Bombay High Court
Rashmi Housing Pvt. Ltd vs Pan India Infraprojects Private ... on 17 December, 2014
Bench: R.D. Dhanuka
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 600 OF 2011
Citation; 2015 (7) ALLMR 290
By this petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the said Act') the petitioner has impugned the arbitral award dated 29th March, 2011 passed by the learned arbitrator allowing the claims of the respondent in the sum of Rs.1,74,72,000/- with interest at the rate of 18% per annum from the due date till the date of the award and thereafter at the rate of 12% per annum till payment and rejecting the counter claim made by the petitioner with cost quantified at Rs.9,25,000/-. For the sake of brevity the parties to this petition hvnARBP600.11 are described in this judgment as they were described before the learned arbitrator.
The petitioner herein was the original respondent before the learned arbitrator. M/s.Essel Sports Private Limited were the original claimants. Name of the original claimants were subsequently changed to Pan India Infraprojects Private Limited. Some of the relevant facts for the purpose of deciding this petition are as under :-
2. The claimant had launched a cricket tournament called the Indian Cricket League (ICL) wherein both domestic and international players were participating. In the year 2007 the claimant hosted the Mumbai Champs (Cricket) Team during the ICL tournament held at Panchkula from 30th November 2007 to 16th December 2007. On 26th November 2007 the claimant entered into a Deal Memo with the respondent and appointed the respondent as the sponsor of the tournament for a consideration of Rs.2 crores. Under the said Deal Memo the respondent had agreed to pay 25% of the said consideration at the time of signing of the Deal Memo. 35% of the balance amount was payable on or before 10 th December 2007 and balance 40% was payable on or before 16 th December 2007. The respondent paid a sum of Rs. 50 lacs to the claimant being 25% of the fee payable under the said Deal Memo upon execution of the said document by cheque. The term of the said agreement was one year i.e. from 30th November 2007 to 29th November 2008.
3. Under the said Deal Memo the claimant had offered the brand logo marks on the jersey of the team. The respondent was given a right to use the team logo in any communication that brand may put out. The respondent was given a right to hold press conference with full team in attendance. In addition to the above referred rights, various other rights were given to the respondent under the said Deal Memo. Clause 8 of the said Deal Memo provided for arbitration. Clause 8 provided that a Long Form Agreement of the said arrangement shall be executed hvnARBP600.11 between the parties within 90 days. Until a detailed and Long Form Agreement was executed between the parties, the terms and conditions in the said arrangement shall continue to be binding and subsisting.
4. There were five matches played i.e. on 1st December 2007, 3rd December 2007, 7th December 2007, 9th December 2007 and 12th December 2007. The conclusion ceremony took place on 16th December 2007. By letter dated 4th December 2007 the respondent made certain suggestions to the claimant regarding their logo. It was suggested that their logo should be displayed on the chest and back of the jersey/sweaters being worn by the team players. The respondent stated that since their deal was signed at the last minute, they fully understood the compulsion of the claimant in not getting the logo of the respondent printed on the back in lieu of Mumbai Champs, there was need to implement the same for forthcoming matches from 7th December 2007.
5. By their letter dated 12th December 2007 the respondent recorded their sincere thanks for implementing suggestion contending letter dated 4 th December 2007 and also recorded their pleasure to learn that the claimant had displayed hoardings about ICL Mumbai team at Bandra and Mahim and suggested for display of some more hoardings at various places in Mumbai. The respondent suggested the claimant to ensure that the name of the respondent as sponsor of Mumbai Team of ICL was permanently displayed in those hoardings. This letter was addressed by the respondent after all the five matches were over.
6. The claimant thereafter sent invoices to the respondent for various amounts. On 23rd April 2008 the claimant informed the respondent that an outstanding hvn ARBP600.11 balance of Rs.1,74,72,000/- was yet to be received from the respondent by the claimant. The claimant by their advocate's letter dated 8 th September 2007 called upon the respondent to pay Rs.1,74,72,000/- with interest at the rate of 18% per annum. There was no response to the said notice of demand. On 1st April, 2009 the claimant once again sent a reminder for payment of the said outstanding amount. There was no response to the said letter also. The claimant through their advocate's letter dated 20th April 2009 once again called upon the respondent to pay the outstanding amount with interest and conveyed that the claimant had decided to invoke their rights under clause 8 of the Deal Memo and accordingly referred the matter to the Essel Sports Private Limited Board to resolve the dispute.
7. On 17th June 2009 the claimants through their advocate issued a winding up notice to the respondent. The respondent by their advocate's letter dated 27 th June 2009 for the first time alleged that the claimant had failed to perform their obligations as per Deal Memo in respect of the last four of total five matches covered by the said Deal Memo and thus there was no question of the respondent having any liability to pay to the claimant any amount as claimed. Respondent called upon the claimant to withdraw the said notice. The respondent by their advocate's letter dated 14th July 2009 once again denied their liability and alleged breaches on the part of the claimant.
8. By their advocate's letter dated 23rd July 2009 the claimant replied to the letters dated 27th June 2009 and 14th July 2009 of the respondent and denied the allegations made therein. On 7th August 2009 the claimant filed a company petition (720 of 2009) against the respondent inter alia praying for winding up of the respondent company. On 18th September 2009 the claimant initiated arbitration hvn ARBP600.11 proceedings under clause 8 of the Deal Memo.
9. On 2nd July 2010 this court passed an order disposing of the company petition filed by the claimant thereby requiring the respondent to secure the claim of the claimant by offering security. The respondent identified four flats and undertook not to dispose of, alienate, transfer, encumber, part with possession of or create any third party rights, title and/or interest in respect of the said four flats except giving the same out on leave and licence basis for the period not exceeding two years at a time. This court kept all the rights of the parties open and disposed of the said company petition.
10. The claimant filed statement of claim before the learned arbitrator inter alia praying for an order and direction against the respondent to pay a sum of Rs.1,74,72,000/- together with interest at the rate of 18% per annum from the due date till payment and cost. The respondent filed their statement of defence on 3 rd November 2009 and denied the claim of the claimant. The respondent also filed a counter claim against the claimant herein inter alia praying for refund of Rs.25 lacs with interest, another Rs.25 lacs towards the amount alleged to have been spent by the respondent for advertising their products and sum of Rs.1 crore by way of damages for the loss alleged to have been caused for defaming the goodwill and deputation of the respondent. The claimant opposed the said counter claim by filing the written statement.
