Delhi High Court
Sahib Sital Singh Bajwa And Ors vs Aakash Educational Service Limited And … on 7 August, 2025
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 30.07.2025
Judgment pronounced on: 07.08.2025
+ FAO (COMM) 197/2025, CM APPL.46101/2025 (for
exemption), CM APPL.46102/2025 (for delay of 360 days in
refilling the Appeal) & CM APPL.46103/2025 (for stay)
SAHIB SITAL SINGH BAJWA AND ORS. .....Appellants
Through: Mr. Manoj Chandra Mishra and
Ms. Pratibha Dwivedi,
Advocates.
versus
AAKASH EDUCATIONAL SERVICE LIMITED AND ANR.
.....Respondents
Through: Nemo.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Appeal under Section 37 of the Arbitration and
Conciliation Act, 19961 and Section 13 of the Commercial Courts
Act, 2015 raises a challenge to Order dated 19.04.20242 passed by
learned District Judge (Commercial Court-01), District South, Saket
Courts, New Delhi, in OMP (Comm.) No. 33/2023, in a Petition under
Section 34 of the A&C Act, titled as Sahib Sital Singh Bajwa & Ors.
v. Aakash Educational Services Ltd. & Anr., confirming the Award
dated 09.02.2023 and correction Order dated 06.03.2023 passed by the
1
A&C Act.
2
Impugned Order
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By:HARVINDER KAUR
BHATIA
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learned Sole Arbitrator in Arbitration Case No. 06/07/2020.
2. Shorn of all details, the present Appeal is premised on the
pointed contention that the Impugned Order is liable to be set aside on
the ground that it failed to consider the significant fact of the Award
having been pronounced after a considerable delay.
CONTENTIONS OF THE APPELLANTS:
3. Learned counsel for the Appellants contends that the
jurisdiction of arbitration was invoked on 23.05.2020 and that the
Tribunal was thereafter constituted on 29.06.2020. It is submitted that
Section 29A of the A&C Act stipulates that the entire arbitral
proceedings ought to have been concluded within a period of one year.
However, in the present case, the proceedings have taken almost two
and a half years to conclude, without any extension or permission
having been sought from the Court. It is, therefore, submitted that the
Award stands vitiated, having been rendered in violation of the
express provisions of Section 29A of the A&C Act.
4. During the course of arguments, the Bench drew the attention of
the learned counsel for the Appellants to the Order dated 10.01.2022
passed by the Hon’ble Supreme Court in Cognizance for Extension of
Limitation, In re3, whereby the time period under Section 29A of the
A&C Act was expressly suspended by the Hon’ble Supreme Court.
The relevant excerpt from the aforesaid Order dated 10.01.2022 is as
follows:
5 (IV). “It is further clarified that the period from 15.03.2020 till
28.02.2022 shall also stand excluded in computing the periods
prescribed under Sections 23 (4) and 29A of the Arbitration and
Conciliation Act, 1996, Section 12A of the Commercial Courts Act,
2015 and provisos (b) and (c) of Section 138 of the Negotiable
Instruments Act, 1881 and any other laws, which prescribe
3
(2022) 3 SCC 117.
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BHATIA
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period(s) of limitation for instituting proceedings, outer limits
(within which the court or tribunal can condone delay) and
termination of proceedings.”
(Emphasis supplied)
5. Learned counsel for the Appellants, upon a perusal of paragraph
5 of the aforesaid order, sought leave to withdraw the present Appeal,
albeit with a caveat that liberty be reserved in favour of the Appellants
to suitably amend and re-present the Appeal under Section 37 of the
A&C Act.
6. This Court, by that time, had already heard the learned counsel
for the Appellants at considerable length and was of the opinion that
the matter can be heard and decided.
7. Apart from the point of limitation; the challenge to the
Impugned Order and the Award rested primarily on the contention that
the underlying contract was itself unenforceable and contrary to the
express provisions of the Indian Contract Act, 1872.
8. Learned counsel for the Appellants further submitted that the
terms and conditions of the Contract were ex facie one-sided, and as a
consequence, the performance thereof imposed an undue and onerous
burden upon the Appellants, culminating in substantial losses. It was,
thus, urged that, on this ground as well, both the Impugned Order and
the Award warranted interference and ought to be set aside.
9. Learned counsel for the Appellants also made a categorical
statement that the evidence which has been rendered by the Appellants
has not been taken into consideration while passing the Award as well
as the Order impugned herein.
10. Learned counsel for the Appellants further submitted that the
period affected by the COVID-19 pandemic constituted a “Force
Majeure” event, and yet, no benefit or consideration in respect thereof
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BHATIA
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had been extended to the Appellants in any manner whatsoever.
11. We have heard the learned counsel for the Appellants and
carefully perused the contents of the Arbitral Award, the impugned
Judgment, and the pleadings along with the documents annexed in
support thereof.
