Bombay High Court
Mahanagar Telephone Nigam Ltd vs M/S Srv Telecom Pvt.Ltd on 25 April, 2016
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 79 OF 2016
IN
ARBITRATION PETITION NO. 1543 OF 2015
Mahanagar Telephone Nigam Ltd.
Mumbai, a Company incorporated
Under the Companies Act, 1956,
Having their office at
Parel Telephone Complex,
P.O. Lane, Parel East,
Mumbai-400 012. ig ....Appellant.
Vs.
M/s. SRV Telecom Pvt. Ltd.,
A Company incorporated
Under the Companies Act 1956,
Having their registered office at
No. 31/5, Left of Magadi,
Main Road, Bangalore-560079. ....Respondent.
Mr. Gobindram D. Talreja I/by Gobindram D. Talreja & Associates for
the Appellant.
Mr. Subodh Gokhale for the Respondent.
CORAM : ANOOP V. MOHTA AND
A.A. SAYED, JJ.
DATE : 25 APRIL 2016.
ORAL JUDGMENT (PER ANOOP V. MOHTA, J.):-
This Bench, on 11 April 2016 in Microsec Capital Limited
Vs. Ankit Bimal Deorah, Appeal No. 537 of 2015, has observed that-
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1 Learned Counsel appearing for the parties are
ad-idem that aggregate the value of the claim and
counterclaim in the arbitration in question is less than
one crore rupees.
2 The roster/assignment with regard to Appeals
before this Division Bench (Anoop Mohta & A.A. Sayed,
JJ) with effect from 21.03.2016 reads thus :
"(C ) Appeals under Section 13 of the
Commercial Courts, Commercial Division
and Commercial Appellate Division of High
Court Act, 2015, against Order under
Section 10 of the said Act."
3 The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015
(for short, Commercial Courts Act, 2015) and the
Arbitration and Conciliation Act, 1996 as amended by
The Arbitration and Conciliation (Amendment) Act,
2015 (3 of 2016) have been brought into force with
effect from 23.10.2015. Both these Acts are required to
be read for the purposes of considering the object of
expeditious hearing of commercial matters in the Court
as well as before the Arbitral Tribunals i.e. the Court
proceedings and the arbitral proceedings.
4 Section 10 of Commercial Courts Act, 2015, is
relevant for arbitration matters. It reads as under :
"10 Jurisdiction in respect of
arbitration matters. - Where the subject-
matter of an arbitration is a commercial
dispute of a Specified Value and -
(1) ...........
(2) If such arbitration is other than an
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international commercial arbitration, all
applications or appeals arising out of such
arbitration under the provisions of the
Arbitration and Conciliation Act, 1996 (26
of 1996) that have been filed on the
original side of the High Court, shall be
heard and disposed of by the Commercial
Appellate Division where such Commercial
Appellate Division has been constituted in
such High Court.
(3) ..........."
(emphasis supplied)
Section 2 (i) of the Commercial Courts, 2015
defines "Specified Value" as follows:
"2.(i) "Specified Value", in relation to a
commercial dispute, shall mean the value of
the subject-matter in respect of a suit as
determined in accordance with section 12
which shall not be less than one crore
rupees or such higher value, as may be
notified by the Central Government."
6 Sections 13 and 14 of Commercial Courts Act,
2015 read as under :
"13. Appeals from decrees of
Commercial Courts and Commercial
Divisions. - (1) Any person aggrieved by
the decision of the Commercial Court or
Commercial Division of a High Court may
appeal to the Commercial Appellate
Division of that High Court within a period
of sixty days from the date of judgment or
order, as the case may be:
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Provided that an appeal shall lie from
such orders passed by a Commercial
Division or a Commercial Court that are
specifically enumerated under Order XLIII
of the Code of Civil Procedure, 1908 (5 of
1908) as amended by this Act and section
37 of the Arbitration and Conciliation Act,
1996 (26 of 1996).
(2) Notwithstanding anything contained
in any other law for the time being in force
or Letters Patent of a High Court, no appeal
shall lie from any order or decree of a
Commercial Division or Commercial Court
otherwise than in accordance with the
provisions of this Act.
14. Expeditious disposal of appeals. -
The Commercial Appellate Division shall
endeavour to dispose of appeals filed before
it within a period of six months from the
date of filing of such appeal."
7 Chapter III of the Commercial Courts Act, 2015
deals with Specified Value. Section 12(2) of which falls
under Chapter III, reads as follows :
"12(1) .........
