Reply on behalf of respondent no.1 to petition under Section 34 of the Arbitration and Conciliation Act, 1996
0 of 129 blanks filled
IN THE COURT OF THE LD. DISTRICT JUDGE (COMMERCIAL COURT), DISTRICT CENTRAL, TIS HAZARI COURTS, DELHI
OMP (COMM.) NO. OMP (Comm.) number OF 2024
IN THE MATTER OF:-
Petitioner's name: PETITIONER
VERSUS
**Respondents' names: RESPONDENTS**
INDEX
| S.NO. | PARTICULARS | PAGES |
|---|---|---|
| 1. | REPLY ON BEHALF OF RESPONDENT NO.1 TO THE PETITION UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996 FILED BY THE PETITIONER, ALONG WITH AFFIDAVIT. |
| 2. | STATEMENT OF TRUTH |
| 3. | LIST OF DOCUMENTS |
| 4. | VAKALATNAMA |
RESPONDENT NO.1
Through
Advocate's name, ADVOCATES
Advocates' address, DELHI
DATED:
IN THE COURT OF THE LD. DISTRICT JUDGE (COMMERCIAL COURT), DISTRICT CENTRAL, TIS HAZARI COURTS, DELHI
OMP (COMM.) NO. OMP (Comm.) number OF 2024
IN THE MATTER OF:-
Petitioner's name: PETITIONER
VERSUS
Respondents' names: RESPONDENTS
N.D.O.H.: Date of next hearing
REPLY ON BEHALF OF RESPONDENT NO.1 TO THE PETITION UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996 FILED BY THE PETITIONER AGAINST THE AWARD DATED Date of arbitral award.
MOST RESPECTFULLY SHOWETH:-
PRELIMINARY SUBMISSIONS:-
1.That at the outset, the answering Respondent No.1 (hereinafter referred to as the "Respondent") denies and disputes all the allegations and averments contained in the Petition under reply, except those which are specifically admitted hereinafter. Nothing contained in the Preliminary Submissions, Preliminary Objections, or the Reply on Merits below shall be treated as an admission of any allegation contained in the Petition unless expressly admitted. The Respondent submits the following Preliminary Submissions, each of which is taken in the alternative and is without prejudice to the others.
2.That in and around the beginning of Month/year of first dealings, the Petitioner firm, through its directors, approached the Respondent's firm and represented themselves as directors of the Petitioner company who were also managing its day-to-day affairs and management. Sh. First director's name, Sh. Second director's name and Third director's name represented that they carried out all the management responsibilities of the Petitioner company, the said directors being further entrusted with substantial powers of management.
3.That the aforesaid directors of the Petitioner company furnished personal guarantees to the Respondent firm, coupled with the assurance that the Petitioner company, through the said directors, would make payment immediately upon receipt of the goods/materials supplied by the Respondent firm.
4.That starting from the year Year of first orders, the Petitioner, through the said directors, began placing numerous orders with the Respondent firm, and it was mutually agreed between the parties, and also as stipulated in the Tax/Retail Invoices, that the amount due against the goods supplied by the Respondent's firm to the Petitioner company would be paid by the directors of the Petitioner within the stipulated period prescribed under law.
5.That starting from the year Year of first orders, the Petitioner, through its directors, personally visited the office of the Respondent firm and placed numerous orders, and all such orders were duly fulfilled by the Respondent firm. The Respondent firm, as and when requested by the Petitioner company through its directors, supplied goods to the Petitioner in the manner and as per the specifications so requested.
6.That against the orders placed by the Petitioner company with the Respondent firm at its Delhi office, goods were supplied by the Respondent, and such goods were accepted by the Petitioner without any protest or demur whatsoever.
7.That it is pertinent to mention that as and when an order was placed by the Petitioner, the Respondent firm delivered the goods of the highest quality and strictly in accordance with the specifications ordered, and the goods were supplied by the Respondent firm to the Petitioner by or before the time period requested by the Petitioner.
8.That pursuant to the aforesaid invoice(s) issued by the Respondent firm to the Petitioner, the Petitioner made payments to the Respondent at its Delhi office on a running account basis.
9.That the Petitioner company, through its directors, placed its orders in light of the mutually accepted terms and conditions between the parties, and in due course, the Respondent firm supplied the goods to the Petitioner in accordance with the specifications and to the satisfaction of the Petitioner. It is pertinent to mention that the Petitioner accepted the goods so supplied by the Respondent firm without any protest or demur.
10.That it is pertinent to mention that the goods were supplied by the Respondent firm through a transport carrier, to whom the Respondent firm delivered the goods against the invoices issued by the Respondent firm to the Petitioner, and the payments were made on a running account basis, the Petitioner making payments to the Respondent at its Delhi office on a running account basis.
11.That the Respondent firm most fairly states before this Hon'ble Court that on Date of account confirmation, the Petitioner admitted and confirmed the accounts, whereby the balance payment, i.e., the principal amount, was outstanding to the extent of ₹Principal amount admitted (₹)/-, which was payable by the Petitioner to the Respondent firm. That on Date of demand notice, the Respondent firm, by invoking the provisions of the Insolvency Act, issued a Demand Notice demanding payment of an unpaid debt to the extent of ₹Total amount in demand notice (₹)/-, of which ₹Principal in demand notice (₹)/- was due towards the principal amount and ₹Interest in demand notice (₹)/- was due towards interest. The said Demand Notice specifically stated that the payments were to be made in accordance with the provisions of the MSME Act, as the Respondent firm is registered under the provisions of the MSME Act, and the Petitioner remained in continuous default of the said outstanding amount, which is further corroborated by its own admission of liability.
12.That the Respondent firm most fairly states before this Hon'ble Court that after receipt of the Demand Notice, the Petitioner, through its director, approached the partner of the Respondent firm and requested settlement of the disputes, the directors of the Petitioner company assuring that the principal amount stated in the Demand Notice would be paid by the Petitioner to the Respondent firm. Pursuant thereto, a Settlement Agreement was executed, whereby it was expressly made clear that the outstanding amount would be paid in four instalments vide Cheque Nos. First settlement cheque number, Second settlement cheque number, Third settlement cheque number and Fourth settlement cheque number, and the Petitioner, through its directors, confirmed that in the event of breach of the payment schedule, the Petitioner, through its directors, would be liable to pay the entire amount together with interest as claimed in the Demand Notice dated Date of demand notice.
