A perusal of Section 19 of the Arbitration and Conciliation Act, 1996 indicates that subject to Part I, the parties are free to agree on the procedure to be followed by arbitral tribunal in conducting its proceedings. Failing any such agreement referred to under Section 19(2) of the Act, the arbitral tribunal may, subject to Part I, conduct the proceedings in the manner it considers appropriate. Under Section 19(4) of the Act, the said provision empowers the arbitral tribunal to determine the admissibility, relevance, materiality and weight of any evidence. In my view, once the parties have agreed to the procedure of hearing required to be followed by the learned arbitrator including the agreement not to lead any oral evidence before the learned arbitrator, the learned arbitrator was empowered to decide the matter on the basis of documents produced by the parties including admissibility of the contents thereof. Since the petitioners have chosen not to lead oral evidence to prove the disputed contents of the document, the learned arbitrator was empowered to consider the effect of not leading oral evidence by the petitioners to prove the contents thereof and come to a conclusion that the alleged plea of the petitioners in such correspondence could not be considered as a proof. In my view, the learned arbitrator has interpreted the terms of the document and has rendered findings of fact which are not perverse and no interference of such findings of fact is warranted under Section 34 of the said Act.
Bombay High Court
M/S. Akbarallys And 2 Ors vs Indian Oil Corporation Ltd on 19 January, 2015
Bench: R.D. Dhanuka
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.1406 OF 2014
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.1406 OF 2014
Citation;2016(3) ALLMR134
By this petition, the petitioner seeks to impugn the arbitral award
dated 28th March 2014 allowing the claims made by the respondent and directing the petitioners to pay an amount of Rs.15,61,101/- with interest ppn 2 31.arbp-1406.14.doc @ 9% p.a. from the date of filing of claim till the date of payment or realization.
2. On 11th December 2000, the parties entered into Memorandum of Understanding (MOU). Under the said MOU, the petitioner agreed to pay certain compensation amounts to the respondent for the premises used and occupied.
3. It is the case of the petitioner that there was discussion held on 12th August 2010 between the officers of the respondent and the petitioners wherein the officers of the respondent agreed for one time settlement and agreed to accept 50% of the compensation in full and final settlement of the entire arrears of the petitioners. The petitioners accordingly by its letter dated 16 th August 2010 recorded such alleged settlement arrived at between the officers of the respondent and the petitioners and forwarded a cheque of Rs.3,33,960/-. On 28 th September 2010, the petitioners handed over the possession of the shop to the respondent.
4. The parties entered into further correspondence in respect of the balance amount. In response to the correspondence addressed by the respondent for recovery of the amount, the petitioners once again contended that the amount is already paid by its letter dated 16 th August 2010 in full and final settlement as per the terms orally agreed between the officers of the respondent and the petitioners in the meeting held on 12th August 2010. The dispute arose between the parties. The matter was referred to the arbitration.
5. By the impugned award dated 28th March 2014, the learned
arbitrator directed the petitioners herein to pay an amount of
Rs.15,61,101/- with interest @ 9% p.a. from the date of filing of claim till the date of payment or realization.
6. Learned counsel appearing for the petitioners submits that though in the meeting held before the learned arbitrator on 4 th June 2013, the learned arbitrator recorded the agreement of both the parties that there would be no oral evidence or examination of any witnesses, the learned arbitrator rejected the contents of document dated 29th June 2010 holding that the contents of the said letter did not suggest in support of plea that there was complete accord and satisfaction of the terms orally agreed between the officers of the respondent and the petitioners. It is submitted that the learned arbitrator once having recorded that no oral evidence would be led, he could not have rejected the said document relied upon by the petitioners.
7. Next submission of the learned counsel is that under the MOU dated 11th December 2000 entered into between the parties, it was agreed that the said MOU shall remain in effect for a period of 10 years from the date of Agreement i.e. 11 th December 2000. It is further agreed that the terms and conditions of the said MOU would be reviewed mutually at the end of the initial 5 year period. Under clause 12 of the said Agreement, it was agreed that the parties would execute necessary legal documents in the form of Leave and License Agreement for each location/site separately and cost of such documentation including registration and stamp duty would be borne by the petitioners. The term of such Leave and License Agreement would be for a period of 5 years.
ppn 4 31.arbp-1406.14.doc
8. It is submitted that after expiry of 5 years from the date of execution of the said MOU, though the petitioners identified the shop to be given on leave and license, the parties did not enter into any Leave and License Agreement but continued the arrangement on payment of agreed compensation. Learned counsel submits that since the parties had agreed for execution of a fresh Leave and License Agreement after expiry of 5 years and having failed to execute subsequent agreement, the Arbitration Agreement recorded in paragraph 34 of the said MOU also has come to an end after expiry of 5 years and thus the learned arbitrator did not have any jurisdiction to entertain the claim made by the respondent.
9. Learned counsel further fairly invited my attention to the Clause 14 of the said MOU which reads as under :-
"14. This MOU and the Leave and License Agreement aforementioned shall run concurrent to one another. Any changes in the MOU terms and conditions will be automatically incorporated in the new and/or existing Leave and License Agreement."
