Bangalore District Court
Food Express Stores vs M/S Manipal Cure And Care on 8 June, 2022
1 Com.A.P.No.35/2020
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A., LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 8th day of June 2022
Com.A.P.No.35/2020
Appellant: Food Express Stores,
Unit of Erstwhile M/s Enpro Pvt. Ltd.,
Now Jubilant Agri and Consumer
Products Ltd., Having its office at
Plot No.15, Knowledge Part-II,
Greater Noida, Uttar Pradesh - 201306,
Rep. by its Assistant Manager,
Mrs. Manjunatha H.A.,
(By Sri. C.M., Advocate)
-vs-
Respondent: M/s Manipal Cure and Care, Unit of
M/s Manipal Health Enterprises
Pvt. Ltd., Rep. by Sri. M. Sarvanan,
Legal Head, Having its registered
Office at 98/2, The Annex,
Rustambagh Road, Off Old Airport
Road, Bangalore - 560 017.
Langford Town, Bengaluru - 25.
(By Sri. B.P., Advocate)
2 Com.A.P.No.35/2020
JUDGMENT
This is a suit filed by plaintiff against the defendant under Sec.34 of the Arbitration and Conciliation Act and sought for to set aside the award dated 04.12.2015 passed in A.C.No.5 and 6/2015 by the sole arbitrator Sri. Chinnabasappa S. Malagi, District Judge (retired) at the Arbitration Centre Karnataka (Domestic and International) Bangalore.
2. Brief facts of the petition are as under:
The plaintiff being the respondent, the defendant being the claimant before the arbitral tribunal feeling aggrieved by the award which passed by the sole arbitrator has filed the instant suit by alleging that the defendant is the unit of M/s Manipal Health Enterprises Pvt. Ltd., a company incorporated under the Companies Act, 1976 engaged in the business of Health Care Services and products and who was engaged in the business of running super market and hyper market with an intention to open health and wellness retail and pharmacy retail outlet at its mall running in the name and style of Total situated at Coidonarahalli village, Varthur hobli, Bangalore entered into lease and license agreement dated 27.12.2007 (Health and Wellness Agreement) and leave and license agreement dated 31.12.2007 (Pharmacy 3 Com.A.P.No.35/2020 Agreement), both agreements are collectively referred as agreements granting licenses to defendant to set up shops with respect to shop No.9a, 3rd floor, measuring 9566 sq.ft. of super built up area situated within the total mall (Health and Wellness shop) and with respect to shop No.26, ground floor measuring 430 sq.ft. of upper built up area situated within total mall (Pharmacy shop) as per clause 2 of Health and Wellness agreement. The defendant was paying license fee of Rs.5,73,963/- per month towards health and wellness shop and the defendant was paying license fee of Rs.43,000/- per month for the pharmacy shop as per clause 2 of the pharmacy agreement. As per clause 3 of Health and Wellness agreement, the defendant paid a sum of Rs.57,39,600/- as refundable interest free security deposit and as per the pharmacy agreement the defendant had paid Rs.4,30,000/- as interest free refundable security deposit. The agreement had a lock in period of 2 years having the date of commencement of health and wellness shop from 18.01.2008 and the date of commencement for pharmacy shop was from 30.01.2008.
3. The plaintiff in its plaint has further alleged the lock in period for the health and wellness agreement came to an end on 17.01.2010 and the pharmacy agreement came to an end on 4 Com.A.P.No.35/2020 29.01.2010, after the expiry of the lock in period for both agreements the defendant terminated leave and license agreement on 24.09.2010 and the defendant vacated both the shops as per mutual understanding between them. As per letter dated 30.12.2010 which was captioned as final settlement deducted the amount dues and paid the balance by way of cheque amounting to Rs.1,39,344/- to the defendant contending that the agreement is terminated and that they have received the possession of the shop. The defendant under protest written the cheque by issuing legal notice through his counsel on 24.08.2012 requesting the final settlement. The defendant issued a legal notice dated 24.08.2012 demanding an amount of Rs.9,98,271/- and again issued another legal notice dated 14.03.2013 contending that the defendant inadvertently demanded lesser amount of Rs.9,98,271/- in the notice dated 24.08.2012 and to rectify the error. The defendant got issued another notice dated 14.03.2013 in which claimed a total of Rs.18,13,461/- as refundable security deposit which includes Rs.16,87,063/- for the health and wellness agreement and Rs.1,26,398/- for pharmacy agreement. The defendant claims that he issued a notice dated 02.06.2013 intimating to refer the matter to the arbitration, but it was not served. In view of no response from its side, as the notice 5 Com.A.P.No.35/2020 was not duly served, the defendant approached the Hon'ble High Court of Karnataka in CMP No.158/2013 and 159/2013 with a prayer for appointment of sole arbitrator to adjudicate the dispute in between them and both matters were clubbed together Hon'ble High Court of Karnataka had issued a notice through vide paper publication and it was placed exparte, but had no knowledge of the proceedings which filed before the Hon'ble High Court of Karnataka.
