Delhi District Court
M/S Omega Marketing Pvt. Ltd. And Ors vs Bostik India Private Limited And Ors on 30 April, 2024
IN THE COURT OF RAJESH KUMAR GOEL District Judge
(Commercial Court) -02, Central, Tis Hazari
OMP (COMM.) No. 112/20
CNR No. DLCT 01-008276-2020
DLCT010082762020
1. M/S Omega Marketing Pvt. Ltd
(Gurbaksish Group) A-5/1, Naraina Industrial Area,
Phase 1, New Delhi 110028
2. Krishna Agencies
through Gurbakshish Gulati
A-5/1, Naraina Industrial Area,
Phase 1, New Delhi 110028
3. Industrial Marketing
through Gurbakshish Gulati
A-5/1, Naraina Industrial Area,
Phase 1, New Delhi 110028 ......Petitioners
Versus
1. Bostik India Private Limited
304-305, Rattan Jyoti Building
18, Rajendra Place, New Delhi 110008
2. Shri Sudhir Nandrajog
Sole Arbitrator/Senior Advocate
A-16, Sector -14
Noida, 201301 ......Respondents
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited
OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 1 of 41 )
Date of filing of suit : 19.11.2020
Date of Arguments: 27.04.2024
Date of Judgment : 30.04.2024
Order :
1. Vide this order, I shall dispose of the present
petition/objections under section 34 of Arbitration &
Conciliation Act, 1996 ( hereinafter referred to as
'Act') filled by the petitioners against the
respondents assailing the interim award dated
09.4.2018 (hereinafter referred to as "impugned
award"). Petitioners namely M/s Omega Marketing
Pvt. Ltd., Krishna Agencies and Industrial
Marketing were respondents before the
Ld.Arbitrator (Arrayed as respondent no.2 in the
present petition). Respondent no.1 Bostik India Pvt
Ltd. was the claimant before the Ld. Arbitrator.
Facts of the case:
2. The brief facts of the case as gleaned from the award, pleadings of the parties and the other material available on record are that the respondent no.1 company is engaged in the business of manufacturing of industrial adhesives and the petitioner no.1 company is engaged in the business of distributing, supplying and marketing of the industrial adhesive in the region of Delhi supplied M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 2 of 41 ) by the respondent no.1. Petitioner no.2 and 3 are stated to be the partnership firms which used to place the order to respondent no.1 through petitioner no.1.
3. As per the case set up by the respondent no.1 company before the Ld. Arbitrator is that in the year 1994, the petitioner no.1 was appointed as the distributor for supply and marketing of industrial adhesive for Delhi region by Coates of India Ltd., the Predecessor of the respondent no.1 company; in the year 2001, Coates of India Ltd was taken over by the respondent no.1 and on the representation being made by the petitioner no.1, respondent no.1 agreed to continue with the petitioner no.1 as their distributor for supplying and marketing of industrial adhesive for Delhi region which was subsequently further renewed; as per the agreement petitioner no.2 and 3 were customers of petitioner no.1, whose wholesale turnover agreed to be considered for calculating for giving volume discount to petitioner no.1.
4. The respondent no.1 noticed that the sale of petitioner no.1 has drastically fallen in the year 2005 but owing to its long past association and M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 3 of 41 ) assurance given by the petitioner no.1, the distribution agreement was further renewed.
5. It was the case of the respondent no.1 that respondent no.1 had been supplying the goods to the petitioners from time to time and various invoices were raised; each and every invoice had an arbitration clause which basically provided that in case any dispute arises over sale and the purchase of the concern assignment, the same shall be put to arbitration.
6. It was the further case of the respondent no.1 that petitioner no.1 delayed the payments which were due to the respondent no.1 from various customers of the petitioner no.1 and also delayed the submission of necessary sales tax declarations i.e 'C'- Forms, due to which respondent no.1 suffered losses; Various emails/communications were sent to the petitioner no.1 but no payments were made. Petitioner no.1 was informed by the respondent no.1 that further supply of the product would be against the payment only. Respondent no.1 continued to raise its demand for payment of its dues but the petitioner no.1 continued to violate the terms of the agreement and failed to make the M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 4 of 41 ) payment to the respondent no.1.
7. Respondent no. 1 having no other option is said to have sent the legal notice dated 07.5.2008 to the petitioner no.1 but the petitioners instead of clearing their dues vide their reply dated 23.5.2008, raised various false and frivolous allegations against the respondent no.1.
