IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.12.2011 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MS. JUSTICE R.MALA O.S.A.No.409 of 2009 Union of India Department of Tele Communications Now BSNL, represented by its AGM Office of Principle G.M. Alagesan Road, Coimbatore-641 011. .. Appellant Vs. 1.Tribhovandas Vendravan and Brothers Rep. by Mr.Kanaklal Abaichand Coimbatore-641 001. 2.Mr.Justice E.Padmanabhan (Retd.) Sole Arbitrator. .. Respondents Original Side Appeal filed under Order XXXVI Rule 1 of C.S. Rules read with clause 15 of Letters Patent, against the order dated 03.12.2008 made in O.P.No.568 of 2007. For Appellant : Mr.K.R.Ramesh Kumar For Respondents : Mr.M.S.Krishnan, senior counsel for M/s. Sarvabhauman Associates for 1st respondent JUDGMENT R.MALA,J. This Original Side Appeal arises out of the order dated 03.12.2008 made in O.P.No.568 of 2007 filed under Section 34 of the Arbitration and Conciliation Act, 1996, confirming the award passed by the learned Arbitrator on 01.10.2006 granting the relief to the first respondent by directing the Appellant/Petitioner to pay a sum of Rs.61,45,000/- with interest at the rate of 15% per annum from 29.04.2000 on the said amount of Rs.61,45,000/- till the date of award and thereafter, at 12% per annum till the date of payment and to pay a sum of Rs.1,50,000/- towards costs. https://hcservices.ecourts.gov.in/hcservices/ 2.First respondent herein as Claimant, is a registered partnership firm and the owner of the premises bearing D.No.184, Tiruchirapalli Road, Coimbatore-45. The first respondent/Claimant leased out the said building to the Appellant/Petitioner herein 40 years back and the said lease was renewed from time to time. The last of the renewals was on 01.04.1996 on a monthly rent of Rs.65,000/- for a period of three years. The leased premises consisted of ground and first floor of an extent of 2,455 sq.mtrs. (i.e.) 26,734.5 sq.ft. 3.It is also an admitted fact that on 28.02.1998, the entire building was gutted by fire. Considering the damage caused, the Fire Service Department estimated the claim at Rs.1.32 crores and the fire accident was stated to be as a result of electrical short circuit. As per the terms of the lease deed, the first respondent called upon the petitioner to surrender the premises as agreed upon, in as good a condition as it was leased out. Considering the damage caused and the failure to intimate the first respondent about getting second service connection, which was a cause for the fire accident, the first respondent filed a suit in O.S.No.370 of 1998 on the file of the District Munsif Court, Coimbatore, for a declaration that the lease was frustrated on account of negligence and also for an injunction restraining the Appellant/Petitioner herein from in any manner altering the physical features or removing any of the building materials. 4.A Commissioner was appointed and he assessed the damages caused to the tune of Rs.53,00,000/- and the cost of reconstruction was fixed at Rs.1.10 crores and the suit in O.S.No.370 of 1998 has ended in favour of the first respondent herein. Thereafter, first respondent/Claimant again issued a notice to the Appellant/Petitioner to pay the damages as per the Commissioner's valuation. On 29.04.2000, the first respondent called upon the Appellant/Petitioner to refer the matter for arbitration and the Court appointed the learned Arbitrator herein to go into the dispute between the parties. Learned Arbitrator after considering the claim and reply statements and also oral and documentary evidence, framed issues 1 to 11 and granted the award as stated above, against which, the Appellant/Tenant herein as a petitioner filed a petition in O.P.No.568 of 2007 under Section 34 of the Arbitration and Conciliation Act. The learned Single Judge after considering the relevant documents and materials on records, confirmed the award passed by the learned Arbitrator, against which, the present O.S.A. has been preferred. 5.Learned counsel for the Appellant/Petitioner would submit that the accident was occurred due to the act of God. There is no negligence or carelessness on the part of the Appellant herein. The learned Arbitrator has not considered the fact that due to the fire https://hcservices.ecourts.gov.in/hcservices/ accident, appellant is out of the possession of the property and hence, the Appellant/Petitioner herein is not liable to pay a sum of Rs.8,45,000/- being the loss of rental income for the unexpired period of lease. He further submitted that the first respondent herein filed a suit for declaration on the lease, which stood frustrated on account of negligence on the part of the Appellant/Petitioner herein. In such circumstances, first respondent herein is not entitled to that amount of Rs.8,45,000/-. Hence he prayed for setting aside the order as well as the award passed by the learned single Judge and the learned Arbitrator respectively. 