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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
T.V. NALAWADE, J.
Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd. & Another - Appellants
Versus
Gangapur Sahakari Sakhar Karkhana Ltd. - Respondent
Arbitration Appeal Nos. 7, 8 & 9 of 2013 With Civil Application Nos. 4637 & 4640 of 2013
Decided On : 17-04-2017
In the present matter there was no agreement between the parties that a party will not be entitled to get interest on the amount like fixed rent and variable amount at the rate of Rs. 71/- PMT of the sugarcane crushed by present appellant. Thus, there was no provision to prevent the claim of the interest and grant of the interest. In spite of this circumstance, this point was not touched by the Arbitrator. The Principal District Judge has considered the scope of provision of Section 34 of the Act and also the aforesaid provision of the Act. The Principal District Judge has granted interest at the rate of 10% per annum from the date of filing the claim till the date of the award and the interest at the rate of 18% per annum from the date of the award till the date of realisation of the amount is awarded. The power is discretionary in nature and considering the scope of the aforesaid two provisions and it is commercial transaction, this Court holds that the Principal District Judge has not committed any error in granting the interest at the aforesaid rates. Thus, on this point it is not possible to interfere in the decision given by the Principal District Judge on this matter. In the result, all the appeals stand dismissed. Pending civil applications stand disposed of.
Arbitration & Conciliation Act, 1996 - Section 33(4)-Arbitral proceedings.-Since counter-claim is filed before Arbitrator hence Arbitrator is duty bound to decide that claim also.
It is settled law that when counter-claim is filed before the Arbitrator, as dispute, it is the duty of the Arbitrator to decide that claim also. The provision of Section 33(4) of the Act only says that if the Arbitrator has omitted to decide such claim, the party who had filed such claim can bring this omission to the notice of the Arbitrator. The Arbitral Tribunal is already constituted and so the notice mentioned in Section 33(4) is not the notice which can be called as mandatory and of the nature mentioned in Section 11 of the Act. The Court has no hesitation to observe that the purpose behind this notice is only to give an opportunity to other side to have its say and contest the matter raised before the Arbitral Tribunal. Thus, it cannot be said that the consent of other side who will be benefited due to such omission is necessary for application under Section 33(4) of the Act. If such interpretation of provision of Section 33(4) is done, then this provision will be become otiose. It can be said that when the omission is brought to the notice of the Arbitrator under Section 33(4) of the Act, it will be the duty of the so called party applying under Section 33(4) of the Act and the Arbitrator to see that the other side gets opportunity to contest this contention also. Thus, there is no force in the contention made by the counsel for the respondent on this point.
Arbitration & Conciliation Act, 1996 - Section 34-Setting aside of Award.-Limitation period for filing proceedings for setting aside award under Section 34 of Act, starts running from date of award delivered by Arbitrator.
The time started to run for filing proceeding under Section 34 of the Act when the sole Arbitrator delivered the award i.e. from 5.8.2010 and not from 15.12.2010 when the so called application under Section 33 came to be rejected by the sole Arbitrator. The proceedings under Section 34 having filed on 9.3.2011 they were not filed within the prescribed period of limitation.
1. The appeals are filed by Vitthalrao Shinde Sahakari Sakhar Karkhana (hereinafter referred to as "VSSSK") to challenge the decision given by the learned Principal District Judge Aurangabad in a proceeding filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”). The Arbitral Tribunal has allowed the claims of Gangapur Sahakari Sakhar Karkhana (hereinafter referred to as "GSSK"). It is the case of the VSSSK that the counter claim made by it is not decided by the Arbitrator. The proceeding was filed under section 33(4) of the Act and this application is also rejected by the Arbitrator. To challenge the decision of the Arbitrator, the proceedings were filed under section 34 of the Act by the VSSSK and one proceeding was filed by GSSK as interest was not awarded on the claim amount by the Arbitrator. The learned Principal District Judge has dismissed the proceedings filed by VSSSK and the proceeding filed by GSSK is allowed. Both the sides are heard.
2. The parties are cooperative sugar factories registered under the Maharashtra Cooperative Societies Act, 1960. GSSK was indebted and it was running in losses. GSSK approached VSSSK and requested to run the factory on partnership basis. As per the provision of Section 20 of the Maharashtra Cooperative Societies Act, approval of the Commissioner of Sugar, Maharashtra State, whose post is equivalent to the post of the Registrar under the said Act, is involved in the process of granting approval and the State Government has also ultimate power to consider this point. After such approval partnership agreement was made and it was registered. Factory premises including machinery was handed over to VSSSK by GSSK prior to sugarcane crushing season of 2006-2007 and from the crushing season 2006-2007 VSSSK was to run the factory under the agreement for five years.
3. The main terms and conditions of the contract which need to be considered and used in the present matter were as follows:-
(i) Every year (for each crushing season) VSSSK was to pay the rent of Rs.200 lakh. This amount was to be paid in three installments like Rs.100 lakh at the time of starting of the crushing season, Rs.50 lakh within the three months from the starting of the crushing season and the remaining Rs.50 lakh at the conclusion of the crushing season;
(ii) Amount @ Rs.71 per metric tonne was to be paid by VSSSK to GSSK as variable amount on the basis of sugarcane crushed by VSSSK for every season;
(iii) VSSSK was to pay the taxes during the aforesaid period and if any taxes were due prior to the date of the agreement, that amount was also to be paid by VSSSK. Such liabilities which were already in existence were to be discharged by VSSSK and the payments made for such liabilities were to be adjusted against the aforesaid amount which was payable to GSSK every year. There was also loan taken by GSSK from the State Cooperative Bank and so amount against it was to be deposited by VSSSK in the account of GSSK in the State Cooperative Bank.
(iv) VSSSK was to comply the provisions of various Acts like Provident Fund Act, Essential Commodities Act etc. VSSSK was to pay contribution for provident fund in respect of the employees who were already working. If already some amount was due under that head that amount was also to be paid by VSSSK and this amount could have been adjusted as against the amount which was payable to GSSK.
(v) If there was capital investment made by VSSSK for running the factory then the depreciation in respect of agreement period was to be deducted from that amount and the VSSSK was entitled to recover the remaining amount from GSSK after the contract period;
(vi) VSSSK was to pay 75% of the salary to the employees already employed by GSSK. Even retirement benefits like payment of gratuity in respect of employees who were to retire during the contract period were to be given by VSSSK.
4. There were other conditions like VSSSK was to pay Statutory Minimu
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