Delhi High Court

Pclit Solutions Pvt Ltd. vs Mtech Solutions on 31 October, 2014

$~17
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+                         O.M.P. 647/2013

%                         Judgment reserved on : 25.09.2014
                          Judgment pronounced on : 31.10.2014

       PCLIT SOLUTIONS PVT LTD.               ..... Petitioner
                     Through : Mr.Anil Sapra, Sr.Advocate
                               with Mr.Sandeep Sharma and
                               Ms.Rupali Kapoor, Advocates.
                     versus

       MTECH SOLUTIONS                             ..... Respondent
                    Through :         Mr. Avneesh Garg, Advocate.

CORAM
HON'BLE MS. JUSTICE DEEPA SHARMA

JUDGMENT

1. The petitioner herein is dealing in the business of leasing out

facilities and services to call centre industry. The respondent herein

operates a BPO (Call Centre) and is also in the business of providing

IT enabled services. Both the parties entered into a Campaigning

Services Agreement on 1.11.06 whereby the premises at Plot No.21,

Electronic City, Sector 18, Gurgaon with 166 calling seats, offices

and training rooms were taken on rent by respondents herein.

2. In the said agreement, the respondent was required to deposit

the security of USD 31800 which included USD 24,000 for security

for seats and USD 7,800 as security deposit for PSTN (telephone

calling minutes).

3. The dispute arose between the parties and the agreement was

terminated between them. This security as per the terms of CSA was

refundable without any interest on it. After the dispute arose between

the parties, the respondent herein demanded the refund of the security

amount. When the petitioner herein refused to refund the same, the

dispute was raised by the respondent herein which was referred to the

arbitrator.

4. Before the learned arbitrator, the petitioner has not disputed the

CSA with the respondent herein. However, it has also not

specifically denied the payment of the security deposit by the

respondent herein but has only taken the plea that some money was

paid by the respondent in respect of the security deposit and some

money was asked to be adjusted against the previous security deposit

and he had further raised the contention that the security deposit in

the previous agreement which the respondent herein had asked to

adjust against this agreement, were adjusted against the dues towards

the respondent herein in that earlier agreement itself.

5. The learned arbitrator on the basis of the evidences led by both

the parties, had reached to the conclusion that the respondent herein

had while paid a sum of USD 25,550 by bank via transfer, balance of

USD 5250 was adjusted against the security amount which was

already with the petitioner herein in another contract and thereafter

passed the award directing the petitioner herein to refund the said

amount of USD 31,800 to the respondent herein. The learned

arbitrator had converted the said USD 31,800 amount into rupees

taking into consideration the rate of one USD as Rs. 14.5 and thus

awarded the sum of Rs. 12,87,000/- alongwith the interest.

6. The petitioner herein also raised the contention that learned

arbitrator has wrongly interpreted the evidence on record and

considered certain contentions as an admission. It is further

contended that the finding of the learned arbitrator that there was " no

documentary evidence on the side of the Respondent" to prove the

averments made in its pleading is wrong. The finding of the learned

arbitrator that claim of the respondent was not based on any

document at all is also contrary because the onus of proving its case

was on the respondent herein. It is submitted that basic principles

have been overlooked by the learned arbitrator.

7. It is further submitted that findings of learned arbitrator that

the respondent could not take two pleas, contrary to each other, is

also against the principle of law because the respondent has the

freedom to take as many pleas as he desired and the pleas were not in

contradiction to each other but were in the form of alternative pleas

and thus both the pleas were admissible to be pleaded and could be

proved in alternative.

8. It is further submitted that the learned arbitrator has wrongly

rejected the claim of the petitioner for the services provided by him

to the respondent from 1.11.2006 till 21st November, 2006 on the

ground that there was no documentary evidence to prove that any

kind of service were provided by the petitioner herein. It is submitted

that the fact that the respondent herein had never complained to the

petitioner for not providing any service to them clearly shows that the

services had been provided to the respondent herein.

9. It is submitted that the findings of the learned arbitrator are

contrary to the legal provisions. It is further submitted that the

security deposit was not refundable on account of the respondent's

liability to pay against the services rendered to them for 20 days and

remaining amount was to be adjusted in the past and future

agreements. It is submitted that since the respondent herein had

entered into an agreement dated 21st November, 2006 with M.S.

Technocall and he was to provide services to the respondent,

therefore, an understanding had entered between the petitioner, the

respondent and M.S. Technocall according to which the security

amount was presumed to have been transferred from agreement dated

1.11.2006 to agreement dated 21.11.2006. It is prayed that award

was liable to be dismissed on these grounds.

