Delhi High Court
Shri Khailesh Garg vs M/S Abhipra Capital Limited And ... on 22 November, 2018
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 22nd November, 2018
+ O.M.P. 244/2009
SHRI KHAILESH GARG ..... Petitioner
Through: Ms. Chanchal Sharma, Advocate (M-
9811652421).
versus
M/S ABHIPRA CAPITAL LIMITED AND ANR. ..... Respondents
Through: Mr. Shekhar Gupta, Advocate for R-1
(M-9868790800).
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. The present petition has been filed challenging the award dated 5 th
March, 2007 passed by the Learned Sole Arbitrator. The brief background is
that an agreement was entered into between the Respondent - M/s Abhipra
Capital Limited with the Petitioner - Shri Khailesh Garg appointed as a
Business Partner for the territory of Hathras, U.P. The Respondent is in the
business of stock-broking and commodity trading. As per the agreement, the
Petitioner was to be given a salary and commission for managing the branch
of Abhipra in Hathras. A security deposit of Rs.1 lakh was to be made by the
Petitioner which was duly paid. The Petitioner was responsible for running
of the branch office. The Petitioner was entitled to brokerage and
commission. As per Clause 4.2(a), the Petitioner was to collect the dues
from the clients which he introduced to Abhipra and make payments to
Abhipra.
2. Disputes arose between the parties in respect of this agreement. The
Respondent through counsel issued a notice to the Petitioner calling upon
the Petitioner to pay to the Respondent all the outstanding amounts to the
tune of Rs.24,59,858/-. The said notice was issued on 22nd August, 2006. In
reply, the Petitioner contended as under:
"...
2. That my client aforesaid never entered into any kind
of such agreement on 1-5-04 with your client, as stated in
the notice.
3. That my client aforesaid neither visited the office of
your client on 13-4-06, nor made any kind of such
promises to pay a sum of Rs.23,01,316-80 out of the total
amount of Rs.24,59,858-52 to your client, as per so
called "Agreement" & as such my client is not liable to
pay eve a single penny to your client.
4. That it also appears that your client intends to extort
my client by way of serving such illegal notice.
Therefore, you are through this reply of your notice
called upon to sincerely advise your client not to drag my
client into any frivolous & vexatious litigations & if any
kind of such threatened action is taken, my client will
defend the same at the sole cost & risk of your client &
further your are called upon to sincerely advise your
client to send the true Photostat copies of so called
"Agreement" dated 01-5-04 & the details of accounts
showing an outstanding of Rs.24,59,858-52/- to my client
within 10 (Ten) days from the date of receipt of this
notice, failing which my client shall have no option, but
to understand that the notice under reply was got served
upon him with a view to harass & blackmailing him
unnecessarily & proper legal action shall be taken
against your client, at his sole cost & risk.
That's all."
3. The matter was thereafter referred to arbitration. The Learned Sole
Arbitrator issued two notices to the Petitioner. The Petitioner, however, did
not appear. Thereafter, an order was passed for service through publication
in the Rashtriya Sahara. The publication was effected and placed on record.
Since, the Petitioner still did not appear in the arbitration proceedings, the
Learned Arbitrator proceeded to hear the arguments and passed the award.
The Learned Arbitrator has awarded a total sum of Rs.24,59,858/- along
with Rs.5 lakhs as damages and Rs.40,000/- as litigation costs.
4. The impugned award is challenged by the Petitioner primarily on
three grounds:
i) that the notice was never served by the Learned Arbitrator;
ii) the publication was ordered by the Learned Arbitrator in the
Rashtriya Sahara, having circulation in Hathras, U.P. However, the
publication was only done in a newspaper having circulation in Delhi;
iii) the agreement was entered into with Abhipra Capital Limited,
and not Abhipra Commodity Consultants Pvt. Ltd. Thus dues of the
latter cannot be sought to be recovered in these proceedings.
5. In response, Ld. counsel for the Respondent submits that notice was
sent twice by the Arbitrator as is evident from a reading of the award. It is
further submitted that the Petitioner's conduct has been dishonest and
malafide inasmuch as in the reply to the legal notice, the Petitioner claimed
that no agreement was entered into. However, in the present petition, in
paras 5.2 and 5.3, the allegation is that the Petitioner signed the documents
but under coercion. This plea establishes that the agreement was actually
signed and that the Petitioner had paid a sum of Rs.1 lakh and the
Petitioner's stand in his reply was false.
6. This Court has heard the submissions of the parties. Each of the
objections are dealt with herein below:
Objections No.1 and 2 - Issuance of notice and publication
7. The memo of parties in the arbitral proceedings has the same address
of the Petitioner as was contained in the legal notice as also in the reply
which is as under:
"R/o 653, Chamar Gate, Hathras, (U.P.)"
8. Admittedly, the initial legal notice was sent by the Respondent to the
Petitioner at this very address by registered post. The same was duly
received and was in fact replied to by the Petitioner. In the same reply, the
address is also admitted to be correct. Thus, there is no dispute that the
notice was issued to the correct address.
9. A perusal of the original record shows that the Learned Arbitrator
issued two notices to the Petitioner at his correct address. The original
envelopes showing the issuance of notices are on record. The first notice has
been issued on 9th October, 2006 by speed post. The remarks on the
envelope shows that the Postman visited the Petitioner's premises twice. On
one occasion, he was informed that the Petitioner is travelling. On another
occasion, the Postmaster again could not find the Petitioner at the premises.
The two remarks of the Postmaster are dated 11th October, 2006 and 16th
October, 2006 respectively. Again on 6th November, 2006, the notice was
sent and has been returned with the remark that the Petitioner could not be
met, however, he has been intimated of the notice. Both these envelopes
show that the Petitioner had adequate notice of the arbitral proceedings and
has deliberately avoided the participation in the said proceedings.