4. The plaintiff in its plaint has further alleged the Hon'ble High Court of Karnataka vide its order dated 28.10.2014 appointed Sri. Channabasappa S. Malagi, Retired District Judge, as a sole arbitrator, after appointment notice was issued which was returned with shara party left the address, after that the defendant furnished its alternative address in Noida, U.P. and remained absent, since the notice was served to the wrong address and he was placed exparte in both cases and the defendant led the evidence and Ex.P.1 to P.9 were marked as A.C.No.5/2015 was allowed with cost directing to pay sum of Rs.16,87,063/- with interest @ 18% p.a. from 24.09.2010 till its realization and A.C.No.6/2015 was allowed with cost directing to pay sum of Rs.1,26,298/- with interest @ 18% p.a. from 24.09.2010 till its realization and its company was de-merged 6 Com.A.P.No.35/2020 pursuant to Hon'ble Allahabad High Court order dated 16.01.2012 and 31.12.2012 in company petition No.47, 48 and 49 of 2011, business of sale of consumer products including mall or hyper market, whole sale cash, carry trade and leasing of M/s Enpro Oil Pvt. Ltd., has been de-merged with Jubilant Agri and Consumer Products Ltd., and took over food express stores and lot of other changes in the management and the employees of the firm happened which resulted in complete destruction of documents and co-ordination between the de-merged company and new company which has resulted in non-service of notice, but the dispute which was an exparte proceedings. The defendant filed an execution case and notices were issued recently for the first time came to know of the arbitration dispute, aggrieved by the order passed in A.C.No.5 and 6/2015 dated 04.12.2015 passed by the sole arbitrator has filed the instant suit for the following;
GROUNDS a. The learned arbitrator failed to notice that the defendant had issued a notice for appointment of arbitrator at some Delhi address and so also the same address was mentioned in the cases before the Hon'ble High Court of Karnataka, but in the arbitration proceedings an amendment application was filed showing another it address in Noida which clearly establishes the 7 Com.A.P.No.35/2020 notice was not at all served at the correct address which was not taken into consideration by the sole arbitrator. b. The learned arbitrator failed to notice that the defendant had made no effort to inform the arbitrator of the change in management and constitution of the company and has arbitrarily proceeded with the proceedings.
c. The learned arbitrator failed to notice that the defendant ought to have approach the Registrar of Companies to know its correct address, its present directors and their addresses before initiating the arbitration proceedings, but it was not taken into consideration by the sole arbitrator.
d. The learned arbitrator failed to notice that the termination of agreements and handing over of possession, the arbitration clause no longer subsisted, it is not valid and in force are not taken into consideration by the sole arbitrator. e. The learned arbitrator failed to appreciate Ex.P.6 that the parties had already settled the matter and nothing else remained to arbitrate which was not taken into consideration by the sole arbitrator and failed to notice that the defendant had not produced any evidence and books of accounts to establish the claim amount for the arbitrator to arrive at a amount awarded. 8 Com.A.P.No.35/2020
f. The learned arbitrator erred in accepting the affidavit evidence which filed by the defendant in the arbitration proceedings which was not identified by their lawyer and tribunal ought to have followed due process of law and verified whether the arbitration proceedings is valid under law to which the defendant subjected to and whether he is in conflict with the public policy of India which means against to Indian laws and he is in conflict with basic notion, morality and justice.
g. The learned arbitrator failed to consider the lease and license agreement which are not registered and are stamped but the learned arbitrator erred in marking those documents which are inadmissible in evidence and proceeded in a accepting the case of the defendant without applying his mind on whether the claim was maintainable without company being not represented by any individual.
h. The learned arbitrator erred in coming to the conclusion that the proceedings were arbitrable in nature, when the parties had already concluded the only remedy for the defendant was before the civil court and not before the arbitral tribunal which not taken into consideration by the sole arbitrator.
