Petitioner challenged the Sole Arbitrator's award under Section 34, alleging exclusion of a counter claim and errors in fact-finding. The court held the arbitrator correctly excluded the claim due to procedural defaults and dismissed the petition, upholding the award.
Petition dismissed with no order as to costs; the impugned Arbitration Award is upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Reserved on:24th October, 2017 Date of decision : 1st November, 2017
M/S JAKKI MULL & SONS ..... Petitioner
Through: Mr.Sachin Dutta, Sr. Adv. with Mr.Sushil Shukla, Ms.S.Jain and Mr.Suhael Buttan, Advs.
versus
JAGDISH THAKRAL ..... Respondent Through: Mr.Arvind Kumar Gupta, Mr.Prashant Bhardwaj, Advs.
CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA
OMP No.30/2009
Page 1
“That in the event of termination of agreement or on the expiry of the stipulated time, agents shall surrender to the principles Furniture & Fixture provided by the principles at the said showroom and the principles shall remove the same at their cost together with unsold stocks.”
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the respondent to remove the goods as well as the furniture and fixtures. It is further contended that as the goods were not removed by the respondent from the showroom of the petitioner till August, 1998, the petitioner had no other option but to close down the showroom w.e.f. 1st September, 1998. The petitioner further alleges that by communications dated 22nd February, 2000, 11th April, 2000 and 22nd April, 2000, it had again reiterated its request to the respondent to remove its stock as well as the fixtures and fittings.
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“17) On the basis of the above-mentioned admission, the petitioner has raised the following disputes for reference for arbitration.
Claim No.1—Whether the applicant is entitled to accounts from the respondent w.e.f. 21.6.1997 to 31.8.1998
Claim No.II—Whether the claimant is entitled to damages for the closure of the shop at the rate of Rs.1.5 lacs per month; w.e.f. 1.09.1998?
Claim No.III—Whether the applicant is entitled to the value of stocks, furniture and fixtures at Rs.20 lacs because all the furniture and stocks, whichever are lying in the closed shop for the last two years, without proper cleaning, air and light must have been made useless and must have become a total loss on account of above factors and moreover in the present day of changing of fashions day by day, as such it is a total loss to the applicant:
Claim No.IV – Whether the applicant is entitled for interest @ 24% p.a. on the said amounts for presuit, pendente lite and future;
Claim No.V – Whether the applicant is entitled for the costs of arbitration proceedings.
It is respectfully submitted that the petitioner in claim No.3 has completely disclaimed/disowned the unsold stock furniture and fixtures and in his present petition has declined to take back the same on the plea that it has become junk for him and he is not interested to take back from the respondents. He has claimed compensation in this regard.
It is further respectfully submitted that under these circumstances the respondents were advised to take the help of a notary public for preparation of the inventory of the unsold stock furniture and fixture in as much as the petitioner had continuously, before the filing of the present arbitration petition, evaded to discharge his obligation in that regard as per the agency agreement and had now
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completely disowned/disclaimed the same in his present petition before this Hon’ble Court.
Accordingly, Ms.Jaswant Kaur, a Notary Public of Patiala House, New Delhi, was requested/engaged to make an inventory on 14.10.2000. She visited the said shop at 11.00 a.m. on 14.10.2000 within 15 minutes thereof Sh. Jagdish Thukral came to the spot and despite objections from the respondents forced his entry in the said shop. He called police and claimed that he is the owner of the shop. He started making false allegations that the people of respondent no.1 have broken open into his shop and have removed his goods lying therein. He further threatened that if anyone from respondent no.1 enters into the shop, he will face dire consequences. Within short time his son Mr.Dimpal Thukral also came to the shop and started abusing and threatening the respondents. Under these circumstances the respondents were compelled to lodge a complaint with the police on 14.10.2000, a copy whereof is annexed as Annexure R-9. The respondents were also informed by the police officials that the petitioner has also lodged the complaint against the respondents, obviously, upon false and baseless allegations. The respondents along with their counsel had also met the ACP (Tilak Mark) on the same day i.e. 14.10.2000 and who after perusing all the documents given with the complaint by the respondents including the present arbitration petition filed by the petitioner, in their presence, directed the Additional SHO of the Connaught Place Police Station to give the necessary protection to the respondents against the threat of the petitioner. The copy of the report of the learned Notary dated 14.10.2000 is annexed hereto as Annexure -10.
