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Judgment
Deepak Gupta, J.—The appellant (hereinafter referred to as the collaborator) entered into an agreement with the respondent-Punjab Tourism Development Corporation (hereinafter referred to as the Corporation) on 28.10.1986. As per this agreement, the collaborator was to arrange for the sale of approximately 2000 sq. yards land to the Corporation for construction of a the Holiday Home. The construction of the Holiday Home consisting of forty rooms was to be carried out by the collaborator as per the specifications and designs provided by the Corporation.
Clause 3 of the agreement provided that the construction was to be completed within twenty months. It appears that the collaborator owned certain other land adjoining this land measuring 2000 sq. yards and agreed to provide a common approach road of 15 feet width at his own cost. The approach road was to be maintained by the collaborator. The agreement was to be in perpetuity and the collaborator, under the terms of the agreement was giving the right to maintain the premises in perpetuity. He was required to provide efficient services detailed in the schedule annexed to the agreement within a reasonable time. He was also to ensure regular supply of water, electricity and power to the persons staying in the complex. The collaborator was also required to provide facilities, such as, restaurant, lounge, bar, shopping arcade, indoor games, trekking and camping equipments commensurate to the occupancy and requirements of the Holiday Home.
It would be pertinent to mention that this Holiday Home was being set up by the Corporation to be run on a time share basis for its members. The collaborator could charge the members of the Holiday Home Club for the facilities provided by it.
Clause 13 of the agreement, which is important for our purpose, reads as follows:
BREACH OF CONTRACT
That, in the event of the collaborator''s failure to perform its part of the contract in any manner, then the corporation shall have the right to rescind the said contract and take over the management and control of the said forty rooms complex and also to become entitled to damages from the collaborator, which shall be recoverable from the collaborator. Similarly in case the corporation fails to comply with its part of the contract the collaborator shall be entitled to claim damages from the corporation.
Though, this agreement was entered into in the year 1986, the collaborator failed to provide the various other facilities, such as restaurant, lounge, bar, shopping arcade, indoor games, trekking and camping equipments etc. Most importantly, the collaborator failed to provide a 15 feet wide path from the main road to the Holiday Home. Though, the collaborator was in charge of running the Holiday Home, as per the Corporation, he, in connivance with his father, Mr. Dwarka Nath Sood, got instituted a suit by his father to the effect that the father was in adverse possession of the land over which the path/road was to be provided. On the admission of the collaborator, the Civil Court passed a decree on 17.08.1990 in favour of the father. As a result thereof, there is no approach road whatsoever to the building constructed to house the Holiday Home. Even thereafter, the collaborator promised the Corporation that despite the Civil Court''s decree, he would get the land back from his father and assured that a common passage would be provided to the Corporation from the main road to the building, as per the terms of the agreement. However, he failed to do so despite various extensions granted to him by the Corporation and when after seven years the facilities were not provided, the Corporation rescinded the contract and took over the possession of the complex in June, 1994.
Thereafter, the collaborator, in terms of the agreement, sent a letter to the Corporation on 24.07.1996 stating that he had suffered losses and to decide the disputes between the parties, he was appointing his Arbitrator. The Corporation sent a reply on 27.08.1996 and also appointed its Managing Director as an Arbitrator to decide the disputes. Thereafter, the collaborator filed an arbitration petition before this Court for appointing of third Arbitrator and finally, this Court vide its order dated 07.09.2000 appointed the Secretary (Tourism), Government of Punjab, as the third Arbitrator. Thereafter, the Arbitral Tribunal entered into reference. The collaborator submitted his claim in person on 14.01.2002 before the Arbitral Tribunal. The Arbitrator appointed by the collaborator fell ill and, therefore, no proceedings could take place and he was replaced by a fresh Arbitrator, Mr. Hardyal Gupta on 22.02.2002. Thereafter, another application for extension of time was moved before this Court and the time for making the award was extended to 19.10.2002. The Corporation filed its reply/ counter claim on 16.05.2002. The Corporation, in its counter claim, not only refuted the claim of the collaborator, but also prayed that an award of Rs. 1,44,97,125/- be passed in its favour.
