JALARAM FABRICS Vs. NISARG TEXTILES PRIVATE LIMITED

JUDGEMENT

(1.) By this Petition filed under Sec. 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), the Petitioner has challenged the Award dtd. 21/7/2022 passed by the three Member Arbitral Tribunal of Bharat Merchants' Chamber. By the impugned Award, the Arbitral Tribunal has directed the Petitioner to pay to the Respondent sum of Rs.11,44,850.00 together with interest @ 18% p.a. on the principal amount of Rs.6,37,146.00 till the date of the Award, totalling Rs.17,81,996.00. The Arbitral Tribunal has also granted post award interest @ 18% p.a. and costs of arbitration in favour of the Respondent.

(2.) Petitioner-Jalaram Fabrics is a proprietary concern engaged in the business of dealing with garments. Respondent is a private limited company registered under the Companies Act, 1956 and carries on business, inter alia of manufacture of fabrics including shirtings. Petitioner placed orders with the Respondent for supply of fabrics. Respondent supplied the goods to the Petitioner from time to time and various invoices were raised by the Respondent on the Petitioner. According to the Petitioner, during March 2019 to July 2019, it noticed issues in the supply, quality and pricing of Respondent's goods and claims to have requested Respondent to have the defective goods exchanged and replaced. By letter dtd. 20/11/2021, Respondent claimed that a sum of Rs.11,92,614.00 was due and payable by the Petitioner towards the goods supplied. Respondent referred to arbitration clause printed on the invoices. Respondent claimed total amount of Rs.17,26,641.00 including interest @ 18% p.a. and threatening the Petitioner to refer the disputes to the Arbitration Bench of Bharat Merchants' Chamber. Petitioner replied to the Respondent on 4/12/2021 claiming that an amount of Rs.10,87,534.00 was already paid by the Petitioner to the Respondent in cash from time to time and that the balance amount was only Rs.1,05,071.00. It was claimed that three cheques were issued towards balance payment, but they were required to be stopped as Respondent had failed to deliver the goods. Petitioner claimed that if Respondent was to deliver the goods, he was ready to pay the balance amount of Rs.1,05,071.00.

(3.) On 8/3/2022, Petitioner's Advocate addressed letter to Bharat Merchants' Chamber branding the same as 'say' of the Petitioner and repeating the stand taken in the previous reply dtd. 4/12/2021. Petitioner did not question the jurisdiction of Bharat Merchants' Chamber to conduct arbitral proceedings. It appears that the Respondent was given copy of 'say' dtd. 8/3/2022 and Respondent's Advocate responded on 17/3/2022 denying the contents of the same and once again demanded amount of Rs.11,92,614.00 alongwith 18% interest. Since the Petitioner failed to nominate his arbitrator, letter dtd. 22/3/2022 was issued by Bharat Merchants' Chamber nominating Mr. Nilesh Khushiram Vaish as nominee arbitrator of the Petitioner. The arbitral proceedings were scheduled to be held on 2/5/2022. On 16/6/2022, Office Secretary of Bharat Merchants' Chamber communicated the next date of hearing of 21/7/2022 to the Petitioner alongwith the names of the two nominee arbitrators and the Presiding Arbitrator. It appears that the Petitioner failed to appear before the Tribunal. The Tribunal proceeded to make Award dtd. 21/7/2022 awarding sum of Rs.17,81,996.00 in favour of the Respondent alongwith post award interest @ 18% p.a. Aggrieved by the Award dtd. 21/7/2022, Petitioner has filed the present Petition under Sec. 34 of the Arbitration Act.