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2020 Supreme(Del) 947
IN THE HIGH COURT OF DELHI AT NEW DELHI
V Kameswar Rao, J.
Sudha Gupta & Anr. - Appellant
Versus
A.K. Gupta And Anr - Respondent
O.M.P. (COMM) 283/2018 & IA. 8797/2018
Decided On : 24-02-2020
Mr.Manish Vashisht, Mr.A.K. Thakur, Mr.Jeevesh Nagrath, Mr.Manashwy Jha, Mr.Chandan, Ms.Urvi Kapoor and Ms.Anushruti, Advocate, for the Appellant, Ms.Panchajanya Batra Singh, Ms.Garima Gupta, Ms.Divya Vishvapriya and Mr.Mahavir Singh, Advs. for the Respondent.
The court's decision emphasized the importance of adhering to the parameters of the contract in arbitration proceedings, highlighting that the arbitrator cannot travel beyond the scope of the contract.
Headnote:
Arbitration - Arbitration and Conciliation Act 1996 - Section 34 - The court set aside the counter-claim awarded in favor of the respondent No. 1 as it was contrary to the stipulation in the Supplementary MoU.
Fact of the Case:
The petitioners challenged the Arbitral Award dated January 31, 2018, which rejected their claims and allowed the counter-claim of respondent No.1. The late claimant and his son had preferred a claim for Rs. 219.52 lacs against respondent No.1, and the counter-claim was for Rs. 49 lacs along with interest.
Finding of the Court:
The court set aside the counter-claim awarded in favor of the respondent No. 1 as it was contrary to the stipulation in the Supplementary MoU. The court held that the late claimant was personally liable to pay the unrealized portion of Rs. 49 lacs to M/s. Brawn Pharmaceuticals Ltd., and the counter-claim in favor of respondent No.1 could not be justified.
Issues: The issues raised by the petitioners included the validity of the counter-claim, the existence of an arbitration agreement, and the limitation of the counter-claim.
Ratio Decidendi: The court concluded that the counter-claim awarded in favor of the respondent No. 1 was not justified as the stipulation in the Supplementary MoU clearly stated that the late claimant was personally liable to pay M/s. Brawn Pharmaceuticals Ltd. the unrealized portion of their share amounting to Rs. 49 lacs.
Final Decision: The petition was allowed, and the court set aside the counter-claim awarded in favor of the respondent No. 1. The court did not address the other issues raised by the petitioners.
JUDGMENT
V. Kameswar Rao, J. - This is a petition filed by the petitioners under Section 34 of the Arbitration and Conciliation Act 1996 (''Act'', for short) challenging the Arbitral Award dated January 31, 2018 (''impugned Award'', for short) passed by Ms. Justice Sharda Aggarwal (Retd.) with the following prayers:
"In view of the foregoing facts and circumstances, it is most respectfully prayed that this Hon''ble Court may most graciously be pleased to:
(a) call for the entire records of arbitration proceedings before the Ld. Sole Arbitrator;
(b) set aside the impugned Arbitral Award dated 31.01.2018 passed in Arbitration proceedings titled as Shri Pawan Kumar Gupta & Anr. Vs Shri A.K.Gupta by the Ld. Sole Arbitrator;
(c) pass such other and further order(s) as this Hon ''ble Court may deem fit and proper in the facts and circumstances of the present case.
2. The current petition has been preferred by petitioner No. 1 Sudha Gupta, who is the wife of the claimant i.e. late Pawan Kumar Gupta (''late Claimant'', for short) who had passed away during the pendency of the arbitral proceedings on August 10, 2008. Petitioner No.2, Tarun Gupta, is the son of Late Claimant. The petitioners were impleaded as legal heirs in the arbitration proceedings.
3. The respondent no.l herein is A.K. Gupta and respondent No.2 Mohit Gupta is also the son of late Claimant. It may be stated here that respondent No.2 Mohit Gupta was claimant No.2 before the arbitration proceedings along with his father, i.e., the late Claimant.
4. Before going into the merits of the controversy, it would be appropriate to briefly state the facts of the case which can be culled out from the record.
5. The respondent No.l with one Nitin Gupta were engaged in the business of Pharmaceuticals products, whereas the late claimant and his son respondent No.2 being engaged in the business of iron and steel, were interested in marketing of pharmaceutical products and one Jitender Sharma was engaged in overseas marketing of pharmaceutical products. The parties mentioned herein executed a Memorandum of Understanding dated January 1, 2003 (''MoU'', for short); wherein itwas agreed that a company by the name of M/s. Strategic Overseas Pvt. Ltd. would be constituted having its Registered Office at Delhi to transact and deal with the export of medicinal and pharmaceutical products to Angola.
6. This MoU was entered into by the parties in their individual capacity and on the same date i.e. January 1, 2003, a Memorandum of Agreement dated January 1, 2003 (''MoA'', for short) was entered into amongst the three companies named hereunder:-
a. M/s. Strategic Overseas Pvt. Ltd., having its registered office in Delhi.
b. M/s. Balajee-Comeric General LDA, having its registered office in Luanda, Angola
c. M/s. Brawn Laboratories Ltd. having its registered office in Delhi.
7. The following arrangement was entered into between the said companies; firstly it was agreed that M/s Brawn Laboratories Ltd. would sell its products to M/s. Strategic Overseas Pvt. Ltd. and M/s. Strategic Overseas Pvt. Ltd. would then deal with M/s. Balajee at Angola, i.e., the company which was engaged in the business of sale and marketing of pharmaceutical and other medicinal products in Angola.
8. M/s. Balajee situated at Angola was supplying the pharmaceutical products manufactured by M/s. Brawn Laboratories Ltd., received through M/s. Strategic Overseas Pvt. Ltd. to a company based in Angola by the name of "Neopharma". In return M/s. Neopharma was to pay M/s. Balajee for the product on realisation basis, which in turn was used to make payment to M/s. Brawn Laboratories after meting out its expenses. As there was no further export done by M/s. Brawn Laboratories to M/s. Balajee since January 01, 2003, the parties wanted to settle their accounts.
9. According to clause 10.1 (a) of the MoU, it was agreed by all the parties to terminate the said MoU and to execute the supplementary MoU dated December 1, 2003 (''supplement
