Delhi High Court
M/S Bharat Sanchar Nigam Limited vs M/S Exnxt Software Private ... on 31 July, 2017
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 31.07.2017
+ O.M.P. (COMM) 337/2016
M/S BHARAT SANCHAR NIGAM LIMITED ..... Petitioner
Versus
M/S EXNXT SOFTWARE PRIVATE LIMITED ..... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Dinesh Agnani, Senior Advocate with Mr L.
B. Rai and Mr Mohit Kumar Sharma.
For the Respondent: Mr Sameer Jain, Ms Anu Sura and Mr Mark
Wright.
CORAM
HON'BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
IA No.8714/2016
1. Exemption is allowed, subject to all just exceptions.
2. The application stands disposed of.
O.M.P. (COMM) 337/2016
3. Bharat Sanchar Nigam Limited (hereafter „BSNL‟) has filed the
present petition under Section 34 of the Arbitration and Conciliation Act,
1996 (hereafter „the Act‟) seeking to set aside the award dated 15.03.2016
(hereafter „the impugned award‟) passed by the sole arbitrator. The
impugned award was rendered in the context of certain disputes raised by
the respondent, EXNXT Software Private Limited (hereafter „EXNXT‟), in
connection with an agreement dated 24.01.2013 (hereafter 'the Agreement')
entered into between the parties.
4. BSNL entered into the Agreement with EXNXT to provide „Mobile
TV to Subscribers of BSNL and TV Content/Services for PC/Laptop‟ in the
East, West, North and South Zones of BSNL‟s network. The Agreement
was valid for a period of fourteen months from the date of signing of the
Agreement.
5. In terms of the Agreement, EXNXT was required to submit a bank
guarantee of ₹15lacs with a validity period of 20 months within 15 days of
signing of the Agreement. Whilst, BSNL claims that the said guarantee
was submitted on 22.02.2013, EXNXT claims to have submitted the same
on 19.02.2013. Clause 9.7 of the Agreement entitled BSNL to terminate
the Agreement and encash the aforesaid bank guarantee on EXNXT‟s
failure to generate top line revenue of ₹1 crore during the validity of the
Agreement.
6. It is BSNL‟s stand that EXNXT failed to generate the requisite
revenue for numerous delays on EXNXT's part in acting towards the
execution of the agreement for each respective zone. EXNXT disputes the
same and contends that BSNL could not provide access and availability of
services to the subscribers via its portals and subsequently failed to
adequately promote the services which led to failure in generation of
revenue as envisaged in the Agreement.
7. EXNXT continued to provide services under the Agreement even
after its expiry in March 2014. Thereafter, BSNL invoked the bank
guarantee, allegedly, without issuing any notice or intimation to EXNXT.
This led EXNXT to file a petition under Section 9 of the Act, being OMP
no.1154/2014, in this Court for seeking an injunction to restrain BSNL
from encashing the bank guarantee. By order dated 10.10.2014, this Court
directed BSNL to deposit the amount encashed with the Registrar General
of this Court.
8. In view of the disputes, EXNXT invoked the arbitration clause and
the sole arbitrator was appointed by a letter dated 29.10.2014.
9. EXNXT filed its statement of claims inter alia praying as under:-
"1. Pass an order directing Respondent No. 1 to pay an
sum of Rs. 7,89,22,000/- for the expenses incurred by
the Claimant while performing his obligations under
the contract along with an interest of 24%.
2. Pass an order directing Respondent No. 1 to pay a
sum of Rupees 15 Lakhs for the illegal invocation of
the Bank Guarantee on their part along with an
interest of 24%."
10. On the other hand, BSNL claimed a sum of ₹28,78,00,000/- as
losses suffered by it for breach on part of EXNXT.
