Arb.O.P (Com.Div.) No.225 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 09.10.2025
CORAM
THE HON'BLE Mr. JUSTICE N. ANAND VENKATESH
Arb.O.P (Com.Div.) No.225 of 2023
1.M/s.Shlok Enterprises
2.Suhas Chaudhari
3.Kiran Keluskar ... Petitioners
Versus
TVS Motor Company Ltd.,
Regd. Office at Chaitanya ... Respondent
Prayer: Arbitration Original Petition (Commercial Division) filed under
Section 34(2)(a) of the Arbitration and Conciliation Act, 1996 to set aside
the award dated 14.12.2022 passed by the learned Sole Arbitrator,
Mr.A.K.Kumarasamy, Senior Advocate and to direct the respondent to pay
the costs.
For Petitioners : Ms.A.Rithika
For Respondent : Mr.Vishnu Mohan
ORDER
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Arb.O.P (Com.Div.) No.225 of 2023
This petition has been filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the Act), challenging the
award passed by the Sole Arbitrator dated 14.12.2022.
2.The respondent is the claimant. The respondent, in the course of its
business, appointed Dealers and Part Stockists for sale of their products for
different regions in India. The respondent issued a letter of offer and the
same was accepted by the petitioners. The dealers for sale of the products
belonging to the respondent are classified as 'Authorised Main Dealers',
'Authorised Dealers' and 'Authorised Part Stockists'. The petitioners were the
Authorised Part Stockists for the areas specified by the respondent. The
letter of offer dated 27.09.2017 (Ex.C2) was accepted by the petitioners. The
transactions commenced from 01.04.2017 and they ended on 31.03.2020.
3.According to the respondent/company, as on 21.06.2021, there was
an outstanding amount of Rs.1,16,82,191.57 due and payable by the
petitioners towards value of goods supplied. A notice dated 07.07.2020 was
also issued to the petitioners calling upon them to clear the outstanding
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amount. On receipt of the same, a reply was given. Ultimately, since the
amount was not settled, the respondent raised the dispute before the learned
Sole Arbitrator in line with Clause 26 of the letter of offer dated 27.09.2017.
4.The petitioners had broadly taken a defence that the respondent
delivered the spare parts to the old address even after the petitioners had
shifted the place of business and as a result, the petitioners sustained
monetary loss and they sent back the excessive goods, which were sent by
the respondent without any order being placed.
5.The other ground raised is that one of the agents, without the
concurrence of the petitioners, had uploaded orders in DMS and the delivery
has also been effected. The agreement only contemplated advance payment
basis and it never contemplated supply of goods on credit basis and
therefore, the claim that was made by the respondent cannot be sustained.
6.The other ground that was raised by the petitioners is that there was
no agreement between the parties for distribution of oil and it was not
covered under the agreement and whereas the respondent has sent the oil
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under the threat of closing the business and the petitioners were forced to
deal with the oil, which resulted in heavy loss to the petitioners.
7.The petitioners also made a counter claim for a sum of
Rs.20,00,000/- from the respondent.
8.The learned Sole Arbitrator, on considering the claim and the
defence taken by the petitioners and considering the claim made by the
respondent along with the counter claim, framed the following issues insofar
as the claim made by the respondent:
'1. Whether relationship between the Claimant and
Respondents is in the nature of Principal & agent or Seller &
Purchaser?
2. Whether the Respondent is liable to pay Rs.1,16,82,191.57/-
along with the interest at rate of 18%?
3. Whether the Respondents are liable to pay costs incurred in
Arbitration proceedings and the Claimant is entitled to any
other reliefs?'
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9.Insofar as the counter claim made by the petitioners, the following
additional issues were framed:
'4. Whether the Letter of Offer dated 27.09.2017 confers
jurisdiction for the arbitrator to adjudicate upon claim for
stocks sent on credit?
5. Whether the Claimant be directed to take back the unsold
goods, materials in stockyard of the 1ª Respondent Company
and give full credit to the same and also to the already returned
goods?
6. Whether the Respondents are entitled for the charges
incurred in supply of goods at wrong address by the Claimant?
7. Whether the Respondents are entitled for the overhead
expenditure of rent incurred?
8. Whether the Claimants supplied goods over and above the
requirement unilaterally?
9.Whether the counter claim of Respondents for Rs.10,00,000/-
is to be allowed and the claim be dismissed in toto?
10. Whether the Claimant is liable to compensate the
Respondents in respect of short supply of goods?
