Full Text
HIGH COURT OF DELHI
Date of Decision: 23rd November, 2022
MS STRATEGIC INFRA SERVICES PRIVATE LIMITED ..... Petitioner
Through: Mr. Jayant Mehta, Senior Advocate with Mr. Arindam Ghose, Mr. Upinder Singh, Ms. Kaveri Rawal & Ms. Rudrakshi Deo, Advocates.
Through: Mr. Samdarshi Sanjay, Advocate. [Enrolment No.
D/1122/2000, M:-9811585062]
JUDGMENT
Exemption allowed, subject to all just exceptions.
This application stands disposed of.
1. This is an application seeking condonation of delay of 11 days in refiling of the petition.
2. The impugned award passed by a three-member Arbitral Tribunal [hereinafter referred to as “the Tribunal”] is dated 01.07.2022. The application states that petition was first filed on 28.09.2022 i.e., within the period of three months, as provided under Section 34(3) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as “the Act”]. Defects were notified by the Registry on 01.10.2022, and after removing the defects, the petition was refiled on 14.10.2022. Certain other defects were notified on the same day, and the petition was thereafter refiled on 11.11.2022.
3. Mr. Samdarshi Sanjay, learned counsel for the respondent, who appears on advance notice, submits that the application does not disclose sufficient grounds for condonation of delay in refiling, particularly in view of the maximum condonable period of 30 days, provided in Section 34(3) of the Act. He submits that this period would have lapsed on 31.10.2022, whereas the petition was refiled only thereafter, on 11.11.2022.
4. Mr. Sanjay relies upon the judgment of this Court in Prominent Tours & Travel Pvt. Ltd. & Ors. vs. Kotak Mahindra Bank Limited[1] in this connection. In the said judgment, the Court was faced with the case where there was a delay of 182 days in refiling of the petition. The Court found the reasons offered by the petitioner insufficient for condonation of delay. With regard to the principle behind Section 34(3) of the Act, the Court held as follows:- “9. Section 34(3) of the Act, though strictly not applicable to a case of refiling of the petition, would certainly have to be kept in mind while considering the reasons submitted by the petitioners for seeking condonation of delay in re-filing of the petition. As held by this Court in Delhi Transco Ltd. & Anr. vs. Hythro Engineers Pvt. Ltd. 2012 SCC OnLine Del 3557, if the delay in refiling is such as to go well and substantially beyond the period of three months and 30 days, the matter would require a close scrutiny and adoption of more stringent norms while considering the application for condonation of delay in re-filing, and the Court would conduct a deeper scrutiny in the matter. The leniency shown and the liberal approach adopted otherwise by the Courts in the matters of condonation of delay in other cases, would in such cases not be adopted, as the adoption of such an approach by the Court would defeat the statutory scheme contained in the Act which prescribes an outer limit of time within which the objections could be preferred.
10. In the present case, the explanation being offered by the petitioners for almost seven months’ delay in re-filing the petition, is certainly not reasonable or sufficient.
11. Counsel for the petitioners has placed reliance on the judgment of the Supreme Court in Northern Railway vs. Pioneer Publicity Corporation Pvt. Ltd. (2017) 11 SCC 234 to contend that Section 34 (3) of the Act has no application in re-filing the petition but only applies to the initial filing of the objections under Section 34 of the Act. As observed earlier, this is the correct proposition of law, however, in the peculiar facts of the present case, would not be of any assistance to the petitioners. In Pioneer Publicity (supra), the Supreme Court found that the petitioner therein had offered an explanation for the delay after the extensions. In the present case, however, I do not find the explanation given by the petitioner to be sufficient or reasonable.”2
5. I find the facts of the present case to be quite distinct from the facts of the aforesaid judgment. The delay in refiling in the present case is only of 11 days, as opposed to seven months in that case. Notably, the judgment in Prominent Tours & Travel Pvt. Ltd[3] does not bar condonation of delay beyond the period prescribed in Section 34(3) of the Act, but requires deeper scrutiny of the reasons keeping in Emphasis Supplied. Supra (note 1). mind the extent of the delay. The Court found against the petitioner therein on facts.
6. In the present case, the reasons for delay mentioned in the application are as follows:- “It is submitted that the defects raised by the Registry could not be removed and refiled within the required statutory period due to the intervening holidays as well as impending festivities, which caused delay in obtaining important instructions for removing certain defects. It is further submitted that the Petitioner’s office is situated in Bangalore, Karnataka. This further prevented the Petitioner from the removing defects within the statutory period on account of the time taken in transit of signed documents from Bangalore to Delhi.”
