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2020 Supreme(Del) 1209
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prateek Jalan, J.
Badri Singh Vinimay Private Limited - Appellant
Versus
MMTC Limited - Respondent
Original Miscellaneous Petition No. 225 of 2015
Decided On : 06-01-2020
Jayant Mehta, Advocate, Pratiksha Sharma, Advocate, Ankit Acharya, Advocate, Sajal Jain, Advocate, Sanat Kumar, Advocate, Saubroto Dutta, Advocate, Vinayak Batta, Advocate, Sarthak Khurana, Advocate
The main legal point established in the judgment is that the challenge on the ground of improper invocation of arbitration was unmerited, and re-appreciation of evidence is not open to the Court under Section 34.
Headnote:
Arbitration - Invocation of Arbitration Proceedings - Arbitration and Conciliation Act, 1996, Section 34 - Rules of Arbitration of Indian Council of Arbitration - The arbitration clause in the agreement between the parties provided for settlement of disputes in accordance with the Rules of Arbitration of Indian Council of Arbitration, Delhi. The petitioner contended that the proceedings of the arbitration were vitiated by an improper invocation of the arbitration. The respondent's claims in the arbitration proceedings were for the loss allegedly incurred in the risk sale. The petitioner's principal legal ground was that no notice invoking arbitration proceedings was served upon the petitioner in terms of Section 21 of the Act and Rule 15 of the Rules of Arbitration of the ICA. The respondent contended that the petitioner had notice of the arbitral proceedings and had chosen not to participate. The court examined the correspondence between the parties and held that the petitioner's challenge on the ground of improper invocation of arbitration was unmerited. The court also rejected the petitioner's reliance on Rule 15 of the ICA Rules, stating that the petitioner's grievance was wholly untenable. The court further held that the impugned award was passed on a proper appreciation of the evidence and that re-appreciation of evidence is not open to the Court under Section 34. The petition was dismissed with costs assessed at Rs. 50,000.
Fact of the Case:
The disputes between the parties arose out of a tender floated by the respondent for the sale of imported lentils. The petitioner's bid for purchase of the goods was accepted, but the respondent contended that the petitioner had failed to lift the goods, resulting in the respondent selling the material to third parties at the risk and cost of the petitioner. The respondent sought to invoke arbitration in accordance with the Rules of the Indian Council of Arbitration. The petitioner approached the City Civil Court, challenging the validity of the agreement and the respondent filed an application under Sections 8 and 21 of the Act for reference of the matter to arbitration. The petitioner contended that the arbitration proceedings were vitiated by improper invocation, noncompliance with Section 21 of the Act, and absence of an arbitration agreement. The respondent claimed that the impugned award was passed on a proper appreciation of the evidence and that re-appreciation of evidence is beyond the scope of the power conferred by Section 34 of the Act.
Finding of the Court:
The court found that the petitioner's challenge on the ground of improper invocation of arbitration was unmerited and rejected the petitioner's reliance on Rule 15 of the ICA Rules. The court also held that the impugned award was passed on a proper appreciation of the evidence and that re-appreciation of evidence is not open to the Court under Section 34. The petition was dismissed with costs assessed at Rs. 50,000.
Issues: The issues involved in the case were the proper invocation of arbitration proceedings, compliance with Section 21 of the Act, and the validity of the impugned award under Section 34.
Ratio Decidendi: The court held that the petitioner's challenge on the ground of improper invocation of arbitration was unmerited and rejected the petitioner's reliance on Rule 15 of the ICA Rules. The court also held that the impugned award was passed on a proper appreciation of the evidence and that re-appreciation of evidence is not open to the Court under Section 34.
Final Decision: The petition was dismissed with costs assessed at Rs. 50,000.
JUDGMENT
Prateek Jalan, J. - By way of this petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as "the Act"], the petitioner seeks setting aside of an award dated 02.12.2014 passed by a sole arbitrator. By the impugned award, the respondent herein was awarded a sum of Rs. 1,12,27,431/- alongwith interest and costs of the arbitration proceedings.
Facts
2. The disputes between the parties arise out of a tender floated by the respondent for sale of 1500 metric tonnes ("MT") of imported lentils (toor lemon - Myanmar origin). The petitioner''s bid for purchase of 250 MT of the goods @ Rs. 42,810/- per MT was accepted. The respondent contended that the petitioner had failed to lift the goods, as a result of which it was compelled to sell the material to third parties at the risk and cost of the petitioner.
3. In terms of the agreement between the parties, the respondent sought to invoke arbitration in accordance with the Rules of the Indian Council of Arbitration (hereinafter "ICA"). The respondent''s claims in the arbitration proceedings were for the loss allegedly incurred in the risk sale.
4. The petitioner approached the City Civil Court, Calcutta by filing Title Suit No.1297/2013, in which it appears that the validity of the agreement itself was challenged. The respondent filed an application in the suit under Sections 8 and 21 of the Act (for reference of the matter to arbitration). Although the pleadings and records of the suit and the orders passed by the City Civil Court are only partially produced on the record of this petition, it is undisputed that the City Civil Court did not grant any stay of the arbitration. In the circumstances, the learned Arbitrator rejected the repeated requests of the petitioner for adjournment. There was some correspondence between the petitioner and ICA relating to the pending arbitration, but the petitioner did not participate in the proceedings. The learned Arbitrator therefore made the impugned award, after recording the evidence led on behalf of the respondent.
Submissions
5. The principal legal ground urged by Mr.Jayant Mehta, learned counsel for the petitioner, was that the proceedings of the arbitration themselves were vitiated by an improper invocation of the arbitration. He contended that no notice invoking arbitration proceedings was served upon the petitioner in terms of Section 21 of the Act and Rule 15 of the Rules of Arbitration of the ICA. Mr. Mehta referred to the judgment of this Court in Alupro Building Systems Pvt. Ltd. vs. Ozone Overseas Pvt. Ltd.,2017 SCCOnlineDel 7228 [O.M.P 3/2015, decided on 28.02.2017]. He also drew my attention to the grounds taken in the petition with regard to limitation, the absence of an arbitration agreement itself, and the merits.
6. Mr. Sanat Kumar, learned Senior Counsel for the respondent, submitted that the contention of the petitioner regarding noncompliance with Section 21 of the Act is belied by the petitioner''s own correspondence showing that he had notice of the arbitral proceedings, and had chosen not to participate. He relied upon various judgments (to which reference shall be made later in this judgment) to contend that any dispute regarding compliance of Section 21 was within the province of the arbitrator, and ought to have been raised at that stage. On merits, Mr. Kumar contended that the impugned award was passed on a proper appreciation of the evidence led before the learned Arbitrator and, in any event, that the re-appreciation of evidence is beyond the scope of the power conferred by Section 34 of the Act.
7. During the course of hearing, Mr.Kumar submitted that the respondent had recalculated the amount due under the head "Interest on risk sale for the period from 21.06.2010 to 04.10.2011". Pursuant to the directions of the Court, the respondent has filed an affidavit dated 26.11.2019, in which it is stated that, after rectification, the total amount receivable to the respondent fr
