M/S Selected Marble Home & Ors vs M/S Arun Kumar Kamal Kumar & Ors
2009 Latest Caselaw 2808 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           CS(OS) 647A/1998 and 715A/1998

%                                    Date of decision: 24th July, 2009

M/S SELECTED MARBLE HOME & ORS                                     ....Petitioners
                                 Through: Mr. Kuljeet Rawal, Advocate.

                                           Versus

M/S ARUN KUMAR KAMAL KUMAR                                        ... Respondents
& ORS
                                 Through: Mr Rakesh Khanna, Sr Advocate with
                                 Mr Reetesh Singh, Advocate.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.       Whether reporters of Local papers may                     No
         be allowed to see the judgment?

2.       To be referred to the reporter or not?                    No

3.       Whether the judgment should be reported
         in the Digest?                                            No


RAJIV SAHAI ENDLAW, J.

1. CS(OS) 647A/1998 was filed by the petitioners M/s Selected

Marble Home, Shri Anil Kumar Jain and Shri Bhim Sain Jain under

Sections 14 and 17 of the Arbitration Act, 1940 for the reliefs of

filing of arbitral award dated 16th March, 1998 in this court and

issuance of notice thereof to the parties. The arbitrator

independently filed the award in this court and which was registered

as CS(OS)715A/1998 and notice thereof issued to the parties.

Thereafter CS(OS) 647A/1998 was merely adjourned from time to

time alongwith the CS(OS) 715A/1998. Upon notice of filing of the

award being issued to the parties, two sets of objections came to be

filed. IA.No.5421/1998 has been preferred under Sections 15, 16, 30

and 33 of the 1940 Act by the Respondents M/s Arun Kumar Kamal

Kumar, Shri Arun Kumar Gupta and Shri Kamal Kumar Gupta.

IA.No.5568/1998 also under Sections 15, 16, 30 and 33 of the Act

was filed by M/s Nathu's Sweets, Bengali Market. The petitioners

did not file any objections to the award and have supported the

award. The petitioners in reply to the objections of M/s Nathu's

Sweets pleaded that the said Nathu's Sweets was not a party to the

arbitration proceedings and there was no award against them and

they had no right to prefer objections; it was further contended that

the position with respect to the said Nathu's Sweets had been

clarified in the award. The record shows that none has been

appearing for the said Nathu's Sweets in the present proceedings

and none appeared to address arguments also. The petitioners also

do not claim any relief against the said Nathu's Sweets under the

award. The award is also not found against the said Nathu's Sweets.

Nathu's Sweets are not impleaded as party even in CS(OS)

647A/998. IA.No.5568/1998 is thus dismissed. IA.No.5421/1998 of

the respondents is for consideration.

2. The petitioner No.3 Shri Bhim Sain Jain, it may be recorded,

died during the pendency of the proceedings before this court and

vide order dated 29th November, 2007 his legal representatives were

substituted.

3. The disputes arose out of two agreements both dated 27th

August, 1990 containing an arbitration clause. In both the

agreements the respective petitioner/s party thereto are described

as the licensors and the respondents as the licensee. Under the said

agreements the petitioners as licensors allowed use of their premises

at 1/26-A, Lalitha Park, Vikas Mark, Laxmi Nagar, Delhi on

commission basis to the respondents as licensee, for sale of goods

under the trademark Nathu's Sweets. The said agreement records

the relationship between the parties to have commenced w.e.f. 1st

August, 1990. The respondents as licensee, inter alia, agreed to pay

to the petitioners/licensors total commission under the two

agreements, of 11% of the gross sales i.e., net of sales tax.

4. Disputes and differences having arisen between the parties

with respect to the two agreements, Suit No.3708A/1991 under

Section 20 of the Act came to be filed by the petitioners against the

respondents. Vide order dated 18th September, 1995 in the said suit

a retired judge of this court was appointed as the arbitrator.

