sent to it for information. It is stated that it vide mail dated 10.05.2013 and letter dated 11.06.2013 refuted the allegations of the respondent alleging to be baseless and afterthought and called upon it to make the payment of the entire outstanding amount stating that the products supplied by it were always in original manufacturer packing and the customer was expected to check the products, their packaging etc before accepting their delivery and the distributor has no role or responsibility for the defects / non performance of the products and the grievances need be taken up directly with the manufacturers / OEM / vendors since such products are covered under the warranty provided by the manufacturers. It is stated that the respondent on receipt of the letter, on 05.08.2013 and 04.09.2013 made the part payment of Rs. 2,00,000/- vide cheque no. 318461 dated 05.08.2013 and no. 382241 dated 04.09.2013. Thus, as on 05.09.2013, total OMP Comm No. 129/2019 Page No.3 of 40 outstanding amount payable by the respondent reduced to Rs. 14,81,745/-. It is stated that on much requests of the petitioner, on 24.09.2013, the respondent issued a cheque no. 001360 dated 24.09.2013 for Rs. 14,81,745/- towards the clearance of the balance outstanding and it was duly honoured on 26.09.2013.
4. It is alleged that the respondent after four days of the realization of amount, sent a letter dated 30.09.2013 alleging that it seems that its misplaced blank cheques favoring the petitioner are in the possession of the petitioner. It thus requested it to return the same immediately. It also requested that in case, the petitioner does not possess any of its cheques, it may confirm for its record. It is alleged that in the said letter, no reference of the cheque no. 001360 was made nor it was alleged that the said cheque was a security cheque. It is alleged that the respondent vide letter dated 28.10.2013 profounded an altogether new theory that the petitioner unauthorizedly encashed the security cheque issued by it. The petitioner then vide dated 04.12.2013 responded that the issue relating to fake / expired cartridges raised by the respondent was duly addressed by it vide letter dated 11.06.2013 and thereafter, it had made the balance payment by way of cheque. It is stated that after about six months, on 24.06.2014, the respondent issued a legal notice complaining about 50 cartridges, which were supplied vide invoice no. 50628881 dated 16.11.2012 for Rs. 89,750/- but in OMP Comm No. 129/2019 Page No.4 of 40 the claims, it claimed Rs. 14,81,745/- towards the alleged counterfeit / fake / spurious supply of goods. It is stated that the petitioner replied to the notice on 25.07.2014 and on 12.09.2014, controverting the allegations and reiterating its stand so taken by it in the previous communications but the respondent, instead, on 20.12.2014 filed a Civil Suit before the High Court of Delhi for recovery of Rs. 16,81,745/- accusing it to have supplied fake / expired / counterfeit cartridges without mentioning the number of cartridges giving an impression that whole lot of cartridges supplied under the invoice dated 16.11.2012 was fake / expired / counterfeit. It is stated that on its application under Section 8 of the Act, the High Court rejected the Civil Suit and referred the matter to be adjudicated in terms of the arbitration clause contained in the invoice. It is stated that on 14.06.2017, the respondent filed the claim petition before the Arbitrator for recovery of Rs. 28,06,745/- (Rs. 16,81,745/- towards alleged counterfeit / fake / spurious supply of goods and Rs. 11,25,000/- towards the interest @ 18% per annum w.e.f. 26.09.2013, the day the cheque of Rs. 14,81,745/- was encashed).
5. It is alleged that initially, the respondent had raised the grievance by filing a complaint with HP regarding the quality of 50 cartridges vide invoice dated 16.11.2012 but later, it cooked up a false story and filed the Civil Suit alleging the cartridges supplied by it as spurious, fake and expired.
OMP Comm No. 129/2019 Page No.5 of 406. It is stated that the petitioner defended the claims and filed its reply on 13.07.2017 to which, the respondent filed its rejoinder on 06.02.2018. After the admission and denial of documents, the Arbitrator framed the issues as detailed in para 3.23 of the petition. The respondent examined Sh. Puneet Singhal as CW1, who exhibited the documents Ex. CW1/2 to Ex. CW1/32 and the petitioner examined Ms. Priya Gupta as RW1, who exhibited the documents Ex. RW1/A to Ex. RW1/F. After hearing the final arguments, the Arbitrator passed the impugned award.
7. The petitioner challenged the award on the following grounds:
A. That the award is bad in law and against the public policy having been passed in contrast to the settled judicial propositions of law. It is in conflict with the basis notions of justice and is based on conjectures and surmises and is also against the observations made by the Arbitrator in para 28 to the effect ".....There is no quantification and specification of goods or their costs pleaded or proved. Mere statement of expired / counterfeit goods or rebuttal thereof may hardly achieve any conclusion......".
