TMI Blog2020 (2) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... n-interest of the petitioners herein Late Pawan Kumar Gupta was personally liable to pay M/s. Brawn Pharmaceuticals Ltd. the unrealised portion of their share amounting to ₹ 49 lacs. Concedingly, M/s. Brawn Pharmaceuticals Ltd. has not raised a claim before the learned Arbitrator. The benefit under the Supplementary MoU could only flow to the entity M/s. Brawn Pharmaceuticals Ltd. In the absence of any claim by M/s. Brawn Pharmaceuticals Ltd., the learned Arbitrator could not have allowed the counter claim of the respondent No.1 in his favour. The award to that extent is liable to be set aside. Supreme Court in the case of Bharat Coking Coal Ltd. v. Annapurna Construction [2003 (8) TMI 368 - SUPREME COURT], wherein it was held that the Arbitrator cannot travel beyond the scope/parameters of the contract. Other issues need not be considered - petition allowed. - O.M.P. (COMM) 283/2018 & IA. 8797/2018 - - - Dated:- 24-2-2020 - HON'BLE MR. JUSTICE V. KAMESWAR RAO Petitioners: Mr.Manish Vashisht, Mr.A.K. Thakur, Mr.Jeevesh Nagrath, Mr.Manashwy Jha, Mr.Chandan, Ms.Urvi Kapoor and Ms.Anushruti, Advs. Respondents: Ms.Panchajanya Batra Singh, Ms.Garima Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act and deal with the export of medicinal and pharmaceutical products to Angola. 6. This MoU was entered into by the parties in their individual capacity and on the same date i.e. January 1, 2003, a Memorandum of Agreement dated January 1, 2003 ( MoA , for short) was entered into amongst the three companies named hereunder:- a. M/s. Strategic Overseas Pvt. Ltd., having its registered office in Delhi. b. M/s. Balajee-Comeric General LDA, having its registered office in Luanda, Angola c. M/s. Brawn Laboratories Ltd. having its registered office in Delhi. 7. The following arrangement was entered into between the said companies; firstly it was agreed that M/s Brawn Laboratories Ltd. would sell its products to M/s. Strategic Overseas Pvt. Ltd. and M/s. Strategic Overseas Pvt. Ltd. would then deal with M/s. Balajee at Angola, i.e., the company which was engaged in the business of sale and marketing of pharmaceutical and other medicinal products in Angola. 8. M/s. Balajee situated at Angola was supplying the pharmaceutical products manufactured by M/s. Brawn Laboratories Ltd., received through M/s. Strategic Overseas Pvt. Ltd. to a company based in Angola by the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned award on January 31, 2018, wherein the claims of the petitioners / claimants herein were rejected and the counter-claim of respondent No.1 was allowed. 14. It was the petitioners case before the learned Arbitrator that in terms of Article 5 of the Supplementary MoU, the late Claimant was to pursue the matter with M/s. Neopharma at Angola to release the payment of ₹ 286 Lacs so that the accounts could be settled in terms of the said MoU. M/s. Brawn Laboratories was to receive an amount of ₹ 49 Lacs after all adjustments who was represented by respondent No.1, the Director of the said company. Article 5 of the Supplementary MoU, reads as under:- Article-5 INDIVIDUAL OBLIGATIONS OF FIRST AND THIRD PARTY: i. That the third party Shri Pawan Kumar Gupta has agreed to pursue to the concerned Angola Parties and taking full responsibility of remittance by M/s. Balajee for the aforesaid balance payment to M/s. Brawn Pharmaceuticals Ltd. ii. That upon receipt of the aforesaid payment in the account of M/s. Brawn Pharmaceuticals Ltd., the obligation of the First Party to disburse the same as per the terms mentioned herein above in point No.4.2 (V). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-A to the said MoU. It was also not disputed by respondent No.1 before the learned Arbitrator that the sum of ₹ 268.52 lacs was due and payable from M/s. Neopharma, i.e. the Angolan Company, to M/s. Balajee which in turn had to be apportioned between the parties as per Annexure-A to the Supplementary MoU. It was the case of the respondent No.1 that this money had to be remitted first by M/s. Balajee in the account of M/s Brawn Laboratories and thereafter it was to be apportioned as per Annexure-A of the supplementary MoU. 18. It was the case of respondent No.1 before the learned Arbitrator that after the execution of the Supplementary MoU, M/s. Balajee through its Director Jitender Kumar tendered two cheques dated February 27, 2004 for 2,83,287.46 USD and 275121 USD (total value being INR 2,35,95,000) favouring M/s. Brawn Laboratories Ltd., the company of respondent no.1. The respondent No.1 further averred that these two cheques were not encashed and were returned by the bank with the remarks that they were negotiable only in Angola. The petitioners had then denied the issuance of any such cheques. 19. It was the case of the respondent No.1 and also argued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Whether the claimant is entitled to a direction against the respondent to co-operate with the claimant with the claimant in realizing the amount of money from M/s. Neopharma at Angola, in terms of prayer No.1 of the claim? OPC 7. In case issued No.6 is decided against the claimant whether the claimant is entitled to relief as claimed in prayer No. (iii) of the Statement of Claim? 8. Relief 23. It was the considered view of the learned Arbitrator in as much as Issue No.1 is concerned, regarding the question, whether the parties are bound by the two agreements i.e. Supplementary MoU executed between parties for settling the accounts after termination of the MoU and Supplementary Agreement dated December 01, 2003 executed between the companies after the termination of MoA, that both the agreements were admitted documents and the parties had placed reliance on them and hence it was held that the parties were bound by the said agreements. 