That under these circumstances the respondents respectfully submitted that the only dispute to be decided is whether it is the petitioner or the respondents who is entitled to claim compensation? The respondents respectfully reiterate the appointment of Hon’ble Mr.Justice Satpal as an arbitrator and furtherance of their bona fide suggests the
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name of Hon’ble Mr.Justice S.B.Wad (Retd.) or Hon’ble Justice Jaspal Singh (REtd.) for appointment as arbitrator is this Hon’ble Court deems that to be fit and appropriate. The answering respondents pray accordingly.”
“Learned counsel for the parties are agreed that the disputes raised in the present petition as well as the reply may be referred to the arbitration of Justice Jaspal Singh (Retd. Judge of the Court).
In this view of the matter, I appoint Justice Jaspal Singh (Retd. Judge) as an Arbitrator to decide the disputes between the parties. The parties are at liberty to approach the learned Arbitrator for any interim relief. The learned Arbitrator is at liberty to fix his fees and other miscellaneous expenses.
Accordingly, the petition and IA stand disposed of.”
Page 6
OMP No.30/2009
“An Arbitration Application No.119/2000 was filed before the Hon’ble Delhi High Court by Shri Jagdish Thakaral praying therein for appointment of an arbitrataor for adjudication of the disputes detailed in para 7(k) of the petition. My clients, M/s Jakkimal & Sons & Ors. who were respondents in the arbitration application filed their reply and counter claim in the above-mentioned arbitration petition. The counter claim has been set out in para 12 of the reply and counter claim filed on their behalf.
The Hon’ble Mr.Justice Madan B.Lokur by an order dated 11.01.2001 has been pleased to appoint you as the arbitrator with the consent of the parties and has been pleased to refer the disputes raised in the arbitration application and in the counter claim for adjudication.
I am, therefore, enclosing herewith the copy of the order dated 11.01.2001, the arbitration application No.119/2000, the copy of the reply and the counter claim and the other documents which were placed on record before the Hon’ble Delhi High Court.
I am also enclosing the copy of the application under Section 9 of the Arbitration Act, which was filed on behalf of my clients. Hon’ble Mr. Justice Lokur, while referring the disputes for arbitration, has been further pleased to observe that the parties may approach the Ld. Arbitrator for any interim orders.
I, therefore, request you to kindly enter upon reference in this matter. You may kindly inform us the date and time convenient to you for holding the proceedings in the present arbitration matter. ”
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counter claim. The respondent herein (claimant in the arbitration proceedings) was granted 10 days time to file reply to the same. The said order is reproduced hereunder:-
“Statement of Claim stands filed. Reply to the Statement of Claim be filed within two weeks with advance copy to the other side. Copies of documents be also filed along with the reply. The respondent has already filed a counter claim. Reply to the same be also filed within 10 days along with copies of documents. Advance copies be furnished. Rejoinders be filed before the next date along with affidavits regarding admission/denial of documents.”
Put up on 18th of May, 2001 at 6.00 PM for framing if issues.
Arbitral fee would be Rs.11,000/- per hearing to be shared equally by both the sides.”
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“12) That thereafter the respondents herein fled their reply to the claim petition of the petitioner along with their counter claim. An application was also filed for interim protective orders against the illegal threat of the petitioner. The arbitration petition was listed before the Hon’ble High Court and on 11.01.2001 the following order was passed:
’11.1.2001
Present : Mr.K.Sharma for the Claimant/petitioner. Mr.Maninder Singh for the respondent.
AA No.119/2000 and IA No.11321/2000.