11. In the statement of claim the claimant relied upon 17 documents and separately filed two copies thereof including a CD containing the pictures of the tournaments. Both the parties led oral evidence before the learned arbitrator. The hvn ARBP600.11 respondent also made various applications before the learned arbitrator during the course of recording of oral evidence which was disposed of by the learned arbitrator. The witnesses examined by the claimants were cross examined by the respondent and vis-a-versa.
12. By the impugned award dated 29th March 2011 the learned arbitrator directed the respondent to pay a sum of Rs.1,74,72,000/- with interest at the rate of 18% per annum from the due date till the date of award and at the rate of 12% per annum thereafter till payment or realization. The learned arbitrator rejected the counter claim made by the respondent and directed the respondent also to pay sum of Rs.9,25,000/- towards cost as against the claim of Rs.21,15,000/-.
13. Learned counsel for the respondent (petitioner herein) invited my attention to various part of the pleadings, oral evidence, documents and various findings rendered by the learned arbitrator. It is submitted by the learned counsel that the learned arbitrator has failed to appreciate the evidence led by the parties and has incorrectly drawn adverse inference against the respondent (petitioner herein) for raising an objection from taking the DVDs on record which evidence ought to have been produced by the claimant in support of their claim at the appropriate time and not during the cross examination of one of the witness of the claimant.
14. It is submitted that the claimant has not produced any satisfactory evidence to show that they had performed their obligation under the Deal Memo. It is submitted that the said Deal Memo contemplated execution of a detailed Long Form Agreement which was the obligation of the claimant which they had failed to execute. It is submitted that unless the claimant would have performed their part hvn ARBP600.11 of obligation, respondent could not have been called upon to pay any amount to the claimant. It is submitted that the adverse inference can be drawn against a party who has in his possession evidence however refuses to produce such evidence and not against a party who raises objection from taking the disputed evidence on record at the belated stage.
15. My attention is invited to the order passed by the learned arbitrator on 18 th June 2010 on the objection raised by the respondent about the CD being marked as exhibit. It is submitted that though the learned arbitrator ultimately rejected those six CDs/DVDs from taking on record in evidence, the learned arbitrator has drawn adverse inference against the respondent in respect of such DVDs which were not marked as exhibits and proceeded to rely upon such DVDs indirectly in the impugned award. Learned counsel submits that though such six CDs/DVDs were available with the claimant since inception, the claimant chose to produce such CD/DVD only in the cross examination of one of the witness. The respondent was thus justified in opposing an attempt on the part of the claimant to produce such six CDs/DVDs at the stage of cross examination.
16. Learned counsel submits that the learned arbitrator has thus violated the principles of natural justice by relying upon a disputed piece of evidence which was not proved and the award on that ground itself is vitiated. In support of this submission the learned counsel placed reliance on the judgment of Supreme Court in case of M/s.Bareilly Electricity Supply Co. Ltd. vs.The Workmen and others AIR 1972 SC 330 and in particular paragraph 14 thereof.
17. Learned counsel also placed reliance on the following judgments :-
hvn
ARBP600.11
(a) Judgment of this court in case of Municipal
Corporation of Greater Mumbai vs. Hindustan Construction Company Ltd. decided on 3rd December 2010 in Arbitration Petition No.65 of 2008 (paragraph 9.)
(b) Judgment of this court in case of Pradyuman Kumar Sharma & Anr. vs. Shri Jaysagar M.Sancheti & Ors. 2013 BCI 49 (paragraphs 9 and 33)
(c) Judgment of this court in case of Bi-water Penstocks Ltd. vs. Municipal Corporation of Greater Bombay & Anr. 2011(1) Bom.C.R. 622 (Paragraphs 13 to 15),
(d) Judgment of Delhi High Court in case of Wazir Chand Karan Chand vs. Union of India and another AIR 1989 Delhi 175 (paragraphs 8 to 15).
18. It is submitted by the learned counsel that even if the learned arbitrator wanted to draw any adverse influence against the respondent in view of the respondent raising objection from the said CD/DVD being marked as exhibits, the learned arbitrator could not have drawn an adverse inference without giving an opportunity to the respondent. It is submitted that the award is liable to be set aside also on this ground.
19. It is submitted by the learned counsel that though the learned arbitrator had directed one of the witness of the claimant to produce the Long Form agreement and the same was not produced by the witness, no adverse inference was drawn by the learned arbitrator against the claimant. The learned arbitrator has thus not treated both parties equally. The learned arbitrator ought to have drawn adverse inference against the claimant for not producing the Long Form agreement by hvn ARBP600.11 exercising powers under section 114(g) of the Indian Evidence Act.
20. It is submitted by the learned counsel that though the respondent had produced certain photographs in evidence which were marked as exhibits W-3 collectively, the learned arbitrator did not consider the impact of those photographs in the impugned award at all. The impugned award is thus passed by ignoring the evidence produced by the respondent and though admitted in evidence.
21. Learned counsel for the respondent lastly submitted that the Deal Memo was signed in great haste and thus no claim could have been allowed by the learned arbitrator based on such Deal Memo which was signed in great haste by the respondent.
22. Per contra, Dr.Saraf, learned counsel for the claimant invited my attention to various pleadings, documents, evidence and also the findings rendered by the learned arbitrator in the impugned award. My attention is also invited to the provisions in Deal Memo which was admittedly executed by and between the parties. It is submitted that when the letter dated 4th December 2007 was addressed by the respondent to the claimant making few suggestions, two matches out of five matches were already over. The next match was due on 7th December 2007. In the subsequent letter addressed by the respondent on 12th December 2007 which was addressed after all the five matches were over, the respondent themselves had recorded their sincere thanks for implementing the suggestions contained in the letter dated 4th December 2007. The respondent had also recorded their immense pleasure by learning that the claimant had displayed hoardings about ICI Mumbai Team at Bandra and Mahim.
hvn ARBP600.11
23. It is submitted that except making payment of Rs. 50 lacs the respondent did not make the payment of the balance amount. Most of the letters of demand issued by the claimant were not replied by the respondent. Only for the first time on 27 th June, 2009 after the claimant issued winding up notice, the respondent made false and incorrect allegations alleging breaches on the part of the claimant of their part of the obligation.