11. On consideration of the pleadings filed by the parties, the arbitral
tribunal framed the following issues:-
"l) Whether BSNL provided all approvals and access etc
on time for the claimant to be able to launch the
services in all zones as per schedule? OPC
2) Whether non- recovery of 1 crore minimum revenue
was due to lapse on part of claimant? OPR
3) Whether the claimant, based on representations of
BSNL, incurred various costs in providing services to
BSNL and is liable for damages? OPC
4) Whether the claimant is in breach of the terms of the
contract/agreement and has achieved the top line
revenue of R. 1 crore as per the contract/ agreement
dated 24.01.2013? OPR
5) Whether the agreement/ contract dated 24.01.2013
provides for any reciprocal obligation or duty on part
of the respondent? OPC
6) Whether the respondent is liable to the counter-claim
owing to the loss incurred by the respondent due to
breach of the claimant? OPR"
12. On considering clause no.5 of the Agreement, the arbitral tribunal
observed that EXNXT‟s obligation of providing services was contingent on
BSNL providing the necessary network connectivity. The arbitral tribunal
examined the e-mails exchanged between the parties and concluded that
EXNXT was ready to commercially launch the Mobile TV services but
was only held back by BSNL‟s failure to provide feedback on the test
launch link. The implementation and integration of services were also
inordinately delayed by BSNL‟s laxity. The arbitral tribunal further
observed that the e-mails placed on record made it evident that at post-
implementation stage too, BSNL continued to stymie the working of
services as (i) BSNL did not initiate technical billing and integration
parallel, which was a pre-requisite to launch the services; and (ii) BSNL
delayed the sharing of „billable MIS‟, which prevented EXNXT from
knowing the billing status of the services. In view of the above, the arbitral
tribunal held that BSNL failed to provide the necessary approvals and
access on time, for EXNXT to be able to launch the services as per
schedule. Accordingly, issue nos. 1, 3 and 5 (quoted above) as framed by
the arbitral tribunal, were decided in favour of EXNXT.
13. Insofar as BSNL's claim that EXNXT was in breach of the
Agreement and its counter claim were concerned, the arbitral tribunal
observed that no documents were placed on record to indicate that BSNL
had made any complaints in the past to EXNXT in respect of any delay.
Further, the set of e-mails, statement of revenue and the letter of EXNXT
relied upon by BSNL also failed to establish that there was any negligence
on EXNXT‟s part to launch services. Although, perusal of the statement of
revenue made it evident that EXNXT was unsuccessful in generating top
line revenue of ₹1 crore but the arbitral tribunal was of the view that
EXNXT was not responsible for such failure. Accordingly, issue nos. 2 and
6 (quoted above) were also decided in favour of EXNXT. In view of the
above findings, the arbitral tribunal did not accept BSNL‟s assertion that
the losses suffered by it were attributable to breach of Agreement on
EXNXT‟s part and therefore, rejected BSNL‟s counter claim.
14. Further, the arbitral tribunal proceeded to reject EXNXT‟s claims for
bandwidth charges, hardware, software, dedicated streaming server
customization charges, content adaption, porting and testing as per formats
required by BSNL, dedicated support/ one time billing integration and
change requests charges, development of mobile application for android
and one time integration charges. However, the arbitral tribunal awarded a
total sum of ₹2.8 crores for claims raised towards expenses incurred on live
TV content per channel for subscription, live TV content for free services
and live TV content for data STV, computed at 50% of such expenses
(being the revenue sharing ratio agreed under the Agreement). In addition,
the arbitral tribunal also held that EXNXT is entitled to the amount
recovered by encashment of the bank guarantee (which was deposited with
the Registrar General of this Court) and, accordingly, requested the
Registrar to release the bank guarantee amount of ₹15,00,000/- in favour of
EXNXT.
Submissions
15. Mr Agnani, learned Senior Counsel appearing for BSNL assailed the
impugned award on the solitary ground that the finding of the arbitral
tribunal that BSNL was responsible for the delays was perverse. He
submitted that the arbitral tribunal had based its finding on various e-mails,
which could not possibly lead to any such inference. He referred to the
decision of the Supreme Court in the case of Associate Builders v. Delhi
Development Authority: (2015) 3 SCC 49 and on the strength of the
aforesaid judgment, submitted that findings of the arbitral tribunal are
perverse and wholly unsustainable and thus amenable to challenge under
Section 34 of the Act.
