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2014 DIGILAW 194 (CAL)

Germinda Pvt. Ltd. v. Aditya Birla Minus Worldwide Ltd.

2014-03-07

SANJIB BANERJEE

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JUDGMENT : Sanjib Banerjee, J. The arbitral award has been challenged primarily on it being hyper technical on rules of evidence without the arbitrator endeavouring a more substantive adjudication. This, according to the petitioner, is opposed to public policy as the technical rules of evidence do not apply to arbitration. 2. The respondent came to be in possession of a property pertaining to a tenancy agreement executed between the parties on November 12, 2009. On January 29, 2010 a further agreement was executed to cancel the earlier tenancy agreement and for the respondent to vacate the premises and hand over possession to the petitioner. The most important clause of the agreement of January 29, 2010 provided that the petitioner would pay a sum of Rs. 95 lakh to 2 the respondent upon the execution of the agreement and the petitioner would pay a further sum of Rs. 95 lakh to the respondent within 90 days of the date of the agreement "but simultaneously with (the respondent) vacating and handing over peaceful vacant possession of the premises to (the petitioner)." In the event the possession was delivered by the respondent later than as contemplated under the agreement, the respondent had to pay liquidated damages of Rs. 25,000/- per day. Similarly, the petitioner was liable to pay the balance sum of Rs. 95,000/- with interest at the rate of 18% per annum if the payment was not tendered within seven days of the respondent's notice indicating its readiness to vacate the premises. 3. It is not in dispute that the respondent vacated the premises sometime in July, 2010 by making over the keys to the premises to the petitioner's security guards engaged at the premises. The petitioner, however, did not make payment of the balance sum of Rs. 95,000/- on the ground that the petitioner was entitled to adjust the damages of Rs. 25,000/- per day for the period of delay and further on the ground that substantial damage had been caused to the premises by the respondent during the short occupation thereof. 4. Clause 5 of the agreement required the respondent to make over peaceful vacant possession of the premises to the petitioner "in its original order and condition, normal wear and tear excepted, within the period of 90 days as aforesaid..." 5. 4. Clause 5 of the agreement required the respondent to make over peaceful vacant possession of the premises to the petitioner "in its original order and condition, normal wear and tear excepted, within the period of 90 days as aforesaid..." 5. Following disputes having arisen between the parties and the parties failing to agree on the mechanism to secure the constitution of the arbitral tribunal, a request was carried to the Chief Justice of this Court or his designate and an arbitrator appointed by consent of parties in course of the Section 11 proceedings. The award dated June 3, 2013 directs the petitioner to pay the amount of Rs. 95 lakh as envisaged in Clause 3(b) of the agreement of January 29, 2010 less the amount that the petitioner was found to be entitled to on account of delay in the respondent's delivery of vacant possession at the rate of Rs. 25,000/- per day. The petitioner is aggrieved by the petitioner's claim for damage to the building being completely disallowed by the arbitrator. 6. The petitioner refers to paragraphs 28 to 30 of the award to suggest that the arbitrator had relied on technical rules of evidence to deny a rightful claim of the petitioner. The petitioner contends that it would be evident from the conduct of the respondent that though the respondent was entitled to payment of the second tranche of Rs. 95 lakh simultaneously with the respondent delivering vacant possession of the premises, the respondent quietly made over the keys to the petitioner's security guards and did not make any contemporaneous demand for release of the amount of Rs. 95 lakh. According to the petitioner, such conduct would suggest that the respondent was aware that it was not entitled to the entirety of the sum of Rs. 95 lakh as considerable damage had been caused by the respondent to the premises. The petitioner also relies on electronic mails exchanged between the parties on October 13, 2010 or thereabouts after the petitioner had forwarded to the respondent photographs apparently evidencing the damage to the premises caused by the respondent. The petitioner refers to the first of the two electronic mails of October 13, 2010 issued by the respondent where the respondent acknowledged the receipt of the photographs but did not deny the claim in the petitioner's original letter that the respondent had damaged the property. 7. The petitioner refers to the first of the two electronic mails of October 13, 2010 issued by the respondent where the respondent acknowledged the receipt of the photographs but did not deny the claim in the petitioner's original letter that the respondent had damaged the property. 7. The petitioner suggests that there would have been no occasion for the respondent to agree to depute its representatives to inspect the premises if the respondent had completely disregarded the petitioner's claim that the building was damaged. 8. The petitioner says that in course of the oral evidence of witnesses called by the respondent it was established that there was some damage caused to the tenanted premises. The petitioner points out that cable trays had been laid by cutting floors at some parts of the building as admitted by the respondent's witnesses. The petitioner submits that in the wake of such admitted position the arbitrator should have assessed the quantum of damages on the basis of the petitioner's claim rather than disregard the claim by relying on the finer rules of evidence. 9. It is in the light of such challenge that paragraph 29 of the award is to be seen. At paragraph 29, the arbitrator has found the contention of the petitioner herein of damage caused to the building was unacceptable on the ground that the witnesses of the respondent herein were not confronted with the letters or electronic mails exchanged between the parties on October 13 and October 18, 2010; that no question was asked to the respondent's witnesses on such documents; that the petitioner herein did not call upon the respondent to produce the photographs of the damaged building that the petitioner had forwarded to the respondent; and, in the absence of the photographs being called 5 upon to be produced, the controversy as to the photographs that had arisen in course of the reference could not be resolved. 10. In effect, the arbitrator has held, not so much that the petitioner herein was not entitled to any damages for any damage being caused to the tenanted premises, but that the petitioner herein as claimant in the reference could not establish the factum of damage to the tenanted premises. 10. In effect, the arbitrator has held, not so much that the petitioner herein was not entitled to any damages for any damage being caused to the tenanted premises, but that the petitioner herein as claimant in the reference could not establish the factum of damage to the tenanted premises. It does not appear that the arbitrator has been too technical in laying down the rules or testing the claims against such rules, particularly, in the context of the controversy that arose between the parties as to the veracity of the photographs evident from the award itself. 11. Paragraph 30 of the award amplifies the basis for the arbitrator summarising the position at paragraph 29 of the award. 12. The reasons furnished by the arbitrator in coming to the conclusion that the petitioner herein had failed to demonstrate damage caused to the tenanted premises are adequate and elaborate and the petitioner herein has misunderstood the reasons to be a rejection of the claim on merits whereas the arbitrator held that the petitioner herein could not establish the claim. In the adversarial system that is followed in this country, it is for a claimant to assert and establish a claim. The arbitrator would have been called upon to assess the quantum of damages only upon the factum of damage being established. The arbitrator had to assess whether there was any damage that would entitle the petitioner herein to claim damages in the backdrop of the relevant clause that required normal wear and tear to be disregarded. The arbitrator found that the petitioner had not established the case of damage to the building. 13. The extent of the authority available in this jurisdiction does not require either the evidence or the entire matter to be reappraised. The limited authority of superintendence is restricted to an overall assessment of whether there is manifest miscarriage of justice occasioned to the challenger by the award. The award in the present case does not appear to be either without reasons or without basis. In any event, it cannot be lost sight of that the agreement did not permit the petitioner herein to withhold the payment of the second tranche of Rs. 95 lakh on the ground of any damage having been caused to the building. 14. For the reasons indicated in the award, the petitioner is found to be unjustified and uncharitable in challenging the same. 95 lakh on the ground of any damage having been caused to the building. 14. For the reasons indicated in the award, the petitioner is found to be unjustified and uncharitable in challenging the same. 15. AP No.1150 of 2013 is dismissed. Since the petitioner's substantive claim has failed on the ground of the petitioner not being able to establish the same, no order as to the costs is made herein.