The contention that that the Arbitral Tribunal had grossly erred
in accepting the said evidence without an affidavit under Section 65B of the Indian Evidence Act, 1872 is difficult to accept. This is because of two reasons. First, in terms of Section 1 of the Indian Evidence Act 1872, the said Act is not applicable to proceedings before the arbitrator. Second, no such objection was taken on behalf of the petitioners at the appropriate stage, that is, before the Learned Arbitrator. {Para 27}
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 15.04.2021
O.M.P. (COMM) 79/2021
MEGHA ENTERPRISES AND ORS Vs M/S HALDIRAM SNACKS PVT. LTD.
CORAM
HON’BLE MR JUSTICE VIBHU BAKHRU
1. The petitioners have filed the present petition under Section 34
of the Arbitration and Conciliation Act, 1996 (hereinafter the „A&C
Act‟) impugning an arbitral award dated 26.10.2020 rendered by an
Arbitral Tribunal constituted by a Sole Arbitrator, Justice (Retd.) Dr
Mukundakam Sharma, a former Judge of the Supreme Court of India.
The arbitration was conducted under the aegis of Delhi International
Arbitration Centre (DIAC) and its Rules.
O.M.P (COMM) 79/2021 Page 2 of 29
2. Petitioner no.1 (hereinafter „Megha‟) is a partnership firm and
petitioner nos. 2 to 5 are its constituent partners. Megha is, inter alia,
engaged, in the business of trading Crude Palm Oil (edible grade). The
subject disputes arise out of two agreements dated 02.02.2013 and
25.02.2013, which were entered into between Megha and M/s Coral
Products Pvt. Ltd. (hereinafter „Coral‟) for sale and purchase of Crude
Palm Oil on a High Seas Sale Basis. In terms of the agreement dated
02.02.2013, Coral agreed to sell 1470 MT of Crude Palm Oil of
Indonesian origin on board the vessel, MT. Prosperity V.01/13, with
Kakinada as the port of delivery, at the rate of ₹46,600/- per MT. In
terms of the Agreement dated 25.02.2013, Coral agreed to sell 2500
MT of Crude Palm Oil on board the vessel, MT. Golden Blessing
V.1301, with Kakinada as the port of delivery, at the rate of ₹48,750/-
per MT.
3. Coral issued two separate invoices dated 02.02.2013 and
25.02.2013 for amounts of ₹6,85,02,000/- and ₹12,18,75,000/-
respectively for sale of Crude Palm Oil, in terms of the respective
agreements as mentioned above. Thus, according to Megha, an
aggregate sum of ₹19,03,77,000/- (Rupees Nineteen Crores Three
Lacs Seventy Seven Thousand only) became due and payable by
Megha to Coral.
4. In terms of a Scheme of Amalgamation under Section 391-394
of the Companies Act, 1956, Coral merged with the respondent
company (hereinafter „Haldiram‟). The said Scheme of
Amalgamation of Coral with Haldiram, was approved by this Court by
O.M.P (COMM) 79/2021 Page 3 of 29
an order dated 25.04.2014 passed in Company Petition No. 66/2014.
In terms of the said Scheme of Amalgamation, the assets of Coral
stood vested with Haldiram. These included the amount receivable
from Megha in respect of the two High Sea Sale Agreements in
question.
5. According to Haldiram, Megha took delivery of the Crude Palm
Oil at the port of delivery, Kakinada, on the basis of the documents
executed by Coral. Haldiram claims that the aforesaid amount of
₹19,03,77,000/- (Rupees Nineteen Crores Three Lacs Seventy Seven
Thousand only) remained outstanding as Megha failed and neglected
to pay the same.
6. Accordingly, by a notice dated 18.05.2016 addressed to the
petitioners, Haldiram invoked the Arbitration Clauses under the
respective High Sea Sales Agreements in question, and sought the
consent of the petitioners to appoint a Sole Arbitrator. Haldiram
suggested names of three former judges of this Court, one of whom
could be appointed as a Sole Arbitrator. In its notice, Haldiram
claimed an amount of ₹19,03,77,000/- with interest at the rate of 18%
per annum, which according to Haldiram was in terms of the said
Agreements as well as the custom and usage of trade.
7. Megha responded to the said notice by a letter dated
03.06.2016. It denied its liability to pay the amount as claimed by
Haldiram and also declined to give consent for the appointment of an
O.M.P (COMM) 79/2021 Page 4 of 29
Arbitrator. Megha further claimed that the Arbitration Clause was not
binding on any of the parties.
8. In the aforesaid circumstances, Haldiram filed a petition under
Section 11(6) of the A&C Act, being ARB.P. 421/2016: Haldiram
Snacks Pvt. Ltd. v. Megha Enterprises and Anr., seeking
appointment of a Sole Arbitrator to adjudicate the disputes in respect
of the two High Sea Sale Agreements in question. The said petition
was allowed by this Court and by an order dated 18.04.2017, this
Court referred the parties to DIAC with the direction for DIAC to
appoint an Arbitrator in accordance with the provisions of the A&C
Act and its Rules.
