Delhi District Court
Ivl Matriculation Hr. Sec. School vs M/S Edu Smart Services Pvt Ltd on 4 May, 2021
In the Court of Shri Sanjiv Jain,
District Judge (Commercial Court)-03, Patiala House Courts
New Delhi
OMP (Comm) No.73/2019
IVL Matriculation Hr. Sec. School,
Irumathur, Post & Village,
Dharmapuri District,
Tamil Nadu 635201
... Petitioner/objector
versus
1. M/s Edu Smart Services Pvt Ltd.
L-74, Mahipalpur Extension, New Delhi-37
2. M/s Educomp Solutions Ltd,
1211, Padma Tower-I,
5, Rajendra Place, New Delhi-08
... Respondents/claimants
Date of institution : 16.04.2019 Date of reserving judgment : 20.03.2021 Date of decision : 04.05.2021 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter called the 'Act' challenges the award dated 19.10.2015 passed by the Arbitrator Sh. J. N. Yadav, District Judge, Retd.
OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.1 of 22 Brief facts:
2. Briefly the facts as stated in the petition are that the petitioner had entered into a tripartite agreement dated 08.07.2011 with the respondents for setting up and implementation of smart class program. As per the agreement, the respondents were to supply and install the requisite hardwares in the premises of the petitioner to provide repository of digital curriculum, support services and necessary consumables. The petitioner was to make payments to the respondents as specified in Annexure-A-2, Annexure B and Annexure C attached with the agreement.
It contained an arbitration clause i.e. clause 9.1 interalia that if any dispute arises between the parties in connection with or arising out of the agreement or any part thereof, such dispute or difference shall be referred to an acceptable Sole Arbitrator to be appointed by the respondent no. 2 and the venue of the arbitration shall be at New Delhi. The agreement was valid for a period of 60 months. Pursuant to the agreement, the petitioner paid Rs. 20,51,875/- from time to time. Dispute arose between them as to the payments. According to the respondents, a sum of Rs. 64,08,125/- became due towards the petitioner as on 30.11.2014. The respondents sent a legal notice calling upon the petitioner to make the payment of the outstanding amount and also informed the petitioner that in the event of non payment of outstanding amount, it shall be presumed that the disputes have arisen between the parties OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.2 of 22 and the notice will be treated as the notice invoking the arbitral proceedings. The petitioner did not make the payments within the specified time stipulated in the notice, which made the respondents refer the claim to the Sole Arbitrator Sh. J. N. Yadav, who passed the impugned award for a sum of Rs. 64,08,125/- as on 31.08.2015 with future interest @ 18% per annum w.e.f. 01.09.2015 till its realization. He also directed the petitioner to pay Rs. 25,000/- as the cost of the arbitration proceedings and Rs. 6500/- towards the expenses.
3. The petitioner challenged the award alleging that it never had the knowledge of the arbitral proceedings and the arbitral award dated 19.10.2015 and it came to know of the award, when it received a notice from the Executing Court i.e. from the Court of the District Judge, Dharmapuri, Tamil Nadu in REP No. 57/2018. It entered the appearance before the Executing Court and applied for its certified copy on 11.02.2019, which it received on 14.02.2019. It is stated that the petitioner came to know of the impugned award in the 2 nd week of February 2019 only.
4. It is alleged that the acceptance of the petitioner was not obtained by the respondents before appointing the Sole Arbitrator, which is in violation of clause 9.1 of the agreement. It never received the notice of invoking of arbitration from the respondents. The purported notice Ex.
OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.3 of 22 P-4 dated 03.03.2014 is almost 9 months prior to the filing of claim before the Arbitrator. The Arbitrator before entering into the reference never tried to verify if the petitioner was informed of invoking of the arbitration. He wrongly presumed that his acceptance was served on the petitioner. It is stated that the petitioner never received any notice from the Arbitrator of the arbitral proceedings and it was wrongly proceeded against ex parte. It is stated that the Arbitrator even did not bother to ensure service on the petitioner, which cast doubt on his impartiality and neutrality in the ex parte arbitral proceedings leading to ex parte award. It is stated that the award has been passed in complete breach of settled norms and in violation of the principles of the natural justice, which is liable to be set aside. Reference is made of the case Dulal Podda Vs. Executive Engineer, Dona Canal Division, 2004 (1) SCC 73, wherein it was held that the appointment of an Arbitrator at the behest of the one party without sending notice to the other party / respondent, ex parte award given by the Arbitrator is illegal and liable to be set aside.
5. It is alleged that the respondents had knowledge of the death of signatory of the petitioner to the tripartite agreement since it was flashed in the newspaper, however, the award was passed subsequent to the death of the signatory, which is a nullity and not binding on the petitioner. It is alleged that the petitioner did not get an OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.4 of 22 opportunity to prove that the claim raised by the respondent does not reflect the true statement as the petitioner has bank statement to prove that it had paid Rs. 5,00,000/- to the respondent no. 2, which sum is not reflected in their statement of claims / account. It is stated that subsequent to the passing the award, a sum of Rs. 5,00,000/- was paid. It is stated that the petitioner has a good case in its favour and in case, the ex parte award is not set aside, it will suffer irreparable loss & injury.
6. Notice of the petition was given to the respondents but they did not prefer to file any reply. The Arbitral record was summoned.
7. It is pertinent to mention that both the respondents were declared insolvent and the NCLT appointed the IRP to represent the respondents.
8. I have heard the arguments advanced by Sh. B. Karunakaran, Ld. Counsel for the petitioner and Karan Khanuja, Ld. Counsels for the respondents. The petitioner also filed the written synopsis.
9. Ld. Counsel for the petitioner reiterated what has been stated in the petition and stated that the impugned ex parte award has been passed against a dead person without verifying and ensuring the service on the petitioner at any stage and the Arbitrator went beyond the scope of the OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.5 of 22 agreement in complete breach of the principles of natural justice. Ld. Counsel stated that the petitioner never had the knowledge of the arbitral proceedings / arbitral award dated 19.10.2015 and it came to know of the same, when it received the notice in REP No. 57/2018 from the Executing Court i.e. the Court of the District Judge, Dharmapuri, Tamil Nadu. There is no proof / record to show that the copy of the award was delivered on the petitioner. It entered its appearance on 17.01.2019 and applied for the certified copy of the award along with the execution petition and obtained the same on 14.02.2019. Ld. Counsel stated that there is no delay in filing the petition under Section 34 of the Act challenging the award.
10. Ld. Counsel stated that the agreement dated 08.07.2011 contained an arbitration clause 9.1, which provides for an acceptable Sole Arbitrator, however, in the present case, no such acceptance from the petitioner was obtained by the respondents. No notice of invoking arbitration was ever issued by the respondents and thus the appointment of Sole Arbitrator was without the legal sanction required for triggering the arbitral proceedings. Even the Arbitrator did not try to verify if the respondents had informed the petitioner about the invocation of the arbitration clause. No notice of the appointment of the Arbitrator or the commencement of the arbitral proceedings was ever sent or served on the petitioner. Ld. Counsel contended that the petitioner never received the OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.6 of 22 notice of the arbitral proceedings and the Arbitrator proceeded with the proceedings with the wrong presumption of service on the petitioner. Ld. Counsel referred Section 23 (1) & 24 (2) of the Act to contend that the parties must be given sufficient advance notice of any hearing or meeting of the Tribunal for the purpose of inspection of documents etc but in this case, no such notice was given. Ld. Counsel stated that in the absence of any notice, the petitioner could not appear before the Arbitrator and as such did not have an opportunity to present its case. Ld. Counsel further argued that the respondents had knowledge about the death of the signatory to the tripartite agreement as the same was flashed in the newspaper but they did not inform the Arbitrator and got passed the award subsequent to the death of the signatory. Ld. Counsel stated that the petitioner has paid Rs. 1,00,000/- on 18.02.2016 and Rs. 4,00,000/- on 01.03.2016. Had the petitioner known the passing of the impugned award, it would not have paid the amount subsequent to the passing of the award. Ld. Counsel contended that the respondents had supplied the defective materials to the petitioner nor gave the proper service and violated the terms of the agreement.