Learned counsel for the parties are agreed that the disputes raised in the present petition as well as in the reply may be referred to the arbitration of Justice Jaspal Singh (Retd. Judge of this Court.)
In this view of the matter, I appoint Justice Jaspal Singh (Retd. Judge) as an Arbitrator to decide the disputes between the parties. The parties are at liberty to approach the learned Arbitrator for any interim relief. The learned Arbitrator is at liberty to fix his fees and other miscellaneous expenses.
Accordingly, the petition and IA stand disposed of.
Dasti.
11th January, 2001 Madan B. Lokur, J”
The perusal of this Order clearly shows that what has been referred for adjudication by arbitrator, by the Hon’ble Delhi High Court is the dispute raised in the arbitration petition by the petitioner and by the respondents in their reply along with the counter claim. The Hon’ble High Court has further gave the liberty to the parties for seeking appropriate interim orders from the learned Arbitrator.
OMP No.30/2009
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13) The respondents respectfully submit that pursuant to the order of the Hon’ble High Court dated 11.01.2001, the claim petition including the claims of the petitioner which stand referred for arbitration is already before this Hon’ble Tribunal and did not, thus, require the duplication of the same. It is further respectfully submitted that as held by the Hon’ble Supreme Court in the case of Orissa Mining Corporation Ltd. vs. Prannath Vishwanath Rawlley (1977) 3 SCC 535, once the reference of disputes for arbitration has been sought for by any party, it is only those disputes which are referred by the Hon’ble Court which are to be adjudicated by arbitration and it is not open to that party to seek to add/modify the claims which were directed to be adjudicated by arbitration by the Hon’ble Court. It is, therefore, respectfully submitted that the petitioner cannot be permitted, in the name of filing a claim petition, to change/modify the disputes which were the subject matter of the arbitration and which have been specifically referred for adjudication by the Hon’ble High Court. It is, therefore, respectfully submitted that the petitioner cannot be permitted to add/modify /change any of its claim now at this stage. The respondent, therefore, respectfully submit that the present statement of claim on behalf of the claims, to the extent it is beyond the statement of claim which was submitted before the Hon’ble High Court, is not maintainable and, therefore, deserves to be ignored.
14) Accordingly, the respondents respectfully submit that the reply of the respondents before the Hon’ble High Court to the claim petition is respectfully reiterated. However, without prejudice to the contentions on behalf of the respondents hereinabove, the para-wise reply to the statement of claim filed by the petitioner is as under:
OMP No.30/2009
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“It is respectfully reiterated that the petitioner cannot be permitted to add/modify/change claims which have been referred for adjudication by the order of the Hon’ble High Court. All such additions/modification/changes in the claims of the present claim statement of the petitioner deserve to be ignored and are not maintainable. Without prejudice to this contention of the respondents, it is respectfully submitted that in any case all these claims are absolutely frivolous, baseless, imaginary, unsustainable in law and deserve to be rejected. There is no occasion for the petitioner even to contend any handing over of the possession to him by the respondents. That the averments made in paras 1 to 13 and the claims against the respondents are misconceived, incorrect, improper and are denied. The submissions made hereinabove are respectfully reiterated. It is therefore, respectfully submitted that the Hon’ble Arbitrator may be pleased to dismiss the claim of the Claimant and award the counter claim of the respondent as prayed for by the respondents.”
“I say that on account of not taking back the unsold stock, fixtures and furniture and threatening partners of M/s Jakki Mull & Sons and thereby preventing use of the shop premises for the last approximately 5 years, Mr.Jagdish Thakral is liable for damages @ Rs.1.5 lakh per month from 1.10.97 till such time the goods are removed from the premises and it is allowed to be used for running of the business. I submit that Mr.Jagdish Thakral is also liable to
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pay to M/s Jakki Mull & Sons interest on the aforesaid amount @ 18% per annum.”
“18(A) I also adopt herein my rejoinder and reply to the reply-cum-counter claims of the respondents the contents of the same may kindly be read as part and parcel hereof which are not being repeated herein for the sake of brevity.”