The collaborator, on 08.07.2002, made a statement that he did not want to give any evidence. On behalf of the Corporation, affidavit of Mr. J.S. Dhillon was filed on 05.08.2002. Thereafter, no oral arguments were addressed and only written arguments were filed by both the parties on 16.09.2002 and the matter was adjourned to 09.10.2002 for announcement of the order. The Arbitrator appointed by the collaborator passed an award in favour of the collaborator and rejected the counter claim filed by the Corporation. On the other hand, the Managing Director of the Corporation, who was the Arbitrator appointed by the Corporation, rejected the claim of the collaborator in its entirety and awarded a sum of Rs. 1,42,84,500/- in favour of the Corporation alongwith the interest @ 12% per annum in case the amount was not deposited within three months. The Presiding Arbitrator, i.e. the Secretary (Tourism) to the Government of Punjab, did not agree with the award of Mr. Hardyal Gupta, the Arbitrator appointed by the collaborator and she also rejected the entire claim of the collaborator. However, she did not accept the assessments made by the Managing Director of the Corporation in toto and as per her award, the Corporation was entitled to a total sum of Rs. 87,61,500/-. The collaborator was given three months time to pay this amount, failing which he would be liable to pay interest @ 12% per annum. The Presiding Arbitrator also culled out the majority opinion, whereby a sum of Rs. 87,61,500/- alongwith interest as aforesaid was to be paid by the collaborator.
The collaborator filed a petition u/s 34 of the Arbitration and Conciliation Act for setting aside the award, which was registered as Arbitration Case No. 62 of 2003 and dismissed by a learned Single Judge of this Court on 11.11.2009. Aggrieved by the said judgment, this appeal has been filed by the collaborator.
Mr. P.C. Markanda, learned Senior Counsel appearing on behalf of the appellant, raised as many as ten contentions before this Court. Each one is being dealt with in detail hereinbelow:
Award not signed by the Arbitrators:
Initially Mr. P.C. Markanda made a submission that the award had not at all been signed by the Managing Director of the Punjab Tourism Development Corporation, i.e. Mr. R.L. Kalsia. While making this submission, he referred to an award of the majority placed on record of the appellate file at page 264. While perusing this award, Mr. P.C. Markanda drew our attention to page 18, which appeared to be the concluding portion of the award of Mr. R.L. Kalsia and stated that the same has not been signed by him. He then drew our attention to the last two pages of this award and stated that the majority view has not been signed by Mr. Kalsia. No reference was made by Mr. Markanda to any other award. At this stage, Mr. Anil Kshetarpal, learned counsel appearing on behalf of the Corporation, drew our attention to the award filed by the collaborator alongwith his petition u/s 34 of the Arbitration and Conciliation act and as per the file of the learned Single Judge, the award of Mr. Kalsia begins at page 4. Each page of the award bears the initials of Mr. Kalsia and the last page has been signed by him.
Faced with this situation, Mr. Markanda changed his argument and then raised an argument that the majority award had not been signed by Mr. Kalsia and that the Presiding Arbitrator, Mrs. Geetika Kalha, Secretary (Tourism) to the Government of Punjab, had not signed the concluding portion of her award. Mr. Markanda drew our attention to the judgment reported in Government of India, Bharat Sanchar Nigam Limited versus Acome and others, 2008 (4) LR 418 and Section 31(2) of the Arbitration and Conciliation Act. There can be no dispute with the legal proposition that an award, to be legal and valid, must be signed by the Arbitrator. However, the contention of Mr. Markanda that the award has not been signed by the Arbitrators is a fallacious argument based on concealment and misrepresentation of facts.
On going through the file of the learned Single Judge, we find that Mr. Kalsia gave a separate award running into 17 pages. Each page of this award bears his initials and the last page is signed by him. The Arbitrator appointed by the collaborator, Mr. Hardyal Gupta, delivered a separate dissenting award running into 24 pages. Each page of the award is initialed by Mr. Gupta and the last page is signed by him. Thereafter is the award of Mrs. Geetika Kalha. This award runs into 46 pages. What the Presiding Arbitrator has done is that she has fully quoted the awards of the other two Arbitrators. The award of Mr. Kalsia ends at page 18 of her award and, thereafter, she quoted the award of Mr. Hardyal Gupta, which ends at page 38 of her award and lastly is the award given by her. This ends at page 45. Thereafter, at the bottom of page 45, the Presiding Arbitrator has culled out the majority opinion and the concluding portion of the award at page 46 bears her signatures.
It would be pertinent to mention that each and every page of this award bears the signatures of Mrs. Geetika Kalha. Therefore, the argument of Mr. Markanda that her award is not signed by Mrs. Geetika Kalha is totally incorrect. As pointed out above, page 45 of the award is signed on the side by her and she has culled out the majority opinion and signed it at page 46.