I. The learned arbitrator erred in passing the award when the defendant has not issued a notice for the appointment of the 9 Com.A.P.No.35/2020 arbitrator or the arbitral proceedings and the food express stores was a division of M/s Enpro Oil Pvt Ltd., pursuant to Allahabad High Court order dated 16.01.2012 and 31.01.2012 in company petition No.47, 48 and 49/2011 M/s Enpro Oil Pvt. Ltd., has been de-merged with jubilant Agri and consumer products limited and had no knowledge of the dispute between the parties and had no knowledge about the proceedings and only after execution petition filed came to know the proceedings which had taken place before the Hon'ble High Court of Karnataka and the arbitral proceedings and prays for allow the suit.
5. In response of the suit summons, the defendant has been appeared through its counsel and filed the objection statement in which has alleged the suit which filed is not maintainable in law or on facts and there is a delay of 2473 days which is not permissible under law and the defendant in its convenient has stated has no knowledge about the proceedings and he will be suffered if the suit is allowed and delay in filing the suit is not maintainable in law or on facts, as the suit which filed is barred by limitation and after receipt of the award in its favour filed the execution petition within the jurisdiction of the court to seek smooth execution way back in the year 2018 and the notice of the same were served upon the defendant and the defendant had 10 Com.A.P.No.35/2020 appeared before the execution court at Noida way back in the year 2018. The execution petition was dismissed in default and restoration of the same has been filed and the plaintiff was duly represented as back as in the year 2018, thus any challenge to the award in 2020 is clearly barred by law and the arbitral award has to be challenged maximum within 3 months, but the suit which filed by the plaintiff is not maintainable as the suit of the plaintiff is barred by limitation and some of the orders of the executing court showing the presence of the plaintiff before the court and the plaintiff was aware of the award way back in the year 2018 and still decided to challenge the award in the year 2020 after about 5 years of passing of award and after about 2 years of participating in the proceedings and the suit which filed by the plaintiff is deserved with dismissal with heavy cost.
6. The defendant in its objection statement has further alleged the plaintiff has filed the application for condonation of delay stating that they did not know about passing of the award still recently when subject petition was filed and said statement is supported by affidavit and knowing about the award has been duly recorded in the order sheet of executing court and the plaintiff committed perjury before the court. The plaintiff is liable to be prosecuted under Sec.193, 196, 199 and 200 of IPC by 11 Com.A.P.No.35/2020 allowing the procedure laid down under Sec.340 of Cr.P.C. for filing the false affidavit before the court and prays for reject the suit with cost.
7. On the basis of pleading of the parties the points that arise for consideration of this court are as under:
1) Whether the plaintiff has made out the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award?
2) Whether the defendant proves that the suit which filed by the plaintiff is barred by limitation?
3) What order?
8. My answer to the above points are as under:
Point No.1: In the Negative;
Point No.2: In the Affirmative;
Point No.3: As per final order, on the following;
REASONS
9. POINT NO.1 and 2: These points are interrelated to each other, hence in order to avoid repetition of facts and materials these points are taken together for consideration. The plaintiff has approached the court on the ground that they were entered into a lease and license agreement dated 27.12.2007 (Health and Wellness Agreement) and Leave and License 12 Com.A.P.No.35/2020 Agreement dated 31.12.2007 (Pharmacy agreement), both agreements are collectively referred as agreements granting the license to the defendant to set up shops with respect to shop No.9A, 3rd floor, measuring 9566 sq.ft. of super built up area by paying license fee of Rs.5,73,963/- per month towards health and wellness shop and by paying license fee of Rs.43,000/- per month for the pharmacy shop as per the pharmacy agreement and the defendant had paid a sum of Rs.57,39,600/- as refundable interest free security deposit as per the pharmacy agreement and paid a sum of Rs.4,30,000/- as interest free refundable security deposit and the lock in period of 2 years having the date of commencement for the health and wellness shop from 18.01.2008. After the expiry of lock in period of both agreements the defendant terminated leave and license agreements on 24.09.2010 and vacated both shops as per mutual understanding in between them, but the defendant has issued a legal notice calling upon to pay amount and without its knowledge filed the CMP got obtained the order for appointment of arbitrator and also obtained exparte award which came to know recently in the execution petition, thereby the plaintiff has filed the instant suit against the defendant.
