Sh. Shyam Sunder Maheshwari (Huf) vs M/S Garg & Company
2009 Latest Caselaw 4172 Del

*        HIGH COURT OF DELHI : NEW DELHI

         FAO No.194/2006 & CM No.10446/2006

%              Judgment reserved on: 11th September, 2009

               Judgment delivered on: 15th October, 2009

    Sh. Shyam Sunder Maheshwari (HUF)
    Through its Karta Mr. Shyam Sunder Maheshwari
    Prop. M/s. Shyam Sunder Maheshwari
    4664-65, Mahavir Bazar, Cloth Market,
    Delhi-110006.                        ....Appellant
                     Through: Mr. Ramesh Chandra,
                              Sr. Adv. with Ms. Geeta
                              Mehrotra, Adv.

                   Versus

    M/s. Garg & Company,
    Though its Proprietor,
    Sh. Kamal Kumar,
    Shop No.845, Karta Mahesh Dass,
    Nai Sarak, Chandni Chowk,
    New Delhi-110006.                     ....Respondents.

                        Through: None.


Coram:
HON'BLE MR. JUSTICE V.B. GUPTA

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                      Yes

2. To be referred to Reporter or not?                   Yes

3. Whether the judgment should be reported
   in the Digest?                                       Yes




FAO 194/2006                                    Page 1 of 9
 V.B.Gupta, J.

This appeal has been filed by appellant under

Section 37 of Arbitration and Conciliation Act, 1996

(for short as „Act‟) against order dated 22nd May, 2006

passed by Additional District Judge, Delhi.

2. Appellant filed a claim before Arbitrator

regarding recovery of money for goods supplied to

respondent. Respondent did not participate in the

proceedings and ex-parte award was passed on 27th

April, 2005. Intimation of the same was given to

respondent, by Arbitrator on 9th May, 2005 by

registered AD. Application under Section 34 of the

Act, for setting aside the award, was filed by

respondent on 27th October, 2005 only i.e. clearly

beyond the period of limitation.

3. Trial court vide impugned order modified the

award and awarded interest @ 6% per annum on the

cheque amount from the date of notice i.e.10th July,

2004 till realisation, whereas Arbitrator awarded

interest @ 18% per annum.

4. On 28th May, 2009, counsel for respondent stated

before this Court that the principal amount was

Rs.1,49,353/- and in order to settle the matter,

respondent is ready to pay equivalent to that amount

as interest. Appellant refused to accept the same and

matter was renotified for 24th August, 2009 for

hearing.

5. On 24th August, 2009, only counsel for appellant

appeared, while there was no appearance on behalf of

respondent. Matter was admitted and ordered to be

listed in due course.

6. On 11th September, 2009, when it came up for

hearing, only counsel for appellant appeared, while

there was no appearance on behalf of respondent.

Under these circumstances, arguments advanced by

learned counsel for appellant have been heard.

7. It is contended by learned counsel for appellant

that trial court wrongly held that petition under

Section 34 of the Act, filed by respondent is within

time. The same was filed on 27th October, 2005, i.e.

clearly beyond the period of limitation.

8. Appellant filed the claim before Arbitrator, prior

to filing of complaint under Section 138 of Negotiable

Instruments Act. On the date, when award was passed,

complaint case was pending and was adjourned to 28th

May, 2005 for making the payment. The same was

finally disposed of on 19th November, 2005.

9. It is contended that proceedings under Negotiable

Instruments Act and those in Arbitration, are entirely

separate and distinct proceedings and one has no

bearing or relevance on the other.

10. Since objections filed by respondent are time

barred, the same are not maintainable. In support,

learned counsel referred a decision of Supreme Court,

Union of India v. Popular Construction Co., AIR

2001 Supreme Court 4010.

11. There is no dispute about principles of law laid

down in M/s. Popular Construction Company

(Supra), that time limit prescribed under Section 34 of

the Act, is absolute and unextendable. This judgment

is not applicable to the facts of the present case since

in the case in hand, the respondent has paid the entire

amount and Arbitrator was not aware of these facts

which are apparent from the record of this case.