The argument of Mr. Markanda that the award has not been signed by Mr. Kalsia is devoid of any merit. Here there are three different awards and the Presiding Arbitrator has culled out the majority view. The Presiding Arbitrator did not agree with the award of Mr. Hardyal Gupta, the Arbitrator appointed by the collaborator and she partly agreed with what was said by Mr. Kalsia, the Arbitrator appointed by the Corporation. It is only an exercise in mathematics to cull out the majority opinion, which she has done and since all the awards are signed by the Arbitrators, the mere fact that Mr. Kalsia has not signed the majority view is not a ground to set aside the award of the Arbitral Tribunal. Each award has been signed by the each and every Arbitrator and the majority view can easily be culled out.
Mr. Markanda also contends that Mr. Kalisa signed the award on 9th October, 2002, whereas the award of Mrs. Geetika Kalha was signed on 10th October, 2002. This, in fact, supports the case of the Corporation. It appears that there was no agreement between the Arbitrators and, thereafter, the Arbitrators appointed by the parties submitted their own awards. Mr. Hardyal Gupta submitted his award on 3rd October, 2002, though he signed it on 10th October, 2002. Mr. Kalsia submitted and signed his award on 9th October, 2002 and Mrs. Geetika Kalha, after going through both the awards, signed her award on 10th October, 2002. There is nothing wrong in this.
Therefore, the first contention raised by Mr. Markanda is devoid of merit being based on misrepresentation and concealment of facts and, therefore, rejected. We would also like to mention that no such point was raised in the petition filed u/s 34 of the Arbitration and Conciliation Act.
Counter claim barred by limitation:
The next contention of Mr. Markanda is that the agreement which was entered into between the parties on 28.10.1986, was rescinded by the Corporation on 14.06.1994 and the Corporation took over the complex on 14.03.1994 and, therefore, the counter claim filed on 16.05.2002 was patently barred by limitation. He has drawn our attention to the fact that the objection of limitation was raised both in the reply to the counter claim as well as in the written arguments, but according to him, has not been discussed by the Arbitrators.
Mr. Kshetarpal has drawn our attention to the reply dated 27th August, 1996 sent by the Corporation to the collaborator in response to his letter dated 17th August, 1996 appointing an Arbitrator. In this letter, the Corporation clearly stated that they were appointing the Managing Director of the Punjab Tourism Development Corporation by designation as Arbitrator in the matter. No reference to this letter was made by Mr. Markanda while making submissions. As detailed hereinabove, the collaborator appointed one Arbitrator. Thereafter, the Corporation appointed its own Arbitrator and finally, the High Court, vide order dated 07.09.2000, appointed the Presiding Arbitrator. It was only thereafter that the claim was filed by the collaborator on 14.01.2002 and the collaborator filed further statement of facts in support of his claim on 06.05.2002 and the Corporation filed its counter claim on 16.05.2002. As pointed by Mr. Kshetarpal, the claim made by the Corporation relates to the period after 1994 only. Thereafter, the arbitration proceedings were to start. The Corporation in its reply to the letter of the collaborator clearly informed the collaborator that it was appointing its own nominee as Arbitrator and that it would be filing its counter claim in due court of time. The collaborator filed his claim only in the year 2002 and within a few months, the counter claim was filed. The counter claim obviously is within limitation.
While considering the point of limitation, though raised by the Corporation, Mr. Kalsia has clearly stated that the entire proceedings including the counter claim are to be treated within time in view of the various orders passed by the Court appointing the Arbitrators and extending the time. Even the Presiding Arbitrator in her award held that the arbitration proceedings were within limitation because the arbitration was started in the year 1996 and the agreement was rescinded in the year 1994. No doubt, the cause of action arose in the year 1994, but the Corporation clearly indicated in 1996 itself that it was raising a claim. Thereafter, when the Arbitral Tribunal entered into reference, a formal counter claim was filed and this included a claim for the period 1994 to 2001 and as such, it cannot be said that the claim was time barred. On the one hand the collaborator claimed that his claims filed in the year 2001 were within limitation and in the same breath, tried to argue that the counter claim, which related to a later period, was not within time. There is no force in this contention. Therefore, the second objection raised by Mr. Markanda is also rejected being devoid of any merit.
In any event, once the Arbitrators have taken a view, unless it is shown that the view is totally against law, the same cannot be set aside. Mr. Markanda has relied upon J.C. Budhraja Vs. Chairman, Orissa Mining Corporation Ltd. and Another, , and Union of India Vs. M/s. Momin Construction Company, . These authorities have no relevance to the present case.