16. Mr Jain, learned counsel appearing on behalf of EXNXT raised a
preliminary objection as to the maintainability of the present petition. He
submitted that the petition was filed on 20.07.2016 without any application
for condonation of delay and, therefore, was beyond the period as specified
under Section 34(3) of the Act. He submitted that although the petition
was purported to have been filed on 02.07.2016, the same could not have
been considered as a petition in the eyes of law as it had fundamental
defects. He further submitted that since the defects were not removed
within a period of seven days as provided under Rule 5 of Part A(a) of
Chapter I of Volume 5 of the Delhi High Court Rules, the re-filing of the
petition would necessarily have to be considered as a fresh institution and
thus, the date of filing of the present petition was rightly indicated as
20.07.2016, which was admittedly beyond the period specified under
Section 34(3) of the Act.
17. Mr Jain further submitted that the arbitral tribunal had taken a
holistic view after considering the pleadings of the parties as well as the e-
mails placed on record. He further submitted that extensive submissions
were advanced before the arbitral tribunal and although no oral evidence
was led before the arbitral tribunal, the arbitral tribunal had considered the
pleadings as well as the e-mails to draw conclusions. He submitted that the
arbitral tribunal was the final adjudicating authority regarding the quality
and quantity of evidence and it was not open for this Court to re-appreciate
the material on record, while examining the conclusion drawn by the
arbitral tribunal.
18. Mr Jain did not contest that the e-mails referred to by the arbitral
tribunal, read in isolation, could not lead to the conclusion drawn by it. He,
however, sought to valiantly defend the impugned award on the ground
that the pleadings of the parties read with the e-mails provided sufficient
material for the arbitral tribunal to draw the conclusions that it had. He
further submitted that even if the award was considered as non-speaking, it,
nonetheless, would be binding on the parties and could not be challenged.
He relied on the decision in the case of Markfed Vanaspati & Allied
Industries v. Union of India: (2007) 7 SCC 679 in support of his
contention. He further submitted that BSNL was responsible for non-
production of the relevant record and thus, could not challenge the
impugned award on the grounds of lack of reasons since BSNL was itself
responsible for the same. He relied on the decision of the Supreme Court
in Union of India v. Harbans Singh Tuli and Sons Building Private
Limited: (2010) 13 SCC 252 in support of his contention.
Reasoning and conclusion
19. The first and foremost issue to be examined is whether the present
petition is beyond the period of limitation as prescribed under Section
34(3) of the Act and whether the delay, if any, can be condoned by this
Court.
20. In view of the preliminary objection raised by Mr Jain, this Court
had independently sought verification from the Registry and it was
confirmed that a duly signed petition supported by an affidavit was filed on
02.07.2016.
21. The learned counsel for the BSNL had also filed an additional
affidavit affirming that the Registry had pointed out some defects on
05.07.2016 and had reverted the petition for curing the same. The defects
were thereafter cured and the petition was re-filed on 22.07.2016.
22. It is seen that the impugned award is dated 15.03.2016 and the three
months period as specified under Section 34(3) of the Act for filing an
application for setting aside the award expired on 14.06.2016. However,
this Court was closed for vacations till 02.07.2016. This Court had issued a
notification dated 01.06.2016, which expressly provided that the period of
limitation would not run during the vacation period for the purposes of
institution of civil and criminal cases. It was also notified that suits,
appeals, applications or other proceedings, which are to be filed on re-
opening day could be filed from 27.06.2016 onwards. Thus, indisputably,
BSNL could have filed the present petition on 27.06.2016 (which is prior
to re-opening of the Court on 02.07.2016). The language of Section 34(3)
of the Act makes it amply clear that a delay in filing of the application
within the specified period could also be entertained if filed within a period
of 30 days thereafter, provided the Court is satisfied that the applicant "was
prevented by sufficient cause from making the application". However, in
view of the notification clearly stating that the Court would re-open on
02.07.2016, BSNL was well within its right to file the petition immediately
on re-opening of the Court; which it did. It is, thus, apparent that there was
no delay in filing the petition. The petition was returned for removing
defects and was re-filed after curing the same.