13.That the Respondent firm most fairly states before this Hon'ble Court that two instalments, vide Cheque Nos. First paid cheque number and Second paid cheque number, were paid, as is verifiable from the statement of accounts of the Respondent firm as well as the Petitioner. After the clearance of the aforesaid cheques, the director of the Petitioner company once again requested the resumption of business between the parties, and relying upon the personal assurances and representations made by the Petitioner, the Respondent firm resumed business dealings between the parties. On request, Cheque Nos. First returned cheque number and Second returned cheque number were returned to the Petitioner, it being assured that the said payments would be made in the course of the running account, as the financial condition of the Petitioner company was not sound and payments would be released only once its business was restored to its original state.
14.Owing to the cordial business relationship inter se between the Parties, the Respondent Firm once again commenced supply of goods in accordance with the specifications laid down by the Appellant, and being satisfied with the quality of the goods, the Appellant once again commenced making payments on a running-account basis. That, despite such payments, from Date of first unpaid payment period up to the last invoice dated Date of last invoice, the Appellant failed to make payment of the amounts due to the Claimant Firm as required under the provisions of Section 15 of the MSMED Act.
15.As on Date of outstanding computation, the total principal amount outstanding inter se the Parties to the proceedings was Total principal outstanding (₹), apart from the interest on delayed payments leviable under the provisions of the MSMED Act.
16.The Respondent had no other option but to file a claim under the provisions of Section 18 of the MSMED Act before the Facilitation Council, as the Appellant had failed to make payment under the provisions of Section 15 of the MSME Act and had also failed to pay interest within the purview of Sections 15 and 16. The application under the provision of Section 18(1) was accordingly filed before the Office of the Sub-Divisional Magistrate and was registered vide File No. MSME case file number. Notice was issued to the Appellant, which appeared and filed a reply before the Office of the Sub-Divisional Magistrate, taking objections primarily on the pretext of the rate of interest coupled with a settlement, which in reality was never complied with by the Appellant. All other contents of the claim were not denied; consequently, the same amounts to an admission on the part of the Appellant that the goods were delivered, and that too without any protest, and that the principal amount stood admitted, the only objection having been taken with regard to the calculation of the interest amount.
17.Despite the indulgence of the Learned Council, under the provision of Section 18(2) of the Act, for conducting conciliation in the matter or for providing an alternate dispute resolution service for conducting conciliation, and despite the best possible assistance rendered by the Learned Council and the Respondent, the Appellant miserably failed to respect the proceedings. On account of the failure of the Appellant, despite the services having been rendered by the Respondent and the Appellant not discharging the payments, the Council deemed it appropriate to refer the matter to the present Arbitration Centre.
18.That all the directors of the Appellant Company, as stated aforesaid, are jointly and severally liable to the Claimant Firm. Owing to the personal guarantees and assurances rendered by the Appellant, coupled with the fraud played by the Appellant, the corporate veil is required to be lifted in the present matter so as to enable recovery of the legitimate dues of the Respondent Company under the provisions of Sections 15 and 16 of the MSME Act, which require the Appellant to make payment to the Respondent Company within a specified number of days of submission of the invoice. Section 15 of the Act uses the word "shall", thereby making it mandatory for the Appellant to clear the dues within the specified period of days of submission of the Respondent's invoice, and in any event, it is statutorily incumbent in law that a buyer cannot exceed the period of 45 days from the date of acceptance of the service for discharging the payments.
19.Compound interest is mandated by the MSMED law, and the provision also uses the word "shall" and is therefore mandatory in nature. The law mandates that compound interest has to be paid by the buyer at three times of the bank rate notified by the Reserve Bank of India, making the said provision applicable to all pending dues and belated payments outstanding against the Appellant. In the matter at hand, the calculation of compound interest commences from Date of interest commencement, being the 45th day of receipt of the Claimant's invoice by the Appellant, which remained uncleared by the Appellant within the prescribed time frame.
20.Consequent upon the above, the Appellant is duty-bound and obligated in law to clear the principal amount and interest of the Respondent as enshrined in Section 17 of the Act. The Appellant has miserably failed to comply with the provisions of law and has deliberately violated the same despite several reminders, and no action was taken by the Appellant towards payment of the dues to the Respondent.
21.That, as such, it is clear from the aforesaid facts that the Appellant has failed to make payments in accordance with the aforementioned provisions of the MSMED Act, and the Respondent accordingly approached the Ld. Tribunal as enshrined under the relevant provisions of law.
22.The Respondent submitted its claim before the Learned Tribunal by way of the statement of claim, in accordance with the provisions of the MSMED Act, on Date of statement of claim, along with the supporting documents.
23.The Appellant thereafter, on Date of statement of defence, filed its Statement of Defence, inter alia, praying for dismissal of the Statement of Claim, and at the same time the Appellant also filed a Counter Claim, inter alia, raising a claim of ₹ Counter claim for loss of sale (₹)/- on account of damage caused by loss of sale, and ₹ Counter claim for loss of reputation (₹)/- as damages on account of loss of reputation and mental distress, together with costs and interest.
24.The Petitioner thereafter, on Date of rejoinder filing, filed the Rejoinder to the Statement of Defence filed by the Appellant to the Claim Petition, along with the Statement of Defence to the Counter Claim filed by the Appellant. In addition thereto, the Petitioner filed an affidavit of admission and denial, and evidence by way of an affidavit, before the Ld. Tribunal over e-mail.
25.In addition to the above, the Petitioner on Date of petitioner's evidence affidavit filed evidence by way of an affidavit, and the Appellant on Date of appellant's evidence affidavit filed evidence by way of an affidavit dated Date on appellant's evidence affidavit; whereas, in the counter case, evidence was filed by the Counter Claimant on Date of counter claim evidence affidavit of October Year of counter claim evidence, and the Petitioner led evidence in the counter claim case, and the same is annexed and appended hereto. It is stated that the directors of the Appellant Company were impleaded in the said arbitration; however, an interim application seeking deletion of the directors was filed, which was subsequently dismissed. In addition thereto, the Respondent also filed an interim application seeking permission to cross-examine the AR of the Appellant, and the same was also dismissed by the Ld. Arbitrator for reasons best known to the learned Arbitrator.