9. Haldiram filed its Statement of Claims on 05.06.2017 claiming
(a) ₹19,03,77,000/- as the amount outstanding against the sale of
Crude Palm Oil (Claim No.1); (b) interest at the rate of 18% per
annum from the date the amount became due till the date of filing of
the Statement of Claim quantified at ₹14,56,38,405/- (Claim No.2); (c)
Pendente lite and future interest at the rate of 18% per annum from the
date of filing of the claim till payment of the award (Claim No.3); and
(d) costs of litigation (Claim No.4).
10. The petitioners filed their Statement of Defence raising several
contentions including that Haldiram‟s claims were barred by
limitation. The petitioners contended that the Arbitration Clause was
invoked on 18.05.2016, which was beyond a period of three years
from the date on which the amounts became payable under the
O.M.P (COMM) 79/2021 Page 5 of 29
Agreements in question. In terms of the Agreements, the payments
were to be made within ten days of the date of invoices/agreements
and thus, the period of three years from the respective invoices expired
on 12.02.2016 and 07.03.2016. The petitioners further claimed that
Megha had supplied the Crude Palm Oil to M/s Good Health Agro
Tech (P) Ltd. and M/s Nikhil Refineries (P) Ltd. at the instance of
Haldiram, as Haldiram intended to fudge its balance sheets and show
profits from its business under the brand name „Haldiram‟. The
petitioners claimed that Megha had not received any amount from the
said companies and further, the same had become a NPA (Non-
Performing Asset). The petitioners further claimed that Haldiram had
received consideration for the said products directly from M/s Good
Health Agro Tech (P) Ltd. and M/s Nikhil Refineries (P) Ltd. but had
not given credit for the said amounts to Megha.
11. Considering the pleadings, the Arbitral Tribunal framed the
following issues:
“1. Whether this Tribunal has no territorial
jurisdiction to try and decide the present
proceedings?
2. Whether the claims of the Claimant are barred by
law of limitation?
3. Whether the Claimant has already received its
entire dues as claimed in the present proceedings
and if so whether there is accord and satisfaction?
4. Whether the Claimant is entitled to claim and
receive an amount of Rs. 19,03,77,000.00 or any
part thereof and if so what amount?
O.M.P (COMM) 79/2021 Page 6 of 29
5. In the event, the aforesaid issue is answered in
favour of the Claimant, whether the Claimant
would also be entitled to claim an amount of Rs.
14,56,38,405.00 towards interest @ 18% per
annum till the date of filing the Claim Petition?
6. Whether the Claimant would also be entitled to
claim interest on the principal amount, if found
due and payable towards pendente lite and future
interest and if so at what rate and for which
period?
7. Whether the Claimant is also entitled to payment
of cost and if so, for what amount?”
12. The Arbitral Tribunal rejected the contention that it had no
territorial jurisdiction to decide the claims raised by Haldiram. It noted
that the Arbitration Clause under the Agreements expressly provided
that the arbitration would be subject to the jurisdiction of Courts at
Hyderabad/Delhi. It also noted that the two Agreements in question
had been engrossed on stamp paper purchased in Delhi. The Arbitral
Tribunal further held that the parties had specifically agreed that the
place of arbitration would be Hyderabad or Delhi and thus, both
Courts at Delhi as well as Hyderabad would have jurisdiction in
respect of the arbitral proceedings. The Arbitral Tribunal, after
evaluating the material/evidence brought on record, rejected the
defence that Haldiram had already received the entire consideration
for the sale of Crude Palm Oil in terms of the High Sea Sale
Agreements in question.
13. The Arbitral Tribunal rejected the contention that the claims
made by Haldiram were barred by limitation and accordingly, awarded
O.M.P (COMM) 79/2021 Page 7 of 29
a sum of ₹19,03,77,000/- as due and payable by the petitioners to
Haldiram. The Arbitral Tribunal also awarded interest at the rate of
9% from 01.04.2013, that is, the date from filing the Statement of
Claims till the recovery of the said amount. In addition, the Arbitral
Tribunal also awarded costs of ₹5,00,000/- in favour of Haldiram.
Submissions
14. Mr Gupta, learned Senior counsel appearing for the petitioners
has assailed the impugned order on the solitary ground that Haldiram‟s
claim is barred by limitation and the Arbitral Tribunal‟s conclusion to
the contrary, is patently illegal. He submitted that the High Sea Sale
Agreements in question, were entered into, on 02.02.2013 and
25.02.2013. The invoices for the same were also issued on the same
date; that is, Invoice dated 02.02.2013 for 1470 MT of Crude Palm Oil
(edible grade) for a sum of ₹6,85,02,000/- and Invoice dated
25.02.2013 for 2500 MT of Crude Palm Oil (edible grade) for a sum
of ₹12,18,75,000/-. In terms of Clause 11 of the High Sea Sales
Agreement, which are identically worded, the payment for the same
was required to be arranged on expiry of ten days from the date of the
Agreement. Thus, undisputedly, the payment of ₹6,85,02,000/- against
the Invoice dated 02.02.2013 was to be paid by 12.02.2013 and the
payment of ₹12,18,75,000/- against the Invoice dated 25.02.2013 was
required to be paid by 07.03.2013. The notice invoking arbitration was
issued on 18.05.2016. Mr Gupta contended that since the said notice
was beyond the period of three years from the agreed dates of
payment, Haldiram‟s claim was barred by limitation. He contended
O.M.P (COMM) 79/2021 Page 8 of 29
that the Arbitral Tribunal had grossly erred in accepting that during
the said period the respondent had issued any acknowledgement of the
amount payable under the said invoices. It is stated that the Arbitral
Tribunal had accepted Haldiram‟s contention that one Mr Avneesh
Agarwal of Coral had received the letter dated 31.05.2013
acknowledging the said liability. He contended that the said letter was
not signed and therefore, could not have been considered as an
acknowledgement under Section 18 of the Limitation Act, 1963
(hereinafter „the Limitation Act‟). He submitted that the said letter
purportedly did not bear any signatures but it was only scribbled „for
Shekhar‟ against the authorized signatory. He submitted that there was
no evidence that any person named Shekhar was employed by Megha.