23. At this stage, it is necessary to refer to Rule 5 of Part A(a) of
Chapter I of Volume 5 of the Delhi High Court Rules, which reads as
under:-
"5. Amendment-(1) The Deputy Registrar Assistant/
Registrar, In-charge of the Filing counter, may specify the
objections (a copy of which will be kept for the Court Record)
and return for amendment and re-filing within a time not
exceeding 7 days at a time and 30 days in the aggregate to be
fixed by him, any memorandum of appeal, for the reason
specified in Order XLI, Rule 3, Civil Procedure Code.
(2) If the memorandum of appeal is not taken back, for
amendment within the time allowed by the Deputy Registrar/
Assistant Registrar, in charge of the Filing Counter under sub-
rule(1), it shall be registered and listed before the Court for its
dismissal for non-prosecution.
(3) If the memorandum of appeal is filed beyond the time
allowed by the Deputy Registrar/ Assistant Registrar, in
charge of the Filing Counter, under sub-rule(1) it shall be
considered as fresh institution.
Explanation: The period of seven days or thirty days
mentioned above shall commence from the date, the
objections are put on the notice board.
Note: The provisions contained in Rule 5(1), 5(2) and 5(3)
shall mutatis mutandis apply to all matters, whether civil or
criminal."
24. As is apparent from the above, the Deputy Registrar/Assistant
Registrar may return memorandum of appeal for amendment and re-filing
the same within a time not exceeding 7 days at a time and 30 days in the
aggregate to be fixed by him for any reason specified in Order XLI, Rule 3
of the Code of Civil Procedure, 1908. The note to the aforesaid Rules
clearly specifies that the provisions of Rule 5 would mutatis mutandis
apply to all matters, whether civil or criminal. In terms of Rule 5(3), if a
memorandum of appeal is filed beyond the prescribed time, it shall be
considered as fresh institution. In the present case, the petition has been
accepted by the Deputy Registrar as it was filed within the period of 30
days. Since no objection as to delay in re-filing was raised by the Deputy
Registrar/Assistant Registrar, In-charge of filing counter, it has to be
inferred that time for re-filing had been extended (which was within the
outer limit of 30 days). Thus, this Court is not persuaded to accept that the
present petition ought to be considered as a fresh institution.
25. In any view of the matter, even if the petition was filed beyond the
period of time specified by the Deputy Registrar/Assistant Registrar, In-
charge of filing counter, the petition would, nonetheless, for the purposes
of Section 34(3) of the Act has to be considered as a re-filing and not as an
original filing. This is the authoritative view of the Supreme Court in
Northern Railway v. M/s. Pioneer Publicity Corp. Pvt. Ltd.: 2016 SCC
OnLine SC 1583, which arose from a decision of this Court declining to
condone a period of 65 days in re-filing objections under Section 34 of the
Act. In that case, the award sought to be challenged was delivered on
29.10.2012 and the objections were filed within the period prescribed under
Section 34(3) of the Act. The petition was returned under objections on
23.01.2013 and seven days time was granted to remove objections. The
petition was finally re-filed on 21.03.2013 which was clearly beyond the
time granted by the Deputy Registrar for removal of objections. This Court
refused to condone the delay and this led the appellant (Northern Railways)
to approach the Supreme Court. The respondent therein referred to Rule
5(3) of the Delhi High Court Rules and contended that since the petition
was re-filed beyond the period granted by the Deputy Registrar, its re-filing
had to be considered as a fresh institution and such institution was beyond
the period specified under Section 34(3) of the Act. This is identical to the
plea urged by EXNXT to oppose the maintainability of the present petition.
26. The Supreme Court rejected the aforesaid contention and held that
Section 34(3) of the Act "has no application in re-filing the petition but
only applies to the initial filing of the objections under Section 34 of the
Act". The Court further held that if Rule 5(3) of the Delhi High Court
Rules is strictly applied, "it would mean that any re-filing beyond 7 days
would be a fresh institution. However, it is a matter of record that 5
extensions were given beyond 7 days. Undoubtedly, at the end of the
extensions, it would amount to re-filing".