PRELIMINARY OBJECTIONS:-
1.That the clauses of the Settlement Agreement, and more particularly Clause No. 3.1, inter alia, state and record that the Appellant agrees, confirms and acknowledges to pay an amount of ₹ Settlement amount (₹)/- to the Respondent in order to amicably resolve the present matter, in accordance with the payment schedule, and in lieu whereof four cheques of ₹ Amount of each settlement cheque (₹)/- each were issued by the Appellant to the Respondent.
2.That Clause No. 3.2 of the Settlement Agreement, inter alia, records that the Appellant irrevocably agreed and confirmed that the Demand Notice dated Date of demand notice shall remain in effect and in continuance until payment of the entire dues mentioned in Clause 3.1.
3.That the Legal Notice aforesaid, i.e., dated Date of legal notice, demanded a total amount of ₹ Total amount in legal notice (₹)/-, out of which ₹ Principal in legal notice (₹)/- was the amount outstanding towards principal and ₹ Interest in legal notice (₹)/- towards interest. It is an admitted fact that the said amount of ₹ Admitted amount (₹)/- stood admitted by the Appellant, in consequence whereof the Settlement Agreement aforesaid was entered into between the parties to the present petition. A perusal of the Settlement Agreement would reveal that the said Settlement Agreement was binding upon the parties to the present arbitration, their successors in interest, and their present and future affiliates, subsidiaries, assignees or acquirers, including any acquirer of substantially all of the assets.
4.That Clause 3.3 of the Settlement Agreement, inter alia and more specifically, provided that the Appellants would pay the sum of INR Amount per payment schedule (₹)/- in accordance with the payment schedule set out in Clause 3.1 above, pursuant to which the Respondent had agreed to amicably resolve the present dispute for an amount of INR Settlement amount (₹)/-. The clauses of the Settlement Agreement further conveyed the intent of the parties to the present petition, as the Appellant expressly agreed that in the event of a breach of the payment plan/schedule set out in Clause 3.1 of the Settlement Agreement, the Appellant would be liable to pay the entire amount with interest as claimed in the Demand Notice dated Date of demand notice, for an amount of INR Balance amount payable (₹)/- after deducting the amount already paid by the Appellant.
5.That the statement of defence on record records the Appellant's own admission of the Settlement Agreement and of the amount in the Legal Notice dated Date of legal notice, as well as of the fact that the cheques, as mentioned above, were duly handed over.
6.The Learned Arbitrator, in his award, recorded a categorical finding on one of the issues which was interlinked with the second issue, in which the Learned Arbitrator, despite adjudicating the issues in favour of the Respondent, turned the position against the Respondent. The Learned Arbitrator held the submissions of the Respondent to be correct to the extent that the claim as filed by the Respondent was well within time, and the Learned Arbitrator, after perusing the pleadings on record and hearing the submissions, rightly held that it is an admitted and acknowledged fact between the parties that "despite the non-compliance with the settlement agreement, given that the Appellant failed to pay the last two instalments of INR Amount of each unpaid instalment (₹)/- each within the scheduled timeframe specified in the agreement, and has only made a part payment to the Respondent."
7.The Learned Arbitrator, despite having recorded a conclusive finding that the settlement agreement, entered into by the parties of their own free will, was not complied with by the Appellant, and that the Appellant had thereby violated Clause 3.3 of the Settlement Agreement, inter alia, by which it became the obligation of the Appellant to pay the entire amount of the demand notice minus the amount already paid, nonetheless recorded a perverse and patently erroneous finding that, since the parties to the petition resumed their transactions, with the Respondent making its last sale on Date of last sale and the Appellant completing its last payment to the Respondent on Date of last payment, coupled with the fact that the Respondent did accept the part-payment from the Appellant without objection, the Respondent was not entitled to re-open the issue of delayed payments for the transactions that had taken place earlier.
8.The aforesaid findings of the Learned Arbitrator are in complete contradiction to the documents on record and, further, to the admissions which are evident from the documents filed by the Appellant, to the effect that there was no question of the Respondent accepting or rejecting the part-payments (if any), since the parties to the contract were governed by Clause 3.3 of the Settlement Agreement, which made it explicitly clear that, in the event of default, the Appellant was liable to pay the entire amount with interest as claimed in the Demand Notice, after deducting the amount already paid by the Appellant.
9.That the Respondent, without prejudice to its rights and contentions, states that the total amount as claimed in the demand notice dated Date of demand notice was INR Total amount in demand notice (₹)/-, and even if the version of the Appellant is accepted, along with the fact acknowledged by the Learned Arbitrator that the payment of the first two instalments amounting to INR Amount of first two instalments (₹)/- has been made, and even if the Respondent, without prejudice to its rights, were to take the payments from 1st Month of payments till End date of payment period, being INR First payment amount (₹)/-, coupled with INR Second payment amount (₹)/-, INR Third payment amount (₹)/-, INR Fourth payment amount (₹)/-, INR Fifth payment amount (₹)/- and INR Sixth payment amount (₹)/-, the total whereof would come to INR Total of payments (₹)/-, thereby leaving a balance of INR Balance after payments (₹)/-, in respect of which the Learned Arbitrator also affirmed that the Settlement Agreement had not been complied with; therefore, Clause 3.3 stood attracted, and as a consequence thereof the Appellant was under an obligation to pay INR Net amount payable (₹)/-, i.e., {INR Gross amount before deduction (₹)/- less INR Demand notice total (₹)/- minus INR Amount already paid (₹)/-}, together with an additional amount of INR Additional amount added (₹)/-, coupled with interest at the rate prescribed under the provisions of the MSMED Act.
10.Out of the nine issues, the Learned Arbitrator rightly framed and decided seven issues in favour of the Respondent; however, the Learned Arbitrator patently failed to consider the remaining two issues in the light of the documents as well as the submissions of the Appellant, which renders the award perverse and in conflict with the public policy of India and with the most basic notions of morality and justice. Hence, the appeal under Section 19 of the MSME Act read with Section 34 of the Arbitration and Conciliation Act filed by the Respondent before the Learned District Judge (Commercial), Delhi was confined to those two findings as rendered by the Learned Arbitrator, since the last issue, when read in conjunction with issue no. 5, discloses that the Learned Arbitrator, at one place, records that there was a default on the part of the Appellant and, at another, rules in favour of the Appellant by holding that the Appellant has fulfilled its obligations under the settlement agreement.