10. Learned counsel in support of this plea invited my attention to the letter dated 16th January 2008 addressed by the respondent to the petitioners informing that the Management of the respondent had accepted the final offer of the petitioners of Rs.2.2 lacs license fee per month. In the said letter, the respondent conveyed that the last contract has expired on 26th December 2005 and thus new contract was executed from 1st January 2006 for a period of 5 years. It is the case of the petitioners that the petitioners accepted the terms and conditions recorded in the said letter dated 16 th January 2008 to the effect that a fresh agreement was entered into after expiry of 5 years.
11. Learned counsel for the petitioners also invited my attention to the letter dated 20th April 2010 addressed by the respondent to the petitioners by which the agreement arrived at between the parties came to be terminated. It is submitted that even in the said letter, the respondent has referred to a fresh agreement entered into between the parties after expiry of 5 years. It is submitted that thus the learned arbitrator has travelled without his jurisdiction without there being any arbitration agreement between the parties after expiry of 5 years from the date of execution of the MOU. The entire award is thus without jurisdiction.
12. Learned counsel appearing for the respondent, on the other hand, submitted that once the parties had agreed not to lead oral evidence, the learned arbitrator has rightly rejected the letter dated 16 th August 2010 by which the petitioners sought to contend that there was complete accord and satisfaction in lieu of the petitioners not having led oral evidence based on alleged oral discussion between the petitioners and the officers of the respondent.
13. In so far as the submission of the learned counsel for the petitioners that there existed no arbitration agreement is concerned, learned counsel invited my attention to the Clauses 11,12, 14 and 34 of the MOU dated 11th December 2000. It is submitted that in this case, the petitioners selected only one location for execution of Leave and License Agreement. The respondent called upon the petitioners to execute the Leave and License Agreement after expiry of 5 years, but the petitioners did not execute. Since the respondent did not pay license ppn 6 31.arbp-1406.14.doc fees, the petitioners referred to the said MOU dated 11 th December 2000 and terminated the Agreement. It is submitted that even if any fresh agreement was required to be entered into so as to fix the amount of compensation, the other terms and conditions of the MOU dated 11 th December 2000 were to be read along with Agreement proposed to be entered into. It is submitted that under Clause 34 of the MOU, any disputes and/or differences of any nature whatsoever including the dispute arising out of or in relation to the said MOU was liable to be referred to the arbitration. The said clause is very wide and thus the learned arbitrator has rightly exercised the jurisdiction and has held that the arbitration agreement is in existence and he has jurisdiction to entertain the claim made by the respondent.
14. As far as the first submission made by Ms. Sadh, learned counsel for the petitioners that the learned arbitrator could not have rejected the letter addressed by the petitioners recording accord and satisfaction on the ground that the petitioners did not lead any oral evidence, once the learned arbitrator had recorded the agreement of the parties that none of the parties would lead oral evidence is concerned, a perusal of the impugned award clearly indicates that in the arbitration meeting held on 4th June 2013, both the parties had agreed to the procedure of hearing which was recorded by the learned arbitrator in paragraph 2 of the impugned award. A perusal of the said paragraph clearly indicates that both the parties had agreed that no oral evidence or examination of any witnesses would be conducted. The matter would be argued on the basis of the documents on record and pleadings.
15. It is not in dispute that inspite of such letter addressed by the petitioners alleging accord and satisfaction, the respondent before invoking arbitration clause had raised demand for making payment of the balance amount. There was thus dispute in respect of case of the petitioners of alleged accord and satisfaction even before the arbitration agreement has been invoked. The petitioners were fully aware of the contention of the respondent that the case of the petitioners of accord and satisfaction was not accepted and demand was raised by the respondent for making payment of the balance amount.
16. Not only that but in the statement of claim filed by the respondent before the learned arbitrator and also in the rejoinder, the respondent had disputed the plea of accord and satisfaction and had pursued the claim made by the respondent. Inspite of such pleadings on accord and satisfaction of the respondent, the petitioners chose not to lead any oral evidence before the learned arbitrator in the meeting held on 4 th June 2013. The record also clearly indicates that even after the pleadings were completed and the stand of the respondent was clear to the petitioners that the plea of accord and satisfaction was disputed by the respondent, the petitioners did not think it proper to make an application before the learned arbitrator for seeking permission to lead oral evidence to prove the contents of the letter recording alleged accord and satisfaction. In the aforesaid circumstances, in my view, the learned arbitrator is justified in rejecting the contents of the said letter recording alleged accord and satisfaction on the ground that no oral evidence led by the parties.
