JUDGMENT G S Patel, J. - The Petition challenges an arbitral Award dated 18th October 2019. By that Award, to put it briefy, the claim of the present Petitioner, Shetty, was rejected entirely, and the opposing claim by the Respondent, Shet, was allowed. For reasons that will soon became apparent, I have not used the expression ''counter claim'' to describe the pleadings presented by Shet before the learned sole Arbitrator. 2. I believe it is necessary in all Section 34 Petitions frst to clearly identify the precise ground for challenge and the scope of that challenge. As the Supreme Court has now repeatedly said, the challenge in Petitions under Section 34 are not in the nature of First Appeals or regular intra-court appeals. They have a far more restricted and limited remit. Any challenge must lie within the contours of Section 34 of the Arbitration and Conciliation Act 1996, and specifcally, sub-clauses (1), (2) and (2-A). To avoid any ambiguity, I will now reproduce these three sections: "(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
To avoid any ambiguity, I will now reproduce these three sections: "(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in confict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court fnds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in confict with the public policy of India. Explanation 1.-For the avoidance of any doubt, it is clarifed that an award is in confict with the public policy of India, only if,- (i) the making of the award was induced or afected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in confict with the most basic notions of morality or justice.
Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court fnds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence." 3. This framework received extensive analysis in Associate Builders vs Delhi Development Authority., (2015) 3 SCC 49 These heads and their implicit sub-heads were all examined and legal dimensions and contours were specifcally set out. 4. Mr Gadagkar for the Petitioner fairly submits that he places the entirety of his case within the ''patent illegality'' ground in sub-Section 34(2-A). This phraseology received elaborate explanation in Associate Builders and specifcally in paragraphs 40 to 45. Of particular interest, therefore, are paragraph 42 and its subparagraphs: 42. In the 1996 Act, this principle is substituted by the "patent illegality" principle which, in turn, contains three subheads: 42.1. (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)(a) of the Act, which reads as under: "28.Rules applicable to substance of dispute. -(1) Where the place of arbitration is situated in India- (a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;" 42.2. (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality - for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside. 42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under: "28.Rules applicable to substance of dispute.
42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under: "28.Rules applicable to substance of dispute. -(1)-(2)*** (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction." This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do. (Emphasis added) 5. As we shall presently see, the submissions presented by the Petitioner do not fall within any of these categories. 6. I have additionally permitted Mr Gadagkar the latitude of showing, if he is able to, that the impugned Award fails the Wednesbury unreasonableness test, i.e. that it is so irrational that no reasonable person could ever have come to its conclusion; or, in other words, that it sufers from the vice of legal perversity. This again is explained in Associate Builders in the following words: 29. It is clear that the juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective. 31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where: (i) a fnding is based on no evidence, or (ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. 32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officere-cum-eAssessing Authority v. Gopi Nath & Sons, (1992) Supp2 SCC 312 , it was held: (SCC p. 317, para 7) "7.
32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officere-cum-eAssessing Authority v. Gopi Nath & Sons, (1992) Supp2 SCC 312 , it was held: (SCC p. 317, para 7) "7. ... It is, no doubt, true that if a fnding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the fnding so outrageously defes logic as to sufer from the vice of irrationality incurring the blame of being perverse, then, the fnding is rendered infrm in law." In Kuldeep Singh v. Commr. of Police, (1999) 2 SCC 10 [ : 1999 SCC (L&S) 429] , it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the fndings would not be interfered with." 33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Very often an arbitrator is a lay person not necessarily trained in law. Lord Mansfeld, a famous English Judge, once advised a high military ofcer in Jamaica who needed to act as a Judge as follows: "General, you have a sound head, and a good heart; take courage and you will do very well, in your occupation, in a court of equity.
Lord Mansfeld, a famous English Judge, once advised a high military ofcer in Jamaica who needed to act as a Judge as follows: "General, you have a sound head, and a good heart; take courage and you will do very well, in your occupation, in a court of equity. My advice is, to make your decrees as your head and your heart dictate, to hear both sides patiently, to decide with frmness in the best manner you can; but be careful not to assign your reasons, since your determination may be substantially right, although your reasons may be very bad, or essentially wrong". It is very important to bear this in mind when awards of lay arbitrators are challenged. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594 [: (2012) 1 SCC (Civ) 342] , this Court held: (SCC pp. 601-02, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. ..." (Emphasis added) 7. The ratio of Associate Builders was reafrmed in Ssangyong Engineering Construction Company Ltd vs National Highway Authority of India.,2019 SCCOnLineSC 677. 8. The point that Mr Gadagkar raises is both jurisdictional in its legal dimensions and procedural in its application to the conduct of the arbitral proceedings. It speaks also to the manner in which the parties chose to conduct themselves before the Arbitrator. 9. The basic factual narrative is like this. Shet is the registered owner of Narayan building at Plot No. 23, Lakhamsi Napoo Road, Opposite Dadar Railway Station, Dadar (East), Mumbai 400 014. On the second and third foors of this building, there is a lodging and guest house called the Summer Land Guest House. [1] [1] There is some suggestion by Mr Gadagkar about the manner in which Shet came to be the owner of this property, but that is strictly not my concern and I will leave that aside. 10. Between the parties, there was a conducting agreement dated 23rd March 2011. Shetty was allowed, under this agreement, to conduct the business of a guest house and a lodging house.