ANALYSIS:
12. While examining the issues contended in this appeal under
Section 37 of the A&C Act, we remain mindful of the Hon’ble
Supreme Court’s rulings that limit judicial interference in arbitral
proceedings have an extremely narrow scope. In a recent judgment, in
the case of Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice
Mills4, the Hon’ble Supreme Court summarized the settled position as
follows:
“11. Section 37 of the Act provides for a forum of appeal inter-alia
against the order setting aside or refusing to set aside an arbitral
award under Section 34 of the Act. The scope of appeal is naturally
akin to and limited to the grounds enumerated under Section 34 of
the Act.
12. It is pertinent to note that an arbitral award is not liable to be
interfered with only on the ground that the award is illegal or is
erroneous in law that too upon reappraisal of the evidence
adduced before the arbitral trial. Even an award which may not be
reasonable or is non-speaking to some extent cannot ordinarily be
interfered with by the courts. It is also well settled that even if two
views are possible there is no scope for the court to reappraise the
evidence and to take the different view other than that has been
taken by the arbitrator. The view taken by the arbitrator is
normally acceptable and ought to be allowed to prevail.
13. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K. Ahuja, it
has been observed as under:
“11. There are limitations upon the scope of interference in
awards passed by an arbitrator. When the arbitrator has
applied his mind to the pleadings, the evidence adduced
before him and the terms of the contract, there is no scope for
the court to reappraise the matter as if this were an appeal
and even if two views are possible, the view taken by the4
2024 SCC OnLine SC 2632
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BHATIA
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arbitrator would prevail. So long as an award made by an
arbitrator can be said to be one by a reasonable person no
interference is called for. However, in cases where an
arbitrator exceeds the terms of the agreement or passes an
award in the absence of any evidence, which is apparent on
the face of the award, the same could be set aside.”
14. It is equally well settled that the appellate power under Section
37 of the Act is not akin to the normal appellate jurisdiction vested
in the civil courts for the reason that the scope of interference of
the courts with arbitral proceedings or award is very limited,
confined to the ambit of Section 34 of the Act only and even that
power cannot be exercised in a casual and a cavalier manner.
15. In Dyna Technology Private Limited v. Crompton Greaves
Limited, the court observed as under:
“24. There is no dispute that Section 34 of the Arbitration Act
limits a challenge to an award only on the grounds provided
therein or as interpreted by various courts. We need to be
cognizant of the fact that arbitral awards should not be
interfered with in a casual and cavalier manner, unless the
court comes to a conclusion that the perversity of the award
goes to the root of the matter without there being a possibility
of alternative interpretation which may sustain the arbitral
award. Section 34 is different in its approach and cannot be
equated with a normal appellate jurisdiction. The mandate
under Section 34 is to respect the finality of the arbitral
award and the party autonomy to get their dispute
adjudicated by an alternative forum as provided under the
law. If the courts were to interfere with the arbitral award in
the usual course on factual aspects, then the commercial
wisdom behind opting for alternate dispute resolution would
stand frustrated.
25. Moreover, umpteen number of judgments of this Court
have categorically held that the courts should not interfere
with an award merely because an alternative view on facts
and interpretation of contract exists. The courts need to be
cautious and should defer to the view taken by the Arbitral
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity unpardonable
under Section 34 of the Arbitration Act.”
16. It is seen that the scope of interference in an appeal under
Section 37 of the Act is restricted and subject to the same grounds
on which an award can be challenged under Section 34 of the Act.
In other words, the powers under Section 37 vested in the court of
appeal are not beyond the scope of interference provided under
Section 34 of the Act.
17. In paragraph 14 of MMTC Limited v. Vedanta Limited, it has
been held as under:
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BHATIA
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“14. As far as interference with an order made under Section
34, as per Section 37, is concerned, it cannot be disputed that
such interference under Section 37 cannot travel beyond the
restrictions laid down under Section 34. In other words, the
court cannot undertake an independent assessment of the
merits of the award, and must only ascertain that the exercise
of power by the court under Section 34 has not exceeded the
scope of the provision. Thus, it is evident that in case an
arbitral award has been confirmed by the court under
Section 34 and by the court in an appeal under Section 37,
this Court must be extremely cautious and slow to disturb
such concurrent findings.”
18. Recently a three-Judge Bench in Konkan Railway Corporation
Limited v. Chenab Bridge Project Undertaking referring to MMTC
Limited (supra) held that the scope of jurisdiction under Section 34
and Section 37 of the Act is not like a normal appellate jurisdiction
and the courts should not interfere with the arbitral award lightly
in a casual and a cavalier manner. The mere possibility of an
alternative view on facts or interpretation of the contract does not
entitle the courts to reverse the findings of the arbitral tribunal.