I have heard the argument. Perused the relevant record.

10. There is no dispute to the fact that there was CSA between the

parties dated 1st November, 2006. Pursuant to that agreement, the

petitioner had leased out his property to the respondent herein for

running a BPO. Under the said agreement, the respondent herein was

to deposit USD 31,800 towards security which included USD 24,000

for security for seats and USD 7,800 as security deposit for PSTN

(telephone calling minutes). The petitioner was non-claimant and

claim was filed by respondent herein.

11. The award shows that the contention to the respondent

herein(the claimant before the arbitrator), was that the said security

amount had been duly deposited with the petitioner herein/non-

claimant.

12. The agreement stood terminated between them on account of

failure on the part of petitioner herein in providing services under the

contract and so the respondent demanded the refund of security

money which the petitioner herein refused to return.

13. After recording the evidences of the witnesses of both the

parties, the learned arbitrator had reached to the conclusion that USD

31,800 was paid towards the security deposit by the claimant to the

non-claimant i.e. the petitioner. The claim of the petitioner/non-

claimant before the arbitrator, for service charges for the period

1.11.2006 to 20.11.2006 on account of services being provided to the

respondent/claimant, was also rejected by the learned arbitrator on

the ground that the petitioner/non-claimant, failed to produce on

record any document to support its contentions and even withheld the

evidences in its possession. It, therefore, is clear that the findings of

the learned arbitrator are based on the evidences produced during the

arbitral proceedings.

14. An award under Section 34 can be challenged only on the

limited grounds mentioned therein.

Section 34(2) of the Arbitration and Conciliation Act uses the

expression 'only if' .

The relevant provision is reproduced as under:-

"Section 34 (2)- An arbitral award may be set aside by the Court only if

(a) the party making the application furnishes proof that--

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that--

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India".

15. The Supreme Court in the case titled as Delhi Development

Authority Vs. R.S. Sharma and Company, New Delhi reported in

(2008) 13 SCC 80 after considering several cases including (2006) 4

SCC 445, Hindustan Zinc Ltd. V. Friends Coal Carbonisation,(2006)

1 SCC 86, State of Rajasthan V. Nav Bharat Construction Co.,(2003)

5 SCC 705, ONGC Ltd. V. Saw Pipes Ltd.,(2002) 4 SCC 45, Northern

Railway V. Sarvesh Chopra,(2001) 4 SCC 86, Bharat Cooking Coal

Ltd V. L.K. Ahuja & Co.,(2000) 9 SCC 552, Grid Corpn. Of Orissa

Ltd V. Balasore Technical School,(2000) 8 SCC 1, Union of India V.

Popular Builders,(1999) 9 SCC 610, Ch. Ramalinga Reddy V.

Superintending Engineer,(1999) 8 SCC 122, Steel Authority of India

Ltd. V. J.C. Budharaja, (1999) 4 SCC 491, Food Corporation of

India V. Sreekanth Transport, (1997) 11 SCC 75, New India Civil

Erectors (P) Ltd. V. ONGC,1994 Supp (1) SCC 644, Renusagar

Power Co. Ltd V. General Electric Co,(1991) 4 SCC 93, Associated

Engg. Co. V. Govt. Of A.P,(1991) 1 SCC 498, Prabartak Commercial

Corpn. Ltd. V. Chief Adminstrator, Dandakaranya Project,(1988) 3

SCC 82, Continental Construction Co. Ltd. V. State of M.P,(1975) 1

SCC 289, N. Chellappan V. Kerala SEB,AIR 1960 SC 588, Alopi

Parshad and Sons Ltd. V. Union of India has enumerated the grounds

on which an arbitral award can be challenged. The relevant

paragraph is reproduced as under:-

"21. From the above decisions following principles emerge:-

(a) An award, which is

(i) contrary to substantive provisions of law; or

(ii) the provisions of the Arbitration and Conciliation Act, 1996; or

(iii) against the terms of the respective contract; or

(iv) patently illegal; or

(v) Prejudicial to the rights of the parties; is open to interference by the Court under Section 34(2) of the Act.

(b) The award could be set aside if it is contrary to:

(a) Fundamental policy of Indian law: or

(b) the interest of India; or

(c) justice or morality.

(c) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.

(d) It is open to the court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.

