Punjab-Haryana High Court
Bharat Sanchar Nigam Ltd vs M/S Lovee Agencies And Anr on 2 September, 2024
Author: Suvir Sehgal
Bench: Suvir Sehgal
Neutral Citation No:=2024:PHHC:122085
FAO-2732-2022(O&M)
237
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
FAO-2732-2022
Date of Order:-02.09.2024
Bharat Sanchar Nigam Ltd.
...Appellant
Versus
M/s Lovee Agencies and another
...Respondents
CORAM : HON'BLE MR. JUSTICE SUVIR SEHGAL
Present :- Mr.K.K. Gupta, Advocate
for the appellant.
****
SUVIR SEHGAL, J.
1. This appeal has been filed under Section 37 of the
Arbitration and Conciliation Act, 1996 (for short "the Act") assailing
judgment dated 20.9.2021 passed by the learned Additional District
Judge, Ambala, whereby objections filed by respondent No.1 under
Section 34 of the Act against award dated 08.08.2017 passed by
respondent No.2, have been accepted.
2. Brief facts, leading to the filing of the instant appeal are that
the appellant entered into an agreement dated 19.1.2017 whereby
respondent No.1 was appointed as a franchisee for selling SIM cards to
new customers and was to be paid commission at the rate specified in
the agreement. Clause 30 of the agreement provided for the resolution of
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disputes, if any, through the medium of arbitration. When differences
arose between the parties, respondent No.2 was appointed as an
arbitrator by the appellant on 26.11.2016 pursuant to order dated
16.09.2015 passed by the learned Additional District Judge, Ambala.
Respondent No.1 filed a statement of claim before the arbitrator alleging
that an amount of Rs.2,90,200/- had been illegally recovered from the
commission payable to it, besides claiming compensation of Rs.2 lakhs.
The claim was opposed by the appellant by filing a statement of defence
and an award dated 08.08.2017 was announced by the arbitrator.
Dissatisfied with the award, respondent No.1 filed objections under
Section 34 of the Act, which have been accepted by learned Additional
District Judge, Ambala vide the impugned judgment.
3. The sole argument raised by Mr.K.K.Gupta, learned
counsel for the appellant is that the learned Additional District Judge,
has erred in accepting the objections on the ground that the award is
non-speaking. Referring to the award, he contends that the arbitrator has
given reasons in support of the findings arrived by him.
4. I have heard counsel for the appellant and examined the
documents placed on the record with the paper-book.
5. At the outset, the conclusion arrived at by learned
Arbitrator vide the award dated 08.08.2017 deserve to be noticed and are
reproduced hereunder:
"After going through the arguments of the parties and also
the documents submitted by the Respondent and the applicants, I
as the arbitrator in the case have come to the following
conclusion:-
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(1) The franchisee M/s Lovee Agencies have done a good job
by selling a large number of SIMs to the potential customers of
the Mobile services. They have also been duly compensated by
way of commission to the tune of approx.. Rs.30 Lakhs by the
respondent as per the Agreement.
(2) M/s Lovee Agencies have not been paid commission in
respect of 1451 SIMs sold by them, which were not recharged, to
that extent the commission is not payable to them and therefore
there is no loss to them as it amounts to only stopping of the
payment for services not rendered. This may not be treated as a
loss as no customer was acquired by BSNL in respect of these
SIMs.
(3) Non payment of Rs.2,90,200/- by the Respondent to the
applicant for the 1451 SIMs seems to be in order.
(4) The Franchisee M/s Lovee Agency who did a good job of
marketing and felt aggrieved on this account need to be
encouraged by giving them more business for the sake of
maintaining a better business relation.
(5) The loss claimed by the applicant and also by the
respondent are not tenable and not payable by either party.
(6) Parties will bear their own cost of Arbitration."
6. A bare perusal of the above reproduced relevant extract of
the award shows that the Arbitrator has not discussed the evidence
brought before him nor has he given any reasons in support of the
award. In Som Datt Builders Limited Versus State of Kerala (2009) 10
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SCC 259, Hon'ble Supreme Court has held as under:
"25. The requirement of reasons in support of the award under
Section 31 (3) is not an empty formality. It guarantees fair and
legitimate consideration of the controversy by the Arbitral
Tribunal. It is true that Arbitral Tribunal is not expected to write
judgment like a Court nor it is expected to give elaborate and
detailed reasons in support of its finding (s), but mere noticing the
submissions of the parties or reference to documents is no
substitute for reasons, which the Arbitral Tribunal is obliged to
give. Howsoever, brief these may be, reasons must be indicated in
the award as that would reflect the thought process leading to a
particular conclusion. To satisfy the requirement of Section 31
(3), the reasons must be stated by the Arbitral Tribunal upon
which award is based; want of reasons make such an award
legally flawed."
7. In Anand Brothers Private Limited Versus Union of India
and others (2014) 9 SCC 212, Supreme Court observed that Section 31
(3) of the Act obliges the Arbitral Tribunal to state the reasons upon
which the award is based unless the parties have agreed that no reasons
be given or the arbitral award is based on the consent of parties. The
Supreme Court noticed that there is a paradigm shift in the legal position
under the new Act, which prescribes a uniform requirement for the
arbitrators to give reasons except in the two situations mentioned above.
8. Insofar as the present case is concerned, no material has
been brought on the record to show that there was any agreement
between the parties that the arbitrator is not obliged to give reasons. The
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award is definitely not based on the consent of the parties. Therefore, the
award does not fall within the four corners of the two situations
contemplated by the Supreme Court in Anand Brother's case (supra).
The learned Arbitrator has failed to notice the evidence brought before
him nor has he supported the award with any reasons. The award
suffers from patent illegality and has rightly been set aside. This Court,
therefore, does not find any infirmity or illegality in the judgment passed
by the learned Additional District Judge, Ambala.
9. Appeal is devoid of merit and is hereby dismissed with
liberty to the parties to pursue the remedies in accordance with law.
10. Since the main appeal has been dismissed, pending
application, if any, shall also stand disposed of.
(SUVIR SEHGAL)
02.09.2024 JUDGE
Brij
Whether reasoned/speaking : Yes/No
Whether reportable : Yes/No
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