10. Between the parties, there was a conducting agreement dated 23rd March 2011. Shetty was allowed, under this agreement, to conduct the business of a guest house and a lodging house. That arrangement began on 10th June 2011. The conducting agreement was for ten years. Shetty came into possession on 10th June 2011 and began running the guest house. 11. None of these facts are disputed. There is also no controversy on the clauses of this conducting agreement. 12. At frst, all went well. Shetty ran this guest house without any disruption from Shet until about August or September 2014. There were then some disputes, the genesis of which is again not immediately relevant. Shetty says that Shet did not give him a required list of furniture, fxtures, licenses and so on and avoided complying with repeated reminders. Shetty also says that Shet insisted that some ten persons be accommodated or put up in the guest house. Shetty refused. Shet demanded possession of the third foor for himself, saying he wanted it for his personal use while his own building was under redevelopment. Again Shetty refused. He said that by this time he had spent about Rs. 70 or 80 lakhs on renovations and repairs and could not just deliver or vacate the premises on a whim. Realizing that there were now disputes that needed resolution, Shetty wrote to Shet on 11th November 2014 invoking the arbitration clause in the conducting agreement. There followed from November 2014 through all of 2015 and until April 2016 not only correspondence by the two sides but also a trading of allegations, the fling of complaints and cross-complaints. Shetty in this period exercised his option to renew the conducting agreement. Shet, for his part, claimed possession and issued notices to Shetty to quit, vacate and deliver possession of the entire premises. Ultimately on 5th April 2016, Shetty wrote to the arbitrator named in the conducting agreement and requested him to enter upon the reference to his arbitration and adjudicate the dispute between the parties. 13. That arbitration clause 19 in the conducting agreement is at page 101-103. "19.
Ultimately on 5th April 2016, Shetty wrote to the arbitrator named in the conducting agreement and requested him to enter upon the reference to his arbitration and adjudicate the dispute between the parties. 13. That arbitration clause 19 in the conducting agreement is at page 101-103. "19. It is hereby mutually agreed by and between the parties that in case of any dispute or diferences in respect of any aspect or terms of this Agreement or touching the conducting of the business herein or in respect of payment of compensation or deduction or adjustment of security deposit or about day-to-day functioning or any aspect of this Agreement, then in that case, the parties hereto shall make their best eforts to settle such disputes or diferences amicably by mutual negotiations and if such approach did not result in proper settlement, then in that case such diferences and disputes shall be referred to the sole arbitration of Mr Sundar Bhandary, Advocate, having his ofce at 43, Hanuman Building, 2nd foor, Perin Nariman Street, Opp. R.B.I., Fort, Mumbai 400 001 under the provisions of the Arbitration and Conciliation Act, 1996 and the language may be Kannada or English as convenient to the parties but the Award shall be in English language and the Arbitrator shall give short reasons for his Award. The parties hereto agree that they are bound by the Award and shall comply with the directions interim or fnal without fail under any circumstances. The parties are entitled to make any application to the Arbitrator, referring any small interim/dispute/disagreements in respect of any clause or aspect at any time for interim decision of the Arbitrator if need be in that behalf. The parties voluntarily agree that they shall not challenge the Award before any court of law and are bound by the same. The arbitration proceedings shall be conducted in the ofce of the Arbitrator or at any such other place as may be mutually decided by the parties themselves. The parties are at liberty to address any interim dispute with regard to the terms of the Agreement or conduct of the business or related thereto, to the decision of the Arbitrator for the resolution of such interim diferences and disputes in any aspect of or any of the terms hereof. The Arbitrator shall be paid at the rate of Rs.
The Arbitrator shall be paid at the rate of Rs. 10,000/- per session of 4 (four) hours or any part thereof and both the parties shall equally bear and pay the same." 14. Mr Bhandary, the named Arbitrator, fxed a preliminary meeting in mid-April 2016. Shet did not attend to this meeting. The Arbitrator re-scheduled it. Very shortly thereafter, Mr Bhandary expressed his inability to proceed on the scheduled date since he had sufered a bereavement and said that he would fx another date. 15. Shet addressed some correspondence to both the Arbitrator and Shetty making allegations. On 2nd May 2016, Shetty fled Arbitration Petition No. 719 of 2016 seeking ad-interim and interim reliefs under Section 9. On 5th May 2016 this Court made an order on that Arbitration Petition. A copy of that order is in the paperbook. The Court appointed an Advocate of this Court, Mr Karl Tamboly, as a sole Arbitrator. The Court also directed the parties to appear before the Arbitrator on 7th May 2016. The Section 9 Petition fled by Shetty was to be treated as a Section 17 Application before him. That Section 17 Application had to be disposed by the 5th June 2016 order. 16. Before Mr Tamboly, the parties fled a reply and rejoinder in the Section 17 Application. On 30th May 2016, Mr Tamboly disposed of the Section 17 Application. That is not the subject matter of challenge before me and it need not detain us. 17. We come now to the main proceedings before the Arbitrator. On 31st May 2016, Shetty fled a Statement of Claim essentially seeking specifc performance of the conducting agreement and consequent injunctive relief. On 21st June 2016 Shet fled his Statement of Defence. Notably, he fled no counter claim. Mr Tamboly granted Shet time until 12th August 2016 to fle a counter claim, if any, and to inform the tribunal by 8th August 2016 whether Shet intended to do so or not. There followed communications by which Shet confrmed that he did not intend to fle a counter claim. Mr Tamboly framed points for determination and the trial commenced. Both sides fled their respective Afdavits in lieu of examination-in-chief. Between August 2016 and mid-March 2017 before the Tribunal, the cross-examination of Shetty, and of Shet''s four witnesses was completed. The cross-examination of Shet''s ffth and last witness was to commence on 17th March 2017.
