M/S Srs Entertainment Limited ... vs M/S Home Stores (India) Ltd
2009 Latest Caselaw 3784 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   Ex.P.12/2009

%                                     Date of decision: 16.09.2009

M/S SRS ENTERTAINMENT LIMITED ...Decree Holder
(Formerly known as M/s SRS Commercial Co. Ltd.)
                        Through: Mr. Tarun Singhla and Mr K.C. Joshi,
                                 Advocates.

                                    Versus



M/S HOME STORES (INDIA) LTD                       ... Judgment Debtor
                             Through: Mr Santosh Kumar with Mr Manish
                             Kumar, Advocates.


                                     And

                               OMP 460/2009

M/S HOME STORE (INDIA) LTD                               ... Petitioner
                             Through: Mr Santosh Kumar with Mr Manish
                             Kumar, Advocates.


                                    Versus

M/S SRS COMMERCIAL COMPANY LTD ....Respondent
                             Through: Mr Tarun Singhla and Mr K.C.Joshi,
                                      Advocates.




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

1.    Whether reporters of Local papers may
      be allowed to see the judgment?   Yes

2.    To be referred to the reporter or not?       Yes

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


RAJIV SAHAI ENDLAW, J.

1. Execution was sought of an arbitral award dated 27th October,

2005 stated to be having force of a decree, under the Arbitration Act,

1996. Notice of the execution petition was issued to the judgment

debtor. On 21 April, 2009 it was reported that upon the notice being

tendered to the person available at the address of the judgment

debtor, the said person after talking to the Managing Director of the

judgment debtor on telephone, refused to accept the notice for the

reason of the same bearing a different address of the judgment

debtor. This court finding the judgment debtor to have avoided

service, issued warrants of attachment of the monies lying in the

bank account of the judgment debtor to the extent of Rs 6,10,000/-

claimed in the execution petition. The said attachment was effected

and a cheque for Rs 6,10,000/- received in this court. However, the

judgment debtor thereafter preferred OMP under Section 34 of the

Arbitration Act 1996 with respect to the arbitral award under

execution.

2. The OMP was instituted in this court first on 10th August, 2009.

The institution thereof, calculated from the date of the award i.e., 3rd

July, 2008 was barred by time. However, it is the plea of the

judgment debtor in the said OMP that signed copy of the arbitral

award was never delivered to it and it learnt of the award only on

inspection of a copy thereof filed in the execution petition.

3. The judgment debtor having denied service of the arbitral

award, this court on 12th August, 2009 when the OMP came up first

before the court called for the arbitral record. The arbitral record

has been received.

4 The arbitral record reveals that the arbitrator under cover of

his letter dated 3rd July, 2008 forwarded to both the parties the

signed copy of the award. The said letter alongwith the signed copy

of the award was dispatched to both the parties by speed post and

the arbitral record also contains the speed post postal receipt

evidencing dispatch of the award to both the parties. The address of

the judgment debtor at which the said letter was dispatched is the

same as the address of the judgment debtor before the arbitrator.

The arbitral record does not contain any envelope containing the

letter and award returned from the address of the judgment debtor

to the arbitrator.

5. The counsel for the judgment debtor(petitioner in the OMP)

has contended that the limitation for preferring a petition under

Section 34(3) of the Act commences from the date when the party

making the petition has received the arbitral award; similarly the

word used in Section 31(5) is of delivery of the arbitral award to the

parties. It is contended that what was envisaged by the Act was

actual delivery of the award; in the present case there is nothing to

show that the award was actually delivered to the petitioner and

hence the limitation period for the petitioner to institute the petition

under Section 34 of the Act with respect to the award cannot be said

to have commenced. Reliance in this regard is placed on Union of

India Vs Tecco Trichy Engineers and Contractors (2005) 4 SCC

239.

6. On query as to why the words "received" and "delivery" in

Section 34(3) and 31(5) (supra) be not interpreted as deemed receipt

and deemed delivery, the counsel has relied upon R.K. Vashisht Vs

Union of India 1993 supp (1) SCC 431.

7. In my view the words "delivered" and "received" cannot be

interpreted in a pedantic fashion i.e. of requiring or insisting upon

actual delivery of the award to the parties. The practical view of the

existing realities and practices has to be taken in this regard. The

arbitral tribunal has no machinery of ensuring the actual delivery of

the award to the parties. The parties/party by avoiding

delivery/receipt of the award cannot be permitted to hold in

abeyance the enforcement thereof against himself/itself. The award

is rarely published immediately after the last hearing before the

arbitrator, to enable the arbitrator to deliver the same there and

then to the parties who may be present before him. In fact in most

of the cases the parties themselves may not be present before the

arbitrator at all and are represented through parokars or advocates.

The awards are usually published after some time of the conclusion

of the arbitral hearings and the only way in which the arbitral

tribunal can deliver / serve the same on the parties is through the

post / courier. Once it is held that the arbitral tribunal is entitled to

serve/deliver the award on the parties through the medium of

post/courier, the law with respect thereto including the

presumptions arising under Section 114 of the Evidence Act and

Section 27 of the General Clauses Act would get attracted.

8. In the present case it has been established from the arbitral

record that the arbitrator dispatched the signed copy of the arbitral

award to the parties at the addresses of the parties before the

arbitrator. The decree holder received the award pursuant thereto.

The postal receipts on the arbitral record of dispatch of signed copy

of the award to the two parties are evidence of the same. In the

absence of the arbitral record containing anything to show that the

article sent under the said postal receipt was returned from the

address of the judgment debtor to the arbitrator, the presumption is

that the same was delivered in the normal course of postal business.