B. That the Arbitrator erroneously held while deciding issue no. 1, 2 & 3 in para 26 & 27 that the cheque no. 001360 dated 24.09.2013 was a security cheque merely on the basis of the bald statement of the claimant / respondent without being substantiated by any supportive document. It is stated that onus was on the respondent to prove that it was a security cheque, which the respondent failed to prove but the Arbitrator completely ignored the fact that even post realization of cheque, the respondent had never raised a dispute that the cheque was a security cheque, which fact is OMP Comm No. 129/2019 Page No.6 of 40 evident from the letter dated 30.09.2013 Ex. CW1/30 and dated 10.10.2013 Ex. RW1/C, wherein, it had stated about some misplaced blank cheques. It is stated that the Arbitrator wrongly held that it was a security cheque, though, it was towards the acknowledgment of the existing liability / debt of Rs. 14,81,745/- and further CW1 has admitted his signature on the cheque. The respondent also raised a baseless suspicion as to why the cheque was deposited for encashment in Mumbai instead of regular practice of being deposited in New Delhi. It is stated that RW1 has deposed that since the matter at the relevant time was being dealt by the legal team of the petitioner based at Mumbai, the said cheque was deposited in Mumbai. Even otherwise, Arbitrator had no reason or occasion to raise such like suspicion, when the account of the petitioner was being maintained at Mumbai having Pan-India operations.
C. That the Arbitrator erroneously opined in para 34 that it is an unfair business practice to encash a security cheque given by the other party. It is stated that in this case, the respondent failed to prove that the goods supplied were the counterfeit / fake / spurious goods.
D. That while deciding issue no. 4 & 5, the Arbitrator wrongly held in para 28 that these issues stand partly proved and go in favour of the respondent. It is stated that the findings are in contravention of the own observations of the Arbitrator, who has stated that "there is no quantification and specification of goods or their costs pleaded or proved. Merely statements of expired / counterfeit goods or rebuttal thereof may hardly achieve any conclusion. No party has tried to bring into, any inspection or assessment report of those goods from any independent agency". It is stated that it was for the respondent to prove that the goods were spurious / counterfeit / expired, which could only be ascertained / proved by filing appropriate inspection / technical / tests / assessment report or by examination of technical experts, which the respondent failed. The Arbitrator erred in relying upon the bald statement of the respondent that NTPC and end users had made the complaints relating to counterfeit / expired items to it and relied on the already denied mails Ex. CW1/19 to Ex. CW1/27 as gospel truth, even after the failure of the respondent to examine any officials from NTPC or other end users.
OMP Comm No. 129/2019 Page No.7 of 40E. That the Arbitrator failed to consider that CW1 in his cross examination has admitted that the respondent had not used the words expired / spurious / counterfeit in the mail dated 02.05.2013 Ex. CW1/20 and that the NTPC and other customers never made the complaint about the fake / expired cartridges and that HP in its response to the mail dated 02.05.2013 has not confirmed that the cartridges were counterfeit. It is stated that the respondent instead following up with the HP levelled the unsubstantiated charges on the petitioner.
F. That the Arbitrator failed to appreciate that on 15.12.2012 the respondent had issued a letter to Standard Chartered Bank acknowledging therein that the goods delivered by the petitioner were in good condition but later, it completely departed and chose to file this claim before the Arbitrator on the same invoice terming the cartridges as duplicate, fake and spurious.
G. That the Arbitrator failed to appreciate that in the claim petition, the respondent had claimed Rs. 28,06,745/- (Rs. 16,81,745/- for the alleged counterfeit / fake / spurious supply of goods and Rs. 11,25,000/- towards interest w.e.f. 26.09.2013) but in the evidence CW1 had claimed Rs. 8,81,742/- (Rs. 84,237/- towards the counterfeit goods and Rs. 7,97,505/- towards the expired goods).
H. That the Arbitrator failed to appreciate that the petitioner being the distributor of the products of the manufacturers has no role or responsibility for the defects and non performance of the products and any product related grievances are required to be addressed to the manufacturers, if any, which fact, the petitioner had apprised in its letter dated 11.06.2013. The respondent, thereafter, made the part payment of Rs. 2,00,000/- and further issued cheque no 001360 dated 24.09.2013 for Rs. 14,81,745/- towards the clearance of the balance outstanding amount.
I. That the Arbitrator did not appropriately deal with the fact that the respondent failed to prove on record the originals of the documents referred inspite of the question put forth on 27.07.2018 to CW1 by the Arbitrator, who in response thereto had stated that he cannot say right now but may bring the record and can make the statement on the next date of hearing but no such record / originals of the executed documents were OMP Comm No. 129/2019 Page No.8 of 40 ever filed on record by the respondent.
