Pioneer Publicity Corporation ... vs Delhi Transport Corporation
2010 Latest Caselaw 117 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+     FAO(OS) 14/2010


      PIONEER PUBLICITY CORPORATION PVT. LTD.        ..... Appellant
                      Through: Mr. Ramesh Kumar, Adv.


                  versus


      DELHI TRANSPORT CORPORATION                       ..... Respondent
                    Through: None


       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW


                  ORDER

% 12.01.2010

This appeal under Section 37 of the Arbitration Act, 1996 has

been preferred against the order dated 14th October, 2009 of the

learned single Judge dismissing in limine the petition preferred by the

appellant herein under Section 34 of the Arbitration Act, 1996. The

appellant had preferred the said petition with respect to the arbitration

award dated 30th July, 2009 whereby the claims No.1 and 3 of the

appellant were rejected and only the claim No.2 was allowed.

2. The respondent DTC had, vide agreement dated 24th November,

2005, awarded to the appellant rights for display of advertisement

boards on the Bus Queue Shelters (BQSs) and Time Keeping Booths

falling in the Najafgarh Zone for a period of three years from 28th

November, 2005 to 27th November, 2008. Disputes and differences

having arisen between the parties with respect to/arising out of the

said agreement were in accordance with the arbitration clause in the

agreement referred to arbitration.

3. Claim No.1 of the appellant, which has been dismissed by the

arbitral tribunal and objections whereagainst have been dismissed by

the learned single Judge, was for refund of Rs.54,06,324/- paid by the

appellant to the respondent DTC with respect to 49 BQSs in terms of

the said agreement. It was the plea of the appellant that after award

of the contract, it was realized that the said 49 BQSs had no angles

and were absolutely unfit for advertisement purposes. It was the case

of the respondent DTC that the appellant was not entitled to any

rebate in the licence fee with respect to the said 49 BQSs since the

BQSs were allotted to the appellant on „as is where is‟ basis.

4. The arbitrator accepted the said reasoning of the respondent

DTC and rejected the claim. It was further held that the agreement

further provided that no relief whatsoever would be permissible to the

appellant on account of any damaged BQS during the entire period of

the contract; it was held that the appellant having signed the contract

fully aware of the said term could not claim refund for the licence fee

paid with respect to the damaged BQS. The arbitrator further held that

the appellant, save for writing letters in this regard to the respondent

DTC, did not take any steps to make the said BQSs usable. The

arbitrator also negated the plea of the appellant of the agreement

being between unequals. It was held that the contract was of a

commercial nature, granted on the basis of an open tender floated by

the respondent DTC and in which itself it was specified that the BQSs

in the Najafgarh zone were being offered on „as is where is‟ basis; that

the appellant did not object to the clauses aforesaid in the agreement

during the tenure of the contract and raised the said point only while

filing the statement of claim.

5. Claim No.2 of the appellant before the arbitral tribunal was for

refund of the amount paid by the appellant to the respondent towards

repair and maintenance of the BQSs. The arbitrator found that under

the agreement, the appellant besides the licence fee for the BQSs was

also to pay an amount towards repair and maintenance of the BQSs;

that not a penny of the said amount received from the appellant was

spent by the respondent DTC on the aforesaid 49 BQSs to make them

fit for display of advertisement boards inspite of the repeated demands

of the appellant; the stand taken by the respondent DTC of the

appellant being responsible for providing angles and supporting

structure was negated and accordingly the claim for refund of the

amount paid towards repair and maintenance charges of the said 49

BQSs allowed.

6. Claim No.3 of the appellant before the arbitrator was on account

of the loss of earnings due to non-display of advertisements on the

aforesaid 49 BQSs. The arbitrator found the appellant to have not led

any evidence of having orders in hand which could not be executed

because the aforesaid 49 BQSs being not fit for display of boards; on

the contrary, it was held that in the survey conducted by the

respondent DTC on 29th November, 2006, 12 out of the 49 BQSs were

found to be having advertisement boards. The arbitrator further held

that the appellant had not taken any steps for mitigation of the losses

and accordingly the claim was disallowed.