11.The Law Commission examined and submitted its 246th Report on "Amendments to the Arbitration and Conciliation Act, 1996" in Year of committee report on arbitration amendments and recommended various amendments to the said Act. The proposed amendments were intended to facilitate and encourage alternative dispute resolution mechanisms, especially arbitration, for the settlement of disputes in a more user-friendly, cost-effective and expeditious manner, since India is committed to improving its legal framework so as to expedite the disposal of cases. The 246th Report of the Law Commission recommended considerable changes to Section 34 of the said Act. The 246th Law Commission Report proposed amendments to the said Act, narrowing down the grounds for challenge to an arbitral award, apart from providing for the appointment of independent, impartial and neutral arbitrators, amongst several other amendments. The judgment in ONGC's case stated supra, along with the judgment in ONGC v. Western Geco International Ltd. (2014) 9 SCC 263 : (AIR 2015 SC 363), has been expressly done away with.
12.Both Sections 34 and 48 of the said Act have been restored to the position of law contained in Renusagar Power Plant Co. Ltd. v. General Electric Co. (1994) Supp (1) SCC 644 : (AIR 1994 SC 860), whereby "public policy" now includes only two of the three grounds set out therein, i.e., "fundamental policy of Indian law" and "justice or morality", in addition to the ground where the making of the award was induced or affected by fraud or corruption, or was in violation of Section 75 or Section 81 as provided in Section 34 of the amended Act. The ground relating to "the interest of India" stated in the said judgment is no longer available as a valid ground. "Fundamental policy of Indian law" is now to be understood as laid down in Renusagar (supra). The meaning of "justice or morality" has been tightened and is now to be understood as only the basic notions of justice and morality, i.e., such notions as would shock the conscience of the Court, as understood in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49 : (AIR 2015 SC 620). The main object of the 2015 amendment is to expedite the arbitration process and to minimise judicial intervention, which would ultimately ease doing business in India.
13.That the Amendment of 2015 clearly defines the term "public policy of India" and has introduced a new ground, namely Section 34(2A), for setting aside domestic arbitral awards on the ground of patent illegality. This ground is applicable only to arbitrations taking place in India and not to International Commercial Arbitrations, as is evident from the wording of the section itself, which states "other than international commercial arbitration".
14.In one of its earlier decisions in Gherulal Parekh v. Mohadeodas Maiya in AIR 1959 SC 781, the Hon'ble Supreme Court adopted a narrow interpretation of public policy. It held that within the public policy of India lay certain determinate, specified heads, and that it would not be prudent to embark upon a search for new heads. However, in Central Inland Water Transport Corp. Ltd. v. Brojo Nath Ganguly, the Hon'ble Supreme Court adopted a wider stance by interpreting the term "public policy" on the pillars of public conscience, public good and public interest.
15.The MSME Act was introduced with the purpose of facilitating the promotion and development of micro, small and medium enterprises as well as ensuring their competitiveness. It aims at ensuring a timely and smooth flow of credit to such enterprises, as also minimising instances of sickness among them. Further, the Act itself provides a statutory remedy of appeal under Section 19 of the MSME Act.
16.In support of the above contentions, the Respondent relies upon various judgments of the Hon'ble Apex Court in the cases of Tirupati Steels v. Shubh Industrial Components and Ors., reported in (2022) 7 SCC 429; Modern Industries v. Steel Authority of India Limited and Others, reported in (2010) 5 SCC 44 : 2010 LAWPACK(SC) 48090; United Bank of India v. Satyawati Tondon and Others, reported in (2010) 8 SCC 110 : 2010 LAWPACK(SC) 48508; Snehadeep Structures Private Limited v. Maharashtra Small Scale Industries Development Corporation Limited, reported in (2010) 3 SCC 34 : 2010 LAWPACK(SC) 47743 : 2010 (1) R.A.J. 532; Goodyear India Limited v. Norton Intech Rubbers Private Limited and Another, reported in (2012) 6 SCC 345 : 2012 LAWPACK(SC) 51351; Gujarat State Disaster Management Authority v. Aska Equipments Limited, reported in (2022) 1 SCC 61 : 2021 LAWPACK(SC) 65628; Sri Paravathi Parmeshwar Cables and Others v. Andhra Pradesh Transmission Corporation Limited and Another, reported in (2013) 10 SCC 693 : 2012 LAWPACK(SC) 51904 : 2013 (1) R.A.J. 148; and Authorized Officer, State Bank of Travancore and Another v. Mathew K.C., reported in (2018) 3 SCC 85 : 2018 LAWPACK(SC) 60356. Reliance is also placed upon the judgment of this Hon'ble Court in Sanghi Industries Ltd. and Anr. v. Micro Small Enterprises Facilitation Council and Anr. (SBCWP No. 988/2018), which has been upheld by the Hon'ble Division Bench in D.B. SAW No. 591/2018, titled Sanghi Industries Ltd. and Anr. v. Micro Small Enterprises Facilitation Council and Anr. Relying upon the said judgments, the Respondent submits that the MSME Act is a special and beneficial piece of legislation and has an overriding effect over other laws, in terms of Section 24 of the MSME Act; that Section 15 of the MSME Act imposes a liability upon the buyer to make timely payment; and that Section 16 of the MSME Act imposes a heavy liability of interest for delay in payment. It is submitted that where Sections 18 and 19 of the MSME Act prescribe a statutory and specific mechanism, the same cannot be bypassed. In the present facts and circumstances, both on merits and as per the statutory mechanism, the learned Arbitrator has, legally and factually, committed an error in entertaining the two issues, and in relaxing the provisions of the MSMED Act and the Indian Contract Act, which is contrary to the above-cited judgments of the Hon'ble Apex Court.
17.It is only where the interpretation of contractual provisions is patently unreasonable or perverse, or is contradictory to the well-settled principles governing the interpretation of contracts, that the Court would interfere. Further, it is equally well settled that an arbitral tribunal, being a creature of the contract, is bound to act in terms of the contract. An award can be said to be patently illegal where the arbitral tribunal has failed to act in terms of the contract or has ignored the specific terms of the contract. In this regard, reference may be made to the judgment of the Hon'ble Supreme Court in Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum, (2022) 4 SCC 463 : 2022 LAWPACK(SC) 66156 : 2022 (2) R.A.J. 100, wherein it has been held as under:
"43. An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract.