5. The arbitrator has, vide award dated 16th March, 1998, inter

alia, held:

i. that the respondents were licensees under the petitioners

with respect to the premises. The claim of the

respondents of being a tenant in the said premises under

the petitioners was negatived;

ii. that the respondents are liable to pay to the petitioners a

sum of Rs 12,793/- and Rs 5072/- respectively, i.e., total Rs

17,865/- towards balance commission for the period 15th

August, 1990 to February, 1991;

iii. that the respondents are also liable to pay to the

petitioners compensation for the period from March 1991

to October, 1995 during which period the shop/premises

admittedly remained closed. The arbitrator found that the

commission in terms of the agreements was paid from 15th

August, 1990 to February 1991 at an average rate of

59,000/- per month and after reopening of the shop

commission was due from November 1995 to November,

1997 at an average rate of Rs 67,736/- per month. The

arbitrator held that the compensation payable for the

period in between i.e., from March 1991 to October 1995

was to be the average of commission for the period prior

to the closure of the shop and on reopening of the shop

and thus directed payment for the said period @ Rs

63,368/- per month;

iv. that commission from November 1995 to November 1997

of Rs 16,93,407.75p was due from respondents to

petitioners. The said commission was computed as per the

statement of accounts for the said period filed by the

respondents and not objected to by the petitioners. It may

be clarified, this amount was arrived at after deduction of

tax at source and for which requisite certificate directed

to be issued by respondents;

v. the arbitrator also awarded commission from December

1997 to the date of the award to the petitioners against

the respondents @ Rs 67,736.31p per month, being the

average commission per month calculated from the

statement of accounts for the period November 1995 to

November 1997 furnished by the respondents;

vi. interest @ 16% was also awarded;

vii. the respondents were directed to deliver peaceful vacant

possession of the premises to the petitioners;

viii. the respondents upon failure to deliver possession of the

premises to the petitioners within a month of the award

were held liable to pay a sum of Rs 1 lac per month to the

petitioners till the date of delivery of possession;

ix. the arbitrator further found that the connected electricity

load in the premises was not sufficient for the respondents

to run their business;

x. that the closure of the shop of the respondents in the said

premises from March, 1991 to October, 1995 was not

attributable to the petitioners;

xi. that the respondents are not entitled to any damages from

the petitioners.

6. I have hereinabove not enumerated the other findings/awards

on the claims of the petitioners which were dismissed and / or with

respect whereto no objections have been preferred or which are not

relevant for the present purposes.

7. As far as award of delivery of possession is concerned it may

be noticed that during the pendency of the proceedings before this

court on 13th March, 2000 the respondents delivered and the

petitioners accepted the possession of the premises without

prejudice to their respective rights and contentions. Similarly, on

12th March, 1999 and as recorded in the order of that date, the

respondents agreed to pay to the petitioners the award amount for

the balance commission from 15th August, 1990 to February 1991,

the commission from November 1995 to 15th March, 1998. The

record (orders dated 11th May, 1999 and 1st July, 1999) shows the

amount of Rs 17,45,810/- to have been deposited by the respondents

and released to the petitioners. Thus, the dispute survives with

respect to the amounts awarded from March, 1991 to October, 1995

when the shop remained closed and for the period of post award i.e.

from 16th March, 1998 till 13th March, 2000 when possession was

delivered and for interest. The senior counsel for the respondents

has also confined his submissions to the surviving aspects alone.

8. The award records and it is not disputed that the arbitrator

had directed the respondents to file before the arbitrator their

statements of sales w.e.f. November, 1995 onwards to determine the

commission payable in terms of the agreement to the petitioners.

The respondents, in response to the said direction, filed a statement

showing the sales from November, 1995 to November, 1997. The

respondents in the said statement also showed the expenses

incurred by them on the diesel generator set installed in the

premises. The respondents deducted the expenses towards the said

diesel generator set from the sales shown and arrived at the figure of

sales net of expenses incurred on running the diesel generator set

and accordingly calculated the commission i.e. of 5% of the share of

petitioner No.1 and 6% of the share of the petitioner No.3. The said

statement is reproduced by the arbitrator at internal page 30 of the

award. The petitioners did not file any objections to the said

statements filed by the respondents and the arbitrator accordingly

accepted the same and on the basis thereof passed an award for

commission for the said period in favour of the petitioners and

against the respondents and payment whereof as aforesaid has also

been made.

9. The contention of the senior counsel for the respondents, inter

alia, is that a mistake occurred in the said statement submitted by

the respondents to the arbitrator. It is urged that the sales shown

therein are gross sales and not net of sales tax as was the

agreement. It is further contended that the expenses on the diesel

generator set were erroneously deducted from the sales shown,

while the same ought to have been deducted from the commission

found due to the petitioners. It is contended that if the said

corrections are carried out, the average commission per month for

the period November 1995 to November 1997 will be about Rs

29,000/- per month instead of Rs 67,736.31p as computed by

arbitrator on basis of said statement; resultantly the compensation

payable for the period March 1991 and October 1995, calculated by

the arbitrator on basis of same will also considerably come down.