***
CONCLUSION:
20. In view of the above position in law on the subject, the scope of
the intervention of the court in arbitral matters is virtually
prohibited, if not absolutely barred and that the interference is
confined only to the extent envisaged under Section 34 of the Act.
The appellate power of Section 37 of the Act is limited within the
domain of Section 34 of the Act. It is exercisable only to find out if
the court, exercising power under Section 34 of the Act, has acted
within its limits as prescribed thereunder or has exceeded or failed
to exercise the power so conferred. The Appellate Court has no
authority of law to consider the matter in dispute before the
arbitral tribunal on merits so as to find out as to whether the
decision of the arbitral tribunal is right or wrong upon reappraisal
of evidence as if it is sitting in an ordinary court of appeal. It is
only where the court exercising power under Section 34 has failed
to exercise its jurisdiction vested in it by Section 34 or has
travelled beyond its jurisdiction that the appellate court can step in
and set aside the order passed under Section 34 of the Act. Its
power is more akin to that superintendence as is vested in civil
courts while exercising revisionary powers. The arbitral award is
not liable to be interfered unless a case for interference as set out
in the earlier part of the decision, is made out. It cannot be
disturbed only for the reason that instead of the view taken by the
arbitral tribunal, the other view which is also a possible view is a
better view according to the appellate court.
21. It must also be remembered that proceedings under Section 34
of the Act are summary in nature and are not like a full-fledged
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By:HARVINDER KAUR
BHATIA
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regular civil suit. Therefore, the scope of Section 37 of the Act is
much more summary in nature and not like an ordinary civil
appeal. The award as such cannot be touched unless it is contrary
to the substantive provision of law; any provision of the Act or the
terms of the agreement.”
13. This Court finds it apposite to extract the relevant paragraphs
from what is, indubitably, an extremely detailed and well-reasoned
Award, as follows:
“ISSUE WISE ADJUDICTION
44. Before I adjudicate issue Nos. (1) and (2), it would to
appropriate to adjudicate issue No.3. Issue No.3
Whether the contrar.t was terminated by the Claimant or the
Respondent exited from the same? OPP
45. The relevant Article in the contract that deals with
„termination‟ and „exit‟ are reproduced hereinbelow:
ARTICLE# 5
DEFAULT
5.1 If the franchisee violates any of the terms and conditions
mentioned in the franchise agreement, the company shall be fully
competent to terminate the franchise agreement.
5.2 The consequence of any of the following events/acts shall
continue good cause for the Company to act at its option and
without prejudice to any other rights or remedies provided for here
under or in law or equity, to terminate without compensation to the
Franchisee this Agreement by notice in writing to the Franchisee,
such notice to expire at such date as the company may in its
absolute discretion determine:
(a) ….
(b) If the Franchisee defaults in payment of dues. or in the
payments of any other dues to the Company or in collection
of course fees and/ or deposit of such collection into the
designated bank account, within a period decided by the
company under or pursuant to this Agreement or as a result
of the operation of this
Agreement.
(c) If the Franchisee ceases to conduct the franchisee centre
at the address mentioned in agreement or loses its right to
the possession/ use of the premises in which the franchisee
centre is located.
(d) xxxxxx ……. .
(q) ~
5.3. The Company may, in its absolute discretion and without
prejudice to its rights to terminate, condone or compound any
breach or breaches by the Franchisee, seek and require immediate
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By:HARVINDER KAUR
BHATIA
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rectification of the concerned breach or breaches where the same
are capable of remedy together with payment of damages to the
Company which shall be assessed by the Company and be binding
on the Franchisee and within such time as the Company
prescribes;
Provided that until the breach or breaches are remedied and
further until the damages referred in the preceding clause are
paid, the Franchisee shall not be entitled to seek and the Company
shall be entitled to suspend fulfilment of Company‟s obligations
provided for under this agreement.
And provided that during the period contemplated under the
preceding clause, the Franchisee shall not register students to any
of the courses and not conduct classes at the franchisee centre.
And provided further that the Company shall be entitled to take
over the administration and premises of the said franchisee centre
and/ or appoint any other party to operate the franchisee centre
with immediate effect with no obligation to compensate the
Franchisee in any manner or to seek the Franchisee‟s
concurrence.
5. 4 xxxxxxxx
5.5. EXIT CLAUSE
a) In case, the franchisee, under compelling circumstances
wishes to make an exit from the agreement, it should do so
when all the courses for a particular session have been
completed. In such a case, the franchisee shall be required
to:
(i) Give a notice to the company in writing of its
intention to make an exit from the agreement at least
6 months before making such exit.