8. It was also the case of the respondent no.1 that vide legal notice dated 6.10.2008, petitioner no.1 was called upon to refer all the dispute between the parties to the Arbitration of Mr. Arjun Bhandari under the arbitration clause provided in each and every invoice sent to the petitioner no.1 from time to time; petitioner no.1 even disputed the existence of any arbitration clause between the parties therefore respondent no.1 filed a petition u/s 11 of the Act before the Hon'ble High Court of Delhi for appointment of the Arbitrator. Hon'ble High Court of Delhi vide order dated 31.7.2009, has been pleased to appoint Sh. Sudhir Nandrajog, who is arrayed as respondent no.2 in the present petition, to adjudicate the dispute which had arisen between the parties and this is how the dispute came to be placed before the Ld. Arbitrator.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 5 of 41 ) Proceedings before the Ld. Sole Arbitrator.
9. Pursuant to the appointment of the Ld. Arbitrator by the Hon'ble High Court of Delhi, the respondent no.1 filed its claim before the Ld. Arbitrator against the petitioners praying for a recovery of Rs 51,58,359/- alongwith pendentelite and future interest @18% p.a from the date of filing of statement of claim till its actual realization.
10. The petitioners herein filed the reply to the claim of the respondent no.1 before the Ld. Arbitrator taking certain preliminary objections and the claim of respondent no.1 was further challenged on merits also.
11. Record would indicate that during the proceedings pending before the Ld. Arbitrator, vide order dated 19.8.2010, the petitioners/respondents therein had supplied the 'C'- Forms to the Ld. Counsel for the respondent no.1/petitioner therein. Ld. Arbitrator noted that the same are given without prejudice to the contention raised by either party and the case was proceeded further for settlement of issues.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 6 of 41 )
12. Vide order dated 27.8.2010, Ld. Arbitrator framed the issues and the case was put to trial/evidence.
13. Thereafter, the respondent no.1 preferred an application u/s 31 (6) of the act praying for an interim award on the ground that by filing the said 'C'- Forms, there is an admission on the part of the petitioners with regard to the supply of the goods by the respondent no.1 to them and since no payment has been made towards the same, it was prayed that interim award may be passed.
14. Petitioners herein filed the reply to the said application in which in addition to the other grounds taken, it was pleaded that mere issuance and supply of the C Forms, does not constitute any admission with regard to the liability on the part of the petitioners.
15. After hearing both the parties on the aforesaid application, the Ld. Arbitrator came to the conclusion that respondent no.1 has been successful in discharging the onus that there is admission on M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 7 of 41 ) the part of the petitioners with regard to the supply of the goods in respect of which 'C'- Forms which have been provided by the petitioners during the course of Arbitratoral proceedings and accordingly impugned interim award dated 09.04.2018 came to be passed in favour of the respondent no.1 in the sum of Rs 24,61,847/- and against the petitioners alongwith interest @ 12% p.a .
16. Thereafter, petitioners moved an application u/s 33 of the Act before the Ld. Arbitrator praying for correction in the interim award dated 09.4.2018 by considering the documents filed alongwith the application.
17. The respondent no.1 filed reply to the aforesaid application and took the objections to the effect that the application moved on behalf of the petitioners u/s 33 of the Act is not maintainable as same is in the nature of an appeal and not for correction in the interim award.
18. Vide order dated 6.1.2020, Ld. Arbitrator dismissed the aforesaid application observing that the limitation for filing the application seeking modification in the interim award is 30 days and the M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 8 of 41 ) application having being filed beyond the period of 30 days, is not maintainable. Ld. Arbitrator further observed that the various contentions which have been raised in the application by the petitioners, the same would fall within the ambit of section 31(1)(b) of the Act and for such contentions to be considered by the Ld. Arbitrator, it is necessary that both the parties agreed that such contentions should be considered and decided by the Arbitrator. Since there was no consent of the respondent no.1 for consideration of the said application, the Ld. Arbitrator observed that application is not maintainable and ultimately the said application came to be dismissed vide order dated 06.1.2020.
19. In the background of the aforesaid factual position, the petitioners have challenged the interim award dated 09.4.2018 by way of present petition/objections.
Proceedings before this Court:
20. On receipt of the present petition/objections, vide order dated 19.11.2020, the notice was directed to be given to the respondent no.1 only and not to the respondent no.2 as he is the Sole Arbitrator but M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 9 of 41 ) subsequently, the notice was given to the respondent no.2 also to produce the record of Arbitration.
21. Respondent no.1 put the appearance. Vide order dated 31.3.2022, on an application moved on behalf of the petitioners u/s 36 of the Act, Ld Predecessor of this Court stayed the execution of the interim award dated 09.4.2018 during the pendency of the present objections subject to the depositing of 70% of the award amount in the court. Here it pertinent to mention that admittedly the said amount has not been deposited till date, therefore, there is no stay of the execution proceedings.