10. The senior counsel for respondents further urges that the

aforesaid are mathematical errors and apparent on the face of the

record.

11. Per contra, the counsel for the petitioners has urged that there

is no mistake and the contention now of the respondents is an

afterthought. He urges that the respondents have not only

themselves filed the statement with which they are bound but have

also deducted at source and paid taxes on the commission shown to

be due in the statement aforesaid. This contention is not

controverted by the senior counsel for the respondents. All that has

been said is that the statement was given as per the books of

account of the respondents and since the mistake had occurred in

the books of account also, tax was deducted and paid in accordance

with the said mistake only and that is no ground for not interfering

with the award.

12. I have inquired from the senior counsel for the respondents as

to whether any material has been placed on record to show that

there is any such mistake viz as to how much sales tax was paid for

the months aforesaid or returns filed with various authorities

showing the sales. The senior counsel has stated that though no such

material has been placed on record but the record must be existing

and upon opportunity being given, the said material will be placed on

record. The matter being old, the usual issues having been framed

on 3rd August, 2005 and the parties having already availed the

opportunity of filing affidavits by way of evidence, the request for

further time was declined. I may notice that in the affidavit by way of

evidence filed by the respondents before this court except for a bare

averment in this regard no proof of any mistake in the statement

submitted by the respondents themselves before the arbitrator has

been placed. Thus, there is no material in support of averment that

there is a mistake.

13. The statement filed by the respondents before the arbitrator

has been perused by me. The same merely gives the figures under

the columns described as "sales" and not as "gross sales". The

respondents who are astute businessmen are presumed to have

made the statement showing "sales" as sales which were to be

accounted for the purpose of computation of the commission i.e., net

of sales tax and there is nothing before this court to presume

otherwise. This is without considering, if at all the respondents can

be permitted to withdraw admission at this stage of the proceedings.

14. The counsel for the respondents, after conclusion of hearing

has handed over in the court a written note of arguments alongwith

case law (which was not cited during hearing). Reliance therein is

placed on:

a) M/s Alopi Parshad & Sons Ltd Vs The Union of India 1960

SCR 793 on the principle of quantum meruit.

The reliance on this judgment is misconceived. Here the

petitioners were merely to provide their premises with

electricity to the respondents and which was so provided. The

arbitrator has held the closure of shop to be not attributable to

petitioners. For electricity, the expenses of generator set were

accounted for by the respondents themselves. Thus no

question of quantum meruit arises.

b) Bharat Coking Coal Ltd. Vs. Annapurna Construction

(2003) 8 SCC 154 on arbitrator being not competent to award

damages beyond the terms of agreement.

This question also does not arise in present case. The

arbitrator has made the award as per statement submitted by

respondents and which the respondents are presumed to have

prepared as per terms of agreement. The question here is

whether the respondents are entitled to withdraw their

statement at this stage.

c) Tilak Raj Vs. Baikunthi Devi (2009) 3 SCALE 741 where

mistake in decree in description of immovable property owing

to such mistake in plaint itself was held to be of clerical nature

and correctible under Section 152 CPC.

Reliance on this judgment is also misconceived. In that case

there was no dispute as to the identity of the property and

error was only in description. Here, the respondents inspite of

reopening of the shop failed to pay any commission to

petitioners. The arbitrator determined the same on basis of

statement furnished by petitioners and on which basis

petitioners had also paid tax. Now, belatedly in challenge to

award mistake is alleged. Such mistake cannot be equated to

mistake in case before the Supreme Court.

d) American Refrigeration Co. Ltd. Vs. AIIMS (1980) 17 DLT

66.

This was also not a case of correction of any mistake in a

statement filed by the party before the arbitrator.

e) Ajanta Builders Vs. BHEL (2007) 93 DRJ 545.

In this case calculation errors in the award were corrected by

the court. The question in the present case is of allowing the

respondents to withdraw their admission before the arbitrator

and on basis whereof monies have been awarded against

respondents.

f) U.G.V.E.S. Co. Ltd. Vs. U.P. Electricity Board AIR 1973 SC

683 holding mistake in calculating market value by wrongly

excluding certain payment to be misconduct of arbitrator.