12(2) The aggregate value of the
claim and counterclaim, if any as set out in
the statement of claim and the
counterclaim, if any, in an arbitration of a
commercial dispute shall be the basis for
determining whether such arbitration is
subject to the jurisdiction of a Commercial
Division, Commercial Appellate Division or
Commercial Court, as the case may be.
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12(3)........."
8 Section 21 of Commercial Courts Act, 2015 has
overriding effect. Section 26 of the Arbitration and
Conciliation (Amendment) Act, 2015 refers only to
arbitration proceedings commenced under Section 21 of
the Commercial Courts Act. (Sic the Principal Act)
Section 26 of Arbitration and Conciliation
(Amendment) Act, 2015 reads as under :
"26 Act not to apply to pending
arbitral proceedings - Nothing contained
in this Act shall apply to the arbitral
proceedings commenced, in accordance
with the provisions of section 21 of the
principal Act, before the commencement of
this Act unless the parties otherwise agree
but this Act shall apply in relation to
arbitral proceedings commenced on or
after the date of commencement of this
Act."
9 In view of above, the Appeals arising out of
Arbitration Act 1996 being commercial in nature and
having valuation of more than one crore rupees (in
accordance with Section 12) and which have been filed
on the Original Side of this Court are required to be
heard and disposed of by the Commercial Appellate
Bench including pending arbitration Appeals also.
10 This is also in the background that Section 15 of
Commercial Courts Act, 2015 mandates the transfers of
all pending Suits including Petitions/Applications under
the Arbitration Act, having valuation of one crore and
above from such Court to the Commercial Division
Bench/Court. Therefore, all such commercial matters
shall be governed by the Commercial Courts Act, 2015
and are required to be heard from the stage at which it
remained at the time of transfer. The Commercial Courts
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Act, 2015 is thus, made applicable to the pending Court
proceedings and for expeditious hearing of commercial
Suits, Applications and the Appeals. Therefore, all
pending Appeals of the specified value and/or estimated
value of intellectual property matters are also to be
heard and disposed of by the Commercial Appellate
Bench.
11 The Commercial Arbitration Appeals of less than
one crore are therefore, required to be placed before the
appropriate Bench to which those matters are assigned
considering the scheme and object of the constitution of
Commercial Courts under the Acts. The distinction is
required to be made between the specified value of the
commercial matters and matters other than specified
value of commercial matters.
12 The Court proceedings are different than the
arbitral proceedings. Therefore, considering the scope
and purpose of the Commercial Courts Act read with the
Amended Arbitration Act, 2015, both these Acts will
apply to pending matters also.
13 From the roster/assignment it appears that the
Arbitration Appeals, where subjectmatter of Arbitration
is a commercial dispute having valuation of less than
one crore rupees are apparently not assigned to this
Division Bench, though such matters are being listed
before this Court daily.
14 We would rather appreciate if the Appeals other
than Commercial Appeals of specified value are listed as
per the assignment only and/or subject to the specific
assignment.
2 On 18 April 2016, the following partial modification to the
Judicial assignment which has come into effect from 7 March 2016,
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has been made by the Hon'ble the Chief Justice.
"(C) Appeals under Section 13 of the Commercial
Courts, Commercial Division and Commercial Appellate
Division of High Court Act, 2015, against order under
Section 10 of the said Act.
(D) All Arbitration Appeals pertaining to Division
Bench."
Accordingly, we are hearing this Arbitration Appeal. By consent the
Appeal is heard finally at the stage of admission.
3 The present Appeal is filed under Section 37 of the
Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act)
on 28 October 2015, as the learned Single Judge by a reasoned order
refused to interfere with arbitral award/order dated 4 December
2014, that resulted into the dismissal of the Arbitration Petition filed
under Section 34 of the Arbitration Act.
4 The learned counsel appearing for the Appellant submitted
that in view of clause 4.2 of (Section III), General (Commercial)
Conditions of Contract, the Appellant should have been awarded some
amount as they suffered losses because of the Respondent's failure to
complete its obligation under the contract. Clause 4.2 of (Section III),
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General (Commercial) Conditions of Contract, reads as under:-
"4.2 The proceeds of the performance security shall
be payable to the purchaser as compensation
for any loss resulting from the supplier's
failure to complete its obligations under the
contract."
5 The learned Single Judge, after considering the admitted
position on record, has recorded in paragraph Nos. 2 to 4 of the
impugned order as under:-
"2.