44.However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.
45.The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one."
18.Similar observations have been made by the Hon'ble Supreme Court in UHL Power Co. Ltd. v. State of H.P., (2022) 4 SCC 116 : 2022 LAWPACK(SC) 65937 : 2022 (1) R.A.J. 193; Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 LAWPACK(SC) 63557 : 2020 (1) R.A.J. 33; State of Chhattisgarh v. SAL Udyog (P) Ltd., (2022) 2 SCC 275 : 2021 LAWPACK(SC) 65698 : 2021 (6) R.A.J. 154; Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236 : 2019 LAWPACK(SC) 62577 : 2019 (5) R.A.J. 1; and South East Asia Marine Engg. & Constructions Ltd. (SEAMEC LTD.) v. Oil India Ltd., (2020) 5 SCC 164 : 2020 LAWPACK(SC) 64119 : 2020 (3) R.A.J. 234.
19.It is a well-settled principle of contractual interpretation that if a contractual provision is unambiguous, the same has to be given effect to. Only where there is any ambiguity is it permissible to resort to internal aids to resolve such ambiguity; and only if the internal aids prove insufficient is recourse to external aids permissible. In Pandit Chunchun Jha v. Sheikh Ebadat Ali (supra), it has been held as under:
"6. The first is that the intention of the parties is the determining factor: see Balkishen Das v. Legge. But there is nothing special about that in this class of cases and here, as in every other case where a document has to be construed, the intention must be gathered, in the first place, from the document itself. If the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used. If, however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended."
20.A document, as is well known, must primarily be construed on the basis of the terms and conditions contained therein. It is also trite that, while construing a document, the Court shall not supply any words which the author thereof did not use.
21.The primary rule of construction of a document is the intention of the executants, which must be found in the words used in the document. The question is not what may be supposed to have been intended, but what has been said. The exercise of construction or interpretation of the document need be undertaken only if the document is ambiguous, or its meaning is uncertain. If the language used in the document is unambiguous and its meaning is clear, evidently, that is what is meant by the executants of the document. Contemporary events and the circumstances surrounding the execution of the document are not relevant in such situations.
22.Where the meaning of a word, phrase or sentence is clear and unambiguous, extrinsic evidence is not admissible. It is only where there is a latent ambiguity that extrinsic evidence, in the shape of an interpreting statement concurred in by both parties, becomes admissible. The parties themselves may not have been clear as to the meaning of a word or phrase at the time of entering into the contract, and unanticipated situations may subsequently arise which were not within the contemplation of the parties; such situations sharpen their focus, and any statement by them which illuminates the darkness arising out of the ambiguity of the language ought not to be shut out. In the case of an ambiguous instrument, there is no reason why a subsequent interpreting statement should be inadmissible.
23.That the Petitioner has completely failed to point out any ground falling within Section 34 of the Act which would attract interference with the Arbitral Award by this Hon'ble Court. It is most humbly submitted that the Petitioner has been unable to demonstrate that the interpretation placed by the Ld. Arbitrator was an impossible or perverse interpretation, and has therefore failed to satisfy the prerequisite for the extent of the scope within which this Hon'ble Court may interfere with the Arbitral Award.
24.That the present Petition is devoid of any merits and is therefore liable to be dismissed with exemplary costs. The Respondent has suffered immense financial loss, as well as loss of business opportunity and reputation, on account of the acts of the Petitioner and the consequent non-payment of the outstanding amount.
25.That the present Petition has been filed with mala fide intentions to extort money from the Respondent, thereby causing wrongful loss to the Respondent and wrongful gain to the Petitioner. The entire case set up by the Petitioner is based on false and fabricated pretexts, and the claim is therefore liable to be dismissed outright.
26.That the present Petition is not maintainable in the eyes of law and has been filed in complete abuse of the process of law. By way of the present proceedings, the Petitioner is seeking to take advantage of its own wrong.
27.That the Petitioner has not approached this Hon'ble Court with clean hands and is seeking to mislead the Hon'ble Court; the present claim is therefore liable to be rejected. The Hon'ble Supreme Court in S.P. Chengalvaraya Naidu vs. Jagannath and others, reported at (1994) 1 SCC 1, was pleased to observe:
“The Courts of Law are meant for imparting justice between the parties. One, who comes to court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gain indefinitely. We have no hesitation to say that a person, whose case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of litigation. ... A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party.”