He submitted that the Arbitral Tribunal had erred in accepting that the
said letter had been sent by electronic mode as there was no evidence
to the aforesaid effect. He also submitted that the said letter could not
be relied upon as the necessary affidavit of evidence under Section
65B of the Evidence Act, 1872 was not submitted.
15. Next, Mr Gupta contended that an email dated 04.06.2013
purportedly forwarding the balance confirmation letter dated
31.05.2013, was purportedly forwarded by one Mr Mohan Maganti of
M/s KGF Cottons Pvt. Ltd. to one Avneesh Agarwal. He stated that
the said communication could not be construed to extend the period of
limitation as it had not been sent by any of the constituent partners of
Megha (petitioner nos. 2 to 5). There was no evidence that Mr Mohan
Maganti was an employee of Megha. Further, the email itself indicated
O.M.P (COMM) 79/2021 Page 9 of 29
that it was sent on behalf of M/s KGF Cottons Pvt. Ltd and a
communication by a third party (in this case, an incorporated
company) could not be considered as an acknowledgement by the
petitioners or on their behalf.
16. Mr Goswami, learned counsel appearing for Haldiram
countered the aforesaid submissions. He submitted that the Arbitral
Tribunal had carefully examined the evidence on record and
concluded that Megha had acknowledged the debt owed against the
two Invoices in question. He submitted that the Arbitral Tribunal had
seen the email dated 04.06.2013 as well as the letter dated 31.05.2013
attached therewith. He contended that the Arbitral Tribunal had also
examined the question whether the acknowledgement dated
31.05.2013 required to be signed. The Arbitral Tribunal had followed
the decision of the Karnataka High Court in Sudarshan Cargo Pvt.
Ltd. v. Techvac Engineering Pvt. Ltd.: 2014 Company Cases 71,
wherein the Court had held that emails can be construed and read as
due acknowledgment of debt and, the same would meet the parameters
as laid down under Section 18 of the Limitation Act.
Reasons and Conclusion
17. It is apparent from the above that the petitioner‟s case is
founded on the assumption that the Arbitral Tribunal has grossly erred
in (a) evaluating the evidence led in the case; and (b) misapplying the
provisions of Section 18 of the Limitation Act.
O.M.P (COMM) 79/2021 Page 10 of 29
18. The relevant extract of the impugned award setting out the
reasoning of the Arbitral Tribunal on the issue of limitation is set out
below:-
“29. The Claimant relies on the ledger account of Megha
Enterprises wherein an outstanding balance of Rs.19,
03,77,000/- is shown still outstanding in terms of the
aforesaid ledger account. My attention was also drawn
to the email dated 04.06.2013 sent by Mohan Maganti
with his email address mentioned therein as
mohan@goodhealthgroup.com to Avneesh Agarwal,
representative of the Claimant. In order to appreciate
the exact nature of admission made therein as alleged
by the Claimant, I extract the entire contents of the
said email hereunder:
"From: Mohan Maganti [mail to:
mohan@goodhealthgroup.com]
Sent: Tuesday, June 4, 2013 4:56PM
To: Avneesh Agarwal
Subject: Kind Attn Mr Avneesh Agarwalji- Please find
enclosed Balance Confirmation letters of KGF Cottons
P.Ltd and Megha Enterprises as on 31.03.2013.
Kind Attn Mr Avneesh Agarwalji- Please find enclosed
Balance Confirmation letters of KGF Cottons P. Ltd and
Megha Enterprises as on 31.03.2013.
Please refer your balance confirmation letters and email
from Shri Mohit dua asking us our balance confirmation
letters, Please find enclosed Balance Confirmation letters
in the Books of Megha Enterprises and KGF Cottons
P,Ltd.
Thank You,
for K.G.F. COTTONS PVT. LTD.
O.M.P (COMM) 79/2021 Page 11 of 29
M. Mohan"
30. The said document was sent by Mohan Maganti to the
Claimant attaching therewith the balance confirmation
letter of KGF Cotton Pvt. Ltd. and Megha Enterprises
as on 31.3.2013. The email further stated that the
balance confirmation letter in the books of Megha
Enterprises is enclosed with the said email. The
balance confirmation letter is marked 'Y' which is
dated 31.5.2013. That letter is in the letter head of
Megha Enterprises and addressed to the Director of
M/s Coral Products Pvt. Ltd. The contents of the said
letter are also extracted hereunder:
MEGHA ENTERPRISES
Date: 31st May '13.
