Delhi High Court
Adarsha Tractors, & Ors. vs New Holland Fiat (India) Private ... on 21 February, 2018
$~52
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 21st February, 2018
+ O.M.P. (COMM) 85/2018 & IAs 2479-2480/2018
ADARSHA TRACTORS, & ORS. ..... Petitioners
Through: Mr.Yogesh Raavi, Adv.
versus
NEW HOLLAND FIAT (INDIA) PRIVATE LIMITED
..... Respondent
Through: Nemo
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
IA 2479/2018
Exemption allowed subject to all just exceptions.
IA 2480/2018
This is an application seeking condonation of 9 days delay in
re-filing the petition.
For the reasons stated in the application, the delay of 9 days is
condoned.
Application stands allowed.
O.M.P.(COMM.) 85/2018 & IA 2480/2018
1. This is a petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the 'Act')
challenging the arbitral award dated 29th September, 2017 passed by
the Sole Arbitrator in the arbitration proceedings between the parties.
2. The dispute between the parties arise out of the relationship of
the respondent as a manufacturer of tractors and other agricultural
equipment and the petitioner as a dealer of the respondent for Koratla
(Mandai), Karimnagar (District), Andhra Pradesh (now Telangana).
3. The relationship between the parties had started through the
Letter of Intent dated 9th January, 2001 whereby the petitioner had
been appointed as an authorized dealer/authorised service
representative by the respondent. A Written Dealership Agreement
dated 16th May, 2009 was also executed between the parties. The
respondent, claiming that certain amounts were due and payable by
the petitioner from this relationship, had raised claims before the Sole
Arbitrator. The same has resulted in the Impugned Award by which
the Arbitrator has awarded the following amounts in favour of the
respondent:-
"RELIEFS:
From above discussion, the Claimant is entitled to the
following reliefs:
1. Rs.6891033/- along with the interest @18%
p.a. with effect from 1.10.2014 till the date of realization.
2. Rs.3 lacs, (being the amount paid by the
Claimant towards the respondent's share of Arbitral
Fee) with interest @ 18% p.a. from the date of this
Award till date of realization.
3. Rs. 3 lacs towards the cost and fee of
Arbitration proceedings with interest at 18% p.a. from
the date of this Award till the date of realization."
4. The contention of the counsel for the petitioner is that prior to
the execution of the Agreement dated 16th May, 2009, there was no
written agreement executed between the parties which would have
authorized or made the respondent entitled to claim any interest over
the amounts due and payable by the petitioner. He further submits
that the Arbitrator has erred in relying upon the Confirmation Letters
that were executed by the respondent confirming the balance
outstanding on particular dates without appreciating that the petitioner
had also protested against the amounts claimed by the respondent by
way of separate letters written with such letters of confirmation. He
further submits that the Arbitrator has erred in law in relying upon
Section 31(7) of the Act for granting claim of interest.
5. I have considered the submissions made by the counsel for the
petitioner, however, I am unable to agree with the same. The
Arbitrator in the impugned award has relied upon inter alia Minutes
of the meeting held between the parties on 25th September, 2003
wherein, the petitioner had acknowledged the outstanding amount
payable by him to the respondent and such amount had included the
interest component as well. The Arbitrator has also relied upon a
letter dated 18th December, 2004 whereby the petitioner had requested
the respondent to waive of the interest charged for the period from 1st
July, 2003 to 3rd September, 2004. Various other letters written by
the respondent prior to the execution of the agreement dated 16th May,
2009 have also been relied upon by the Arbitrator to finally conclude
that, even prior to the execution of the agreement dated 16 th May,
2009, there was an understanding between the parties on payment of
the interest by the petitioner to the respondent on the amounts
remaining outstanding from the petitioner.
6. I may only quote the relevant portion of the award passed by
the Arbitrator in this regard:-
"15. It is admitted case of the parties that a meeting
was held on 25.09.2003 to sort out the pending issues of
the Respondent including its resignation letter. The
Minutes of the Meeting duly signed by the parties is Exb.