22. The ordersheet dated 16.3.2023 would reveal that reply on behalf of the respondent no.1 to the present petition/objections was not filed. Ld. Counsel for the respondent no.1 submitted that he does not wish to file any reply to the same and is ready to argue orally.
23. Subsequently, the original arbitration record was received by this court. The ordersheet dated 2.11.2023 would further reveal that Ld. Predecessor of this Court granted the respondent no.1 a last opportunity to file the reply within two weeks and M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 10 of 41 ) both the parties were directed to file the written synopsis also. Despite that no reply has been filed by the respondent no.1 to the present petition/objections but the written synopsis have been filed by both the parties.
24. The petitioners have assailed the impugned award, mainly on the following grounds:
i. Respondent no.1 had filed one combined case against three different entities i.e petitioners which is in gross violation of the settled principles of law as Respondent no.1 cannot be allowed to club different cause of action in one statement of claim. ii. The claim of the respondent no.1 was barred by limitation and there was no acknowledgment of the debt by the petitioners.
iii. Ld. Arbitrator failed to appreciate that the submission of the C Forms by the petitioners to respondent no.1 cannot be considered as admission of the debt.
iv. The interim award needs to be clarified on the ground on maintainability of the petition after the evidence is adduced by the parties.
v. Ld. Arbitrator failed to appreciate that in the claim petition, no amount has been shown by the respondent no.1 on account of penalty /interest to be paid on account of sales tax or any loss.
vi. The Ld. Arbitrator failed to appreciate that the amount of Rs 2461847/- awarded by interim award even does not reflected in the application moved u/s 31(6) of the Act by the respondent no.1.
vii. The Ld. Arbitrator failed to appreciate that respondent no.1 has given a wrong statement regarding the status of the petitioner no.2 and 3 claiming to be the partnership firms.
viii. There was a contradiction in the amount claimed by the respondent no.1 which is clearly evident from the statement of claim filed by the respondent no.1.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 11 of 41 ) ix. There was no agreement for payment of interest but Ld. Arbitrator has awarded the interest also in favour of the respondent no.1.
x. Ld. Arbitrator failed to appreciate the conduct of the respondent no.1 as respondent no.1 is guilty of its own conduct as the volume discount, credit notes were always delayed by the respondent no.1 for the reasons best known to them .
xi. Ld. Arbitrator has failed to appreciate the preliminary objections taken by the petitioners in their reply filed to the statement of claim by the respondent no.1.
xii. Ld, Arbitrator failed to appreciate that respondent no.1 has conducted a breach of contract for which the petitioners has suffered losses of business reputation and they are entitled to claim the damages from respondent no.1.
xiii. Vide reply dated 30.05.2008 to the notice dated 7.5.2008, it was specifically brought to the notice of the respondent no.1 that petitioner no.2 M/S Krishna Agencies was closed for last about 3-4 years but the Ld. Arbitrator has also failed to appreciate the same.
xiv. Ld. Arbitrator while passing the interim award has misconducted himself and has passed the award in most arbitrary, capricious and collusive manner which has raised the question on his impartiality in conducting such arbitration proceedings, therefore, the interim award dated 09.4.2018 is liable to be set aside.
25. As noted herein above, both the parties have already filed the written synopsis.
26. The main objection of the Ld. Counsel for the petitioners is that impugned award has been passed only on the basis of 'C'- Forms which were supplied by the petitioners to the respondent no.1 during the pendency of the arbitration proceedings.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 12 of 41 ) He has taken me to the order dated 19.8.2010 passed by the Ld. Arbitrator and pointed out that 'C'- Forms were handed over without prejudice to the rights of the parties, which is duly recorded in the order dated 19.8.2010.
27. By referring to the impugned award, Ld. Counsel for the petitioners vehemently argued that the said award was passed by relying upon the judgment of Hon'ble High Court of Delhi in a case titled as Chemical System Technologies Vs Simboli Sugar Mills Ltd, as reported 2013, SSC OnLine Delhi 416, which was set aside in appeal and therefore, the Ld. Arbitrator has wrongly placed the reliance upon such judgment.
28. By referring to the another judgment passed in the case of Zion Steel Ltd. Vs. Subtleweigh Electric (India) Pvt. Ltd., CP 326/2013, DoD 22.1.2014, Calcutta, Ld. Counsel submitted that in that case it was observed that the submissions of 'C'- Forms would not mean an admission of the debt but the Ld. Arbitrator has not considered the same. It is further stated that the claim of the M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 13 of 41 ) respondent no.1 was barred by limitation. Ld. Counsel for the petitioner has relied upon one more judicial authority namely M/S Alliance Paints and Varnish Works Pvt. Ltd vs. Hari Kishan Gupta ( deceased) through LRs, RFA no. 54/1997, DoD 10.2.2010, DHC.