(ii) Discharge the full consideration of the franchisee
fees as agreed and make all balance payments to the
company due on that account and all other
outstanding due payable to the company.
b) However, In any case, if the franchisee wishes to make an
exit from the agreement in mid-session, it will have to
compensate the company as follows: –
(i) A sum of Rs. 15 lacs (Rupees Fifteen Lacs Only) as
compensation for business loss and damage to
company’s brand caused by such exit.
(ii) Pay 1 00% of the gross fee received for the number
of students enrolled at the centre minus service charges
paid to company.
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By:HARVINDER KAUR
BHATIA
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(iii) The full consideration of the franchisee fees as
agreed and make all balance payments to the company
if any due on that account and all other outstanding
dues payable to the company.
c) In the event that this Agreement is terminated for any
breach by the Franchisee as provided herein, the Company
shall be entitled to the following: –
(i) ·A sum of Rs. 15 lacs (Rupees Fifteen Lacs Only) as
compensation for business loss and damage to
company’s brand caused by such termination.
(ii) The full consideration of the franchisee fees as
agreed and make all balance payments to the company
if any due on that account and all other outstanding
dues payable to the company.”
(Emphasis supplied)
46. From the forgoing clauses of the contract, it is clear that in
case the Respondents exit, clauses (a) and (b) of Article 5.5, as the
case may be, triggers in. While in case the Claimant has
terminated the agreement, Cause (c) of Article 5.5 triggers in. The
case of the Claimant is that the Respondents terminated the
contract in terms of the letter dated 08.05.2020. Emphasis is laid
on the following sentence in the said letter, “sir, by your actions,
conduct and behaviour towards Pathankot centre, the Aakash
Institute, Pathankot Centre stands closed”. According to the
learned counsel for the Claimant ‘closure’ actually means final
closure i.e. end of the contract and its termination. His submission
is that although by letter dated 25.02.2020, the Claimant intimated
to the Respondent that it shall be withdrawing all its services to the
Respondent on account of non -payment of dues and that the
Respondent would also not be entitled to register any new students.
It is argued that in reality, the Claimant had not stopped its
services. Even otherwise, the Claimant vide its letter dated
17.4.2020 expressly took a decision and communicated to the
Respondent that it was restarting all support and services to it
(except enrolment of new students), subject to the assurance that
due payments would be made after the lockdown due to COVID 19
Pandemic.
47. Reference to emails exchanged between 14.4.2020 till
21.4.2020 would show that there was no. deficiency in support
being given to the Respondent. By the letter dated 5.5.2020 of the
Respondents even said that the Academic Session Planner phase II
was not required for the Pathankot centre. The Learned Counsel
for the Claimant places reliance on (200.5) 11 SCC 73 to show
how the contract can be said to be repudiated. ·
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By:HARVINDER KAUR
BHATIA
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48. On the other hand the Learned Counsel for the Respondent
relies upon the correspondence between the parties to show that
the Claimant had in fact stopped support and by it’s letter dated
11.05.2020 categorically terminated the contract by invoking
Article 5 of the Agreement between the parties. First, the claimant
withdrew the support and services by letter dated 25.02.2020 and
later terminated the contract vide letter dated 11.5.2020. In fact,
vide email dated 26.02.2020 made an earnest request to the
Claimant not to stop the support and allow admissions. Vide
emails dated 03.003.2020, 04.03.2020 and 05.03.2020 of the
Respondent shows that the Respondent was keen to continue the
Centre as it pleaded and requested the Claimant not to withdraw
support and allow it to admit students. All this according to the
Respondent shows that the Respondent wanted to run the Centre
and never exited from it. But the Claimant remained rigid on its
stand and directed the Respondent not to take admission even after
the lock-down vide email dated 21.04.2020.
49. I have carefully gone through the correspondence between the
parties, particularly letters dated 25.02.2020 and 11.5.2020, of the
Claimant. The email dated 08.05.2020 of the Respondent and the
other mails exchanged between the parties. Had the Claimant
understood that the respondent had ‘exited’ the contract then there
was no need for the Claimant to have expressly used the word,
“hereby terminates the Franchisee Agreement dated 30th June
2016 executed between you, the Franchisee and the Company with
immediate effect.” In its letter dated 11.05.2020. It would be
relevant to reproduce the said letter hereunder.
“Without Prejudice
Through Speed Post I e-Mail
May 11, 2020
To, Mls Paramount Learning Solutions
A partnership firm,
Registered Office at: VPO- Jug ail,
Tehsil & Distt. Pathankot, Punjab.
Through its partners:
1. Mr. Sahib Sital Singh Bajwa
Slo Mr. Gunnail Singh,
Rio: Village Jandrai, PO-Ranipur,
Tehsil & District- Pathankot.