13 Com.A.P.No.35/2020
10. The learned counsel for the plaintiff in his arguments has submitted that the defendant is the unit of M/s Manipal Health Enterprises Pvt. Ltd., a company incorporated under the Companies Act 1976 and engaged in the business of running supermarket and hypermarket. The defendant with an intention to open health and wellness retail and pharmacy retail outlet at the plaintiff's mall running in the name and style of Total situated at Coidonarahalli village, Varthur hobli, Bangalore entered into lease and license agreement dated 27.12.2007 and leave and license agreement dated 31.12.2007 and the defendant was paying a license fee of Rs.5,73,963/- per month towards health and wellness shop and also paying license fee of Rs.43,000/- per month for the pharmacy shop and the defendant had paid a sum of Rs.57,39,600/- as refundable interest free security deposit and also paid Rs.4,30,000/- as interest free refundable security deposit towards pharmacy agreement and the agreement had lock in period of 2 years having the date of commencement for the health and wellness from 18.01.2008 and the date of commencement of pharmacy shop was from 30.01.2008 and the lock in period for health and wellness came to an end on 17.01.2010 and pharmacy agreement came to an end on 29.01.2010 and after the expiry of the lock in period the 14 Com.A.P.No.35/2020 defendant terminated the leave and license agreements on 24.09.2010 and final settlement was taken place and deducted the amounts due and paid the balance by way of cheque and the defendant under the pretext returned the cheque by issuing a legal notice through its counsel requesting the final settlement and demanding the amount from the plaintiff and the defendant has not issued any notice not served on the plaintiff. However the defendant has filed the CMP petition before the Hon'ble High Court of Karnataka, even in the said petition also notice has not been served on the plaintiff and arbitrator has been appointed, though who issued a notice which was not served on the plaintiff, however the defendant got obtained the award which came to the knowledge of the plaintiff in the execution proceedings, thereby the plaintiff obtained the award copy and filed the instant suit. The arbitrator failed to notice that the defendant had issued a notice to the plaintiff for appointment of the arbitrator at some Delhi address and also the same address of the plaintiff was mentioned in the cases before the High Court, but the arbitrator has not taken into consideration for non service of the summons, nor the notice to the plaintiff and the defendant has not made any effort to inform the arbitrator of the change in management and constitution of the company and the defendant ought to have 15 Com.A.P.No.35/2020 approach the Registrar of Companies to know the address of the plaintiff company but the defendant has not made any efforts to get the correct address, instead has obtained the exparte award which is against to the principles of natural justice. No opportunity has been granted to the plaintiff to put forth its case. Therefore, it is just and necessary to allow the suit and to set aside the award which passed by the sole arbitrator, otherwise the plaintiff will be put to irreparable loss and injustice and prays for allow the suit.
11. Per contra, the learned counsel for the defendant in his arguments has submitted that the suit which filed by the plaintiff is not maintainable in law or on facts, since the plaintiff has filed the instant suit in a belated stage, as there is a delay of 2473 days in filing the instant suit and the delay cannot be condoned as sought for, as the defendant after receipt of the award in its favour filed the execution petition in the year 2018 and the very plaintiff has been appeared and participated in the execution petition, though it was came to be dismissed in default and restoration petition has been filed which is pending and the plaintiff was duly represented as back as in the year 2018, but the reasons best known to the plaintiff did not challenge the award when he came to know the execution has been filed based 16 Com.A.P.No.35/2020 on the award in year 2018 itself and the provision empowers to challenge the award within 3 months, but the plaintiff did not do so. On this ground alone the suit which filed by the plaintiff is not maintainable and deserved for dismissal. The plaintiff has filed the instant suit for condonation of delay stating that they did not know about passing of the award and prays for dismiss the suit with cost.
12. It is an admitted fact the plaintiff being the respondent before the arbitral tribunal feeling aggrieved by the award which passed by the sole arbitrator has filed the instant suit on the ground the sole arbitrator has not taken into consideration about non issuance of notice for appointment of arbitrator and not considered that the defendant has not made any effort to inform the arbitrator about the change in management and constitution of the company and failed to notice that the defendant ought to have approach the registrar of companies to know the correct address it was not taken into consideration by the arbitrator and the arbitrator has not taken into consideration about non service of notice to the plaintiff, thus before considering the arguments which advanced by both counsels and the materials on record, it is just and necessary to consider the legal aspects first for the 17 Com.A.P.No.35/2020 proper appreciation of the arguments which advanced by both counsels.