29. Per contra, Ld. Counsel for the respondent no.1 submitted that he would simply submit that respondent no.1 stands by the impugned award passed in its favour and the present objections filed by the petitioners are liable to be dismissed.
30. I have perused the record and heard the Ld. Counsel for the petitioners and the respondents. I have also gone through the material available on record.
31. The amended Section 34 of the 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, M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 14 of 41 ) 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 force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 15 of 41 ) (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."
32. It is no more res integra that, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding the application filed under Section 34 of the Act, Courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or reappreciation of matters of fact as well as law.
33. Having regard to the contentions urged and the issues raised, it shall also be apposite to take note of the principles enunciated by the Hon'ble Supreme Court in some of the relevant decisions on the scope of challenge to an arbitral award under Section 34 of the Act.
34. In so far as the state of the law prior to 2015 Amendment is concerned, the situation stands encapsulated by the Hon'ble Supreme Court , in M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 16 of 41 ) DDA v. R.S. Sharma and Co., (2008) 13 SCC 80, where the grounds whereby courts may intervene against arbitral award, were listed, which are as under:-
"21. From the above decisions, the following principles emerge:
(a) An award, which is
(i) contrary to substantive provisions of law; or
(ii) the provisions of the Arbitration and Conciliation Act, 1996; or
(iii) 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 Section 34(2) of the Act.
(b) 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.
(c) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
(d) It is open to the court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India."
35. One of the grounds on which the award could have been assailed was it to have been in conflict with the public policy of India. This concept has been elaborately considered by Hon'ble Supreme Court in Associate Builders v. DDA, (2015) 3 SCC 49 , wherein it was held:-
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 17 of 41 ) "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) "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 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."
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 18 of 41 )
36. The observations made in the case of Associate Builders v. DDA(supra), were followed by Hon'ble Supreme Court in the case of Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 and has spelt out the contours of the limited scope of judicial interference in reviewing the arbitral awards under the Act and observed thus : (SCC pp. 169-71, paras 34-41) "34. 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 paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 expansion has been done away with. In short, Western Geco , as explained in paras 28 and 29 of Associate Builders , would no longer obtain, as 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 para 30 of Associate Builders .
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 19 of 41 )
35. 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 paras 36 to 39 of Associate Builders , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. 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 paras 18 and 27 of Associate Builders , or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders . 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 , as understood in Associate Builders , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), 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 M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 20 of 41 ) the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 inAssociate Builders , 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(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders , 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 M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 21 of 41 ) 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."
37. The position in Associate Builders (supra) was recently summarised by Hon'ble Supreme Court in the case of Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum, (2022) 4 SCC 463 and held as under:-
"42. In Associate Builders , this Court held that an award could be said to be against the public policy of India in, inter alia, the following circumstances:
42.1. When an award is, on its face, in patent violation of a statutory provision. 42.2. When the arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute.
42.3. When an award is in violation of the principles of natural justice.
42.4. When an award is unreasonable or perverse. 42.5. When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act.
42.6. When an award is contrary to the interest of India, or against justice or morality, in the M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 22 of 41 ) sense that it shocks the conscience of the Court."
38. Here I may note the observation of Honble Supreme Court made in another recent case of Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corpn. Ltd., (2024) 2 SCC 375 at page 401:-
"32. Post award interference and the extent of the second look by the courts under Section 34 of the A&C Act has been a subject- matter of perennial parley. The foundation of arbitration is party autonomy. Parties have the freedom to enter into an agreement to settle their disputes/claims by an Arbitral Tribunal, whose decision is binding on the parties. [ See Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : which examines arbitrability and non-arbitrability of subject-matters and claims, which aspect will not be examined in this case.] It is argued that the purpose of arbitration is fast and quick one-stop adjudication as an alternative to court adjudication, and therefore, post award interference by the courts is un-warranted, and an anathema that undermines the fundamental edifice of arbitration, which is consensual and voluntary departure from the right of a party to have its claim or dispute adjudicated by the judiciary. The process is informal, and need not be legalistic [ The expression "judicially", does not equate arbitration with formal/court proceedings, and would include a just and fair decision.] . Per contra, it is argued that party autonomy should not be treated as an absolute defence, as a party despite agreeing to refer the disputes/claims to a private tribunal consensually, does not barter away the constitutional and basic human right to have a fair and just resolution of the disputes. The court must exercise its powers when the award is unfair, arbitrary, perverse, or otherwise infirm in law. While arbitration is a private form of dispute resolution, the conduct of arbitral proceedings must meet the juristic requirements of due process and procedural fairness and reasonableness, to achieve a "judicially" sound and objective outcome. If these requirements, which are equally M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 23 of 41 ) fundamental to all forms of adjudication including arbitration, are not sufficiently accommodated in the arbitral proceedings and the outcome is marred, then the award should invite intervention by the court."