To,
The Director,
M/s. Coral Products Pvt. Ltd.
R0:2032-34, Katra, Lachhu Singh
Chandni Chowk,
Delhi-110006.
Dear Sir,
Sub: Confirmation of Credit Balance of Rs.
19,03,77,000/- (Due to you)
As on 31.03.2013-Reg.
As part of our Closure of Our Accounts and Audit for
the Assessment year 2013-14. We, do hereby
inform/confirm that the balance amount Due to your
company is Rs.19.03.77,000/- (In Words: Nineteen
Crores Three Lakhs Seventy Seven Thousand Only) as
reflected in our books of account closing as on
31.03.2013.
Please confirm the Balance with in 7 days on the
receipt of the letter and notify the discrepancy if any. If
O.M.P (COMM) 79/2021 Page 12 of 29
no communication is received from you we assume that
the said balance is confirmed by you.
Thanking you,
Yours faithfully,
for MEGHA ENTERPRISES.,
Sd/-
(Authorised Signatory)
31. This document clearly indicates that in the said letter
Megha Enterprises, the Respondent has clearly
confirmed that the balance amount due to the
Claimant company is Rs.19,03,77,000/- as reflected in
the books of account of Megha Enterprises as on
31.3.2013. This letter was attached with the
electronically generated mail and is also a part of the
electronically generated documents.
32. The email dated 04.06.2013 was sent to M/s Coral
Products Pvt. Ltd. through Shri Avneesh Agarwal by
Shri Mohan Maganti from email ID being
mohan@gpodhealthgroup.com. M/s Good Health
Agro Pvt. Ltd. is a part of a group of companies
including the Respondent No.1. This is admitted
position by the witness of the Respondent in cross
examination (Q.No.11). He has also admitted that M/s
Good Health Agrotech Pvt. Ltd. has email accounts
with one of the domain name "goodhealthgroup.com".
He evaded to answer the specific question as to
whether Shri Mohan Maganti was an employee of M/s
Good Health Agrotech Pvt. Ltd. When asked he
replied in his answer to question No.12 in cross
examination that he did not remember. Therefore, he
did not specifically deny the suggestion that Shri
O.M.P (COMM) 79/2021 Page 13 of 29
Mohan Maganti was not an employee of M/s. Good
Health Agrotech Pvt. Ltd. The entire evidence when
read in proper perspective, it makes it amply clear that
the aforesaid email dated 04.06.2013 was sent by and
on behalf of the Respondent admitting and
acknowledging the balance confirmation of
Rs.19,03,77,000/-, the amount which is specifically
mentioned in the letter dated 31.05.2013 issued in the
letterhead of the Respondent. This letter was an
attachment to the electronically generated email dated
04.06.2013.
33. Both the documents, therefore; marked 'Y' and 'Z'
which is the email dated 04.06.2013 are found to be
admissible in evidence in terms of the various
provisions including Section 4 of the Information and
Technology Act. In this regard reference can be made
to the decision of the Karnataka High Court in the
case of Sudarsan Cargo Pvt.Ltd. vs. M/s Techvac
Engineering Private Limited, reported in (2014)
Comp Cases 71. The following paragraphs being
relevant to the issue in question are extracted:-
"10. Section 18 does not provide that
acknowledgement has to be in any particular
form or to be express. Even a statement which, if
literally construed, does amount to an
acknowledgment, may be sufficient, if it implies
an admission of liability. A narrow interpretation
should not be put on what constitutes
acknowledgement under Section 18. An
acknowledgement is an admission by the debtor
to the creditor indicating that he owes money to
the creditor. The acknowledgement requires to
be examined in the light of surrounding
circumstances by an admission that the writer
owes a debt. Generally speaking, a literal
construction of the statement on which the
O.M.P (COMM) 79/2021 Page 14 of 29
acknowledgement is sought to be founded should
be given. If there is an admission of fact of which
the liability in question is a necessary
consequence, it should be taken as an
acknowledgement. The term 'acknowledgement'
has to be construed in its plain literary sense. In
Oxford Dictionary II Edition, it has been defined
as under:
"acknowledgement" - acceptance of the
truth or existence of something;
recognition of the importance or quality
of something; the expression of gratitude
or appreciation for something; the action
of showing that one has noticed someone
or something; a letter confirming receipt
of something."
In Black's Law Dictionary 9th Edition, it has been
defined as:
"acknowledgement" - a recognition of something
has been factual; an acceptance 'of responsibility;
the act of making it known that one has received
something; a formal declaration made in the
presence of an authorised officer, such as a Notary
public, by someone who signs a document and
confirms that the signature is authentic.
"acknowledgement of debt" - recognition by a
debtor of an existence of a debt; an
acknowledgment of debt interrupts the running of
prescription’’
If the intention of the parties is to acknowledge a preexisting
debt within the period of limitation, then it is an
acknowledgment under the Limitation Act, 1963.
