M/S. Jay Yushin Ltd. vs Sh. Sudhir Goel
2009 Latest Caselaw 3794 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+OMP No.470/2008 (U/s.34 of the Arbitration Act, 1996) & IA
No.10783/2008 (U/s.5 of the Limitation Act)

%                    Date of decision: 16th September, 2009

M/S. JAY YUSHIN LTD.                                 ....Petitioner

                       Through: Mr. Sanjiv Kakra with Mr. Amit Punj
                                 and Mr. Umesh Gulati, Advocates

                               Versus

SH. SUDHIR GOEL                                     ... Respondent


                       Through: Mr. Ajay Verma with Mr. Amit Mehra,
                                 Advocates


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

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

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 Petition under Section 34 of the Arbitration Act, 1996 is

preferred with respect to the arbitral award dated 25th April, 2008.

The petition is accompanied with an application (IA No.10783/2008)

for condonation of delay of 28 days in preferring the petition. The

respondent has contested the application for condonation of delay.

2 The petitioner seeks condonation of delay on the ground that

the signed copy of the award was not sent by the arbitrator to the

petitioner but was instead sent by the arbitrator by courier at the

address of the counsel for the petitioner before the arbitrator; the

same was received by the old and ailing mother of the counsel for

the petitioner who did not even inform her son about the same; the

petitioner thus remained under the impression that the award had

not been published. It is further pleaded that the respondent sent a

letter to the petitioner enclosing therewith a pay order in payment of

the amount awarded by the arbitrator to the petitioner against the

respondent; the said letter also was received by a peon in the Delhi

office of the petitioner company who also did not inform his

superiors of the same and the said letter was ultimately discovered

on 19th August, 2008 whereafter inquiry was made and the petition

challenging the award filed.

3 The counsel for the respondent has contested the application

for condonation of delay on the ground that the same is replete with

false averments. From the copies of the records obtained from the

office of the arbitrator it is shown that the arbitrator had sent the

award not only to the counsel for the petitioner but also at the

address of the petitioner and the postal records are also shown to

disclose that both were duly received by the addressees. It is also

disputed that the envelope sent at the address of the advocate for

the petitioner was received by the mother of the said advocate.

4 The counsel for the petitioner has fairly stated that in the face

of the documents produced by the respondents he would leave the

matter of condonation of delay to the discretion of the court.

5 In the circumstances the counsels have also been heard on

merits.

6 The respondent was an employee of the petitioner. The claims

of the petitioner against the respondent were for breach of contract

for leaving the employment of the petitioner prior to the agreed term

and for recovery of the amounts which the respondent had agreed to

pay to the petitioner in the event of such breach.

7 The counsel for the petitioner has drawn attention to the

arbitral award to show that the arbitrator has decided all material

issues in favour of the petitioner. It is contended that the arbitrator

has found that the petitioner had incurred a sum of Rs.17,48,873/- in

the training of the respondent in Japan and which the respondent

had agreed to reimburse to the petitioner in the event of leaving the

employment of the petitioner before the stipulated term. The

counsel has also contended that the arbitrator has held the

respondent to be in breach of the agreement. It is argued that on

the basis of the said two findings of the arbitrator, the petitioner had

become entitled to an award not only for Rs.17,48,873/- but also for

reimbursement of the entire emoluments paid to the respondent

during the term of his employment with the petitioner, as agreed,

together with interest as agreed. The claims of the petitioner

against the respondent were for over Rs.66 lacs. The arbitrator has

awarded a sum of Rs.5 lacs only to the petitioner and the counsel for

the respondent points out that the pay order for the said amount sent

by the respondent as aforesaid to the petitioner has been encashed.

8 The arbitrator has while computing the damages to which the

petitioner has become entitled to for breach of contract by the

respondent held that since the respondent had served the petitioner

for part of the term agreed, the expenses incurred by the petitioner

in training of the respondent abroad have to be reduced

proportionately. A sum of Rs.8,16,140/- was thus found by the

arbitrator to be due on this account. However the arbitrator has

further held that the petitioner has not proved any loss to have been

suffered by the petitioner on account of breach of contract by the

respondent. The arbitrator has thus awarded lump sum damages of

Rs.5 lacs to the petitioner as found by the arbitrator to be reasonable

and fair compensation for the reason of the respondent in any case

having benefited from the training abroad imparted by the petitioner

to the respondent.

9 I have enquired from the counsel for the petitioner as to how

the assessment of damages by the arbitrator would be challengeable

under Section 34 of the Arbitration Act 1996. The counsel has

contended that the arbitrator cannot award damages at his ipsi-dixit

and once having held the amount of at least Rs.8,16,140/- to be due

towards actual expenses incurred in the training of the respondent,

the arbitrator has not given any justification for reducing the

amount.

10 The only test to be applied by this court is whether the award

is contrary to substantive law. As far as the same concerned,

reference can be made to Fateh Chand Vs. Balkishan Das AIR

1963 SC 1405 holding that even where the damages are stipulated in

the contract, the same become due only upon loss being proved.

Though a slight deviation was made in ONGC Vs. SAW Pipes Ltd.

AIR 2003 SC 2629 but in that case the parties had at the time of

entering into the agreement satisfied themselves that the damages

stipulated would be the damages which would be suffered in the

event of breach and the computing of damages being not possible.

No such case has been made out in the present case and as such the

law laid down in Fateh Chand (Supra) would apply and which had

been followed by the arbitrator. The arbitrator following the said

law held that there is breach but no loss has been established. Thus

it cannot be said that the award is contrary to the substantive law or

that the conclusion in the award was such which no reasonable

person could arrive at.

11 In view of the above and for the reason of the facts concerning

the application for condonation of delay, the petition and the

application are dismissed. No order as to costs.

RAJIV SAHAI ENDLAW (JUDGE)

September 16th, 2009 J