Learned counsel appearing for the petitioner states
that under the provisions of the contract entered into
between the parties, since the respondent had refused
to supply the goods during the extended period, the
petitioner was required to invite fresh tender. He
submits that under the provisions of the contract, the
petitioner is entitled to encash performance bank
guarantee and to forfeit the amount. He submits that
since the respondent had admitted the facts of
committing breaches before the learned arbitrator, the
petitioner was not required to lead any oral evidence
to prove the actual loss suffered by the petitioner.
3. It is not in dispute that the petitioner had invited
fresh tender for obtaining supply of the goods in
question from another contractor. The petitioner did
not lead any oral evidence to prove the actual loss
before the learned arbitrator, if any, suffered by the
petitioner due to non-supply of the material by the
respondent.
4. The learned arbitrator has considered the oral
evidence led by the respondent and also the judgments
of various Courts holding that the alleged loss
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suffered, if any, is required to be proved. In my view,
the award rendered by the learned arbitrator is in
accordance with law and rendered after following the
law laid down by the Supreme Court and various
High Courts recorded in the impugned award.
Admittedly, the petitioner did not prove actual loss
suffered by the petitioner, if any, before the learned
arbitrator and thus could not have retained the
amount recovered from the encashment of the bank
guarantee."
The learned Single Judge thus, refused to entertain the claim so
prayed for, for want of proof of actual loss suffered by the Appellant.
This is in the background that admittedly the Appellant failed to lead
any oral evidence in support of the actual loss. The reasons so
recorded above, as well as, clause 4.2 so reproduced above and
considering the position of law, even as read and referred by the
learned counsel appearing for the Appellant as well as the Apex Court
1 ,
Judgment in Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd.
wherein the importance of leading evidence is also emphasized to
claim actual loss, we see no perversity or illegality to interfere with
the reasoned Judgment and order of the learned Single Judge. The
learned Arbitrator's award is well within the framework of law and the
record.
1 (2003) 5 SCC 705
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6 This Court (Coram: Anoop V. Mohta & S.C. Gupte, JJ), in
Raheja Universal Pvt. Ltd. Vs. B.E. Billimoria & Co. Ltd., Appeal No. 11
of 2016, dated 31 March 2016, has held that unless the loss suffered is
pleaded and proved, it cannot be recovered and observed as under:-
"9 This Court in Hindustan Petroleum Corporation
Limited vs. Offshore Infrastructure Limited 2 held as under:-
"28 This Court in case of Continental Transport
Organisation Pvt. Ltd. v. Oil & Natural Gas
Corporation Ltd., decided on 21st April, 2015 in
Arbitration Petition No. 372 of 2013 has after
adverting to the judgment of the Supreme Court in
case of Kailash Nath Associates v. Delhi Development
Authority, decided on 9th January, 2015 in Civil
Appeal No. 193 of 2015 has held that unless loss is
pleaded and proved, it cannot be recovered. There
cannot be any windfall in favour of the respondent
to recover liquidated damages even if no loss is
suffered or proved."
10 Additional factors are also noted by this Court
(Coram:-Anoop V. Mohta, J.) in Oil and Natural Gas
Corporation Limited, New Delhi Vs. Oil Country Tubular
Limited, Hyderabad 3 while dealing with the similar
circumstances has observed as under:-
"(g) In Saw Pipes (Supra), the Apex Court has
observed that the party who relied upon
such clause, may lead evidence to claim
more, if the damage/compensation amount
is not reasonable. The Court may also direct
the parties to lead evidence to confirm that
2 2015 (6)Mh.L.J. 287
3 2011 Vol. 113 (3) L.R. 1417
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the action of delay amounts to breach of
contract and which has caused the damages
and therefore, entitled for a reasonable
compensation/ amount. The reasonable
amount/ compensation cannot be equated
with the fixed amount and/or maximum
amount as per the liquidated damages
clause in question. The observations that
other side to prove that the claimant has not
suffer any loss or damage itself
contemplates necessity of leading evidence
by both the parties. The burden is always
on the parties who claimed compensation to
prove actual loss, even for the reasonable
compensation. The other doctrines;
"Mitigation of loss", "Burden of Proof",
"Onus of proof" and "Shift of burden" just
cannot be overlooked by the Court or the
Arbitrator, while determining the reasonable
compensation."
7 In view of above, there is no case made out to interfere
with the impugned Judgment and order passed by the learned Single
Judge.
8 Appeal is accordingly dismissed. There shall be no order
as to costs.
(A.A. SAYED, J.) (ANOOP V. MOHTA, J.)