39. In the case of Konkan Railway Corpn. Ltd. v.
Chenab Bridge Project, (2023) 9 SCC 85, it was held that :
"19. Therefore, the scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. [UHL Power Co. Ltd. v. State of H.P., (2022) 4 SCC 116, para 15 :. See also : Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, paras 24, 25.] It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal. [Ibid; Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, para 11.1 : In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] , this Court held : (Dyna Technologies case [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] , SCC p. 12, paras 24-25) "24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards 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. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 24 of 41 ) alternative forum as provided under the law. 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.
25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."
40. In the case of Patel Engg. Ltd. v. North Eastern Electric Power Corpn. Ltd., (2020) 7 SCC 167 , it was held that:-
"22. The present case arises out of a domestic award between two Indian entities. The ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view."
41. In the case of K. Sugumar v. Hindustan Petroleum Corpn. Ltd., (2020) 12 SCC 539 , it was held that:-
"2. The contours of the power of the Court under Section 34 of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 25 of 41 ) to interfere with an arbitral award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute resolution, they must be left to reconcile themselves to the wisdom of the decision of the arbitrator and the role of the court should be restricted to the bare minimum. Interference will be justified only in cases of commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator."
42. In the case of Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022) 1 SCC 131, it was held:-
"28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by Courts while examining the validity of the arbitral awards. The limited grounds available to Courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the Courts. There is a disturbing tendency of Courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 26 of 41 )
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2- A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression "patent illegality".
43. Adverting to the present case, the number of objections have been raised in the present petition which may be divided into three categories i.e (a) misjoinder of cause of actions (b) claim of the respondent no.1 before the Ld. Arbitrator was M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 27 of 41 ) barred by limitation (c ) objections on merits i.e no amount was pending or due against the petitioners and the submission of the 'C'- Forms by the petitioners was not an admission of any liability.
44. Now take the first one i.e misjoinder of cause of action. The record would indicate that the aforesaid objection was taken by the petitioners before the Ld. Arbitrator also and the observations and findings of the Ld. Arbitrator on this issue are being reproduced as under:
"31. The learned advocate for the respondents heavily emphasised on preliminary submissions/objections which have been raised by the respondents with regard to maintainability of the petition and the claims therein. The respondents have contended that the present claim petition is not maintainable as against the three respondents simultaneously in one arbitration proceedings in as much as three separate causes of action have arisen and the claimant should have filed separate claim petitions in separate arbitrations against each of the respondents separately.
32. In my considered opinion the same would not be a ground available to the respondents at this stage in as much as the appointment of the arbitrator has taken place pursuant to a petition filed under Section 11 of the said Act by the claimant and the present Tribunal has been constituted under the orders of the court. The entire dispute relating to the composite payment to be recovered by the claimant from the respondent was the subject matter of the petition M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 28 of 41 ) under Section 11.The respondents have been unable to show that any such objection was raised by the respondents before Hon'ble the Chief Justice in the said petition. The respondents have acquiesced to the appointment of the present arbitral tribunal for deciding the entire dispute in relation to the outstanding payment in respect of the three respondents having been referred to the present tribunal under Section 11 of the said Act. Thus, in the considered opinion of the tribunal the objection with regard to the maintainability of the claim on account of misjoinder of orders of action does not survive anymore.
33. Even otherwise, as per the agreement between the parties, which agreement is admitted by both the parties and is relied upon by them, in case of the goods supplied to the respondent No. 1 or through the said respondent to its customers, the liability for making payment for the same is of respondent No.1 in addition to the liability of the customers. Clause i) of the agreement as the reproduced above categorically makes the respondent No. 1 liable not only for making payment of the goods supplied to any of the customers of the said respondent but also the liability of providing the requisite sales tax forms is of the said respondent. Further, from the averments made by the claimant and which have not been denied by the respondent it is amply clear that the three respondents are operating as one economic entity under the effective control and management one gentleman and it seems that clause i) has been inserted in the agreement only on that account. For the aforesaid reason, the contention of the respondent that three separate claims not be clubbed together in one arbitration proceedings is rejected."
