Ranu Enterprises & Anr. vs Malanpur Captive Power Ltd.
2018 Latest Caselaw 5827 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                   Date of Decision: 26.9.2018
+      O.M.P. (T) (COMM.) 18/2017
       RANU ENTERPRISES & ANR.               ..... Petitioners
                    Through: Mr. Gulshan Chawla, Adv.

                            versus

       MALANPUR CAPTIVE POWER LTD.         ..... Respondent
                   Through: Mr. Surender Kumar Gupta, Mr.
                            Prashant Rawat and Ms. Priya
                            Mishra, Advs.


       CORAM:
       HON'BLE MR. JUSTICE RAJIV SHAKDHER

RAJIV SHAKDHER, J. (ORAL)

1. This petition is directed against the order dated 6.12.2014 passed by the learned Arbitrator.

2. By virtue of this order, the learned Arbitrator terminated the arbitration proceedings in exercise of powers under Section 25 of the Arbitration and Conciliation Act, 1996 (for short '1996 Act').

3. It may be noted that the learned Arbitrator upon his appointment had fixed the first sitting in the matter on 20.11.2013. 3.1 On that date, the learned Arbitrator, inter alia, fixed a schedule for filing the pleadings.

3.2 In particular, the petitioner was given time to file the statement of claim on or before 14.12.2013.

4. The next date of hearing was fixed on 28.3.2014.

O.M.P. (T) (COMM) 18/2017                                                Page 1
 4.1    Pertinently, on 20.11.2013, the learned Arbitrator noted the stand

taken by the parties before him that they were attempting an amicable settlement in the matter.

5. The record shows that prior to the hearing fixed on 28.3.2014. The advocate for the petitioner, one, Mr. Prashant Shukla, advocate, on 25.3.2014, sought an adjournment in the matter on the ground that parties were still exploring the possibility of settling the matter. 5.1 As a result, the learned Arbitrator fixed a fresh date of hearing in the matter. The matter was ordered to be listed on 18.4.2014.

6. The record also shows that on 18.4.2014, a request for an adjournment was, once again, made, albeit, on behalf of the respondent. 6.1 Taking into account the request, the learned Arbitrator fixed 3.7.2014 as the date of hearing.

7. On account of the aforesaid circumstances, in effect, 3.7.2014 was the second sitting which the learned Arbitrator had in the matter. 7.1 The proceedings on that date were slated to be held at 4.00 p.m. However, a request was received from the advocate of the petitioner, i.e. Mr. Prashant Shukla, via an email which was received by the learned Arbitrator at 3.16 p.m. for deferment of the case on the ground that he was seeking a discharge in the matter.

8. Having regard to the aforesaid circumstances obtaining in the matter, the learned Arbitrator re-notified the proceedings for 26.7.2014.

9. The record shows that on 26.7.2014 there was no representation on behalf of the claimant.

10. The learned Arbitrator, however, granted further four weeks to the petitioner to file its statement of claim.

O.M.P. (T) (COMM) 18/2017 Page 2

11. The matter was listed by the learned Arbitrator for further proceedings on 25.10.2014.

12. On 25.10.2014, the learned Arbitrator on reviewing the case file noticed that his office had failed to dispatch a copy of the order dated 26.7.2014 to the parties herein.

13. Having regard to this circumstance, even though, there was delay on the part of the petitioner in filing the statement of claim, one last opportunity was given to file the statement of claim, albeit, within a period of four weeks.

14. The matter was thereafter adjourned to 6.12.2014.

15. On 6.12.2014, the learned Arbitrator noticed that while the statement of claim had been filed, it had various deficiencies and that the advocate who represented the petitioner on that date was not carrying his vakalatnama.

16. The observations made by the learned Arbitrator, in this behalf, in the order dated 6.12.2014, are extracted hereafter:

"....A perusal of the Statement of Claim filed by Mr. Dixit reveals that the same is not signed by the Claimant but only by Mr. Dixit. It is also not verified nor supported by any affidavit. When requested for his Vakalatnama, Mr. Dixit stated that he had been engaged by Mr. Yadav only today and therefore, offered to file it shortly after the hearing as he did not have a vakalatnama handy. He however, stated that Mr. A.L Yadav was the authorized representative of the Claimant. At this juncture, I requested Mr. Yadav to produce his letter of authority. In response, Mr. Yadav handed over a letter dated 03.07.2014 on the letterhead of Ranu Enterprises which is taken on record as Ex.A. A copy of the same is also handed

over to Mr. Malhotra.

