ssm 1 4-app79.16.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 79 OF 2016 IN ARBITRATION PETITION NO. 1543 OF [SECTION] [ENTITY], a Company incorporated Under the Companies Act, 1956, Having their office at Parel Telephone Complex, P.O. Lane, Parel East, Mumbai-400 012. ig Appellant. Vs. M/s. SRV Telecom Pvt. Ltd., A Company incorporated Under the Companies Act 1956, Having their registered office at No. 31/5, Left of Magadi, Main Road, Bangalore-560079. Respondent. Mr. [ENTITY] I/by [ENTITY] & Associates for the Appellant. Mr. [ENTITY] for the Respondent. CORAM : [ENTITY] AND [ENTITY], JJ. DATE : 25 APRIL 2016. ORAL JUDGMENT (PER [ENTITY], J.):-
This Bench, on 11 April 2016 in [ENTITY] Vs. [ENTITY], Appeal No. 537 of [SECTION], has observed that-
ssm 2 4-app79.16.sxw 1 Learned Counsel appearing for the parties are
ad-idem that aggregate the value of the claim and counterclaim in the arbitration in question is less than one crore rupees.
2 The roster/assignment with regard to Appeals before this Division Bench ([ENTITY] & [ENTITY], JJ) with effect from 21.03.2016 reads thus :
"(C ) Appeals under [SECTION] of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, [SECTION], against Order under [SECTION] of the said Act."
3 The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, [SECTION] (for short, [ACT], [SECTION]) and the [ACT] as amended by The Arbitration and Conciliation (Amendment) Act, [SECTION] (3 of 2016) have been brought into force with effect from 23.10.[SECTION]. Both these Acts are required to be read for the purposes of considering the object of expeditious hearing of commercial matters in the Court as well as before the Arbitral Tribunals i.e. the Court proceedings and the arbitral proceedings.
4 [SECTION] of [ACT], [SECTION], is relevant for arbitration matters. It reads as under :
"10 Jurisdiction in respect of arbitration matters. - Where the subject- matter of an arbitration is a commercial dispute of a Specified Value and -
(1) (2) If such arbitration is other than an ssm 3 4-app79.16.sxw
international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the [ACT] that have been filed on the original side of the High Court, shall be heard and disposed of by the Commercial Appellate Division where such Commercial Appellate Division has been constituted in such High Court.
(3) " (emphasis supplied)
[SECTION] of the Commercial Courts, [SECTION] defines "Specified Value" as follows:
"2.(i) "Specified Value", in relation to a commercial dispute, shall mean the value of the subject-matter in respect of a suit as determined in accordance with [SECTION] which shall not be less than one crore rupees or such higher value, as may be notified by the Central Government."
6 [SECTION] and [SECTION] of [ACT], [SECTION] read as under :
"13. Appeals from decrees of Commercial Courts and Commercial Divisions. - (1) Any person aggrieved by the decision of the Commercial Court or Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of judgment or order, as the case may be:
ssm 4 4-app79.16.sxw Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under [SECTION] of the [ACT] as amended by this Act and [SECTION] of the [ACT].
(2) Notwithstanding anything contained in any other law for the time being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.
[SECTION]. Expeditious disposal of appeals. -
The Commercial Appellate Division shall endeavour to dispose of appeals filed before it within a period of six months from the date of filing of such appeal."