1. What is arbitration?
2. When court can interfere with arbitral award?
3. What is the scope of Court's power to interfere with the arbitral award?
4. What are the grounds are required to set aside the award?
5. Setting aside of arbitral award when permissible?
Let me decide one by one for proper appreciation of the materials on record. Thus this court drawn its attention on Sec.2(1)(a) of the Arbitration and Conciliation Act, 1996 which reads like this:
2(1)(a). The definition arbitration means any arbitration whether or not administered by permanent arbitral institution.
Arbitration is a private dispute resolution mechanism agreed upon by the parties. Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties.
Arbitration is a process of settlement extra curses curiae and the parties are at liberty to choose their judge. "The essence of arbitration without assistance or intervention of the court is settlement of dispute by a tribunal of the own choosing of the parties." Law of arbitration aids in implementation of arbitration agreement contract between the parties which remains a private adjudication by a forum consequently chosen by the parties and made on consequential reference.18 Com.A.P.No.35/2020
Now let me know when court can interfere with the arbitral award. Thus this court drawn its attention on Sec.34(43) of the Arbitration and Conciliation Act, 1996 which reads like this:
43. Principles of interference with arbitral award:-
The principles of interference with an arbitral award under Sec.34(2) of the Act are as follows:
(1) An award, which is -
(i) contrary to substantive provisions of law; or
(ii) The provisions of Arbitration and Conciliation Act, 1996, or
(ii) against the terms of the respective contract; or
(iv) Patently illegal or
(v) Prejudicial to the rights of the parties; is open to interference by the court under Sec.34(2) of the Act.
(2) The 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.
(3) The award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the court.
(4) It is open to the court to consider whether the award is against the specific terms of the contract and if so interfere with it on the ground that it is patently illegal and opposed to the public policy of India.19 Com.A.P.No.35/2020
So, by virtue of the provision which stated above, the court can interfere with the arbitral award in the grounds which mentioned above.
Now let me know what is the scope of Court's power to interfere with the arbitral award? Thus this court drawn its attention on Sec.34 of the Arbitration and Conciliation Act which reads like this;
Scope of Court's power to interfere with the arbitral award:
The scope of the interference by the court's in regard to arbitral award is limited. Courts do not sit in appeal over the findings and decision of the arbitrator, nor can it reassess or re- appreciate evidence or examine the sufficiency or otherwise of the evidence.
So, by virtue of the provision which stated supra, the scope of interference by the court in regard to the arbitral award is limited scope. The scope of interference under Sec.34 of the Act is limited in view of the judgment of the Hon'ble Supreme Court of India which reported in AIR 2003 SC 2629 in between Oil and Natural Gas Corporation Ltd., V/s Shah Pipes Ltd., and in the said judgment, their Lordship held that;
'an award can be set aside if it is contrary to fundamental policy of Indian Law, the interest of India, justice or morality, if it is patently 20 Com.A.P.No.35/2020 illegal and unfair and unreasonable it shocks the conscience of the court'.
Now let me know what are the grounds are required to set aside the award which passed. Thus this court drawn its attention on Sec.34(18) of the Arbitration and Conciliation Act which reads like this:
18. Grounds to set aside award:- Under the new Act, 1996 misconduct of arbitrator is no ground to set aside an award but court may set aside an award in the following grounds:
(1) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(2) falling such agreement, the composition of arbitral tribunal was not in accordance with the part I of the Act.
(3) if the arbitral proceeding was not in accordance with -
(a) the agreement of the parties.
(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 21 Com.A.P.No.35/2020 the Act or any other substantive law governing the parties or is against the terms of the contract.
An award can be set aside, if it is against the public policy of India that is to so it is contrary to:
(1) fundamental policy of Indian law, (2) the interest of India, or (3) justice or morality , or (4) if it is patently illegal.
It could be challenged -
(a) as provided under Sec.13(5); and
(b) Sec. 16(6) of the Arbitration and conciliation Act. So the court can set aside the award, if the grounds found which stated supra.