RW1/X1. In this document, the Respondent admitted
and acknowledged the outstanding amount payable to the
Claimant as Rs.44,22,613/- as indicated in the
Claimant's statement of accounts for quarter April-Jun
2003. While confirming this and expressing willingness
to pay this amount, the Respondent requested for support
from the Claimant stating having suffered losses. The
Claimant agreed to give the support by concession to the
extent of Rs.12,85,692/- thereby reducing the balance
payable to Rs.31,36,924/-. The Claimant also agreed to
provide Good Will incentive of Rs.9,76,956/- and special
incentive including miscellaneous expenses of
Rs.3,08,736/-. Further, the Claimant also agreed to
waive the interest for quarter July 2003 to September
2003 and quarter October 2003 to December 2003. In
addition, the Claimant also agreed to take return of
Dead/Slow moving parts, after inspection and valuation.
All these supports were linked with the return of above
mentioned outstanding amount in phased manner in six
installments, starting from 30.09.2003 and ending March
2004. In his own way of interpretation of above minutes,
the Ld. Counsel of the Claimant submitted that the
Respondent had agreed not to charge any interest from
the Respondent on amounts outstanding at any point of
time. I do not see any logic or reason of such an
interpretation. The Minutes would evidence that the
supports as agreed by the Claimant including waiver of
interest, incentive etc. were linked with the payments of
outstanding amounts in installments.
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18. From the correspondence between the parties it is
evident that the interest was being levied by the Claimant
on the delayed payments much prior to execution of
Agreement on 16.05.2009 (Exb.RW1/X1). The
th
Respondent vide letter dated 18 December 2004 (Exb.
RW3/5A) had requested the Claimant for waiver of
interest charged for the period from 01.07.2003 to
03.09.2004. In his cross-examination RW-3 stated that
the company had been assuring that the interest will not
be charged, but admittedly there was nothing in writing
in this regard. In this context it is worthwhile to note that
in answer to a question in cross-examination as to
whether the Respondent paid the amount of
Rs.83,32,431/- as mentioned by it in its letter
Exb.RW3/5A, RW3 admitted that whole of it was not
paid. There are numerous letters written by the
Respondent to Claimant regarding for waiver of interest
of the Pre-Agreement period of 16.05.2009. To note a
few are dated 23.03.2005, 25.06.2005, 01.07.2005,
02.08.2005, 10.08.2005, 11.11.2005, 30.05.2006 and
17.12.2008. In its letter dated 17.12.2008 the
Respondent humbly requested for waiver of interest as a
special case. It is already seen from the Minutes of
25.09.2003 that interest was being levied by the Claimant
on delayed payments in the year 2003. In fact RW1, had
admitted in cross-examination that in October 2002, the
Respondent owed Rs.44,22,616/- to the Claimant. This
is the same amount which was inclusive of interest and is
mentioned in Minutes of 25.09.2003 (Exb. RW1/X1) if
there was no interest being levied by the Claimant, why
would the Respondent request for waiver of interest on
delayed payments."
7. The above finding being arrived at upon appreciation of
evidence by the Arbitrator, it would not be open for this Court to re-
appreciate the evidence as a Court appeal.
8. As far as the contention of the counsel for the petitioner that the
Arbitrator has wrongly relied upon the balance confirmation letters
written by the petitioner and has ignored the letters of protest written
by the petitioner contemporaneously with balance confirmations, I
have gone through these letters and as an example would quote from
one of the letters relied upon by the counsel for the petitioner as
under:-
"With reference to the letter under cited, it is submit that
the outstanding to NHI in our books is Rs. 24,290,193/- as on
31st March, 2010, whereas the same is Rs.28,169,344 /- as per
your books. The difference of Rs.3,879,151 /-in between both
books is interest debited on the account. The details are shown
at Annexure.
A copy of the balance confirmation letter (your letter
dated 7th March, 2010) is enclosed herewith."
9. The said letter does not make any protest against charging of
the interest but only states that difference in the accounts is due to the
respondent showing the interest as an outstanding in its books of
account, while the same is not being considered by the petitioner in its
own books of accounts as outstanding.
10. In my opinion the above would not amount to a protest on the
right of the respondent to charge interest from the petitioner on the
amount outstanding from the petitioner to the respondent.
11. Such right to charge interest would even otherwise be a right in
equity as held by the Supreme Court in Dushyant N.Dalal & Anr. vs.
Securities & Exchange Board of India (2017) 9 SCC 660.
