Anand Rao Infrastructure Pvt. ... vs Abb India Limited
2018 Latest Caselaw 4278 Del

$-7
*     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                           Date of decision: 26th July, 2018

+     O.M.P. (COMM.) 32/2016 & I.A. 1567/2016
      ANAND RAO INFRASTRUCTURE PVT. LTD.            ..... Petitioner
                     Through: Mr. Aakash Sherwal, Mr. Faheem
                                 Shah, Mr. Rohan Sharma, Mr.
                                 Sidharth Agarwal and Mr. Apurv,
                                 Advs.
                     versus

      ABB INDIA LIMITED                                 ..... Respondent
                    Through:          Ms. Ekta K. Sikri and Mr. Junaid H.
                                      Nahvi, Advs.

      CORAM:
      HON'BLE MR. JUSTICE NAVIN CHAWLA
      NAVIN CHAWLA, J. (Oral)

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been filed by the petitioner challenging the Arbitral Award dated 12.10.2015 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the work of Designing, Installation and Commissioning of two Power Transformers for 220KV Station in two phases on turnkey basis awarded by the petitioner to the respondent.

2. The work had been awarded by the petitioner to the respondent under the Letter of Intent dated 12.11.2008 which resulted in two Work Orders and one Purchase Order, all dated 27.11.2008, being placed by the petitioner on the respondent. Thereafter three separate Agreements were executed

OMP(COMM.)32/2016 Page 1 between the parties on 08.06.2009; one for supply of extension of existing Switchyard Equipment; second for Civil Work of the aforesaid extension and; the third for Erection, Testing and Commissioning of the said extension. The stipulated time for completion of the work was 20.07.2009. It may be noted that this was a sub-contract as the work was to be completed for Maharashtra State Electricity Transmission Company Limited (MSETCL), which had awarded the work of installing a 100 MV Wind Farm in District Satara, Maharashtra to R.S. India Wind Energy Pvt. Ltd. (R.S. India). R.S. India in turn had awarded the work to the petitioner which, in turn, awarded the work to the respondent.

3. The respondent claiming that the work had been duly completed as far as the supply of Extension and the Civil Work on 22.02.2010 and with respect to the Commissioning on 27.08.2010, however, as the petitioner had not made payments for the work to the respondent, filed a petition under Section 11 of the Act before this Court being Arb.P. 11/2013. This Court vide order dated 15.05.2014 appointed a Sole Arbitrator who has passed the Impugned Award inter alia granting the following relief in favour of the respondent:-

"46. For the reasons stated herein above, the award is made as follows:-

(i) The counter-claim filed by the respondent is dismissed.

(ii) An award is hereby made in favour of the petitioner/claimant and against the respondent for an amount of 4,58,55,499/- as the principal sum. The petitioner/claimant is also awarded a sum of Rs.3,19,70,095/- as interest till 31st August, 2015.

(iii) The claimant/petitioner is further awarded interest @ 12% per annum on the principal amount of

OMP(COMM.)32/2016 Page 2 Rs4,58,55,499/- w.e.f. 1.9.2015 till realisation of the said amount.

(iv) The petitioner/claimant shall also be entitled to recover the cost of arbitration proceedings amounting to Rs.5,60,760/- and the secretarial expenses amounting to Rs4,500/-, from the respondent."

4. The learned counsel for the petitioner submits that the Arbitrator has placed reliance on various e-mails filed by the respondent in the Arbitral record, though the same had not been proved in accordance with Section 65(B) of the Indian Evidence Act 1872. In this regard he has placed reliance on the cross-examination of Mr. Pradeep Mehandiratta (PW-4), a witness produced by the respondent. He submits that the said witness admitted in his cross-examination that he was not aware of the contents of the e-mails filed in the case and that he had not personally printed the said e-mails.

5. I have considered the submission made by the learned counsel for the petitioner. The said submission has to be appreciated keeping in view Section 19(1) of the Act which provides that the Arbitral Tribunal shall not be bound by the Indian Evidence Act, 1872. In any case, the Arbitrator has considered this issue in detail and has held as under:-

"..... However, in the present case, the claimant has filed the affidavit of Shri Pradeep Mendiratta, Manager (Information Systems) with the claimant company. In his affidavit by way of evidence Mr. Mendiratta, inter alia, stated that abb.com/@abb are domain name of the claimant company and every employee of the company is provided with electronic mail id, identifiable with their full name as the initial, followed by the domain name. He further stated that the electronic mails annexed with the claim and rejoinder sent by him are the electronic mails

OMP(COMM.)32/2016 Page 3 received by the officials of the company on their respective email ids, over which such officials have lawful control and access. He further stated that electronic mails sent and received by their employees from their mail id are stored in the server of the claimant company as archive and all electronic mails received and sent by such employees are stored in the server of the claimant company maintained in their original form. He further stated that the electronic mails received and sent by their employees which are part of the record are the same as maintained in the sever in their original form and the accuracy of their contents have not been altered, defaced etc. He claimed that said electronic mails are derivation/reproduction of the mails stored in the server which are still maintained in the original form. He also stated that all printouts of the mails which were taken out from server opening the archives mails from the printers during its regular course of business which were maintained by his department and which are in good working condition. In my view, affidavit of Mr. Mehendiratta meets all the requirements of section 65B. and, therefore, the mails filed by the claimant are admissible in evidence."

