IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. Arb.Case No.62/2003 Reserved on: 8.9.2009 Decided on:11.11. 2009 _______________________________________________ Kuldeep Kumar Sood. …Petitioner. Versus Punjab Tourism Development Corporation Limited. …Respondent. _________________________________________________________ Coram: Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. For the petitioner : Mr. P.C. Markanda and Mr. Naresh Markanda, Senior Advocates with Mr. Suneet Goel, Advocate. For the Respondents: Mr. Anil Kshetarpal, Mr. Gunjan Rishi and Mr. Prashant Kanwar, Advocates. _______________________________________________________ The present petition has been preferred under section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award dated 10.10.2002 passed by the Arbitral Tribunal. Brief facts necessary for the adjudication of this petition are that an advertisement was issued in the month of May/June, 1986 seeking applications from parties to collaborate with the respondent- corporation for setting up Holiday Home Resort at Dharamshala. In 1 Whether reporters of the local papers may be allowed to see the judgment? Yes. 2 sequel to the advertisement, an agreement was entered into between the petitioner and respondent-corporation on 28.10.1986. The work was to be completed within a period of 20 months from the date of signing of the agreement. The scope of construction work included construction of 40 rooms with furniture, furnishings and providing linen etc. However, subsequently, the scope of work was reduced and the petitioner was directed to construct 27 rooms instead of 40 rooms. The petitioner was permitted to complete the work by giving various extensions and the last extension was upto 11.11.1993. The agreement was rescinded on 14.6.1994. The petitioner appointed Sh. Arvinder Singh Chadha as Arbitrator on 24.7.1996. The respondent appointed Managing Director of the respondent-corporation as Arbitrator on 27.8.1996. This Court appointed Secretary (Tourism) to the State of Punjab as Presiding Arbitrator. The statement of claim was filed by the petitioner on 14.1.2002. The statement of additional facts was filed on 8.5.2002. The respondent-corporation filed reply-cum-counter claim on 16.5.2002 claiming a sum of Rs. 1,44,97,125/-. The petitioner filed replication to the same on 10.6.2002. The petitioner made a statement before the Arbitral Tribunal on 8.7.2002 and stated that he will not give any further evidence. Sh. B.S. Khera, Superintendent of the Corporation tendered his evidence in the shape of affidavit of Sh. Jagmohan Singh Dhillon on 5.8.2002. The case was fixed for 2.9.2002 for filing written arguments by both the parties. The petitioner’s application for supply of certain documents was rejected by the majority on 20.8.2002. The written arguments were furnished 3 by the parties and no oral arguments were addressed by the parties at any stage. The item-wise claim made by the petitioner is as under: Sr.No. Brief description of claim/item of work Amount in Rs. Revised estimate dated 10.6.02 1. Delay in release of security deposit. 1,00,000.00 - 2. Reimbursement of losses and damages suffered due to breach of the agreement by the PTDC during Nov. 1986 to March, 1994. 20,00,000.00 16,18,000.00 3. Reimbursement of statutory increase in Labour and wages and price escalation. 25,00,000.00 20,14,420.00 4. Incorrect and arbitrary rates framed for N.S. item rates. 9,00,000.00 6,90,594.27 5. Non payment of Architect’s fee as per agreement 70,000.00 1,39,267.23 6. Loss suffered due to reduction of number of rooms from 40 to 27. 5,00,000.00 5,97,684.31 7. Illegal imposition of penalty 1,65,000.00 1,60,000.00 8. Losses suffered due to procurement of materials by PTDC- breach of agreement. 2,00,000.00 - 9. Cost of development of approach not paid 2,50,000.00 2,53,200.00 10. Illegal deduction made towards cost of development of parking and retaining walls and lighting etc. in PTDC area. 1,00,000.00 - 11. Losses suffered due to illegal and arbitrary cancellation of perpetual collaboration agreement dated 28.10.1986. 1,35,00,000.00 2,94,30,000.00 12. Interest on all claims as admissible, late payments of running bill etc. under the provisions of the Arbitration and Conciliation Act, @ 24% p.a. - 4 1996 (26 of 1996) (pre-suit, pendente lite and future). 13. Cost of reference to Arbitration. 