1 pps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Arbitration Petition No.295 of 2010 Rajdhani Textiles Pvt. Ltd. .. Petitioners v/s. Tech Process Solutions Ltd. ..Respondents Mr.P.Sancheti, Ms. Aziza Khatri and Nirav Jani i/b. Hariani & Co. for the Petitioner Mr.Virag Tulzapurkar , Sr. Counsel with Ms. Somaya Srikrishna, Mr. Sachin Chanderana, Ms.Pramika Bhatia and Ms.Priyanka Vegad i/b. M/s.M.K.Ambalal & Co.for the Respondents CORAM : R.Y.GANOO, J. DATED : 7th April , 2010 P.C. : 1. Before the learned Arbitrator, the respondents were the claimants and the petitioners were the respondents. The petitioners had filed counter claim. By Award dated 26.9.2009, the respondents in this petition were held entitled to receive Rs.21,35,337/- and counter claim of the petitioners was dismissed. The respondents had received pending award, a sum of Rs. 25,00,000/- and that is how the respondents had with them a sum of Rs. 3,64,663/- in excess of their entitlement under the award. By the award the 2 respondents were directed to refund the said amount of Rs.3,64,663/- to the petitioners. 2. The Petitioners have challenged this award dated 26.09.2009 by filing this petition under Section 34 of the Arbitration and Conciliation Act (hereafter referred to as the said Act). The Respondents have filed their affidavit in reply opposing the admission. Petitioners have filed their rejoinder. 3. The Petition was taken up for admission. Learned Senior Counsel Mr.Virag Tulzapurkar appearing on behalf of the respondents submitted that on account of what transpired between the Petitioners and Respondents as regards the payment of Rs.3,64,663/- by the Respondents to the Petitioners after passing of the award and before admission of this petition is absolutely relevant and according to him the way in which the events have taken place it is clear that the Petitioners have accepted the award, accepted the sum of Rs.3,64,663/- and therefore they are not entitled to challenge this award. 4. This objection was considered as and by way of preliminary objection and hearing was afforded to both the learned Counsels. It is seen 3 that after passing of the award dated 26.9.2009 the respondents addressed a letter to the Advocate for the Petitioners being letter dated 6.10.2009 and forwarded the pay Order for Rs.3,64,663/- towards the full and final settlement of the amount due and payable by the Respondents to the Petitioners under the award. The said letter along with the cheque was received by the Petitioners and thereafter the Petitioners addressed a letter to the advocate for the Respondents being letter dated 10.10.2009 and acknowledged the receipt of said pay order and indicated their intention to challenge the award dated 29.9.2009 and also communicated to them that the pay order has been deposited without prejudice to the rights and contentions of the Petitioners. 5. My attention was drawn to the aforesaid two letters by learned Senior Counsel for the Respondents and it was submitted that the respondents had arranged to repay the amount as per the directions contained in the impugned award and if at all the Petitioners intended to receive the said amount without prejudice to their rights and contentions and with an intention to challenge the award they should have entered into communication to inform the respondents that they intend to deposit the amount without prejudice to the rights and contentions and intended to 4 challenge the award. According to learned Senior Counsel for the Respondents, the purport of the letter dated 10.10.2009 is that the Petitioners accepted the amount and thereafter thought of using the terminology “without prejudice to rights and contentions”. According to him this letter dated 10.10.2010 and use of terminology “without prejudice to the rights and contentions” was subsequent to the accepting the said amount of Rs.3,64,663/- as and by way of full and final settlement of the award dated 26.9.2009 in the light of the counter claim of the petitioners being rejected by the learned Arbitrator. In support of the aforesaid submission, the judgments (i) The Union of India v. Rameshwarlal Bhagchand, reported in AIR 1973 Gauhati 111 and (ii) Bhagwati Prasad Pawan Kumar v. Union of India, reported in (2006) 5 Supreme Court Cases 311 were relied upon. Learned Senior Counsel for the Respondents had drawn my attention to the relevant paragraphs of two judgments where the Supreme Court has laid down the proposition that if at all the acceptance is going to be conditional, the condition must be put first and then acceptance must be conveyed. According to the learned Senior Counsel for the Respondents, here is a case where monies were accepted first and thereafter conditions were put. According to Learned Senior Counsel this conduct on part of Petitioners shows that the Petitioners 5 accepted the award as a whole and therefore the Petitioners have no locus standi to challenge the said award. 