2. Srnt. Renu Sharma
wlo Sh. Davinder Pal Sharma,
Rio: PO- Jugail,
Tehsil & Distt. Pathankot,
Punjab.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
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(Collectively referred as ”Franchisee”)
Also at:
1st & 2nd Floor, Above Axis Bank,
Patel Chowk, Saili Road,Pathankot, Punjab
May 11,2020
Subject: Termination of Franchise Agreement dated 3oth
June, 2016 (”AAKASH INSTITUTE/ AAKASH IIT-JEE”)
between Aakash Educational Services Ltd. and Mls
Paramount Learning Solutions to run the franchise coaching
centre at 151 & 2nd Floor, above Axis Bank, Patel Chowk,
Salll Road, Pathankot, Punjab 145001.
Ref.: Your e-mail dated 8th May 2020, where in you have
mentioned that Pathankot centre stands closed.
Dear Mr. Sahib Sital Singh Bajwa & Smt. Renu Sharma,
At the outset, this is to inform you that abrupt closing of
Pathankot Franchisee Centre, as informed by you via e-mail
dated 81h May, 2020, is arbitrary, illegal & against the
agreed terms of Franchise Agreement dated 3oth June, 2016.
Please be informed that vide Franchise Agreement dated
30th June 2016 [For XII Boards,
Medical/IITJEE/Engineering. Entrance Exams] you are not
allowed to close the centre and abruptly suspend the classes
without even talking and discussing with Aakash Educational
Services Limited and thereby you have put the career of
innocent students at stake.
1. You the Franchisee being desirous of coaching students
appearing in XII Board, Medical, IIT-JEE/ Engineering
Entrance Examinations approached Aakash Educational
Services Limited (Formerly Aakash Educational Services Pvt.
Ltd.,· hereinafter referred to as “Company? for
permission/license to launch coaching centre in the name and
style of ”AAKASH INSTITUTE! AAKASH IIT-JEE” for the
coaching of Medical/ Engineering students. On your
representation, Company agreed and allowed you to run the
centre at the space available with you. Accordingly, a
franchise agreement was duly executed on 30th June, 2016
between you, the franchisee & Company wherein Company
agreed and allowed you to nm the coaching centre in the
name and style of “AAKASH INSTITUTEIAAKASH IIT-JEE”
at 1st & 2nd Floor, Above Axis Bank, Patel Chowk, Saili
Road, Pathankot, Punjab-145001 at your cost and expenses
for imparting coaching to students appearing in XII board,
Medical/IIT-JEE/Engineering Entrance Examination initiallySignature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
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for a period of 5 years commencing from 30th June, 2016 till
29th June, 2021 (Refer Annexure A). Franchise agreement
was duly signed by both the parties and both the parties
mutually agreed to be abide by the terms and conditions of
the Franchise Agreement.
2. That as per Clause 1.2 of the above noted Franchise
Agreement, you, the franchisee, were under contractual
obligation to pay 33% of the gross fee collected to the
Company. Clause 1.2 of the Agreement is reproduced
hereunder for your reference:
“1.2 The Franchisee shall pay 33% of the gross fee
collected/ to be collected including PDCs for all
courses. and for the services provided and permitted by
the company by demand draft in favour of Aakash
Educational Services Pvt. Ltd. payable at New Delhi,
on expiry of each fortnight i.e., 4th Day & 19111 Day
of every English Calendar month along with a
statement offees collected (and data in CD) in the
preceding month by the franchisee …………….. For
payment purpose, time is the essence of this
agreement.”
However, fact of the matter is that you continuously failed to
peiform your contractual obligations under the abovementioned
clause 1.2 and defaulted on several occasions to clear the
outstanding dues as under:
a. You have been in violation of the above-mentioned
clause for the past 24 months. Numerous
reminders/advisories were issued to you for clearing
the dues but you did not pay any heed to it. Details of
the communications made in this regard are annexed
as Annexure- B.
b. You also visited Delhi Head office of the Company in
the month of May, 2019 for a meeting with Managing
Director of the Company wherein you assured verbally
as well as in writing vide letter dated 3th May, 2019
[Refer Annexure G) that going forward all payments
shall be made regularly on fortnightly basis as per the
invoice received from Company’s Head Office.
c. Further, to ensure the financial security of the
Company, a Bank Guarantee of Rs. 25, 00,000/- was
also provided by you to the Company.
d. But defaults in payment continued despite your
assurances. The situation reached to such an extent
that company was forced to invoke the Bank Guarantee
of Rs. 25,00,000/- on 24th December 2019.
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Digitally Signed
By:HARVINDER KAUR
BHATIA
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e. Despite given enough chances to mend your ways
and to work according to the
company franchise agreement norms, you failed to fall
in line.