1,00,000.00 - The Managing Director, Punjab Tourism Development Corporation, Co-arbitrator rejected the claim of the petitioner and made an award in favour of respondent-corporation to the tune of Rs. 1,42,84,500.00. He has directed that the awarded amount will not fetch any interest in case the petitioner makes payment within three months, failing which the awarded amount would carry interest @ 12% per annum till the final payment of the amount to the respondent-corporation. Sh. Hardyal Gupta, co-arbitrator accepted the claims qua items No. 1, 2, 3, 4, 5, 7, 9, 11 and 12. He rejected the claim of the petitioner qua items No. 6, 8, 10 and 13. He rejected the counter claim of the respondent-corporation in its entirety. The Presiding Arbitrator agreed in principle with the award made by co- arbitrator i.e. Managing Director of the respondent-corporation and rejected the claim of the petitioner and while allowing the counter- claim, reduced the amount from Rs. 1,42,84,500/- to Rs. 87,61,500/-. Mr. P.C. Markanda, Senior Advocate has vehemently argued that counter-claim was barred by limitation. He further argued that the award made in favour of respondent-corporation is based on assumptions and speculations. He further contended that the counter-claim could not be awarded beyond the period of recession of contract. According to him, three separate awards have been made by the Arbitrators. The material documents were not produced on record. No liquidated damages could be levied after the extension of time. He then contended that the reasons have not 5 been assigned by the Arbitrators while disallowing claim of the petitioner and allowing the counter-claim filed by the respondent- corporation. He lastly supported the award made by Mr. Hardyal Gupta. Mr. Anil Kshetarpal, Advocate learned counsel appearing on behalf of the respondent-corporation has supported the award given by co-arbitrator and Presiding Arbitrator. He has also argued that the petitioner has neither led any evidence by way of affidavit nor placed any documents on record. I have heard the learned counsel for the parties and have perused the pleadings carefully. The agreement is dated 28.10.1986. The work was to be completed within 20 months. Extensions were granted by the corporation from time to time, however, the fact of the matter is that the agreement was rescinded on 14.6.1994. The petitioner appointed Arbitrator on 24.7.1996. The respondent-corporation appointed arbitrator on 27.8.1996. The petitioner approached this Court and the Court appointed Secretary Tourism to the State of Punjab as Presiding Arbitrator. The petitioner has not led any evidence by way of affidavit. The affidavit of Additional Managing Director of the Corporation was filed during the course of hearing before the learned Arbitrator. The parties have chosen to file written arguments. As noticed above in the opening part of the judgment, the co-arbitrator Sh. R.L. Kalsia has rejected the claim filed by the petitioner. He has allowed the counter claim preferred by the respondent-corporation to the extent of Rs. 1,42,84,500.00. Sh. Hardyal Gupta has accepted the claim item-wise as mentioned 6 hereinabove. However, he has rejected the counter-claim of the respondent-corporation. The Presiding Arbitrator has agreed with the award made by co-arbitrator Sh. R.L. Kalsia while rejecting the claim of the petitioner, however, while agreeing with the findings recorded by the co-arbitrator in principle, the Presiding Arbitrator reduced the counter-claim from Rs. 1,42,84,500/- to Rs. 87,61,500/- of the respondent-corporation. Mr. P.C. Markanda, Senior Advocate has vehemently argued that the counter-claim filed by the respondent-corporation was barred by limitation. According to him, the agreement stood rescinded on 14.6.1994 and the final payment was made on 22.11.1994. In this case, the Arbitrator was appointed by the petitioner on 24.7.1996. The respondent-corporation appointed the Arbitrator on 27.8.1996. The matter has come before this Court. This Court appointed Secretary Tourism to the State of Punjab as Presiding Arbitrator. The claim petition was filed by the petitioner on 14.1.2002. The statement of additional facts was filed on 8.5.2002. The reply-cum- counter claim was filed on 16.5.2002. The petitioner has not taken the ground of limitation as canvassed before this Court while filing reply to the reply-cum-counter claim filed by the respondent- corporation. Since the counter-claim was filed by the petitioner on 14.1.2002 and the counter-claim was filed within a period of five weeks, the same was within limitation. In view of this factual position the judgment i.e. 1995 (2) ALR-35, AIR 2008 HP (NOC) 1739 cited by Mr. Markanda is not attracted. Mr. Markanda has also argued that the award could not be made after the recession of the agreement. The agreement was 7 entered on 28.10.1986. It was rescinded on 14.6.1994. Initially, the petitioner had to construct 40 rooms but later on the rooms were reduced to 27. The petitioner had to provide necessary infrastructure, like bar, shopping arcade, indoor games, trekking and camping equipments etc. He had also to provide access road of the width of 15 feet. The respondent-corporation has claimed for business losses for not providing facilities like, bar, shopping arcade, indoor games, trekking and camping equipments etc. from 1.4.1994 to 30.4.2002. The corporation has claimed a sum of Rs. 47,61,500.00 for providing these facilities. The co-arbitrator has held that these facilities were required to be provided by the petitioner for attracting more tourists. According to him non-providing of these facilities has led to non-occupancy of 810 rooms. The Presiding Arbitrator agreed with the co-arbitrator and upheld the