PARAWISE REPLY ON MERITS
1.That the contents of paragraph 1 of the Petition are matters of record and hence require no reply. It is submitted that the present Petition has been filed by a person who is not competent and not authorised to sign and file the same. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
2.That the contents of paragraph 2 of the Petition are matters of record and hence require no reply. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
3.Reply to brief facts:
a.That the contents of sub-paragraph (a) of the brief facts of the Petition are matters of record and hence require no reply. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
b.That the contents of sub-paragraph (b) of the brief facts of the Petition are denied to the extent that goods were supplied and that regular payments were made by the Petitioner on a regular basis. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
c.That the contents of sub-paragraph (c) of the brief facts of the Petition are wrong and incorrect and are denied. It is denied that goods were supplied and that regular payments were made against the same. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
d.That the contents of sub-paragraph (d) of the brief facts of the Petition are wrong and incorrect and are denied. It is denied that, in Month of alleged balance payment, there was a balance payment of approximately Rs. Alleged balance amount (₹) to be made by the Petitioner to Respondent No. 1; it is further denied that Respondent No. 1, other than settling the amount amicably, threatened to approach the NCLT by invoking the provisions of the Insolvency and Bankruptcy Code, 2016 against the Petitioner, and issued a demand notice for an amount of Rs. Amount in demand notice (₹)/-, inclusive of the balance amount together with an arbitrary amount of interest of Rs. Alleged arbitrary interest (₹)/-. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
e.That the contents of sub-paragraph (e) of the brief facts of the Petition are matters of fact and hence require no reply. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
f.That the contents of sub-paragraph (f) of the brief facts of the Petition are wrong and incorrect and are denied. It is denied that the cheques bearing numbers First cheque number and Second cheque number, dated Date of first cheque and Date of second cheque respectively, were not deposited and encashed by Respondent No. 1 with its bank, and it is further denied that the advent of the COVID-19 pandemic caused unprecedented disruptions to the business operations of the Petitioner. Subsequent to the clearance of the aforesaid cheques, the director of the Petitioner Company requested the resumption of business between the Parties, and, upon the personal assurances and representations of the Petitioner, the Respondent Firm once again commenced business trade inter se between the Parties; and, on request, cheques bearing numbers First returned cheque number and Second returned cheque number were returned, as it was assured by the Petitioner that the said payment would be made in the course of the running account, the financial position of the Petitioner Company being such that payment could be released only once its business was restored to its original state. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
g.That the contents of sub-paragraph (g) of the brief facts of the Petition are wrong and incorrect and are denied. It is denied that the doctrine of force majeure is applicable in the present matter. Force majeure, in the context of a contract, means "an unexpected event or situation that can neither be anticipated nor controlled, which prevents the person from doing or completing the promise he or she had promised to under a contract". It is further denied that the conditions prevailing during the COVID-19 pandemic lockdown were unforeseeable by the Petitioner; rather, on the basis of an oral mutual understanding between the Parties, it was decided that the remaining balance of Rs. Remaining balance (₹)/- was to be paid by the Petitioner to Respondent No. 1 on a regular basis. It is further denied that Respondent No. 1 returned the cheques bearing numbers First returned cheque number and Second returned cheque number, dated Date of first returned cheque and Date of second returned cheque respectively, to the Petitioner as per agreed terms between them, taking into consideration the conditions prevailing at the time of the COVID-19 pandemic. Owing to the cordial business relationship inter se between the Parties, the Respondent Firm once again commenced supplying goods as per the specifications stipulated by the Petitioner, and, being satisfied with the quality of the goods, the Petitioner once again commenced making payments on a running-account basis. That, with effect from Start date of unpaid payment period until the last invoice dated Date of last invoice, the Petitioner failed to make payment of the amount to the Respondent Firm as required under the provisions of Section 15 of the MSMED Act. However, the contents of the preliminary submissions and objections be read as part and parcel of this reply, as the same are not repeated herein for the sake of brevity.
h.That the contents of sub-paragraph (h) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the Petitioner paid the remaining balance to Respondent No. 1 on a regular basis. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
i.That the contents of sub-paragraph (i) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that, by the conduct of Respondent No. 1, it could be verified that the condition of payment of the remaining balance on a regular basis was mutually agreed between the parties. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
j.That the contents of sub-paragraph (j) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that in Month of alleged balance, when a meagre balance of Rs. Alleged balance amount (₹) remained to be paid, Cheque No. First returned cheque number and Cheque No. Second returned cheque number were returned by Respondent No. 1 to the Petitioner with a request to commence business activities on the previously agreed terms of payment on a regular basis. It is further denied that the Petitioner has always cleared the invoices and paid the outstanding balances of Respondent No. 1 in due course and at regular intervals, without any delay beyond the stipulated time agreed between the parties. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
k.That the contents of sub-paragraph (k) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the settlement agreement relied upon by Respondent No. 1 in substantiation of its illegal claim makes any such reference in Clause 3.2. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
l.That the contents of sub-paragraph (l) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that, as on Date of last instalment, the last instalment of Rs. Amount of last instalment (₹) from the remaining balance was paid by the Petitioner through proper banking channels, in execution of the terms and conditions of the settlement agreement. It is further denied that, even otherwise, upon payment of the last balance payment of Rs. Amount of last balance payment (₹)/-, Clause 3.2 rendered the demand notice dated Date of demand notice null and void. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
m.That the contents of sub-paragraph (m) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that in Month of complaints about LED lights, numerous complaints began to be reported in respect of the LED lights supplied by the Petitioner to its own customers. It is further denied that, upon perusal of the assembly line of manufacturing, it was noticed that the raw material supplied by Respondent No. 1 was exclusively used to manufacture the LED lights in respect of which the complaints were received. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
n.That the contents of sub-paragraph (n) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the raw materials supplied under the invoices dated First invoice date, Second invoice date and Third invoice date were used in the assembling process of the LED lights in respect of which the Petitioner received complaints. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
o.That the contents of sub-paragraph (o) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the Petitioner complained of the same to Respondent No. 1. It is further denied that the material supplied against these invoices was of the value of Rs. Value of raw materials (₹)/-. It is further denied that the Petitioner, on several occasions, communicated to Respondent No. 1 orally and telephonically regarding the rejection of these invoices, and also sent a gentle reminder by email dated Date of first reminder email and again on Date of second reminder email. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
p.That the contents of sub-paragraph (p) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the rejection of the materials against the rejected invoices was communicated within a statutory and reasonable period of Number of days for defect communication days from the supply of the raw materials. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
q.That the contents of sub-paragraph (q) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that Respondent No. 1 failed to take any steps to collect the rejected goods, despite numerous reminders and complaints from the Petitioner in this regard, including through telephonic communication. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
r.That the contents of sub-paragraph (r) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that business between the parties continued in the usual manner, on the assurance, given orally by the representatives of Respondent No. 1, that the goods supplied against the rejected invoices would shortly be collected by Respondent No. 1. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