3. That you also defaulted in making timely payment of salaries to
your staff working at the franchise centre. It has been brought to
the knowledge of the Company that salaries have not been paid to
academic and non-academic staff of your franchise centre since
January, 2020 [Refer Annexure C). Non-payment of salary is gross
violation of Clause 3.9 of the franchise agreement by you as well
as applicable labour laws. Retevant clauses are reproduced for
your reference:
“Clause 3.9: Payments
3.9.1 All liabilities for payments/salaries of teachers,
employments of personnel, payments of wages, and
compensation packages to teachers shall be the liability of
the franchisee alone.
3.9.2 The payment to the teachers and other staff shall be
regularly made and after every quarter, a certificate shall
be issued by the franchisee, addressed to the· company at
its registered office certifying that the payments to
teachers/other staff has been made. In case any report or
complaint is received for non-payment/short payment. It
shall be the sole responsibility of the franchisee to
discharge its obligations of payments to the teachers and
staff employed at his/her centre.”
4. That even you did not spare the Government Treasury from
cheating, leave alone the Company or your Franchisee staff. It is
on record that in violation of applicable Income Tax Rules and
Clause 4.1.3 of the Franchise Agreement, you did not deposit the
TDS amounting to Rs. 7,98,2871- with the Government for the FY-
2018-19 despite deducting this TDS at the time of payment to the
Company. Relevant Clause 4.1.3 of the Franchisee Agreement is
given below: [Refer Annexure F)
“Clause 4.1.3 The franchisee will/oak after its all type of tax
obligations but not limited to Service Tax, TDS, Income tax,
PF & VAT etc. as may be imposed by the Central
Government, State Government and local authorities from
time to time. The· company shall not be responsible in any
manner in respect to any tax liability or any other legal
liability in nature of civil or criminal”.
5. That in the month of May, 2019 an audit was conducted at your
Pathankot Franchise Centre, in terms of the Franchise Agreement,
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BHATIA
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wherein financial & operational irregularities were found.
Accordingly, a letter dated 25th May, 2019 was issued to you to
mend your ways however, you did not take the note of the same
[Refer Annexure D (a)].
6. That another audit was conducted by corporate audit team at
your Pathankot Centre in the month of March, 2020, but again
serious financial & operational irregularities were found. [Refer
Annexure D (b)}, but there was no remorse or signs of
improvement on your part rather you started making false
allegations against the Company itself.
7. That you were well·aware that as per Clause No. 5.5 of the
franchise agreement you, the franchisee, were under contractual
obligation to serve 6 months’ advance notice in writing to the
Company before making an exit from the agreement.
Clause No. 5.5 is reproduced hereunder for your reference:
“Clause 5.5: EXIT CLAUSE
a) In case, the franchisee, under compelling circumstances
wishes to make an exit from the agreement, it should do so
when all the courses for a particular session have been
completed. In such a case, the franchisee shall be required
to:
(i) Give a notice to the Company in writing of its
intention to make an exit from the agreement at least 6
months before making such exit.
(ii) Discharge the full consideration of the franchisee
fees as agreed and make all balance payments to the
company due on that account and all other outstanding
dues payable to the company.
b) However, in any case, if the franchisee wishes to make an
exit from the agreement in midsession, it will have to
compensate the company as follows: –
(i) A sum of Rs. 151acs (Rupees Fifteen Lacs Only) as
compensation for business Joss and damage to
company’s brand caused by such exit.
(ii) Pay 100% of the gross fee received for the number
of students enrolled at the centre minus service charges
paid to company
(iii) The full consideration of the franchisee fees as
agreed and make all balance payments to the company
if any due on that account and all other outstanding
dues payable to the company.
(c) In the event that this Agreement is terminated for any
breach by the Franchisee as provided herein, the Company
shall be entitled to the following:
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(i) A sum of Rs. 15/lacs (Rupees Fifteen Lacs Only) as
compensation for business Joss and damage to
company’s brand caused by such termination.
(ii) The full consideration of the franchisee fee as
agreed and make all balance payments to the company
if any due on that account and all other outstanding
dues payable to the company”
You were advised to stop all new admissions at Aakash Pathankot
centre for the session 2020-2021 & 2022, as we were concerned
that you will not be able to serve the students as per the Aakash
corporate norms and will further increase the liabilities towards
service charges payable to the company. However, to the utter
shock of the Company, vide e-mail dated 8th May 2020, you
informed the Company that Pathankot centre stands closed. It has
also come to our knowledge that you, the franchisee, through your
representatives have been communicating to the parents/students
of the Aakash Pathankot centre that the centre has been closed, no
more classes will be conducted and you are no more associated
with the Company & will start your own Institute. We are in
receipt of such numerous calls lately from the parents at our
Aakash Customer Care
Service Centre. Franchise Agreement clearly provides that you
cannot stop the classes and have to complete the remaining course.
