INDIA INFOLINE LTD. v. SANJAY GUPTA

1. Respondent has failed to appear for many hearings in spite of being served. I have therefore heard the counsel for the appellant.

2. Respondent was the claimant in the arbitration proceedings. Out of five claims made by the respondent, who is the constituent member of the appellant/broker in the multi-commodity exchange, four claims were dismissed and one claim with respect to the claim of lots of Rs. 1 lakh was allowed by the arbitrator. This claim of Rs. 1 lac was allowed on the 2014:DHC:1286 ground that the appellant/broker did not modify the bid with respect to four lots of sugar although instructions were received before end of the closing of the trade on the relevant date i.e 20.8.2007.

3. Learned counsel for the appellant very vehemently argues that even assuming the appellant was guilty of not complying with the directions to modify the bid of four lots of sugar, however, a claim of loss is allowed only if loss is actually caused and proved in the arbitration proceedings. It is argued that reference to the entire record of arbitration as also the Award shows that the respondent/claimant led no evidence and the arbitrator has awarded this claim without reference to any evidence of alleged loss caused and without giving any reason as to how the loss is quantified at Rs. 1 lakh. It is argued that the arbitrator has committed a gross illegality and perversity and which is violative of the law of the land contained in Section 73 of the Indian Contract Act, 1872, and which requires that any claim of damages for breach of contract can only succeed if damages are proved in the legal proceedings in accordance with law.

4. I agree with that arguments urged on behalf of the appellant inasmuch as the arbitration record as well as Award does not show as to how the arbitrator quantified the loss at Rs. 1 lakh once no proof is referred to and filed as to how the loss is quantified at Rs. 1 lakh. Not only the loss should not have been awarded at a quantified figure of Rs. 1 lakh, but the claim petition should itself have been dismissed because unless loss is to be proved of a specific amount, Award for such amount could not have been passed in favour of the appellant/plaintiff. Passing of an Award, therefore, violates the settled law of land contained in Section 73 of the Indian Contract Act, 1872, and Award cannot be against the law of land as per Section 28(1)(a) of the Arbitration and Conciliation Act, 1996.

5. In view of the above, appeal is allowed. Objection of the appellant to the Award of the arbitrator dated 5.1.2009 succeeds. The claim petition of the respondent/claimant even with respect to the claim of loss of Rs. 1 lakh is therefore dismissed. Parties are left to bear their own costs.

MARCH 07, 2014 VALMIKI J. MEHTA, J godara