8. On getting notice of the petition, respondent filed its reply denying the averments made in the petition and stated that the petition does not lie within the four corners of Section 34 of the Act. No facts or submissions have been made by the petitioner that it was under some incapacity or that the arbitration agreement was not valid in law or that it was not given proper notice of the proceedings or was unable to present its case or the award dealt with the dispute not contemplated by or the dispute not falling within the terms of the submission to arbitration or that it contains the decisions on matters beyond the scope of the submission to arbitration or the subject matter of dispute was not capable of settlement by arbitration under the law for the time being in force or the award is in-conflict with the public policy of India. It is stated that the petition is in the nature of appeal calling upon the Court to reappreciate the evidence on record and come to a different conclusion, which is not permissible under Section 34 of the Act. It is stated that the impugned award is in perfect harmony with the law and the Arbitrator has conducted himself judiciously. It is stated that the Arbitrator is the creature of the agreement and is the final arbiter of the dispute between the parties and it is not open to challenge the award on the ground that the Arbitrator has drawn his own conclusions or has failed to appreciate the fact by purporting to construe the contract. It is stated that the Court cannot take upon itself the burden of saying that it was contrary OMP Comm No. 129/2019 Page No.9 of 40 to the contract or beyond jurisdiction. If, on a view taken of a contract, the decision of the Arbitrator on certain amount awarded is a possible view though, perhaps not the only view, the award cannot be examined by the Court. The Arbitrator is the Sole Judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a Judge on the evidence before the Arbitrator.
9. It is stated that onus of proving that the cheque in question was not a blank security cheque was upon the petitioner as evident from issue no. 1 but the petitioner did not lead any evidence in this respect. The only evidence produced by the petitioner was of its witness Ms. Priya Gupta, DGM (Legal), who had joined the service in 2016, whereas, the matter pertained to 2012 and admittedly, she had no personal knowledge of the case. Her deposition was as per the information received / derived from the records and the documents maintained by the petitioner. It is stated that the petitioner ought to have produced a person, who had dealt with the matter at the relevant time, which it failed to do. It is stated that the respondent had deposited the blank cheque with the petitioner before it had commenced the business. It was agreed upon that the payment would not be on invoice basis but on a running account basis and as such, it had been making the payments for the goods received from the petitioner. It had a OMP Comm No. 129/2019 Page No.10 of 40 credit limit of Rs. 75,00,000/- with the petitioner. Since, it was making timely payment to the petitioner, the petitioner enhanced its limit to Rs. 1,50,00,000/-. It is stated that the relations between them were good until the petitioner supplied the goods in the year 2012. It is stated that the respondent had sold the products received from the petitioner to its customers without knowing that the said products were counterfeit / expired or the packages / cartridges have different expiry dates. It is stated that it had brought this fact to the notice of the petitioner through various communications. It is stated that since, it was purchasing the products in bulk from the petitioner, it was not possible to check all the products. Even, checking the sealed products was not feasible, since, once the seal is broken, the customer to whom it is to be sold will not purchase the same. It is stated that the petitioner being the supplier of the products cannot shun its responsibility towards its customers including the respondent. It is stated that the respondent in good faith sold the products received from the petitioner under the aforesaid invoices to its customers without knowing that the goods supplied by the petitioner under the above invoices were counterfeit / expired. When, the customers / NTPC complained and returned the defective goods, it inspected the goods and discovered that the packing on the products had a different expiry date and the cartridges had the different expiry dates. It had brought this fact to the OMP Comm No. 129/2019 Page No.11 of 40 notice of the petitioner, manufacturer and the bank. Since, an amount of Rs. 51,33,526/- was struck, the petitioner entered into the talks with the respondent for settlement. It paid Rs. 34,51,781/- clearing the dues of the bank leaving the balance of Rs. 16,81,745/- and in a gesture of goodwill and good faith, it paid Rs. 2,00,000/- on 03.08.2013 & 04.09.2013 by RTGS. It is stated that the respondent did not voluntarily make the payment of Rs. 14,81,745/-. It, as a matter of practice had kept a signed blank cheque with the petitioner as a condition for commencing the business. It is stated that the petitioner unauthorizedly used the signed blank cheque to take the balance amount not due to it without prior intimation to the respondent. It is stated that the cheque was not encashed through the normal banking channels. The respondent had lodged its protest with the petitioner but the petitioner instead honestly sorting out the matter denied the same.
10. It is stated that the respondent stopped the payment because of the expired / counterfeit / repacked goods supplied by the petitioner, which were taken by it in good faith. As a consequence thereof, NTPC stopped the payment of the respondent. When the respondent raised this issue, HP ordered for the investigation but it was not communicated of the result. Thus, the petitioner cannot feign ignorance. It is alleged that the petitioner on two occasions had tried to throttle the business of OMP Comm No. 129/2019 Page No.12 of 40 the respondent by asking TDAI not to engage any commercial dealing with the respondent, so that it agrees to its illegal demand and withdraws the proceedings but when HP intervened, billings were resumed by the members of TDAI with the respondent. Section 60 of the Evidence Act and Rule 9 & 19 of Chapter 12 of Delhi High Court Rules are referred including the cross examination of RW1 and CW1 and it is stated that the petitioner cannot be absolved from its responsibility in relation to the products it sells as any mischief on the packing / product can be done while the product is in its power and possession. It is stated that it was a blank signed cheque, which was kept as security by the respondent on which the particulars were filled by the petitioner before it presented to the bank without due authority from the respondent. It is stated that since the petitioner did not deny the photocopies at the time of exhibition, they are deemed admitted as held in the case of R. V. E. Venkatachala Gounder Vs. Arulmigu Veswesarawami & V. P. Temple, 2003 AIR (SC) 4548.
