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IN THE HIGH COURT OF DELHI
Prateek Jalan, J.
Badri Singh Vinimay Private Limited - Appellant
Versus
MMTC Limited - Respondent
O.M.P. 225 of 2015
Decided On : 06-01-2020
The court affirmed the arbitrator's award, asserting compliance with Section 21 of the Arbitration Act through adequate notice, adjudicating the case on evidence presented without revisiting factual determinations.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Jurisdiction of court in reviewing arbitral awards - The petitioner challenged the award arguing improper invocation of arbitration and lack of notice under Section 21. The court found sufficient evidence of notice, dismissed the petition, and upheld the arbitrator's decision. (Paras 1, 23)
(B) Arbitration proceedings - Compliance with arbitration agreement - The court emphasized the parties' agreement to arbitration rules, ruling that sufficient notice was given under both Section 21 of the Act and ICA Rules, thus enforcing the award. Discussion on the nature of correspondence supporting compliance. (Paras 11-21)
Facts of the case:
The disputes arose from the appellant's failure to lift goods as per a tender agreement with the respondent, leading to a loss claimed in arbitration. The arbitrator ruled in favor of the respondent for Rs.1,12,27,431/- along with interest. (Paras 2-3)
Findings of Court:
The court upheld the arbitrator’s award as valid, confirming that the petitioner was aware of the arbitration proceedings and failed to participate appropriately, relying on the evidence presented by the respondent. (Paras 23)
Issues: The main issue was whether proper notice had been given to the petitioner under Section 21 of the Act prior to invoking arbitration. (Para 11)
Ratio Decidendi: The court concluded that the requirement for notice under Section 21 was satisfied due to communications indicating a clear request for arbitration, and that the arbitrator's action was justified given the circumstances. (Paras 12-23)
Result: Petition dismissed with costs, affirming the validity of the arbitration award. (Paras 23)
| Table of Content |
|---|
| 1. disputes from tender and arbitration initiation (Para 2 , 3 , 4) |
| 2. grounds for challenging arbitration proceedings (Para 5 , 6) |
| 3. importance of notice per section 21 of the act (Para 11 , 12 , 13) |
| 4. compliance with ica rules and section 21 (Para 14 , 15 , 19) |
| 5. rejection of petition under section 34 (Para 23 , 24) |
JUDGMENT
1. 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 SCC Online Del 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 non-compliance 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
