MITESH MEHTA Vs. SAREGAMA INDIA LIMITED

JUDGEMENT

(1.) The present challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) is to an Award dated 15th March, 2015 passed by a learned Sole Arbitrator. By the said Award, the claims of the respondent (claimant in the arbitration proceedings) were substantially allowed. The petitioner was directed to pay the sums awarded to the respondent with interest at the rate of 12% from the date of submission of the statement of claim till realization and the respondent/claimant was directed to adjust a sum of Rs.5 lakhs which was with the respondent as security deposit at the rate of 6% per annum from the date of deposit till the date of the Award from the principal sum awarded in favour of the respondent.

(2.) The dispute between the parties arose out of an agreement dated 2nd May, 2008 by which the petitioner was appointed by the respondent to provide storing, handling, forwarding services and to act as clearing agent and logistic services provider in respect of the respondent's goods lying at the workshop maintained by the respondent at Byculla, Mumbai. The respondent's case before the learned Arbitrator was that the agreement was for a period of two years with effect from 1st June, 2008 till 31st May, 2010. The respondent terminated the agreement on 10th September, 2008 and called upon the petitioner to return the goods, documents, books of accounts, etc. which were lying with the petitioner at the Byculla Warehouse. The petitioner by its letter dated 13th September, 2008 offered to continue providing services and relied on a letter dated 22nd September, 2008 in support of its contentions. The respondent approached the Arbitrator claiming Rs. 37,00,992/- as on 15th March, 2010 under several heads including stock shortage from 15th October 2008 to 14th January 2009, operating and other expenses including rent and electricity charges etc.

(3.) Mr. Anirban Bose, learned counsel appearing for the petitioner (respondent before the learned Arbitrator) submits that the dispute between the parties relates to the termination of the agreement dated 2nd May, 2008 and contends that the Award should be set aside under Section 28(3) of the Act for ignoring the terms of the contract entered into between the parties. Counsel relies on Clause 30 of the agreement which provides that any party can terminate the agreement but must give to the other party 30 days' advance written notice of its intention to terminate and the agreement shall stand terminated only after expiry of the period of notice. Counsel submits that while deciding the question of validity of the termination, which was held in favour of the respondent herein, the Arbitrator only considered two letters dated 10th September, 2008 and 7th October, 2008 but did not consider the effect of Clause 30 of the agreement. Counsel submits that the agreement was terminated with effect from 14th September, 2008 while the letter of termination was of 10th September, 2008, which is in violation of Clause 30 and the subsequent letter of the respondent of 7th October, 2008 was only to guard the deficiency of the initial termination notice of 10th September, 2008. Counsel relies on ONGC Limited Vs. Saw Pipes Limited, 2003 5 SCC 705 which held that the Arbitral Tribunal has to follow the procedure prescribed under the Act in the absence of which an Award would be patently illegal and liable to be set aside. Counsel also relies on State of Jharkhand Vs. HSS Integrated SDN, 2019 9 SCC 798 which held that an Award can be interfered with if the findings are perverse or contrary to the evidence and against the public policy of India.