MR. PUNIT CHAINANI Vs. BHALLA TECHTRAN INDUSTRIES LTD.

JUDGEMENT

(1.) THIS petition under Section 34 of Arbitration & Conciliation Act, 1996 ('the Act', for short) has been preferred by the petitioner raising certain objections against an award dated 16th May, 2009.

(2.) THE petitioner and respondent had agreed to enter into an agreement in respect of 5000 imported watches which were in possession of petitioner. The watches were of 'Time Engine' and 'ZZYZ Series'. As per the agreement, the petitioner was under an obligation to clear the consignment of watches by 15th January 1998. Out of 5000 watches, the petitioner collected only 405 pieces of watches and issued a cheque of Rs. 5 lac dated 15th December 1997. This cheque also got dishonoured. According to the claimant (respondent herein), the petitioner was under contractual obligation to take the leftover consignment of watches and pay a sum of Rs. 36,34,475/ - in terms of agreement. As petitioner failed to lift the consignment, the claimant raised a dispute. The petitioner took a stand that he was merely providing consultancy services and he had issued a cheque of Rs. 5 lac only as a guarantee for performance of his obligations. It is submitted by petitioner (objector) that it was mentioned in the agreement that the goods picked up from claimant shall never be in excess of Rs. 5 lac. In order to cover this risk factor he had issued a cheque of Rs. 5 lac. He was only to find appropriate party who would buy the watches. However, he found that the first consignment of watches sent by the claimant had serious defects and the watches were not marketable. He, therefore, wrote to the claimant not to present the cheque. He had no obligation under the agreement and award was bad in law and contrary to the contract.

(3.) THE learned arbitrator while deciding the claim of the claimant about the damages took the value of watches as Rs. 30 lac. The learned arbitrator during arbitral proceedings also asked the claimant to put the watches on auction. The auction notice for these watches was published, however, only one person turned up and he offered Rs. 50,000/ - only for the watches. The learned arbitrator while awarding damages to the claimant took the value of watches as Rs. 30 lac and then considered that the claimant was supposed to mitigate the losses and observed that since the watches were designer watches, fast losing their value and if claimant had tried to mitigate the losses, he could have got 20% of the value of watches. He, therefore, considered that the mitigation can only be considered to the tune of 20% of the value of watches. Thus, considering the value of watches as Rs. 30 lac, he awarded the damage of Rs. 24 lac after taking 20% as mitigation and out of Rs. 24 lac, he deducted Rs. 50,000/ - as the present value of watches and awarded Rs. 23,50,000/ -. Over this amount, the learned arbitrator awarded interest @ 9% per annum with effect from 1st June 1998 till 30th April 2009.