So, if the petitioner is made out the grounds which stated supra, court can set aside the award. Now let me know about the setting aside of arbitral award when permissible. Thus this court drawn its attention on Sec.34(4) of the Arbitration and Conciliation Act, 1996 which reads like thus:
4. Setting aside of arbitral award when permissible:-
That the court can set aside the arbitral award under Sec.34(2) of the Arbitration and Conciliation Act if the party making the application furnishes the proof that:
(i) a party was under some incapacity
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it 22 Com.A.P.No.35/2020 or, failing any indication thereon, under the law for time being in force.
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or otherwise unable to present his case.
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitrator or it contains visa decisions on matters behind the scope of the 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) falling such agreement, the composition of the arbitral tribunal was not in accordance with part-1 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-1 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 within the provisions of part-1 of the Act from which the parties cannot derogate.
(c) If the award passed by the arbitral tribunal is in contravention of provisions of the Act or 23 Com.A.P.No.35/2020 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;
(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 Sec.13(5); and
(b) Section 16(6) of the Act."
"B. Further held as follows in this case: (1) The impugned award requires to be set aside mainly on the grounds:
(I) There is specific stipulation in the agreement that the time and date of delivery of the goods was the essence of the contract;
(ii) in case of failure to deliver the goods within the period fixed for such delivery in the schedule, ONGC was entitled to recover from the contractor liquidated damages as agreed;
(iii) it was also explicitly understood that the agreed liquidated damages were genuine pre- estimate of damages;
(iv) on the request of the respondent to extend the time limit for supply of goods, ONGC informed specifically that time was extended but stipulated liquidated damages as agreed would be recovered;
(v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor;24 Com.A.P.No.35/2020
(vii) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable.
(viii) in certain contracts, it is impossible to asses the damages or prove the same. Such situation is taken care by section 73 and 74 of the Contract Act and in the present case by specific terms of the contract" - Oil and Natural Gas Corporation V Shah Pipes Ltd. (2003)5 SCC 705 : AIR 2003 SC 2629; see also Moona Abousher V M/s. Cholamandalam DBS Finance Ltd. AIR 2019 Mad 233.
The above provisions which referred above are very much clear when court can interfere with the arbitral award and what is the scope of court's power to interfere with the arbitral award and what are the grounds are required to be set aside the award as well as setting aside of arbitral award when permissible.
13. Now let me know the arguments which advanced by the both parties by keeping the provisions which referred above in mind as the learned counsel for the plaintiff while canvassing his arguments has much argued that the arbitrator failed to notice that the defendant had not issued any notice for appointment of arbitrator in the address shown in the lease and license agreement dated 27.12.2007. It is an admitted fact the dispute has been arisen in between the plaintiff and the defendant, for which sole arbitrator has been appointed as per the orders 25 Com.A.P.No.35/2020 passed by the Hon'ble High Court of Karnataka in the CMP No.158/2013 and 159/2013 and the documents which are on record reflects the defendant got issued a notice on 02.06.2013 for appointment of the arbitrator in the address as shown in Ex.P.9 as the Ex.P.9 is the leave and license agreement which taken place in between the defendant and the plaintiff, wherein the defendant address has been shown as shown in Ex.P.9. So for the proper appreciation of the address as shown in Ex.P.9 is necessary for reproduction which reads like this:
Managing Director, M/s Food Express Stores ( a division of Enpro Oil Pvt. Ltd., No.1517, 15th floor, Devika Towers, 6, Nehru Palace, New Delhi - 110 019.
So, the address which shown in Ex.P.9 and the Ex.P.1 are one and the same. So one thing is clear the defendant before initiation of the arbitral proceedings by way of CMP before Hon'ble High Court of Karnataka got issued a arbitration notice to the plaintiff calling upon the plaintiff for appointment of the sole arbitrator to adjudicate the issue which arising in between them. Thus this court drawn its attention on Sec.11 of the Arbitration and Conciliation Act which reads like this:
11 Appointment of arbitrators. --
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an 26 Com.A.P.No.35/2020 arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in sub-section (3) applies and--
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties,--
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) A decision on a matter entrusted by sub-section (4) or sub- section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.
(8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to--
(a) any qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Chief Justice may make such scheme 1 as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.
(11) Where more than one request has been made under sub- 27 Com.A.P.No.35/2020
section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to ''Chief Justice'' in those sub-sections shall be construed as a reference to the ''Chief Justice of India''.