7 [SECTION] of the [ACT], [SECTION] deals with Specified Value. [SECTION] of which falls under [SECTION], reads as follows :
"12(1) 12(2) The aggregate value of the
claim and counterclaim, if any as set out in the statement of claim and the counterclaim, if any, in an arbitration of a commercial dispute shall be the basis for determining whether such arbitration is subject to the jurisdiction of a Commercial Division, Commercial Appellate Division or Commercial Court, as the case may be.
ssm 5 4-app79.16.sxw 12(3) " 8 [SECTION] of [ACT], [SECTION] has overriding effect. [SECTION] of the Arbitration and
Conciliation (Amendment) Act, [SECTION] refers only to arbitration proceedings commenced under [SECTION] of the [ACT]. (Sic the Principal Act) [SECTION] of Arbitration and Conciliation (Amendment) Act, [SECTION] reads as under :
"26 Act not to apply to pending arbitral proceedings - Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of [SECTION] of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
9 In view of above, the Appeals arising out of [ACT] being commercial in nature and having valuation of more than one crore rupees (in accordance with [SECTION]) and which have been filed on the Original Side of this Court are required to be heard and disposed of by the Commercial Appellate Bench including pending arbitration Appeals also.
10 This is also in the background that [SECTION] of [ACT], [SECTION] mandates the transfers of all pending Suits including Petitions/Applications under the [ACT], having valuation of one crore and above from such Court to the Commercial Division Bench/Court. Therefore, all such commercial matters shall be governed by the [ACT], [SECTION] and are required to be heard from the stage at which it remained at the time of transfer. The Commercial Courts [SECTION], [SECTION] is thus, made applicable to the pending Court proceedings and for expeditious hearing of commercial Suits, Applications and the Appeals. Therefore, all pending Appeals of the specified value and/or estimated value of intellectual property matters are also to be heard and disposed of by the Commercial Appellate Bench.
11 The Commercial Arbitration Appeals of less than one crore are therefore, required to be placed before the appropriate Bench to which those matters are assigned considering the scheme and object of the constitution of Commercial Courts under the Acts. The distinction is required to be made between the specified value of the commercial matters and matters other than specified value of commercial matters.
12 The Court proceedings are different than the arbitral proceedings. Therefore, considering the scope and purpose of the [ACT] read with the Amended [ACT], [SECTION], both these Acts will apply to pending matters also.
13 From the roster/assignment it appears that the Arbitration Appeals, where subjectmatter of Arbitration is a commercial dispute having valuation of less than one crore rupees are apparently not assigned to this Division Bench, though such matters are being listed before this Court daily.
[SECTION] We would rather appreciate if the Appeals other than Commercial Appeals of specified value are listed as per the assignment only and/or subject to the specific assignment.
2 On 18 April 2016, the following partial modification to the Judicial assignment which has come into effect from 7 March 2016, ssm 7 4-app79.16.sxw has been made by the Hon'ble the Chief Justice.
"(C) Appeals under [SECTION] of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, [SECTION], against order under [SECTION] of the said Act.
(D) All Arbitration Appeals pertaining to Division Bench."
Accordingly, we are hearing this Arbitration Appeal. By consent the Appeal is heard finally at the stage of admission.
3 The present Appeal is filed under [SECTION] of the [ACT] (for short, the [ACT]) on 28 October [SECTION], as the learned Single Judge by a reasoned order refused to interfere with arbitral award/order dated 4 December 20[SECTION], that resulted into the dismissal of the Arbitration Petition filed under [SECTION] of the [ACT].
4 The learned counsel appearing for the Appellant submitted that in view of clause 4.2 of (Section III), General (Commercial) Conditions of Contract, the Appellant should have been awarded some amount as they suffered losses because of the Respondent's failure to complete its obligation under the contract. Clause 4.2 of (Section III), ssm 8 4-app79.16.sxw General (Commercial) Conditions of Contract, reads as under:-
"4.2 The proceeds of the performance security shall be payable to the purchaser as compensation for any loss resulting from the supplier's failure to complete its obligations under the contract."
5 The learned Single Judge, after considering the admitted position on record, has recorded in paragraph Nos. 2 to 4 of the impugned order as under:-
Learned counsel appearing for the petitioner states that under the provisions of the contract entered into between the parties, since the respondent had refused to supply the goods during the extended period, the petitioner was required to invite fresh tender. He submits that under the provisions of the contract, the petitioner is entitled to encash performance bank guarantee and to forfeit the amount. He submits that since the respondent had admitted the facts of committing breaches before the learned arbitrator, the petitioner was not required to lead any oral evidence to prove the actual loss suffered by the petitioner.