7. The factual position that the Dusshera, Diwali festivities and the consequent Court holidays fell within the month of October, 2022, is undisputed. In these circumstances, I do not find the delay of 11 days to be such as to disentitle the petitioner to maintain the present petition under Section 34 of the Act.
8. It may also be noted that, in the facts of the present case, it is not suggested that the original filing dated 28.09.2022 was non-est, for want of any of the essential pre-requisites of the petition.
9. For the reasons aforesaid, the application is allowed, and the delay in refiling of the petition in condoned.
10. The application stands disposed of. O.M.P. (COMM) 473/2022 & I.A. 19464/2022 (for stay)
1. By way of this petition under Section 34 of the Act, the petitioner- M/s Strategic Infra Services Private Limited [hereinafter referred to as “Strategic Infra”] seeks setting aside of an award dated 01.07.2022, rendered by an Arbitral Tribunal, adjudicating disputes between the parties pursuant to bids for “Hiring of Distribution Agency for Distribution, Storage, Inventory Management of energy appliances”.
2. Pursuant to the tenders, Strategic Infra was declared as the successful bidder for distribution of various energy appliances, and a total of nine Letters of Awards [hereinafter referred to as “LoAs”] were issued in its favour. Contract agreements were also entered into pursuant to the said LoAs. The details of the LoAs, as set out in paragraph 3 of the impugned award, are as follows:-
┌────────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. Particulars State/ Contract Price Contract value │ │ Duration of Inclusive of all │ │ Contract taxes and duties │ ├────────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 1. LoA No. Himachal Rs.11.29/- Rs.3,52,96,435/- │ │ 0601050/2389/ Pradesh. 1 ½ │ │ dated year from the │ │ 12.08.2015 for date of LoA │ │ distribution of │ │ LED Bulbs │ │ 2. LoA No. Maharashtra/ Rs.7.58/- Rs.15,29,75,709/- │ │ 0601050/2389/ 2 years from │ │ dated the date of │ │ 12.08.2015 for Award. │ │ distribution of │ │ LED Bulbs. │ │ 3. EESL/06/2015- Andhra Rs.8.10/- Rs.81,00,000/- │ │ 16/DELP Pradesh/ 45 │ │ Distribution- days from │ │ Anantpur- 01.12.2014. │ │ Andhra │ │ Pradesh/LoA- │ │ 0601057/2974/ │ │ 17.11.2014 for │ │ distribution of │ └────────────────────────────────────────────────────────────────────────────────────────────────────────┘
35. Second limb of the defence of the Respondent is that the Claimant was negligent and irresponsible in as much as it had continued to supply LED Bulbs to the implementing partner's representative (GITS) without caring for the fact that the amounts collected on the sale had not been remitted to its account. It has further taken a stand that the claimant with a lethargic attitude had allowed huge sums of money collected on sales to be accumulated in the hands of the implementing partner's representative (GITS). It has alleged that the claimant is now trying to pass on the liability on it by demanding the outstanding payment. In this regard, it would be relevant to examine as to how the implementing partner's representative was to be appointed and the consequent rights and liabilities of the parties arising out of it. 1.[1] GCC 19: Sub Contracting: xxxx xxxx xxxx xxxx
36. From the above, it can be seen that the implementing partner’s representative (GITS) was solely appointed by the respondent and the claimant had no role in its appointment. The terms of the contract further make it amply clear that the appointment of implementing partner’s representative does not create any obligation on the part of the claimant and the acts of the implementing partner’s representative are regarded as the acts of the respondent itself. This is consistent with the 'law · of agency', which provides that it is the Principal who is liable for the acts of its Agent.
37. Ld. Counsel for the claimant has also relied upon Clause 3.11 of GCC which starts with the heading 'Non Waiver'. The clause is reproduced below: - "3.11 Non-Waiver
38. Perusal of the above clause in the GCC would show that even if there was any relaxation or delay or indulgence by any party in enforcing any term of contract, it will not prejudice or affect the rights of the party under the contract. Therefore, even if the Claimant was lax in ensuring that the proceeds of the sale were regularly remitted to its account, it would in no way affect rights of the claimant to recover its dues. On the contrary, it was obligatory on the part of the Respondent to ensure that the sale proceeds were duly deposited in the designated accounts of the claimant.
