Delhi District Court
Learning Temple English Medium High ... vs M/S Edu Smart Services Pvt Ltd on 28 February, 2025
IN THE COURT OF MS. ANU GROVER BALIGA,
DISTRICT JUDGE (COMMERCIAL COURT-04),
SOUTH-EAST DISTRICT
SAKET COURTS, NEW DELHI
ARBTN No. 165/2018
LEARNING TEMPLE ENGLISH MEDIUM HIGH SCHOOL VS. M/S EDU SMART SERVICES PVT. LTD.
In the matter of:
LEARNING TEMPLE ENGLISH MEDIUM HIGH SCHOOL
Near Agriculture Office
Ward No. 17, Kathua,
Jammu & Kashmir-184101 ......Petitioner
Versus
1. M/S EDU SMART SERVICES PVT. LTD.
Having registered office at :
L-74, Mahipalpur Extension,
New Delhi-110037. ......Respondent no.1
2. M/S EDUCOMP SOLUTIONS LTD.
Having its office at :
1211, Padma Tower-1,
5, Rajendra Palace,
New Delhi-110008. ......Respondent no.2
Date of institution : 25.05.2018
Date of reserving order : 27.02.2025
Date of pronouncement of Order : 28.02.2025
ORDER
1. Vide the present order, I shall decide a petition filed under Section 34 of the Arbitration and Conciliation Act seeking to challenge the Arbitral Award dated 02.05.2017 passed by the learned Arbitrator, Ms. Rekha Gupta.
ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 1 of 11 ANU Digitally signed
by ANU GROVER
GROVER BALIGA
Date: 2025.03.03
BALIGA 15:17:59 +0530
2. Briefly stated the material facts inter-alia asserted by the Petitioner in the present petition are as follows :-
(a) The Respondents in the end of December 2011, approached Sh. Naresh Kumar, the Proprietor of the Petitioner and proposed, the installation and commencement of smart classes under their module called Educlass Basic, Educlass Pro and Educlass Interactive, at the premises of the Petitioner.
(b) The terms and conditions agreed between the parties was recorded in a Tripartite Agreement dated 21.12.2011. The said Agreement contained an Arbitration Clause and the Agreement was also valid till the year 2017. Pursuant to the said Agreement certain hardware was installed at the premises of the Petitioner by the Respondents.
(c) The Petitioner however vide letter dated 11.05.2012 requested the Respondents to take back the installed hardware from the Petitioner school as the Petitioner was not having sufficient space and was not in the position to install more hardware for smart classes.
(d) Pursuant to the letter dated 11.05.2012, Mr. Henry Don, the officer of the Respondents sent an email dated 12.05.2012 for cancellation of the Educlass agreement, and accordingly the hardware ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 2 of 11 Digitally signed ANU by ANU GROVER GROVER BALIGA Date:
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was picked up by the Respondents from the Petitioner school.
(e) An amendment agreement dated 24.05.2012 was executed between the parties which recorded in writing that the Petitioner school had only one classroom with smart class setup and the Petitioner does not want to convert the other classrooms into smart classes due to unavoidable circumstances and that therefore the earlier Agreement dated 21.12.2011 between the parties stands suspended. The agreement dated 24.05.2012, which contained the correct address of the Petitioner did not have an arbitration clause.
(f) In terms of the amendment agreement, the Petitioner cleared all its dues towards the Respondents and a no dues certificate by the Respondents was also given to the Petitioner.