24. Dr.Saraf learned counsel for the claimant states that the respondent has not denied that the brand logo marks of the respondent was there on the jersey. Even the witness examined by the respondent admitted that the brand logo marks was there on the jersey. The suggestions given by the respondent was admittedly implemented by the claimant in so far as suggestions given on 4 th December 2007 were concerned. The other suggestions given by the respondent on 12 th December 2007 were given after all the five matches were over. The respondent themselves have accepted the fact that the claimant had implemented all the suggestions of the respondent in the said letter dated 12th December 2007 and had expressed pleasure for such implementation and had thanked the claimant for the same. It is submitted that the learned arbitrator had rendered findings of fact.
25. In so far as issue raised by the respondent that in absence of the Long Form not having been executed by the claimant and thus no reliance could be placed on the Deal Memo or that the same was not conclusive is concerned, it is submitted that the Deal Memo itself was a concluded contract as is apparent from clause 8 thereof. It is submitted that the respondent also had partly implemented the said Deal Memo. The learned arbitrator therefore rightly relied upon the obligations of both parties under the Deal Memo and analyzed the same. The learned arbitratorhvn ARBP600.11 rendered a finding that logo mark of the respondent was visible and proved. It is submitted that the witness of the respondent in the cross examination admitted that the logo mark of the respondent was visible on jersey. The respondent could not exploit other rights as the respondent had no marketing plan. It is submitted that the claimant did not obstruct the respondent from exploiting their rights.
26. It is submitted by the learned counsel that the claimant in the examination in chief of the witness Mr.Yogesh P.Bosmiya (witness of the respondent), he had relied upon the contents of six DVDs which were opposed by the respondent when produced by the witness of the claimant. It was thus clear that the objection of the respondent in taking those six DVDs on record in evidence was frivolous. It is submitted that in any event the learned arbitrator had not allowed the claim of the claimant only by drawing adverse inference against the respondent but has considered several documents, oral evidence led by both parties and also the contents of a CD containing photographs which was proved by the witness examined by the claimant.
27. It is submitted that in any event under section 167 of the Indian Evidence Act, even if there was any improper rejection of the evidence or the learned arbitrator not having considered a piece of evidence, there can be no new trial if there was otherwise sufficient evidence available on record.
28. In so far as submission of the learned counsel for the respondent that the learned arbitrator could not have considered the photographs contained in the CD is concerned, Dr.Saraf learned counsel invited my attention to the oral evidence led by the witnesses examined by the claimant and in particular Mr.Dominic Savio hvn ARBP600.11 D'souza (CW-5) who produced the said CD. In his cross examination, the said witness deposed that he was the author of the said CD. The witness was asked how did he compile the CD and what did the DVD contain. The witness deposed that he was author of the CD and the DVD covered the entire matches. My attention is invited to the order passed by the learned arbitrator on the objection of the respondent raised in the application dated 26th July 2010. It is submitted that the respondent had raised objection for the DVD being taken on record on the ground that the respondent had already produced a CD through the said witness and could not be allowed to produce any more CDs/DVDs.
29. Learned counsel invited my attention to the evidence of Mr.Gaurav R.Behal examined by the claimant who had initially tendered the said CD. In the arbitration meeting held on 6th March 2010 when the evidence of the said witness was recorded, the learned arbitrator had taken the said CD on record and had marked as Ex.L. The learned counsel submits that the claimant thus rightly relied upon the said CD and the same has been rightly considered by the learned arbitrator in the impugned award.
30. Dr.Saraf, learned counsel for the claimant invited my attention to the grounds raised by the respondent in the arbitration petition and submits that no ground has been raised by the respondent that the learned arbitrator had wrongly drawn adverse inference or that the CD was wrongly marked as exhibit by the learned arbitrator. It is submitted that the respondent has also not raised any ground that the photographs produced by the respondent though marked have not been considered by the learned arbitrator. It is submitted that the respondent cannot be allowed to urge any grounds across the bar which are not raised in the hvn ARBP600.11 arbitration petition.
31. Dr.Saraf learned counsel distinguished the judgments relied upon by the learned counsel for the respondent on the ground that the learned arbitrator has not followed the principles of natural justice and has relied upon the evidence and the documents which were duly proved by the respondent in evidence.
32. Dr.Saraf, placed reliance on the judgment of the Division Bench of this court in case of Rashtriya Chemicals and Fertilizers Limited. vs. M/s.Mohinder Singh & Co. AIR 1985 Bombay 381 and in particular paragraphs 28 and 29 in support of the submission that the strict provisions of Evidence Act are not applicable to arbitration proceedings. Paragraphs 28 and 29 of the said judgment read thus :-
28. The sixth ground urged by Mr. Thakkar was that the arbitrator took on record documents which had not been strictly proved as required by the Evidence Act. This must surely be the weakest of all the contentions urged before us.
Technical rules of evidence do not apply to arbitration proceedings. What is more, the arbitrator called upon both parties to produce the documents on which they relied. They did so. They were taken on record without demur from either side. The appellant took inspection of the measurement books and measurement registers tendered by the contractor. The appellant was even allowed to take away those books and registers for perusal. Parties based their arguments and submissions on the measurement books, measurement registers and other documents which were on record of the arbitrator.
No desire was expressed by either party for production of any person for cross-examination or that any document be strictly proved. A party cannot sit back on an objection during the hearing before the arbitrator and raise it later after finding himself faced with an adverse award; such conduct would amount to acquiescence. (N.E.S. & T. Corporation v. State of PunjabMANU/PH/0018/1963, K. N. Co-op. Society v. Union hvn ARBP600.11 of India, MANU/SC/0002/1973 : AIR1973SC1338 and N. Chellapan v. Kerala S. E. Board, MANU/SC/0002/1974 :
[1975]2SCR811 ). In these circumstances, pray, where arises the question of the documents necessitating strict proof as required in a Court of law where the Evidence Act holds the field? In any event, in these circumstances, it was open to the arbitrator to dispense with strict proof.
