0

Indigency Status Misjudged: Supreme Court Sets Aside High Court Order; Urges Quick Appeal Decision.

CASE TITLE – ALIFIYA HUSENBHAI KESHARIYA v. SIDDIQ ISMAIL SINDHI & ORS.

CASE NUMBER – (Neutral Citation) 2024 INSC 457

DATED ON – 27.05.2024

QUORUM – Justice J.K. Maheshwari & Justice Sanjay Karol

 

FACTS OF THE CASE

The appellant, who was the original claimant before the Motor Accident Claims Tribunal, [Court of Motor Accident Claims Tribunal (Auxiliary) & 10th (Adhoc) Addl. District Court Jude, Jamnagar] in M.A.C.P.No.255 of 2011, was injured in an accident on 4th July 2010, while riding pillion on a bike, which was hit by a truck. Having sustained injuries, she was admitted for medical treatment at a hospital for a period of fourteen days and subsequently she underwent plastic surgery. At the time of the accident, she was earning Rs.3,000/- per month, but, post the accident, she sustained permanent disablement, and hence had not been able to work thereafter. A claim was filed for Rs.10 lakhs with 18% interest and costs. The Tribunal vide Award dated 17th October 2016, awarded a sum of Rs.2,41,745/- with 9% interest from the date of claim petition till the date of realization and proportionate costs. Dissatisfied thereby, the claimant-appellant approached the High Court of Gujarat by way of Regular First Appeal No.2611/2017. Misc. Civil Application No.3/2018 was filed therein by which the claimant-appellant prayed for permission to file the said First Appeal as an indigent person. The High Court vide judgment and order dated 7th August, 2018 dismissed the Misc. Civil Application

 

ISSUES

Whether the High Court of Gujarat had erred in it’s judgement and the Appellant should be recognized as an Indigent Person.

 

LEGAL PROVISIONS

Order XLIV Rule 3(2) of the Code of Civil Procedure, 1908, deals with determining the financial status of someone seeking to appeal as an indigent person.

 

COURT ANALYSIS AND JUDGEMENT

The High Court of Gujarat whose order has been impugned stated that “the applicant– appellant cannot be considered to be indigent person and therefore, he has to pay court fees first. The Learned counsel for the applicant, however, submitted that, till date, no amount is received by the applicant. It is open for the applicant to pursue the said remedy before appropriate forum. Present application cannot be entertained.” The Hon’ble  Supreme Court upon viewing this chose to first refer to one of it’sprevious judgements, where the definition of an Indigent Person was prescribed, “A person may proceed as poor person only after a court is satisfied that he or she is unable to prosecute the suit and pay the costs and expenses. A person is indigent if the payment of fees would deprive one of basic living expenses, or if the person is in a state of impoverishment that substantially and effectively impairs or prevents the pursuit of a court remedy.” The ground, upon which the claimant-appellant’s application to file the appeal as an indigent person was rejected, was that she had received compensation by way of the Award of the Tribunal, and therefore, she was not indigent. The Hon’ble Supreme Court found this observation to be belied by the impugned order itself as the learned Single Judge had recorded the submission of the counsel for the claimant-appellant that no money stood paid to her at that point in time. So even though she had been awarded a sum, her indigency was not extinguished thereby. And thereby, held that the High Court was incorrect in rejecting the Misc. Application. They further viewed Order XLIV Rule 3(2), of the Code of Civil Procedure, 1908, where it states that the inquiry into the question whether or not he is an indigent person shall be made by the Appellate Court. And noted that The Appellate Court, in accordance with the above, did not conduct any inquiry. The same was necessitated since nothing on record speaks of the claimant-appellant having filed the claim before the learned Tribunal as an indigent person. The Hon’ble Supreme Court stated that she had not yet received the money and, therefore, at the time of filing the appeal she was arguably indigent. And second, that the statutory requirement under the C.P.C., as described above, was not met , therefore, held that the order of the learned Single Judge has to be set aside, and allowed the Appeal. They also stated that since the Award was given in 2016, and the appeal to be recognized as an Indigent was rejected in 2018, the Hon’ble Supreme Court instructed the High Court that the appeal filed by the claimant-appellant be decided expeditiously, and preferably within a period of six months from the date of receipt of the copy of this judgment.