27. In view of the aforesaid decision of the Supreme Court, EXNXT's
contention that the petition was filed beyond the period as specified under
Section 34(3) of the Act, must be rejected. It is also relevant to mention
that in an earlier decision of the Division Bench of this Court in Delhi
Development Authority v. Durga Construction Co.: (2013) 139 DRJ 133,
this Court had considered the question whether delay in re-filing could be
condoned if the cumulative period exceeded the specified period of three
months plus 30 days, from the receipt of the award. This Court had held
that if the petition was filed within the period as specified under Section
34(3) of the Act, this Court would retain the jurisdiction to condone the
delay in re-filing notwithstanding that the cumulative delay in filing and re-
filing exceeded the period specified under Section 34(3) of the Act.
However, this Court had also observed that a liberal view in condoning the
delay in re-filing would not be warranted given the legislative intent in
Section 34(3) of the Act.
28. In the present case, the petition, as initially filed, had defects but was
not incompetent as it was signed and supported by an affidavit. The
petition was re-filed within the outer limit of thirty days and thus the
petition cannot be rejected as being beyond the period specified in Section
34(3) of the Act.
29. The next issue to be examined is whether the impugned award to the
extent that it allows EXNXT‟s claims is liable to be set aside as being
perverse. The arbitral tribunal had examined the set of e-mails exchanged
between the parties on 27.08.2013 and 05.09.2013 and concluded that the
said documents evidenced that EXNXT was ready to initiate commercial
launch of the Mobile TV services and the matter was delayed on account of
BSNL's failure to provide feedback on the test launch link. Similarly, the
arbitral tribunal had examined another set of e-mails exchanged during the
period of 01.06.2013 to 11.06.2013 and concluded that the implementation
and integration of services were inordinately delayed by BSNL's laxity.
The relevant extract of the impugned award is set out below:-
"Documents marked as Annexure P-4 are a set of emails
exchanged between the parties on 27.08.2013 and 05.09.2013.
From these documents, it is quite evident that the Claimant
was ready to initiate the commercial launch of the Mobile-TV
services and was only delayed by the Respondent's failure to
provide feedback on the test launch link. From the bare
perusal of these emails, it is further evident that the Claimant
had attempted to follow-up on the required feedback and was
dealt with in an abrupt and uncooperative manner by the
Respondent.
Documents marked as Annexure P-5 are a set of emails
exchanged between the parties during the period from
01.06.2015 to 11.06.2015. A perusal of the documents clearly
reveals the Respondent's laxity in attaching the requisite
banner and link for the Mobile-TV services on their BSNL
Live Portal. From this document, it is clearly evident that the
implementation and integration of the services were
inordinately delayed by the respondent's laxity."
30. Annexure P-4 as referred to by the arbitral tribunal consists of four
e-mails. The first email dated 27.08.2013 was sent by Vikas Lacca of
BSNL to EXNXT and reads as under:-
"Subject: testing and launch
Ur service are being chkd. Will Give Launch Feedback soon.
Pls be patient."
31. The other three emails, all dated 05.09.2013, are set out below:-
(i) E-mail dated 05.09.2013 at 02.17 PM written by Ashish from
EXNXT to Vikas Lacca of (VAS) BSNL :-
"Will request to please let us know your feedback so that we
can go live by this weekend.
Your help and support is required to Launch ASAP basis."
(ii) E-mail dated 05.09.2013 at 04:14 PM written by Vikas Lacca of
(VAS) BSNL to Ashish of EXNXT :-
"Subject: Re: testing and launch
Sorry for Delay.
As discussed with Vicky will share details today itself."
(iii) E-mail dated 05.09.2013 at 10:30 PM written by Ashish of EXNXT
to Vikas Lacca of BSNL :-
"Subject : Re: testing and launch
Dear Vikas
We are waiting the details for the commercial launch, Please
give us the feed back so that we may launch this week."
32. The aforesaid e-mails pertain to BSNL, West Zone and indicate that
EXNXT had requested for a feedback and on 05.09.2013, BSNL had
assured that it would provide its feedback on that date but had not done so
till 10:30 PM. However, there is no material on record to indicate when
such feedback was actually provided by BSNL to EXNXT. Clearly, a delay
of one week in providing a feedback on the test launch link would not be
material to conclude that commercial launch of Mobile TV Services was
only delayed on part of BSNL's failure to provide feedback. Such
conclusion cannot be drawn from the said e-mails, particularly, when there
is no assertion as to when such feedback was finally provided. There are no
pleadings to the effect as to when the feedback from the West Zone was
requested and when it was provided (if at all).