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 29 of 41 )
45. The next contention raised by the petitioners is that the claim filed by the respondent no.1 was barred by limitation. The aforesaid contention was also dealt with by the Ld. Arbitrator and the observations of the Ld. Arbitrator are being reproduced as under:
"34. The other contention raised by the respondent is that the entire claim is barred by limitation. The distribution agreement between the parties has been renewed in the year 2006. The goods have been supplied during the said period and even thereafter till the year 2007. Even as per the "C' forms provided by the respondents to the claimant during the course of the arbitration proceedings, it is evident that the goods and the invoices relate to the year 2006 and thereafter. The notice for appointment of the arbitrator had been issued in the year 2008 well within the period of 3 years provided under the Limitation Act for instituting proceedings for recovery of money. In view of section 21 of the Arbitration and Conciliation Act, 1996 the period of limitation has to be seen on the date when steps for initiation of arbitration proceedings have been undertaken by a party. Even otherwise, the respondents have not been able to show as to how the claim is not within the period of limitation. In case any part of the claim was for the period prior to 3 years from the date of the notice issued for initiating arbitration proceedings, the details of the same should have been provided by the respondent. Other than making a bald averment, no details are forthcoming on the part of the respondents.
35. Even otherwise, the present is a case for passing an interim award in view of the admission as contained M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 30 of 41 ) in the act of the respondents in supplying "C' forms during the course of the present arbitral proceedings, and which claims are well within the period of limitation as stated above. Thus, even this contention of the respondents being without any merit is hereby rejected."
46. From the aforesaid observations and the findings of Ld. Arbitrator, it is crystal clear that the aforesaid contentions as raised by the petitioner, were also raised before the ld. Arbitrator and the were duly considered by the Ld. Arbitrator and were decided by him.
47. In para 32 of the impugned award, the Ld. Arbitrator, has given the reasons to the effect that the grounds available to the respondents/petitioners herein, were available at the time of appointment of the Arbitrator by the Hon'ble Chief Justice of India, they have acquiesced to the appointment of the present Arbitral Tribunal for deciding the entire dispute in relation to the outstanding payment in respect of three respondents having been referred to the Arbitrator u/s 11 of the Act. Therefore, the objection of the petitioners with regard to maintainability of the claim on account of misjoinder of orders of action does not survive anymore.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 31 of 41 )
48. In para 33 of the impugned award, by referring to the clause (j) of the agreement to the effect that the goods supplied to the respondent no.1/petitioner no.1 herein or through the said petitioner to its customers, Ld Arbitrator observed that the liability for making payment for the same would be of respondent no.1/petitioner no.1 in addition to the liability of its customers. It was also observed that all the three respondents/petitioners herein, are operating as one economic entity under the effective control and management of one gentlemen and therefore, the aforesaid contentions of the petitioners that three separate claims cannot be clubbed together, came to be rejected.
49. Similarly, the contention of the petitioners on the point of limitation was also duly considered and rejected by the Ld. Arbitrator. The Ld. Arbitrator observed that the distribution agreement between the parties was renewed in the year 2006; the goods were supplied even thereafter till 2007; C Forms were provided by the respondents/petitioners during the course of arbitration proceedings ; the invoices relate to the year 2006; the notice for appointment M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 32 of 41 ) of the Arbitrator was given in the year 2008 which is well within the period of three years provided under the limitation act for instituting the proceedings for recovery of money.
50. By referring to the provision of section 21 of the Act, Ld. Arbitrator further observed that the period of limitation is to be seen on the date when the steps for initiation of arbitration proceedings have been undertaken by the party and the respondents /petitioner herein have not been able to show as to how the claim is not within the period of limitation. Ld. Arbitrator was of the opinion that while passing the interim award on the admission based upon the supply of 'C'-Forms during the course of Arbitral Proceedings, comes well within the period of limitation and aforesaid contention was also rejected.
51. The next main contention of the petitioner is that no amount is outstanding towards the petitioners and the Ld. Arbitrator has wrongly relied upon the 'C'- Forms supplied during the Arbitral proceedings without prejudice to the rights of the petitioner. Ld.Counsel for the petitioner vehemently argued that the reliance placed on the judgment of M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 33 of 41 ) Chemical System Technologies Vs Symbolic Sugar Mills Ltd (Supra) by the Ld. Arbitrator is misplaced as the said judgment was set aside by the Hon'ble High Court of Delhi in appeal.
