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2009 DIGILAW 318 (JHR)

Shyam Enterprises v. Iva Pharmaceutical Pvt. Ltd.

2009-03-02

GYAN SUDHA MISRA

body2009
Order This appeal has been filed against the order dated 9.10.2007 passed by the Subordinate Judge-I, Ranchi in Misc. Case No. 9/2007 whereby the application filed by the appellant-M/s Shyam Enterprises against the award passed against it for a sum of Rs. 2,44,803/- was dismissed by the Sub-Judge-1 on the ground at limitation as the Misc. Case which was dismissed under Section 34 of the Arbitration and Conciliation Act, 1996 was time barred by twenty months from the date of the award although under sub-section (3) of Section 34 of the Act, 1996 the limitation to file an application for setting aside an award is only three months. 2. The learned Sub-Judge was pleased to hold that the, appellant had failed to state the reason indicating that the delay in filing the application was bona fide and in fact it amounted to laches and delay on its part. 3. This appeal, therefore, has been preferred under Section 37(1)(b) of the Act, 1996 assailing the award initially on the ground that the Sub-judge was not justi-• fied in dismissing the same on the ground, of limitation. In addition, it was also submitted that the award for a• sum of Rs. 2,44,803/- which was passed against the appellant was not legally justified as the appellant could not be held liable to make the payment to the respondent as it was merely a commission agent to supply the goods which was done at the instance of the respondent. 4. The first question which arises for consideration by this Court is whether the appeal should be considered on merit when the court below was pleased to dismiss the application of the appellant not on merit but merely on the ground of limitation. To avert this part of the objection, the counsel for the appellant relied upon an authority reported in (2006)13 SCC 622. [Chief Engineer of BPDP/REO vs. M/s Scoot Wilson Kirpatrick India (P) Ltd.] wherein the learned Judges of the• Supreme Court had been pleased to hold that even. if the case is rejected by the court below on the oround of limitation and an appeal is preferred against• the same, the appellate court would decide the matter not only on the ground of delay but also on merit. 5. if the case is rejected by the court below on the oround of limitation and an appeal is preferred against• the same, the appellate court would decide the matter not only on the ground of delay but also on merit. 5. Counsel for the appellant appears• to be correct in so far as this part of the contention is concerned and, therefore, he was permitted to address the Court on the merit of the award. This is how the counsel addressed this Court on the merit ot the award also and submitted that the amount of Rs. 2,44,803/- which had been held payable by the appellant to the respondent is not justified as it is merely a commission agent and had to supply the goods to the buyers after the said order was placed before the respondent. 6. It may' be relevant to state that the amount which has been held payable by the appellant to the respondent is on account of failure on its part to realize the outstanding market dues meaning thereby that the goods, which were supplied by the appellant to the buyers were not accounted for and the amount was not realized from them which was payable to the respondent and in the event of failure to supply the goods, the goods had to be returned to the respondents. This also was alleged not to have been complied by the appellant. Besides this, the appellant was also accountable for submission of the sales tax forms and receipts for payment which had been made by way of sales-tax. 7. The counsel for the appellant assailing the award passed by the Arbitrator had submitted that the appellant was not liable to realize the payment from the buyers nor it was liable to realize the amount from the buyers for the goods which had been supplied at the instance of the respondent. 8. Counsel for the respondent, on the contrary, submitted that the appellant was a commission agent and although it had to supply the goods at the instance of the respondent, it was legally responsible to transfer the payment received from the "buyers to the respondent and in the event of the supply was not made, stock had to be transferred to the respondent, which the appellant had failed to comply. Besides this, the appellant had not: explained as to why it had not paid the amount realized by it towards realization of the sales-tax from the buyers and for all those reasons, the appellant was held liable to make payment of Rs. 2,44,803/to the respondent as that was ordered to be indemnified by the appellant to the respondent. 9. Counsel for the parties had been heard at length at the admission stage itself and although the appeal was fit to be dismissed for unusual delay of 16 months in filing the appeal, yet in view of the ratio of the decision of the Supreme Court relied upon by the counsel for the appellant it was considered appropriate to enter into the merit of the matter to adjudicate whether the Arbitrator has misdirected or misunderstood himself in passing the award. 10. On a careful analysis of the factual situation it could be instantly noticed that the appellant although was a commission agent for the respondent to supply the goods nevertheless it was legally duty bound to ensure not only the supply but also make sure that the supply that had been made satisfied the realization of the amount towards sales-tax against the goods which were supplied by the appellant to the buyers and in the event of non supply, the remaining stock had to be returned to the respondent. That compliance clearly has been found to be missing in so far as the conduct of the appellant is concerned. In that event, the award for a sum of Rs. 2,44,803/- which has been held payable by the appellant cannot be held to be unjustified. Thus, apart from unusual delay of 16 months in filing the Misc. Case which the appellant had failed to explain before the Sub-Judge as also before this Court, the appeal, even on the merit, has no substance. 11. The appeal, therefore, is dismissed but without any order as to costs.