29. Mr. Thakkar relied on Bareilly Electricity Supply Co. Ltd. v. Workmen MANU/SC/0501/1971 : (1971)IILLJ407SC , where on the question of observance of the principles of natural justice it was held that where issues are seriously contested and have to be established and proved, the requirements relating to proof cannot be dispensed with even though the Evidence Act is not applicable to industrial tribunals. This is yet another decision which can avail the appellant nothing. Labour matters and decisions of tribunals cannot be equated with arbitration proceedings and arbitrators awards. In the former where depend issues like the correctness of a balance sheet prepared by the employer from materials to which the workers would have no access and on which their fate is in balance, it is but right that the strict requirements of proof should not and cannot be dispensed with. To do otherwise would be contrary to the principles of natural justice. Unlike arbitrators, industrial tribunals have statutory rules as to how evidence is to be taken. No parallel can conceivably be drawn between mode of proof before tribunals and arbitrators. Moreover, in the present matter even Mr. Thakkar does not say that the appellant challenges the genuineness of the documents produced by the contractor. All he says is that they have not been strictly proved. In these circumstances, reliance on the Bareilly Electricity case MANU/SC/0501/1971 : (1971)IILLJ407SC is utterly misplaced.
33. Dr.Saraf also placed reliance on the judgment of this court in case of New Consolidated Construction Co. Ltd. vs. Serum Bio Pharma Park on the same issue. Paragraphs 62 and 63 of the said judgment read thus :-
hvn ARBP600.11
62. Mr. Chinoy relied upon the judgment in the case of M/s.Bareilly Electricity Supply Co. Ltd. Vs. The Workmen & Ors., AIR 1972 Supreme Court 330 which was a case before the labour tribunal and in which it was held that evidence had to be strictly proved when issues are seriously contested. It is observed that applications of principles of natural justice would not imply that what was not in evidence could be acted upon whilst considering the evidence contained in the Balance Sheet and Profit and Loss Account of the company. It was held that mere production cannot amount to the proof of the truth of the entries contained therein and the tribunal cannot pass an award on the copies of documents when originals were not proved either by affidavit or by direct evidence. Mr. Chinoy would argue that this was shown to be standard of proof even in industrial courts where direct proof of evidence was not required.
63. Mr. Kadam on the other hand correctly drew my attention to the same principle imported into arbitration as held by the Division Bench of this Court in the case of Rashtriya Chemicals & Fertilizers Ltd. Vs. M/s. Mohinder Singh & Co., 1984, The Bombay Law Reporter (LXXXVI). The Division Bench frowned upon the analogy in the case of Bareilly Electricity (supra) sought to be applied to arbitrations under the old Arbitration Act of 1940, the principles of which have been further streamlined and smoothened in the new Arbitration Act of 1996 giving the arbitrators the greater ambit to follow the procedure not set out in the Indian Evidence Act.
34. It is submitted by the learned counsel that the learned arbitrator has rendered various findings of fact which cannot be re-appreciated by this court under section 34 of the Act since the same are not perverse. In support of this submission, the learned counsel placed reliance on the judgment of Supreme Court in case of Ravindra Kumar Gupta and Company vs. Union of India(2010) 1 SCC 409 and in particular paragraph 14 which reads thus :-
In this case, the Supreme Court notice the earlier judgment in hvn ARBP600.11 the case of Ispat Engineering & Foundry Works, B.S. City, Bokaro v. Steel Authority of India, B.S. City, BokaroMANU/SC/0389/2001 : (2001) 6 SCC 347 wherein it was held as follows:
" 4. Needless to record that there exists a long catena of cases through which the law seems to be rather well settled that the reappraisal of evidence by the court is not permissible. This Court in one of its latest decisions [Arosan Enterprises Ltd. v.
Union of India MANU/SC/0595/1999 : (1999) 9 SCC 449] upon consideration of decisions inChampsey Bhara & Co. v. Jivraj Balloo Spg. & Wvg. Co. Ltd. MANU/PR/0071/1923 : Air 1923 PC 66, Union of India v. Bungo Steel Furniture (P) Ltd. MANU/SC/0004/1966 : 1967 1 SCR 324, N. Chellappan v. Secy., Kerala SEB MANU/SC/0002/1974 : (1975) 1 SCC 289, Sudarshan Trading Co. v. Govt. of Kerala MANU/SC/0361/1989 : (1989) 2 SCC 38, State of Rajasthan v. Puri Construction Co. Ltd. MANU/SC/0865/1994 : (1994) 6 SCC 485 as also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan MANU/SC/0359/1999 : (1999) 5 SCC 651 has stated that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act, 1940. This Court in Arosan Enterprises categorically stated that in the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, interference would still be not available unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. This Court went on to record that in the event, however, two views are possible on a question of law, the court would not be justified in interfering with the award of the arbitrator if the view taken recourse to is a possible view. The observations of Lord Dunedin in Champsey Bhara stand accepted and adopted by this Court in Bungo Steel Furniture to the effect that the court had no jurisdiction to investigate into the merits of the case or to examine the documentary and oral evidence in the record for the purposes of finding out whether or not the arbitrator has committed an error of law. The court as a matter of fact, cannot substitute its own evaluation and come to the conclusion that hvn ARBP600.11 the arbitrator had acted contrary to the bargain between the parties. "
35. Dr. Saraf placed reliance on the judgment of Supreme Court in case of Arosan Enterprises Ltd. vs. Union of India and another (1999) 9 SCC 449 and in particular paragraphs 36 and 37 on the issue that the court cannot re-appreciate the evidence and cannot interfere with the findings of fact in the petition challenging an arbitral award. Reliance is placed on paragraphs 36, 38 and 39 of the said judgment which read thus:-
36. Be it noted that by reason of a long catena of cases, it is now a well settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law: In the event however two views are possible on a question of law as well, the Court would not be justified in interfering with the award.