No evidence led by the claimant and the counter claim based on estimates only:
These two arguments are being dealt with together. The contention of Mr. Markanda is that the Corporation did not file any evidence in support of its claim. He, therefore, submits that the award made on the basis of the tabulations submitted by the Corporation is only a guesstimate and not an assessment of damages. According to him, the Corporation has failed to show the exact loss suffered by it. He also submits that the Corporation has failed to show what steps it took to mitigate the damages.
In support of its contention, Mr. Markanda has relied upon the judgments of the Apex Court in State of Rajasthan and Another Vs. Ferro Concrete Construction Pvt. Ltd., , K.P. Poulose Vs. State of Kerala and Another, and M/s. Sathyanarayana Brothers (P) Ltd. versus Tamil Nadhu Water Supply and Drainage Board, AIR 2004 SC 651. In support of his contention, Mr. Markanda has submitted that the collaborator had prayed that the occupancy register be produced, but despite his request, the occupancy register was not produced. Therefore, his submission is that there was no material before the Arbitrators to come to a conclusion as to what was the exact loss, if any, suffered by the corporation.
We are dealing here with a case where the collaborator had agreed to built a forty room hotel to be run on a time share basis with the Corporation. He was also to provide certain facilities to which we had made reference above. He was also required to provide a 15 feet wide path to the building. Admittedly such facilities and path were not provided by him. Can a hotel, especially in hills, run in a proper manner if there is no way of taking a car/vehicle to the hotel. The facts speak of themselves. The collaborator in connivance with his father suffered a collusive decree to defeat the rights of the Corporation. When an assessment of damages is made, there is always some element of estimation involved.
With regard to the submission of Mr. Markanda that the Corporation led no evidence, we are constrained to observe that he is again making a false and incorrect statement. Mr. Kshetarpal has pointed out that the Corporation filed the affidavit of Mr. J.S. Dhillon in support of its claim. The collaborator did not choose to call Mr. Dhillon for cross-examination, nor did he make any request to the Arbitrators in this behalf. Thus, the averments made in the affidavit are deemed to have been accepted by the collaborator. As such, the first part of the submission of Mr. Markanda that this is a case of no evidence is totally based on concealment of material facts and is rejected. The affidavit of Mr. J.S. Dhillon was evidence in the case and if the appellant chose not to cross-examine Mr. Dhillon, he did so at his own risk and parrel. Non-examination of Mr. Dhillon amounts to accepting his statement in toto and, therefore, the learned Arbitrators were justified in relying upon the statement of Mr. Dhillon.
Assessment of damages is an issue to be decided on the evidence led before the Arbitrators. They have decided this issue and assessed the damages. This Court cannot interfere in such assessment.
As far as the estimation of damages is concerned, this was something to be done by the Arbitrators. They, on the basis of the material led before them, have assessed the damages and an award of the Arbitrator cannot be set aside on this ground.
Only remedy of the Corporation was to construct the facilities at the risk and cost of the collaborator:
Mr. Markanda next contended that once the contract was rescinded, then the only remedy available with the Corporation was to have constructed the facilities not provided for by the collaborator at the risk and cost of the collaborator. His submission is that future damages could not have been asked for and the Corporation could have itself made available the facilities and could not claim damages. This point was not raised in the petition filed u/s 34 of the Arbitration and Conciliation Act. Even otherwise, we find no merit in this contention. The appellant failed to provide an access road from the main road to the building. Why should the Corporation be expected to spend huge sums of money on providing further facilities when the very basic facility of path had not been given. The Corporation could not itself construct a path through the land of any other person and, therefore, this contention of the appellant is totally without merit and is rejected.
No deliberation amongst the Arbitrators as per Section 20(3) of the Arbitration and Conciliation Act:
The contention of Mr. Markanda is that in terms of Section 20(3) of the Arbitration and Conciliation Act, the Arbitrators are required to carry out deliberations between themselves. This argument is totally misconceived. Section 20(3) of the Act only deals with the place of arbitration. In the present case, the Arbitrators met at different places on different occasions and in all the proceedings all the Arbitrators were present together. It was apparent that the Arbitrators were taking a different view and, therefore, they submitted their separate awards and the Presiding Arbitrator, after considering the awards of the other two Arbitrators, passed her own award. This also amounts to due deliberation between the Arbitrators and it cannot be said that there is no application of mind.
