Savannah Lifestyle Pvt. Ltd. And 2 ... vs Nishant Kanodia
2021 Latest Caselaw 10913 Bom

                                  1           7. COMAP(L) 517.2018.doc

JPP

     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
         ORDINARY ORIGINAL CIVIL JURISDICTION

    COMMERCIAL APPEAL (Lodg.) NO. 517 OF 2018
                       IN
 COMMERCIAL ARBITRATION PETITION NO. 468 OF 2017

1.    Savannah Lifestyle Pvt. Ltd.
      Private Limited Company
      registered under the provisions
      of the Companies Act, 1966
      having its present address at
      Everest Tower, 164, Hill Road,
      Near Holy Family, Bandra (West),
      Mumbai - 400 050 and its registered
      office at Chapsey Terrace, 3rd floor,
      30, Altamount Road, Bandra,
      Mumbai - 400 026

2.    Basab Paul, Indian inhabitant, a
      Director of Respondent No.1 residing
      at 13, Galaxy Apartments, 111, B.J. Road,
      Bandra, Mumbai - 400 050

3.    Bhupenra Singh Balwant Singh,
      Indian inhabitant, a Director of Respondent
      No.1, having his address at 802, Nisarg, Nargis
      Dutt Road, Pali Hill Road, Bandra (West),
      Mumbai - 400 050                          ...     Appellants
                                                 Orig. Petitioners
      V/s.

Nishant Kanodia, Indian inhabitant,
having his address at 12, Vikas Park,
Juhu Tara Road, Mumbai - 400 049                  ... Respondent
                                      2       7. COMAP(L) 517.2018.doc



Mr. M.M. Vashi, Senior Advocate i/b. M.P. Vashi & Associates for
the Appellants
Mr. Sarosh Bharucha a/w. Ms. Alya Khan a/w. Mr. Cyrus Jai i/b.
Vashi & Vashi for the Respondent

                               CORAM : NITIN JAMDAR &
                                      C.V. BHADANG, JJ.

(Through Video Conferencing)

DATE : 12 AUGUST 2021

Judgment (Per Nitin Jamdar, J.) :-

The Appellants challenged the Award passed by the Sole Arbitrator before the learned Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996. The learned Single Judge rejected the Arbitration Petition. The Appellants are, thus before us with this Commercial Appeal.

2. The Respondent, the claimant, wanted to invest his funds in a business venture. The director of Appellant No.1 - Company approached the Respondent with a business proposal to invest in a project called 'C'est La Vie Club' at Bandra, Mumbai. An agreement was executed between the parties on 6 December 2008. In the Agreement, the Respondent was referred to as Investor and the Appellant No.1 as Company and directors as Promoter. The Respondent agreed to invest an amount of Rs.60 lakhs upon which 3 7. COMAP(L) 517.2018.doc

the Respondent was to be allotted 60,000 shares of Rs.100/- each. On the date of execution, the Respondent was to hold 10% of the share capital of the Appellant - Company. The lock-in period of 36 months from the date of purchase was agreed upon. Parties agreed that the Promoter Director of the Appellant within the lock-in period and during the pendency of the Agreement would have absolute right to re-pay the sum based on mutually agreed valuation and when the sum is paid in full, the Agreement shall come to an end, and the shares would stand re-transferred. The Agreement contained an arbitration clause.

3. Pursuant to the Agreement, the Respondent, paid an amount of Rs. 60 lakhs to the Appellants. Further, an amount of Rs.6 lakhs was paid in cash sometime in the year 2008. The Appellant issued 500 equity shares of Rs.100/- each to the Respondent even though the Respondent was to receive 60,000 shares.

4. Later disputes arose between the parties. The Respondent residing in London at that time was initially under the impression that the Appellants have complied with their obligation. The Respondent alleged that the Appellants had breached various provisions of the Agreement. He was not given notice of the meetings, and there was a shortfall in the issue of equity shares. Meetings were held on 2 May 2011 and 8 June 2011, attended by 4 7. COMAP(L) 517.2018.doc

Saurabh Kanodia, brother of the Respondent. The discussions of the meeting were recorded in the letter dated 9 June 2011 acknowledging the liability. Cheques issued to the Respondent were dishonoured. On 8 March 2014, discussions again took place, and in the written conversation between Saurabh Kanodia and Appellant No.3, the Appellants acknowledged the liability. In view of the disputes, the arbitration clause of the Agreement was invoked, and the parties went for arbitration.

5. The learned Arbitrator observed that claim for specific performance of the agreement entered into on 6 December 2008 was barred by limitation. The claim for damages or compensation given the breach occurred on 5 January 2009, and notice invoking arbitration was issued on 4 November 2015 was also barred by limitation under Article 55 of the Limitation Act. Regarding the claim of Rs.66 lakhs, the learned Arbitrator found that the Respondent proved this claim, and there was an acknowledgement of liability on 8 March 2014 in a message conversation on the Whatsapp platform. The learned Arbitrator determined the interest on Rs.66 lakhs as Rs.36,67,068/- and directed the Appellants to pay Rs.1,02,67,068/- to the Respondent. The Respondent was directed to transfer the shares to the Appellant. The cost of arbitration was awarded. Accordingly, the Award was declared on 8 June 2017.

5 7. COMAP(L) 517.2018.doc

6. The Appellants filed Commercial Arbitration Petition No. 468 of 2017 before the learned Single Judge. The learned Single Judge found that Appellant made out no case under Section 34 of the Act of 1996 to set aside the Award. Accordingly, the learned Single Judge dismissed the Petition by judgment and order dated 22 October 2018. Thereafter, the present Appeal is filed.

