Amita Batra vs Anand Auto Corporation and Others

Shiv Narayan Dhingra, J.—The petitioner has filed this petition u/s 34 of the Arbitration & Conciliation Act, 1996 assailing an award dated 30.11.1999 passed by the learned Arbitrator which was written on stamp paper on 30.12.1999.

Brief facts relevant for the purpose of deciding this petition are that the petitioner had entered into a supervisory-cum-licence fee agreement with the respondent on 6.10.1987 in respect of premises No. D-18/2, Okhla Industrial Area, Phase II, New Delhi. The agreement provided that the licensor/respondent shall obtain a 50 horse power load of the power in the premises for use of the licensee i.e. petitioner and petitioner shall pay a monthly license fee of Rs. 50,000/- from the date when the industrial power was installed in the premises. Clause 5 of the agreement dated 6.10.1987 reads as under:

That the licensee also agree and undertake to pay for consumption of electricity however, industrial payload and all other outgoings including any charges payable to DDA for such uses, fire-tax, scavenge charges, education tax (but the property-tax shall be paid by the Licensor being owner of the said factory premises).

While the petitioner was doing her business, a raid of DESU took place in the premises on 15.1.1992 and it was found that the petitioner had installed much higher load than the sanctioned load in the unit being run in the premises. Due to higher load unit got categorized as LIP while the sanctioned load was of SIP nature. After the inspection, when the load was found on the higher side, the DESU changed its tariff from SIP to LIP and raised a bill of Rs. 60 lac against the respondent in whose name the connection was there. This bill was contested by the petitioner through respondent, since being the User the petitioner was liable to pay all electricity charges. In order to show her bona fide, she also executed an indemnity bond in favour of M/s Anand Auto Corporation (India) and M/s Anand Manufacturing Co. Pvt. Ltd. confirming and agreeing that in the eventuality of any demand of DESU required to be paid, she would pay the same to DESU and she indemnified the respondent against any loss that may be suffered by respondent due to this demand. The petitioner continued in occupation of the premises and vacated the premises in September, 1996. The demand raised by DESU till that time was being contested in the Court and had not crystallized. The petitioner then executed another agreement on 15.10.1996 reiterating her assurance that she would pay the amount as would be decided by the adjudicating authority. She also executed an affidavit to this effect. The demand was ultimately crystallized when adjudicating authority presided over by retired Justices Mr. M.K. Chawla and Mr. J.K. Mehra passed an order on 14.3.1998 ordering that the consumer shall pay total sum of Rs. 48 lac in full satisfaction of the bill from the period 1992 to September, 1996 (which is the period during which petitioner remained in occupation of the premises and had been using the electricity). The authority also ordered for giving credit of the amount already paid. After passing of this order by the authority, the respondent served a notice upon the petitioner asking petitioner to pay the amount however, the petitioner refused to pay the amount and thereafter the respondent invoked arbitration clause. The arbitration clause as contained in the agreement dated 6.10.1987 reads as under:

That in case of any dispute or difference regarding the interpretation of this document, rights, duties and liabilities including accounts, the same shall be referred to the sole Arbitration of Shri Tarlok Singh Sawhney, S/o Shri Prem Singh, R/oA-14, Nizamuddin (West), New Delhi whose decision shall be final and binding and shall not be questioned in any court of law.

The learned Arbitrator sent a notice to the petitioner for appearance but the petitioner refused to acknowledge the authority of the Arbitrator and refused to appear before the Arbitrator instead petitioner wrote a letter dated 6.9.1999 to the Arbitrator that the Arbitrator had no jurisdiction as there was no arbitration agreement between the petitioner and the respondent. She stated in letter dated 14.8.1999, written to the Arbitrator that agreement dated 6.10.1987 had come to an end in September 1996 when the premises was vacated. The alleged agreement was with regard to the user of the premises and not with regard to the user of the amenities. A separate agreement was entered into in October, 1996 with regard to user of the amenities superseding the earlier agreement and the agreement regarding amenities did not contain any arbitration clause.

The learned Arbitrator sent notice of hearing dated 26.7.1999 and 17.8.1999 informing that the hearing shall take place on 18.8.1999 at 3.30 p.m. The Arbitrator sent another notice dated 30.8.1999 to the petitioner informing her that the next date of hearing was 20.9.1999. She replied to the notice vide letter dated 6.9.1999 and stated that she was not submitting to the jurisdiction of the Arbitration as the Arbitrator was acting without authority. Ultimately, the Arbitrator on 20.9.1999 proceeded ex parte against the petitioner and informed the petitioner about the order and petitioner being proceeded ex parte. The Arbitrator also informed the petitioner about next date of hearing as 6.10.1999. The Arbitrator thereafter passed the award.