You cannot put the future of the students at stake and play with
their careers. You are advised to resume their classes with
immediate effect. Relevant clause is reproduced hereinbelow for
your reference:
“Clause 8.3
. .. .. .. In case, the franchisee decides to prematurely
discontinue the affiliation, he/if/they will be liable and duty
bound to get the remaining course of the enrolled students
fully completed up to their best satisfaction and also up to the
satisfaction of the Company. Any type of claims by any
student or his/her parents/representatives will have to be
borne by the franchisee. “It is also pertinent to mention here
that Franchisee centre has been closed unlawfully,
unauthorizedly and in an arbitrary manner. Before closing
down the franchise centre neither you served the 6 months’
notice period nor cleared the outstanding dues as per above
mentioned clauses 5.5, nor you compensated the Company in
terms of abovementioned clauses. You shut down the
franchise centre suddenly without getting the clearance I
permission from Company for closure of the franchise centre.
Even you did not think for a moment about the career of
innocent students who are the worst affected victims of your
above noted misconduct. Students and their parents are
worried and enquiring about the centre and classes whichSignature Not Verified
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were being held there. Such unlawful and unauthorized act of
suddenly closing down the centre at Pathankot has caused
irreparable loss and permanent dent in the career of students
studying at the above-mentioned centres. This unauthorized
act on your part has caused loss of profits to the Company as
well as tarnished the image of the Company in general public
resultantly causing loss to the Goodwill of the Company.
8. That Company vide numerous reminders informed/remind
you to clear the outstanding dues to the tune of Rs.
70,66,7521- however, you miserably failed to clear the same.
This is to bring to your notice that your continuous defaults
in making the due payment to the Company are in gross
violation of Clause 1.2 of the Franchise
Agreement. [Refer Annexure E]
Your above noted misconduct is also in absolute violation of
various clauses of the franchise agreement including but not
limited to clause nos.5.1, 5.2 (b) and 5.2(c) of the above
noted Franchise Agreement:
“5. I If the franchisee violates any of the terms and conditions
mentioned in the franchise agreement, the company shall be
fully competent to terminate the franchise agreement.
5.2 The consequences of any of the following events/acts
shall continue good cause for the Company to act at its
option and without prejudice to any other rights or remedies
provided for hereunder or i law or equity, to terminate
without compensation to the Franchise this Agreement by
notice in writing to the Franchisee, such notice to expire at
such date as the company may in its absolute discretion
determine:
(b) if the Franchisee defaults in payment of dues or in the
payments of any other dues to the Company or in collection
of course fees and/or deposit of such collection into the
designated bank account, within a period decided by the
company under or pursuant to this Agreement or as a result
of the operation of this Agreement.
(c) If the Franchisee ceases to conduct the franchisee centre
at the address mentioned in agreement or loses its right to
the possession/use of the premises in which the franchisee
centre is located. ”
From the above noted facts, it is established and evident that
you have deliberately violated the terms and conditions of the
Franchise Agreement and committed the continuous default
in making payment to the Company despite being served with
constant reminders and hence, as per Article 5 of the
Franchise Agreement, Company hereby terminates Franchise
Agreement dated 30 June, 20I6 executed between you, the
Franchisee and the Company with immediate effect.
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9. You are hereby directed to remove all material, boards,
hoardings bearing name of Aakash institute/Aakash IIT-JEE as
well as new admissions immediately on the receipt of this
Termination notice. as per Article# 6 (Effect of Termination) of the
Franchise Agreement, it is the clear mandate of sub clause 6.4
(Premises of Franchisee) that after termination or nonrenewal of
agreement due to any reason whatsoever, the franchisee cannot
use the same premises for activity of caching for Medical/IIT-
JEE/Engineering courses of its own or any other brand in
competition with Aakash for a period of 02 years from the
termination/agreement expiry date. Franchisee cannot use
telephone nos. which were operational when it was a franchisee.
These telephone numbers have to be surrendered with the company
from where they were got issued. Hence, you are hereby informed
to abide by the above noted mandatory term of the Franchise
Agreement with immediate effect.
10. You are also directed to make the payment of below mention
amount through demand draft payable to “Aakash Educational
Services Limited” within 10 (ten) days of receipt of this notice:
Further to the outstanding amount calculated as mentioned above,
Company reserves the right to add any other amount accumulated
in due course/currently in the knowledge of the Company.
It is further to inform you that if you fail to comply with the
mandate of this notice mentioned herein above, Company shall be
constrained to initiate appropriate legal proceedings against you
at your own risk and costs.
Please be informed.
Sincerely
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BHATIA
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Authorised SignatoryFor Aakash Educational Services Limited.
