Delhi High Court
M/S Saumya Mining Ltd. & Ors. vs M/S S.E. Investments Ltd. on 10 July, 2015
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP No. 308/2015
% 10th July, 2015
M/S SAUMYA MINING LTD. & ORS. ..... Petitioners
Through: Mr. Rudrajyoti Nath Ray, Adv. and
Mr. Amit Bikram Das, Adv.
versus
M/S S.E. INVESTMENTS LTD. ..... Respondent
Through: Mr. P.Nagesh, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This is a petition under Section 34 of the Arbitration and Conciliation
Act, 1996 (in short 'the Act') impugning the Award dated 1.12.2014.
2. I need not go into the merits of the matter in detail inasmuch as, the
Award which is challenged is a consent Award and against a consent Award
no objections can be filed under Section 34 of the Act.
3. The facts of the case are that the respondent herein had given a loan to
the petitioner no.1 and in such transaction the other petitioners stood as
OMP No. 308/2015 Page 1 of 7
guarantors. The loan granted was for a sum of Rs.5 crores and on various
defaults having occurred, respondent for seeking payment served a legal
notice upon the petitioners dated 29.1.2014. Thereafter on account of failure
of the petitioners to pay the amount due, arbitration was invoked and a
statement of claim was filed before the Arbitrator for a sum of
Rs.3,72,57,889/- alongwith future interest thereon.
4. Petitioners herein, respondents in the arbitration proceedings,
duly appeared and initially filed an application for the arbitrator to recuse
himself. Petitioners herein filed this application under Section 13 of the Act
before the Arbitrator on 30.7.2014. Thereafter the next date was fixed on
11.8.2014 and a further date was then fixed for 27.8.2014. Then again
another date of 8.9.2014 was fixed. After arguments on this application
under Section 13 of the Act, the Arbitral Tribunal vide its order dated
8.10.2014 dismissed the application under Section 13 of the Act.
5. On 18.10.2014, petitioners herein filed an application
requesting the Arbitral Tribunal to facilitate the initiation of settlement
process and accordingly the Arbitral Tribunal fixed 7.11.2014 for the said
purpose and which hearing was adjourned to 13.11.2014. On 13.11.2014, a
settlement was arrived at whereby with respect to the claim amount of
OMP No. 308/2015 Page 2 of 7
Rs.3.72 crores alongwith future interest as stated above, it was agreed that
the petitioners herein were only to pay a sum of Rs.2.4 crores in two
installments in the months of January and February of this year viz 2015. In
view of the agreement the petitioners herein thus were the beneficiaries of
reduction of a substantial amount from the claimed amount. This order
dated 13.11.2014 passed by the Arbitrator reads as under:-
"ORDER
13.11.2014, 2.15 PM
Mr. Satish Jadon, Company Secretary, Appeared on behalf
of Claimant.
Mr. Amit Bikram Das appeared on behalf of all
Respondents.
Today both parties discussed a settlement.
The settlement figure arrived at between both parties is Rs.2.40
Crores.
Payment Schedule will be as follows:-
First Installment of the Settled Figure amounting to Rs.1.20
Crores shall be paid on or before 01.01.2015.
Second & Final installment of the Settled Figure amounting to
Rs.1.20 Crores shall be paid on or before 15.02.2015.
If Respondents fail to adhere to the Payment Schedule, the
original claim shall stand allowed.
Both the parties are directed to pay the requisite arbitration fees
on the next date of hearing.
OMP No. 308/2015 Page 3 of 7
The Consent Award will be passed on the next date of hearing
28.11.2014 at 11.00 A.M. The venue shall remain the same."
6. It is not disputed that representative of the respondent herein
and the petitioners' advocate duly signed this order and consequently this
order is an agreement in writing signed between the parties satisfying the
requirements of Order XXIII Rule 3 of the Code of Civil Procedure, 1908
(CPC).
7. Pursuant to the order dated 13.11.2014, the arbitrator fixed the
date of 28.11.2014 as a date for passing of the consent Award and also for
payment of his fees. On 28.11.2014, the matter was reserved and thereafter
the consent Award/the impugned Award dated 1.12.2014 was passed by the
Arbitrator, and which is challenged in these proceedings.
8. The contention of the petitioners is that the consent order
passed on 13.11.2014 reproduced above, was only a talk and a proposal for
settlement and the talks/settlement did not fructify into an
agreement/settlement. It is argued that petitioners after the order was passed
by the Arbitrator on 13.11.2014 wrote to the arbitrator an email dated
28.11.2014 contending that there was only a proposal as recorded in the
order of the Arbitrator dated 13.11.2014 and that there was no final
OMP No. 308/2015 Page 4 of 7
agreement between the parties, and hence the order dated 13.11.2014 should
not be taken as a consent order and it should only be taken as a proposal.
9. Before this Court, counsel for the petitioners has very
vehemently argued relying upon the email dated 28.11.2014 that the
petitioners' consent has not been obtained to the order dated 13.11.2014 and
nor is the order dated 13.11.2014 an agreement inasmuch as the same was
only a proposal, and so clearly stated by the petitioners in the email dated
28.11.2014.
10. I am unable to agree with the arguments urged on behalf of the
petitioners, inasmuch as, there is no doubt whatsoever as to the language of
the order passed by the Arbitrator on 13.11.2014 and which language clearly
shows that there is no proposal but a final agreement between the parties. It
is also not in issue that this order of the Arbitrator dated 13.11.2014 was
signed by both the parties. And, as already stated above, petitioners got a
substantial reduction in the total amount payable whereby the claim amount
of Rs.3.72 crores alongwith future interest was got settled only at a sum of
Rs.2.4 crores i.e the claim amount was reduced by over Rs.1.4 crores.
Obviously, petitioners, after the settlement, have turned dishonest and are
wanting to wriggle out of the settlement as recorded in the order dated
OMP No. 308/2015 Page 5 of 7
13.11.2014. Once there is an agreement and settlement, merely because one
of the party wants to back out of the same by stating that the settlement was
not a settlement but only a proposal, the same cannot be allowed to be done,
inasmuch as, a settlement is a contract and a contract cannot be unilaterally
avoided. Any endeavor to unilaterally avoid the settlement does not mean
that there is no settlement but that only means that one of the parties wants
to breach the agreement. Therefore, endeavor of the petitioners in seeking to
back out of its agreement and refusing to pay the amount to the respondent is
impermissible in law.
11. At this stage, I may refer to Section 96 (3) of the CPC and
which reads as under:-
"96. Appeal from original decree.--(1) xxx
(2) xxx xxx xxx
(3) No appeal shall lie from a decree passed by the Court
with the consent of parties."
12. As per this provision, no appeal lies against a judgment which
is a consent judgment and therefore on similar principles once there is a
consent Award, objections cannot be filed against such an Award. The
rationale of disallowing a party to challenge a consent order is that a
challenge is only to an order which is contested and against which a party
OMP No. 308/2015 Page 6 of 7
would have grievance, and to a consent order or an Award there cannot be
any grievance because the same is passed as per the consent of the parties.
Hence, the objections filed under Section 34 of the Act are clearly
misconceived.
13. I may note that the provision of Section 30 of the Act envisages
and permits settlement during the arbitration proceedings.
14. In view of the above, the petition is dismissed. No costs.
JULY 10, 2015 VALMIKI J. MEHTA, J.
ib