(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court. The above provision is very much clear a party fails to appoint an arbitrator within 30 days from the receipt of the request to do so from the other party, appointment shall be made upon request of the party by the High Court or any person or institution designated by such court. So the defendant got issued arbitration notice to the plaintiff calling upon for appointment of the sole arbitrator to adjudicate the issue which arisen in between them when the plaintiff did not come forward for appointment of the sole arbitrator, in pursuance of Ex.P.1 the defendant has filed the CMP No.158/2013 and 159/2013 before the Hon'ble High Court of Karnataka and both petitions were came to be allowed and sole arbitrator has been appointed to adjudicate the dispute in between the plaintiff and the defendant. Therefore, the 28 Com.A.P.No.35/2020 arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water.
29 Com.A.P.No.35/2020
14. The learned counsel for the plaintiff while canvassing his arguments has much argued no notice has been served on the plaintiff after initiation of arbitral proceedings, but the sole arbitrator has not taken into consideration about non service of the notice to the plaintiff and passed the exparte award and the defendant failed to bring to the notice of the sole arbitrator about change in management and constitution of the company. It is an admitted fact the order sheet which is on record reflects the plaintiff has been called out did not appear as he was absent and notice has been ordered to issue in the alternative address which furnished by the claimant which was came to be served on 16.03.2015 and one more notice which was issued to the plaintiff was also returned served on 13.07.2015 but in spite of the service of notice for twice, the plaintiff was absent, thereby the exparte award has been passed. If the order sheet which is on record reflects notice has been served on the plaintiff to prosecute the case before the sole arbitrator. But the reasons best known to the plaintiff did not appear nor prosecute the case before the sole arbitrator. Admittedly, leave and license and agreement was taken place in between the plaintiff and the defendant, wherein company address has been shown and alternative address has been shown at Uttar Pradesh as per the 30 Com.A.P.No.35/2020 award and notice has been served on the same address. Now the question arises when the notice has been issued in the correct address of the plaintiff whether it amount to service of notice. Thus this court drawn its attention on Sec.27 of the General Clauses Act, 1897 which reads like this:
27 Meaning of service by post. Where any 49 [Central Act] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-
paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
The above provision is very much clear after the commencement of the Act authorizes or requires any document to be served by post where the expression serve or either of the expressions give or send or any other expression is used then, unless a different intention appears the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post and a letter containing the document and unless the contrary is proved the letter would be delivered on the addressee. 31 Com.A.P.No.35/2020
15. In the instant case also except the arguments which advanced by the learned counsel for the plaintiff nothing has been placed to substantiate its objection as alleged in the suit. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water. So one thing is clear from the materials on record that in spite of the arbitral notice, the plaintiff did not come forward to appoint the sole arbitrator. That is the reason why the defendant has moved an CMP before the Hon'ble High Court of Karnataka and both petitions were came to be allowed and sole arbitrator has been appointed, though notice has been issued to the plaintiff to prosecute the case, but in spite of notice did not appear nor prosecute the case before the sole arbitrator. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water.
16. The learned counsel for the plaintiff while canvassing his arguments has much argued that the matter has been settled in between the plaintiff and the defendant, there was no dispute for adjudication, in spite of the same the sole arbitrator has been directed the plaintiff for payment to the defendant. It is an admitted fact the defendant got issued a notice on 24.08.2012 and 14.03.2013 calling upon the plaintiff to pay an amount of 32 Com.A.P.No.35/2020 Rs.18,13,461/- together with interest payable by the plaintiff, but the reasons best known to the plaintiff did not come forward to deny the liability as shown in Ex.P.7 and P.8. So the sole arbitrator after considering not only the evidence of the defendant, but also materials on record found that the plaintiff was due a sum of Rs.18,13,461/- accordingly directed to pay the said amount and the plaintiff as not made out any of the grounds to show that there is a patent illegality while passing the award which committed by the sole arbitrator nor any of the grounds which enumerated under sec.34 of the Arbitration and Conciliation Act to set aside the award. Therefore, the arguments which advanced by the learned counsel for the plaintiff on this aspect holds no water.