claim of Rs. 47,61,500/- payable to the respondent-corporation. The respondent- corporation has claimed a sum of Rs. 47,61,500.00 for non- sanctioning of mutation of 15 feet wide passage in favour of the corporation. The co-arbitrator has awarded a sum of 47,61,500/- in favour of the corporation. However, the Presiding Arbitrator has reduced the same and awarded a sum of Rs. 15,00,000/- for not entering the mutation in the name of respondent-corporation. The learned co-arbitrator has awarded a sum of Rs. 47,61,500.00 due to non-construction of parking area. The learned Presiding Arbitrator has reduced the same to a sum of Rs. 25,00,000.00. Consequently, a sum of Rs. 87,61,500.00 was awarded in favour of the corporation. The corporation has suffered looses by the action of the petitioner by not providing infrastructure 8 like, bar, shopping arcade, indoor games, trekking and camping equipments etc. from 1.4.1994 to 30.4.2002. In case these facilities had been provided, it would have brought more business to the corporation and improve the occupancy. Non-providing of passage to the corporation has also adversely effected the business of the respondent-corporation. Once the agreement has been entered into between the petitioner and the respondent-corporation, the mutation of 15 feet vide passage was to be made in favour of the corporation. It was necessary to have a passage for connecting the property in question. Since the passage was not provided the hotel could not run efficiently. The co-arbitrator has awarded a sum of Rs. 47,61,500.00 towards this claim. It has rightly been reduced by the Presiding Arbitrator to a sum of Rs. 15,00,000/-. Providing of parking area is must for attracting visitors and tourists. In case there is no provision of parking lot, visitors and tourists will not be attracted. It was incumbent upon the petitioner to construct the parking lot as per agreement dated 28.10.1986. The corporation has definitely suffered losses due to failure of the petitioner to provide parking lot. The co-arbitrator has awarded a sum of Rs. 47,61,500.00 to the respondent-corporation, however, the same has rightly been reduced to a sum of Rs. 25,00,000.00 by the Presiding Arbitrator. The learned co-arbitrator has assigned sufficient reasons while rejecting the claim of the petitioner and accepting the counter- claim of the respondent-corporation. He has dealt with all the items separately and given his findings. The Presiding Arbitrator also while agreeing with the learned co-arbitrator Sh. R.L. Kalsia has assigned cogent reasons. Accordingly, the plea of Mr. Markanda that the 9 award is non-speaking, merits rejection. There are sufficient reasons assigned by both the Arbitrators. The Court is of the considered view that allowing the counter- claim of the corporation is justifiable and there is no merit in the contention of Mr. Markanda that the same has been awarded after the recession of the contract. These were the consequences, which were bound to ensue after the recession of the contract, which had led to financial losses to the respondent-corporation. The ancillary submission of Mr. Markanda that these are speculations and estimation cannot be accepted. The party cannot take advantage of its own wrongs while contesting the genuine claim of the aggrieved party. In view of this, the ratio of judgments cited by Mr. Markanda i.e. AIR 1962 SC 1314 and AIR 1987 SC 418 is not attracted. Mr. Markanda has also argued that the final award is not signed by all the three Arbitrators. I have gone through the awards made by three Arbitrators. The first award made by Sh. R.L. Kalsia is signed. The second award made by Sh. Hardyal Gupta is also signed. The third award made by Presiding Arbitrator is also signed. The Presiding Arbitrator has also agreed so far as the rejection of the claim of the petitioner is concerned and has also agreed as far as the counter-claim of the respondent-corporation is concerned in principle. However, he has reduced the amount. In view of this, since the Presiding Arbitrator has also agreed with the award made by the co-arbitrator Sh. R.L. Kalsia, it was not necessary for all the three Arbitrators to sign the same jointly. The award made by the Presiding Arbitrator is the majority award and has to be given effect 10 to. Consequently, the ratio of the judgment cited by Mr. Markanda i.e. 2008 (4) Arb. LR-418 is not attracted. Mr. Markanda finally argued that certain documents asked for by his client have not been supplied to him. The application has been rejected by the majority on 20.8.2002. The majority has given the opinion that the documents asked for by the petitioner were already in his custody. Consequently, the rejection of the application was justified and the documents prayed for being in possession of the petitioner could not be directed to be supplied again. Accordingly, in view of the observations made hereinabove, there is no force in the petition and the same is dismissed. There shall, however, be no order to costs. (Rajiv Sharma), Judge 11.11. 2009. *awasthi*