Mr Tamboly framed points for determination and the trial commenced. Both sides fled their respective Afdavits in lieu of examination-in-chief. Between August 2016 and mid-March 2017 before the Tribunal, the cross-examination of Shetty, and of Shet''s four witnesses was completed. The cross-examination of Shet''s ffth and last witness was to commence on 17th March 2017. He did not attend on that date citing ill-health. In March 2017 it was now Shet who fled a Section 17 Application seeking to restrain Shetty from entering the guest house. 18. In March and April 2017 Shet asked Mr Tamboly to intercede for a settlement. 19. This is when we come to the pivotal point in the arc of this litigation. On 6th May 2017, the parties executed what are called preliminary consent terms. A copy of these is from pages 161 to 186 of the Petition itself. I will return to these presently for a closer scrutiny. Parties began acting under the consent terms. Shet signed the necessary application to obtain a license under the Shops and Establishment Act. That license was obtained. Shetty through his Advocate asked Shet to furnish the remaining documents for municipal licenses. He sent a reminder. This correspondence went on for a month or so. In the meantime, Shet''s Section 17 Application was still pending and the Arbitrator was asked to pass directions extending the time to fle replies. 20. Comes now the second tipping point, 14th August 2017. This is the date on which Shet terminated the conducting agreement. A copy of this notice is not annexed to the Petition but is part of the compiled record in Volume III from pages 2640-2649. I will have to return to this document while dealing with the rival submission before me on it. 21. It is at this point that on 16th August 2017 Shet fled a separate ''Statement of Claim''. This fling is the targeted focus of Mr Gadagkar''s attention in this presentation. It must be remembered that Shet had been given an opportunity to fle a counter claim. He had been given additional time. He had not done so. He had, instead, confrmed that he would be fling no counter claim. This was, however, prior to the so-called preliminary consent terms.
It must be remembered that Shet had been given an opportunity to fle a counter claim. He had been given additional time. He had not done so. He had, instead, confrmed that he would be fling no counter claim. This was, however, prior to the so-called preliminary consent terms. I note this because this is really the fulcrum of Mr Gadagkar''s submission, and to put it briefy, his submission that no such Statement of Claim could have been fled, let alone entertained, without a preceding invocation under Section 21 of the Arbitration and Conciliation Act 1996. 22. I will now summarize that submission. What Mr Gadagkar says constitutes a patent illegality is the failure of the learned sole Arbitrator to recognize and acknowledge that this so-called Statement of Claim by the Respondent was entirely without jurisdiction and not maintainable. It is his submission that this Statement of Claim was on an entirely ''independent'' cause of action. That cause of action was the alleged breach by Shetty of certain clauses of the preliminary consent terms. This had nothing at all to do with the original set of disputes referred to arbitration. Therefore, if Shet wanted to take his disputes or his claim for possession to arbitration, he would necessarily have had to give notice invoking arbitration under Section 21. Absent that notice, the Statement of Claim of August 2017 was simply not maintainable. No party could directly go to arbitration without a preceding invocation. Since the Arbitral Award does not accept this position, in Mr Gadagkar''s submission it sufers from a patent illegality. Correctly read, in his view, that Statement of Claim fled by Shet should have been entirely discarded or dismissed at the threshold. 23. A few further dates are to be noted. On 15th December 2017, there came to be issued a second notice by Shet in which his Advocate then did make a reference to Section 21. A copy of this notice is at pages 2828-2829 but the allegation of breach here is still in regard to the preliminary consent terms. 24. I should note that on 6th/8th January 2018, the learned sole Arbitrator ordered closure of business until Shetty obtained the necessary licenses and rejected Shetty''s application for extension of time. 25. In the meantime, Shetty fled as many as four Statements of Defence to Shet''s Statement of Claim.
24. I should note that on 6th/8th January 2018, the learned sole Arbitrator ordered closure of business until Shetty obtained the necessary licenses and rejected Shetty''s application for extension of time. 25. In the meantime, Shetty fled as many as four Statements of Defence to Shet''s Statement of Claim. The Claim Statements by both sides were taken up together. Between January 2019 and March 2019 the evidence was concluded and in April 2019 both sides completed their arguments. On 18th October 2019, the learned sole Arbitrator dismissed Shetty''s claim entirely. He allowed Shet''s claim and imposed costs of Rs. 5 lakhs. 26. Almost predictably Mr Gadagkar is outraged by imposition of costs. I refuse to interfere with that part of the Award. These are matters entirely within the discretion of an Arbitral Tribunal. 27. In order to appreciate the controversy, it is necessary frst to see what the two rival claims before Mr Tamboly were. While these are reproduced in the Award itself, I believe it is best to set them out once again. In his Statement of Claim, Shetty, the Petitioner, sought these reliefs: "a. That this Arbitral Tribunal be pleased to declare that there is a legal, valid, binding and subsisting Conducting Agreement dated 23rd March 2011 executed by and between the Claimant and the Respondent. b. That this Arbitral Tribunal be pleased to hold and declare that the Claimant has rightly exercised his option for renewal/extension of the said Conducting Agreement for one more term of fve years, commencing from 10th June 2016, and extending till 10th June 2021, as provided in the various clauses under the said conducting agreement, and the respondent is bound by the option so exercised by the claimant. c. That this Arbitral Tribunal be pleased to order and direct the respondent to specifcally perform his obligations under the conducting agreement dated 23rd March 2011 executed by and between the claimant and the respondent and further order and direct the respondent to acknowledge and do all acts, things and deeds to give full efect to the option so exercised by the claimant. d. In the alternative to prayer clause (c) above, in the event that the conducting agreement cannot be specifcally performed by the Respondent then this Arbitral Tribunal be pleased to order and direct the respondent to pay to the claimant a sum of Rs.