s.That the contents of sub-paragraph (s) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the materials in respect of which complaints were filed by the Petitioner were never collected by Respondent No. 1. It is further denied that, in the course of time, owing to the previous business relations and oral assurances, no debit note was issued in respect of the rejected materials. It is further denied that business continued on the basis of payments on a regular basis. It is further denied that numerous orders were placed and paid for by the Petitioner for material supplied against other invoices issued by Respondent No. 1. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
t.That the contents of sub-paragraph (t) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that on Date of outstanding amount, the total amount outstanding was Rs. Outstanding amount (₹)/-, which was duly communicated to Respondent No. 1 as payable as soon as it arranged for the collection of the rejected goods. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
u.That the contents of sub-paragraph (u) of the Brief Facts of the Petition are wrong, incorrect and are hereby denied. It is denied that the Petitioner was suffering losses of lakhs of rupees owing to the delay in the collection of the raw material, as the said material could neither be used in the manufacture of the final goods nor could new material be purchased from another supplier, there being a severe shortage of space at the factory of the Petitioner. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
v.That the contents of sub-paragraph (v) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the Petitioner is engaged in the business of assembling various components of LED lights and delivering the same to government authorities, or that, on account of non-supply of good-grade raw material by the Respondent No. 1, the Petitioner was unable to assemble the lights within the stipulated time period and thereby lost several orders and its reputation in the eyes of its clients. It is further denied that the failure of the Respondent No. 1 to pick up the rejected material has caused loss to the Petitioner; the Petitioner has annexed a table for the purported quantification of such alleged loss. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
w.That the contents of sub-paragraph (w) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the aluminium housing of 110W supplied by the Respondent No. 1 to the Petitioner at the rate of Rs. Rate of aluminium housing (₹)/- each was used in the manufacture of finished goods. It is further denied that the said aluminium housing used to be assembled along with various components to obtain the finished product. It is further denied that the cost borne by the Petitioner in assembling the finished goods was Rs. Assembly cost of aluminium units (₹)/-, and that the said finished goods were further sold by the Petitioner to its customers at the price of Rs. Sale price of aluminium units (₹)/- each. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
x.That the contents of sub-paragraph (x) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the MOW aluminium housing supplied by the Respondent No. 1 to the Petitioner at the rate of Rs. Rate of MOW housing (₹)/- each was used in the manufacture of finished goods. It is further denied that the said aluminium housing used to be assembled along with various components to obtain the finished product. It is further denied that the cost borne by the Petitioner in assembling the finished goods was Rs. Assembly cost of MOW units (₹)/-, and that the said finished goods were further sold by the Petitioner to its customers at the price of Rs. Sale price of MOW units (₹)/- each. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
y.That the contents of sub-paragraph (y) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that, upon purchase of raw material worth Rs. Raw material purchase cost (₹)/-, the Petitioner would have earned revenue of Rs. Revenue earned (₹)/-, or that, for the purpose of quantifying the alleged loss, the Petitioner lost almost 80% of its revenue on account of the alleged low-grade quality of raw materials supplied by the Respondent No. 1. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
z.That the contents of sub-paragraph (z) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the Petitioner and the Respondent No. 1 had been in business for the last 5 years, or that, on account of such alleged association, the Petitioner refrained from filing any claim for its alleged losses, and instead merely informed the Respondent No. 1 to pick up its alleged damaged and low-grade goods. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
aa. That the contents of sub-paragraph (aa) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that, as on Date of outstanding amount, the total amount of payment outstanding to the Respondent No. 1 was Rs. Outstanding amount (₹)/-, or that it was duly communicated to the Respondent No. 1 that the said amount would be paid as soon as it arranged for a transporter to pick up the alleged low-grade material supplied by it against the aforesaid invoices from the factory of the Petitioner. It is further denied that the Petitioner was losing lakhs of rupees on account of the delay in picking up of the raw material, or that the said material could neither be used in manufacturing the final goods nor could fresh material be purchased from another supplier owing to a severe shortage of space at the factory of the Petitioner. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
bb. That the contents of sub-paragraph (bb) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the Respondent No. 1, instead of picking up the material, filed a claim under Section 18 of the MSME Act for Rs. Total MSME claim amount (₹)/-, which included a pending amount of Rs. Principal in MSME claim (₹)/- as principal and Rs. Interest in MSME claim (₹)/- towards interest charged for alleged delayed payments; the said claim is without any pith and substance and is barred by the law of limitation of 3 years for initiating proceedings. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
cc. That the contents of sub-paragraph (cc) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the alleged arbitrary interest charged by the Respondent No. 1 was ever agreed between the parties, or that any communication in that behalf was ever made to the Petitioner at any time. It is further denied that the Petitioner was under any legal obligation, as no such charge was ever created in respect of the payments to be made by the Petitioner. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
dd. That the contents of sub-paragraph (dd) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the MSME Council arrived at the conclusion that both the parties were not ready for conciliation in respect of the disputed amount, or that it found conciliation to be not possible in this case, and decided to terminate the conciliation proceedings and refer the case under Section 18(3) of the Micro, Small and Medium Enterprises Development Act to the Arbitration Centre (DAC) for initiating arbitration proceedings in accordance with the Arbitration and Conciliation Act, 1996. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
ee. That the contents of sub-paragraph (ee) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the Respondent No. 2 failed to take into consideration the relevant grounds contended by the Petitioner at the time of the arbitration proceedings. It is further denied that the Respondent No. 2, vide the impugned order, wrongly awarded the claim in favour of the Respondent No. 1. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
ff.That the contents of sub-paragraph (ff) of the Brief Facts of the Petition are wrong, incorrect and are accordingly denied. It is denied that the Respondent No. 2 failed to take into account that the alleged claim of the Respondent No. 1 filed before the MSME Council as well as the Respondent No. 2 was time-barred. It is further denied that the said claim included interest charged at an arbitrary rate. It is further denied that the Respondent No. 2 failed to appreciate the facts of the case, namely that losses were borne by the Petitioner due to the alleged inferior goods supplied by the Respondent No. 1. It is further denied that not an iota of evidence was produced by the Respondent No. 1 in its claim to establish that any steps were taken by the Respondent No. 1 to pick up the alleged inferior quality of goods. It is further denied that no proof was produced by the Respondent No. 1 by which the alleged arbitrary rate of interest charged could be substantiated. However, the contents of the preliminary submissions and objections may be read as part and parcel of this reply, as the same have not been repeated herein for the sake of brevity.
gg. That the contents of sub-paragraph (gg) of the Brief Facts of the petition are wrong, incorrect and are accordingly denied. It is denied that the Respondent No. 2, in the impugned order, failed to take into account the said facts and erroneously awarded the claim in favour of the Respondent No. 1. It is further denied that the Respondent No. 2 failed to appreciate the contentions of the Petitioner while passing the impugned order. However, without repeating the same herein for the sake of brevity, the contents of the preliminary submissions and objections be read as part and parcel of this paragraph.
4.That the contents of paragraph 4 of the petition are wrong, incorrect and are absolutely denied. However, without repeating the same herein for the sake of brevity, the contents of the preliminary submissions and objections be read as part and parcel of this paragraph.
REPLY TO GROUNDS:-
It is denied that the impugned Award passed by the Ld. Arbitrator under Section 18 of the MSME Act, 2006 is bad in the eyes of law, or on the facts and in the circumstances of the case, and it is denied that the same is liable to be set aside.