O.M.P (COMM) 79/2021 Page 15 of 29
An unconditional acknowledgment implies a promise to
pay because that is the natural inference if there is no
other contrary material."
"14. Section 18 of the Limitation Act prescribes that
acknowledgement of liability if made in writing before
the expiration of the prescribed period, a fresh period of
limitation has to be computed from the time when the
acknowledgement was so signed. Thus, essential
requirements of a valid acknowledgment under
Section18 of the Limitation Act, 1963 are:
(a) It must be in writing;
(b) Must be signed by the party against whom
such right is claimed;
The word 'writing' employed in Section 18 refers to paper
based traditional manual writing."
"15. However, the Information Technology Act,
2000 (hereinafter referred to as 'IT Act, 2000'
[or brevity) provides for legal recognition [or
transactions carried out by means of electronic
data/electronic communication which involve
the use of alternatives to paper based methods
of communication and storage of information.
The IT Act, 2000 came in to force with effect
from 17.10.2000. On account of advanced
technology taking giant steps and the business
transactions being conducted through the use of
digital technology and communication systems,
said Act came into force. It also requires to be
noticed that on account of the business
community as well as individuals increasingly
using computers to create, transmit and store
information in the electronic form instead of
traditional paper documents and tor facilitating
O.M.P (COMM) 79/2021 Page 16 of 29
e-commerce and e-governance, the above said
Act came into force. It would be necessary to
note the Statement and Objects of IT Act, 2000
for better understanding of the said enactment
and the relevancy of its application to the facts
on hand and for answering the point formulated
herein above. It reads as under:
"New communication systems and digital technology
have made dramatic changes in the way we live. A
revolution is occurring in the way people transact
business. Businesses and consumers are increasingly
using computers to create, transmit and store
information in the electronic form instead of traditional
paper documents. Information stored in electronic form
has many advantages.
It is cheaper, easier to store, retrieve and speedier to
communicate. Although people are aware of these
advantages, they are reluctant to conduct business or
conclude any transaction in the electronic form due to
lack of appropriate legal framework. The two principal
hurdles which stand in the way of facilitating electronic
commerce and electronic governance are the
requirements as to writing and signature for legal
recognition. At present many legal provisions assume
the existence of paper based records and documents
and records which should bear signatures. The Law of
Evidence is traditionally based upon paper based
records and oral testimony. Since electronic commerce
eliminates the need for paper based transactions, hence
to facilitate ecommerce, the need for legal changes
have become an urgent necessity. International trade
through the medium of e-commerce is growing rapidly
in the past few years and many countries have switched
over from traditional paper based commerce toecommerce.
O.M.P (COMM) 79/2021 Page 17 of 29
2. xxx
3. There is need for bringing in suitable, amendments in
the existing laws in our country to facilitate ecommerce.
It is, therefore, proposed to provide tor
legal recognition of electronic records and digital
signatures. The will enable the conclusion of contracts
and the creation of rights and obligations through the
electronic medium. It is also proposed to provide for a
regulatory regime to supervise the Certifying
Authorities issuing Digital Signature Certificates. To
prevent the possible misuse arising out of transactions
and other dealings concluded over the electronic
medium, it is also proposed to create civil and criminal
liabilities for contravention of the provisions of the
proposed legislature.
4. With a view to facilitate Electronic Governance, it is
proposed to provide for the use and acceptance of
electronic records and digital signatures in the
Government offices and its agencies. This will make the
citizens interaction with the Government offices hassle
free.
5. It is also proposed to make consequential
amendments in the Indian Penal Code and the Indian
Evidence Act, 1872 to provide for necessary changes in
the various provisions which deal with offences relating
to documents and paper based transactions. It is also
proposed to amend the Reserve Bank of India Act, 1934
to facilitate electronic fund transfers between the
financial institutions and banks and the Bankers' Books
Evidence Act, 1891 to give legal sanctity for books of
account maintained in the electronic form by the banks.
6. xxx
7. xxx
O.M.P (COMM) 79/2021 Page 18 of 29
Electronic Mail, most commonly referred to as, is a method
of exchanging digital messages from one person to another
person or from an author to recipient. Modern email
operated across internet by computer network and it is
based on store and forward modem. E-mail is an
electronically transmitted correspondence between two or
more persons. Thus, any communication between the
sender and the recipient would result in privity of
transaction. Some of the provisions which have relevance
to the word 'e-mail' under IT Act, 2000 are extracted
herein below:
"2. Definitions. - (1) In this Act unless the context
otherwise requires,
(b) "addressee" - means a person who is intended
by the originator to receive the electronic record
but does not include any intermediary;
(r) "electronic form", with reference to information
means any information generated, sent, received,
or stored in media, magnetic, optical, computer
memory, micro film, computer generated micro
fiche or similar device;
(t)"electronic record" means data, record or data
generated, image or sound stored, received or
sent in electronic form or micro film or computer
generated micro fiche.
(v) "information" includes data, message, text,
images, sound, voice, codes, computer
programmes, software and databases or micro
film or computer generated micro fiche.
