Arbitration Petition No. 556, 680 of 2014. Case: M/s. Auto Craft Engineers Vs Akshar Automobiles Agencies Private Limited. High Court of Bombay (India)
| Case Number | Arbitration Petition No. 556, 680 of 2014 |
| Counsel | For Appellant: Mr. A. Kumbhakoni, Senior Advocate, a/w. Mr. Shardul Singh, i/b. Mr. Kunal Bhanage, Advs. and For Respondents: Mr. Pravin Samdhani, Senior Advocate, a/w. Mr. Arun Mehta, Ms. Pooja Thorat, Ms. Sanika Mehta, i/b. Akshar Laws |
| Judges | R.D. Dhanuka, J. |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 34, 34(2)(a)(iii), 31(8), 12, 13, 25; Code of Civil Procedure, 1908 - Sections 35A, 35(B); Indian Contract Act - Section 74 |
| Judgement Date | July 29, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
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By these two petitions filed under section 34 of the Arbitration and Conciliation Act, 1996 (for short the 'Arbitration Act') both the petitioners have impugned the ex-parte award dated 24th September, 2013 passed by the learned arbitrator allowing the claims made by the respondent. Since the facts in both the arbitration petitions are identical, by consent of parties, both the petitions were heard together and are being disposed of by a common order and judgment.
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Learned senior counsel appearing for the parties have addressed this court in the Arbitration Petition No.556 of 2014 and thus the facts in the said arbitration petition are summarized in the later part of this judgment. It is agreed by and between the parties that the conclusion drawn by this court in the Arbitration Petition No.556 of 2014 will apply also to the Arbitration Petition No. 680 of 2014.
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The petitioner is a sister company of M/s.Navnit Motors Pvt. Ltd., an authorized dealer for Maruti Suzuki India Ltd. The respondent is owner of the piece or parcel of land or ground admeasuring 40,000 sq.ft. carpet area or thereabout togetherwith sheds and structures standing thereon bearing Survey No.326 A, Plot No.1 and Survey No.326(P), Plot No.1 lying being and situated at Village Majiwada, Taluka and District Thane.
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Sometime in the year 2008-09, the petitioner was desirous of setting up of another showroom and workshop for the said company in and around Ghodbunder Road, Thane. On or about 16th March, 2009, the petitioner and the respondent entered into a leave and licence agreement in respect of a portion of larger property admeasuring 20,000 sq.ft. carpet area on various terms and conditions agreed and recorded in the said agreement. Under the said agreement, the petitioner had deposited a sum of Rs.25 lacs as and by way of security deposit free of interest with the respondent. There was a locking period of 12 months agreed by and between the parties under the said leave and licence agreement. It is the case of the petitioner that the said leave and licence agreement was subject to the approval of M/s.Maruti Udyog Ltd. insofar as the selection of the said premises was concerned. According to the petitioner, the said premises were not vacant and available for the petitioner and was occupied by the previous licencee M/s.Global Gallarie which licencee was running its showroom of Mahendra Jeeps and continued to occupy the said premises. The petitioner had not occupied the said premises even for a day.
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It was the case of the petitioner that on 23rd March, 2009, M/s.Maruti Udyog did not approve the said premises. On 25th March, 2009, the parties met and agreed to put an end to the said leave and licence agreement. The respondent had alleged to have assured the petitioner that the said cheque of Rs.25 lacs issued by the petitioner towards security deposit would be returned to the petitioner or the said cheque would be destroyed.
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The petitioner sent an e-mail to the respondent on 27th March, 2009 recording various discussions arrived at in the meeting between the parties. The respondent replied the said e-mail vide their letter dated 31st March, 2009 and denied the alleged understanding arrived at between the parties though alleged to have been admitted at the meeting held between the parties. The petitioner thereafter issued instructions to their bankers to stop payment in respect of the said cheque of Rs.25 lacs issued by the petitioner. There was further correspondence exchanged between the parties.
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On 29th June, 2011, the respondent herein invoked the arbitration agreement after expiry of two years of the last correspondence exchanged between the parties. On 16th March, 2012, the Designate of the Hon'ble Chief Justice passed an order in the application filed by the respondent under section 11 of the Arbitration Act and appointed a senior counsel of this court as a sole arbitrator. The respondent abandoned the claim of licence fees and sought to claim damages only in the arbitral proceedings.
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In the preliminary meeting held by the learned arbitrator on 14th June, 2012, the learned arbitrator issued various directions to the parties and also fixed his fees to be paid by both the parties. It is the case of the petitioner that in the said preliminary meeting dated 14th June, 2012, the learned arbitrator did not issue any directions for imposing cost in the event of any party seeking any adjournment of the meeting proposed to be held. The learned advocate representing the petitioner remained absent in the said preliminary meeting held by the learned arbitrator. The respondent thereafter filed a statement of claim before the learned arbitrator. The petitioner filed written statement on 24th September, 2012.