OMP No.30/2009
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claim of the respondent (petitioner herein) for an amount of Rs.1.5 lacs per month (as set out before this Court) deserves to be allowed. Importantly, I find that excepting the said prayer, no submission have been made with respect to the amount so claimed or justification thereof in the said submission; no reference to any document or evidence has been made.
“Coming to the Counter Claims of the respondent it may be mentioned that the respondent had applied for amendment of the Statement of defence seeking expenses at the rate of Rs.3,000/- per month with effect from 1st of January, 2004 for keeping the unsold stock, Rs.38,183/- in respect of electricity connection and Rs.1.5 lacs per annum from 1st of October, 1997 till 31st December, 2003 on account of the shop having remained closed resulting in damages. It had also claimed interest at the rate of 18%/. However, I need not deal with these Counter Claims because ultimately the application for amendment was withdrawn. Even otherwise, these Counter Claims were beyond the scope of the reference.”
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No.119/2000, had specially referred the dispute raised in the Reply filed by the petitioner herein to the Arbitration. In the Reply, Counter Claim had been specially raised. It is, therefore, submitted that failure of the Arbitrator to adjudicate the Counter Claim filed by the petitioner amounts to misconduct and the Award is liable to be set aside.
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Supreme Court in the case of Praveen Enterprises (supra) and the same is quoted below:-
“25. Section 20 of the old Act required the court while ordering the arbitration agreement to be filed, to make an order of reference to the arbitrator. The scheme of the new Act requires minimal judicial intervention. Section 11 of the new Act, on the other hand, contemplates the Chief Justice or his designate appointing the arbitrator but does not contain any provision for the court to refer the disputes to the arbitrator. Sub-sections (4), (5) and (9) of section 11 of the Act require the Chief Justice or his designate to appoint the arbitrator(s). Sub-section (6) requires the Chief Justice or his designate to “take the necessary measure” when an application is filed by a party complaining that the other party has failed to act as required under the appointment procedure. All these sub-sections contemplate an applicant filing the application under section 11, only after he has raised the disputes and only when the respondent fails to co-operate/concur in regard to appointment of arbitrator.
26. Section 23 of the Act makes it clear that when the arbitrator is appointed, the claimant is required to file the statement and the respondent has to file his defence statement before the Arbitrator. The claimant is not bound to restrict his statement of claim to the claims already raised by him by notice, "unless the parties have otherwise agreed as to the required elements" of such claim statement. It is also made clear that "unless otherwise agreed by the parties" the claimant can also subsequently amend or supplement the claims in the claim statement. That is, unless the arbitration agreement requires the
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Arbitrator to decide only the specifically referred disputes, the claimant can while filing the statement of claim or thereafter, amend or add to the claims already made.
27. Similarly, Section 23 read with Section 2(9) makes it clear that a respondent is entitled to raise a counterclaim "unless the parties have otherwise agreed" and also add to or amend the counter claim, "unless otherwise agreed". In short, unless the arbitration agreement requires the Arbitrator to decide only the specifically referred disputes, the respondent can file counter claims and amend or add to the same, except where the arbitration agreement restricts the arbitration to only those disputes which are specifically referred to arbitration, both the claimant and respondent are entitled to make any claims or counter claims and further entitled to add to or amend such claims and counter claims provided they are arbitrable and within limitation.
28. Section 11 of the Act requires the Chief Justice or his designate only to appoint the arbitrator(s). It does not require the Chief Justice or his designate to identify the disputes or refer them to the Arbitral Tribunal for adjudication. Where the appointment procedure in an arbitration agreement requires disputes to be formulated and specifically referred to the arbitrator and confers jurisdiction upon the arbitrator to decide only such referred disputes, when an application is filed under section 11(6) of the Act, alleging that such procedure is not followed, the Chief Justice or his designate will take necessary measures under section 11(6)of the Act to ensure compliance by the parties with such procedure.
