Madras High Court
Kothari Industrial Corporation ... vs M/S.Southern Petrochemicals ... on 29 September, 2021
OSA (CAD) No.83 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.09.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU
OSA (CAD) No.83 of 2021
Kothari Industrial Corporation Limited,
rep. by its Chairman Pradip D.Kothari,
No.114, Nungambakkam High Road,
Kothari Building, 4th Floor,
Chennai – 600 034. ... Appellant
Vs.
1.M/s.Southern Petrochemicals Industries
Corporation Limited,
rep. by its General Manager (Legal)
R.Venkata Krishnan,
No.88, Mount Road, Guindy,
Chennai – 600 032.
2.The Sole Arbitrator,
Justice F.M.Ibrahim Kalifulla,
Former Judge, Supreme Court of India,
No.141, Eldams Road, Flat No.4,
Ground Floor, Chennai – 600 018. ... Respondents
(Respondent No.2 deleted from the array
of parties as per this judgment)
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OSA (CAD) No.83 of 2021
Prayer: Appeal filed under Section 13(1) of Commercial Courts Act,
2015 read with Order XXXVI Rule 1 of the Original Side Rules and
under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996
against the order dated 23.02.2021 passed in O.P.No.361 of 2018.
For Appellant : Mr.S.Sivaraman
For Respondent : Ms.Nalini Chidambaram
Senior Counsel
for Ms.C.Uma
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
This appeal is in complete abuse of the process and a
dishonest attempt by the appellant to wriggle out of its obligation.
2. For a start, the name of the second respondent is deleted
from the array of parties. It is a pernicious practice in this court to
implead arbitrators or arbitral tribunals when there is no need to do
so. Often, arbitrators are embarrassed upon receipt of notice. It is
only in a rare case when a personal allegation is made against an
arbitrator may such arbitrator be impleaded. Just as in case of a
revision or an appeal the lower forum or the Judge manning the
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OSA (CAD) No.83 of 2021
lower forum is not impleaded as a party, in proceedings under
Section 34 of the Arbitration and Conciliation Act, 1996, the
arbitrator or the members of the arbitral tribunal are utterly
unnecessary parties unless specific personal allegations are levelled
against them that would require such persons to answer the
allegations.
3. The appeal arises out of an order dated February 23, 2021
passed on the appellant's petition under Section 34 of the said Act.
The order impugned refers to the nature of the challenge canvassed
and notices that by an order of January 6, 2017, the then Hon'ble
Chief Justice of this court was pleased to appoint an arbitrator
following a request under Section 11(6) of the said Act. Indeed,
the order of the Chief Justice had dwelt on the aspect of limitation
which was later canvassed by the appellant before the arbitrator
and which has also been taken as a ground in the present appeal.
4. At paragraph 11 of the impugned judgment, the principal
grounds of challenge fashioned before the arbitration court were
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OSA (CAD) No.83 of 2021
recorded. The first ground was that the arbitral proceedings were
not maintainable since the arbitration clause was incorporated in an
agreement of sale of 1987 which had come to an end upon the
execution of the sale deed in the year 1989. The second ground
was that the claim ought to have been made within three years
from the demand made on December 24, 2001. Incidentally, the
claim was made on account of electricity dues by Tamil Nadu
Electricity Board in respect of a unit that was formerly owned and
controlled by the appellant herein and, by the sale completed in the
year 1989, such unit stood transferred to the respondent herein.
The third ground was that there was no agreement for grant of
interest and, as such, the award of interest by the arbitrator was
flawed.
5. The most important ground appears not to have been
recorded in the judgment impugned. It is the contention of the
appellant herein that the liability that had arisen pertained to the
unit that had been transferred by the appellant to the respondent
and the respondent had issued a letter of undertaking to TNEB to
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OSA (CAD) No.83 of 2021
take responsibility for discharging the debt which was the subject-
matter of a challenge by way of a writ petition. The writ petition
had been filed by the appellant herein upon a demand for a sum of
about Rs.82,77,622.88 being made on account of withdrawal of
tariff concession. The respondent herein got impleaded in the writ
petition and undertook in writing to discharge the liability on such
account. The writ appeal finally failed. The liability had to be
discharged by the respondent by virtue of the undertaking
furnished in court or made available to the electricity authorities.
6. A claim was subsequently made on the appellant herein on
the ground that it was the appellant herein which was liable for the
payment to the electricity authorities and the fact that the
respondent had discharged the liability entitled the respondent to
seek refund of the entire amount from the appellant herein. It may
also be noticed that by the time the writ appeal failed, the total
amount due to the licensee was swelled to over Rs.2 crore and the
entirety of the liability was discharged by the respondent by
payment to the appropriate authorities.