d. In the alternative to prayer clause (c) above, in the event that the conducting agreement cannot be specifcally performed by the Respondent then this Arbitral Tribunal be pleased to order and direct the respondent to pay to the claimant a sum of Rs. 9,00,00,000 as an by way of liquidated damages along with interest at the rate 18% per annum from the date of order till payment or realization. e. That the Respondent be called upon to specifcally perform his obligations under the said conducting agreement and allow the claimant to peacefully carry on/conduct the business of the said guest house till 10 June 021, in view of the option exercised by the Claimant, and the Respondent, his agents, representatives, heirs, subordinates, employees etc, be restrained by an order of injunction from causing obstruction of any nature whatsoever and/or dispossessing the Claimant, his agents, representatives, subordinates and employees etc. f. This Arbitral Tribunal be pleased to order and direct the Respondent to sign the requisite forms, applications and documents and continue to do so till June 2021, for obtaining / renewing the licenses, permits, permissions etc, to run/conduct the business of the said guest house. g. That this Arbitral Tribunal be pleased to hold and declare that the purported notice of termination dated 24th February 2015 issued by the Respondent to the Claimant is illegal, bad in law, null and void ab initio and be pleased to cancel, quash and set aside the same. g-1. That this arbitral tribunal he pleased to declare that the termination notice dated 14th August, 2017, issued by the respondent being illegal, bad in law, invalid is quashed and set aside. g-2. That this arbitral tribunal be pleased to order and direct the respondent to pay the Claimant an amount of Rs. 16,50,000 with interest thereon of 18% per annum from 31st July 2018, till payment of realization, towards the monthly compensation paid by the Claimant to the Respondent during the closure of the guest house. g-3. that this Arbitral Tribunal be pleased to order and direct the respondent to pay to the claimant and amount of Rs. 55 lakhs, with interest thereon of 18% per annum from 31st July 2018, till payment or realization, being the loss and proft of business of the said guest house between 8th January 2018 till 23rd June 2018. g-4.
g-3. that this Arbitral Tribunal be pleased to order and direct the respondent to pay to the claimant and amount of Rs. 55 lakhs, with interest thereon of 18% per annum from 31st July 2018, till payment or realization, being the loss and proft of business of the said guest house between 8th January 2018 till 23rd June 2018. g-4. that this Arbitral Tribunal be pleased to order and direct the Respondent to pay to the Claimant and amount of Rs. 50 lakhs towards compensation for harassment and mental agony caused by the Respondent to the Claimant and creating hurdles of the Claimant in obtaining requisite licenses. h. That this Arbitral Tribunal be pleased to order and direct the respondent to remove the locks put on the gates of the said property so as to allow smooth and uninterrupted access, ingress, egress of the Claimant, his agents, representatives, subordinates, employees and guests of the said guest house into the said property." 28. At least four of these reliefs were introduced by way of amendment to deal with the much latter purported termination under the frst notice dated 14th August 2017 and the termination of the conducting agreement by Shet. 29. The rival prayers by Shet in his opposing Statement of Claim are these: "(a) That this Hon''ble Forum be pleased to pass an order ordering the claimant to quit vacate and handover the vacant and peaceful possession of the Hotel business being carried on in premises being Hotel Summerland, 23, Narayan Bldg., 2nd Floor, Above Vidyalankar Classes, Near Dadar Station, LN Road, Dadar East, Mumbai 400 014 to the Respondents forthwith in view of the Conducting Agreement having been rightly terminated on the 14th day of August 2017. (b) That the Claimant be directed to pay an amount of Rs. 50,000/- per day the damages/mesne profts from the 15th day of August 2017 till handing over possession of the suit premises to the Respondent." 30. There were two sets or points for determination fnalized. We fnd this in paragraphs 97 and 98 at pages 119-120: "Points for determination (Shet''s Claim) i) Whether the Tribunal has jurisdiction to try and entertain the claims made by the Respondent? ii) Whether the Claimant has breached the terms and conditions of the Conducting Agreement dated 23rd March 2011 and/or the preliminary Consent Terms dated 6th May 2017?