17. The learned counsel for the plaintiff while canvassing his arguments has much argued that the plaintiff has filed the instant suit within the limitation, but whereas the learned counsel for the defendant while canvassing his arguments has submitted that the suit which filed by the plaintiff is barred by limitation in view of Sec.34(3) of the Arbitration and Conciliation Act. Thus this court drawn its attention on Sec.34(3) of the Arbitration and Conciliation Act which reads like this:
33 Com.A.P.No.35/2020
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.34 Com.A.P.No.35/2020
The above provision is very much clear an application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application has received the arbitral award or if a request had been made under Sec.33 from the date on which that request had been disposed of by the arbitral tribunal, provided that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months, it may entertain the application within a further period of 30 days, but not thereafter. So one thing is clear the plaintiff has not file instant suit within 3 months and if sufficient cause has been made out, then it can be extended another one month, but not thereafter. So the limitation to file suit under Sec.34 of the Arbitration and Conciliation Act in total 120 days, admittedly the award has been passed by the sole arbitrator on 04.12.2015 and the materials on record reflects the very plaintiff has filed the application under Sec.5 of the Limitation Act and sought for condone the delay of 2473 days in filing the instant arbitration suit on the ground that he had no knowledge of the arbitration proceedings, which culminated in an award, so also in view of destruction of files could not file the instant suit within the limitation and subsequently the defendant has filed the execution petitions 35 Com.A.P.No.35/2020 pending before the Hon'ble High Court of District Judge, Goutham Buddha Nagar came to be dismissed and did not proceed in the matter, in view of the restoration of execution petition the instant suit has been filed. So one thing is clear from the averments of the affidavit filed in support of the application under Sec.5 of the Limitation Act that the plaintiff had no knowledge about the arbitration proceedings and execution petition has been filed based on the award which came to be dismissed thereby they did not proceed the matter when the execution petitions were restored then only they filed the instant suit. So one thing is clear that the execution petition has been filed based on the award which passed by the sole arbitrator on 04.12.2015. The materials on record reflects E.P. No.489/2016 has been filed before the District Judge, Goutham Buddha Nagar for execution of the award passed by the sole arbitrator and the order sheet dated 09.05.2018 reflects the present plaintiff being the JDR before that court who has been appeared through its counsel, if he did not appear in the said execution petition, question of representing through counsel does not arise. If the order sheet of execution No.489/2016 is taken into consideration that the plaintiff was well aware of the award which passed by the sole arbitrator in the year 2018 itself as the plaintiff has filed the instant suit on 36 Com.A.P.No.35/2020 10.03.2020. If the appearance of the plaintiff in Ex.No.489/2016 and the date of instant suit are taken into consideration that the plaintiff has not filed the suit in view of the provision which referred above. Therefore, the suit which filed by the plaintiff is barred by limitation. On this aspect the learned counsel for the plaintiff has drawn the court attention on the judgment of the Hon'ble Supreme Court passed in C.A.No.995/2021 dated 19.03.2021 wherein their lordship held that there was no sufficient cause which made out to condone the such a long delay, thereby the appeal which filed was came to be dismissed. Therefore I do respect to the judgment which relied by the learned counsel for the plaintiff, but the facts and circumstances of the present case and the judgment which relied are different, and not applicable to the case on hand, as the learned counsel for the plaintiff while canvassing his arguments has drawn the court attention on the judgment of Hon'ble Supreme Court reported in 2021 SCC Online SC 1315 in between Mahindra & Mahindra Financial Service Ltd., Vs Mahesh Bhai, Tina Bhai Rathod & Ors, dated 16.12.2021 which is subsequent judgment which relied by the plaintiff and in the said judgment, their lordship held that where the limitation has been prescribed the extent to which it can be condoned is circumscribed and it has been held that Sec.5 of the 37 Com.A.P.No.35/2020 Limitation Act is not applicable to condone the delay beyond the period prescribed under Sec.34(3) of the Arbitration and Conciliation Act and the learned division bench was not justified in condoning the delay in a casual manner. Therefore, the order dated 24.09.2012 is not sustainable and set aside the order and allowed the appeal. In the instant case also the plaintiff has not filed the instant suit within the limitation in view of Sec.34(3) of the Arbitration and Conciliation Act and judgment which relied by the learned counsel for the defendant is directly applicable to the case on hand. So looking from any angle the plaintiff has not made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the award which passed by the sole arbitrator. Hence, I am of the opinion that the point No.1 is answered as Negative and point No.2 answered as Affirmative.
17. POINT NO.3: In view of my answer to point No.1 and 2 as stated above, I proceed to pass the following;
ORDER
The petition under Sec.34 of the
Arbitration and Conciliation Act filed by the plaintiff is hereby dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 8th day of June, 2022) 38 Com.A.P.No.35/2020 (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City