12. I may also note that the Arbitrator has also relied upon the cross
examination of the petitioner's witness to conclude that not only was
the books of accounts produced by the respondent not denied by the
petitioner, but also the petitioner had admitted the amount owed by it
to the respondent in the form of admitted failure to comply with the
various efforts of settlement that had been arrived at between the
parties during the currency of their relationship. I would again quote
from the award in this regard:-
16. RW-1, who is the accountant of the Respondent, admitted
that only first installment of Rs.5 lakh was paid. He stated that
the other installments were not paid as per the schedule as the
incentive of Rs.2 lakh was not paid by the Claimant. Though he
volunteered that these installments were paid subsequently but
could not inform the dates of payments. Then again he
volunteered that there being a running account, the payments
were made along with invoices, but he could not inform the
details of invoices or the payments. It was specifically
suggested to him that no payments were made as per the
Minutes of 25.09.2003.
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19. It is noted above that it was undisputed that the Claimant
was maintaining running account for its dealers including the
Respondent, and the books of accounts were regularly
maintained by the Claimant in the ordinary of its business.
The Claimant has produced its statement of account relating to
the Respondents in respect of Tractor and Spare Parts account
for the period from January 2001 to 03.02.2016, and which is
on record as Exb. CW2/8. It was also not the case of
Respondent in SOD nor put in cross-examination of CW2 that
the Statement of Account was not properly maintained by the
Claimant in its ordinary course of business. The same
remaining un-assailed and rather admitted is, admissible in
evidence. The entries of transactions with all calculations,
being undisputed, also become admissible in evidence. This
would evidence that the interest was being levied, and also
apportioned from the payments received from the Respondent
time to time from the very beginning of dealership, all to the
knowledge of the Respondent.
20. There is still much more evidence against the Respondent
Vide confirmation letters dated 07.04.2010, 07.10.2010,
08.04.2011, 07.10.2011 (Exb. CW2/1 to CW2/4), the
Respondent through its Managing Partner (RW-1) confirmed
the outstanding amounts payable to the Claimant as on
31.03.2010, 30.09.2010, 31.03.2011 and 30.09.2011
respectively. The amounts stated in these letters and confirmed
by Respondent as correct are inclusive of interest, and
correspond with the entries in Statement of Accounts of the
Claimant. Other confirmations dated 07.04.2012, 09.10.2012
and 11.04.2013, which were denied by the Respondent initially,
were admitted by the Respondent's witness (RW3) in his cross-
examination. These are respectively Exb. CW1/X1 to CW1/X3.
With regard to the amounts mentioned by the Claimant in these
confirmation letters, the Respondent made endorsement of
different amounts, the difference being of the interest as
reflected in the Statement of Account of the Claimant. The
Respondent had also vide separate letters, though belatedly
objected about the levy of interest reiterating its previous stand
of waiver of interest on account of various factors including
that of slump in business, complaints and financial constraints.
Be that as it may, the fact remains that all the confirmations
noted above testify that the interest was being levied by the
Claimant on the delayed payments even prior to be period of
16.05.2009 and it was admitted by RW1 that all these balance
confirmations were received by the Respondent from the
Claimant during the course of business transactions.
21. The Respondent continuing to default in payments
resulting in huge outstanding, a meeting was held between the
parties on 24.01.2012, to discuss the plan to revive the business
of dealership of Respondent. It is evident from the Minutes
dated 25.01.2002 of this meeting that the Managing Partner
(RW3) of Respondent admitted the outstanding as on
24.01.2012 of Rupees 2,36,77,594/- (Tractor Account) &
Rupees 1,11,76,281/- (Spare Parts Account). The plea of RW3
that it was signed under protest, is not tenable, given the fact
that the outstanding mentioned in this Minutes is nothing but as
per record of the Statement of Account, and there was nothing
on record of suggest pressure of any kind whatsoever on RW3."
13. In view of the above finding of the Arbitrator, I find no merit in
the submission raised by the counsel for the petitioner on the
applicability of Section 31 (7) of the Act. Section 31(7) empowers the
Arbitral Tribunal to award interest from the date on which the cause
of action arose, unless otherwise agreed between the parties. In the
present case, the petitioner has not shown any agreement prohibiting
grant of interest.
14. In view of the above, I find no merit in the present petition and
the same is accordingly dismissed with no order as to costs.
NAVIN CHAWLA, J.
FEBRUARY 21, 2018
RN