38. It is on the basis of this well settled proposition that the learned Single Judge came to a conclusion that the findings of the Arbitrators in regard to the extension of delivery period and failure to fix the fresh date has resulted in breach of the contract on the part of the Government and the same being purely based on appreciation of material on record by no stretch it can be termed to be an error apparent on the face of the record entitling the court to interfere. The Arbitrators have, in fact, come to a conclusion on a closer scrutiny of the evidence in the matter and re-appraisal of evidence by the Court is unknown to a proceeding under Section 30 of the Arbitration Act. Re-appreciation of evidence is not permissible and as such we are not inclined to appraise the evidence hvn ARBP600.11 ourselves save and except what is noticed herein before pertaining to the issue as the time being the essence of the contract. In this context, reference may be made to a decision of this Court in the case of M. Chellappan v. Secretary, Kerala State Electricity Board and Anr. MANU/SC/0002/1974 : [1975]2SCR811 . Mathew, J. speaking for the Three Judge Bench in paragraph 12 and 13 observed as below:
" 12. The High Court did not make any pronouncement upon this question in view of the fact that it remitted the whole case to the arbitrators for passing a fresh award by its order. We do not think that there is any substance in the contention of the Board. In the award, the umpire has referred to the claims under this head and the arguments of the Board for disallowing the claim and then awarded the amount without expressly adverting to or deciding the question of limitation. From the findings of the umpire under this head it is not seen that these claims were barred by limitation. No mistake of law appears on the face of the award. The umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when a proposition of law is stated in the award and which is the basis of the award, and that is erroneous, can the award be set aside or remitted on the ground of error of law apparent on the face of the record:
Where an arbitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside.
The general rule is that, as the parties choose their own arbitrator to be the judge in the disputes between them, they cannot, when the award is good on its face, object to his decision, either upon the law or the facts, (see Russell on Arbitration, 17th ed., p.322).
13. An error of law on the face of the award means that you hvn ARBP600.11 can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous (see Lord Dunedin in Champsey Ehara & Co, v. Jivraj Baloo Co.). In Union of India v. Bungo Steel Furniture Pvt. Ltd., this Court adopted the proposition laid down by the Privy Council and applied it. The Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out, whether or not the arbitrator has committed an error of law."
39. In any event, the issues raised in the matter on merits relate to default, time being the essence, quantum of damages--These are all issues of fact, and the Arbitrators are within their jurisdiction to decide the issue as they deem it fit--The Courts have no right or authority to interdict an award on a factual issue and it is on this score the Appellate Court has gone totally wrong and thus exercised jurisdiction which it did not have. The exercise of jurisdiction is thus wholly unwarranted and the High Court has thus exceeded its jurisdiction warranting interference by this Court. As regards issues of fact as noticed above and the observations made herein above obtains support from a judgment of this Court in the case of Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Ors. MANU/SC/0359/1999 :
[1999]3SCR490.
36. Learned counsel for the respondent in rejoinder submits that the learned arbitrator did not consider the evidence led by the witnesses examined by the respondent properly and has not treated both parties equally. It is submitted that the effect of drawing adverse inference by the learned arbitrator for opposing the DVDs being taken on record was so much on the mind of the learned arbitrator that it disclosed a prejudice in the mind of the learned arbitrator thereby rendering an illegal and erroneous award.
hvn ARBP600.11 REASONS AND CONCLUSION :
37. I shall first deal with the issue raised by the respondent that the respondent was kept in dark since the claimant had not signed the Long Form agreement.
Perusal of clause 8 of the Deal Memo clearly indicates that though it was provided that the Long Form Agreement of the said arrangement shall be executed between the parties within ninety days, it was also provided that until detailed and Long Form Agreement was executed between the parties, the terms and conditions of the arrangement shall continue to be binding and subsisting.
Perusal of the record indicates that the respondent never called upon the claimant to execute any such Long Form Agreement before the expiry of ninety days from the date of execution of the Deal Memo or even thereafter. Respondent has also not raised any such ground in the arbitration petition and has raised this issue across the bar.
38. Perusal of the award on this issue indicates that even before the learned arbitrator it was not the case of the respondent that they were not bound by the Deal Memo but only defence was that for want of Long Form Agreement, they were kept in dark regarding the procedure and other obligations between the parties. Learned arbitrator has rendered a finding that the Deal Memo itself made it clear that the terms stipulated in the Deal Memo shall be valid and binding upon the parties and both the parties will have to act upon the same. No terms and conditions were left to be observed until Long Form Agreement was executed hvn ARBP600.11 and nothing was subject to the Long Form Agreement. Learned Arbitrator has also rendered a finding that the respondent was not able to point out as to how and in what manner and at what point the respondent was handicapped or prejudiced in the absence of the Long Form Agreement. It is held that there was no dispute that the claimants were bound to implement the Deal Memo as was executed and nothing was left to the Long Form Agreement.
39. Learned arbitrator has rendered a finding that the Deal Memo was itself sufficient wherein all the terms and conditions between the parties were stipulated. It was also an admitted position that on 16 th December, 2007, there was no Long Form Agreement signed between the parties. Learned Arbitrator also considered the fact that even in their correspondence addressed by the respondent, there was no whisper that absence of Long Form Agreement was handicap for them in any manner. I am therefore, of the view that the terms and conditions recorded between the parties in the Deal Memo were binding on both the parties and the said Deal Memo itself was a concluded contract. Both the parties acted upon the said agreement. The respondent never called upon the claimant to execute any such Deal Memo at any point of time. No such ground has been raised in the petition.
40. In my view merely, because the claimant did not produce the said Long hvn ARBP600.11 Form Agreement, though agreed to be produced in the oral evidence, no adverse inference could be drawn against the claimant for not producing the Long Form Agreement as urged by the respondent. Even if the learned arbitrator would have proceeded on the basis that there was no Long Form Agreement executed, the Deal Memo itself being the concluded agreement and having been acted upon partially even by the respondent, the execution of the Long Form Agreement would not be a condition precedent for the agreement already entered into between the parties to come in force. Learned arbitrator in my view has thus rightly not drawn any adverse inference against the claimant in not producing the said Long Form Agreement and has rightly rendered a finding that the Deal Memo itself was a concluded contract between the parties. There is thus no merit in the submission of the learned counsel for the respondent that the respondent was kept in dark about the subsequent agreement agreed to be entered into between the parties.