7. The learned single Judge dismissed the petition under Section 34

of the Act with respect to the aforesaid arbitration award for the reason

of the same not disclosing any ground under Section 34 of the

Arbitration Act. The counsel for the appellant had contended before

the learned single Judge that the award disallowing the Claim No.1 and

allowing the Claim No.2 was contradictory. The learned single Judge

held the two claims to be entirely different. It was held that the

reasoning given with respect to the two claims by the arbitrator was

also different.

8. The contention of the counsel for the appellant before this Court

also is of the award on the claims No.1 and 2 (supra) being

contradictory. It is contended that the arbitrator having allowed refund

of the amount paid towards maintenance and repair charges of the 49

BQSs ought to have also allowed refund of the licence fee with respect

to the said BQSs.

9. We do not agree. There is no inconsistency in the two parts of

the award, even if the same was to constitute a ground for interference

under Section 34 of the Act, and on which we are not expressing any

view in this order. The arbitrator has clearly held that while the licence

fee for the BQSs was payable irrespective of the condition of the BQSs

owing to the BQSs having been offered on „as is where is‟ basis and

owing to it being a term of the agreement that no representation

would be admitted for the reason of any damage to the BQSs. On the

contrary, it has been held that the repair and maintenance charges

were levied by the respondent DTC for repairing and maintaining the

shelters and since the respondent DTC had failed to repair and

maintain the aforesaid 49 BQSs, the appellant had become entitled to

refund thereof. It cannot thus be said that merely because the repair

and maintenance charges had been ordered to be refunded, the

appellant became entitled to refund of the licence fee also. The terms

and conditions for payment under the two heads were different. The

view taken by the arbitrator is a reasonably plausible view and no

perversity can be found in the award nor can it be said that the award

is contrary to the public policy of India. The learned single Judge is

right in holding that no ground for interference under Section 34 of the

Act has been made out.

10. Arbitration is intended to be a faster and less expensive

alternative to the courts. If this is one‟s motivation and expectation,

then the finality of the arbitral award is very important. The remedy

provided in Section 34 against an award is in no sense an appeal. The

legislative intent in Section 34 was to make the result of the annulment

procedure prescribed therein potentially different from that in an

appeal. In appeal, the decision under review not only may be

confirmed, but may also be modified. In annulment, on the other

hand, the decision under review only may be invalidated in whole or in

part or be left to stand if the plea for annulment is rejected.

Annulment operates to negate a decision, in whole or in part, thereby

depriving the portion negated of legal force and returning the parties,

as to that portion, to their original litigating positions. Annulment can

void, while appeal can modify. Section 34 is found to provide for

annulment only on the grounds affecting legitimacy of the process of

decision as distinct from substantive correctness of the contents of the

decision. A remedy of appeal focuses upon both legitimacy of the

process of decision and the substantive correctness of the decision.

Annulment, in the case of arbitration, focuses not on the correctness of

decision but rather more narrowly considers whether, regardless of

errors in application of law or determination of facts, the decision

resulted from a legitimate process.

11. In the case of arbitration, the parties through their agreement

create an entirely different situation because regardless of how

complex or simple a dispute resolution mechanism they create, they

almost always agree that the resultant award will be final and binding

upon them. In other words, regardless of whether there are errors of

application of law or ascertainment of fact, the parties agree that the

award will be regarded as substantively correct. Yet, although the

content of the award is thus final, parties may still challenge the

legitimacy of the decision-making process leading to the award. In

essence, parties are always free to argue that they are not bound by a

given "award" because what was labeled an award is the result of an

illegitimate process of decision.

12. This is the core of the notion of annulment in arbitration. In a

sense, annulment is all that doctrinally survives the parties‟ agreement

to regard the award as final and binding. Given the agreement of the

parties, annulment requires a challenge to the legitimacy of the

process of decision, rather than the substantive correctness of the

award.

13. There is accordingly no merit in the appeal. The same is

dismissed.

CHIEF JUSTICE

RAJIV SAHAI ENDLAW, J JANUARY 12, 2010 pk