S.S. Sinha vs Hcl Technologies Ltd. & Anr.
2012 Latest Caselaw 6417 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI
                                     (Not reportable)
F-226
+                          OMP No. 684 of 2007

         S.S. SINHA                                    ..... Petitioner
                                  Through: Mr. Krishna Kumar with
                                  Mr. Pradeep Kumar, Advocates.

                           Versus

         HCL TECHNOLOGIES LTD & ANR             ..... Respondents
                          Through: Ms. Anita Bahri with
                          Mr. Gaurav Puri, Advocates.

          CORAM: JUSTICE S. MURALIDHAR

                             ORDER

% 01.11.2012

1. The challenge in this petition under Section 34 of the Arbitration and

Conciliation Act, 1996 ('Act') is to an impugned Award dated 5th July

2007 passed by the learned sole Arbitrator in the dispute between the

Petitioner, Mr. S.S. Sinha, and the Respondent No. 1, HCL Technologies

Limited ('HCL'). By the impugned Award, the learned Arbitrator allowed

the claims filed by the HCL in the sum of Rs. 22 lakhs together with

interest @ 8% per annum from 1st March 1999 till the date of actual

payment and rejected the counter claim filed by the Petitioner.

2. The background to the present petition is that the Petitioner was issued a

letter of appointment dated 20th September 1996 by HCL offering him a

post of President, Software Development Centre. Apart from specifying the

compensation package which worked out to Rs. 1.50 lakhs per month, the

said letter inter alia stated that the Petitioner would be covered under

"Attractive Performance Bonus Scheme of the company subject to a

maximum of Rs. 1,50,000", flexible expenses plan basket of Rs. 5.5 lakhs,

hard furnishing scheme up to Rs. 1,50,000. The Petitioner was also

covered by the Equity linked Wealth Creation Scheme in the following

terms:

"You shall be covered under Attractive Equity Linked Wealth Creation Scheme of the Company, under which you shall be provided with Housing Loan at nominal interest and Stocks sufficient to cover this amount shall be offered to you. Details of this scheme shall be communicated to you on joining."

3. It is not in dispute that on 23rd January 1997 the Petitioner received a

cheque in the sum of Rs. 22 lakhs from HCL. There is a handwritten

receipt of the Petitioner in this regard which was marked as Ex. P-2A in the

arbitral proceedings. The case of HCL was that the said amount was given

to the Petitioner as loan. This was disputed by the Petitioner. According to

him, although he did sign the loan agreement (which was marked as Ex. P-

1 in the arbitral proceedings), no person on behalf of HCL had signed it.

This was the principal dispute between the parties.

4. Another critical document is a mortgage deed dated 28th January 1997, a

copy of which was exhibited as P-2 in the arbitral proceedings. This

mortgage deed was entered into between the Petitioner's wife and HCL. In

the preamble clause of the said mortgage deed, it was noted that the

Petitioner's wife had approached the HCL requesting to lend her a sum of

Rs. 22 lakhs "on mortgage of the property described in the schedule

attached, since she is the sole and absolute owner." The said mortgage deed

was signed not only by the wife of the Petitioner but the Petitioner himself

as well as a representative of HCL.

5. The Petitioner served with HCL till 28th February 1999. Thereafter while

on the one hand HCL was asking the Petitioner to repay the loan, the

Petitioner made representations to it on 27th April 1999, 4th October 1999

and 12th January 2000 for payment of certain amounts to which he claimed

he was entitled in terms of the appointment letter dated 20th September

1996. The stand of HCL as evidenced from the email dated 14th June 1999

addressed to the Petitioner by Mr. Sujeet Bakshi was that since the

Petitioner had not served the full tenure in terms of the employment letter

dated 20th September 1996 he was not entitled to the Employees' Stock

Option Plan ('ESOP'). The Petitioner through his advocate sent a legal

notice dated 4th October 1999 calling upon HCL to make payment of Rs.

72.50 lakhs together with interest @ 18% per annum. Reminders were sent

on 12th January 2000 and 9th June 2000.

6. HCL filed Arbitration Petition No. 83 of 2000 under Section 11 of the

Act in this Court. The case of HCL was that there was a loan agreement

between the parties which fact has been disputed by the Petitioner. The

aforementioned petition was disposed of by this Court by an order dated

15th February 2002 which reads as under:

"In spite of several opportunities, Respondent has not filed reply to the instant petition through which appointment of Arbitrator is being sought for adjudicating the disputes raised therein. In view of the failure of the Respondent to file reply in spite of several opportunities, petition has to be allowed. There is no dispute as to the existence of arbitration clause in the correspondence as well as loan agreement between the parties. Petition is allowed.

