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Delhi District Court

Ms Anand Offset Printers vs Ms Ess Dee Nutech Infrinities on 16 February, 2024

          IN THE COURT OF MS. RUCHIKA SINGLA,
       ADDL. DISTRICT JUDGE-03, NORTH-WEST DISTT.,
                  ROHINI COURTS, DELHI


16.02.2024
                               ARBTN no. 57736/16

                   M/S ANAND OFFSET PRINTERS
                                Vs.
                  M/S ESS DEE NUTECH INFRINITIES

                                         ORDER

1. These are objections U/s 34 of the Arbitration & Conciliation Act filed by the petitioner. The respondents' reply to the said objections was filed. Detailed arguments have been advanced by both the parties.

2. I have also gone through the record.

3. Briefly stated the facts of the case, as alleged by the petitioner are that the petitioner is a proprietorship concern dealing in the business of printing. It is submitted that on 24.02.2005, the petitioner had placed an order for supply of a printer model No.1830S with the respondents. The total consideration amount for this machine was fixed at Rs. 6,65,600/-. The petitioner paid a sum of Rs.6,00,000/- as advance to the respondent. The balance amount of Rs.65,600/- was ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 to be paid upon the delivery of the machine. It is submitted that when the machine was delivered by the respondent, the model number which was ordered by the petitioner was not delivered and in fact the respondent delivered a machine of model number 1800E. The petitioner made several communications to the respondent for the redressal of his grievance, but in vain. Hence, the petitioner filed a complaint before the District Consumer Disputes Redressal Forum at Jalgaun. The Ld. Consumer Court passed the order in favour of the petitioner on 13.01.2006. The respondent preferred an appeal against the said order but the same was also dismissed by the State Consumer Commission.

4. Thereafter instead of complying with the orders of Ld. Consumer Forum, the respondent unilaterally appointed an Arbitrator. The Ld Arbitrator did not follow the principles of natural justice. The petitioner received the notice of the appointment of the Arbitrator and he objected to the said appointment in view of the orders of Ld. Consumer Court. However, instead of deciding the objections filed by the petitioner, the Ld. Arbitrator went ahead and passed the impugned award against the petitioner. Hence, it is submitted that the present award passed by the arbitrator is without juridiction. Hence, the same is not enforceable in the eyes of law.

5. It is submitted that on the merits of the case also, the award which was passed by the Ld. Arbitrator is not enforceable. It is ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 submitted that the award has been passed in a mechanical manner. The sale agreement between the parties was not referred by the Ld. arbitrator while passing the award. It is submitted that the sale agreement was the most essential piece of evidence as the whole transaction depended upon the same. However, despite the same, the same was not considered by the arbitrator. The Ld. Arbitrator did not consider the fact that the respondent did not prove the delivery of the correct machinery to the petitioner. Hence, it submitted that on merits also, the award of the Ld. Arbitrator is liable to be set aside.

6. Ld. Counsel for the petitioner further argued that in view of the judgment passed by Hon'ble Supreme Court in case titled SMT. M. HEMALATHA DEVI & ORS. Versus B. UDAYASRI CIVIL APPEAL NOS. 6500-6501 of 2023 decided on 05.10.2023, once the matter was subjudice before the Ld. District Consumer Disputes Redressal Forum, the same could not have been referred to the arbitrator. Hence, it is submitted that in view of all the above mentioned grounds, the award of the arbitrator is liable to be set aside.

7. The objections have been strongly opposed by the Ld counsel for the respondent. It is submitted that as per contract between the parties, the respondent delivered the correct machinery to the petitioner. The installation report of the said machinery is on record which bears the signatures of the petitioner. However, the petitioner, only to evade his liability to pay the balance amount to the ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 respondent, initiated the proceedings before the Ld. Consumer Forum. It is submitted that as per the contract between the parties, the matter was to be settled by way of arbitration. However, the petitioner did not move an application under Section 11, Arbitration Act before the concerned court. Further, it is stated that as per the contract between the parties, Ld. Arbitrator was appointed after giving due notice to the petitioner. However, he himself did not appear before the Ld. Arbitrator and he was proceeded against exparte. It is submitted that the grounds which are taken by the petitioner are frivolous and without any basis. The Ld.Arbitrator has passed the award in the favour of the respondent after going through the entire facts of the case. Hence, it is submitted that there is no ground for the setting aside of the award in question. Hence, the objections may be dismissed.

8. Record perused.

9. The facts of the case are as mentioned above. It is not in dispute that a contract was entered into between the parties whereby the respondent was to supply one particular model of a machine to the petitioner for a total consideration amount of Rs. 6,65,600/-. It is also not in dispute that the respondent did supply a machine to the petitioner. However, the petitioner has alleged that the machinery which was supplied was not the same machinery which was ordered ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 by him, while the respondent has alleged that the machinery supplied was of the same model.