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Reviewed by – Gnaneswarran Beemarao

Click here to view full Judgement

0

Delhi High Court Sets Aside Arbitrator’s Rs. 20 Lakh Award for Loss of Profit Due to Lack of Evidence

CASE TITLE – M/S DIVYAM REAL ESTATE PVT LTD v. M/S M2K ENTERTAINMENT PVT LTD

CASE NUMBER – O.M.P. (COMM) 162/2020 & I.A. 14331/2012, I.A. 10655/2022

DATED ON – 22.05.2024

QUORUM – Justice Anup Jairam Bhambhani

 

FACTS OF THE CASE

Disputes had arisen between the parties from a Memorandum of Understanding dated 20.02.2006 (“MoU‟), under which the petitioner was to construct a mall in the name and style of “R-3 Mall‟ in Ahmedabad, Gujarat (“Mall‟) in which the respondent was to be provided space for running a multiplex on a lease basis. The bone of contention between the parties was, that the respondent alleged that the petitioner had committed a breach of the terms of the MoU by entering into a contract with a third party on 09.03.2006, thereby terminating the respondent’s contract. The respondent claimed that the termination was invalid and illegal, which compelled them to file a claim in arbitration. By way of the Arbitral Award, the petitioner has been directed to pay to the respondent the sum of Rs. 24,54,458.33 along with interest at the rate of 12% per annum. The said sum comprises two primary components: (i) the sum of Rs. 4,54,458.33 towards expenses held to have been incurred by the respondent towards advertisement and exhibition charges etc. as detailed in the award; and (ii) the sum of Rs.20,00,000.00 towards „loss of profit‟ suffered by the respondent, as also detailed in the award.

 

ISSUES

Whether the Learned Arbitrator was justified in issuing an award of Rs. 20,00,000.00 by way of loss of profit?

 

CONTENTIONS BY THE PETITIONER

The Learned Counsel appearing for the petitioner submitted that in the petition they have raised two principal contentions impugning the Arbitral Award. The first is that the MoU signed between the parties was merely an “agreement to agree‟ and was therefore not a concluded or enforceable contract, and second, that the award of Rs. 20,00,000.00 in favour of the respondent by way of loss of profit, is untenable since it was based entirely on conjectures and surmises. The petitioner’s main contention is that the learned Arbitrator has awarded loss of profit to the respondent based on no evidence tendered on record, and the Arbitral Award is in fact self-contradictory in its reasoning

 

CONTENTIONS BY THE RESPONDENT

The Learned counsel for the respondent has argued that the learned Arbitrator has returned a finding that the petitioner was guilty of breach of the MoU, thereby also dismissing the petitioner‟s counterclaims. It was argued that by way of the present petition, the petitioner is therefore asking the court to re-appreciate evidence adduced before the learned Arbitrator, which is impermissible under section 34 of the A&C Act. It was submitted that the award is neither contrary to law nor against the public policy of India. He had drawn the attention of the Hon’ble High Court to an affidavit dated 01.02.2010 tendered by Mr. Sunil Gupta, Deputy Manager of the respondent by way of evidence in the arbitral proceedings, in which, it was argued, the witness has furnished details of the expenses incurred by the respondent towards performing its obligations under the MoU. It was pointed out that the said witness has deposed that the respondent spent a sum of Rs. 20,08,343.00 towards payment made to various parties for performing its part under the MoU. The Learned Counsel also stated that in addition to such expenses, the respondent has also suffered loss of goodwill and loss of profit, resulting from termination of the MoU by the petitioner.

 

COURT ANALYSIS AND JUDGEMENT

The Hon’ble High Court of Delhi, after looking through the evidence before them and the Arbitrator’s reasoning for issuing the award was of the opinion that on the limited challenge pressed on behalf of the petitioner, viz. a challenge only to the award of Rs. 20 lacs to the respondent towards loss of profit, the discussion and reasoning contained in the Arbitral Award was sparse and cryptic. They noticed that the learned Arbitrator first makes a passing observation that the respondent had incurred loss of profit, which he says has been calculated for the period from 20.06.2006 to 20.12.2008 based on the estimated loss of and then proceeds to observe that calculating loss of profit must involve a certain amount of conjecture and that there cannot be straight-jacket formula for that purpose. However, the learned Arbitrator thereafter proceeds to observe “it is speculative if any profit would be made or not. However, it cannot be ignored that it is the respondent who had committed the breach.” Therefore, the Hon’ble High Court noticed that the learned Arbitrator was of the view that even the foundational fact as to whether the respondent would have made a profit at all was in doubt. IIt the opinion of the Hon’ble High Court, that there is a clear discordance, whereby on the one hand, the learned Arbitrator holds that whether or not the respondent would have made any profit is itself a matter of speculation, but on the other hand, he proceeds to award loss of profit of Rs. 20 lacs, drawing that figure literally from thin air. Hence, they stated that, the learned Arbitrator did not proceed even on the basis of the evidence on record, that was available inter alia by way of the evidence tendered before him. The Hon’ble High Court then held that it was persuaded to allow the present petition, holding that the award of Rs. 20 lacs to the respondent towards loss of profit was based on no evidence on record, and in fact, the learned Arbitrator has failed to even decide whether the respondent had incurred, or would have incurred, any loss of profit at all, and stated that the Arbitral Award dated 07.03.2012 is to be set aside.