Change of Arbitrator:
According to Mr. Markanda, initially one Mr. V.K. Janjua was the Arbitrator and he submits that the Arbitral Tribunal, consisting of Mr. Hardyal Gupta, Mr. V.K. Janjua and Mrs. Geetika Kalha, was hearing this matter and at the last stage, Mr. Janjua was replaced by Mr. Kalsia and Mr. Kalsia has not heard any arguments and could not have passed the award.
With regard to this submission, it would be pertinent to refer to the proceedings of the Arbitral Tribunal on 5th August, 2002 when the Corporation filed the affidavit of Mr. J.S. Dhillon. Copy of the affidavit was supplied to Mr. K.K. Sood. Thereafter, the matter was listed on 20th August, 2002 for further evidence and arguments. The Punjab Tourism Development Corporation did not lead any further evidence. The collaborator, Mr. K.K. Sud, did not seek an opportunity to cross-examine Mr. Dhillon. Learned counsel for the collaborator stated that he wanted to submit arguments in writing and at this stage, also filed an application for supply of certain documents, which was rejected. The matter was adjourned to 2nd September, 2002 for submission of written arguments by both the parties. It appears that the hearing could not be held on 2nd September, 2002 and the case, thereafter fixed for 16th September, 2002 and on that date, written arguments were submitted by both sides and the matter was adjourned to 9th October, 2002 for announcement of award. Mr. V.K. Janjua was acting as Arbitrator in his designation as Managing Director of the Corporation. It appears that he got transferred and was replaced by Mr. Kalsia. Since the appointment of Arbitrator was by designation, obviously Mr. Kalsia took over. In case, oral arguments had been addressed, there may have been some merit in the submission of Mr. Markanda. However, in this case, the arguments were submitted in writing and the award of Mr. Kalsia shows that he considered all the arguments raised by both sides and his given a reasoned award. Therefore, there is no merit in the contention raised by Mr. Markanda.
Time was the essence of the contract:
Mr. Markanda submits that in this case time was the essence of the contract and, therefore, the facilities could have been provided at any stage. He has made reference to the judgment of the Apex Court in M/s. Hind Construction Contractors by its Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (Dead) by Lrs Vs. State of Maharashtra,
In our opinion, this judgment has no relevance to the facts of the present case. All that has been laid down by the Apex Court is that whether time is the essence of the contract is a question of intention of the parties to be gathered from the terms of the contract. In the present case, Mr. Markanda, while addressing his arguments, conveniently did not draw our attention to Clause 3 of the agreement, which specified that the construction must be completed within a period of 20 months from the date of signing of the agreement and to Clause 14, which also provided that all facilities would be provided by the collaborator within 20 months. Furthermore, under Clause 7, in case any deficiency or shortcoming of the facilities was pointed out by the Corporation, the collaborator was required to make the same good within a reasonable time.
In this case, the agreement was entered into in the year 1986 and for almost seven years, no facilities were provided. How long was the Corporation expected to wait. It would indeed travesty of law if the Corporation was expected to wait till eternity. We also find that this point was not raised in the petition filed u/s 34 of the Arbitration and Conciliation Act.
No reasons in the award of the Presiding Arbitrator:
We have gone through the award of Mrs. Geetika Kalha and we find that she has given sufficient reasons in her award. She was the Presiding Arbitrator and as stated hereinabove, has quoted in extenso the awards made by the other two Arbitrators. She, thereafter, gave her own reasons, which are apparent from her award and, therefore, this objection is also rejected. It would be pertinent to point out that the objection that the award of the Presiding Arbitrator does not contain any reasons has not been raised in the petition filed u/s 34 of the Arbitration and Conciliation Act.
No damages could have been awarded since the contract provided for grant of the liquidated damages:
At the outset, we may state that this point was not raised in the petition u/s 34 of the Arbitration and Conciliation Act. Be that as it may, this objection is totally without merit. No doubt, the agreement did contain a clause for award of liquidated damages, but that was only in respect of the building to be constructed by the collaborator. As far as breach of contract was concerned, Clause 13, quoted hereinabove, clearly shows that the Corporation was entitled to recover damages from the collaborator, in case there was breach of contract by the collaborator. Therefore, this objection is totally without merit and is rejected.
Keeping in view the aforesaid discussion, we find no merit in the appeal. We are also of the considered view that an attempt was made to mislead the Court and various facts were not mentioned and concealed from the Court when arguments were being addressed on behalf of the appellant. Therefore, it is a fit case where exemplary costs should be awarded against the appellant. Accordingly, the appeal is dismissed with costs assessed at Rs. 50,000/-.