41. The next question that arises for consideration of this court is whether the claimant had committed any breach of the agreement or not or whether the respondent had wrongfully withheld the balance payment due and payable to the claimant by the respondent. It was the case of the respondent before the learned arbitrator that though in the Deal Memo, the brand logo marks of the respondent on the jersey of player was to be absolutely clear and visible, thehvn ARBP600.11 same was not clear and visible. The respondent was thus not liable to make any payment to the claimant. To controvert these allegations of the respondent, the claimant had examined witnesses. The respondent also had examined witnesses.
In the oral evidence of the claimant, the claimant had produced the CD containing the compilation of still pictures taken from the live matches where the Mumbai Champs played at Chandigarh from 4 th December, 2007 to 15th December, 2007. The claimant had also relied upon 5 DVDs in support of their plea that the claimant had not committed any breach and that the logo marks of the respondent was on the jersey of the team and also the respondent had exercised their right under the terms of the said agreement.
42. It is not in dispute that one of the said CD was marked as exhibit in the arbitration proceedings as the same was produced by the author of the said CD.
When the said CD was marked as exhibit, the respondent did not raise any objection at that point of time. The claimant however, when produced 5 DVDs, the respondent raised strong objection against the claimant producing said 5 DVDs on the ground that the same was produced by the claimant at the stage of cross examination of the witness and not at the threshold though the claimant had possessed the said DVDs before commencing the oral evidence. Learned arbitrator accepted the submission of the respondent and refused to take the said DVDs on record in the evidence.
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43. A perusal of the oral evidence led by the respondent themselves clearly indicate that in the examination in chief of Mr. Yogesh Bosmiya, a witness examined by the respondent had himself relied upon the contents of those 6 DVDs which were opposed by them when the same were tendered by the witness examined by the claimant. In my view, the respondent themselves relying upon these DVDs could not have raised such objection before the learned arbitrator for taking those DVDs on record in the evidence when the same was tendered by the claimant. Be that as it may, the perusal of the entire award clearly indicates that the learned arbitrator has not allowed the claim of the claimant only by drawing an adverse inference against the respondent in opposing the said DVDs being taken on record in evidence but has considered entire documentary evidence and oral evidence relied by both the parties.
44. It was strenuously urged by the learned counsel for the respondent that the drawing of adverse inference against the respondent for opposing the DVDs being taken on record in the evidence and which according to respondent was a valid objection has affected the merits of the case. In my view, since the respondent themselves were relying upon the said DVDs, learned arbitrator was right in holding that if the said DVDs would have been produced, it would have assisted the case of the respondent also to prove that brand logo of the respondent was not properly visible and/or was not clear on the jersey of the hvn ARBP600.11 players. In my view, thus there is no substance in this submission of the learned counsel for the respondent that the mind of the learned arbitrator was prejudiced or that the claim awarded in favour of the claimant was on the basis of such adverse inference drawn by the learned arbitrator against the respondent. Perusal of the record also indicates that no such ground has been raised by the respondent in the arbitration petition but has been urged only across the bar which is even otherwise not permissible in law.
45. A perusal of the record also indicates that when the CD which was a compilation of still pictures was tendered by the witness examined by the claimant, the respondent did not raise any such objection. The said CD was already marked as Exhibit "L" by the learned arbitrator. In para 27 of the impugned award, the learned arbitrator has placed reliance upon the said CD and has recorded that the learned arbitrator has seen the CD which was produced by the claimant which was legally proved by the author of the CD. The said CD was taken on record and was served upon the respondent along with 16 other documents on 19th September, 2009. It is held by the learned arbitrator that the respondent must have seen the said DVDs and thereafter had decided to oppose very strongly the production of these DVDs.
46. The learned arbitrator had seen the said CD and has rendered a finding that the boundaries clearly and distinctly shown the logo with the name of the hvn ARBP600.11 respondent in Hindi and English on the front and back of the jerseys of the players. The name and the logo were also displayed on the runner board and on the boundary line. It was an advertisement showing drawing of a small house with logo and the name of the respondent clearly appeared. It is held that every picture was reasonably visible and clear. Learned arbitrator also took cognizance of the letter dated 12th December, 2007 which was addressed by the respondent to the claimant expressing their thanks for implementing their suggestions. Even in the said letter, there was no whisper of any grievance about the quality or visibility of the pictures or display on the screen or on the hoardings etc. Considering these material, the learned arbitrator held that the grievance of the respondent on this issue was afterthought and baseless and wholly contrary to the record or material on record. It is held that all these allegations were made only with an ulterior motive to dodge to make outstanding payment to the claimant.
47. A perusal of the record also indicates that after considering the entire evidence, the learned arbitrator has rendered a finding that it was not the case of the respondent that the claimant had in any manner prevented the respondent from exercising any rights provided under clause V of the Deal Memo. There was neither whisper in the pleadings nor was there an iota of evidence to support the said claim against the claimant. The learned arbitrator has held that it was for the respondent to use the team logo and the brand in its communication with hvn ARBP600.11 the world. The claimant could do nothing in the matter. The claimant could not have advised the respondent how to prepare the team logo brand and how to communicate the same in its correspondence. There was failure on the part of the respondent and not on the claimant.
48. In so far as the right of the respondent to do press conference with full team in attendance is concerned, it is held by the learned arbitrator that it was for the respondent to have organized press conference by conveying the attendance of the full team and the claimant could not have conveyed such press conferences on behalf of the respondent. It was not the case of the respondent that they had contacted the team and that the team had refused to attend the press conferences or that the respondent had approached the claimant to help them organize press conference with the attendance of the full team and that the claimant had not cooperated with the respondent in that respect.