9. The counsel for the judgment debtor (petitioner in the OMP)

has also urged that the presumption under Section 114 of the

Evidence Act and 27 of the General Clauses Act is a rebuttable

presumption. There can be no dispute whatsoever with the said

proposition. However, the fact remains that the petitioner has not

rebutted the said presumption and there is nothing before this court

to rebut the presumption of service arising under the law.

10. As far as the judgments (supra) cited by the counsel for the

petitioner are concerned, Tecco Trichy Engineers and

Contractors (supra) was concerned with delivery of the arbitral

award on the Railways. It was held that for the delivery to be

effective, it has to be on the person capable of taking a decision with

respect to the award and not on any person in the department.

Emphasis in that case was on the department of Union of

India/Railways being large and not having personal interest.

Similarly, R.K. Vashist (supra) though relating to service by post, in

that case the envelop sent by post had been received back

undelivered and it was in that context that it was held that no

presumption of service arises. In my view neither of the said

judgments are apposite to the facts of the present case.

11. Be that as it may, the counsel for the judgment debtor

(petitioner in the OMP) has also been heard on the merits of the

petition to determine whether otherwise a case for issuance of notice

or of interference by this court under Section 34 is made out.

12. The disputes between the parties arise out of an agreement to

lease executed by the parties and containing an arbitration clause.

The proposed lease was with respect to the space in a mall being

developed by the respondent at Faridabad and in which the

petitioner wanted to setup its operations. The admitted position is

that neither any lease came into existence nor was the judgment

debtor ever put into possession of the premises. The judgment

debtor claimed Rs. 32,88,825.72p from the decree holder towards

refund of security deposit made with the decree holder and for losses

suffered by the judgment debtor for the alleged failure of the decree

holder to deliver possession of the space agreed to be let out as

agreed. The decree holder also made claims against the judgment

debtor, again on account of breach of the agreement and resultant

loss of rent.

13. The arbitrator has dismissed the claims of the judgment debtor

and allowed the claims of the decree holder and after adjusting the

amount of the security deposit made by the judgment debtor with the

decree holder directed the judgment debtor to pay the balance sum

of Rs 5,35,283/- with interest to the decree holder.

14. It was inter alia the case of the judgment debtor before the

arbitrator that the time for delivery of possession was of the essence,

that the decree holder failed to deliver the possession and hence the

judgment debtor became entitled to its claims aforesaid from the

decree holder.

15. The arbitrator has found that the decree holder had been

offering possession of the premises to the judgment debtor and the

judgment debtor had at one stage though represented that it will be

taking over possession, failed to take over the possession of the

premises. The arbitrator has also found that at the time of

execution of the agreement to lease the decree holder was ready to

deliver possession of the premises to the judgment debtor for

fitments as agreed even though the completion certificate was issued

a little thereafter. The arbitrator has in this regard also noticed the

evidence qua the other occupants of the mall. The arbitrator found

that it was the judgment debtor who changed its mind about taking

on rent the premises in the said mall and for this reason only neither

made further payments to the decree holder nor took possession of

the premises as it was required to take in terms of the agreement.

The arbitrator thus found the judgment debtor to be in breach of the

agreement and for this reason dismissed the claims of the judgment

debtor for losses on account of breach by the decree holder. The

arbitrator nevertheless also discussed the evidence led by the

judgment debtor in support of its losses and held that there was

nothing to show that the judgment debtor had incurred any expenses

with a view to commence business/operations in the said mall.

16. On the plea of the judgment debtor of time for delivery of

possession being the essence of the contract, the arbitrator held on

an interpretation of the various clauses of the agreement to lease

that though the same stipulated the time for delivery of possession

but there was nothing to show that such time was agreed to be of the

essence of the contract. The arbitrator in this regard found that

even the date stipulated was not fixed/absolute and was subject to

change and the agreement itself provided for consequences of delay,

if any, in delivery of possession i.e., of extension of the term of the

lease.

17. The counsel for the judgment debtor (Petitioner in OMP) has

laid much emphasis on the finding of the arbitrator of time being not

of the essence. The contention is that since a particular date by

which possession was expected to be given was mentioned, the same

made time the essence of the contract. I am unable to agree with

the contention. The contract was with respect to the immovable

property and the presumption is that time is not of the essence. The

contract does not even state that the intention of the parties was that

time was of the essence. There is nothing to indicate that the

judgment debtor at any time called upon the decree holder to deliver

the possession on the alleged date or notified the decree holder that

upon failure to so deliver possession the judgment debtor shall void

the agreement or claim any damages with respect thereto. The

award contains cogent reasons for the conclusion arrived at by the

arbitrator.

18. As far as the factual finding of the arbitrator of breach of the

agreement being on the part of the judgment debtor is concerned,

the same is not interferable in these proceedings. Similarly, no fault

can be found with the award allowing the counter claims of the

decree holder for losses suffered on account of breach of contract by

the judgment debtor.

19. I thus do not find any case for issuance of notice of the petition

under Section 34 of the Act. The same is dismissed. Upon dismissal

of the OMP under Section 34 of the Arbitration Act, the decree

holder has become entitled to the monies attached in execution. The

same were ordered to be kept in a fixed deposit for one year. The

decree holder is at liberty to either withdraw the said monies on

expiry of the term of the fixed deposit or withdraw the same

immediately and in which case the registry to break/ have

discharged the FDR made and release the amounts realized

therefrom to the decree holder. With these directions, the execution

is also disposed of.

RAJIV SAHAI ENDLAW (JUDGE) September 16, 2009 M