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On 1st October, 2012, the learned arbitrator fixed a meeting on 5th October, 2012 for framing issues. It is the case of the petitioner that the said meeting proposed to be held on 5th October, 2012 however was adjourned at the request of the respondent to 17th October, 2012. The learned arbitrator did not impose any cost upon the respondent for seeking adjournment of the said proposed meeting to be held on 5th October, 2012.
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On 17th October, 2012, the learned arbitrator framed issues and issued further directions. The learned arbitrator fixed the dates of hearing as 24th to 26th July, 2013 for completion of evidence and fixed the dates as 1st and 2nd August, 2013 for arguments. The learned arbitrator directed the parties to deposit Rs.4,50,000/- each towards his fees. It is the case of the petitioner that the petitioner deposited the amount of Rs.4,80,000/- towards the fees of the learned arbitrator. The respondent initially did not deposit their share of fees of the learned arbitrator.
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It is the case of the petitioner that on 13th December,2012, the learned arbitrator by his e-mail unilaterally re-scheduled the dates to 29th to 31st July, 2013 and 1st and 2nd August, 2013. It is the case of the petitioner that on 5th April, 2013, the learned arbitrator once again vide his e-mail revised the dates to 30th and 31st July, 2013 and 2nd and 3rd August, 2013. According to the petitioner these were the dates on which the first time matter was fixed for recording evidence.
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It is the case of the petitioner that on 21st June, 2013 i.e. 38 days prior to the scheduled date of the meeting proposed to be held on 30th and 31st July, 2013 and 2nd and 3rd August,2013, the petitioner filed a detailed application before the learned arbitrator requesting for re-scheduling the dates fixed on 29th and 30th July, 2013 by 15 days on the ground that the only witness Mr.Jayendra Kachalia whose affidavit in evidence was already filed by the petitioner was travelling a business tour abroad and would not be available in India during that period. It is the case of the petitioner that the said application for re-scheduling the dates by 15 days was not opposed by the respondent. The learned arbitrator heard the said application dated 21st June 2013 on 1st July 2013. It is the case of the petitioner that even on that day also, the respondent did not oppose the request of the petitioner for rescheduling the dates fixed for 29th to 31st July, 2016 by 15 days.
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The learned arbitrator cancelled the hearing dates fixed on 30th and 31st July, 2013 and 2nd and 3rd August, 2013 and adjourned the matter to 23rd to 27th September, 2013 from 11.00 a.m. to 5.00 p.m. subject to the condition that the petitioner herein pays the cost to the respondent herein equivalent to the share of the respondent herein in the fees of the learned arbitrator for the said hearings equivalent to Rs.3 lacs and also Rs.60,000/- towards the cost awarded to the respondent. The learned arbitrator directed the petitioner to pay the said cost of Rs.3,60,000/- to the respondent on or before 30th July, 2013 and made it clear that the said payment of cost shall be the condition precedent to further participation of the petitioner in the further arbitration proceedings. The learned arbitrator also directed the respondent herein to deposit his fees as directed in the minutes of the meeting held on 17th October, 2013. The learned arbitrator also directed each party to deposit a further sum of Rs.3,75,000/- with the learned arbitrator on or before 31st August,2013 for the five hearings fixed for 23rd to 27th September, 2013.
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The petitioner vide their letter dated 11th July, 2013 addressed to the learned arbitrator raised protest against the learned arbitrator on the ground that the adjournment was sought by the petitioner on genuine grounds setout in the application and that also well in advance before the actual dates of hearing. It was stated in the said letter that no inconvenience was caused either to the learned arbitrator or to the respondent in any manner or no prejudice had been caused or shown to have been caused to the respondent by adjournment. The petitioner expressed its unwillingness to comply with the said order imposing cost as a condition precedent and contended that the said order imposing cost was unreasonable, penal, harsh, onerous, unfair and unjustifiable. The petitioner also recorded that the petitioner had already complied with all earlier directions issued by the learned arbitrator.
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On 13th July, 2013, the learned arbitrator sent an e-mail recording that he was reluctant to cancel the hearing which was fixed several months in advance and he had believed that there had to be discipline in adhering to the schedule of hearing and the same should not be lightly disturbed. However, keeping in mind the convenience of the witness of the petitioner herein and inspite of opposition of the respondent, the learned arbitrator had granted time to the petitioner on the condition of payment of costs. It is stated in the said e-mail that if the petitioner did not wish to comply with the conditions, it ought to have been carried on with the hearings on the dates...
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