We fnd this in paragraphs 97 and 98 at pages 119-120: "Points for determination (Shet''s Claim) i) Whether the Tribunal has jurisdiction to try and entertain the claims made by the Respondent? ii) Whether the Claimant has breached the terms and conditions of the Conducting Agreement dated 23rd March 2011 and/or the preliminary Consent Terms dated 6th May 2017? iii) Whether the Respondent is entitled to an Award directing the Claimant to hand over quiet, vacant and peaceful possession of the subject premises situated on the 2nd and 3rd foors of Narayan Building, LN Road, Dadar East, Mumbai 400 014 to the Respondent? iv) Whether the Respondent is entitled to an Award against the Claimant for damages/ mesne profts of Rs. 50,000/- per day, or any other sum, from 15th August 2017 till such time as the Respondent is handed over possession of the subject premises? v) What costs? Claimant''s Claim: 1) Whether the Claimant is entitled to an Award in the sum of Rs. 16,50,000/- or any other sum, towards reimbursement of monthly compensation paid by the Claimant to the Respondent during the period when the guest house was closed between 8th January 2018 and 23rd July 2018? 2) Whether the Claimant is entitled to an Award in the sum of Rs. 55,00,000/- or any other sum, in respect of loss of proft / loss of business claimed to have been sufered by the Claimant between 8th January 2018 and 23rd July 2018? 3) Whether the Claimant is entitled to an Award in the sum of Rs. 50,00,000/- , or any other amount, towards compensation for harassment and mental agony claimed by to have been caused by the Respondent in the Claimant obtaining the necessary licenses to run the guest house? 4) If the answer to any of the aforesaid point numbers 1, 2 or 3 is in the afrmative, then whether the Claimant is entitled to interest on the amount awarded, and if so then for what period and at what rate?" 31. With this, I now turn to the two documents that, in my view, are probably determinative. The frst of course is the preliminary consent terms signed between the parties. The business and its location are undisputed. Shetty agrees to pay Rs. 3 lakhs less TDS from 11th May 2017 until 10th June 2021 'instead of the amounts recited in the conducting agreement''.
The frst of course is the preliminary consent terms signed between the parties. The business and its location are undisputed. Shetty agrees to pay Rs. 3 lakhs less TDS from 11th May 2017 until 10th June 2021 'instead of the amounts recited in the conducting agreement''. He agrees to hand over possession of the business on 10th June 2021 (clauses 3 and 4). Clause 5 then says that in the ''unlikely'' event that Shetty does not return possession, a named Advocate would stand appointed as a private receiver and would take possession of the guest house and deliver possession of it to Shet. These consent terms were to be treated as a preliminary Award for the purposes of possession. Then in clause 6 both sides agree to abide by the terms and conditions of the conducting agreement. Clause 7 lists six separate items and Shetty is to give the originals, details and copies of these to Shet within 90 days. Clause 11 requires Shetty to obtain all licenses, renew all licenses / permissions and Shet is to cooperate by signing the necessary documents. In clause 12, Shetty agrees not to run the business without the necessary permissions. Clause 20 then has an undertaking by Shetty not to park any vehicles in the compound of the building. Clauses 8 and 19 of these consent terms should be read together. This is what they say: "8. Both parties agree that for the easier enforcement of the Conducting Agreement, as modifed herein, the parties shall be entitled to complain about the breaches of these Consent Terms / Conducting Agreement, to this Arbitral Tribunal till the 10th day of June 2021 and the decision of this Tribunal on the matter shall be fnal and binding on both parties. 9. It is further agreed that the claimant or his servants shall not prevent the Respondent or his authorised representative from entering into the common areas of the suit premises i.e., Summer Land Guest House at Narayan Building, 2nd Floor and Part 3rd Floor, situate at Plot No. 23, Opp. Dadar Railway Station, Dadar, East, Mumbai 400 014, at any time for the purposes of verifying and inspecting the conditions as may be prevailing in the guesthouse lodging business at such reasonable time accompanied by not more than two persons.
Dadar Railway Station, Dadar, East, Mumbai 400 014, at any time for the purposes of verifying and inspecting the conditions as may be prevailing in the guesthouse lodging business at such reasonable time accompanied by not more than two persons. In the event the Respondent fnds anything objectionable, then in that event the Respondent shall report the same to the concerned authorities and also the Learned Arbitrator. In the event the Respondent creating any ruckus then in that event the Claimant shall be at liberty to apply to the Learned Arbitrator for cancellation of the visiting / inspection rights of the Respondent." 32. I will immediately now turn to the termination letter issued by Shet through his Advocate Mr Dubey on 14th August 2017. This specifcally alleges breach by Shetty of clauses 7, 11, 12, 15 and 20 of the consent terms (not the conducting agreement) and, therefore, contains in paragraph 6 a demand for return of possession. Paragraph 5 clearly states that there is no question of giving copies to rectify breaches ''in view of the clear clauses of the consent terms''. 33. This is in fact the singular focus of challenge. Mr Gadagkar submits that since the purported termination by Shet was after the fling of the consent terms, alleging a breach of these terms, therefore, this was a fresh cause of action and demanded a fresh invocation under Section 21. That Section reads thus: "21. Commencement of arbitral proceedings.-Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." 34. It is Mr Gadagkar''s submission that Shet could not have invoked clause 19 of the consent terms, and in any case nothing in the consent terms amounted to a by-passing of Section 21. His submission is that subject to an agreement to the contrary, the arbitral proceedings ''in respect of a particular dispute'' can commence only when a request for that dispute to be referred to arbitration is received by the other side. He says that the particular dispute in question - the termination of the conducting agreement and the allegation of breach by Shetty of clauses of the consent terms, - was a ''particular'' or ''fresh'' dispute and required an independent invocation. 35.