11. I have heard Ld. Counsel Sh. Pulkit Srivastava for the petitioner and Ld. Counsel Sh. Amitabh Marwah for the respondent. The parties also filed the written synopsis supported with the judgments.
12. Ld. Counsel for the petitioner reiterated what has been OMP Comm No. 129/2019 Page No.13 of 40 stated in the petition. He contended that the Arbitrator has passed the award in contradiction to his own findings / observations as made in para 28 of the award to the effect that there is no quantification and specification of goods or their costs pleaded or proved; mere statement of expired / counterfeit goods or rebuttal thereof may hardly achieve any conclusion; no party has tried to bring into any introspection or assessment report of those goods from any independent agency. Ld. Counsel stated that the respondent did not produce the defective goods before the Arbitrator to substantiate its claim. The Arbitrator erroneously assumed the goods to be defective and passed the award merely on the plea of the respondent. This falls foul of the fundamental policy of India legal system and stands counter to the basic notions of justice and equity. Ld. Counsel stated that the Arbitrator failed to appreciate that the respondent had taken contradictory stand in making different claims under various pleadings. He referred the claim and the testimony of CW1 and stated that the Arbitrator ignored the fact that even post realization of the cheques, the respondent never raised a dispute alleging that the cheque was the security cheque. Ld. Counsel contended that the respondent miserably failed to lead any evidence to prove that the cartridges were spurious / counterfeit / fake / repacked / expired nor it placed the inventory of these cartridges lying with it till the date of filing of claim. Ld. Counsel stated that the respondent never OMP Comm No. 129/2019 Page No.14 of 40 returned the defective cartridges to the petitioner, which itself put a question mark on the genuineness of the claim.
13. Ld. Counsel stated that in the legal notice dated 26.06.2014, the complaint was merely restricted to 50 cartridges bearing part no. C-4836A, which were supplied vide invoice no. 50-50628881 dated 16.11.2012 for a value of Rs. 89,750/-, which the Arbitrator totally ignored. Ld. Counsel stated that the respondent as an afterthought indulged in the act of manipulation and inflated the claim at an exorbitant figure of Rs. 16,81,745/-. Ld. Counsel referred the case of Patel Engg. Ltd Vs. Nnorth Eastern Electric Power Corporation Ltd (2020) 7 SCC 167 to contend that the award is patently illegal, if it is contrary to the substantive provision of law; or provision of the 1996 Act or the terms of the contract. He also referred the case of Dyna Technologies Pvt Ltd Vs. Cromptom Greaves Ltd (2019) 20 SCC 1 to contend that inadequate reasoning has been given in the award on the approval of the respondent without appropriately considering the complexity of the issue involved therein and the award is unintelligible and cannot be sustained.
14. Ld. Counsel for the respondent per contra reiterated what has been stated in the reply to the petition. He stated that the award passed by the Arbitrator is perfectly a reasoned award after considering the evidence and the submissions of the OMP Comm No. 129/2019 Page No.15 of 40 parties. In support of his contentions, he placed reliance on the case Food Corporation of India Vs. Shanti Cereals (P) Ltd, 2011 (1) RAJ 413 (Del) and Dyna Technologies Pvt Ltd Vs. Crompton Greaves Ltd, 2020 (1) SCALE 121 to contend that Section 34 of the Act limits a challenge to an award only on the grounds provided therein or as interpreted by the various Courts. It should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Ld. Counsel stated that Section 34 of the Act cannot be equated with a normal appellate jurisdiction. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.
15. Ld. Counsel stated that the petitioner is the first tier distributor of the products manufactured and marketed by the computer manufacturers. The respondent is the reseller, who cannot purchase directly from the manufacturers but has to purchase from the first tier distributors. Ld. Counsel stated that the respondent since 1994 had been purchasing the products from Godrej EBE Division. It was subsequently taken over by the petitioner and the purchasing by the respondent continued OMP Comm No. 129/2019 Page No.16 of 40 as before. Ld. Counsel stated that the petitioner has a practice of keeping the duly signed blank cheque of the reseller including that of the respondent as security for repayment of the goods received by the reseller. The Arbitrator in para 34 & 35 of the award has observed that it is an unfair business practice to encash a security cheque given by the other party. Ld. Counsel stated that the dispute apparently is the manner in which, the petitioner encashed the security cheque in an extra ordinary manner by banking the cheque at Mumbai Branch of the bank instead at the branch at Delhi Region where financial transactions used to be carried on between the parties. It was unfair on the part of the petitioner to encash a cheque without the knowledge of the claimant / respondent. Ld. Counsel stated that the claimant / respondent had already paid Rs. 34,15,781/-. After the payment of Rs. 2,00,000/-, it were only Rs. 14,81,745/-, which were retained by the claimant / respondent. Had there been any grievance of the petitioner, it would have raised the same at the proper forum in a legal proceeding, which the petitioner did not raise as stated by RW1. The Arbitrator has observed that in a business transaction, both the parties are considered to be on equal footing. Ld. Counsel stated that the performance of the respondent was excellent and for this reason, its credit limit was enhanced to Rs. 1,50,00,000/- from Rs. 75,00,000/-. Their business relations were very good till the year 2012. Their relations became sour OMP Comm No. 129/2019 Page No.17 of 40 when the petitioner supplied the counterfeit and expired products to the respondent, which fact it came to know from its customers including NTPC, who complained and returned the defective goods. Upon inspection also, it discovered that the packaging had a different expiry date than that on the cartridge. Ld. Counsel stated that this issue was brought not only to the notice of the petitioner but also to the manufacturer