49. Learned arbitrator has considered the oral evidence of one Mr. Ramesh Bhandari who in his evidence admitted that the respondent had no marketing place. The learned arbitrator recorded a finding that it was for the respondent to have taken benefits of those rights provided in the Deal Memo which were specifically conferred upon the respondent. It is held that it was failure of the respondent to exercise the rights conferred on them in the Deal Memo and it was hvnARBP600.11 not failure of the claimant to allow the respondent to avail of such rights. The respondent is thus liable to face consequences of its own failure and had pushed the blame on the claimant. The fact remains that the logo was admittedly displayed. It is held that the sense of visibility is an individual perception.
Learned arbitrator has rendered a finding that there was no deficiency in the service rendered by the claimant. The witness examined by the respondent in his cross examination admitted that the brand logo of respondent was displayed on the jersey of the team players but it was his case that it was not prominently printed. In my view the learned arbitrator had considered the entire material on record and has rightly rendered a finding that the respondent had committed breaches of their obligations under the Deal Memo and not the claimant and the respondent had wrongfully withheld the payment due and payable to the claimant.
50. Learned arbitrator also considered the letters on record addressed by the respondent themselves by which the respondent had acknowledged the implementation of the suggestions given by the respondent and had expressed pleasure and had thanked the claimants for such implementation. Learned arbitrator has rightly observed that the submissions of the respondent were contrary to the contents of the letter addressed by the respondent themselves.
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51. I am therefore, of the view that the findings rendered by the learned arbitrator are not perverse and cannot be interfered with under section 34 of the Arbitration and Conciliation Act, 1996. This court cannot re-appreciate the findings of fact recorded by the learned arbitrator unless the same are perverse.
52. Learned counsel appearing for both the parties have relied upon number of judgments on the issue whether the strict provisions of Evidence Act applies to the arbitration proceedings or not.
ig I will now deal with the issue whether strict provisions of the Evidence Act applies to arbitration proceedings or not?
Supreme Court in the case of M/s. Bareilly Electricity Supply Co. while dealing with the provisions of the Industrial Disputes Act has held that application of principle of natural justice does not imply that what is not evidence can be acted upon. If a letter or any other document is produced to establish some fact which is relevant to the enquiry, the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accord with principles of natural justice as also according to the procedure under Order III of Civil Procedure Code and the Evidence Act both of which incorporate these general principles.
53. Learned Single Judge of this court in the case of Municipal Corporation of Greater Mumbai Vs. Hindustan Construction Company Ltd. in Arbitration Petition No. 65 of 2008 while dealing with the petition under section 34 of the hvn ARBP600.11 Arbitration and Conciliation Act, 1996 has followed the principles led down by the Supreme Court in the case of Bareilly Electricity (supra) and has held that the judgment of the Supreme Court would also buttress the contention of the respondent that the minutes of the meeting of 15 September, 2004 could not have been relied upon when neither the original was produced nor was any justification put fourth for the absence of the signed copy of the original.
54. The Division Bench of this court in case of Bi-water Penstocks Ltd. Versus Municipal Corporation of Greater Bombay and anr. (supra) after adverting to the judgment of the Supreme Court in the case of M/s. Bareilly Electricity Supply Co.
(supra), judgment of Delhi High Court in the case of Wazirchand Karan Chand Versus Union of India and another and various other judgments has adopted the principles therein and has held that in blatant breach of the principles of natural justice, the arbitrator had permitted the documents to be admitted in evidence, inspite of repeated objections raised by the respondent, by receiving such documents, therefore, amounts to a procedural error which can also be said to be in breach of principles of natural justice.
55. Learned Single Judge of this Court in the case of Pradyuman Kumar Sharma and anr. Vs. Shri Jaysagar M. Sancheti and Ors (supra) while deciding the petition under section 34 of the Arbitration and Conciliation Act, 1996 and after hvn ARBP600.11 considering the section 19 of the Arbitration and Conciliation Act, has held that though the arbitrator is not bound by the provisions of the Code of Civil Procedures or Evidence Act, the principles of Evidence Act and Code of Civil Procedure are applicable even to the arbitration proceedings. The document which is disputed by the party and if not proved, cannot be considered even by the arbitrator to be on record or as piece of evidence. It is held that by taking into consideration the unproved document by the arbitrator on the contrary would be in violation of the principles of natural justice. The learned arbitrator is not bound to refer to an unproved document.
56. In so far as judgment of the Division Bench of this court in the case of Rashtriya Chemicals and Fertilizers Limited Vs. M/s. Mohinder Singh & Co.
relied upon by Dr. Saraf is concerned, a perusal of the said judgment indicates that in that matter, learned arbitrator had called upon both the parties to produce documents on which they relied upon which they did. The documents were taken on record by the learned arbitrator without demur from either side.
Parties took inspection of the documents. None of the parties had shown their desire for production of any person for cross examination or to prove strictly any of such documents produced by either party. The appellant in that case had not challenged the genuineness of the documents produced by the contractor.
With such facts in hand, the Division Bench of this court while hearing the appeal arising out of the order passed by the learned Single Judge under section 30 of hvn ARBP600.11 the Arbitration Act, 1940 distinguished the judgment of the Supreme Court in the case of Bareilly Electricity (supra) and held that reliance thereof was misplaced.
In this case, the respondent in the arbitration proceedings did not dispute the existence and contents of the CD produced by the claimant and the same was already marked as Exh. "L". Learned arbitrator has not considered any document which was not proved by the claimant. In my view, the principles laid down by the Supreme Court in the case of Bareilly Electricity (supra) that the principles of natural justice applied to the industrial tribunal also applies to the arbitral tribunal.
57. In so far as judgment of the learned single Judge of this court in the case of New Consolidated Construction Co. Ltd. (supra) relied upon by Dr. Saraf is concerned, perusal of the said judgment clearly indicates that the judgment of this court in the case of Municipal Corporation of Greater Mumbai Vs. Hindustan Construction Co Ltd. (supra), judgment of Division Bench in the case of Bi-water Penstock and judgment of this court in the case of Pradyuman Sharma (supra) were not brought to the notice of the learned Single Judge. The facts in the case of Rashtriya Chemicals were different. Learned Single Judge in the case of New Consolidated Construction Co Ltd. therefore, held that the reliance placed upon the judgment in the case of Bareilly Electricity (supra) was misconceived and the extent of the reliance upon the Evidence Act in that judgment cannot be made hvn ARBP600.11 applicable to arbitral proceedings in commercial contracts where the contract and correspondence following thereafter would alone be material along with the proof of expenses incurred. In my view this judgment of the learned Single Judge is delivered without noticing several other judgments of this court and a contrary view came to be taken by the learned Single Judge, I am bound by the judgment of the Supreme Court and judgment of Division Bench of this court rendered earlier and also the judgment of the learned Single Judge delivered prior to the delivery of this judgment which hold the field.