(za)"originator" means a person who sends,
generates, stores or transmits any electronic
O.M.P (COMM) 79/2021 Page 19 of 29
message; or causes any electronic message to be
sent, generated, stored or transmitted to any other
person but does not include an intermediatery
4. Legal recognition of electronic records - Where
any law provides that information or any other
matter shall be in writing or in the typewritten or
printed form, then, notwithstanding anything
contained in such law, such requirement shall be
deemed to have been satisfied if such information
or matter is –
a) rendered or made available in an
electronic form; and
(b) accessible so as to be usable for a
subsequent reference.
Section 4 of The IT Act, 2000 provides that if
information or any other matter is to be in writing
or in the typewritten or printed form, then,
notwithstanding anything contained in such law,
the requirement is deemed to have been satisfied if
such information or matter is rendered or made
available in an ·electronic form' and same is
accessible to be used for a subsequent reference.”
"21. A harmonious reading of Section 4 together
with definition clauses as extracted hereinabove
would indicate that on account of digital and new
communication systems having taken giant steps
and the business community as well as individuals
are undisputedly using computers to create,
transmit and store information in the electronic
form rather than using the traditional paper
documents and as such the information so
generated, transmitted and received are to be
construed as meeting the requirement of section
18 of the Limitation Act, particularly in view of
O.M.P (COMM) 79/2021 Page 20 of 29
the fact that section 4 contains a non obstante
clause. Since respondent does not dispute the
information transmitted by it is in electronic form
to the petitioner by way of message through the
use of computer and its network as not having
been sent by it to the petitioner, the
acknowledgement as found in the e- mails dated
14.01.2010 and 06.04.2010 originating from the
respondent to the addressee namely, petitioner,
such e-mails have to be construed and read as a
due and proper acknowledgement and it would
meet the parameters laid down under section 18
of the Limitation Act, 1963 to constitute a valid
and legal acknowledgement of debt due.
"22. For the reasons aforestated and in view of
the discussion made herein above, I am of the
considered view that point formulated herein
above requires to be answered by holding that an
acknowledgement of debt by e-mail originating
from a person who intends to send or transmit
such electronic message to any other person who
would be the 'addressee' would constitute a valid
acknowledgment of debt and it would satisfy the
requirement of Section 18 of the Limitation Act,
1963 when the originator disputes having sent the
e-mail to the recipient."
34. When these documents are considered, it is clearly
proved that the Respondent had acknowledged and
admitted the dues payable by the Respondent to the
Claimant to the extent of Rs.19,03,77,000/- as on
31.3.2013. Besides, the witness of the respondent was
asked the following question in his cross as question
No.51 to which he has replied as follows:
“Q51: Can you inform as to what amount
has. been paid/remitted by the
O.M.P (COMM) 79/2021 Page 21 of 29
Respondent firm to M/s. Coral
Products Pvt. Ltd. or the claimant for
the two purchases made by the
Respondent of Crude Oil worth Rs.
19,03,77,000/-?
A. The Respondent firm has remitted payments of Rs.1.50
crores to the directors of M/s. Coral, Products Pvt.
Ltd.”
In this answer also there is practically an admission of the
dues payable of the amount of Rs.19,03,77,000/- by the
Respondent. Therefore, the said amount which is claimed
in the Claim Petition is found due and payable to the
Claimant by the Respondent. The claim raised by the
Claimant through their letter of invocation of arbitration
dated 18.05.2016 (Ex.CW1 /13) and the acknowledgment
having been sent by letter dated 31.5.2013 and email
dated 4.6.2013, the claim is also held to be within the
period of limitation. Issue No.2 is accordingly decided in
favour of the Claimant.”
19. It is apparent from the above that the Arbitral Tribunal had
examined the question of limitation in some detail. It had first of all
accepted, on evaluation of evidence led before it that the email dated
04.06.2013 had been sent by one Mohan Maganti from the email
address, mohan@goodhealth.com, to Avneesh Agarwal, representative
of Haldiram. The contents of the said email clearly indicate that the
balance confirmation letters of M/s KGF Cottons Pvt. Ltd. and Megha,
as on 31.03.2013, were forwarded pursuant to the request made by one
Mohit Dua. The letter dated 31.05.2013, which was stated to be
attached along with said email, clearly confirms that a sum of
₹19,03,77,000/- was outstanding in the ledger accounts of Megha as
O.M.P (COMM) 79/2021 Page 22 of 29
on 31.03.2013. The Arbitral Tribunal also concluded that Good Health
Agro Pvt. Ltd. was a part of the same Group as Megha. This was
conceded by the witness examined by the petitioners. In this
perspective, the Arbitral Tribunal concluded that it was sent on behalf
of one of the employees of the group company and thus, obviously on
behalf of Megha.
20. It is relevant to note that Megha did not produce its books of
accounts or its ledger to otherwise contest the contents of the said
email. Thus, no evidence was produced by Megha to establish that the
assertion made in the letter dated 31.05.2013, that its ledger accounts
reflected a sum of ₹19,03,77,000/- as outstanding towards
Coral/Haldiram, was wrong. This was, plainly, evidence within the
control of Megha.