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29. Where the arbitration agreement requires the disputes to be formulated and referred to arbitration by an appointing authority, and the appointing authority fails to do so, the Chief Justice or his designate will direct the appointing authority to formulate the disputes for reference as required by the arbitration agreement. The assumption by the courts below that a reference of specific disputes to the Arbitrator by the Chief Justice or his designate is necessary while making appointment of arbitrator under section 11 of the Act, is without any basis. Equally baseless is the assumption that where one party filed an application under Section 11 and gets an arbitrator appointed the arbitrator can decide only the disputes raised by the applicant under Section 11 of the Act and not the counter claims of the respondent.
30. Section 23 of the Act enables the claimant to file a statement of claim stating the facts supporting his claim, the points at issue and the relief or remedy sought by him and enables the respondent to state his defence in respect of those claims. Section 2(9) provides that if any provision [other than Section 25(a) or Section 32(2)(a)], refers to a "claim", it shall apply to a "counter claim" and where it refers to a "defence", it shall also apply to a defence to that counter claim. This would mean that a respondent can file a counter claim giving the facts supporting the counter claim, the points at issue and the relief or remedy sought in that behalf and the claimant (who is the respondent in the counter claim) will be entitled to file his defence to such counter claim. Once the claims and counter claims are before the arbitrator, the arbitrator will decide whether they fall within the scope of the arbitration agreement and whether he has jurisdiction to adjudicate on
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those disputes (whether they are claims or the counter claims) and if the answer is in the affirmative, proceed to adjudicate upon the same.”
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his appointment and forwards the documents that may be relevant for him to have a flavour of the dispute between the parties.
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the petitioner also that a separate Counter Claim had been filed by that date. In fact as noted above, reliance has been placed to the ‘Reply and Counter Claim filed on behalf of the Respondent’ which was filed before the Arbitrator only on 14th May, 2001 i.e. after 28th April, 2001 when the above record of proceedings were made.
“ 13(k) It is therefore most respectfully submitted that on account of not taking back the unsold stock, fixture and furniture etc. and threatening the respondent with dire consequences by the petitioner, the respondents have not been able to use their premises for more than six years. Because of this unlawful conduct of the petitioner, the respondents have become entitled for damages at least @ Rs. 1.5 lakhs per month from 01.10.1997 till 31.12.2003. The respondents are therefore entitled to an amount of Rs. 1,12,50,000/- for the aforesaid period calculated @ Rs. 1.5 lakhs per month. The respondents are also entitled to interest
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at least @ 18% per annum on the said amount till such time the aforesaid amount is paid to the respondent.”
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no averment regarding the alleged Counter Claim was made by the respondent in its affidavit by way of evidence. I am informed that the witnesses who filed their affidavits were not cross examined by either side and, therefore, even a question being put to the witness(es) regarding the Counter Claim did not arise.
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was transacted after June, 1997. The claim of the petitioner that there was no sale made w.e.f. 20th June, 1997 was found to be incorrect.
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petitioner. I find that for awarding the said figure, the Sole Arbitrator has relied upon the report of the Local Commissioner appointed by him for making an inventory of stock and principle of depreciation.
NAVIN CHAWLA, J
NOVEMBER 01, 2017 RN/sd
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2 issues framed by the court
Whether the Sole Arbitrator was correct in holding that the petitioner's counter claim was beyond the scope of the reference under Section 34 of the Act.
Whether the award surveying sales figures was patently illegal or an error of fact attracting judicial intervention under Section 34.
Colour shows how this judgement treated each authority
State of Goa vs. Praveen EnterprisesDistinguished¶25
State of Goa vs. Praveen Enterprises (2012) 12 SCC 581 · Who else cites this
Associate Builders vs. Delhi Development AuthorityApplied¶46
Associate Builders vs. Delhi Development Authority (2015) 3 SCC 49 · Who else cites this
3 provisions across 1 enactments
M/s Jakki Mull & Sons
Jagdish Thakral
Navin Chawla
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