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Reviewed by – Gnaneswarran Beemarao

Click here to view full Judgement

 

0

Delhi High Court Upholds Commercial Court’s Decision: Defendant’s Contradictory Claims Rejected, ₹5.91 Lakh Awarded to Plaintiff with 18% Pre-Suit Interest

CASE TITLE – Casa 2 Stays Pvt. Ltd. v. Comfia Ecom Private Ltd.

CASE NUMBER – RFA(COMM) 187/2023 &CAV 445/2023

DATED ON – 13.05.2024

QUORUM – Justice Vibhu Bakhru & Justice Tara Vitasta Ganju

FACTS OF THE CASE

This appeal at the Delhi High Court originated after a judgement (hereafter referred to as the Impugned order) passed by the learned Commercial Court in favour of the Respondent (the Plaintiff in the suit first filed – hereafter referred to as ‘the Plaintiff’), where the Appellant was and (hereafter referred to as ‘the Defendant’). The Plaintiff claims that it runs an online apparel store by the name of Poptailor Corporate Apparel and manufactures customized clothing as per the requirements of its clients. The defendant operates a chain of hotels in India and had placed orders for a supply of apparel to be delivered to different locations in the country. The Plaintiff filed the above-mentioned suit inter alia claiming that the Defendant had placed an order dated 30.06.2018 for manufacture and delivery of 2500 T-shirts of various sizes customized as per its requirement. The total value for the said Purchase Order was ₹5,70,725/-, which was payable on delivery of the goods. The plaintiff claims that it had made clear to the defendant that the goods once sold were not returnable and that the plaintiff being an establishment, under the MSMED Act, would be entitled to an interest at the rate of 18% per annum after 45 days of the delivery of the goods. The plaintiff claimed that it had delivered 2500 T-shirts against the afore-mentioned purchase order, which was duly received and acknowledged by the defendant. However, the defendant had not made the payment against the said delivery. The Plaintiff served a legal notice dated 27.07.2019 calling upon the defendant to pay a sum of ₹6,73,455.5 payable as of 27.07.2019. The said amount included ₹5,70,725/- towards the principal amount and ₹1,02,730.5 towards interest. However, the defendant did not clear the said dues. The plaintiff claimed that as on 30.05.2019, an amount of ₹8,49,385/- including the outstanding balance of ₹5,91,906/- towards the principal amount and an amount of ₹2,57,479/- towards interest at the rate of 18% per annum was payable.

 

ISSUES

  1. Whether plaintiff is entitled to the recovery of Rs.5,91,906/- towards balance amount for supply of goods to the defendant?
  2. Whether plaintiff is entitled to interest claimed @ 18%per annum w.e.f. July, 2019 till the filing of the suit, amounting to Rs.2,57,479/- from the defendant?

LEGAL PROVISIONS

Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)

CONTENTIONS BY THE APPELLANT

The defendant filed it’s statement of defence disputing the claim made by the plaintiff. The defendant denied that the plaintiff had supplied the goods in question, 2500 T-shirts. It also denied that the goods were received and acknowledged by the defendant. But on the other hand, It claimed that the goods were never delivered on time and the goods so delivered were always of a bad quality. The defendant also claimed that the goods delivered by the plaintiff did not conform to the agreed design and quality and that the plaintiff had changed the design of the T-shirts as per their whims and fancies, and due to this fact, were returned. Therefore, the amount as claimed by the plaintiff was not payable. In addition, the defendant claims that the learned Commercial Court had erred in allowing pre-suit interest at the rate of 18% per annum on the basis that the plaintiff was covered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereafter MSMED Act). However, no such averment was made in the plaint. It claimed that the defendant had paid all the legitimate dues to the plaintiff. The next entry in the ledger account was a debit entry of ₹5,70,725, leaving a credit balance of ₹1,58,677/-. The learned counsel for the defendant earnestly contended that this clearly reflected that the payments were made in advance and therefore, the invoice in question was paid in advance. He submitted that the plaintiff’s suit was thus, required to be dismissed.