21. The affidavit filed by the witness on behalf of Haldiram (CW1)
affirmed that the written acknowledgement dated 31.05.2013 was sent
through an email dated 04.06.2013 and it had confirmed that the credit
balance of ₹19,03,77,000/- was standing in the books of accounts of
Megha as on 31.03.2013. The Arbitral Tribunal had accepted the
same.
22. The petitioners, essentially, impeach the impugned award on the
ground that (a) that the Arbitral Tribunal had grossly erred in
evaluating the evidence led by the parties. According to the
petitioners, the evidence led by the respondent did not establish that
Megha had authorized anyone to forward the letter of
O.M.P (COMM) 79/2021 Page 23 of 29
acknowledgement confirming the balance outstanding in its ledger
accounts by the letter dated 31.05.2013. Further, according to the
petitioners, the said letter was not attached to the email dated
04.06.2013. And, the said email had not been sent on behalf of Megha.
Mr Gupta had drawn attention to CW1‟s response to Question no. 7
which indicates that CW 1 had stated that the email dated 04.06.2013
did not show any attachment. Mr Gupta also emphasized that the
requisite evidence, as required in terms of Section 65B of the Indian
Evidence Act, had not been filed.
23. As noticed above, the Arbitral Tribunal had after considering
the evidence, returned the finding that the letter dated 31.05.2013 was
sent electronically by an email sent on 04.06.2013.
24. In view of aforesaid, one of the principal controversy is
whether there was any evidence to establish that the letter dated
31.05.2013 was sent as an attachment to the email dated 04.06.2013.
CW1‟s response to Question no. 7 put to him in his cross examination
is at the heart of this controversy. Question no. 7 and CW1‟s response
is reproduced below:
“Q. I put it to you that there is no attachment of the
document attached alongwith the email marked Z. what do
you have to say?
A: Yes, it is correct that there is no attachment in the said
email but in the earlier part of the said email it is shown
that a balance confirmation was sent.”
25. CW 1‟s response does indicate that on being confronted with
the e-mail dated 04.06.2013 CW 1 had conceded that it did not show
any attachment. In view of the aforesaid, this Court had granted an
additional opportunity to Haldiram to advance arguments/file a reply.
This was also in view of Mr Gosawmi‟s contention that Megha
established before the learned Arbitrator that the letter of
acknowledgement dated 31.05.2013 was attached to the e-mail dated
04.06.2013.
26. Along with its reply, Haldiram filed an additional document
purporting to be the e-mail dated 04.06.2013, which showed the letter
dated 31.05.2013 as an attachment. This was objected to, by Mr Dhruv
Gupta. He contended that additional documents could not be accepted
at this stage. In this regard, Mr Goswami explained that he had not
produced the said document as additional evidence but merely to
demonstrate that if a print-out of an email is taken from the electronic
mail service hosted by Google Inc, G-mail, it reflects an attachment to
the e-mail but if a printout is taken from Outlook Express (Microsoft
Office software), the attachment is reflected at the beginning of the
chain of e-mails and not as an attachment to the initial mail (the
trailing mail). This was also demonstrated over video conferencing. It
is necessary to record that after the demonstration, Mr Dhruv Gupta
conceded that the email dated 04.06.2013 did reflect the letter dated
31.05.2013 as an attachment. He however, contended that the other
objections regarding the evidentiary value of such an attachment,
remained.
27. The contention that that the Arbitral Tribunal had grossly erred
in accepting the said evidence without an affidavit under Section 65B of the Indian Evidence Act, 1872 is difficult to accept. This is because of two reasons. First, in terms of Section 1 of the Indian Evidence Act 1872, the said Act is not applicable to proceedings before the arbitrator. Second, no such objection was taken on behalf of the petitioners at the appropriate stage, that is, before the Learned
Arbitrator.
28. Thus, in substance, Megha‟s challenge in this regard is limited
to the learned Arbitral Tribunal‟s evaluation of the evidence led by
parties.
29. As noted above, the scope of examination of an arbitral award
under Section 34 of the A&C Act is extremely limited. It is trite law
that this Court would not undertake the exercise of re-appreciation of
evidence on the ground of patent illegality.
30. In the present case, no case has been made out by the petitioner
that the arbitral award is contrary to the Fundamental Policy of India.
The arbitral award cannot by any stretch be considered to be opposed
to justice or morality. The dispute in the present case relates to a
simple transaction of sale and purchase of goods. All that the Arbitral
Tribunal has done is, after having found that the petitioners had not
paid for the goods purchased by them, awarded that the said
consideration be paid with interest. It is trite that a delay in filing a
claim only bars the remedy, it does not extinguish any debt. Viewed in
O.M.P (COMM) 79/2021 Page 26 of 29
this perspective, the Arbitral Tribunal has after evaluating the
material, rejected Megha‟s contention that Haldiram be denied its
remedy to seek what it claimed to be legitimately due to it.
Obviously, there is no question of such an approach offending any
sense of morality as is embodied in the expression „public policy‟ as
used in Section 34(2)(6) of the A&C Act.