6. Learned Senior Counsel for the Petitioners opposed the submissions and contended that the payment of Rs.3,64,663/- should not be considered by this Court as the payment made to the Petitioners towards putting an end to the entire matter which came up on account of the award passed on 26.9.2009 and that the said payment will have to be treated as having been done by the Respondents to comply with the award as regards repayment of the excess amount payable. He had submitted that the text of the letter dated 6.10.2009, and in particular the words “in full and final settlement of the amount due and payable by our client to your client under the award”, do not mean that the amount was repaid in full and final satisfaction of what was expected to be done in terms of award dated 26.9.2009. Learned Senior Counsel appearing on behalf of the Petitioners submitted the letter dated 10.20.2009 clearly states that the cheque would be deposited without prejudice to the rights and contentions. It was also suggested that the cheque was deposited on 12.10.2009 i.e. after despatching the letter dated 10.10.2009. It must be mentioned that at this juncture looking to the rival contentions, it may not be necessary for this Court to go into the question as 6 to date when the cheque was deposited in the bank. In my view, on the basis of the points raised before this Court, the Court will have to consider what was the intention of the parties in exchanging the correspondence, namely the Respondents sending their letter dated 6.10.2009 and the Petitioners replying to the said letter. In order to do this, one will have to refer to the operative part of the award and a reading of the operative part of the award goes to show that towards the claim put up by the respondents before the learned Arbitrator, the Respondents were entitled to receive Rs. 21,35,337/- which means they were obliged to return to the Petitioners sum of Rs.3,64,663/-. The Court will also have to note that the Counter claim of the Petitioners before the learned Arbitrator was rejected. This would mean that item No.1 and item No.3 of the operative part of the award will have to be read together and if at all the Petitioners get the sum of Rs. 3,64,663/-, the Petitioners were not entitled to receive anything more from the Respondents. Reading of the award shows that on receipt of Rs. 3,64,663/- from the Respondents the award would get satisfied and nothing more was required to be done by any of the parties to the arbitration. 7. Reading of letter dated 6.10.2009 it is clear that Respondents did not simply returned the sum of Rs.3,64,663/-. By sending pary order for Rs. 7 3,64,663/- they wanted to put an end to the matter i.e. nothing is to be done by the petitioners and respondents thereafter, and that is how the respondents have used the words in letter dated 6.10.2009 “under the award”. With this, one will have to look to the conduct of the petitioners. If at all the petitioners intend to challenge the award, it was open for the Petitioners not to accept the amount and inform the respondents that they do not wish to receive the said amount and they wish to press their claim before the appropriate forum by filing petition under Section 34. The Petitioners, instead of doing this received the said cheque, acknowledged the said cheque, took steps to deposit the said cheque in the bank and then manifested their intention to receive the amount without prejudice to their rights and contentions. These additional words put up in letter dated 10.10.2010 namely “without prejudice to their rights and contentions”, seems to be added without intention to challenge the award particularly because the petition under Section 34 of the said Act has been filed in December 2009. 7. If at all the Petitioners intend to challenge the award and raise various questions before the appropriate forum the text of Petitioners would have been different. They would have in the first place communicated to the 8 Respondents that they have a mind to challenge the award and they are receiving the aforesaid amount of Rs.3,64,663/- purely to see that the said amount does not remain with the respondents. A reading of the said award would go to show that the learned Arbitrators wanted the Respondents to repay the amount of Rs.3,64,663/- as the Respondents were not entitled to keep it with them as the said amount was received by them pending arbitration. This has also to be viewed alongwith the fact that Petitioners counterclaim was rejected. 8. In view of the aforesaid discussion, I am inclined to observe that the terms of letter dated 10.10.2009 would clearly indicate that the petitioners were not interested in challenging the award and they received the amount of Rs.3,65,663/- to put an end to the entire matter between the Petitioners and Respondents and to see that no further steps are taken in that behalf. Additional words in the letter dated 10.10.2009 were written without the intention to challenge the award. The arguments advanced by learned Senior Counsel for the Respondents in terms of two judgments will have to be accepted. In the present case the acceptance of the amount was first and then condition for acceptance was put subsequently. In view of the above discussion, the objection raised by the learned Counsel for the Respondents 9 is required to be accepted and if that be so, the petition cannot be gone into merits for the purpose of its admission and to that extent the petition will have to be rejected. 9. For the reasons mentioned aforesaid, the challenge put up by the Petitioner to the impugned award dated 26.09.2009 cannot be considered in this petition under Section 34 of the Arbitration and Conciliation Act. ORDER Petition is rejected at the stage of admission. [R.Y.GANOO, J.]