Justice A.B. Rohtagi, Retd. Judge of this Court is appointed as Arbitrator. The learned Arbitrator shall fix his own fee. The parties shall appear before the learned Arbitrator on 18th March 2002. However, the Respondent shall be at liberty to prefer counter claim, if any, before the learned Arbitrator in order to adjudicate all the disputes arising from the said agreement.

Copy of this order be sent to the learned Arbitrator."

7. Before the learned Arbitrator, HCL filed its claim in May 2002. The

Petitioner filed his reply as well as counter claim on 30th July 2002. HCL

filed its affidavit by way of evidence in February 2003 and the Petitioner

filed his affidavit by way of evidence dated 14th October 2003. Long

thereafter, the Petitioner filed an additional affidavit dated 31st May 2007

enclosing a photocopy of a purported document bearing monogram of HCL

containing a handwritten note. According to the Petitioner, this was written

by Mr. Shiv Nadar, Chairman of HCL. On the basis of the said document,

the Petitioner sought the summoning of Mr. Shiv Nadar as witness in the

arbitral proceedings.

8. In the impugned Award dated 5th July 2007, the learned Arbitrator

negatived the contention of the Petitioner that the sum of Rs. 22 lakhs was

not repayable by him to HCL and that it was to be adjusted against the dues

owning to the Petitioner by HCL. The learned Arbitrator categorically held

that there was a loan transaction between the parties whereby a sum of Rs.

22 lakhs was advanced to the Petitioner on the express understanding that it

would become repayable once the Petitioner's service with HCL ceased.

The learned Arbitrator declined the prayer of the Petitioner for summoning

of Mr. Shiv Nadar as a witness in the arbitral proceedings.

9. The learned Arbitrator proceeded to hold that the Petitioner's counter

claim was barred by limitation; it was beyond the scope and purview of the

arbitration clause; that the Petitioner had failed to prove the amount of Rs.

89.23 lakhs claimed by him from HCL. The learned Arbitrator further held

that in the absence of the signature of HCL's representative, the loan

agreement was not valid and that in any event the advancing of a sum of

Rs. 22 lakhs to the Petitioner by HCL stood proved by other documents.

Accordingly, the learned Arbitrator held that the Petitioner should pay

HCL a sum of Rs. 22 lakhs together with interest @ 8% per annum from 1st

March 1999 till the date of actual payment and also pay Rs. 3 lakhs as costs

of arbitration. The Petitioner's counter claim was rejected.

10. It was first contended by Mr. Krishna Kumar, learned counsel for the

Petitioner, that the Petitioner had not conceded to the existence of the

arbitration clause between the parties as there was no such clause in the

service contract but only in the loan agreement which in any event was not

signed by HCL's representative. This Court is unable to accept the above

plea in view of the order dated 15th February 2002 passed by this Court

while appointing the sole Arbitrator where it was specifically stated that

"there is no dispute as to the existence of arbitration clause in the

correspondence as well as loan agreement between the parties." The above

order has not been challenged by the Petitioner.

11. This Court was taken through the arbitral record including the

affidavits by way of evidence, the statement of claims, reply and counter

claim. It was urged by Mr. Krishna Kumar that the learned Arbitrator

grievously erred in observing that there was a transaction of loan and that

"there is no nexus between the loan and employment benefits." Mr.

Krishna Kumar repeatedly urged that the service contract made it clear that

the Petitioner would be entitled to be "covered by the stock option plan"

offered to the Petitioner and as long as the Petitioner was not actually

provided the stock option plan of HCL the question of the Petitioner having

to repay a sum of Rs. 22 lakhs to HCL did not arise at all. According to the

Petitioner, the said sum was to be adjusted against stocks or any employee

benefit scheme owing to the Petitioner. In his counter claim, the Petitioner

quantified the amount due to him under the ESOP as Rs. 15 lakhs @ Rs.

7.5 lakhs per year for the period 1997-98, 1998-99 when he had rendered

service with HCL. Additionally, he had claimed performance bonus of Rs.

6 lakhs under profit sharing bonus option and additional payment of Rs. 50

lakhs over and above the ESOP gains for two years.