11. Ld. Counsel submitted that since the petitioner had no knowledge of passing of the impugned ex parte award and it came to know of passing of the impugned award OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.7 of 22 after getting the notice from the Executing Court, it applied for its certified copy before the Executing Court, which it received on 14.02.2019 and thereafter, filed the petition i.e. on 16.04.2019 i.e. within limitation. Ld. Counsel referred the case of Union of India Vs. Tecco Trichy Engineers (2005) 4 SCC 239, where it was held that limitation for filing application for setting aside an arbitral award starts from the date on which the party making the application has received the award. Ld. Counsel referred the case of Dakshin Haryana Bijli Vitran Nigam Ltd Vs. Navigant Technologies Pvt Ltd, 2021 SCC Online SC 157, where it was held that the period of limitation for filing objection would have to be reckoned from the date on which the signed copy of the award was made available to the parties. Ld. Counsel contended that the impugned award is against the fundamental policy of India, which is liable to be set aside.
12. Ld. Counsel for the respondent per contra argued that the impugned award was passed by a Retd. District Judge, who in Para 3 of the award has recorded that since the petitioner never raised any objection about his appointment, the only inference that can be drawn is that his appointment is acceptable to the parties as per clause 9.1 of the agreement. Ld. Counsel stated that the Arbitrator in Para 4 has observed that the respondent no. 2 vide its letter dated 01.11.2014 has referred the claim to him for arbitration in terms of clause 9.1 of the agreement and he OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.8 of 22 has accepted the appointment as the Sole Arbitrator and there is nothing to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Ld. Counsel contended that the Arbitrator had given due opportunities to the petitioner to appear and contest the claims by sending notices by post but the petitioner did not appear on the dates fixed. Since, the petitioner was served of the notice issued for 23.09.2015 and despite that it did not appear, the Arbitrator righly proceeded against ex parte on 23.09.2015. Even notice of pronouncement of award was given to the petitioner for 19.10.2015 but the petitioner did not appear. Ld. Counsel stated that the Arbitrator had considered the evidence and the documents and thereafter, passed the impugned award, which does not suffer from any infirmity / illegality.
13. Ld. Counsel contended that the copy of the award was sent at the address of the petitioner, which was duly served as evident from the postal receipt dated 07.11.2015. The petitioner has falsely alleged that it came to know of the impugned award after getting notice from the Executing Court in February 2018 and got the certified copy of the award on 14.02.2018. Ld. Counsel stated that the petition filed by the petitioner is barred by limitation and not maintainable. Ld. Counsel placed reliance on the case Maruthi Apartments Vs. K. V. Narasimhan, O.P. OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.9 of 22 Diary No. 116747/2018, decided on 21.03.2019.
14. Ld. Counsel contended that there is no illegality or infirmity in the impugned award and the grounds raised by the petitioner do not fall within the scope of Section 34 (2)
(a) & (b) of the Act. Ld. Counsel referred the case of Swan Gold Mining Ltd Vs. hindustan Copper Ltd, CA No. 9048 of 2014, decided on 22.09.2014 to contend that the Arbitrator's decision is generally considered binding on the parties and the Court should exercise the power to set aside the award only in cases, where it finds that the award on the face of it is erroneous or patently illegal or in contravention of the provisions of the Act. The Court while deciding objections is not sitting in appeal over the conclusion of the Arbitrator nor can reappraise the evidence, where the Arbitrator assigns cogent reasons and when no error of law or misconduct is cited, the award will not call for interference by the Court.
