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2019 Supreme(Bom) 654

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT NAGPUR
A.S. CHANDURKAR, J.
JAYASWAL ASHOKA INFRASTRUCTURES PVT LTD - Appellant
Vs.
PANSARE LAWAD SALLAGAR - Respondent
First Appeal No. 106 of 2015
Decided On : 07-03-2019

Advocates Appeared:
D.V. Chavan, Adv., Yash Maheshwari, Adv.

Headnote:

Code of Civil Procedure, 1908 – Section 96 – Contract Act, 1872 – Section 23 – Partnership Firm – Appeal under Section 96 of the Code of Civil Procedure, 1908 has been preferred by the original defendant as it is aggrieved by the decree passed by the trial Court directing it to pay an amount of Rs.1,28,37,817/- with interest at the rate of 9% per annum. – Whether the agreement dated 14/08/2007 was hit by the provisions of Section 23 of the Act of 1872 – Whether the agreement dated 14/08/2007 was competently executed – Whether the fees payable were only after the award attained finality – Held, It becomes clear that the partner of the plaintiff-firm had represented the defendant in the arbitration proceedings as a counsel. – That representation before the arbitrator could not be said to be a representation before the Court. – There is however no material on record to indicate that the said partner conducted the proceedings before the arbitrator as an Advocate. – Mere fact that the said partner happened to be a law graduate by itself would not be sufficient to conclude that the agreement entered into by him for being entitled to remuneration based on the outcome of the arbitration proceedings would render that agreement contrary and opposed to public policy and hence void under Section 23 of the Act of 1872. – The law as laid down in B. Sunitha (supra) therefore would not apply to the facts of the present case and there is no basis whatsoever to hold that the agreement under which the plaintiff was entitled to receive fees based on the outcome and valuation of the award was contrary to Section 23 of the Act of 1872. – It is to be seen that DW-1, Satish in his deposition has clearly admitted that Jairam Raman and Anil Gandhi were assisting and representing the defendant in the arbitration proceedings. – The Company had through its authorised representative executed a special Power of Attorney at Exhibit-75 in favour of these two persons. – The burden to prove that these two persons were not competent to enter the agreement dated 14/08/2007 or that they were not representing the defendant-Company was on the defendant. –However, there is no such evidence is brought on record by the defendant. – Moreover, the trial Court has observed that the said witness had avoided to give proper answers with a view to conceal the truth from the Court. – It is on that basis that the agreement at Exhibit-31 came to be signed by the authorised representatives who in turn engaged the plaintiff-Firm to represent the defendant in the arbitration proceedings. – In the light of the evidence on record it is clear that the agreement dated 14/08/2007 was competently executed by the authorised signatories who were empowered by the defendant. – There is no reason to interfere with the judgment of the trial Court – Appeal Dismissed

JUDGMENT :

A.S. Chandurkar, J.

This appeal under Section 96 of the Code of Civil Procedure, 1908 (for short, the Code) has been preferred by the original defendant as it is aggrieved by the decree passed by the trial Court directing it to pay an amount of Rs.1,28,37,817/- with interest at the rate of 9% per annum.

2. The facts as can be gathered from the plaint are that according to the plaintiff it is a partnership firm duly registered and engaged in providing consultancy services in arbitration matters. The defendant firm was engaged in construction works and was assigned Government contracts. On account of disputes between the defendant-firm and the State Government, the defendant approached the plaintiff seeking consultation over the issues involved. After such consultation the defendant agreed to avail the services of the plaintiff-firm in the arbitration proceedings. An agreement was accordingly entered into between the parties on 14/08/2007. As per that agreement the manner in which the defendant was to be represented in the arbitration proceedings was agreed to. One of the terms of the agreement was that the plaintiff would be entitled to 1% of the award amount up to Rs.1,00,00,000/- and 1.50% of the award amount over the amount of Rs.1,00,00,000/-. According to the plaintiff it participated in the arbitration proceedings on behalf of the defendant and based on the result of said arbitration proceedings, it raised a claim for an amount of Rs.1,28,37,817/- for the amount due for the services rendered. As the aforesaid amount was not paid despite demand, the plaintiff filed suit for recovery of the aforesaid amount with interest.

3. The defendant filed its written statement denying the claim as made. It was denied that any amount of fees was agreed to be paid to the plaintiff as contended. It was denied that the agreement in question was accepted by the defendant and hence it was pleaded that the same was not binding on the plaintiff.

4. Before the trial Court the plaintiff examined it partner at Exhibit-25 and relied upon various documents. The defendant examined its authorised signatory and also relied upon various documents. After considering the evidence on record the trial Court held that the agreement at Exhibit-31 was duly proved by the plaintiff and that the defendant did not prove that the said agreement was merely a quotation. On these findings the trial Court by its judgment dated 26/11/2014 decreed the suit and directed payment of the decreetal amount with interest at the rate of 9% per annum. Being aggrieved by that decree the defendant filed the present appeal.

5. In support of the appeal Shri D.V. Chavan learned counsel for the appellant made the following submissions :

(a) The suit could have been decreed on the strength of the agreement dated 14/08/2007 at Exhibit-31 as the said agreement was hit by the provisions of Section 23 of the Contract Act, 1872 (for short, the Act of 1872). It was submitted that since one of the terms of the agreement entitled the plaintiff to seek remuneration based on the result of the arbitration proceedings, that stipulation in the agreement was opposed to public policy. He referred to the agreement at Exhibit-31 and submitted that on its entire perusal it was clear that Item-7 of the said agreement on the basis of which the claim was made was opposed to public policy. It was urged that the partner of the plaintiff-firm being a qualified lawyer he was precluded from demanding and thereafter prosecuting the claim which was based on the outcome of the arbitration proceedings. Reference was also made to the dictionary meaning of the word "pleader" and "counsel" by referring to the Black's Law Dictionary and relying upon the judgments of the Division Bench of this Court In Re K.L. Gauba, (1954) CriLJ 1531 and B. Sunitha vs. State of Telangana and Anr., (2018) 1 SCC 638, it was submitted that even if it was assumed that the partner of the plaintiff-firm did not act as a lawyer for the d

























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