HP through mails and letters. An investigation was also ordered by the HP but the respondent was not informed of the outcome. Ld. Counsel referred para 22 of the award to contend that RW1 was non cooperative and evasive during the cross examination. He referred the case of Bhanumati Jaisukhbhai Bhuta Vs. Ivory Properties & Hotels Pvt Ltd, 2021 (1) RAJ 633 /2020 (4) ArbLR 556. Ld. Counsel stated that it was not possible to check each & every packets in the whole sale dealing. The packets cannot be opened as the customers would not accept the same. The Arbitrator in para 18 has observed that RW1 has admitted that the cartridges can be repacked and re-boxed. The Arbitrator in para 30 has held that the petitioner is the trading link between the far placed manufacturer. It has the responsibility of original and usable goods to be supplied. In case of any irregularity, it owes the responsibility. Ld. Counsel stated that the respondent had not made the payment of Rs. 14,81,745/- but the same was recovered by the petitioner by encashing a security cheque of the respondent without the knowledge and OMP Comm No. 129/2019 Page No.18 of 40 consent of the respondent. Ld. Counsel contended that the petitioner used coercive measures to capitulate to its illegal demands and asked the members of TDAI not to engage in commercial dealing with the respondent. When HP intervened, the billing resumed by the members with the respondent.
16. Ld. Counsel further argued that the grievance of the petitioner that the respondent had enhanced its claims against the petitioner was dealt by the Arbitrator in para 34, wherein, he held "Be that as it may the statement of claim has brought into the dispute as a whole for adjudication. Both the parties have pleaded and rebutted as per their version. Hence, the same cannot be said to be beyond the reference".
17. Ld. Counsel stated that the respondent still has in its possession all the expired cartridges supplied by the petitioner. With regard to the counterfeit cartridges, the respondent has only a sample. The remaining cartridges had been supplied to its customers. Ld. Counsel stated that the respondent has suffered loss as many of its customers declined to have further dealing with it. Ld. Counsel submitted that there is no illegality in the impugned award and the petition deserves to be dismissed.
18. I have given my thoughtful consideration to the rival OMP Comm No. 129/2019 Page No.19 of 40 contentions and perused the award and the documents as well as the case laws supra.
19. Section 34 of the Arbitration and Conciliation Act reads 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 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 OMP Comm No. 129/2019 Page No.20 of 40 force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation- I For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of Indian law;
iii) It is in conflict with the most basic notions of morality or justice.
Explanation-II- 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 merits of the dispute.
[2 (A) 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.
20. Normally, the principles are that the decision of the Arbi-
trator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, OMP Comm No. 129/2019 Page No.21 of 40 the award will not call for interference by the court in exercise of the power vested in it.
21. In Sudarsan Trading Co. Vs. Government of Kerala & Anr, 1989 AIR 890, it was held that Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in the case. By purporting to construe the contract, the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
22. In the case of Hiedelberg Cement India Ltd Vs. The In-
dure Pvt Ltd, OMP (Comm) No. 413/2019 decided on 29.01.2020, it was held that law of judicial review and interfer- ence in proceedings under Section 34 of the Act is no more res integra. Reference of the case Associate Builders v/s Delhi De- velopment Authority, (2015) 3 SCC 49 was made, where the Supreme Court has held as under:-
"19. When it came to construing the expression the public policy of India contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : held: (SCC pp. 727-28 & 744-45, paras 31 & 74) OMP Comm No. 129/2019 Page No.22 of 40
31. Therefore, in our view, the phrase public policy of India used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be 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.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.
74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if 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 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 O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbitration, or it contains decisions on matters beyond the scope of the OMP Comm No. 129/2019 Page No.23 of 40 submission to arbitration.
(2)The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3)The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India;
or (c) justice or morality; or (d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and
(b) Section 16(6) of the Act.......
44. It was held that in the recent judgments, the Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held as under:-
35. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of Associate Builders (supra), I.e., the fundamental policy of Indian law would be relegated to the Renusagar understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as OMP Comm No. 129/2019 Page No.24 of 40 under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).
36. It is important to notice that the ground for interference insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the most basic notions of morality or justice.
This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.
38. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub- section (2A), added by the Amendment Act, 2015, to Section
34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within the fundamental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
39. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to OMP Comm No. 129/2019 Page No.25 of 40 do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
40. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent illegality on the face of the award.
41. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).
42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under public policy of India, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.