15. Ld. Counsel stated that the petitioner failed to make the payment within the stipulated time and despite notice, which made the respondents invoke the arbitration clause as per the agreement. Ld. Counsel stated that the notice of appointment of the Arbitrator and other notices were sent to the petitioner but the petitioner did not pay any heed. Ld. Counsel stated that there is no error apparent on the face of record and the petition deserves to be dismissed.
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16. I have given my thoughtful consideration to the above contentions and perused the proceedings and the award.
17. The statutory period for filing an application / petition for setting-aside the award is provided in sub Section (3) of Section 34 of the Act, which reads as under:
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
18. Reading of Section 34 (3) of the Act, leaves no manner of doubt that the period of limitation is three months. If the objections are filed beyond three months, then the delay in filing can be condoned upto a maximum period of 30 days and not more. Condonation of delay in the extended period of 30 days, is at the discretion of the court, provided the party satisfies the court that there was 'sufficient cause' for the delay. Delay in initial filing, beyond 30 days cannot be condoned, even for one day.
19. In the instant case, impugned ex parte award was OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.11 of 22 passed on 19.10.2015. Although, the arbitral record finds a postal receipt dated 07.11.2015 but there is no proof of delivery of the same. The petitioner has categorically denied having received the signed copy of the arbitral award. I find force in the contention of the petitioner that had it received the signed copy of the award in November 2015, it would have not paid Rs. 1,00,000/- on 18.02.2016 and Rs. 4,00,000/- on 01.03.2016 as evident from the statement of accounts placed by the petitioner. No explanation came from the side of the respondents. In the absence of postal proofs, no presumption can be drawn that the signed copy of the ex parte award was duly served on the petitioner. So whatever has been stated by the petitioner has to be presumed to be correct.
20. The petitioner has stated that it came to know of the ex parte award, when it received the notice of the Execution Petition bearing No. 57/2018 from the Executing Court. The record shows that the petitioner received the certified copy of the arbitral award on 14.02.2019. He filed this petition under Section 34 of the Act on 16.04.2019 i.e. within 90 days of the receipt of the certified copy of the award as provided under Section 34 (3) of the Act. In the case of Union of India Vs. Tecco Trichy Engineers (supra), it was held that delivery of an arbitral award under Section 31 (5) of the Act is not a matter of mere formality. It is a matter of substance. The OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.12 of 22 delivery of arbitral award to the party to be effective has to be "received" by the party. Under Section 34 (3) of the Act, the limitation of three months commences from the date on which the parties making that application has received the arbitral award. In the case of Benarsi Krishna Committee supra, it was held that limitation of three months under Section 34 (3) is to be reckoned from the date on which the party itself received the award and not its advocates or agent. If the copy of the signed award is not delivered to the party itself, it would not amount to compliance with provision of Section 31 (5) of the Act. In the case of Dakshin Haryana Bijli Vitran Nigam Ltd (supra), it was held that the period of limitation for filing of objection would have to be reckoned on which the signed copy of award was made available to the parties. In the case of State of Maharastra Vs. ARK Builders Pvt Ltd, 2011 (4) SCC 616, it was held that the expression "party making the application has received the arbitral award"
cannot be read in isolation and it must be understood that Section 31 (5) of the Act requires a signed copy of the award to be delivered to each party. In the case of State of Himanchal Vs. Himanchal Techno Engineers, 2010 (12) SCC 2010, it was held that the delivery has to be effective, so as to be called as receipt by the parties.
21. In the instant case, the petitioner has stated that it received the certified copy of the award from the OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.13 of 22 Executing Court only on 14.02.2019 and it never received the signed copy from the Arbitrator. Section 31 (5) (b) of the Act provides that after an arbitral award is made, a signed copy shall be delivered to each party. In the instant case, there is no proof as to the delivery of the signed copy of the award to the petitioner. The petitioner has also stated that he had requested the Arbitrator to provide the signed copy of the award but it did not receive any reply from the Arbitrator. The case of Maruthi Apartments Vs. K. V. Narasimhan, O.P. Diary No. 116747/2018, decided on 21.03.2019 referred by the respondents is distinguishable on the facts. In that case, the entire arbitral records pertaining to the award were made available to the Court. The Court after perusing the record found that the impugned award were sent to the petitioner by speed post with acknowledgment due vide postal receipts bearing reference and the same was returned with the Postal Department 'refused'. Even, the notices of the proceedings also returned with the postal endorsement 'refused'. In the instant case there is no evidence, receipt or acknowledgment of the impugned award.