52. Here it is pertinent to reproduce the observations of the Ld. Arbitrator on the aforesaid issue, which are as under:
"29. The case which has been set out by the claimant is that goods have been supplied to the respondents and for which payment has not been made. It is further the case of the claimant that "C' forms have not been issued by the respondents goods supplied, resulting in an additional tax liability. In this regard a specific case was by the pleace by the respondent that C' forms have been supplied in time. Various defences though have been raised by the respondents, the fact that "C' forms have been issued by the respondents during the course of the arbitration proceedings, is an admission with regard to the supply of the goods with respect to which the said forms have been supplied and also of the corresponding invoices. Until and unless the said goods had been supplied by the claimant and received by the respondents, the question of issuance of the "C' forms would not arise. The C forms/the corresponding amount of tax quantification in respect of the same was the subject matter of the claim set out by the claimant. Only to avoid the quantification and payment of money, the said forms had been supplied by the respondent during the course of the present proceedings. The supply of the said forms constitutes an admission with regard to the supply of the goods. The claimant has relied upon the judgement of the Delhi High Court titled Chemical System Technologies vs Simbhaoli M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 34 of 41 ) Sugar Mills Ltd. reported as 2013_SCC Online Delhi 416, in which it has been held that C' forms having been issued by the defendant alongwith other relevant facts can constitute an admission of liability. The Hon'ble Court considered the fact that the said forms constitute a declaration to the tax authorities with regard to the transaction having been executed between the parties and the revenue implication arising from the same. Thus, they would be relevant factor consider when passing a judgement on admission.
30. In view of the law laid down by the Delhi High Court the claimant in my considered view has discharged the onus with regard to the supply of the goods and receipt of the same by the respondents. The same constitutes a clear admission by conduct on the part of the respondents with regard to the receipt of the goods by it. The onus to show that payment for the said goods has already been made was on the respondents. The respondents have failed to discharge the said onus. It is further pertinent to note that in the present case thought it was the contention of the respondents that the entire forms have been supplied earlier however, the said forms have been supplied during the course of the arbitral proceedings. The fact that payment has been made in respect of the goods covered under the 'C' forms is not even pleaded in the reply to the application and has only sought to be raised during the arguments. This itself as a serious doubt on the stand of the respondents.
36.Another contention of the respondent that various goods in respect of the invoices, the details of which have been given in the statement of defence, have not been supplied by the claimant will also not apply to the goods with respect to which "C' forms have been provided by the respondents. As already held above, in respect of the goods where 'C' forms have been provided by the respondents, the same is a cicar M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 35 of 41 ) admission that the said goods have been received by the respondent and duly accounted for on which either the requisite tax has been paid or the exemption as provided under the relevant laws have been obtained by the respondents. Thus, the plea regarding receipt of the goods will not apply to the claim based upon the C' forms.
37.The stand of the respondent, though not pleaded either in the reply or even in the written submissions of respondent, that in respect of the said goods which form the subject matter of the application under section 31 (6), due payment has already been made has also not been substantiated. The respondent was unable to point out any such payment having been made in respect to the invoices in question from the statement of account which was produced by the respondent. The learned advocates for the respondent attempted to show that the said payment was included in the various on account payments made by the respondents from time to time.
However, no documentary or other evidence was placed before the Tribunal to show that the payment in respect of the goods covered by the 'C' forms in question formed part of the on account payments. The onus to show that the payment for the said goods has been made was cntirely upon the respondent which was to be discharged on the basis of cogent material and evidence has not been discharged by the respondent. The mere averment that the said payments have been made, without any supporting material or evidence, would not suffice.
38. In view of the above, following the law laid down by the Delhi High Court in the judgement aforesaid I hold that the claimant has been successful in discharging the onus that there is an admission on the part of the respondents with regard to the supply of the goods in respect of which C' forms have been provided by the respondents during the course of the present arbitral M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 36 of 41 ) proceedings and thus the claimant is entitled to a decree for the said amount. Thus, an interim award is passed in favour of the claimants in the sum of Rs.24,61,847/-. The claimant would also be entitled to interest on the aforesaid amount. Interest at the rate of 12% p.a. is awarded in favour of the claimant and against the respondent from the date of the respective invoices raised by the claimant and till payment of the same is made by the respondents to the claimant."
53. It is true that Ld. Arbitrator has placed the reliance on the judgment of Chemical System Technologies (Supra) also which subsequently was set aside by the division bench on the consent of the parties. The initial judgment in the said case was passed by the Hon'ble High Court u/o 12 rule 6 CPC and the suit of the plaintiff therein was decreed which appear to have been assailed in appeal and the division bench of Hon'ble High Court allowed the appeal on the basis of the consent of the parties and matter was put to trial. The aforesaid factual position is not in dispute. But it would not help the petitioners. For the sake of convenience the relevant extract of the observation of the Hon'ble High Court made in the said judgment ( judgment passed u/o 12 rule 6 CPC) is reproduced as under:
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 37 of 41 ) "21. The issuance of the 'C'. Forms is an acknowledgment of the defendant having informed its taxation authorities of having purchased goods of the value thereof, on payment of concessional rate of tax. The defendant cannot be permitted to have conflicting stands before its taxation authorities and vis-à-vis plaintiff.