17. A perusal of Section 19 of the Arbitration and Conciliation Act, 1996 indicates that subject to Part I, the parties are free to agree on the procedure to be followed by arbitral tribunal in conducting its proceedings. Failing any such agreement referred to under Section 19(2) of the Act, the arbitral tribunal may, subject to Part I, conduct the proceedings in the manner it considers appropriate. Under Section 19(4) of the Act, the said provision empowers the arbitral tribunal to determine the admissibility, relevance, materiality and weight of any evidence. In my view, once the parties have agreed to the procedure of hearing required to be followed by the learned arbitrator including the agreement not to lead any oral evidence before the learned arbitrator, the learned arbitrator was empowered to decide the matter on the basis of documents produced by the parties including admissibility of the contents thereof. Since the petitioners have chosen not to lead oral evidence to prove the disputed contents of the document, the learned arbitrator was empowered to consider the effect of not leading oral evidence by the petitioners to prove the contents thereof and come to a conclusion that the alleged plea of the petitioners in such correspondence could not be considered as a proof. In my view, the learned arbitrator has interpreted the terms of the document and has rendered findings of fact which are not perverse and no interference of such findings of fact is warranted under Section 34 of the said Act.
18. In so far as the second submission of the learned counsel for the petitioners that there existed no arbitration clause and the learned arbitrator had no jurisdiction to entertain the claim of the respondent is concerned, a perusal of the MOU clearly indicates that it was agreed by ppn 9 31.arbp-1406.14.doc and between the parties that the MOU shall remain in effect for a period of 10 years from the date of such Agreement. It was further provided that the terms and conditions of the MOU will be reviewed mutually at the end of the initial 5 year period. Parties agreed to execute necessary legal documents in the form of Leave and License Agreement for each location/site separately and cost of such documentation including registration and stamp duty was agreed to be paid by the petitioners. Under clause 14 of the said Agreement, it was clearly provided that the said MOU and the Leave and License Agreement shall run concurrently to one another. Any changes in the MOU terms and conditions will be automatically incorporated in the new and/or existing Leave and License Agreement.
19. It is not in dispute that there was only one shop identified by the petitioners to the respondent after expiry of 5 years. The respondent accordingly revised license fees as far as the said shop is concerned and communicated the said decision by letter dated 16th January 2008 which amount would be charged for next period of 5 years. It is a common ground that there was no other Leave and License Agreement entered into between the parties.The correspondence indicates that the respondent called upon the petitioners to execute Leave and License Agreement but the petitioners did not execute. Questions that arose before the learned arbitrator in such circumstance was that whether the petitioners had not complied with terms and conditions of the MOU by not making payment of license fees and not executing Leave and License Agreement though called upon by the respondent, whether the terms and conditions of the MOU would continue to remain binding upon the parties in so far as the other terms and conditions of the agreement are concerned or not.
20. In my view, even if the Leave and License Agreement which was required to be entered into was not entered into but only compensation was agreed by and between the parties, there was no other agreement under which the petitioners could have continued the possession of the premises. Even if any Leave and License Agreement would have been entered into between the parties after expiry of 5 years, in view of clause 14 of the said MOU, in my view, the said provision of the MOU dated 11th December 2000 was agreed to run concurrent to such Leave and License Agreement required to be entered into. It was agreed that any changes in the MOU terms and conditions would be automatically incorporated in the new and/or existing Leave and License Agreement. In my view, thus all the terms and conditions of the MOU stood incorporated/continued which were part of the said MOU. Be that as it may, in so far as the existence of arbitration agreement is concerned, a perusal of clause 34 of the MOU clearly provides that any disputes and/or differences of any nature whatsoever including the dispute arising out of or in relation to the said MOU was required to be referred to the arbitration. Clause 34 is very wide and would include even the dispute raised by the respondent before the learned arbitrator that the petitioners had failed to execute Leave and License Agreement and committed breach of the terms of the said MOU and the learned arbitrator was empowered to decide the said issue under the arbitration agreement under the said MOU.
21. A perusal of the impugned award indicates that the learned arbitrator has dealt with all these issues and interpreted the terms of the MOU. In my view, the interpretation rendered by the learned arbitrator is a possible interpretation and thus the said interpretation cannot be substituted by another interpretation under Section 34 of the said Act.
22. In so far as the judgment of the Supreme Court in the case of U.P. Rajkiya Nirman Nigam Ltd. Vs. Indure Pvt. Ltd. and Ors., reported in AIR 1996 SC 1373 relied upon by Ms. Sadh, learned counsel for the petitioners is concerned, the Supreme Court in the said judgment has considered a case under Section 2 of the Arbitration Act, 1940 and rendered a finding that there existed no valid and subsisting agreement between the parties and the parties had referred to the oral agreement. The Supreme Court came to the conclusion that there was no independent contract for reference to the arbitration as contemplated under Section 2 (a) of the Arbitration Act, 1940. In this case, the parties had entered into the MOU which recorded an arbitration agreement. The said arbitration agreement was agreed to be continued even in the situation when the fresh Leave and License Agreement was agreed to be entered into after expiry of 5 years. In my view, the reliance placed on the judgment of the Supreme Court in the case of U.P. Rajkiya Nirman Nigam Ltd. (supra) by the learned counsel is totally misplaced.
23. The petition is devoid of merits and is accordingly dismissed.
There shall be no order as to costs.
R.D. DHANUKA, J.
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