31. Insofar as the ground of patent illegality is concerned, it would
be relevant to refer to the oft quoted passage from Associate Builders
v. Delhi Development Authority: (2015) 3 SCC 49, as set out below:
“33. It must clearly be understood that when a court is
applying the “public policy” test to an arbitration award,
it does not act as a court of appeal and consequently
errors of fact cannot be corrected. A possible view by the
arbitrator on facts has necessarily to pass muster as the
arbitrator is the ultimate master of the quantity and
quality of evidence to be relied upon when he delivers his
arbitral award. Thus an award based on little evidence or
on evidence which does not measure up in quality to a
trained legal mind would not be held to be invalid on this
score [ Very often an arbitrator is a lay person not
necessarily trained in law. Lord Mansfield, a famous
English Judge, once advised a high military officer in
Jamaica who needed to act as a Judge as follows:
“General, you have a sound head, and a good heart; take
courage and you will do very well, in your occupation, in
a court of equity. My advice is, to make your decrees as
your head and your heart dictate, to hear both sides
patiently, to decide with firmness in the best manner you
can; but be careful not to assign your reasons, since your
determination may be substantially right, although your
reasons may be very bad, or essentially wrong”. It is very
important to bear this in mind when awards of lay
O.M.P (COMM) 79/2021 Page 27 of 29
arbitrators are challenged.] . Once it is found that the
arbitrators approach is not arbitrary or capricious, then he
is the last word on facts. In P.R. Shah, Shares & Stock
Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. [(2012) 1
SCC 594 : (2012) 1 SCC (Civ) 342] , this Court held:
(SCC pp. 601-02, para 21)
“21. A court does not sit in appeal over the
award of an Arbitral Tribunal by reassessing or
reappreciating the evidence. An award can be
challenged only under the grounds mentioned in
Section 34(2) of the Act. The Arbitral Tribunal
has examined the facts and held that both the
second respondent and the appellant are liable.
The case as put forward by the first respondent
has been accepted. Even the minority view was
that the second respondent was liable as claimed
by the first respondent, but the appellant was not
liable only on the ground that the arbitrators
appointed by the Stock Exchange under Bye-law
248, in a claim against a non-member, had no
jurisdiction to decide a claim against another
member. The finding of the majority is that the
appellant did the transaction in the name of the
second respondent and is therefore, liable along
with the second respondent. Therefore, in the
absence of any ground under Section 34(2) of the
Act, it is not possible to re-examine the facts to
find out whether a different decision can be
arrived at.”
32. As is apparent from the above, the evaluation of evidence by the
Arbitral Tribunal may be erroneous and perhaps this Court may have
taken a different view but that is not the scope of examination under
Section 34 of the A&C Act and, this Court cannot interfere with the
arbitral award merely on the ground that it does not concur with the
O.M.P (COMM) 79/2021 Page 28 of 29
inference drawn by the Arbitral Tribunal from the evidence led by the
parties.
33. In Ssangyong Engineering and Construction Company Ltd. v.
National Highway Authority of India (NHAI): (2019) 15 SCC 131,
the Supreme Court had authoritatively held as under:
“38. Secondly, it is also made clear that reappreciation of
evidence, which is what an appellate court is permitted to
do, cannot be permitted under the ground of patent
illegality appearing on the face of the award.”
34. In view of the above, this Court is unable to accept that any
interference in the arbitral award is warranted on the ground that the
Arbitral Tribunal has arrived at an erroneous conclusion on the
evidence led by the parties.
35. The second aspect of the arguments advanced on behalf of the
petitioners is that the Arbitral Tribunal has misapplied Section 18 of
the Limitation Act.
36. As noticed above, the Arbitral Tribunal had proceeded on the
basis that an electronic communication acknowledging the debt would
sufficiently meet the parameters of Section 18 of the Limitation Act.
The Arbitral Tribunal had drawn strength from the decision of the
Karnataka High Court in Sudarshan Cargo Pvt. Ltd. v. Techvac
Engineering Pvt. Ltd. (supra). Plainly, the said view is a plausible
view and this Court is unable to accept that the said view warrants any
interference under Section 34 of the A&C Act. In Ssangyong
O.M.P (COMM) 79/2021 Page 29 of 29
Engineering and Construction Company Ltd. v. National Highways
Authority of India (NHAI) (supra), the Supreme Court had
authoritatively clarified that a mere erroneous application of law
would also not warrant any interference on the ground of patent
illegality as available under Sub-section (2A) of Section 34 of the
A&C Act. Paragraph 37 of the said decision is relevant and is set out
below:
“37. Insofar as domestic awards made in India are
concerned, an additional ground is now available under
sub-section (2-A), added by the Amendment Act, 2015,
to Section 34. Here, there must be patent illegality
appearing on the face of the award, which refers to such
illegality as goes to the root of the matter but which does
not amount to mere erroneous application of the law. In
short, what is not subsumed within “the fundamental
policy of Indian law”, namely, the contravention of a
statute not linked to public policy or public interest,
cannot be brought in by the backdoor when it comes to
setting aside an award on the ground of patent illegality.”
37. In view of the above, this Court finds no reason to interfere with
the impugned award. The petition is, accordingly, dismissed.
VIBHU BAKHRU, J
April, 15, 2021
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