33. Annexure P-5 as referred to by the arbitral tribunal consisted of a set
of 10 e-mails exchanged between the parties between 01.06.2013 to
11.06.2013. The first e-mail dated 01.06.2013 is sent by Dinesh of BSNL
to EXNXT Team stating that certain VAS Services as indicated in the mail
had been approved for commercial launch with effect from 31.05.2013.
The next e-mail is sent by Ramesh of EXNXT to BSNL requesting that
EXNXT‟s Mobile TV portal link be placed on BSNL live portal. Further e-
mails exchanged (forming a part of Annexure P-5) read as under:-
(i) E-mail dated 04.06.2013 at 11:30 AM written by Vivek Asthana of
BSNL to Ramesh from EXNXT:-
"Dear Ramesh,
Send the banner as per below specifications
1. Width : "234" pixel
2. Height : "25" pixel
3. File Format "Gif"
4. File size should be within "l0kb"
(ii) E-mail dated 04.06.2013 at 12:14 PM written by Ramesh of EXNXT
to Vivek Asthana from BSNL;-
"Dear Vivek,
Please find the Attached Banner as per your specifications"
(iii) E-mail dated 05.06.2013 at 11:08 AM written by Ramesh of EXNXT
to Vivek from BSNL:-
"Hi Vivek,
Please confirm once the Mobile TV Link is placed on the
Main Portal"
(iv) E-mail dated 10.06.2013 at 05:36 PM written by Ramesh from
EXNXT to Vivek of BSNL:-
"Subject : Re: Launch of Mobile TV Services - Exnxt
Dear Vivek,
Awaiting for your confirmation on making the link live on
BSNL Portal"
(v) E-mail dated 11.06.2013 at 10:48 AM written by Bibhu from
EXNXT to BSNL:-
"Mr Vivek,
When are we getting a confirmation on this.
Why do we have to wait for so many days for a link to go
live."
(vi) E-mail dated 11.06.2013 at 11:29 AM written by Rajiv Garg from
BSNL to Bibhu of EXNXT:-
"Subject : RE: Launch of Mobile TV Service - Exnxt
Dear Bibhu
The services have already been made live and the link was
supposed to be made live yesterday, which could not be done
due to some technical problems in WAP portal. It will be done
by EOD. Further, you are requested to be polite in such
communications
Aside Vivek/Manoj
Please confirm the same once done."
(vii) E-mail dated 11.06.2013 at 01:16 PM written by Bibhu of EXNXT
to Rajiv of BSNL:-
"Dear Mr Rajiv,
Apologies if I have sounded impolite that was not the intent.
Will wait for your confirmation."
(viii) E-mail dated 11.06.2013 at 01:21 PM written by Manoj of BSNL to
Bibhu from EXNXT:-
"Subject : Re : Launch of Mobile TV Service - Exnxt
Dear Bibhu
The URL http://bsnln.zengatv.com with the Banner is place3d
under BSNL TV link on bsnllive.in portal. This is for your
kind info."
34. The aforesaid e-mails clearly indicate that BSNL took about 7 days
to place EXNXT's link on its portal due to certain technical problems.
These mails do not establish that "the implementation and integration of
the services were inordinately delayed by the respondent's" (BSNL's)
"laxity", as concluded by the arbitral tribunal.
35. The arbitral tribunal also referred to a set of e-mails (forming the
part of Annexure P-6) exchanged between EXNXT and representatives
from the South Zone during October 2013. The relevant extract from the
impugned award reads as under:-
"From these documents, it appears that the Respondent had
continued to hamper the working of the services post the stage
of implementation and that the Claimant could, consequently,
not receive any hits showing the usage of the services."
36. Plainly, no conclusion as was drawn by the arbitral tribunal could
have been drawn from the aforesaid e-mails. The e-mail sent from Zenga
TV to EXNXT only indicates that on 24.10.2013, the channel was not
receiving any hits and on 28.10.2013, EXNXT had requested Zenga TV for
response to resolve the issue.