In this case, the arbitrator valued an electric undertaking

acquired by the State Govt. The court interfered with the

award for the reason of not finding valuation in the award in

accordance with the provisions of Indian Electricity Act, 1910.

The mistake was qua the statute and not as in the present case

i.e. in making admission before the arbitrator.

15. The other mistake pointed out of deduction of expenses on

diesel generator set from sales rather than from commission

payable, even if made out, also cannot be permitted to be withdrawn

at this stage especially when the respondents have already deducted

and paid taxes on the basis of said statement. Under the agreement

the electricity and water charges of the premises were to be borne

by the petitioners. Admittedly the premises/shop on reopening were

without electricity and diesel generator set arranged. There is no

dispute that the expenses therefor were to be borne by the

petitioners. The respondents while furnishing the statement to

arbitrator, did direct the same. The objections now that such

deduction was wrongly done is not tenable.

16. The mistake is alleged not on the face of the award but in

admission made before the arbitrator. Mistake is sought to be

corrected by withdrawal of the admission made before the arbitrator.

In my view the same is not permissible.

A. Firstly the law with respect to pleadings before court is now

well settled that admissions cannot be permitted to be withdrawn.

The statement of accounts filed by the respondents before the

arbitrator was in the nature of pleadings on the claim of petitioners

for damages/compensation/commission.

B. Secondly the arbitrator has found and is also borne out as

discussed below that the average commission payable/paid between

August 1990 and February 1991 was @ Rs 59,000/- per month. It

seems probable/believable that average commission after nearly five

years from November 1995 to November 1997 was Rs 67,736/- per

month. It is highly improbable, as now contended that the

commission would be Rs 29,000/- per month.

C. Thirdly the respondents even in the objections preferred by

them before this court and the time for preferring which is of 30

days only from receipt of notice of filing of the award, did not plead

any such mistake. The said plea was taken much belatedly and for

the first time only in IA.No.3907/2000. Such belated plea also

creates serious doubts as to the correctness thereof and the

possibility of the same being a figment of imagination or creation of

advocacy skills cannot be ruled out. If there had been any mistake,

the same even if committed ought to have been detected at the time

of finalization of the annual accounts or at the time of filing the

income tax and other returns for the relevant period. Nothing of this

sort is shown to have happened. There is nothing to indicate as to

how and when and on what material the respondents realized that

such a mistake had occurred.

D. With respect to Section 25B of the Delhi Rent Control Act,

providing for a limitation of 15 days for filing application for leave to

defend the petition for eviction, this court in Vinod Industries Pvt

Ltd Vs Suraj Kumar MANU/DE/0725/1993 and in Chetan Lal Jain

Vs Manohar Lal Vohra AIR 1984 Del. 150 has taken a view that

after 15 days the application cannot be permitted to be amended,

specially to withdraw admissions or to take inconsistent pleas. The

purpose of arbitration is expediency. Only 30 days limitation is

provided for preferring objections to the award. New objections

cannot be permitted to be taken after the limitation has expired and

merely because the matter is pending.

E. I also find that the respondents have willingly on 12th March,

1999 agreed to pay the commission awarded for the period from

November, 1995 till 15th March, 1998 @ Rs 67,736/- per month. The

award to that extent already stands implemented / executed. The

respondents cannot now be heard to contest the same.

F. Lastly, in my view the respondents after having deducted and

paid the tax and made the payments to the petitioners in accordance

with the said statements are now not entitled to poke holes in the

same and objection in that respect is rejected.

17 The senior counsel for the respondents next contended that the

finding of the arbitrator of average commission for August 1990 to

February 1991 being of Rs 59,000/- per month is not correct.

However, the counsel for the petitioners has demonstrated that it

was the admitted case of the parties before the arbitrator that for

the said period commission of Rs 1,58,134/- to one of the petitioners

and of Rs 2,01,285.82p to the other petitioner was due. The balance

commission of Rs 17,865/- for the said period was awarded on this

basis. Thus, the commission for about six months from 15th August,

1990 to February 1991 works out to Rs 3,59,419.82p i.e. of Rs

59,903/- per month. The senior counsel for the respondents did not

dispute the said position. Moreover, I find that the respondents have

in the order dated 12th March, 1999 accepted the award for the

balance commission of Rs 17,865/- for the said period and for this

reason also the respondents are now not entitled to challenge the

finding of the arbitrator of the commission per month for the said

period being Rs 59,000/- per month.