10. However, not going into the merits of the case, it is a matter of record that before the initiation of the Arbitral proceedings, the petitioner had filed a complaint before Ld. District Consumer Disputes Redressal Forum at Jalgaun. The petitioner has placed on record the copy of order dt. 13.04.2006, passed by Ld. District Consumer Disputes Redressal Forum. Perusal of the said order shows that the complaint was presented by the petitioner before the Ld. Consumer Disputes Redressal Forum on 21.12.2005. The original arbitral award is before this court. As per the arbitral record, the arbitrator was appointed by the respondents on 28.02.2008. Hence, it is a matter of record that the arbitration proceeding were initiated after the first order was passed by the District Consumer Disputes Redressal Forum. In this regard, the judgment referred to by the Ld. Counsel for the petitioner is highly relevant. In SMT. M. HEMALATHA DEVI & ORS. Versus B. UDAYASRI CIVIL APPEAL NOS. 6500-6501 of 2023 decided on 05.10.2023, the Hon'ble Supreme Court has observed:-

"The arbitrability of a dispute has to be examined when one of the parties seeks redressal under a welfare legislation, in spite of being a signatory to an arbitration agreement. 'The Consumer Protection Act' is definitely a piece of welfare legislation with the ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 primary purpose of protecting the interest of a consumer. Consumer disputes are assigned by the legislature to public fora, as a measure of public policy. Therefore, by necessary implication such disputes will fall in the category of non-arbitrable disputes, and these disputes should be kept away from a private fora such as 'arbitration', unless both the parties willingly opt for arbitration over the remedy before public fora.

In Fair Air Engineers (P) Ltd. v. N.K. Modi (1996) 6 SCC 385, Section 8 of the Arbitration Act, 1996 was considered in light of the provisions of the 1986 Act.

"16. It would, therefore, be clear that the legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act."

21. This Court ultimately held that the main purpose of bringing an amendment inter alia in Sections 8 and 11 of the Arbitration Act, 1996 was to minimise the scope of judicial authority, which was to refuse reference to arbitration only on the ground when it prima facie ARBTN 57736/16 M/S ANAND OFFSET PRINTERS Vs. M/S ESS DEE NUTECH INFRINITIES Page 10 of 10 finds that there was no valid arbitration agreement. The legislative intent for the amendment was confined to limiting judicial intervention, and once the Court finds that there is a valid arbitration agreement, it has no option but to refer the matter for arbitration. But this would not mean that where the matter itself is non- arbitrable, or is covered by a special legislation such as the Consumer Protection Act, it still has to be referred for arbitration.

11. In view of the above observations, it is apparent that though a matter which is pending before the Consumer Court can be referred for Arbitration, the same is not mandatory. For that purpose, an appropriate application has to be filed before the Ld. Consumer Court for reference of the matter to arbitration. In the present matter, no such application was filed before the Ld. District Consumer Court. In fact the matter was already disposed of by the Ld. District Consumer Court at Jalgaon when the arbitration proceedings were initiated, unilaterally by the respondent. The arbitration proceedings were not consensual. Further, at the cost of repetition, final order had already been passed by the Ld. District Consumer Court. Hence, when a court of law had already passed its order on the subject matter dispute, the Ld. Arbitrator could not have assumed jurisdiction and passed the award, in violation of the order of the Ld. District Consumer Court.

12. Further, perusal of the arbitral record shows that upon service, the petitioner filed his objections to the appointment of the Arbitrator but instead of disposing of the same, as per law, the Ld. Arbitrator merely stated on 25.07.2009 that "Since the parties have agreed to the arbitration by sole arbitrator in terms of Clause 19 of the agreement, the respondent cannot wriggle out of the agreed forum of jurisdiction at this stage". Perusal of the objections shows that the petitioner had clearly mentioneed that the matter was subjudice before the hon'ble State Consumer Forum at Aurangabad. However, Ld. Arbitrator ignored the same and went ahead with the arbitration proceedings. In view of the same, considering the observations of the Hon'ble Supreme Court, once the matter was already subjudice before a court of law, i.e. the District Consumer Redressal Forum and thereafter the State Consumer Dispute Redressal Forum, the Ld. Arbitrator could not have proceeded with the arbitration proceedings, in the absence of any such order regarding the reference of the matter to arbitration by the concerned court.

13. At the cost of repetition, the proceedings could not have been initated unilaterally after the passing of the award in the favour of the petitioner by the Ld. Consumer Court. This was done in clear violation of judicial propriety and same is violative of public policy, as the same is against the procedure established by law. Hence, the arbitral award is liable to be set aside. In view of the same, the objections are allowed. The arbitral award dt. 15.01.2011 is set aside.

The original arbitral award be sent back to the Ld. Arbitrator, as per rules. File be consigned to record room.

                                           RUCHIKA          SINGLA
                                           SINGLA           Date:
                                                            2024.02.17
                                                            16:01:50 +0530
                                      (RUCHIKA SINGLA)
                                        ADJ-03 (N/W)
                                Rohini Courts :Delhi/16.02.2024




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