O.M.P. (T) (COMM) 18/2017 Page 3 A perusal of Ex.A reveals that it is purportedly signed by "(Ms. Madhu Yadav) (Partner)" as 'Authorized Signatory' for Ranu Enterprises and states that Mr. A.L Yadav is authorized to "act on our behalf in all matters relating to application for equipment authorization, including signing of all documents relating to these matters. Any and all acts carried by Mr. A.L Yadav shall have the same affects as acts of our own."

Apart from the fact that Ex. A does not authorize Mr. Yadav to act for Ranu Enterprises as an Authorised Representative in connection with the instant, or any other, legal proceedings, it cannot be taken cognizance of since it is purportedly issued by Ms. Madhu Yadav as a "Partner' of Ranu Enterprises whereas the Statement of Claim filed by Mr. Dixit states in paragraph 1 that "The Petitioner is a proprietorship firm...".

Clearly, Ex. A was not intended to authorize Mr. Yadav for the purpose of the present proceedings. As such, I have no option but to conclude that there is no "appearance" on behalf of the Claimant. Further, no "Statement of Claim" has been filed before me since the purported 'Statement of Claim' filed today is not signed by the Claimant nor is it verified or supported by a valid Affidavit.

Mr. Dixit, however, requests for grant of a last and final opportunity to file a duly verified and supported Statement of Claim as also his Vakalatnama. He offered to file the same within a period of 12 hours failing which the proceedings could be terminated. This is opposed by Mr. Malhotra who points out that in fact, the notice to terminate the proceedings was issued on 26th July. 2014 but that the Claimant had got the benefit of additional time only owing to the fortuitous circumstance that the Order dated 26th July 2014 was inadvertently not sent out by my office. He also states that there are no credible reasons for granting the Claimant any additional time in the matter.

In this background, I requested from Mr. Dixit/Mr.

Yadav to clarify the reasons for the Claimant's failure to appear on previous occasions as also to file its statement of

O.M.P. (T) (COMM) 18/2017 Page 4 Claim, Mr. Yadav informs me that his previous advocate had not communicated the Orders dated 20.11.2014 and did not keep him advised of the subsequent developments. He further states that while he received the e-mail dated 26.07.2014 sent by me to Mr. Prashant Shukla only on 3rd July 2014 as a forward to Mr. Shukla's e-mail dated 3.07.2014 sent to me notifying me of his 'discharging himself from the brief. He also states that he received an SMS from Mr. Shukla notifying him that the matter had been renotified to 4th July 2014.1 am also informed that Mr. Yadav visited my Chambers on 4th July 2014 to inquire about the matter. He, however, confirms that that he did not meet me and that he was not notified of the next date. He also states that he visited my Chambers on or around the 4th-5th November 2014 to enquire about the matter. Once again, he confirms that he did not meet with me."

(emphasis is mine)

17. As would be evident from reading the aforesaid extract, the counsel for the petitioner, i.e. Mr. Abhay Dixit, had sought a leeway of 12 hours to rectify the defects in the statement of claim and file his vakalatnama. Since the objections were taken by the counsel for the respondent, the learned Arbitrator proceeded to terminate the arbitration proceedings.

18. The record shows that this petition was filed on 25.2.2017.

19. On the previous date, i.e. 6.7.2018, I had directed the counsel for the petitioner to file an affidavit setting out reasons for delay in filing the instant petition.

20. It may be noted that in the first paragraph of the order dated 6.7.2018 the date of filing the instant petition has been noted as 2.1.2017.

21. This date, as noted in the order, is not correct. As observed above, the correct date for filing the petition is 25.2.2017.

22. The petitioner has, in fact, filed an affidavit setting out various

O.M.P. (T) (COMM) 18/2017 Page 5 reasons in paragraphs 3 to 11 of the affidavit.

23. Amongst the reasons set out in the affidavit, it has been averred by the affiant that though the learned Arbitrator terminated the proceedings on 6.12.2014, the advocate for the respondent had assured that the matter would be settled.

24. The other reason given is that even though the petitioner approached his advocate, Mr. Abhay Dixit, to prepare a proper action to be filed in this Court for seeking relief qua the order passed by the learned Arbitrator, he failed to comply with the instructions given in that behalf.

25. Affiant goes on to state that, as a matter of fact, another advocate by the name of Mr. Ankit Gaurav Kainth was engaged who was paid a fee in the sum of Rs.50,000/- to take steps in the matter.