37. The arbitral tribunal has referred to a second set of e-mails
exchanged between March 2013 to April 2013 in relation to initiating
technical and billing integration. The first e-mail is dated 04.03.2013 sent
at 01:31 PM by Ramesh of EXNXT to Mr Akil of BSNL, which is set out
below:-
"Dear Akil
As discussed Just now over Phone, we need to start the
Technical Integration for Mobile TV Services.
Request you to provide the SMSC and Billing Integration
details."
38. BSNL responded to the said e-mail on the very said date at 02:21
PM requesting for certain documents, which were listed in the said e-mail.
Apparently, the third email is dated 05.04.2013 which was sent by EXNXT
to BSNL. The said e-mail reads as under:-
"Subject: Mobile TV Services by Exnxt - Technical
Integration Details to be initiated ASAP
Hi All, Please note that all documents as listed below has been
couriered to the address as mentioned
Please note the tracking number as 39919939363, it should
reach you positively tomorrow. Amy I request you to Initiate
technical billing and Integration parallel so we can plan to
launch services on time.
Please do get back with a confirmation on the same."
39. From the set of the aforesaid e-mails, the arbitral tribunal had
concluded that a "perusal of these documents reveals the Respondent also
failed to initiate technical billing and integration parallel which was a
prerequisite for the Claimant to launch services". These e-mails do not
indicate that there was any failure on the part of BSNL to initiate technical
billing and integration parallel. BSNL had requested for certain documents
on 04.03.2013 which were apparently sent by EXNXT on 05.04.2013.
There is no assertion as to when BSNL initiated technical billing and
integration.
40. The arbitral tribunal also referred to a set of e-mails (referred to as
Annexure P-7) exchanged in the month of December 2013, which read as
under:-
(i) E-mail dated 01.12.2013 at 08.21 PM written by Vikas Lacca of
BSNL to EXNXT and Apalya:-
"Subject : Data STV mobile TV implementation
Exnext/Apalya
As per CO circulars attached h/w, kindly share product flow
for mobile Tv bundled data STV so that the same can be
discussed and approved from IN team before final
implementation."
(ii) E-mail dated 02.12.2013 at 09:42 AM written by Ashish of EXNXT
to Vikas Lacca of BSNL:-
"Subject: Re: Data STV mobile TV implementation
Dear Viaks,
Please find attached the user flow also we will request to
please share the billable MIS so that we can raise the
invoices."
41. The arbitral tribunal referred to the aforesaid e-mails and held as
under:-
"From these documents, it is easily gathered that the
Respondent was delaying the process of sharing 'billable MIS',
which in turn, prevented the claimant from knowing the billing
status of the services, which were made live."
42. Plainly, the aforesaid conclusion is wholly perverse and
unsustainable. None of the two e-mails in question can possibly lead to the
conclusion that BSNL had delayed the process of sharing billable MIS
which prevented EXNXT from knowing the billing status. The first e-mail
was sent by BSNL requesting EXNXT to share the product flow for mobile
TV bundled data STV. EXNXT had sent an e-mail on the next date
providing the use of flow and also requesting to share the billable MIS to
enable EXNXT to raise bills. There is no material to indicate whether such
request for billable MIS had been made earlier and whether BSNL had
failed to comply with the said request. The impugned award clearly
indicates that the said e-mails are the only documents relied upon by the
arbitral tribunal in arriving at its findings.
43. This Court is acutely aware that the scope of interference in an
arbitral award under Section 34 of the Act is very restricted. This Court
while examining whether an impugned award falls foul of the public policy
of India does not sit as a court of first appeal to re-examine and correct
findings of facts returned by the arbitral tribunal. However, one of the
exceptions to this rule is where the finding is based on no evidence or the
finding of fact defies logic. In H.B. Gandhi, Excise and Taxation Officer-
cum-Assessing Authority, Karnal & Ors. v. M/s Gopi Nath & Sons &
Ors.: 1992 Supp (2) SCC 312, it was held as under:-
"7. ........ It is, no doubt, true that if a finding of fact is
arrived at by ignoring or excluding relevant material or by
taking into consideration irrelevant material or if the
finding so outrageously defies logic as to suffer from the
vice of irrationality incurring the blame of being perverse,
then, the finding is rendered infirm in law."