45. It was also observed that recently, in Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as OMP Comm No. 129/2019 Page No.26 of 40 under:-
55. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for - see Associated Construction v. Pawanhans Helicopters Limited. (2008) 16 SCC 128 at paragraph 17.
56. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd. v.
NHAI 2019 SCC OnLine SC 677, after the 2015 Amendment Act, this Court cannot interfere with an arbitral award on merits. "
23. In the backdrop of the above, let me now examine the ob-
jections against the impugned award agitated by the petitioner, vis-a-vis the reply of the respondent, in support of the award.
24. A perusal of record reveals that the petitioner, having expertise in technology solutions, mobility, cloud and supply chain solutions etc used to distribute the products received from the manufacturers / OEM / vendors. It had been dealing with the respondent since 2001. It used to raise the invoices and had maintained a ledger account of the respondent. As per the condition stipulated in the invoices, the products under warranty would be repaired / replaced at the sole discretion of the petitioner according to the standard warranty policy of the manufacturer. The record shows that as on 12.03.2013, Rs.OMP Comm No. 129/2019 Page No.27 of 40
23,95,400.24 were outstanding against the respondent. To discharge its liability, the respondent issued two cheques for an amount of Rs. 16,15,680.55 but on presentation, one of its cheque got dishonoured and a sum of Rs. 16,81,744.94 remained outstanding against the respondent. When the petitioner requested the respondent vide mail dated 02.05.2013 to clear the outstanding dues, the respondent vide mail of the same date brought to the notice of the petitioner that it has supplied the fake and expired products to it. It also raised this issue with the manufacturer HP.
I am not in agreement with the contention of the petitioner that the customer was expected to check the products / their packaging before accepting their delivery and the distributor has no role or responsibility for the defects or the non performance of the products. If any defect regarding the fake and expired product is brought to the notice of the distributor, the distributor has to bring it to the notice of the manufacturer immediately and address the grievances of the vendor. I find force in the contention of the respondent that since it was purchasing the products in bulk from the petitioner, it was not possible to check all the products. Even checking the sealed products was not feasible. Once, the seal is broken, the customer to whom it is to be sold would not purchase the same. That being the position, the petitioner being the supplier of the products cannot shun from its responsibility towards its vendors OMP Comm No. 129/2019 Page No.28 of 40 / resellers / respondent. In the instant case, the respondent had been purchasing the materials from the petitioner since 2001. Their relations were very good till the year 2012. It is not the case that the respondent during that period had ever raised dispute about the quality of the products supplied by the petitioner. The dispute arose when the customers of the respondent including NTPC complained about the supply of the counterfeit or expired products / cartridges. There are specific averments of the respondent / its witness that when its customers complained and returned the defective goods, they inspected the goods and discovered that the packaging on the goods had a different expiry date than the expiry date on the products. It is not the case that the respondent had not brought this fact to the notice of the manufacturer i.e. HP. Record rather shows that HP had ordered for an investigation but surprisingly it did not inform the respondent about the outcome of the investigation.
25. It is also evident from the record that the respondent did not have the direct dealing with the manufacturer. It was the petitioner, which used to supply the products of the manufacturer to the respondent. The record shows that initially the respondent had a credit limit of Rs. 75.0 lakhs. Since, the dealing of the respondent with the petitioner was good, it enhanced the limit to Rs. 1.50 crores. Had there been sour OMP Comm No. 129/2019 Page No.29 of 40 relations between the petitioner and the respondent, the petitioner would not have enhanced the credit limit of the respondent. The record shows that the respondent had sold the products submitted by the petitioner to its customers without doubting that the products would be the counterfeit / expired products. When this fact came to the knowledge / notice of the respondent, it took the action, raised the dispute and withheld the payments.
26. The record shows that the respondent used to make on account payments to the petitioner against the invoices through cheques or RTGS. It is not in dispute that the respondent had received the goods of the value of Rs. 14,81,745/- against which, it had to make the payment but when the respondent came to know of the supply of counterfeit / expired goods, it withheld the payment and sent an email to the petitioner on 02.05.2013 highlighting this fact. Although, the petitioner has claimed that the respondent had issued the cheque against the balance outstanding but the version of the respondent is that the petitioner as a matter of practice had taken a signed blank cheque as a security from it, which it encashed. The record also shows that on this cheque, date of 24.09.2013 i.e. after May 2013 has been put. I find force in the contention of the respondent that earlier all the cheques used to be presented in the bank at New Delhi but this cheque was presented in the OMP Comm No. 129/2019 Page No.30 of 40 bank at Mumbai for encashment.