12. The scope of this Court's powers under Section 34 of the Act is limited.

The Court is not expected to re-appreciate the evidence and come to a

different conclusion only because it is possible to do so. In other words,

this Court is not exercising an appellate jurisdiction under Section 34 of the

Act. It is only expected to determine if the impugned Award suffers from

patent illegality or whether it is opposed to the public policy of India.

13. The learned Arbitrator had examined both the documents and evidence

carefully. In his cross-examination, the Petitioner admitted to having

signed the mortgage deed dated 28th January 1997 together with his wife

and that the said mortgage deed was a collateral security. When asked

whether there was any writing to show that the loan amount given as an

advance was not returned to HCL and to be adjusted against benefits owing

to him under other schemes, he replied 'there is no writing to this effect'.

14. It must be observed at this stage apart from reading the relevant

portions of the Petitioner's affidavit by way of evidence, the learned

counsel for the Petitioner was unable to show any document in terms of

which the Petitioner was not required to repay the amount of Rs. 22 lakhs.

There is also no document to show that the loan amount was to be adjusted

against other amounts owing to the Petitioner by HCL. The learned

Arbitrator was right in highlighting the preamble clause of the mortgage

deed which clearly stated that the Petitioner's wife had requested HCL to

lend a sum of Rs. 22 lakhs to him on mortgage of the property described in

the schedule. This recital further showed that a sum of Rs. 22 lakhs was

advanced as loan to the Petitioner and towards the security of which a

mortgage was created on the property standing in the name of his wife. The

conclusion of the learned Arbitrator that there was a loan transaction and

that the sum of Rs. 22 lakhs was repayable by the Petitioner to HCL cannot

be said to be suffering from any patent illegality.

15. Learned counsel for the Petitioner was also unable to show any

document which entitled the Petitioner to payments under the ESOP. The

learned Arbitrator while referring to the email written by Mr. Bakshi

observed that ESOP would be available to the Petitioner only if he served

four years. If there was any understanding to the contrary then the burden

was on the Petitioner to prove it in accordance with law. The Petitioner was

unable to do so. The relevant clause of the letter dated 20th September 1996

concerning the Equity linked Wealth Creation Scheme was repeatedly read

by learned counsel for the Petitioner to urge that there was an obligation

thereunder on HCL to issue stocks worth Rs. 7.5 lakhs to the Petitioner for

every year of service. This Court is unable to read into the said clause any

such obligation on the HCL.

16. Learned counsel for the Petitioner was critical of the learned Arbitrator

declining the prayer to summon Mr. Shiv Nadar as a witness. This Court

was also shown the handwritten note which contains a single line as under:

"one crore worth in 4 years outside housing programme in ESOP".

The said line hardly advances the case of the Petitioner that the loan

amount was not to be repaid or to be adjusted against other entitlements.

No purpose would have been served in summoning Mr. Nadar for that

purpose. This Court is unable to find any illegality in the decision of the

learned Arbitrator rejecting the Petitioner's request for summoning Mr.

Nadar as witness.

17. The learned Arbitrator has rightly drawn a distinction between the

counter claim and a set off. It is not in dispute that the counter claim was

admittedly filed on 30th July 2002 whereas the Petitioner had left the

services of HCL before 1st March 1999 itself. It was for the Petitioner to

show how his counter claim was within time. In any event even on merits,

the Petitioner was unable to prove his entitlement to the specific amounts

claimed by him by way of counter claim.

18. Finally, it is urged by Mr. Krishna Kumar that the loan was advanced to

the Petitioner with simple interest @ 2% per annum and therefore, the

learned Arbitrator ought not to have awarded HCL simple interest @ 8%

per annum. The above submission is based on the misreading of the

relevant clause which required the Petitioner to pay 2% interest on a

monthly basis. In any event the learned Arbitrator has only awarded

interest for the pre-reference period, i.e., from 1st March 1999 and not from

the date when the loan was advanced to the Petitioner. The rate of simple

interest @ 8% per annum can hardly be said to be excessive or

unreasonable. Considering the number of years over which the dispute has

been pending, award of Rs. 3 lakhs as costs of arbitration cannot be said to

be unreasonable.

19. The finding of the learned Arbitrator was based on a proper analysis of

the evidence on record. This Court is unable to find any patent illegality

vitiating the impugned Award dated 5th July 2007. The petition is

dismissed, but in the circumstances, with no order as to costs.

S. MURALIDHAR, J.

NOVEMBER 01, 2012 Rk