He says that the particular dispute in question - the termination of the conducting agreement and the allegation of breach by Shetty of clauses of the consent terms, - was a ''particular'' or ''fresh'' dispute and required an independent invocation. 35. It is difcult to see any merit in this submission. The reference to arbitration in the original clause was of all disputes and diferences. Section 21 essentially deals with the time of commencement of arbitral proceedings. It provides a starting point for that purpose. It will have to be read with relevant portion of Section 11 and in particular 11(4). It also must be read with the newly introduced Section 29-A. Nothing in this clause suggests that each claim under every head must receive a separate invocation or that there can be a series of fragmented claims, all arising under the same agreement and between the same parties but necessitating a reference to diferent arbitrations. 36. Mr Gadagkar does not suggest, and rightly, that a breach of the consent terms arrived at before Mr Tamboly would have necessitated a separate arbitration to someone other than Mr Tamboly. 37. What Mr Gadagkar''s construct overlooks is that the consent terms continued the previous arbitration clause. Those Consent Terms, however, substituted certain important provisions including compensation and created new reciprocal obligations. They also contained provisions requiring parties to adhere to those terms. It is settled law that a breach of an obligation by one party gives rights to the other party, including a right of termination, whether or not the agreement specifcally includes a contractual provision for termination. 38. The argument also overlooks the fact that one Section 21 had already been issued and arbitration invoked, agreed upon, and the disputes referred. The Consent Terms came to be fled during the course of an attempted resolution of those disputes. As we have seen, the Consent Terms over-rode some portions of the original Conducting Agreement, and introduced other reciprocal rights and obligations, but continued the arbitration clause. It is impossible, in these circumstances, to treat the Consent Terms as a stand-alone contract meriting its own distinct arbitration, or an arbitration within an arbitration, or an arbitration starting within an arbitration and then leaping outside it. Yet, these are precisely the implications of Mr Gadgakar''s arguments and submissions, whether he says so or not.
It is impossible, in these circumstances, to treat the Consent Terms as a stand-alone contract meriting its own distinct arbitration, or an arbitration within an arbitration, or an arbitration starting within an arbitration and then leaping outside it. Yet, these are precisely the implications of Mr Gadgakar''s arguments and submissions, whether he says so or not. Once Mr Gadagkar concedes, as he must, that a counter claim by Shet required no separate Section 21 invocation, then Shet fling something called a ''Statement of Claim'' would make no diference. Obviously, the continuance of the arbitration agreement in the Consent Terms and the substitution of terms and conditions would have to be read together. 39. Mr Gadagkar relies upon the decision of this Court in M/s. Anacon Process Control Pvt Ltd v Gammon India Limited.,2016 SCCOnlineBom 10076 That decision is of little assistance to Mr Gadagkar. What happened in that case was that the applicant frst moved for winding up of the respondent company. It then fled a summary suit. In that summary suit, the respondent fled a notice of motion under Section 8 of the Arbitration Act pointing out that there was a binding arbitration clause. The notice of motion was made absolute. Parties were directed to abide by the arbitration clause. The applicant then straightaway fled an application under Section 11 without giving notice and without invoking arbitration. It is in this context that the learned Single Judge held that a Section 21 notice was required. This was, therefore, not a case like ours where the parties were already in arbitration and one of the two parties then raised an additional claim. 40. In the present case, it would have been equally possible for Shet to fle a separate application for leave to withdraw his previous commitment not to fle a counter claim and to fle a counter claim seeking the same reliefs as he did in his Statement of Claim. The result would have been the same. Mr Gadagkar would not have been able to object to that claim on jurisdictional grounds. I do not see how he can possibly object to it because it was styled and fled as a Statement of Claim. 41. Third, the submission elides important provisions of the Consent Terms themselves.
The result would have been the same. Mr Gadagkar would not have been able to object to that claim on jurisdictional grounds. I do not see how he can possibly object to it because it was styled and fled as a Statement of Claim. 41. Third, the submission elides important provisions of the Consent Terms themselves. Clauses 8 and 19 make it clear that the parties did not intend to terminate the arbitration by the fling of the Consent Terms. Under clause 8, the parties agreed that each would be entitled to complain about the breaches of the terms of the Conducting Agreement as well as of the Consent Terms and that any such complaint would be made only to Mr Tamboly until 10th June 2021 (the revised term of the Conducting Agreement). His decision on any such complaint - i.e. of a breach of either the Conducting Agreement or the Consent Terms themselves - would be fnal and binding on the parties. Clause 19 said that should either side breach any of his obligations under the Consent Terms, the other party could approach Mr Tamboly for redress. The parties conferred on Mr Tamboly by a written agreement the power and jurisdiction to pass appropriate orders on any such complaint, including, evidently, a complaint about a breach of the Consent Terms. There was no termination of the arbitration. Instead, the parties treated the Consent Terms as a ''preliminary'' award. Clause 5 says so. Therefore, the reference and arbitration continued even after the Consent Terms were fled. Once, therefore, the parties themselves conferred jurisdiction on Mr Tamboly to decide their disputes - including any arising from breaches of the Consent Terms - I do not see how it is at all open for either of them to raise a plea of want of jurisdiction for any reason at all. If there was a question of Section 21, it stood waived within the meaning of Section 4. 42. This is where Mr Gadagkar''s client is, as the Bard said, hoist by his own petard. It was not just Shet who alleged breaches of the Consent Terms. He did, and he fled his own ''Statement of Claim''. What did Shetty, on the other side, do?