7. The Appeal was admitted by order dated 18 January 2019, and stay was granted subject to deposit of the amount. The Appeal is taken up for final hearing.

8. We have heard Mr. M.M. Vashi, learned Senior Advocate for the Appellants and Mr. Sarosh Bharucha, learned Counsel for the Respondent.

9. The scope of Section 34 and Section 37 of the Arbitration Act is limited as settled by the decisions of the Supreme Court and the High Court. Section 34 of the Act provides for limited grounds on which an arbitral award can be assailed. Unless these grounds are made out, interference in an arbitral award would not be permissible.

10. The learned Senior Advocate for the Appellants firstly argued that both, the learned Arbitrator and the learned Single Judge have held that the letter dated 9 June 2011 issued by the Appellants to the Respondent would constitute a new agreement as per clause 6 7. COMAP(L) 517.2018.doc

17 of the agreement dated 6 December 2008 and if that be so, there is no arbitration clause in the 'agreement' dated 9 June 2011 and therefore, the dispute with reference to the 'agreement' dated 9 June 2011 could not have been referred for arbitration. The learned Counsel for the Respondent pointed out that in the Appeal, this ground is not taken. From reading the impugned order, we find that the submission was not urged before the learned Single Judge. If the submission was made and not recorded, the course of action would have been to approach the learned Single Judge. Despite the order being passed in October 2018, no such attempt was made. Even otherwise, there is no merit in the submission. Clause 17 of the agreement of 6 December 2008 states that till the amounts are tendered in full, the agreement will continue. The payments are not tendered. There is no question of replacing the Agreement of 6 December 2008 with the letter of 9 June 2011. It is under this agreement dated 6 December 2008 that parties have gone to arbitration. The Arbitrator had dealt with this issue, observing that only when mutually agreed valuation is paid in full to the Respondent and the Respondent's share stood re-transferred to the Appellants that the agreement would come to an end. Thus, this point was dealt with by the Arbitrator with a possible interpretation. As noted earlier this contention was not advanced before the learned Single Judge and does not find mention in the appeal memo. This contention is rejected.

7 7. COMAP(L) 517.2018.doc

11. The learned Senior Advocate for the Appellants then contended that the Arbitrator has relied upon the decision of the learned Single Judge of this Court in Zee Sports Ltd. v/s. Nimbus Media Pte. Ltd.1 to hold that a WhatsApp message is sufficient to constitute an acknowledgment under Section 18(1) of the Limitation Act. The learned Senior Advocate submitted that the decision in Zee Sports is in a different context and does not lay down that a WhatsApp message can be taken as an acknowledgment. The learned Counsel for the Respondent submitted that law laid down in the decision of Zee Sports is regarding the ambit of Section 18 of the Limitation Act and not per se regarding WhatsApp messages.

12. We have perused the decision of the learned Single Judge in the case of Zee Sports. The learned Single Judge has considered the legal position under Section 18 of the Limitation Act regarding acknowledging liability in correspondence. In that case the correspondence happened to be by way of an e-mail. Before the learned Arbitrator, the Appellants had not disputed the position of law under Section 18 but had raised the contention as to whether the exchange of messages was proved. The Arbitrator considered the evidence on record and found that the evidence regarding the conversation has been duly brought on record by the Respondent and can be looked into in evidence. No argument that WhatsApp messages, as a class of electronic messages, cannot constitute

1 Manu/MH/0294/2017 Judgment dtd. 7/2/2017 in ARBP 1698/15 8 7. COMAP(L) 517.2018.doc

evidence was advanced. The exchange of communication was proved, may be electronic messages and was found as sufficient evidence for arbitral proceedings. On this ground, therefore, the Award cannot be assailed. There is, therefore, no merit in this contention of the Appellants as well.

13. Lastly, the learned Senior Advocate for the Appellant submitted that the cheque of Rs.40 lakhs was issued in the name of Saurabh Kanodia and the liability if any of the Appellants to pay Rs.40 lakhs was at the most of Saurabh Kanodia, who was not a party to the arbitral proceedings and no Award would have been passed. The learned Counsel for the Respondent submitted that the learned Arbitrator has dealt with the issue, and there is no error in his findings.

14. In the correspondence dated 9 June 2011 where the Appellants recorded what had transpired in the meeting, Saurabh Kanodia, brother of the Appellant, is referred to as being present on behalf of the Respondent. This lends credence to the Respondent's case that part of the investment was made through Saurabh Kanodia's account. If considering the documentary evidence on record and that both Saurabh Kanodia and the Respondent had deposed the Arbitrator has found that Saurabh Kanodia was acting on behalf of the Respondent, this becomes a finding of fact on assessment of evidence.

9 7. COMAP(L) 517.2018.doc

15. To conclude, the three grounds urged before us by the Appellants do fall within the ambit of Section 34 of the Arbitration Act. There is no error in the impugned order holding that the Appellants made out no case under Section 34 of the Act. No interference under Section 37 of the Act is warranted. The Appeal is dismissed.

      C.V. BHADANG, J.                    NITIN JAMDAR, J.
                 Digitally signed
  JYOTI          by JYOTI
  PRAKASH        PRAKASH PAWAR
                 Date: 2021.08.17
  PAWAR          16:59:47 +0530