26. According to the affiant, despite the cheque for the fee having been encashed, no steps were taken by Mr. Kainth.

27. In sum, the affiant says that the delay was on account of his advocates not acting with due alacrity despite instructions being given to file an action in this Court against the order passed by the learned Arbitrator terminating the arbitration proceedings.

28. Mr. Chawla, who, appears for the petitioners, has, based on the record and the pleadings, contended that the delay in filing the statement of claim was primarily on the account that the petitioners believed that the matter would be settled.

29. Learned counsel further submits that, thereafter, though the statement of claim was filed it, concededly, contained defects. Consequently, on behalf of the petitioner a request had been made to the learned Arbitrator to give short accommodation to remove the defects.

O.M.P. (T) (COMM) 18/2017 Page 6

30. Furthermore, it is submitted by Mr. Chawla that thereafter the petitioners did take steps to approach the Court at the earliest, however, they were let down by their advocates.

31. In support of his submission Mr. Chawla has relied upon the judgment of the Supreme Court rendered in Rafiq and Anr. vs. Munshilal and Anr., AIR 1981 SC 1400, for the proposition that litigants should not be made to suffer on account of inaction of their lawyers.

32. Insofar as the aspect of maintainability of this petition is concerned, learned counsel for the petitioners has relied upon the judgment of the Supreme Court in Lalit Kumar V. Sanghavi (Dead) and Anr. vs. Dharamdas V. Sanghavi & Ors., (2014) 7 SCC 255, to contend that the instant action is maintainable.

33. Mr. Gupta, who appears on behalf of the respondent, says that a perusal of the record would show that despite several opportunities having been given to the petitioners to file their statement of claim, no steps were taken and, therefore, the learned Arbitrator was left with no choice but to terminate the arbitration proceedings.

34. For this purpose, Mr. Gupta drew my attention to the proceedings dated 26.7.2014 and 25.10.2014.

35. Furthermore, Mr. Gupta submitted that the petitioners in the affidavit dated 28.7.2018 had wrongly shifted the blame onto the respondent.

36. It was the learned counsel's submission that there was no assurance given by the counsel for the respondent that the dispute would be settled on the date when learned Arbitrator terminated the arbitration proceedings.

37. Mr. Gupta found fault even with the averments made in the affidavit dated 28.7.2018.

O.M.P. (T) (COMM) 18/2017 Page 7

38. It was pointed out by Mr. Gupta that if the petitioners were genuinely aggrieved by the inaction of their lawyers they ought to have filed complaints with the concerned Bar Council.

39. It was the learned counsel's submissions that since no such complaints were filed, the averments made in the affidavit cannot be relied upon.

40. I have heard the learned counsel for the parties and perused the record clearly.

41. What emerges therefrom is as follows:

(i) The parties did engage in settlement talks. This is evident upon perusing the proceeding sheet of 20.11.2013 and emails dated 25.3.2014 and 18.4.2014.

(ii) The email dated 25.3.2014 was sent on behalf of the petitioners to the learned Arbitrator seeking accommodation on the ground that parties were attempting a settlement in the matter.

(iii) The second email dated 18.4.2014 was in fact sent by the respondent seeking accommodation in the matter on ground that parleys for settlement were on.

(iv) Furthermore, the record, thus, show that insofar as the hearing fixed on 3.7.2014 was concerned, the petitioners' advocate, one, Mr. Shukla withdrew at the eleventh hour leaving a very little time for the petitioners to engage another advocate on their behalf.

(v) Insofar as the hearing fixed by the learned Arbitrator on 26.7.2014 is concerned, it is evident that parties had no notice of the said proceedings. The learned Arbitrator, in fact, in the subsequent hearing, conveyed on 25.10.2014 clarified that his office had been remiss in despatching the order

O.M.P. (T) (COMM) 18/2017 Page 8 sheet of 26.7.2014.

(vi) The record further shows that on 25.10.2014, the learned Arbitrator, once again, gave time to the petitioners to file their statement of claim.

(vii) The petitioners finally did place before the learned Arbitrator their statement of claim which, concededly, was defective.

(viii) The petitioners' counsel, however, had asked for a short accommodation to rectify the defects in the statement of claim and for placing his vakalatnama on record.

(ix) Since this request was opposed by the counsel for the respondent, the learned Arbitrator after examining the record decided to terminate the proceedings.