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11. Whether the Respondents are entitled for return of
Rs.1,00,000/- as refund of security deposit?
12. Whether the Respondents are entitled to costs of counter
claim and the Respondents are entitled to any other reliefs?'
10.The respondent had examined CW1 and marked Exs.C1 to C16.
No one was examined on the side of the petitioners and Exs.R1 to R29 were
marked on the side of the petitioners. The learned Sole Arbitrator came to a
conclusion that the respondent is entitled for the following reliefs:
1. 2W Spare Part Rs. 67,76,136.17
2. TRU4 Lubricants Rs. 11,12,930.46
3. Interest on overdue payments Rs. 36,96,069.94
4. Total Rs.1,15,85,136.57
The Sole Arbitrator has held that the petitioners are entitled for the counter
claim in the following manner:
1. Credit for returned parts Rs.3,10,699.22
2. Orders placed under Inventory funding Rs.2,07,383.15
(ZSIF) and paid by TATA Capital
3. Security Deposit Rs.1,00,000/- with 9% Rs.1,33,928.76
interest per annum from 27.09.2017 till
the date of claim 03.07.2021
4. Total Rs.6,52,011.13
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11.The learned Sole Arbitrator by setting off the counter claim made
in favour of the petitioners, awarded a total sum of Rs.1,09,33,125/- to the
respondent along with interest at the rate of 18% per annum from the date of
claim till the date of realisation.
12.Learned counsel for the petitioners broadly raised three issues and
they are:
a)The award given in favour of the respondent insofar as TRU4
lubricants to the tune of Rs.11,12,930.46, is beyond the scope of the
agreement and the agreement never contemplated supply of TRU4
lubricants;
b)The agreement only contemplated advance payment basis and both
the parties never intended supply of goods on credit basis and therefore, the
claim made by the respondent was beyond the scope of the agreement;
c)There was an un-authorised punching of invoices by the official,
belonging to the respondent company, which was complained by the
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petitioners and as a result of which the goods were virtually dumped by the
respondent and this issue was not properly considered by the learned Sole
Arbitrator on the materials that were available.
13.In view of the above, the learned counsel for the petitioners
submitted that the award is liable to be interfered under Section 34(2)(b)(ii)
and 34(2-A) of the Act.
14.Per contra, the learned counsel for the respondent submitted that
the learned Sole Arbitrator has dealt with each and every issue that was
raised by the learned counsel for the petitioners and has provided reasons
and those reasons does not suffer from any perversity or manifest illegality.
Learned counsel further submitted that the view taken by the learned Sole
Arbitrator is a possible view and the same was based on the evidence relied
upon and therefore, this Court cannot sit on appeal against the view taken by
the Sole Arbitrator. Learned counsel for the respondent sought for dismissal
of this petition.
15.This Court carefully considered the submissions made on either
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side and the materials available on record.
16.The first issue that has been raised on the side of the petitioners is
that the agreement does not cover TRU4 lubricants and the agreement also
does not cover supply of goods on credit basis. Therefore, those issues, that
were decided by the Sole Arbitrator, are beyond the scope of the agreement.
The learned Sole Arbitrator has dealt with those issues elaborately. The
learned Sole Arbitrator has rendered a finding that on 28.04.2020, the
respondent had sent an arbitral notice, which was marked as Ex.C5 and for
which the petitioners issued a reply dated 07.07.2020 (C7), wherein the
petitioners never disputed the arbitrability of the dispute. Even in the counter
statement and in the counter claim filed by the petitioners, the said issues
have not been raised. It was only in the re-joinder statement, the petitioners
had raised those issues.
17.Insofar as the first issue, regarding the claim made for the supply
of TRU4 lubricants is concerned, the learned Sole Arbitrator has rendered a
finding that totally 6 invoices were raised towards TRU4 lubricants and the
petitioners, at no point of time, had disputed the veracity of invoices and
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also the ledger entries. The only ground that has been taken by the
petitioners is that at some point of time, they were forced to take the
lubricant oil with the threat of closing down the business. This issue was
raised for the first time before the learned Sole Arbitrator at the time of
filing the re-joinder statement. In view of the same, the learned Sole
Arbitrator has concluded that the petitioners have not disputed the invoices
that were raised and they have also not disputed the ledger entries that were
made and hence, the petitioners cannot be permitted to raise a dispute for the
supply of oil when they have not even lifted their little finger when the
invoices were raised.