58. I am therefore, of the view that even in arbitration proceedings though strict provisions ofEvidence Act and Code of Civil Procedure, 1908 are not applicable and though the arbitral tribunal is not bound by the provisions of the Indian Evidence Act and Code of Civil Procedure, 1908, the arbitral tribunal is bound to consider the principles of Evidence Act and the Code of Civil Procedure and has to follow the principles of natural justice.
59. The question however, that arises in this case is whether the learned arbitrator has violated the principles of natural justice as urged by the learned counsel for the respondent or not. A perusal of the record clearly indicates that the learned arbitrator has while rendering the findings against the respondent on the issue whether logo mark appeared on the jersey or not has relied upon the CD which was a compilation of photographs which was proved best of evidence.
hvn ARBP600.11 Learned arbitrator has not relied upon the DVDs which were objected to by the respondent before the learned arbitrator and did not take the same on record in evidence. In my view there is thus no substance in the submission of the learned counsel for the respondent that the learned arbitrator relied upon any unproved documents or that the impugned award is in violation of principles of natural justice.
60. In my view, there is also no merit in the submission of the learned counsel for the respondent that the learned arbitrator has decided the entire matter against the respondent only on the basis of adverse inference drawn against the respondent. A perusal of the record clearly indicates that though the respondent themselves had relied upon the DVDs in their evidence, opposed the claimant in producing such evidence. Learned arbitrator however, has not considered those DVDs since the same were not taken on record in the evidence. A perusal of the entire award does not indicate that the learned arbitrator has directly or indirectly considered the said disputed DVDs any manner whatsoever. Learned arbitrator on the contrary has taken into consideration the CD which was marked as Exh. L and after going through the said CD has rendered a finding of fact which in my view cannot be interfered with.
61. In so far as submission of the learned counsel for the respondent that the hvn ARBP600.11 learned arbitrator ought to have considered the photographs produced by the respondent is concerned, no such ground is raised in the petition. The respondent cannot be allowed to urge any grounds not raised in this petition filed under section 34 of the Arbitration & Conciliation Act, 1996.
62. In so far as submission of the learned counsel for the respondent that the learned arbitrator ought to have granted liberty to the respondent before drawing any adverse inference is concerned, in my view since the respondent themselves had relied upon the DVDs and inspite thereof had raised objection against the claimants from tendering the said DVDs, learned arbitrator was justified in drawing adverse inference. Be that as it may, the claim awarded is not based on any such adverse inference drawn by the learned arbitrator. The respondent cannot be allowed to urge that the learned arbitrator should not have drawn adverse inference in view of the respondent opposing the DVDs being taken on record in evidence, since the respondents themselves had relied upon those DVDs.
There is thus no merit in the submission of the learned counsel for the respondent on this issue.
63. In so far as submission of the learned counsel for the respondent that the learned arbitrator did not draw any adverse inference against the claimant in not producing the Long Form agreement by exercising powers under section 114(g) of the Indian Evidence Act is concerned, I am of the view that since the learned hvn ARBP600.11 arbitrator has rightly interpreted clause 8 of the Deal Memo and has rendered finding that the terms and conditions of the said Deal Memo itself was recording a concluded agreement and execution of the separate Long Form Agreement was not mandatory, learned arbitrator has rightly not drawn any adverse inference against the claimant in not producing the said Long Form Agreement. There is no merit in this submission of the learned counsel for the respondent.
64. In so far as submission of the learned counsel for the respondent that the Deal Memo was signed in great haste and thus no claim could have been allowed by the learned arbitrator based on this Deal Memo, in my view, there is no merit in this submission of the learned counsel for the respondent. The respondent has acted upon by the said agreement partly and did not terminate the said agreement on the ground that the said agreement was not valid since the same was allegedly signed in great haste.
65. Supreme Court in the case of Ravindra Kumar (supra) has after adverting to various earlier judgments of the Supreme Court has held that re-appraisal of the evidence of the court is not permissible and as a matter of fact exercise of power to reappraise the evidence is unknown to the proceedings under section 30 of the Arbitration Act. This court has extended such principles even in the proceedings filed under section 34 of the Arbitration & Conciliation Act, 1996. Similar is the hvn ARBP600.11 view taken by the Supreme Court in in the case of Arosan Enterprises Ltd. Versus Union of India and another (supra). In my view the learned arbitrator has rendered finding of fact after considering all the evidence and pleadings on record and has interpreted the terms of the Deal Memo which interpretation is not only possible interpretation but is correct interpretation of the terms of the contract. Supreme Court has held that even if the interpretation of the contract by the arbitral tribunal is possible interpretation, the court cannot substitute such possible interpretation by another interpretation which according to the court shall be another possible interpretation. I am of the view that no case is thus made out by the respondent for warranting interference with the impugned award. Learned arbitrator has considered all the aspects of the matter and have rendered the reasoned award on all the issues. No infirmity can be found with the impugned award rendered by the learned arbitrator.
66. In so far as submission of the learned counsel for the respondent that the learned arbitrator has not treated both the parties equally is concerned, perusal of the record does not indicate that the learned arbitrator has not treated both the parties equally. Learned arbitrator has granted liberty to both the parties to present their case and to lead appropriate evidence. No such grievance was ever made by the respondent before the learned arbitrator. There is thus no merit in the submission of the learned counsel for the respondent. The petition is devoid hvnARBP600.11 of merits. I, therefore, pass the following order :
(a) Arbitration Petition is dismissed.
(b) There shall be no order as to costs.
(R.D. DHANUKA,J.)
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