42. In my view, while there was undoubtedly delay on the part of the petitioners in filing their statement of claim, some amount of delay took place as parties were engaged in negotiations to arrive at a settlement in the matter.

42.1 The fact that the petitioners' advocate withdrew, it appears, did cause a setback to the petitioners and hence the delay in placing the statement of claim before the learned Arbitrator which, as indicated above, was placed before him on 6.12.2014.

43. Therefore, having, regard to the overall circumstances, including the affidavit filed in this Court whereby the petitioners have attempted to explain the delay in approaching this Court, I am of the view that one more opportunity ought be given to the petitioners to have their claims tried on merits.

43.1 The reason I have chosen to adopt this approach is on account of the fact that often clients are short-changed by lawyers engaged to prosecute

O.M.P. (T) (COMM) 18/2017 Page 9 their matters.

44. Courts have often noted this difficulty which is faced by the clients. This case is no different. Mr Shukla chose to literally seek discharge from the case at the eleventh hour. Mr. Dixit chose not to act on instructions, while Mr Kainth after having encashed the cheque of Rs. 50,000 chose not to act on the instructions of the petitioners. The argument that the petitioners should lodged complaints with the Bar Council proceeds on the hypothesis that the assertions made in the affidavit are untrue. My sense is that they are not. Since, there is nothing which would contradict the assertions made on affidavit I intend to accept them.

45. The Supreme Court, as rightly pointed out by the learned counsel for the petitioners, has noted this malice in the judgment rendered by it in Rafiq (supra).

45.1 For the sake of convenience, the observations made are extracted therein:

"...3. The disturbing feature of the case is that under our present adversary legal system where the parties generally appear through their advocates, the obligation of the parties is to select his advocate, brief him, pay the fees demanded by him and then trust the learned advocate to do the rest of the things.

The party may be a villager or may belong to a rural area and may have no knowledge of the court's procedure. After engaging a lawyer, the party may remain supremely confident that the lawyer will look after his interest. At the time of the hearing of the appeal, the personal appearance of the party is not only not required but hardly useful. Therefore, the party having done everything in his power to effectively participate in the proceedings can rest assured that he has neither to go to the High Court to inquire as to what is happening in the High Court with regard to his appeal nor is he to act as a watchdog of the advocate that the latter appears in the matter when it is

O.M.P. (T) (COMM) 18/2017 Page 10 listed. It is no part of his job. Mr. A.K. Sanghi stated that a practice has grown up in the High Court of Allahabad amongst the lawyers that they remain absent when they do not like a particular Bench. Maybe, we do not know, he is better informed in this matter. Ignorance in this behalf is our bliss. Even if we do not put our seal of imprimatur on the alleged practice by dismissing this matter which may discourage such a tendency, would it not bring justice delivery system into disrepute. What is the fault of the party who having done everything in his power expected of him would suffer because of the default of his advocate. If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. The problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate omission, or misdemeanour of his agent. The answer obviously is in the negative. Maybe that the learned advocate absented himself deliberately or intentionally. We have no material for ascertaining that aspect of the matter. We say nothing more on that aspect of the matter. However, we cannot be a party to an innocent party suffering injustice merely because his chosen advocate defaulted. Therefore, we allow this appeal, set aside the order of the High Court both dismissing the appeal and refusing to recall that order..."

(emphasis is mine)

46. Therefore, having regard to the foregoing discussion, I am inclined to set aside the order and remit the matter to the learned Arbitrator with a request to take up the proceedings, once again, for adjudication, subject to payment of costs of Rs.30,000/- to the respondent. The costs will be paid within two weeks from today.

47. Since the statement of claim has already been placed on record with the learned Arbitrator which is defective, the petitioners are given liberty to file a proper statement of claim with the learned Arbitrator within a period

O.M.P. (T) (COMM) 18/2017 Page 11 of two weeks.

48. Parties and their counsel will appear for this purpose before the learned Arbitrator on 25.10.2018 at 3.00 p.m.

49. In case, the date given by this Court is not convenient to the learned Arbitrator, he will fix another date which would be proximate to the date fixed by this Court.

50. The time for proceedings as envisaged under the 1996 Act will commence from the aforementioned date.

51. The petition is disposed of in the aforesaid terms.

52. The Registry will despatch a copy of this order to the learned Arbitrator, i.e. Mr. Rajshekhar Rao.

                                                     RAJIV SHAKDHER, J
SEPTEMBER 26, 2018
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O.M.P. (T) (COMM) 18/2017                                              Page 12