6. The cross-examination of Mr. Mehandiratta relied upon by the petitioner does not support the contention raised by him. The said witness is the Manager (Information Systems) of the respondent. He has stated that it is his duty to ensure that the data server of the respondent is kept up and running, though it is maintained by IBM. He further states that the access to the servers is granted only to authorised officers of the respondent company. He further certified that the domain names in the e-mails were those of the respondent company. He further stated that the e-mails downloaded from the respondent's server cannot be edited. In view of the above, I find no merit in

OMP(COMM.)32/2016 Page 4 the contention raised by the learned counsel for the petitioner relying upon Section 65(B) of the Evidence Act.

7. The next contention raised by the learned counsel for the petitioner challenging the Arbitral Award is that the arbitrator has based his Award on the invoices filed by the respondent, though they remained unproved in evidence and do not bear any receiving from the petitioner. He submits that PW-1 Mr.Rahul Agarwal, who was produced by the respondent as a witness to the transaction had admitted in his cross examination that he does not have in-depth knowledge of the work undertaken and the equipment required for executing the work. He in fact, was not even posted at Satara, where the work had been undertaken.

8. I again do not find any merit in this contention raised by the counsel for the petitioner. The dispute that had been raised before the Arbitrator was as to whether the work had indeed been completed by the respondent or by the principal contractor, that is, R.S.Wind. The Arbitrator, after scrutinizing the evidence led before him in detail, has held that the work was indeed completed by the respondent and it is the respondent who had handed over the said work upon completion to MSETCL. There was no dispute with respect to the quantification of the claim raised by the respondent before the Arbitrator. In any case, the respondent proved its claim also by producing as witnesses PW-2, Mr.Ajay Dubey who was the Project Manager as also Mr.Raaj K.Gupta (PW-3), who was the Head of Finance of the North Zone of the respondent company. The learned counsel for the respondent has also drawn my attention to various invoices which bear the signatures on behalf of the petitioner signifying their receipt and contends that these invoices were never challenged by the petitioner. The Arbitrator, in light of the above

OMP(COMM.)32/2016 Page 5 evidence, as also as there was no real dispute raised on the quantification of the claim by the petitioner, awarded a sum of Rs.4,11,25,090/- as the principal sum representing the unpaid value of the invoices in favour of the respondent. The Arbitrator has further held that as the petitioner had not issued the requisite C-Forms to the respondent, the respondent was also entitled to a further sum of Rs.47,30,409/-. This being a finding of fact, cannot be interfered with in exercise of powers under Section 34 of the Act by re-appreciating the evidence led before the Arbitrator.

9. It is further contended by the counsel for the petitioner that there was no proper authorization on behalf of the respondent company for filing of the claim before the Sole Arbitrator. He submits that the respondent had filed the Statement of Claim under signatures of Mr.Rahul Aggarwal claiming himself to be the legal counsel of the respondent holding a power of attorney issued by one Mr.B.Gururaj. Learned counsel for the petitioner submits that no authorization in favour of Mr.B.Gururaj has been filed on record by the respondent.

10. It is first to be noted that before the Arbitrator only the following issues have been framed:

"(i ) Whether time was essence of the contracts between the parties, and if so, to what effect? OPR (ii ) Whether the petitioner/complainant completed/executed the work in time, and if not, to what effect? Onus of the first part of the issue on the claimant and onus of the second part of the issue on the respondent.

(iii) To what amount if any, the claimant is entitled as principal sum?

OPP

(iv) To what amount, if any, the claimant is entitled as interest? OPP (v ) To what amount, if any, the respondent is entitled in the counter claim, as the principal sum? OPR

OMP(COMM.)32/2016 Page 6

(vi) To what amount, if any, the respondent is entitled as interest in the Counter Claim? OPR

(vii) Relief."

11. Therefore, there was no issue framed with respect to authorization of Mr.Rahul Aggarwal to file the Statement of Claim before the Arbitrator. The same having not been in dispute, the Arbitrator has rightly rejected the said contention raised by the petitioner. In Shabnam Gulati v. M/s Religare Finvest Pvt. Ltd., 2017 SCC OnLine Del 11656, this Court held as under:

"10. In similar circumstances, Supreme Court in the case of United Bank of India v. Naresh Kumar, (1996) 6 SCC 660 had held that procedural defects, which do not go the root of the matter, should not be permitted to defeat a just cause. There is sufficient power in the Courts, under Code of Civil Procedure, to ensure that injustice is not done to any party who has a just cause. We may herein quote from the said judgment:

"9. In cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the Courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just case. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable.