CONTENTIONS BY THE RESPONDENT

The plaintiff had filed the said suit [CS (COMM) 83/22] for recovery, alleging that it had supplied goods to the defendant. However, the amounts payable in terms of the invoices raised were not fully discharged. It claimed that the dispute between the parties, essentially, related to the supply of 2500 T-shirts, which were covered under an invoice dated 30.06.2018 (Ex.PW-1/2A) for an amount of ₹5,70,725/-. The plaintiff had also produced the ledger account of the defendant as maintained in its books of account for the period 01.04.2018 to 22.08.2020, which reflected the outstanding amount of ₹5,91,906/-. The plaintiff claimed that it had delivered 2500 number of Tshirts against the afore-mentioned purchase order, which was duly received and acknowledged by the defendant. However, the defendant had not made the payment against the said delivery. The plaintiff claimed that since there was an already running business relationship between the parties, it did not raise any immediate objection towards non-clearance of the dues of ₹5,70,725/- but it made several efforts thereafter through formal and informal channels for clearance of the said dues. The plaintiff also claims that the defendant had cleared various amounts in respect of various other completed transactions; however, the invoice dated 30.06.2018 in respect of the 2500 number T-shirts remained unpaid.

COURT ANALYSIS AND JUDGEMENT

The Hon’ble High Court viewed that the learned Commercial Court evaluated the evidence led by the parties and considered the issues. The learned Commercial Court observed that the pleadings were not drafted properly, however, the Court is required to not only consider the pleadings but evaluate the documents and evidence brought on record as well. The Hon’ble High Court noticed that the written statement filed by the defendant is contradictory. Where, the defendant had denied receiving the supply of goods of 2500 number of T-Shirts. However, it also claimed that goods supplied were not of good quality. The said claims were mutually inconsistent. If the defendant did not receive the goods, there is no question of it objecting to the quality of the goods. There was also no communication from the defendant claiming that it had not received the goods in question goods covered under an invoice. Even one of the evidence that was cross-examined, confirmed that the defendant had not returned the defective goods. It was clear from the evidence led by the parties that the goods in question were supplied to the defendant but the same were never returned to the plaintiff. An e-mail between the employees of the parties dated 10.07.2018, claimed that the said products were from the batch of 2500 T-Shirts and were found to be defective. However, he acknowledged that the goods were never returned. He was specifically asked as to the whereabouts of the said T-Shirts. To which he responded that they were in different locations. Although, the defendant has relied on the e-mail dated 10.07.2018, and has suggested that the entire lot was defective there is no correspondence on record to indicate that the entire lot was found to be defective. And as noted above, admittedly, the defendant had not taken any steps to return the goods in question. The High Court then accepted and were able to concur with the decision of the Commercial Court that the plaintiff was entitled to a sum of ₹5,91,906/- as reflected in the ledger account maintained by the plaintiff. And the question as to whether the Plaintiff were entitled to the a pre-suit interest at the rate of 18% per annum, they noticed that the Defendant did not contest about whether the Plaintiff was an establishment under the MSMED Act, and the fact, that the Defendant had notice of the interest that claimed by the Plaintiff much prior to the institution of the suit, which included the principal amount and the interest on it, also allowed the High Court to concur with the Commercial Court to accept the plaintiff’s claim for pre-suit interest at the rate of 18% per annum.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Reviewed by – Gnaneswarran Beemarao

0

Patent Illegality, Patent Injustice, Redefining Fairness in Award Review: Delhi High Court

Case Title: MBL Infrastructures Limited vs Delhi Metro Rail Corporation

Case No: 12/12/2023

Decided on: O.M.P. (COMM) 311/2021

Coram: The Hon’ble Mr. Justice Chandra Dhari Singh

 

 Facts of the Case

MBL Infrastructure Ltd., a civil engineering company, entered into a contract with Delhi Metro Railway Corporation in 2012 to construct Sarai Metro Station in Delhi. The project, valued at Rs. 41.57 crore, was meant to be completed within 18 months. However, disputes arose due to alleged delays in site handover by the Metro and non-compliance by MBL. The Metro terminated the contract and encashed bank guarantees in 2013. Arbitration in 2015-2020 found the Metro responsible for delays and the termination illegal, but rejected MBL’s claims for damages and profits. MBL filed a petition challenging this partial award. The case hinges on proving who caused the project’s downfall. The court will determine whether the arbitration tribunal’s decision on specific claims was legally sound.