22. The Supreme Court in Phool Chand Gupta Vs. State of A.P. (1997) 2 SCC 591 and Shree Digvijay Cement Co. Ltd. and Another Vs. State of Rajasthan (2000) 1 SCC 688 has held that issuance of 'C' Form is a proof of the sale of the goods having being effected and the goods having been accepted without any demur. The Company Judge of this Court in M/s Gulati Agencies (P) Ltd. /s. M/s Hallex Applied Power Pvt. Ltd. MANU/DE/5118/2012 and in M/s Shyam Dri Power Ltd.Vs. Bhav Shakti Steel Mines Private Limited MANU/DE/4106/2012 and Company Appeals No. 84/2012 titled M/s Hallex Applied Power Pvt. Lid. Vs. M/s Gulati Agencies (P) Ltd. and No. 81/2012 titled Bhay Shakti Steel Mines Pvt. Ltd. Vs. Shyam Dri Power Ltd.
whereagainst were dismissed on 12.10.2012 and 19.09.2012 respectively, has been relying on such 'C' Forms coupled with other circumstances to arrive at a conclusion as to whether the defence to a petition for winding up, is a sham or moonshine or not. Mention may though be made of Elte Vessels Vs. Flex Engineering Ltd.MANU/DE/1169/2004 where a Single Judge of this Court merely on the basis of C' Forms and in the absence of anything else, held the dispute to be a bona fide one. Similarly, a Single Judge of the Bombay High Court in In Re: Reunion Electrical Mfrs. (P.) Lid. MANUMH/0627/2006 also held C Form to be not an acknowledgement of liability.
M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 38 of 41 )
23. Thus, though 'C Form may not be an acknowledgement of liability but along with other facts, can certainly be relied on to take a view on whether there is an implied admission or not."
54. The aforesaid judgment was admittedly set aside in the appeal but we must not miss the observation of the Hon'ble High Court made in para 22 as noted herein above, wherein the judgments of Hon'ble Supreme Court were referred to, to the effect that issuance of 'C'- Form is a proof of sale of goods having being effected and the goods having being accepted without demour. The order of the Hon'ble division bench of High Court, at the most, is confined to the observation made in para 21 of the judgment passed u/o 12 rule 6 CPC. Meaning thereby, even if the said judgment was set aside, as consented by the parties, it does not mean that Hon'ble Division Bench has negated the observations of Hon'ble Supreme Court and settled proposition of law as noted by the Hon'ble Single Judge in para 22, that is still in force and binding as a law.
55. Be that as it may, even if for the sake of argument, the judgment of Chemical System Technologies Pvt Ltd (Supra) is ignored in totality, M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 39 of 41 ) still it would not make any difference because admittedly it is also not a law that 'C'- Form are not to be relied upon as an admission of the supply of the goods. Here it is pertinent to note that 'C'- Form is used in the context of Inter State sale and it is issued by the registered purchaser to the registered seller as against the purchase made from another state.
56. Thus, it is difficult for this court to arrive at a conclusion that the impugned award is patently illegal and is against the well established norms of the law. There is nothing on record indicating that the impugned award is unfair, arbitrary or perverse or there is a violation of any due process. Even if there is possibility of an alternative view in the given circumstances, still it would not be a ground for this court to reverse the finding of the Ld. Arbitrator. Moreover, even if there is erroneous application of law by the Ld. Arbitrator, it cannot also be a ground to challenge the award u/s 34 of the Act as amended up to date.
57. A reading of the materials placed on record, including the impugned award, would disclose that the view taken by the Ld arbitrator is on a M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 40 of 41 ) consideration of the documents and materials placed before him and the conclusion that the petitioners are liable to pay the award amount to the respondent No.1 is a possible and reasonable conclusion. If that is so, I do not see how this court could have re- appreciated the same to come to a contrary finding. Hence, the present petition being devoid of merits is hereby dismissed.
58. File be consigned to record room, as per rules.
Digitally signedRAJESH by RAJESH KUMAR GOEL KUMAR Date:
GOEL 2024.04.30 14:15:30 +0530 (Rajesh Kumar Goel) District Judge (Commercial)-02 Central, Tis Hazari Courts 30.04.2024 Announced in the Open Court today i.e: 30.04.2024 M/S Omega Marketing Pvt. Ltd & ors vs Bostik India Private Limited OMP (COMM.) No. 112/20 Date of order 30.04.2024 (Page 41 of 41 )