3. In view of the aforementioned facts it has been contended that the Respondents despite the termination of the Agreement 21.12.2011 which contained the arbitration clause, maliciously used the same to assertedly invoke arbitration. It has been pointed out by Ld. Counsel for the Petitioner that the arbitral record placed before this Court reveals that the Amendment Agreement dated 24.05.2012 was also filed before the Ld. Arbitrator and yet in the Award passed there is no reference whatsoever to the said Agreement. It has also been contended that the Petitioner was never served with the notice of the arbitration proceedings assertedly issued by the Respondents or the Ld. Arbitrator. In this regard it has been pointed out that the arbitral record reflects that there was no ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 3 of 11 Digitally signed by ANU ANU GROVER GROVER BALIGA Date:
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document placed before the Ld. Arbitrator, reflecting the service of the notice of the arbitration upon the Petitioner and yet the Ld. Arbitrator gave a finding that the Petitioner stood served. Ld. Counsel for Petitioner has also sought to contend that the address on which the notice of arbitration was assertedly dispatched was not even the correct address of the Petitioner. The contention therefore is that without informing the Petitioner, the Respondents malafidely appointed a Sole Arbitrator of their own choice and the said Arbitrator in a completely biased manner passed an ex-parte Award against the Petitioner. It is also the submission of Ld. Counsel that Respondents had taken loans from a consortium of Banks / Financial Institutions for the purposes of installation and commencing smart classes in various schools of the country, but that they however diverted the said funds and also failed to repay the loans of the Financial Institutions / Banks. He further submits that when the said Financial Institutions preferred to file winding up petitions before the Delhi High Court and Hon'ble NCLT, the Respondents in order to prove that they had infact given loans to schools and had also recovered part of loan amounts resorted to manipulating forged records of asserted arbitral proceedings. He submits that even CBI has registered FIRs against the Respondents. A copy of one such FIR has been filed on record.
4. In reply to the aforementioned petition, as per record an application has been filed on behalf of the Respondents seeking dismissal of the present petition on the ground of limitation. It has been asserted therein that the Petitioner was fully aware of the Award passed by the Ld. Arbitrator on 06.05.2017 and that therefore the present petition filed after lapse of 294 days is hopelessly time barred by limitation. It is relevant to mention herein that none has appeared on behalf of the Respondents to advance any arguments before this Court despite 03 opportunities granted. However a perusal of record ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 4 of 11 Digitally signed ANU by ANU GROVER GROVER BALIGA Date:
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reflects that written submissions were filed on behalf of Respondents before the Ld. Predecessor of this Court. In the said written submissions it has been additionally asserted that the Petitioner is trying to mislead this Court. It has been asserted therein that the Petitioner was duly served at the address mentioned in the Tripartite Agreement dated 21.12.2011. It has been further asserted that the said Agreement was never amended and that the Amendment Agreement and the no due certificate being referred to by the Petitioner pertain to another distinct Agreement and not the Agreement that was the subject matter before the Ld. Arbitrator. It has also been contended that the present petition is not maintainable in view of the provisions of Section 14 (1) (a) of the Insolvency and Bankruptcy Code for as on the date of filing of the present petition, insolvency proceedings already stood initiated against both the Respondents before the Hon'ble NCLT and the moratorium period was in operation.
5. As regards the issue of maintainability of the present petition in view of the bar placed by the provisions of Section 14 (1) (a) of the Insolvency and Bankruptcy Code, Ld. Counsel for Petitioner had placed before this Court, the copies of orders dated 25.04.2023 and 09.10.2023 which reflect that the insolvency proceedings stand terminated and revival plans for the Respondents stand approved by the Hon'ble NCLT and that no moratorium is now in operation. Ld. Counsel for Petitioner had therefore submitted that this petition be continued with. He has further submitted that the Respondents deliberately did not bring the notice of the said termination of insolvency proceedings before this Court for the entire year of 2024 and that the Petitioner became aware of the said orders only in January 2025 when in similar petitions pending before the Patiala House Courts, the Respondents chose to inform the said Court about the termination of the insolvency proceedings.
ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 5 of 11 ANU Digitally signed
by ANU GROVER
GROVER BALIGA
Date: 2025.03.03
BALIGA 15:18:33 +0530
6. It is relevant to mention herein that all the aforementioned submissions were made before this Court by Ld. Counsel for Petitioner on 10.02.2025. On the said date one Proxy Counsel Ms. Aprita Bhattacharya had joined the Court proceedings through VC and had submitted that she and her senior one Sh. Devender Kejriwal have been engaged by the Respondents and that the vakalatnama of the said Counsels will be filed during the course of the day and that they would make their submissions on the present petition on 22.02.2025. However, none appeared on behalf of the Respondents on 22.02.2025, 27.02.2025 or even today. As such, this Court hereby takes notice of the copies of orders placed on record by the Ld. Counsel for Petitioner which reflect that insolvency proceedings stand terminated against both the Respondents. In view of the said orders clearly there cannot be any bar with the continuation of the present petition. In a case titled and reported as Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184, the Hon'ble Supreme Court was dealing with the maintainability of a suit filed by an unregistered partnership firm. In the said case, the Hon'ble Supreme Court interalia held as follows :-
"29. We, prima facie, find substance in what is contended by Dr. Singhvi for the respondent. It is obvious that even if the suit is filed by an unregistered partnership firm, against a third party and is treated to be incompetent as per Section 69 sub-section (2) of the Partnership Act, if pending the suit before a decree is obtained, the plaintiff puts its house in order and gets itself registered the defect in the earlier filing which even though may result in treating the original suit as still born, would no longer survive if the suit is treated to be deemed to be instituted on the date on which registration is obtained. If such an approach is adopted, no real harm would be caused to either side. As rightly submitted by Dr. Singhvi that, Order 7 Rule 13 of the CPC would permit the filing of a fresh suit on the same cause of Action and if the earlier suit is ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 6 of 11 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:18:40 +0530 permitted to be continued it would continue in the old number and the parties to the litigation would be able to get their claim adjudicated on merits earlier while on the other hand if such subsequent registration is not held to be of any avail, all that would happen is that a fresh suit can be filed immediately after such registration and then it will bear a new number of a subsequent year. That would further delay the adjudicatory process of the court as such a new suit would take years before it gets ready for trial and the parties will be further deprived of an opportunity to get their disputes adjudicated on merits at the earliest and the arrears of cases pending in the court would go oh mounting."
In the present case also it is sought to be argued by the Respondents that as on the date of the filing of the present petition, it was not maintainable in view of the moratorium declared by the Hon'ble NCLT in the insolvency proceedings initiated against both the Respondents. In view of the judicial dicta referred hereinabove, this Court is of the considered opinion that now that the insolvency proceedings stand terminated and the moratorium stands lifted, the defect in the earlier filing no longer survives. To direct the Petitioner to file a fresh petition u/s 34 of the Arbitration and Conciliation Act would only further delay the adjudicatory process of the Court and would lead to multiplicity of litigation. This Court therefore holds that there is now no bar in continuation of the present petition.
7. Coming now to the merits of the present petition, though as narrated hereinabove there are various grounds on which the aforementioned Award has been challenged by the Petitioner, Ld. Counsel for the Petitioner, Sh. Amandeep Singh has submitted before this Court that the Arbitral Award in the present case is liable to be set aside on one main ground itself namely that it has been passed by an Arbitrator who was unilaterally ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 7 of 11 Digitally signed by ANU ANU GROVER GROVER BALIGA Date:
BALIGA 2025.03.03
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appointed by the Respondent, DDA. In support of this contention, Ld. Counsel for the Petitioner has relied upon the following judgments:-
• TRF Ltd. vs. Energo Engg. Projects Ltd., (2017) 8 SCC 377. • Perkins Eastman Architects DPC vs. HSCC (India) Ltd. AIR 2020 SC 59.
• Dharma Partisththanam vs. M/s Madhok Construction Pvt. Ltd. AIR 2005 SC 214.
• Alupro Building Systems Pvt. Ltd. vs. Ozone Oversees Pvt. Ltd. 2017 (162) DRJ 412.
• Union of India vs. Tecco Trichy Engineers And Contractors AIR 2005 SC 1832.
• Soya Finance Pvt. Ltd. vs. Tirupati Paper Mills Pvt. Ltd. and Others 106 (2003) DLT 653.
• Dhembla Enterprises vs. Chelsea Products & Ors., 2002 (suppl.) ARBLR584 (Delhi).
8. As regards the plea of limitation taken by the Respondents, Ld. Counsel for Petitioner has submitted that the Petitioner became aware of the Award only when the Respondent herein filed a petition for the execution of the arbitral award. He points that the petition has been filed within the prescribed period of limitation starting from the date of receiving of the copy of the Award. In the alternative, it has also been submitted by Ld. Counsel for Petitioner that since the Sole Arbitrator had no jurisdiction to pass the Award and the said fact goes to the root of the matter, the Arbitral Award can be challenged at any stage.
9. I have considered all the submissions made by the Ld. Counsel for the Petitioner and have gone through the entire judicial dicta referred to by him. The judicial dicta relied upon by learned Counsel for the Petitioner makes it clear that it is impermissible for a party to unilaterally appoint an Arbitrator in view of Section 12 (5) of the Arbitration and Conciliation Act read with 7 th Schedule of the said Act.
ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 8 of 11 Digitally signed ANU by ANU
GROVER
GROVER BALIGA
BALIGA Date: 2025.03.03
15:18:58 +0530
10. In the present case, the relevant Clause of the agreement between the parties, in pursuance to which the Arbitrator in the present case came to be appointed is reproduced as below :-
Clause 8.1 If any dispute or difference of any kind whatsoever arise between the parties in connection with or arising out of this Agreement or any part thereof, such dispute or difference shall be referred to an acceptable sole arbitrator under the provisions of the Indian Arbitration and Conciliation Act, 1996, or any enactment or modification there under. The sole arbitrator shall be appointed by party A. The venue for arbitration shall be at New Delhi and the language shall be English subject thereto, the courts in New Delhi shall have jurisdiction to entertain all requests for interim measures and reliefs, and disputes, appeals, etc between the parties.
The parties hereby waive any right to claim the jurisdiction of any other Court on the ground that the choice of venue is onerous or otherwise inconvenient to them.
11. Clearly, the aforementioned Clause gives the sole authority to the Respondents herein to unilaterally appoint an Arbitrator and therefore in view of the law laid-down by the Hon'ble Supreme Court in the Judgments relied upon by the Ld. Counsel for Petitioner, the Award given by the Sole Arbitrator in the present case is to be held as nonest and without jurisdiction.
12. Further in the considered opinion of this Court, the contention of the Respondents that the Petition is barred by limitation has no merit in view of the law laid-down by the Hon'ble Delhi High Court in the case titled and reported as Telecommunication Consultants India Ltd. v. Shivaa Trading, 2024 :
DHC : 3094. In the said case before the Hon'ble Delhi High Court, a similar contention had been taken on behalf of the Respondent namely that the Petition ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 9 of 11 Digitally signed ANU by ANU GROVER GROVER BALIGA BALIGA Date: 2025.03.03 15:19:05 +0530 u/s 34 of the Arbitration and Conciliation Act filed beyond the period of 120 days should not be allowed to succeed. Dealing with the said contention, the Hon'ble Delhi High Court held that since the order passed by the Ld. Arbitrator was without jurisdiction and is therefore nonest and void ab-initio, the same can be challenged at any stage. In particular in para no. 27 it has been observed as follows :-
"27. There also cannot be any cavil with the proposition of law that a defect of jurisdiction, which renders a decision void, can be challenged at any stage, since such defect strikes at the very foundation of the power of the court or tribunal to decide a dispute."
13. In view of the aforementioned judicial dicta it is to be held that the present case cannot be dismissed on the ground that it is time barred and it is to be held that the Award given by the Ld. Sole Arbitrator in the present case is nonest and void ab-initio. Even otherwise, the Respondents have failed to bring on record any material to sufficiently prove that the Petitioner was made aware of the Arbitration Proceedings either by them or the Ld. Arbitrator. In such view there are no grounds for this Court to doubt the assertion of the Petitioner, on oath, that it became aware of the Arbitral amount only when the Respondents filed a petition for execution of the Arbitral Award and received a copy of the Award only on 27.04.2018. The present petition having been filed on 25.05.2018 has been filed within 90 days thereof is therefore within limitation.
14. In view of the discussion hereinabove, the award challenged in the present case therefore is liable to be set aside. As such, the present petition filed under Section 34 of the Arbitration and Conciliation Act stands allowed and the Arbitral Award dated 02.05.2017 passed by the learned Arbitrator Ms. Rekha Gupta stands set aside.
ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 10 of 11 ANU Digitally signed
by ANU GROVER
GROVER BALIGA
Date: 2025.03.03
BALIGA 15:19:12 +0530
15. This file be consigned to Record Room after due compliance.
Digitally signed by ANU ANU GROVER
GROVER BALIGA
Announced in the open court BALIGA
Date: 2025.03.03
15:19:22 +0530
on 28th February, 2025. (Anu Grover Baliga) District Judge (Commercial Court-04) South-East/Saket Court New Delhi ARBTN (COMM) No 165/18 Learning Temple English Medium School Vs. M/s EDU Smart Services Pvt. Ltd. Page 11 of 11