In this case, the Arbitrator has discussed the testimony of RW1, who had shown total ignorance as to when the cheque was handed over by the respondent to the petitioner and also about the series of the cheque or whether it was only signed and was not filled up by the respondent. He held that RW1 being evasive to the pointed question even after the deposition in the affidavit with regard to date & amount of cheque strengthens the version of the respondent that it was a security cheque and it was not filled up by it. He also observed that when the cheque had allegedly been issued on 24.09.2013 to clear the remaining amount after the payment of Rs. 2.0 lakhs on 03.08.2013 & 04.09.2013, what was the need of banking the cheque in Mumbai instead in Delhi. He did not believe the version of the respondent that since the Legal Cell of the petitioner has settled the dispute and the cheque was handed over by the respondent to the petitioner out of the settlement, so it was presented in Mumbai. Had the respondent issued the cheque to clear the dues in normal course, what made the Legal Cell of the petitioner coming in picture, which remained unexplained. The Arbitrator has observed that in this case, the respondent has not disputed of its liability to pay the amount of the cheque but has disputed its liability on the ground that the goods were counterfeit / expired. The Arbitrator has categorically held that the petitioner cannot be absolved from its liability in case the OMP Comm No. 129/2019 Page No.31 of 40 goods are expired or counterfeit or repacked. The Arbitrator has rightly observed that it is an unfair business tactic to encash a security cheque given by the other party. The dispute apparently is the manner in which the petitioner encashed the security cheque in an extra ordinary manner by banking the cheque at Mumbai Branch instead of the branch at Delhi Region where financial transaction used to be carried on by the parties. It is unfair on the part of the petitioner to encash the cheque without the knowledge of the respondent. He observed that the respondent had already paid Rs. 34,15,781/-. It had made further payment of Rs. 2.0 lakhs. The dispute / complaints was raised / made on 05.05.2013. When the respondent had already raised the dispute about the supply of spurious materials, there would not have been any question of issuing the cheque for the balance amount to the petitioner. There is no record to indicate that the petitioner had addressed the grievances of the respondent. It rather shows that when the respondent refused to make the payment against the spurious goods, the petitioner used the blank cheque given by the respondent as security, filled the amount and the date and got it encashed to realize its dues. The Arbitrator in para 18 of the award has held that RW1 has admitted that the cartridges can be repacked and re-boxed. He held that the petitioner is the trading link for the far placed manufacturer. It has the responsibility of the original and unusable goods to be supplied. In case of any OMP Comm No. 129/2019 Page No.32 of 40 irregularity, it owes the responsibility. In the instant case, as evident from the record, the plaintiff adopted all sorts of coercive tactics to capitulate to its demands. It had asked the members of TDAI not to have any commercial dealing with the respondent. It was only after the intervention of the manufacturer HP, the other members of TDAI resumed the dealing with the respondent. The Arbitrator has rightly held that it was unfair business tactic of the respondent to encash the security cheque given by the petitioner without the knowledge of the respondent. Had there been any grievance of the petitioner, it would have raised the same before the proper forum in a legal proceeding. He held that it is common in business that to start business with a company, the company asks the vendor to furnish guarantee. Taking security cheque is one of the mode of securing the amount of transaction between the parties.
27. In the instant case, admittedly, the respondent during the arbitral proceedings did not produce the expired / counterfeit cartridges supplied by the petitioner but for this, it has given an explanation inter alia that since it had only a sample and the remaining cartridges had been supplied to the customers, it did not produce the same before the Arbitrator. He has however stated that it has in its possession all the expired cartridges supplied by the petitioner. A perusal of mails exchanged OMP Comm No. 129/2019 Page No.33 of 40 between the parties would show that the petitioner instead inspecting the goods, simply refuted the allegations that it had supplied the counterfeit / spurious goods to the respondent. It was rather incumbent upon petitioner to check the goods and take immediate action. That being the position, non production of spurious / counterfeit goods or non examination of technical experts during the arbitral proceedings would not prove fatal to the case of the respondent / claimant. Further, the report of the investigations ordered by the manufacturer was not brought on record by the petitioner to substantiate its defence that the goods supplied were not spurious or counterfeit.
28. As regards issue of admissibility of documents. In the instant case, the Arbitrator has referred Section 9 of the Act and held that the arbitral proceedings are not strictly governed by the provisions of CPC and the Evidence Act. He has referred the case of Silor Associates SA Vs. BHEL, 2014 (2013) DLT 312 and R. V. E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami & V. P. Temple, AIR 2003 (SC) 4548 and held that in the instant case, the parties never pointed out as to which particular documents are admissible or inadmissible. General arguments have been extended on the principle of admissibility of documents which is not res-integra. He held that failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the OMP Comm No. 129/2019 Page No.34 of 40 document itself, which is sought to be proved being admissible in evidence.
29. The averments show that the petitioner had supplied the fake / expired goods to the respondent against invoices dated 17.04.2012, 28.07.2012, 28.09.2012 & 16.11.2012. The respondent had supplied the above goods to the end users. When the customers complained, the respondent discovered that the packaging have a different expiry date and the cartridges have a different expiry date. It immediately brought this fact to the notice of the petitioner and the manufacturer HP. Even then, it had made on account payment of Rs. 2.0 lakhs on 05.08.2013 & 04.09.2013.
30. The Arbitrator has also discussed the contention of the petitioner that initially, the dispute pertained to 50 cartridges under the invoice dated 16.11.2012 but later, respondent included the other goods supplied under other invoices. He held that in the statement of claims, the respondent has referred all the invoices for adjudication. So, it cannot be said that the same was beyond reference.