39. Further, the terms of the contract make it mandatory on the part of the Respondent to provide all the details of the distribution to the claimant (Clause 5 of the 'Technical & Special Conditions of Contract'). Some of such obligations have been extracted by us in Para-5 above. As per Clause 8, it was the duty of the respondent to deposit the sale proceeds in the account of the EESL every alternate day. It was also the duty of the respondent to submit deposit-challans simultaneously.”11
10. It is evident that the Tribunal has rendered a finding that the exercise of the penal provision was a prerogative of EESL, and cannot lead to a conclusion that EESL was obliged to stop the distribution work for a breach of any contractual provisions. The Tribunal has also found that Strategic Infra did not ask EESL to stop the supplies at any point. The Tribunal has held that GITS was the appointee of Strategic Infra, and that Strategic Infra, as the principal, was responsible for its actions and omissions. Strategic Infra’s arguments with regard to continued supply of goods by EESL to GITS has been repelled by the Tribunal relying inter alia upon Clause 3.11 of the GCC, which makes it clear that neither party would be taken to have waived continued performance, merely by reason of any forbearance or indulgence in enforcing the terms of the contract.
11. I am of the view that the aforesaid findings returned by the Tribunal are based upon an interpretation of contractual clauses that cannot, by any stretch of imagination, be described as implausible or perverse. It is settled by several decisions of the Supreme Court that Emphasis supplied. interpretation of the contract is clearly within the domain of the tribunal, and the Court would decline to interfere under Section 34 of the Act, absent a finding of manifest arbitrariness or perversity in the interpretation preferred by the tribunal12.
12. On the question of quantification, Mr. Mehta referred me to paragraphs 76 to 82 of the award, wherein the Tribunal has come to the conclusion that the quantification of the amounts due were not contested by Strategic Infra. The aforesaid conclusion is derived from the contents of paragraph Nos. 16 and 20 of the Statement of Defence of Strategic Infra13. The relevant contents of the Statement of Defence are as follows: -
13. The Tribunal has also referred to replies addressed by Strategic Infra to various show cause notices issued by EESL, to return the finding that the quantum of the amount due on this count is undisputed.
14. The Tribunal’s finding on this issue are factual. It was satisfied on consideration of the pleadings and correspondence placed before it that the quantification remained uncontested by Strategic Infra. Such factual findings are not vulnerable to interference under Section 34 of the Act unless, again, they are shown to be “patently illegal”, in the sense that no tribunal could have arrived at such a finding on a reasonable consideration of the material before it14.
15. I do not find the Tribunal’s reading of the Statement of Defence Refer Associate Builders vs. Delhi Development Authority (2015) 3 SCC 49 [paragraphs 52 and 56], Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (NHAI) (2019) 15 SCC 131 [paragraph 38] and Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Limited (2022) 1 SCC 131 [paragraphs 26 to 29]. to suffer from any such perversity or arbitrariness as to require interference with the impugned award. It is clear that the case set up by Strategic Infra was one of its larger claim against EESL, and the quantification of EESL’s claims were not expressly or impliedly disputed. The Tribunal, in paragraphs 81 and 82 of the impugned award, has also referred to disputes between Strategic Infra and GITS. Asserting its claims against GITS, Strategic Infra itself quantified an amount of approximately ₹20.91 crores as due from GITS on account of accumulated proceeds under the contract. Strategic Infra had also approached the Karnataka High Court against GITS under Section 11 of the Act15, in which it was inter alia stated as follows:- “It is submitted that on account of the aforesaid acts of collecting money from the distribution of LED Bulbs and not remitting the same to the Petitioner, or to EESL, a sum of Rs.12,33, 99, 312/- (Rupees Twelve Crore Thirty-Three Lakh Ninety-Nine Thousand Three Hundred Twelve only) remained overdue from the Respondent.”16
16. The Tribunal’s conclusion, based upon this evidence, is a plausible one. I am, therefore, not persuaded to reappreciate the evidence, which is beyond the scope of Section 34 of the Act.
17. The award on claim No.2 proceeds on a similar basis, relating to distribution of goods on EMI basis. Mr. Mehta did not urge any distinct ground in connection with this claim, as the Tribunal has proceeded on a similar interpretation of the contract and appreciation of evidence, including oral evidence.
18. For the reasons aforesaid, I am not inclined to exercise the CMP No. 400/2019 Refer page Nos. 47-48 of the impugned award. jurisdiction of this Court under Section 34 of the Act in respect of the impugned award.
19. The petition, alongwith the pending application, is therefore, dismissed.
20. There will be no order as to costs.