22. On a consideration of the facts in entirety and the case laws supra, I am of the view that the limitation as provided under Section 34 (3) of the Act would start from the date, when he received the certified copy of the award i.e. on 14.02.2019. The instant petition under Section 34 of OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.14 of 22 the Act has been filed by the petitioner on 16.04.2019 i.e. within three months from the date the petitioner received the certified copy of the award. The petition is therefore within limitation.
23. Now coming to the objections, Section 34 the Arbitration and Conciliation Act provides the grounds for setting aside the arbitral award. It reads as under:
"34.Application for setting aside arbitral award- (1)Re- course to a court against an arbitral award may be made only by an application for setting aside such award in ac- cordance with sub-section (2) and sub- section (3). (2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indica- tion 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 contem-
plated 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 ar- bitration can be separated from those not so submitted, only that part of the arbitral award which contains deci- sions 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 pro- vision 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-
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(i) the subject-matter of the dispute is not capable of settle- ment 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- I For the avoidance of any doubt, it is clari- fied that an award is in conflict with the public policy of India only if the making of the award was induced or af- fected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of In- dian law;
iii) It is in conflict with the most basic notions of morality or justice.
Explanation-II- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental pol- icy of Indian law shall not entail a review on the merits of the dispute.
[2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is viti- ated 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.
24. Normally, the general principles are that the decision of the Arbitrator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.16 of 22 grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the court in exercise of the power vested in it.
25. In the case of Associate Builders Vs. DDA, (2015) 3 SCC 49, it was held that the interference with an arbitral award is permissible only when the findings of the Arbitrator are arbitrary, capricious or perverse or when the conscience of the Court is shocked or when patent illegality is not trivial but goes to the root of the matter. In the case of Ssangyong Engineering & Construction Co. Ltd Vs. NHAI, 2019 SCC Online SC 677, it was held that under Section 34 (2A) of the Act, a decision, which is perverse 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.
26. Now adverting to the facts, it is not in dispute that the petitioner had entered into a tripartite agreement with the respondents on 08.07.2011. The agreement contained an arbitration clause i.e. clause 9.1, which interalia provided that 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 Indian Arbitration & Conciliation Act, 1996....... The clause clearly provides OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.17 of 22 that the Arbitrator so appointed must be acceptable to the parties to the agreement. In the instant case, as evident from the record, the respondents vide notice dated 01.11.2014 unilaterally appointed Sh. J. N. Yadav as the Sole Arbitrator. They never took the consent of the petitioner before appointing the Arbitrator. The petitioner even denied having received the notice dated 01.11.2014 or the notices sent by the Arbitrator qua his appointment and entering into reference.
27. In the case of Bhanumati J. Bhuta Vs. Ivory Properties & Hotels Pvt Ltd, 2020 SCC Online Bombay 157, it was held that the arbitral proceedings commence in respect of dispute when notice invoking of arbitration agreement is received by other side and not when such notice is only served upon the Arbitral Tribunal. The onus is on the applicant who had issued such notice to prove the delivery of such notice upon the other side.
28. In the case of Dulal Podda Vs. Executive Engineer, Dona Canal Division, 2004 (1) SCC 73, it was held that the appointment of an Arbitrator at the behest of the one party without sending notice to the other party / respondent, ex parte award given by the Arbitrator is illegal and liable to be set aside.
29. The Supreme Court in the case of Perkins Eastman OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.18 of 22 Architects DPC & Anr Vs. HSCC Ind Ltd, 2019 SCC OnLine SC 1517 has held that in a case where only one party has a right to appoint a sole Arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. The person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.