3. It is not in dispute that the petitioner had invited fresh tender for obtaining supply of the goods in question from another contractor. The petitioner did not lead any oral evidence to prove the actual loss before the learned arbitrator, if any, suffered by the petitioner due to non-supply of the material by the respondent.
4. The learned arbitrator has considered the oral evidence led by the respondent and also the judgments of various Courts holding that the alleged loss ssm 9 4-app79.16.sxw suffered, if any, is required to be proved. In my view, the award rendered by the learned arbitrator is in accordance with law and rendered after following the law laid down by the Supreme Court and various High Courts recorded in the impugned award.
Admittedly, the petitioner did not prove actual loss suffered by the petitioner, if any, before the learned arbitrator and thus could not have retained the amount recovered from the encashment of the bank guarantee."
The learned Single Judge thus, refused to entertain the claim so prayed for, for want of proof of actual loss suffered by the Appellant.
This is in the background that admittedly the Appellant failed to lead any oral evidence in support of the actual loss. The reasons so recorded above, as well as, clause 4.2 so reproduced above and considering the position of law, even as read and referred by the learned counsel appearing for the Appellant as well as the Apex Court 1 , Judgment in Oil & Natural Gas Corporation Ltd. Vs. [ENTITY] Ltd.
wherein the importance of leading evidence is also emphasized to claim actual loss, we see no perversity or illegality to interfere with the reasoned Judgment and order of the learned Single Judge. The learned Arbitrator's award is well within the framework of law and the record.
1 (2003) 5 SCC 705 ssm 10 4-app79.16.sxw 6 This Court (Coram: [ENTITY] & [ENTITY], JJ), in
[PRECEDENT], dated 31 March 2016, has held that unless the loss suffered is pleaded and proved, it cannot be recovered and observed as under:-
"9 This Court in [PRECEDENT] 2 held as under:-
"28 This Court in case of [PRECEDENT], decided on 21st April, [SECTION] in [CASE NUMBER] has after adverting to the judgment of the Supreme Court in case of [PRECEDENT], decided on 9th January, [SECTION] in Civil Appeal No. 193 of [SECTION] has held that unless loss is pleaded and proved, it cannot be recovered. There cannot be any windfall in favour of the respondent to recover liquidated damages even if no loss is suffered or proved."
10 Additional factors are also noted by this Court (Coram:-[ENTITY], J.) in [PRECEDENT] 3 while dealing with the similar circumstances has observed as under:-
"(g) In [ENTITY] (Supra), the Apex Court has observed that the party who relied upon such clause, may lead evidence to claim more, if the damage/compensation amount is not reasonable. The Court may also direct the parties to lead evidence to confirm that 2 [SECTION] (6)Mh.L.J. 287 3 2011 Vol. 113 (3) L.R. [SECTION]17 ssm 11 4-app79.16.sxw the action of delay amounts to breach of contract and which has caused the damages and therefore, entitled for a reasonable compensation/ amount. The reasonable amount/ compensation cannot be equated with the fixed amount and/or maximum amount as per the liquidated damages clause in question. The observations that other side to prove that the claimant has not suffer any loss or damage itself contemplates necessity of leading evidence by both the parties. The burden is always on the parties who claimed compensation to prove actual loss, even for the reasonable compensation. The other doctrines;
"Mitigation of loss", "Burden of Proof", "Onus of proof" and "Shift of burden" just cannot be overlooked by the Court or the Arbitrator, while determining the reasonable compensation."
7 In view of above, there is no case made out to interfere with the impugned Judgment and order passed by the learned Single Judge.
8 Appeal is accordingly dismissed. There shall be no order as to costs.
([ENTITY], J.) ([ENTITY], J.)