42. This is where Mr Gadagkar''s client is, as the Bard said, hoist by his own petard. It was not just Shet who alleged breaches of the Consent Terms. He did, and he fled his own ''Statement of Claim''. What did Shetty, on the other side, do? He, too, alleged breaches by Shet, and he gave these voice by amending his own earlier Statement of Claim and seeking reliefs directly related to the Consent Terms - but without himself invoking Section 21. What is sauce for Mr Kini''s goose must surely be sauce for Mr Gadagkar''s gander. 43. Mr Gadagkar''s reliance on the decision of the Supreme Court in the case of State of Goa v Praveen Enterprises, (2012) 12 SCC 581 is also not apposite. That judgment sets out the diferences between an order under Section 8 and a reference to arbitration. 44. I am unable to see how this submission by Mr Gadagkar brings the case under patent illegality provision of Section 34. It is not as if the learned sole Arbitrator did not note and deal with the submission. He did, in the following manner: "105. I shall frst deal with the submission made by Mr. Gadagkar with respect to the jurisdiction of the Tribunal in respect of the claim made by the Respondent in his Statement of Claim dated 16th August 2017. According to Mr. Gadagkar, since the Respondent did not issue an invocation notice under section 21 of the Act prior to filing his Statement of Claim. I have no jurisdiction to entertain his claims. 106. I fnd myself unable to accept this contention of Mr. Gadagkar. I fnd his reliance on the judgment of the Hon''ble Bombay High Court in the case of Anacon Process Control Pvt Ltd v Gammon India Ltd,2016 SCCOnlineBom 10076 . and the judgment of the Hon''ble Supreme Court in the case of State of Goa vs. Praveen Enterprises, (2012) 12 SCC 581 to be misconceived. 107. Anacon (supra) was a case where one of the parties to the dispute, instead of invoking arbitration under the arbitration agreement, chose to fle a Summary Suit before the City Civil Court for recovery of this dues. In that suit, the Defendant took out an application under Section 8 of the Act for referring the parties to arbitration in view of the arbitration agreement between the parties.
In that suit, the Defendant took out an application under Section 8 of the Act for referring the parties to arbitration in view of the arbitration agreement between the parties. That application was disposed of by holding that the civil Court did not have jurisdiction in view of the arbitration agreement between the parties, and the parties were directed to refer their disputes to arbitration. Thereafter, instead of invoking arbitration by addressing a notice under Section 21 of the Act, the Plaintif in the civil suit, straightaway fled an application under Section 11 of the Act before the Hon''ble Bombay High Court for appointment of an Arbitrator. It was in that context that the Hon''ble Bombay High Court for appointment of an Arbitrator. It was in that context that the Hon''ble Court held that a party to an arbitration agreement is bound to invoke arbitration in terms of Section 21 of the Act which is a sine qua non for commencement of the arbitration proceedings. The Hon''ble Court relied on the judgment of the Hon''ble Supreme Court in the case of State of Goa vs Praveen Enterprises (supra) to elaborate the diference between referring parties to arbitration under Section 8 of the Act and a reference to arbitration. 108. I do not see how either of the aforesaid two judgments are of any aid to Mr Gadagkar. The present case is not one where there is no reference to arbitration. The sequence of events which are relevant for the purposes of determining this issue in the present case are as follows: a) Disputes arose between the parties in the year 2014. Correspondence in this regard was exchanged after which the Respondent terminated the Conducting Agreement. b) The Claimant his Advocate''s letter dated 5th December 2014 invoked the arbitration agreement under Clause 19 of the Conducting Agreement and sought to refer the disputes between the parties to arbitration before the arbitrator named in the said clause. This was clearly a notice under Section 21 of the Act. c) The Claimant thereafter took out an application under Section 9 of the Act, being Arbitration Petition No. 717 of 2016 before the Hon''ble Bombay High Court. d) The Hon''ble Court by its order dated 5th May 2016 appointed me as the Sole Arbitrator to decide the disputes between the parties arising out of the Conducting Agreement.
c) The Claimant thereafter took out an application under Section 9 of the Act, being Arbitration Petition No. 717 of 2016 before the Hon''ble Bombay High Court. d) The Hon''ble Court by its order dated 5th May 2016 appointed me as the Sole Arbitrator to decide the disputes between the parties arising out of the Conducting Agreement. e) Thereafter, the parties fled Consent Terms on 6th May 2019. Clauses 8 and 19 of the Consent Terms, which read as under, are relevant for the purposes of this discussion. 8. Both parties agree that for the easier enforcement of the Conducting Agreement as modifed herein, the parties shall be entitled to complain about the breaches of these Consent Terms/ Conducting Agreement to this Arbitral Tribunal till the 10th day of June 2021 and the decision of this Tribunal on the matter shall be fnal and binding on both parties. 19. In the event of :e a) Either parties committing breach of any of the Terms and Conditions and/or undertakings provided hereinabove; b) Difculty in implementation of the present Consent Terms or any part therof; and c) Any difculty arising here from, both parties agree that either/or both parties may apply to this Arbitral Tribunal for necessary orders to resolve the same. Both the parties agree that this Arbitral Tribunal may pass such orders as it deems appropriate in the facts and circumstances of the case, having due regard to the letter and spirit of these Consent Terms, and for that purpose both parties hereby agree that this Arbitral Tribunal shall have the power and jurisdiction to pass such orders on such applications, after giving an opportunity of hearing to both sides." f) Thereafter, disputes once again arose between the parties leading to the Respondent terminating the Conducting Agreement by his Advocate''s notice dated 14th August 2017. g) In view of the disputes between the parties, both sides have efectively fled their respective claims before me in view of the facts which have transpired post the fling of the Consent Terms. 109. From the aforesaid facts, it is clear that the present case is not one where there has been no reference to Arbitration or no invocation notice under Section 21 of the Act. In fact, it is the Claimant himself who has issued the notice under Section 21 of the Act, pursuant to which this Tribunal came to be eventually appointed.