16. While in the above case, Supreme Court has laid down

the grounds on which the award can be challenged. In the case

titled as "Maharashtra State Electricity Board Vs. Sterlite

Industries (India) and Another, (2001) 8 SCC 482, the

Supreme Court has laid down the guidelines to be followed by

the court while dealing with an award. It has held as under:-

"...the arbitrator's award both on facts and law is final; that there is no appeal from this verdict; that the court cannot review his award and correct any mistake in his adjudication, unless the objection to the legality of the award is apparent on

the face of it."

17. The scheme of the Arbitration and Conciliation Act

clearly shows that as soon as the award is passed, it attains

finality and becomes a decree in terms of Section 35 of the

Arbitration and Conciliation Act, and the expression "An

arbitral award can be set aside only if " used in Section 34

clearly envisages that the courts are required to honour the

award and not to interfere with it, except on the grounds

enumerated above.

18. The same view is taken by the Supreme Court in the

case of Markfed Vanaspati and Allied Industries Vs. Union

of India, (2007)7SCC 679.

The relevant para 17 of the said case reads as under:-

"17. Arbitration is a mechanism or a method of resolution of disputes that unlike court takes place in private, pursuant to agreement between the parties. The parties agree to be bound by the decision rendered by a chosen arbitrator after giving hearing. The endeavour of the court should be to honour and support the award as far as possible."

Therefore, it is clear that except on the grounds as

shown above, the award cannot be challenged.

19. In the present case, the petitioner has failed to point out

any patent illegality in the award. He has also failed to show

that the award is contrary to the substantive provision of law.

It is also not shown if the award is in violation of any terms of

the contract between the parties. There is nothing on record to

show that the award is unfair or unreasonable to the extent that

it shocks the conscience of the court. The contention raised to

challenge the awards shows that challenge actually is to the

conclusion of facts by arbitration, which he has based on

evidences, recorded by him during proceedings. Findings of

facts are under challenge.

20. His first challenge is that arbitrator has wrongly

concluded that security of Rs.31800 was paid by respondent.

The Arbitrator in its award has based its finding on the

evidences on record and finding is duly supported by the

reasoning given by arbitrator while reaching to this conclusion.

21. Even otherwise in the petition itself, the petitioner has

contended that there was a previous CSA dated 6.9.2006

between the parties and while entering into the CSA dated

1.11.2006, the respondent herein had made a request to adjust

the security deposit under the previous CSA dated 6.9.2006.

22. From the evidences produced before arbitrator, it is

apparent that while paying the security of USD 31,800, the

claimant i.e. the respondent herein had sent an amount of USD

25,550 via bank transfer and asked the petitioner herein to

adjust USD 5250, given as a security in the previous

agreement, towards this agreement and the learned arbitrator

had reached to this conclusion that the said security amount of

previous CSA between the parties had been considered as a

security against the current agreement dated 1.11.2006 and the

balance amount was paid on 9th November, 2006 was paid by

bank transfer to the petitioner. The findings are based on

cogent evidences on record. Moreover, it was only USD 5250

from the previous contract dated 06.09.2006, which was

adjusted. The petitioner herein has not disputed the fact that

there was a security given by respondent herein to him in the

previous CSA dated 06.09.2006. The contention was that it

was adjusted against certain dues payable by respondent herein

qua said CSA dated 06.09.2006 and the arbitrator on the basis

of evidences before him held that the petitioner herein had

failed to prove this contention . Therefore, conclusion of the

learned arbitrator of the fact that amount USD 31,800 was paid

towards the security to the petitioner in respect of CSA dated

1.11.2006 cannot be faulted. Moreover, it is the finding of the

fact on the basis of the evidences on the record, which

certainly cannot be ground of challenge under Section 34 of

the Act.

23. Similarly, all the other contentions of the respondents

have been duly considered by the learned arbitrator and on the

basis of the evidences led by the parties, the learned arbitrator

has reached to its conclusion.

24. It is the settled principle of law that this court does not

under Section 34 of the Act exercises the jurisdiction of the

appellant court. It does not sit in appeal. It is not required to

re-appreciate the findings of the learned arbitrator and to judge

whether on the basis of the evidences led before the learned

arbitrator, the arbitrator has reached to the correct conclusion

or not.

25. The same view is taken by the Supreme Court in the

case titled as P.R. Shah, Shares and Stock Brokers Pvt. Ltd

Vs. B.H.H. Securities Private Limited and Ors. reported in

(2012) 1 Supreme Court Cases 594.

26. The relevant paragraph is reproduced as under:-

"From the above decisions following principles emerge:-

            (a)    An award, which is
            (i)    contrary to substantive provisions of law; or