10. Insofar as the publication is concerned, the publication in Rashtriya
Sahara is only due to the absence of the Petitioner and was by way of
abundant caution. The substituted service does not by itself in an isolated
manner decide the question of service. It is accordingly held that there is no
justification to hold that the Petitioner was not afforded adequate
opportunity. The turn of events clearly point to the fact that the Petitioner,
initially, had received the legal notice and had replied to it, thereafter, two
notices were issued by the Ld. Arbitrator by Speed post and finally
publication was also effected. This is adequate compliance of the
requirement of issuance of notice to the Petitioner.
Objection No.3 - No arbitration agreement with Abhipra commodity
Consultants Pvt Ltd. and Abhipra Capital Ltd had no locus to invoke
arbitration.
11. Coming to the last objection in respect of Abhipra Capital Ltd., a
perusal of the agreement dated 1st May, 2004 shows that the same is entered
into between the Petitioner and Abhipra Capital Limited. The word 'party'
has been defined in the agreement as under:
"party" means Abhipra or the Business Partner, as the
case may be."
12. Further, the Petitioner had entered into an agreement dated 30th
August, 2004 by which he wanted that his services should also be extended
to Abhipra Commodity Consultants Pvt. Ltd. This fact is recorded in the
Award as under:
"That the respondent had once over again approached
the applicant company for carrying on the business of
the commodity trade, relating to Abhipra Commodity
Consultants Pvt. Ltd. as well in the same infrastructure
and for extension of the terms and conditions of the
agreement dated 01.05.04 to the commodity trade as
well. Accordingly a letter, dated 30.08.04, was
exchanged between the parties which duly received
and signed by Director, Shri Abhinav Aggarwal, of M/s
Abhipra Commodity Consultants Pvt. Ltd and by the
respondent accepting all the terms as narrated in the
letter, where by the respondent was specifically
authorised to carry on the business of the Commodity
trade relating to M/s Abhipra Commodity Consultants
Pvt. Ltd as per the terms and conditioned of the
Agreement dated 01.05.2004 and it was further laid
down and agreed between the parties that Mis Abhipra
Capital Ltd. would be entitled to file and institute
Arbitration proceedings as per Article 19 of the
Agreement dated 01.05.2004, for any dispute which
may arise between the parties relating to the capital,
derivative and commodity segment."
The Ld. Counsel for the Petitioner submits that this document has not been
proved by the Respondent.
13. A letter dated 13th April, 2006 was written, duly signed by the
Petitioner wherein he admitted the amount of Rs.23, 01,316/- as being due.
The same is placed on record at Annexure - D. The said letter reads as
under:
"Date: April 13, 2006
M/s. Abhipra Commodity Consultants Pvt. Ltd.
Azadpur
Delhi
Dear Sir,
The position of Hathras office (Mr. Khailesh Garg) as
on 12.4.2006 is as under:
Total debit MCX 31,83,106.67
Credit in NCDEX 2,65,831.80
4,17,272.67
Margin 1,98,685.40
-------------- 8,81,789.87
--------------
Net recoverable after margin even: 23,01,316.80
---------------
I am giving assurance that total recovery shall be
made within a period of 4 months with a minimum
target of Rs. 5,00,000/- per month.
Temporarily, please allow me a limit on presumed
credit basis of Rs. 5,00,000/- for smooth running of the
business. On this figure regular payin/payout shall
take place.
This acceptance letter is for acknowledging the above
debt and shall be paid by me as per above
understanding.
Any assistance for the recovery, if required may please
be provided to me.
With regards
(Khailesh Garg)
Hathras
Above matter is considered favourable and as asked
for credit limit is allowed with an assurance that full
cooperation shall be provided by Mr. Khailesh Garg
for smooth running of the business. It is advised that
VSAT from NEAT shall be shifted to CTCL VSAT for
risk control. VSAT may also made available by the
company at free of cost except installation charges but
maintenance charges i.e. around Rs. 5,000/-- is to be
paid by Mr. Khailesh Garg. If he agreeable then
process may be started.
(V.D. Aggarwal)"
14. This was a settlement of sorts between the Petitioner and the
Respondent. It is not disputed that the Petitioner had signed this letter. Only
a vague averment in the Petition is made challenging this letter. This letter is
addressed to Abhipra Commodity Consultants Pvt. Ltd. Thus, the Petitioner
has been taking a completely dishonest stand, both in the reply to the notice
as also before this Court in the present petition firstly, as having not signed
the agreement and secondly that he has not signed any settlement.
15. The Learned Arbitrator has taken all steps required in law to ensure
that the Petitioner is duly served with the notices in the arbitration
proceedings. If a party chooses not to participate in the arbitration
proceedings, it chooses to do so at its own peril. The Petitioner was well
aware through the legal notice, through repeated notices by the Ld.
Arbitrator that the Respondent had commenced arbitration proceedings
against him.
16. The award to the extent admitted by the Petitioner in his letter dated
13th April, 2006 for a sum of Rs.23,01,316.80/- is upheld.
17. Insofar as damages in respect of reputation and goodwill and legal
costs are concerned, since there is no evidence on record, the same deserves
to be set aside. The Petitioner shall pay the entire sum due within a period of
two months, failing which, interest shall be payable @ 8% per annum from
the date of award. In the facts of the case, since the present petition was
pending before this Court, interest from date of award is not being granted so
long as the payment is made within two months from today.
18. OMP is disposed of.
PRATHIBA M. SINGH
JUDGE
NOVEMBER 22, 2018
Rahul