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OSA (CAD) No.83 of 2021
7. In the award rendered by the arbitrator on September 30,
2017, the matter has been discussed in great detail. The discussion
begins from paragraph 25 of the award and at paragraph 51
thereof, the arbitrator holds as follows:
“(51) It is true that the said payment was made by TPL
on 18.09.2002. On behalf of the Respondent it was
pointed out that there was an undertaking executed by
the Claimant in favour of the Electricity Board on
01.07.1991, wherein the Claimant with its eyes wide
open undertook not to claim any relief as against the
Electricity Board arising out of the Writ Petitions filed
by the Respondent and that even if ultimately some
impediment was created for the Board to recover the
said sum, the Claimant would discharge the liability of
the belated payment surcharge. The learned counsel
would, therefore, contend that the said undertaking,
namely Ex.C-9 would preclude the Claimant from
making a claim as against the Respondent. The said
submission is absolutely without any substance. In my
humble opinion, it was an undertaking executed by the
Claimant in favour of the Electricity Board and the
Respondent was not a party to the said undertaking.
The said undertaking came to be executed by the
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OSA (CAD) No.83 of 2021
Claimant to and in favour of the Electricity Board to the
effect that it would not claim any benefit even if the
litigations preferred by the Respondent went against
the Electricity Board. There is no specific undertaking
in the said document that the Claimant gave up its
rights even as against the Respondent. Therefore, I do
not find any scope to use the said document Ex.C-9 to
deprive the Claimant of its entitlement as against the
Respondent herein.”
8. What is recorded at the paragraph quoted above is only the
culmination of the discussion and the finding pertaining to the
relevant documents rendered by the arbitrator. Over at least the
previous 18 pages of the award, the aspect of limitation, the aspect
of liability and of the appellant herein having taken the benefit of
the concession were referred to in great detail.
9. In the judgment and order impugned, the arbitration court
noticed, inter alia, at paragraphs 14 to 16 thereof that the arbitrator
had discussed the issue at length and had come to the conclusion
that the claim was not barred by limitation. The court noticed that
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OSA (CAD) No.83 of 2021
there was no dispute between the parties at the relevant point of
time, since both the parties had challenged the demand of TNEB.
The arbitration court also referred to the examination of the
evidence by the arbitrator and indicated that in the limited scope of
interference available under Section 34 of the said Act, the court
was required to ascertain whether the impugned award suffered
from any patent illegality. Indeed, in the previous paragraphs of
the impugned judgment, the arbitration court noticed how the
reference was born and how the aspect of limitation that had been
urged even at the stage of Section 11 of the said Act had been dealt
with by the Hon'ble Chief Justice.
10. The scope of interference under Section 34 of the said Act
is limited. The court does not sit in appeal over an award which has
been challenged before it. The court does not re-appreciate the
evidence and it is judicially accepted that the arbitrator is the final
authority as to both the quality and the quantity of the evidence.
The order impugned appropriately reads the award, finds that the
arbitrator had applied his mind to the matters in issue and dealt
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OSA (CAD) No.83 of 2021
with all three aspects that were urged by the appellant before the
arbitration court, namely that the claim was not maintainable, that
the claim was barred by limitation and that no amount was payable
by the appellant herein, including the interest that has been
awarded. The arbitration court found adequate reasons having
been furnished by the arbitrator in the impugned award.
11. Once the appropriate tests are applied at the stage of
Section 34 of the said Act, there is very little room for an appellate
court to interfere with the order. Litigants appear to be taking a
chance by not accepting the finality of an award and questioning
the same on specious grounds by invoking Section 34 of the Act
and, even thereafter, pursuing worthless challenges in appeal from
the order of dismissal of the petition under Section 34 of the said
Act. One of the principal ways how litigants are encouraged to
adopt this procedure and clog up courts with undeserving matters is
the reluctance on the part of the courts to award appropriate costs.
In this case, both the petition under Section 34 of the said Act and
this worthless appeal were a complete waste of time. The
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OSA (CAD) No.83 of 2021
contention of the appellant that the arbitrator did not look into the
matter flies in the face of at least 20 pages of discussion in the
award.
12. For the aforesaid reasons, the judgment and order
impugned dated February 23, 2021 does not call for any
interference. The arbitral award dated September 30, 2017
appears to be perfectly justified and in order. For the appellant's
inglorious efforts in this court, the appellant will pay costs assessed
at Rs.50,000/- to the respondent herein and further costs assessed
at Rs.50,000/- to the Tamil Nadu State Legal Services Authority.
Such costs need to be tendered within a month from date.
OSA (CAD) No.83 of 2021 is dismissed as above.
C.M.P.No.16099 of 2021 is closed.
(S.B., CJ.) (P.D.A., J.)
29.09.2021
Index : No
sasi
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OSA (CAD) No.83 of 2021
To:
The Sub Assistant Registrar
Original Side
High Court, Madras.
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OSA (CAD) No.83 of 2021
THE HON'BLE CHIEF JUSTICE
AND
P.D.AUDIKESAVALU, J.
(sasi)
OSA (CAD) No.83 of 2021
29.09.2021
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