From the aforesaid facts, it is clear that the present case is not one where there has been no reference to Arbitration or no invocation notice under Section 21 of the Act. In fact, it is the Claimant himself who has issued the notice under Section 21 of the Act, pursuant to which this Tribunal came to be eventually appointed. This is very diferent from the facts of the Anacon (supra) case where the Court held that even after an order is passed under Section 8 of the Act directing the parties to refer their disputes to arbitration, a notice under Sectin 21 of the Act is mandatory before the Court can pass an order under Section 11 of the Act appointing an arbitrator. Similarly, I do not see how the judgment of the Hon''ble Supreme Court in the case of State of Goa (supra) comes to the aid of Mr Gadagkar. 110. Moreover, from a reading of the Consent Terms and more particularly clauses 8 and 19 thereof, it becomes clear that the parties never intended for the reference to come to an end with the filing of the Consent Terms. In fact, in clause 5 of the Consent Terms, the parties have treated the Consent Terms to be in the nature of a preliminary award. Moreover, under clause 8 of the Consent Terms, the parties have agreed that both sides would be entitled to complain about the breaches of the terms of the Conducting Agreement as well as of the Consent Terms to this Tribunal up to 10th June 2021 and the decision of the Tribunal on such complaint would be final and binding on the parties. Moreover, under clause 19 of the Consent Terms, in the event of either party committing a breach of any of his obligations under the Consent Terms, it was agreed that either party would be entitled to approach this Tribunal in respect of the same and the Tribunal would have the power and jurisdiction to pass such orders it deems appropriate. A conjoint reading of these 3 clauses make it clear that the parties never intended for the reference to terminate, but that the same should continue even after the filing of the Consent Terms. That is why the consent terms were styled as preliminary Consent Terms.
A conjoint reading of these 3 clauses make it clear that the parties never intended for the reference to terminate, but that the same should continue even after the filing of the Consent Terms. That is why the consent terms were styled as preliminary Consent Terms. Thus the parties have themselves conferred this Tribunal with jurisdiction to decide their disputes arising out of the performance of their respective obligations under the Conducting Agreement read with the Consent Terms. 111. In view of the aforesaid, I cannot agree with Mr. Gadagkar that the Respondent was required to invoke arbitration afresh under Section 21 of the Act prior to fling his Statement of Claim dated 16th August 2017. 112. Further, in this regard, it is relevant to note that the Claimant himself has amended his Statement of Claim to introduce reliefs in respect of what the Claimant perceives to be breaches committed by the Respondent of his obligations under the Consent Terms. The Claimant himself has not sent any notice under Section 21 of the Act before he introduced such fresh claims. Thus, the conduct of the Claimant runs contrary to his own case that the Respondent ought to have issued a notice under Section 21 of the Act before fling his Statement of Claim. 113. In the context of the Claimant''s argument with respect to the jurisdiction of this Tribunal, a reference to Section 32 of the Act would be apposite. Under Section 32 (1), the arbitral proceedings shall be terminated by the Final Award or by an order of the Tribunal under sub-section 2. Under sub-section 2, the Tribunal shall issue an order for termination of the arbitral proceedings where (a) the Claimant withdraws his claim, (b) the parties agree on the termination of the proceedings, or (c) the Tribunal fnds that the continuation of the proceedings for any reason has become unnecessary or impossible. In the present case, even after the filing of the Consent Terms, there was no termination of the arbitration proceedings, and the same were still at large in view of the express mandate of clauses 5,8 and 19 thereof. In this view of the matter, I am unable to accept Mr. Gadagkar''s submission that the Respondent was required to issue a notice under Section 21 of the Act before filing his Statement of Claim dated 16th August 2017. 114.
In this view of the matter, I am unable to accept Mr. Gadagkar''s submission that the Respondent was required to issue a notice under Section 21 of the Act before filing his Statement of Claim dated 16th August 2017. 114. In light of the above discussion, I answer the issue of jurisdiction raised by the Claimant by holding that I have the jurisdiction to decide the claims, both of the Claimant, as well as of the Respondent." (Emphasis added) 45. In my view, this fnding returned by the learned sole Arbitrator is correct in law and on facts. There is nothing illegal, let alone patently illegal, about it. It is not merely a probable, plausible or possible view. In my considered opinion, it is the only view that could have been taken. Any other view taken by the Arbitral Tribunal would have sufered from vice of patent illegality or even perversity. 46. There is no other argument advanced by Mr Gadagkar to assail the Award. 47. In my view, there is no infrmity in the Award. There is no substance in the Petition. It is dismissed. 48. In the facts and circumstances of the case, there will be no order as to costs. 49. At Mr Gadagkar''s request, since he says he has instructions to carry the matter higher, the operation of this order is stayed for period of four weeks from today. I do so because the Petitioner Shetty has been admittedly in possession for a long period of time since June 2011. Even after the Award was passed on 18th October 2019, the Respondent Shet has not been able to regain possession. The operation of this order, and therefore of the award, is stayed for four weeks, i.e. until