44. In a recent decision given in ONGC v. Western Geco International
Ltd.: 2014 (9) SCC 263, the Supreme Court had while considering the
principles applicable while determining where an arbitral award falls foul
of the public policy test held as under:-
"39. No less important is the principle now recognised
as a salutary juristic fundamental in administrative law that
a decision which is perverse or so irrational that no
reasonable person would have arrived at the same will not
be sustained in a court of law. Perversity or irrationality of
decisions is tested on the touchstone of Wednesbury
principle (Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn., (1948) 1 KB 223: (1947) 2 All ER
680 (CA)] of reasonableness. Decisions that fall short of
the standards of reasonableness are open to challenge in a
court of law often in writ jurisdiction of the superior courts
but no less in statutory processes wherever the same are
available."
45. The documents referred to by the arbitral tribunal cannot possibly
lead to the conclusion so drawn by it. The arbitral award suffers from the
vice of irrationality. In the present case, the parties did not lead any
evidence and chose only to rely on documents submitted by them.
46. This Court had also examined whether the impugned award could be
sustained on the basis of pleadings of the parties. Although general
allegations had been made in the pleadings, there are no pleadings as to the
relevant particulars, which could be read in conjunction with the e-mails to
sustain the conclusion arrived at by the arbitral tribunal. For instance, the
arbitral tribunal has relied upon e-mails exchanged on 27.08.2013 and
05.09.2013 (marked as Annexure P-4) to conclude that EXNXT was ready
to initiate commercial launch of Mobile TV Services but the same was
delayed on account of timely feedback not provided by BSNL on the test
launch link. The said e-mails pertain to the West Zone. There are no
averments as to when the feedback on the test launch was first requested by
EXNXT and when such feedback was finally provided.
47. The decision in the case of Markfed Vanaspati(supra) is of no
assistance to EXNXT as the said decision was rendered in the context of
the Arbitration Act, 1940. By virtue of Section 31(3) of the Act, it is
mandatory that an arbitral award state the reasons upon which it is based;
the only exceptions being: (a) the parties have agreed that no reasons be
given or (b) that the award is passed with the consent of parties. Thus, if
the arbitral award is considered as non-speaking/unreasoned (as is the
alternate submission made by Mr Jain), the same would have to be set
aside as falling foul of Section 31(3) of the Act.
48. The decision in the case of Harbans Singh Tuli (supra) is also
inapplicable in the facts of the present case. In that case, the claimant had
filed affidavits and the deponents were also available for cross examination
but were not cross-examined by the appellant (Union of India). Further, the
appellant had failed to produce the relevant records. It is in the aforesaid
context that the Court held that the arbitrator was not in a position to give
detailed reasons. Plainly, it is open for the arbitrator to accept averments
made in an uncontroverted affidavit. It would not be necessary for the
arbitrator to provide detailed reasons for accepting the same. However, in
the present case, EXNXT had not filed any affidavit. More importantly, the
arbitral tribunal has given detailed reasons, which indicates that he has
based his conclusions on reading of the e-mails produced before it. His
conclusions, thus, have to be tested on the basis of evidence available on
record. As stated earlier, this Court does not find that it was possible to
draw the conclusions that the arbitral tribunal had drawn on the basis of the
e-mails referred by it. Thus, the impugned award is liable to be set aside.
49. Before concluding, it is relevant to note that BSNL had not assailed
the conclusion of the arbitral tribunal rejecting its counter claim; Mr
Agnani had unequivocally stated that he was restricting the challenge to the
claim awarded in favour of EXNXT. Thus, no interference with the
impugned award in regard to rejection of counter claim is warranted.
50. In view of the above, the impugned award to the extent that it
awards a sum of ₹2.8 crores in favour of EXNXT is set aside. However,
no interference with the direction for release of the bank guarantee amount
in favour of EXNXT is necessary.
51. The petition is accordingly, allowed. The parties are left to bear their
own costs.
VIBHU BAKHRU, J
JULY 31, 2017
RK