6.Resisting the same, Mr.M.S.Krishnan, learned senior counsel, would submit that the learned Arbitrator after considering the claim statement, reply statement and rejoinder of the claimant/first respondent and oral & documentary evidence framed 11 issues and came to the correct conclusion that the accident not occurred due to the act of God. But the learned Arbitrator has held that the fire accident has been occurred by the negligence of the petitioner/tenant, without any consent, he has obtained additional connection, which lead to fire accident. Appellant/Petitioner had not taken any safety measures and he had not intimated about the bad wiring and hence he came to the correct conclusion that the fire accident was occurred only due to the negligence on the part of the Appellant/Petitioner/Tenant and that has been confirmed by the learned Single Judge. A Commissioner was appointed in O.S.No.370 of 1998 on the file of the District Munsif Court, Coimbatore. Since none has filed objection, learned Arbitrator on the basis of the Commissioner's report awarded the damage as Rs.53,00,000/- and a sum of Rs.8,45,000/- being the loss of rental income for the unexpired period of lease, which was confirmed by the learned Single Judge in her judgment. He further submitted that in pursuance of the decision reported in (2006) 11 SCC 181 (McDermott International Inc. v. Burn Standard Co. Ltd. and others), the arbitral award can be set aside, only if it is patently illegal or arbitrary, such patent illegality, however, must go to the root of the matter, unless the error of law is patent on the face of the award. Award is not perverse. He would further submit that both the learned Arbitrator as well as learned Single Judge have considered both oral and documentary evidence, came to the correct conclusion and their order is not suffered by any perversity. Therefore, he prayed for the dismissal of the appeal. 7.Considered the rival submissions made on both sides and scrutinising the materials on record. 8.Admitted facts are the first respondent/claimant, is a registered partnership firm and owner of the premises and leased out the premises to the Appellant/Petitioner herein. The building https://hcservices.ecourts.gov.in/hcservices/ was around 60 years old at the time of fire accident. Admittedly, the lease was renewed from time to time. On 01.04.1996, the last renewal of the lease for a period of three years on a monthly rent was Rs.65,000/-. The lease hold premises consisted of ground and first floor with an extent of 2,455 sq.mtr. (i.e.) 26,734.5 sq.ft. It is also an admitted fact that there was a fire accident on 28.02.1998 at 11.56 a.m. On the basis of the complaint given by one of the staff Parameshwaran, the case has been registered in Crime No.B7, Law and order, CrP.176/1998. In the F.I.R, it was specifically mentioned that cause of the fire accident was reported to a short circuit in the electrical wires while cleaning with long sticks were done. Hence the Fire is due to the Electrical Short Circuit and no causalities were involved. It would clearly show that due to electrical short circuit that fire accident has been occurred. Immediately, first respondent herein filed a suit in O.S.No.370 of 1998 on the file of the District Munsif Court, Coimbatore, against the Appellant/Petitioner herein for the following reliefs: "a) declaring that the lease between the plaintiff and the defendant in respect of the suit property stands frustrated and terminated on account of destruction of the material portion of the leasehold building fully described below in the schedule due to the fire caused due by the negligence on the part of the defendants on 28.02.1998 and grant consequently a permanent injunction restraining the defendant, their men and agents from in any way altering the physical features of the suit property either by putting up construction or otherwise. b) granting a permanent injunction restraining the defendant and their men and agents from removing any of the building materials which are now lying on the suit property. " 9.In the above suit, a Commissioner was appointed and inspected the property along with the Surveyor and filed a report. Since none has filed any objection, the suit was decreed exparte. As per the report given by the Fire Service Department, damages were estimated at Rs.1.32 crores, which finds place in page-7 of the typed set of papers. Thereafter, the first respondent herein filed a claim statement claiming Rs.1,10,00,000/- with interest at the rate of 18% per annum from the date on which notice was issued till payment. Appellant was also filed reply statement and rejoinder was also filed by the first respondent. First respondent herein also filed an additional claim statement claiming Rs.8,45,000/- as loss of rental income. After considering the arguments of both sides and considered the evidence of C.W.1, R.W.1 to R.W.3 and documents C1 to C13 and R1 to R34, learned Arbitrator has raised 11 issues. In his award, the learned Arbitrator https://hcservices.ecourts.gov.in/hcservices/ discussed the evidence in paragraphs-31 to 37 and came to the conclusion that the accident was not occurred due to act of God and that has been confirmed by the learned Single Judge in para-9 to 18 of her judgment and came to the conclusion that the accident has occurred only due to the negligence on the part of the Appellant/Petitioner in not maintaining the property with proper safety measures. In the said judgment, the learned Single Judge has stated that the learned Arbitrator held that the electricity leakage and electrical short circuit was caused by cross contact of electrical wires by the house keeping staff engaged in the day just before the fire broke out and this clearly pointed out to an act of negligence. The learned Arbitrator has also held that the Appellant/Petitioner is being a Government of India establishment, failed to follow even the minimum safety standards prescribed for public companies; that there was obvious negligence on the part of the Appellant/Petitioner in following the safety measures as a prudent officer. So the evidence of R.W.1 and R.W.2 and the documents namely, the report of the fire squad as well as First Information Report, clearly indicate short circuit as the main cause. Hence we do not find any infirmity or perversity in the findings given by the learned Arbitrator as well as learned Single Judge that the fire accident has occurred only due to the negligence on the part of the Appellant/Petitioner in maintaining proper safety measures. 