Delhi High Court
Gail India Ltd. & Ors. vs M/S Prerna Enterprises & Anr. on 31 October, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO No. 424/2017
% 31st October, 2017
GAIL INDIA LTD. & ORS. ..... Appellants
Through: Mr. Sacchin Puri, Sr. Advocate
with Mr. Vikrant Panchanda
and Ms. Mehak, Advocates.
versus
M/s PRERNA ENTERPRISES & ANR. ..... Respondents
Through: Mr. Aman Bhalla, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
C.M. Appl. No. 39161/2017 (for exemption)
1. Exemption allowed, subject to all just exceptions.
The application stands disposed of.
C.M. Appl. No. 39160/2017 (for delay)
2. Considering that there are issues of huge monetary
liability upon the appellant, and delay is not of over one year, and is
only of 228 days, therefore, applying the ratio of the judgment of the
Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy
AIR 1998 SC 3222 delay of 228 days in filing the appeal is condoned
but subject to payment of costs of Rs.10,000/- to counsel for the
respondents within two weeks from today.
C.M. stands disposed of.
FAO No. 424/2017 and C.M. Appl. No. 39159/2017 (for stay)
3. This first appeal under Section 37 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as 'the Act') is filed by
the appellant/objector impugning the judgment of the court below
dated 26.11.2016 by which objections filed by the appellant under
Section 34 of the Act have been dismissed whereby challenge was laid
to the Award of the Arbitrator dated 19.12.2014.
4. It is seen that the appellant had passed orders dated
7.2.2011, 11.4.2011, 9.3.2012, 20.9.2012 and 6/17.9.2012 whereby the
appellant had claimed amounts from the respondent no.1/house-
keeping service provider charges not only with respect to the extant
contract dated 20.2.2010 which was granted for a period of two years
with a three months extension, but also the appellant sought to recover
monies under an earlier contract dated 22.10.2007 which was for a
period of two years with one extension of four months. Total amounts
of Rs.88,000/-, Rs.2,00,000/-, Rs.2,54,889/- and Rs.4,40,432/- were
sought to be recovered from the respondent no.1 by the appellant. An
amount of Rs.4,40,432/- was already recovered by the appellant by
invoking and encashing a bank guarantee furnished by the respondent
no.1.
5.(i) So far as the challenge by the appellant with respect to its
entitlement of claim of deductions for the earlier contract dated
22.10.2007, the claim of the appellant was based on the charge against
the respondent no.1 that the respondent no.1 had provided a chef not
having requisite qualifications and that the staff of the respondent no.
1 was found sleeping in the guest house premises of the appellant.
(ii) In this regard the undisputed position which emerges on record
is that there is no clause of liquidated damages either under the
contract dated 22.10.2007 or the subsequent contract dated 20.2.2010
and appellant has not led any evidence to show that any loss was
caused to it by the breach of the contract of the respondent no.1 in not
providing a qualified chef or that it was found that the respondent
no.1's staff was sleeping on the premises, and therefore once neither
there is a clause of liquidated damages under Section 74 of the Indian
Contract Act, 1872 nor are the losses proved to have been caused to
the appellant, hence no adjustments or deductions or claims of the
appellant could have been allowed by non-payment on account of the
alleged dues of the respondent no.1 under the contract dated
22.10.2007.
6. So far as deduction made by the appellant under the
extant contract dated 20.2.2010, deductions were made on the ground
of alleged excess payment. Once again no evidence was led on behalf
of the appellant before the Arbitrator as to how the so called excess
payment was made to the respondent no.1. Therefore, Arbitrator
denied the claim of the appellant as there was nothing on record to
show how and in what manner excess payment was made to the
respondent no.1 by the appellant.
7. Accordingly, it is seen that there is no basis for sustaining
the impugned orders, and learned senior counsel for the appellants at
this stage during the course of arguments does not very seriously press
the appeal so far as these aspects are concerned.
8. Learned senior counsel for the appellant however very
emphatically questions the grant of high rate of interest by the
Arbitrator under the Award at 15% per annum. Learned senior
counsel for the appellants has placed reliance upon various judgments
of the Supreme Court which observe that since there is consistent fall
in the rate of interest courts could not award high rate of interest.
These judgments of the Supreme Court are Rajendra Construction
Co. v. Maharashtra Housing & Area Development Authority and
Others, (2005) 6 SCC 678, McDermott International Inc. v. Burn
Standard Co. Ltd. and Others, (2006) 11 SCC 181, Rajasthan State
Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC
700, Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy
and Another, (2007) 2 SCC 720 & State of Rajasthan and Another
Vs. Ferro Concrete Construction Private Limited (2009) 12 SCC 1.
9. At this stage, learned counsel for the respondent no.1
states that the respondent no.1 if not be held entitled to 15% rate of
interest, it should yet be awarded a reasonable rate of interest which
should be much higher than 6% per annum as passed by the
appellants, and therefore in the facts of this case I am of the opinion,
and so agreed by counsels for both the parties, that the rate of interest
under the Award would stand reduced from 15% per annum to 9% per
annum, of course without in any manner interfering with the period for
which interest is payable by the appellant to the respondent no.1.
10. In view of the aforesaid discussion this appeal is disposed
of by sustaining the impugned judgment dated 26.11.2016 and the
Award of the Arbitrator dated 19.12.2014, except that the rate of
interest will stand reduced to 9% per annum simple.
11. The appeal is disposed of accordingly. Parties are left to
bear their own costs.
OCTOBER 31, 2017 VALMIKI J. MEHTA, J
AK