24. The Learned Arbitrator then went onto deal with issues Nos 2, 2A and 3. It was recorded that the facts of the case revealed that the sum of ₹ 268.52 lacs was to be recovered from M/s. Neopharma, Angola through M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as parties to arbitration proceedings, the learned Arbitrator observed that, it was impossible to ascertain the question whether the money was in possession of M/s Neopharma or M/s. Balajee. Thus, the learned Arbitrator decided Issue No.2 in favour of petitioners while deciding Issue no. 2A in favour of respondent No.1, however, Issue no. 3 was decided against respondent. 29. The Arbitrator deemed it to fit to adjudicate issues Nos. 4 and 5 relating to counter-claim together. It was thus held by the learned Sole Arbitrator in view of Article 5(iv) of the Supplementary MoU, that the late Claimant having failed to realise the said amount from M/s. Neopharma or M/s. Balajee of Angola, had become personally liable to pay ₹ 49 lacs to M/s. Brawn Pharmaceuticals Ltd, a company owned by the respondent No.1. As per supplementary MoU, it was the late Claimant who was bound to arrange remittance of the said amount within 8 months from December 01, 2003. 30. It was thus held by the learned Arbitrator that the respondent No.1, was therefore entitled to the counter-claim of ₹ 49 lacs from the petitioners. The learned Arbitrator also awarded a simple interest @ 8% p.a. there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No.1 to the Section 11 Petition wherein the respondent No.1 stated that there existed no dispute between the petitioners and respondent No.1 in his individual capacity. (viii) Counter claim made by respondent No.1 is barred by time. The amount had to be paid by late claimant to M/s. Brawn Pharmaceuticals Ltd. by or before August 01, 2004 subject to fulfilment of conditions in the agreements. (ix) That no acknowledgement by late claimant regarding any payment to respondent No.1 which would extend the period of limitation. (x) The learned Arbitrator acted contrary to S. 28 (a) of the Contract Act for the following reasons: i. That late claimant had agreed before August 01, 2004 he would ensure payment of ₹ 49 lacs to M/s. Brawn Pharmaceuticals Ltd. and not to respondent No.1 in his personal capacity. ii. No arbitration agreement existed between the late claimant and M/s. Brawn Pharmaceuticals Ltd. iii. M/s. Brawn Pharmaceuticals Ltd. was not a party to the arbitration agreement which was entered into by the parties in their individual capacity. iv. M/s. Brawn Pharmaceuticals Ltd. was not a party to the arbitration proceedings. v. M/s. Brawn P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable in eyes of Law. (xiii) The learned Arbitrator failed to appreciate that RW-1 failed to prove that the amount of ₹ 219.52 lacs stood released by M/s. Neopharma at Angola to the claimants. 34. It is pertinent to note at this juncture that there was, in fact, a delay of 14 days in filing the Petition. The Petition was filed after the period of 90 days expired but before expiry of 120 days. This delay was condoned by this Court vide order dated January 28, 2019. 35. It is the case of the petitioners and contended by the counsel that the impugned Award was rendered after reserving the same on October 29, 2014, i.e., after the period of almost three years and three months and the same is against principle of natural justice, fair play and public policy. That this ground is in itself sufficient to set aside the Award. To buttress his arguments, the learned counsel for the petitioners has cited the following judgments: i. Kanhaiyalal Ors. vs. Anupkumar Ors. (2003) 1 SCC 430 ii. HarjiEngg. Works Pvt. Ltd. vs. Bharat Electricals Ltd. Anr. 153 (2008) DLT 489 36. It is further contended that the counter-claims are governed by Section 3(2)(b)(ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute between the parties. The petitioners filed their claim before the Arbitrator in April, 2008. 41. It the case of the petitioners that the counter-claim was filed only on June 04, 2008 by none other than the respondent No.1 even though he opposed any liability, agreement or the existence of an arbitration agreement itself. It is submitted by the petitioners that the respondent No.1 did not make a request or took any steps seeking appointment of an Arbitrator for adjudication of his alleged counter claim within the period of limitation. It is also the case of the petitioners that for these afore-stated reasons the counter claim is barred by limitation and the arbitrator erred in holding otherwise. To support his submission, the petitioners have relied on the following case laws: i. Thomas Mathew vs. Construction Engineer KLDC (2018) 12 SCC 560 ii. Voltas Limited vs. Rolta India Limited (2014) 4 SCC 516 iii. State of Goa vs. Praveen Enterprises (2012) 12 SCC 581 iv. Ten Creative Studio P. Ltd. Ors. vs. Nelson Planning Design P. Ltd. 253 (2018) DLT 197. 42. The counsel argued that the learned Arbitrator has given erroneous findings de-hors the evidence. Even t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with issue No.3 first. To understand the issue, it is necessary to reproduce the relevant stipulation of the MoU, which has already been reproduced in para 16 (iv). I again reproduce the same for better understanding. 16. iv. Inspite of fulfilling the obligation by first party as stated above, in case of non-receipt of total payment from territory of Angola, Mr. Pawan Kumar Gupta is personally liable to pay to M/s. Brawn Pharmaceuticals Ltd., the unrealized portion of their share amounting to ₹ 49.00 lakhs (Rupees forty nine lakhs only), M/s Brawn will have no claim for any balance payment from M/s. Balajee. (emphasis supplied). 47. The submission of the learned counsel for the petitioners is primarily that in terms of the said stipulation, the amount was to be paid to M/s. Brawn Pharmaceuticals Ltd. Admittedly, M/s. Brawn Pharmaceuticals Ltd. was not a party before the learned Arbitrator. In fact, it is his submission that the respondent No.1 has resisted the petition filed under Section 11 of the Arbitration Conciliation Act, 1996 by stating that there is no dispute between the petitioner and the said respondent. The grant of the counter claim in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