30. In the case of Proddatur Cable TV Digi Services vs. Siti Cable Network Ltd., 2020 SCC Online Del 350, following the ratio of the judgment in the case of Perkins (supra), it was held that it is clear that a unilateral appointment by an authority which is interested in the outcome or decision of the dispute is impermissible in law. When the Arbitration Clause empowers the Company to appoint Sole Arbitrator, it can hardly be disputed that the Company acting through its Board of Directors will have an interest in the outcome of the dispute.
31. In the instant case, clause 9.1 of the agreement clearly provides that the dispute or difference shall be referred to an acceptable Sole Arbitrator under the provisions of the Act. In the instant case, the respondents before appointing the Sole Arbitrator did not take the consent of the petitioner nor informed the petitioner about the appointment of Sh. J. N. Yadav as the Sole Arbitrator, which action is clearly in violation of the clause 9.1 of the OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.19 of 22 agreement. Though, the Arbitrator in para 2 & 4 of the award has stated that the petitioner never raised any objection about his appointment and the inference, which can be drawn is that his appointment is acceptable to the parties and that there is nothing to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality but since, the petitioner did not receive any notice of his appointment nor of the arbitral proceedings, there was no occasion for the petitioner to raise the objection qua his appointment or giving acceptance to his appointment. As observed earlier the petitioner came to know of the award for the first time, when it received the notice from the Executing Court in the execution petition filed by the respondents. It is a case of an unilateral appointment of the Arbitrator. No plausible explanation came from the respondents, why there was unilateral appointment of the Arbitrator inviolation of clause 9.1 of the agreement and why the consent of the petitioner was not taken. Without commenting on the impartiality of the Arbitrator, I am of the view that the appointment of the Sole Arbitrator was in violation of clause 9.1 of the agreement.
32. In the instant case, the respondents have claimed that before invoking the arbitration, they had given notice on 03.03.2014 to the petitioner alleging default in making the payment, which was also the notice of termination of OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.20 of 22 agreement but the petitioner has denied having received the said notice. No proof is placed / shown by the respondents that the above notice was served on the petitioner. The copy of the letter dated 01.11.2014 written by the respondents to the Arbitrator Sh. J. N. Yadav proposing his appointment as the Sole Arbitrator for adjudication in respect of disputes and differences arising out of the agreement between the parties was never sent to the petitioner as evident from the record. The petitioner has even denied having received the notices dated 21.11.2014, 22.12.2014, 16.05.2015 & 29.07.2015 allegedly sent by the Arbitrator before it was proceeded against ex parte. It has also denied having received the signed copy of the arbitral award dated 19.10.2015. Although, the respondents have claimed the service of above notices and the signed copy of the award but no postal receipts / acknowledgements of the above dates are on record. The postal receipt dated 01.06.2015 and the tracking report dated 06.06.2015 would show that the notice was allegedly sent at the incorrect pin code and was not served on the petitioner. There is no proof of service of the notice dated 29.07.2015 on the basis of which, the petitioner was proceeded against ex parte vide order dated 23.09.2015. Even there is no proof of service of notice of pronouncement of order dated 23.09.2015. It is not known how the Arbitrator presumed the service of notices upon the petitioner.
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33. The petitioner has also alleged that it did not get any opportunity to present its case, the respondents had supplied defective products and did not provide proper service as per the agreement. Even the respondents violated the terms of the agreement.
34. For the foregoing reasons, the impugned award dated 19.10.2015 is set aside under Section 34 (2) (a) (iii) and Section 34 (2A) of the Act being vitiated by patent illegality appearing on the face of the award. The petition is accordingly allowed.
35. The parties are left to bear their own costs. File be consigned to Record Room.
Announced in open court today i.e. 04th May, 2021 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi OMP No. 73/19 IVL Matriculation Vs. Edu Smart Pvt Ltd & Ors Page No.22 of 22