The Arbitrator in his award dealt with the objections raised by the petitioner through her letters about his jurisdiction and about his relationship with the claimant and answered both the objections against the petitioner. The Arbitrator held that the petitioner was liable to pay claim of DESU for the period when the premises was in occupation of the petitioner. He held that since this claim was settled at 48 lac, the liability of payment of this amount was that of the petitioner. After considering the amount already paid, the Arbitrator passed an award of Rs. 26,61,801/- in favour of the respondent which was to be paid in terms of the demands of DESU in 10 quarterly installments of Rs. 2,66,000/- starting from 7th of every month to start from January, 2000, as per order passed by the competent authority. He held that the entire balance outstanding amount payable to DESU was the liability of the petitioner and respondent shall be entitled to interest @ 18% p.a. from the date of non-payment of installment or on the outstanding balance amount. The Arbitrator however, did not award any litigation expenses.

The petitioner has assailed the award on the ground that there was no subsisting arbitration agreement between the parties and Arbitrator committed an error in assuming jurisdiction on the basis of agreement dated 6.10.1987 when she had already vacated the premises in September, 1996. She submitted that the agreement dated 6.10.1987 was superseded by the subsequent agreement dated 15.10.1996 and the earlier agreement was not enforceable. The agreement dated 15.10.1996 was executed under pressure and coercion so it was no agreement in the eyes of law. She submitted that Arbitrator was related to the claimant and he did not disclose his relationship with the respondent to the petitioner, the award was therefore without jurisdiction.

Another objection taken by the petitioner is that the Arbitrator passed two awards one dated 30.11.1999 and second dated 30.12.1999, neither of the awards was final award, the Arbitrator had become functus officio on 30.11.1999 and he could not have passed the award dated 30.12.1999.

All the objections raised by the petitioner are frivolous objections. The Arbitrator had not passed two awards. The learned Arbitrator passed award on 30.11.1999 and sent a copy of the award to the parties stating in the award that the award was kept in abeyance for 30 days and was issued to both the parties by registered post so that if there was any typographical correction, the same could be pointed out by the parties by making an application within a month. This one month time was given by the Arbitrator in view of statutory provision contained in Section 33 of the Arbitration & Conciliation Act, 1996. The same award was typed on stamp paper and signed by the Arbitrator on 30.12.1999 thus, it is not a case of two different awards having been passed but the same award passed on 30.11.1999, was typed on stamp paper and signed on 30.12.1999. Merely because the award was typed on stamp paper after one month would not make the award illegal or nor would make the Arbitrator functus officio in signing the stamped award.

The petitioner has raised contradictory arguments in respect of agreement dated 15.10.1996. On the one had the petitioner has stated that the agreement dated 6.10.1987 was superseded by agreement dated 15.10.1996, on the other hand stated that agreement dated 15.10.1996 was got executed from her under duress and coercion therefore this was not a valid agreement. I consider that the agreement dated 15.10.1996 is not of much importance. The dispute in respect of payment of electricity bill had arisen during continuation of agreement dated 6.10.1987, which was the basic agreement in respect of license of the premises and which contained the relevant clause regarding payment of electricity dues by the petitioner as reproduced in para 2 above. The petitioner was bound to pay electricity charges as per the license agreement. The connection was got installed by the respondent only for the use of petitioner and it was in exclusive use of the petitioner. The petitioner executed subsequent agreement i.e. agreement dated 15.10.1996 to assure the respondent that she would continue to contest the case and would bear all legal expenses of her contesting of the case against DESU. Since the connection was in the name of the respondent, the petitioner could contest the demand only through the respondent and that is why this agreement was executed. The petitioner also executed an indemnity bond and affidavit in this respect. The petitioner was clear in her mind that the liability towards DESU was her liability. It is for this reason that she after the order of the competent authority starting evading her liability and refused to even appear before the Arbitrator.

During arguments, the Counsel for the petitioner contended that the learned Arbitrator has mentioned in the award that the reference was made to the Arbitrator of the dispute arising out as per the agreement dated 15.10.1996 regarding electricity charges but the agreement dated 15.10.1996 did not contain any arbitration clause and therefore the Arbitrator acted without jurisdiction and without there being any arbitration clause. I consider that this argument must fail. The arbitration was invoked by the claimant under agreement dated 6.10.1987, which was the agreement between the parties in respect of license of the premises and the notice was sent to the petitioner by the Arbitrator of invocation of the arbitration clause in agreement dated 6.10.1987. The dispute between the parties was prior to vacation of the premises since the raid of DESU was conducted in the year 1992 and premises was vacated by the petitioner in 1996. The petitioner so long as was in occupation of the licensed premises, continued to assure the respondent of payment of the electricity charges. Even after vacating the premises she had assured the respondent to the same effect and executed a subsequent agreement. The arbitration clause as contained in agreement dated 6.10.1987 was rightly invoked by the respondent and the Arbitrator had acted under this very clause. The dispute was also raised within the scope of agreement dated 6.10.1987. I, therefore, consider that the Arbitrator rightly passed an award relying on the arbitration clause contained in agreement dated 6.10.1987 although reference has been made to agreement dated 15.10.1996 but this reference was made considering the assurance given by petitioner in this agreement. The agreement dated 15.10.1996 was in fact a continuation of agreement dated 6.10.1987, it was not a separate agreement and the arbitration clause contained in agreement dated 6.10.1987 was therefore rightly invoked.

I find no merits in the objections raised by the petitioner. The objection petition is hereby dismissed with cost. The cost is quantified at Rs. 2 lac.