31. As regards contention that the respondent took a contradictory stand as it after four days of realization of amount against cheque no. 001360 dated 24.09.2013 for Rs.OMP Comm No. 129/2019 Page No.35 of 40
14,81,745/-, sent a letter on 30.09.2013 that its misplaced blank cheque favoring the petitioner is in possession of the petitioner and requested it to return the same immediately but later, vide letter dated 28.10.2013, it all together profounded a new theory that the petitioner unauthorizedly encashed the security cheque issued by it. It is true that the respondent had taken the contradictory stand but there is no denial of the fact that the cheque no. 001360 was of the old series of cheque. After through checking of the record, it had found that the said blank cheque was issued for security. That had made the respondent send the letter dated 28.10.2013 and no importance can be attached to this contention.
32. In the instant case, the Arbitrator has given due opportunities to the parties to present / defend their cases. The Arbitrator has referred all the relevant documents and the terms contained in the invoices and thereafter passed the award supported with the reasons. It is not for this Court to sit in appraisal of the evidence led before the Arbitrator and this Court will not open itself to the task of being a Judge on the evidence placed before the Arbitrator which was subject mater of the dispute. The Arbitrator has discussed in detail the contentions of the parties and the evidences and then decided the claims on merit. Further, the scope and purview of deciding the objection being limited one does not permit this Court to OMP Comm No. 129/2019 Page No.36 of 40 replace the findings given by the Arbitrator by its own by reappreciating the evidence produced before the Arbitrator.
33. In the instant case, the petitioner has failed to show how the impugned award is against the public policy of India or not in conformity with the proposition of law or there are errors on the face of record or the Arbitrator has treated the stand taken by the respondent as gospel truth without going into the authenticity of the documents. Admittedly, the Arbitrator in para 28 of the award has observed that there is no quantification and specification of good or their costs pleaded or proved and mere statement of expired / counterfeit goods and rebuttal thereof may hardly achieve any conclusion but in this case, the Arbitrator has referred the mails exchanged between the parties, where the respondent had complained of the supply of expiry / spurious goods by the petitioner. The respondent had also taken up the matter with the company, which had ordered for the investigation. It has given the specific details referring the invoices vide which the expired / counterfeit goods were supplied by the petitioner to it.
As regards issuance of letter on 15.12.2012 to the bank acknowledging the goods delivered by the petitioner in good order, since the complaints from the customers and the end users were received later and by 16.11.2012, none of the customer had pointed out any deficiency, which fact is evident OMP Comm No. 129/2019 Page No.37 of 40 from the testimony of CW1, it took up the matter with the petitioner and the company in May 2013 and withheld the payments against the invoices. CW1 has also denied the suggestion that its claim of Rs. 28,06,745/- in the statement of claim and Rs. 23,53,220/- in the examination in chief affidavit are false and misleading to extort money from the petitioner. As regards admission of CW1 in his cross examination that NTPC and other customers never made complaint about the fake / expired cartridges, cross examination of CW1 reveals that regarding the complaint, he and Mr. Gurudutt were called on by NTPC.
34. It was held in the case of State Trading Corporation of India Ltd Vs. Teopfer International Asia PTE Ltd FAO (OS) 242/2014 that Section 34 proceeding which in essence is the remedy of annulment, cannot be used by one party to convert the same into a remedy of appeal. Finality of the award is very important. An interpretation placed on a contract is a matter within the jurisdiction of the Arbitral Tribunal and even if an error exists, this is an error of fact within jurisdiction which cannot be re-appreciated by the Court under Section 34 of the Act. Legal position is no more res integra that the Arbitrator having been made the final Arbiter of resolution of dispute between the parties, the award is not open to challenge on the ground that Arbitrator has reached at a wrong conclusion. If we OMP Comm No. 129/2019 Page No.38 of 40 were to start analyzing the contract between the parties and interpreting the terms and conditions thereof and which will necessarily have to be in the light of the contemporaneous conduct of the parties, it will be nothing else than sitting in appeal over the arbitral award and which is not permissible.
Conclusion:
35. Now to sum up, in the instant case, most of the grounds raised by the petitioner to challenge the award are factual in na-
ture which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion be- cause such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts. (P.R Shah, Shares & Stock Brokers (P) Ltd v. B.H.H Securities (P) Ltd. [(2012) 1 SCC 594).
36. Having examined the various contentions of the OMP Comm No. 129/2019 Page No.39 of 40 petitioner on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award does not suffer from any infirmity or error apparent on the face of record. It is not for this Court to sit in appraisal of the evidence led before the Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Arbitrator which was subject matter of dispute. In the present case, the Arbitrator has deliberated on the issues under reference which were within his competence and as per the agreement entered into between the parties. The Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that award is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or it lacks reasoning as pleaded in the petition.
37. For the aforesaid reasons, the impugned award is maintained and the petition is dismissed. No order as to costs. File be consigned to record room.
Announced in open court today i.e. 21st October 2021 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi OMP Comm No. 129/2019 Page No.40 of 40