10. ....A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its

OMP(COMM.)32/2016 Page 7 officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by it's officer.

10. xxxxxxx

11. xxxxxxx

12. The Courts below having come to a conclusion that money had been taken by respondent no.1 and that respondent no.2 and husband of respondent no.3 had stood as guarantors and that the claim of the appellant was justified it will be a travesty of justice if the appellant is to be non-suited for a technical reason which does not go to the root of the matter. The suit did not suffer from any jurisdictional infirmity and the only defect which was alleged on behalf of the respondents was one which was curable.

13. The court had to be satisfied that Sh. L.K. Rohatgi could sign the plaint on behalf of the appellant. The suit had been filed in the name of the appellant company; full amount of court fee had been paid by the appellant bank; documentary as well as oral evidence had been led on behalf of the appellant and the trial of the suit before the Sub-Judge, Ambala, had continued for about two years. It is difficult, in these circumstances, even to presume that the suit had been filed and tried without the appellant having authorised the institution of the same. The only reasonable conclusion which we can come to is that Sh. L.K. Rohatgi must have been authorised to sign the plaint and, in any case, it must be held that the appellant had ratified the action of Sh. L.K. Rohatgi in signing the plaint and thereafter it continued with the suit."

OMP(COMM.)32/2016 Page 8

11. In fact, it will be a travesty of justice if the respondent herein is to be non-suited for a technical reason on the ground that the authority was lacking and defective. A person may be expressly authorized to sign the pleadings on behalf of the company and in absence thereof, the company can later ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. In the present case, the respondent, by their conduct, have clearly ratified all actions taken by Mukesh Kumar Choudhary in the arbitration proceedings. The respondent's do not dispute his authority. They affirm the same."

12. Learned counsel for the petitioner has lastly contended that the Arbitrator has made certain observations in paragraph 41 of the Impugned Award which were unwarranted, inasmuch as R.S.India was not a party in the arbitration proceedings. Before considering this submission, I would quote paragraph 41 of the Impugned Award as under:-

"41. Though the respondent company and R.S. India are two separate companies, the facts and circumstances of the case indicate that they are group companies, being managed by same set of persons. Mr. Raj Kumar Yadav, who is the Director of R.S. India admittedly was the Managing Director of the respondent company though he has since ceased to be its Director.

A perusal of Form-32 required to be submitted in terms of the provisions of Companies Act would show that Shri Raj Kumar was Managing Director of the respondent company prior to 26.2.2009. Mr. Pawan Kumar Yadav was also a Director of R.S. India as would be seen from Form-32 in respect of the aforesaid company. Mr. Raj Kumar Yadav who was earlier the Managing Director of the respondent company is now the Managing Director of R.S. India. The names of Mr.Raj Kumar Yadav and P.K. Yadav appear as Managing Director and Director

OMP(COMM.)32/2016 Page 9 respectively of R.S. India in the minutes of the Extraordinary General Meeting of the said company held on 3.2.2012, whereas Mr.Jeetendera Pratap Yadav is stated to be the authorised representative of the respondent company. The address of the respondent company, available in the record of the Registrar of Companies is 606, Aakash Deep Building, Connaught Place, New Delhi. The same is the address of the respondent company as per the records maintained by ROC in respect of the said company. On some documents including letters from MESTCL, this is the address of R.S. India. On several documents, including the work orders and agreements dated 6.6.2009, this is the address of the respondent company. As noted earlier, Mr.Jeetendra Pratap Yadav had signed the minutes of the meeting held on 27.8.2010 on behalf of R.S.India. Mr. P.K. Yadav, who is shown as a Director of R.S. India in the minutes of the AGM dated 3.2.2012 was signatory to the agreements dated 8.6.2009 executed between the claimant company and the respondent company. One of the addresses of the respondent company given in the agreements dated 8.6.2009 is C/o R.S.India, 2nd Floor, NBCC Tower, Bhikaji Cama Place, New Delhi. The aforesaid facts and circumstances leave no reasonable doubt that the respondent company and R.S. India, despite having been separately incorporated were being managed and controlled by the same set of persons and, therefore, were associate companies for all practical purposes. This become relevant in the context of the case of the respondent that R.S. India has withheld the payment due to it."

13. The above observations were made by the Arbitrator as the petitioner had set up a case that the work had been completed by R.S.India and for failure of respondent to complete the project resulting in loss, R.S.India had stopped payments that were due to the petitioner. The Arbitrator, after

OMP(COMM.)32/2016 Page 10 considering the evidence led before him, came to the conclusion that R.S.India and the petitioner were associate companies and, therefore, the case set up by the petitioner was not believed. The above findings were germane to the issue raised by the petitioner itself and, therefore, cannot be said to be unwarranted in the facts of the case.

14. In view of the above, I find no merit in the present petition and the same is accordingly dismissed with costs quantified at Rs.1 lac.

NAVIN CHAWLA, J.

JULY 26, 2018
pv




OMP(COMM.)32/2016                                                  Page 11