18.Insofar as the other ground raised by the petitioners to the effect
that the agreement is only for cash and carry transaction, the learned Sole
Arbitrator has taken into account clause 26 of the letter of offer and
concluded that the said clause does not restrict its applicability to the cash
and carry transaction and that it covers all the disputes that may arise in the
course of business between the parties. The preliminary objection that was
raised by the petitioners, was answered by the Sole Arbitrator by assigning
reasons and the same does not suffer from any perversity and manifest
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illegality.
19.The other issue that has been raised on the side of the petitioners to
the effect that un-authorised punching of invoices is concerned, this issue
was dealt with in issue No.8 by the learned Sole Arbitrator. The learned Sole
Arbitrator has taken into consideration Ex.R4, which was marked on the side
of the petitioners to the effect that goods were supplied without the
knowledge of the petitioners, based on the order that was placed by one
Anirvan. The petitioners have sought for taking back those goods after
adjusting with the stocks already in their possession. However, the learned
Sole Arbitrator found that the petitioners, through their subsequent
communications, were seeking to despatch the goods that were stopped by
the respondent/company. The learned Sole Arbitrator found that the
petitioners, at no point of time, had protested the so called dumping of goods
and instead they were only requesting the respondent/company to despatch
the goods under the inventory funding. This was done to bring down the
dues by virtue of the meeting conducted on 11.01.2019 to reconcile the
issues between the parties and and this meeting was conducted mutually to
bring down the dues and the Minutes of meeting was also marked as Ex.C5.
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The learned Sole Arbitrator by placing reliance upon the Minutes of meeting
has given a finding that the issue of supply of goods was not even agitated in
the meeting. Therefore, if really there are differences arising out of the
business transaction and the parties had agreed to resolve the dispute, the
same should have been raised in the meeting and that there is no evidence let
in on the side of the petitioners to show that the goods were dumped. The
learned Sole Arbitrator has also rendered a finding that there is no evidence
let in by the petitioners regarding the supply of goods over and above the
requirement of the petitioners.
20.In view of the above, this Court finds that the grounds that have
been raised on the side of the petitioners have been dealt with by the learned
Sole Arbitrator and the reasons have been assigned and those reasons does
not certainly suffer from any perversity or manifest illegality.
21.Learned Sole Arbitrator has also considered the counter claim
made by the petitioners and has awarded a sum of Rs.6,52,011.13, for which
reasons have been assigned from paragraph Nos.64 to 69 of the award. The
award passed by the Sole Arbitrator cannot be interfered with on the grounds
which are not envisaged under Section 34 (2) or even (3) of the Act. There
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can be no interference with the factual findings of the Arbitral Tribunal,
unless they are perverse. A possible view taken by the Arbitrator, on the
facts, has to be respected.
22.It is now well settled that the Arbitrator is the ultimate master of
the quantity and quality of evidence to be relied upon. The Hon'ble Apex
Court had an occasion to deal with the scope of the term 'patent illegality' in
a recent judgment in OPG Power Generation Private Limited v. Enexio
Power Cooling Solutions India Private Limited and another reported in
2025 (2) SCC 417. Paragraph No.73 of the said judgment is extracted
hereunder:
"73. In a recent three-Judge Bench decision of this Court in DMRC
Ltd. v. Delhi Airport Metro Express (P) Ltd. [(2024) 6 SCC 357],
the ground of patent illegality/perversity was delineated in the
following terms:
"39. In essence, the ground of patent illegality is
available for setting aside a domestic award, if the decision of
the arbitrator is found to be perverse, or so irrational that no
reasonable person would have arrived at it; or the
construction of the contract is such that no fair or reasonable
person would take; or, that the view of the arbitrator is not
even a possible view. A finding based on no evidence at all or
an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside under
the head of "patent illegality". An award without reasons
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would suffer from patent illegality. The arbitrator commits a
patent illegality by deciding a matter not within its
jurisdiction or violating a fundamental principle of natural
justice."
23.This Court finds that none of the above requirements has been
satisfied in this case. The learned Sole Arbitrator has considered every
ground and has rendered finding based on the facts and the evidence that
was let in and this Court cannot sit on appeal and interfere with the same.
This Court does not find any ground to interfere with the award passed by
the learned Sole Arbitrator. Accordingly, this petition stands dismissed with
costs of a sum of Rs.1,50,000/- payable by the petitioners to the respondent.
09.10.2025
vga
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Arb.O.P (Com.Div.) No.225 of 2023
N. ANAND VENKATESH, J.
vga
Arb.O.P (Com.Div.) No.225 of 2023
09.10.2025
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