18. The senior counsel for the respondents has also drawn

attention to Section 15(c)of the 1940 Act and contended that the

court is empowered to correct the mistakes. However, the said

provision deals with clerical mistakes or errors arising from an

accidental slip or omission contained in the award. It is not the case

here that there is any clerical mistake or error in the award. The

mistake is alleged in the statement of accounts of the respondents

themselves filed by the respondents before the arbitrator. The same

would be outside the ambit of Section 15(c) of the Act.

19. The senior counsel for the respondents also sought to

challenge the jurisdiction of the arbitrator to award

damages/compensation to the petitioners for the period the shop

remained closed. It was urged that it was a term of the agreement

that no rent was payable by the respondents to the petitioners. The

arguments appears to be that commission was payable only when

sales were effected from the premises and not when there were no

sales i.e., when the shop was lying closed.

20. I find it has been the case of the respondents that the

transaction between the parties was of tenancy and not of a licence.

It is so pleaded in the objections also. Even if the respondents

consider themselves to be tenants at the rent equivalent to

commission @ 11% per month, the respondents would under Section

108 of the Transfer of Property Act have continued to remain liable

for payment of rent, notwithstanding not carrying on business in the

premises. It has been held by the Division Bench of this court in

State Bank of Patiala Vs Chandermohan 1996 RLR 404 held that

a tenant continues to be liable for rent/damages even if the premises

are destroyed and the only option of the tenant if desirous to stop the

running of rent is to surrender the premises. Thus as per the

respondents own understanding of the relationship also, the

respondents were liable for payment of rent.

21. The arbitrator has given a factual finding of the closure of the

shop being owing to the respondents own exigency and being not

attributable to the petitioners. Such finding of the arbitrator has

neither been challenged nor is challengable under Sections 30/33 of

the Act. The counsel for the petitioners also after conclusion of

hearing has filed copies of judgments, of which reference may be

made to Coimbatore District Podu Thozillar Samgam Vs Bala

Subramania Foundry AIR 1987 SC 2045 laying down that error of

facts committed by arbitrator are not amendable to correction. That

being the position, the respondents would certainly be liable to

compensate the petitioners and no error can be found with the said

logic, reasoning and law applied by the arbitrator.

22. Though no other ground has been urged by the respondents

during the hearing but I find that the respondents have in

IA.No.5421/1998 pleaded other grounds also. The other grounds

pleaded are found to be in the nature of an appeal to this court

against the award and which is not permissible in law. The

respondents had signed the documents with the petitioners

whereunder they had agreed to carry out business in the premises of

the petitioners as licensee and had expressly ruled out tenancy. The

respondents cannot be heard to contend otherwise. It was not even

the case that the writing was a sham or was created for any

collateral purposes. The respondents are astute businessmen and

are presumed to know the effect of their writing. In the absence of

any plea to explain the agreement, no error can be found with the

award finding the respondents to be licensees and not the tenants.

Moreover, I find that with the respondents having of their own

volition, during the pendency of the present proceedings having

delivered possession, the said objection is not relevant. As aforesaid

even if the respondents were the tenants they would still be liable to

pay the rent to the petitioners as landlords. The respondents have

also pleaded that the Collector of Stamps on reference being made in

the suit under Section 20 of the CPC had found the documents liable

to stamp duty as a lease. This court nevertheless thereafter

referred the disputes to arbitration and the arbitrator having found

the relationship to be of a licencee and licensor and not of

landlord/tenant no error/misconduct can be found therewith on the

ground of the view expressed by the Collector of Stamps. Objections

taken with respect to Nathu's Sweets who chose themselves not to

pursue their application also loose significance. There is no award

against Nathu's Sweets nor has the arbitrator dealt with a dispute

not submitted to him. The other challenges with respect to the

factual findings of the arbitrator cannot be gone into at this stage,

specially as no other argument has been urged.

22. IA.No. 5421/1998 is accordingly dismissed. The arbitral award

dated 16th March, 1998 is made a rule of the court and judgment

pronounced in terms thereof. Decree sheet be also drawn up.

23. I also find that vide order dated 5th February, 2001, a sum of

Rs 1 lac deposited by respondents was ordered to be kept in fixed

deposit. The same with interest accrued thereon be released to the

petitioners.

RAJIV SAHAI ENDLAW (JUDGE) July 24th, 2009 M