Legal Provision

Section 34 of the Arbitration and Conciliation Act, 1996 provides for the grounds of setting aside an arbitral award.

 (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that]—

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

 (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that— (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India.

Section 73 of the Indian Contract Act, 1872 provides compensation for the loss or damage caused by the breach of Contract.

Issue

  1. Whether the learned Tribunal has erred in not awarding the damages to the petitioner despite holding that the delay is attributable to the respondent?
  2. Whether Arbitral tribunal can go beyond to grant relief to aggrieved party when contract illegally restricts Remedies?
  3. Whether DMRC’s actions caused significant delays and if MBL deserves compensation for their alleged losses?

Court Decision and Analysis

In light of the precedents set by the judgements in cases like, NHAI v. Trichy Thanjavur Expressway Ltd. 2023 SCC Del 5183, Union of India v. Alcon Builders & Engineer (P) Ltd 2023 SCC OnLine Del 160, and few more, the Court found itself empowered under Section 34 of the Act to rectify specific parts of the arbitration award that are demonstrably flawed and fundamentally unjust. Such portions must be so blatantly erroneous that they shake the very foundation of this Court’s judicial conscience.

However, it is crucial to note that setting aside any portion of the award should not inadvertently impact the upheld sections. Any such action must be carefully executed to avoid unintended consequences or cascading effects that disrupt the remaining provisions.

Therefore, should the Court choose to set aside Claim No. 3 (Damages on Account of Idling of Machines and loss of overheads) and Claim No. 4 (loss of profit), it assured that the remaining claims will remain unaffected and suffer no adverse repercussions. This targeted approach upholds the valid aspects of the award while correcting the demonstrably problematic portions.

The Tribunal’s decision was legally flawed. They admitted respondent’s wrongful delays and contract termination, yet denied damages to the petitioner. This contradicts the law and ignores the unique circumstances of the case, where wrongful termination replaced a deserved extension.

The Award exhibited patent illegality due to the Tribunal’s inconsistency in Claim no. 1. While acknowledging the respondent’s project delays, they inexplicably withheld damages from the petitioner, rendering the Award legally unsound.

In view of the aforementioned claims, court partially allowed the petition and disposed pending applications.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal falls into the category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

 

Written by- Bhawana Bahety

click to view judgement

0

The Kerala High Court held that merely procedural infractions are insufficient to overturn Lok Adalat’s settlement Award

Title: Babumon K.G. v. State of Kerala & Ors

Decided on: 07 November, 2023

+ WA NO. 547 OF 2023

CORAM: HON’BLE Justice A.Muhamed Mustaque

Introduction

According to a recent ruling by the Kerala High Court, procedural infractions alone will not be sufficient to invalidate an award made by a Legal Services Authority; instead, it would be necessary to prove that the Authority lacked the authority to make the decision.

Facts of the Case

The appellant contended that the award was made because they had consented to pay Rs. 10,83,808 in two installments. The appellant contested the award on two grounds: first, a procedural breach; and second, a threat about the impugned award that the third respondent had directed at him. It was argued that as Section 20 of the Legal Services Authorities Act, 1987 (the “Act, 1987”) “overrides all other provisions,” the parties should have applied to take jurisdiction in order to pass an Award.

Courts analysis and decision

The Court rejected all of the appellant’s arguments on the merits and stated that, as contemplated by Section 19(5) of the Act, 1987, which specifies a Lok Adalath’s jurisdiction in determining and reaching a compromise or settlement between parties, the Lok Adalat was competent to pass an Award with respect to any matter falling within its jurisdiction and not pending before a court. We are unable to locate any procedural flaw that would impair Lok Adalath’s jurisdictional ability to make such an award under these circumstances. A court cannot tamper with an award like that. It noted that the learned single judge declined the challenge in a proper manner. As a result, the appeal was denied.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by- Hargunn Kaur Makhija

Click here to view your judgement

1 2