10.As per the F.I.R., value of the property was not mentioned, but whereas the report issued by the Director of Fire Services, Coimbatore on 28.02.1998, value of the damage is Rs.1.32 crores. It is appropriate to consider the report filed by the Commissioner, who assessed the value of the damage as Rs.53,00,000/- and the costs of reconstruction of a building as Rs.1,10,00,000/-. Considering documents C7 and C8, copies of Commissioner's Report and Inspection Report respectively, learned Arbitrator came to the conclusion that even though reconstruction of the building was estimated at Rs.1,10,00,000/-, but expert assessed the value of damage at Rs.53,00,000/- and hence, awarded Rs.53,00,000/- towards damage and that has been confirmed by the learned Single Judge in para-21 of her order. So we do not find any perversity in the findings by awarding Rs.53,00,000/- towards damages. Hence we hereby confirm and concur with the findings that the first respondent is entitled to Rs.53,00,000/- as damages for the building. 11.Learned counsel appearing for the Appellant would forcefully argue that both the learned Arbitrator and learned Single Judge have erroneously awarded Rs.8,45,000/- as loss towards rental income for unexpired portion of lease. The first respondent himself filed a suit in O.S.No.370 of 1998 on the file of the District Munsif Court, Coimbatore, for declaration that the lease is frustrated and terminated on account of destruction of the https://hcservices.ecourts.gov.in/hcservices/ material portion of the leasehold building due to the fire caused by the negligence on the part of the Appellant/Petitioner on 28.02.1998 and consequently, for an injunction. Since he himself sought for a declaration for frustration and termination of lease deed, he is not entitled to any loss of rental income. Therefore, he prayed for setting aside the findings given by the learned Arbitrator as well as learned Single Judge. 12.As per the dictum laid down in (2001) 8 SCC 482 (Maharashtra State Electricity Board v. Sterilite Industries (India) and another), unless the findings of the Arbitrator as well as the learned Single Judge suffers from any irregularity or error of law is patent on the face of the award or finding is perverse, then only the Court would interfere with the award of the learned Arbitrator as well as the order of the learned Single Judge. In such circumstances, it is appropriate on the part of this Court to consider the order passed by the learned Arbitrator as well as the learned Single Judge. The learned Arbitrator in his award in para-81 held that the monthly rent as per the lease deed under Ex.C2 is Rs.65,000/- per month and that lease was entered into between them from 01.04.1996 to 31.03.1999. But the fire accident was occurred on 28.02.1998. From 01.03.1998 to 31.03.1999, first respondent is entitled to the loss of rental income and that has been awarded in para-99 as Rs.8,45,000/- being the loss of rental income for the unexpired portion of lease. That aspect has been considered and confirmed by the learned Single Judge in her judgment in para-22 and 23 and held that the lease commencing from 01.04.1996, Appellant/Petitioner would have continued to pay rent till 31.03.1999. Due to the fire accident, the first respondent has suffered loss of rental income for 13 months. Hence the loss was calculated as per the rent agreed by the Appellant, which comes to 8,45,000/-. It is true, in the Civil Court, Appellant herein obtained an exparte decree for declaration that the lease is frustrated and terminated on account of destruction of the material portion of the leasehold building, which will not determine the right of the first respondent to claim rental income, damages, since the fire accident occurred due to the negligence on the part of the Appellant/Petitioner herein. Hence the learned single Judge considered this aspect and came to the correct conclusion that the first respondent is entitled to Rs.8,45,000/- towards loss of rental income for unexpired period of lease and that has been confirmed by the learned Single Judge. So we do not find any reason warranting interference with the findings of the learned Single Judge and hence, we hereby confirm the order passed by the learned Single Judge. https://hcservices.ecourts.gov.in/hcservices/ 13.In the result, confirming the order dated 03.12.2008 made in O.P.No.568 of 2007, this Original Side Appeal is dismissed with costs. Consequently, connected Miscellaneous Petitions are closed. kj Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar To The Sub Assistant Registrar, Original Side, High Court, Madras. + 1 cc to M/s. Sarvabhauman Associates, Advocate SR No.76549 + 1 cc to M/s. K.R. Ramesh Kumar, Advocate SR No.76177 MP(CO) SR/11.1.2012 Judgment made in O.S.A.No.409 of 2009 https://hcservices.ecourts.gov.in/hcservices/