12. There is no doubt that appellant has concealed

the fact about compromise made in the court of

Metropolitan Magistrate from the Arbitrators. In the

statement of claim made before the Arbitrator, there is

no mention of filing of the complaint under Section 138

of the Negotiable Instruments Act. The principal

amount of the dishonoured cheque is the same in both

the matters. Thus, it cannot be said that both matter

are totally distinct. The Arbitrator had passed the

award being unaware of such concealment. The

appellant has, thus, not approached the Arbitrator nor

he had come to the court with clean hands.

13. The observations made by trial court in this

regard are as under;

"The respondent had filed a complaint under Section 138 of Negotiable Instruments Act prior to invoking the arbitration proceedings i.e. 8.9.2004. The summons of this complaint were issued to the accused/petitioner for 21.4.2005. On the said date of hearing, the petitioner as well as the respondent had appeared before the court and made statements. The petitioner had admitted his liability in respect of the cheque and has stated that he is ready and willing to make the payment. He had undertaken to pay the cheque amount in a monthly instalments of Rs.25,000/- and had further undertaken that in case he commits any default then he shall pay interest @ 15% per annum from the date of cheque on the balance amount. The said statement of the petitioner has been accepted by the respondent in his statement. He had undertaken that after receiving the payment as undertaken by the petitioner, he shall withdraw his complaint.

The petitioner is stated to have made the entire payment on 19.11.2005. On the said date of hearing the respondent made statement that he had received the entire payment with respect to the settlement with the petitioner and had prayed that his complaint may be disposed of as compromised. However, in the statement of claim made before the Ld. Arbitrator, the respondent has concealed the fact regarding filing of the complaint under Section 138 of Negotiable Instruments Act. Admittedly, the principal amount with respect to the dishonoured cheque is one and the same in both the proceedings. Since the respondent had concealed the fact regarding filing of the complaint before the Ld. Arbitrator. Thus the Ld. Arbitrator had also passed the award with respect to the cheque amount also. The award has been passed on 27.4.2005. Whereas the statement of the parties with respect to the compromise was recorded before the Ld. Metropolitan Magistrate on 21.4.2005. Thus, the respondent has concealed this fact about compromise from the Ld. Arbitrators.

Admittedly, the petitioner has made the payment of the dishonoured cheque in the proceedings under Section 138 of Negotiable Instruments Act to the tune of Rs.1,49,211/-. Had this fact been brought to the notice of the Ld. Arbitrators then the award with respect to the amount of dishonoured cheque would not have been passed.

Moreover, the petitioner had

undertaken by to pay interest @ 15% per annum on balance amount of instalments in case he defaulted to make the payment of dishonoured cheque. The respondent has not disputed the said statement made by the petitioner before the Ld.

Metropolitan Magistrate. The respondent has also not disputed that the petitioner made no default in making instalments as undertaken by him. Thus, award passed by the Ld. Arbitrator awarding interest @ 18% per annum is also not tenable as the respondent have agreed to receive interest @ 15% per annum subsequently.

However, the fact cannot be ignored that the petitioner did not participate in the arbitration proceedings though the same were in his knowledge. It is also not the case of the respondent that he had given up the rate of the interest on the principal amount. In these circumstances, keeping in view the current rate of interest being paid in different classes of deposits by the Schedule Banks in accordance with the directions issued to the Banking Companies by RBI under Banking Regulation Act, the pendentelite and future interest 6% per annum is awarded to the respondent on the cheque amount from the date of notice i.e. 10.7.2004 till realisation."

14. The trial court, accordingly, modified the award of

Arbitrator and awarded appellant interest @ 6% per

annum on the cheque amount from the date of notice

i.e. 10th July, 2004 till realisation. Admittedly as there

was concealment of the material facts by the appellant,

I do not find any infirmity in the impugned judgment,

passed by the trial court. Hence, present appeal is,

hereby, dismissed.

15. No order as to costs.

16. Trial court record be sent back.

+CM No.10446/2006 *

17. Dismissed.

15th October, 2009 V.B.GUPTA, J.

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