I.That the contents of paragraph I of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that the Statement of Claim filed by the Respondent No. 1 was, in itself, not maintainable in the eyes of law in view of Section 69 of the Indian Partnership Act.
II.That the contents of paragraph II of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that the bill invoices claimed by the Respondent were not genuine and were bogus.
III.That the contents of paragraph III of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that the claim was barred by limitation.
IV.That the contents of paragraph IV of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that, upon resumption of business by the Respondent, the contract stood discharged under Section 62 of the Indian Contract Act, 1872, and consequently the Respondent was under no liability to honour the settlement agreement.
V.That the contents of paragraph V of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that the claim petition was not filed by an authorised person.
VI.That the contents of paragraph VI of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider that the goods delivered by the Respondent No. 1 were of inferior quality, which led to complaints from customers and resulted in the rejection of the invoices dated First rejected invoice date, Second rejected invoice date and Third rejected invoice date, amounting to Rs. Amount of rejected invoices (₹)/-. It is further denied that the absence of any reply from the Respondent No. 1 with regard to the emails sent on Date of first email and Date of second email implies any admission of guilt on the part of the claimant.
VII.That the contents of paragraph VII of the grounds are wrong, incorrect and are denied. It is denied that the Ld. Arbitrator failed to consider the counter claim seeking an amount of Rs. Counter claim amount (₹)/-. It is further denied that the rejected goods of inferior quality were not taken back by the claimant, or that this caused a loss of lakhs of rupees to the Petitioner on the ground that the premises could not be used for manufacturing the final goods and new materials could not be purchased, even though upon the purchase of material worth Rs. Material purchase cost (₹)/- the Petitioner earns revenue of Rs. Revenue amount (₹)/-, and the Petitioner allegedly suffered a revenue loss of 80% owing to the non-supply of good quality raw material by the claimant. It is further denied that, being unable to assemble the lights within the stipulated time period, the Petitioner lost orders and suffered loss of reputation in the eyes of its clients. It is most humbly submitted that the Ld. Arbitrator rightly rejected the counter claim of the Petitioner on a correct understanding and interpretation of law, after carefully considering the pleadings and giving due weightage to the evidence adduced by both parties.
5-6. That the contents of paragraphs 5-6 of the petition are legal paragraphs and require no reply.
7.That the contents of paragraph 7 of the petition are wrong, incorrect and are denied. The present petition is barred by limitation.
8-9. That the contents of paragraphs 8-9 of the petition are legal paragraphs and require no reply.
The prayer clause of the petition is vague, frivolous, baseless and misconceived, and is therefore strongly opposed. The petition of the Petitioner is liable to be rejected in the interests of justice.
It is, therefore, most respectfully prayed that this Hon'ble Court may be pleased to dismiss the petition of the Petitioner with interest and costs, in favour of the Respondent No. 1.
It is prayed accordingly.
RESPONDENT NO. 1
Through
Advocate's name
ADVOCATES FOR
Counsel for (name)
Counsel for (name)
Advocates' address
DELHI
DATED:
IN THE COURT OF THE LD. DISTRICT JUDGE (COMMERCIAL COURT), DISTT. CENTRAL, TIS HAZARI COURTS, DELHI.
OMP (COMM.) NO. OMP (Comm.) number OF 2024
IN THE MATTER OF:-
Petitioner's name: PETITIONER
VERSUS
Respondents' names: RESPONDENTS
AFFIDAVIT
Affidavit of Mr. Deponent's name, Partner of M/s Firm name, having its address at Deponent's address, New Delhi, who do hereby solemnly affirm and declare as under:-
1.That I am the Partner / Authorised Representative of the Respondent No. 1 in the above-noted matter, am well conversant with the facts of the case, and am competent to swear the present affidavit.
2.That the contents of the accompanying reply to the petition have been drafted by my counsel as per my instructions; the contents thereof have been duly read over and explained to me in my vernacular language, and, having fully understood the same, they are true and correct to my knowledge and belief. Nothing material has been concealed therefrom.
DEPONENT
VERIFICATION:-
Verified at Delhi on this Day of verification day of Month of verification, Year of verification, that the contents of my above affidavit are true and correct to my knowledge, that no part of it is false, and that nothing material has been concealed therefrom.
DEPONENT
IN THE COURT OF THE LD. DISTRICT JUDGE (COMMERCIAL COURT), DISTT. CENTRAL, TIS HAZARI COURTS, DELHI.
OMP (COMM.) NO. OMP (Comm.) number OF 2024
IN THE MATTER OF:-
Petitioner's name: PETITIONER
VERSUS
Respondent's name: RESPONDENT
STATEMENT OF TRUTH
Affidavit of Mr. Deponent's name, Partner of M/s Firm name, having its address at Deponent's address, New Delhi, who do hereby solemnly affirm and declare as under:-
1.That I, the Deponent, am the Partner / Authorised Representative of the Respondent No. 1, and am therefore competent to swear this Statement of Truth. I am well conversant with the facts and circumstances of the case, and am hence competent to swear this affidavit.
2.I am sufficiently conversant with the facts of the case and have also examined all relevant documents and records in relation thereto.
3.I state that the statements made in paragraphs 1 to Paragraph number (from) are true to my knowledge; the statements made in paragraphs Paragraph number (from) to Paragraph number (to) are based on information received and records available, which I believe to be correct; and the statements made in paragraphs Paragraph number (from) to Paragraph number (to) are based on legal advice, and no part thereof is false nor has anything material been concealed therefrom.
4.I state that there is no false statement or concealment of any material fact, document or record, and that I have included all information relevant to the captioned reply.
5.I state that the above-mentioned reply comprises a total of 1 to Total number of pages pages, each of which has been duly signed by me.
6.I state that all documents in my power, possession, control or custody pertaining to the facts and circumstances of these proceedings have been disclosed and copies thereof annexed, and that I do not have any other documents in my power, possession, control or custody as of now.
7.I state that the Annexures hereto are true copies of the documents referred to and relied upon by me.
8.I submit that I am aware that, for any false statement or concealment of material facts, I shall be liable to action being taken against me under the law for the time being in force.
DEPONENT
VERIFICATION
Verified at Place of verification on this Day of verification day of Month of verification, Year of verification. That the contents of my affidavit above are true and correct to my knowledge, that no material fact has been concealed therefrom, and that nothing therein is false.
DEPONENT