ANNEXURE ATTACHED
I. ANNEXURE A Agreement scanned copy
2. ANNEXURE B List of Communications
3. ANNEXURE C Faculty Mail on Non-Payment of Salary
4. ANNEXURE D Audit Reports
5. ANNEXURE E Total Outstanding Report
6. ANNEXURE F TDS Outstanding report
7. ANNEXUREG Pathankot Payment Commitment letter to MD sir
dated 08 May 2019
8. ANNEXURE H Pathankot Security Deposit Fee available
9. ANNEXURE I 100% of the gross fee received for the number of
students enrolled at the centre minus company commission paid ”
50. I am not persuaded by the submission of ·the Learned Counsel
for the Claimant that the letter dated 08.05.2029 of the Respondent
indicates that it had expressly exited the Contract or at all.
Moreover, the manner in which the Respondent could exit the
contract are clearly laid down in Article 5.5 (a) and (b), which
steps were not taken by the Respondent.
51. Undoubtedly the Respondent failed to honor its part of the
obligation especially in respect of non-payment of dues but by no
stretch of imagination can it be said that the Respondent existed
the contract. On the default of the Respondent, the Claimant was
entitled to take steps by stopping support and even by terminating
the contract, which the Clamant did. The Claimant chose to
terminate the contract and therefore “issued the letter dated
11.05.2020 by invoking Article 5 of the Franchisee Agreement
dated 30.06.2016.
52. I therefore hold that the Claimant terminated the Franchisee
Agreement dated 30.06.2016 between the parties on account of the
breach of the obligation by the Respondents. Issue No.3 is this thus
decided accordingly.
53. Now coming to Issues 1 and 2.
Issue No.1.
1. Whether the Claimant is entitled to an award in a sum of
Rs.66,31,787/- towards dues from the Respondent i.e. Rs.
49,74,941/- towards Franchise Service Charges and ‘.Rs.
16,56,845/towards other reimbursements? And if yes,
whether the Claimant is entitled to interest upon such
amounts and for what period and at what rate? OPC
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54. The Claimant has claimed a sum ofRs.66,31,787/-from the
Respondent towards dues for Franchisee Service Charges and
towards reimbursements. In order to prove the said claim, the
Claimant has filed a detailed statement of account from the ledger
maintained in the ordinary course of business. In term of the
Franchisee Agreement, the respondent paid to the Claimant
Rs.42,00,000 /- as onetime non-refundable payment. The
Respondent was required to pay 33% of the gross fee collected,
every fortnight to the Claimant. The statement of account filed bv
the Claimant as Schedule I i.e. Exhibit CW2/1 gives the details of
the outstanding. The said statement has not 57 of the Amended
Statement of Claim. The Claimant has placed on record the email
dated 31.7.20 19 showing the quarterly balance for the period
1.4.2019 to 31.6.2019; email dated
10.10.2019 shows quarterly balance for the period 14.2019 to
30.9.2019 and email dated 13.1.2020 showing quarterly balance
from 1.4.2019 to 31.12.2019. The Respondent had confirmed the
account statements by email dated 19.8.2019. 29.10.2019 and
15.3.2020. With each of the emails, using the same method, the
Respondent has confirmed the balance at the end of each quarter
by the signed and stamped balance confirmation letter. The
documents have been duly proved as Ex CW-l /X. The signed
account statements are the same as schedule I for the relevant
period and the balances confirmed match with the statement of
account as Exhibit The last balance confirmation is as it stood on
The entries have not been challenged in the pleading or otherwise
proved the same to be wrong. Even before the said period, the
Respondent has admitted the amounts as would be evident from
emails at pages 325 to 34 J. Exhibits CW117 (Colly). The.
Respondent confirmed the dues as on 201212019 and the same
amount matches with the last entry before 20.2.2019 i.e.
161212019 in the statement of account.
55. The Charges towards Franchisee Fee are duly supported by
emails containing necessary invoices Exhibit GW114 sent on
fortnightly basis.
56.The Respondent has not filed any counter statement of account
contradicting the statement of account filed by the Claimant.
Exhibits CW1 /5 being various emails from 06.07.2019 to
13.12.2019 have not been disputed by the Respondent. Although
the Respondent‟s case is that it had paid in excess to the Claimant
but no. material to substantiate the said submission has been
placed on record. Not a single letter or any other document prior
to the present proceedings have
been filed to show that there was any objection to the heads under
which charges are demanded or levied by the Claimant. It is only
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at the state of filing the counter Claim that the Respondent has
alleged that it is entitled to recover Rs. 5.5 Crore from the
Claimant without any material on record.
57. The Respondent has tried to dispute the entries in the ledger
account filed by the Claimant but there is no material filed by the
Respondent to show its own statement or to show that such entries
were disputed by them prior to institution of the present
proceedings. On the other hand, the Respondent has never denied
it‟s liability whenever the Claimant demanded the. Outstanding
through emails but only sought time to make the payment.
58. It is relevant to mention here that the Respondent furnished a
Bank Guarantee to the Claimant in a sum of Rs. 25 Lakhs on
25/6/2019. Had no amount been due, the question of furnishing the
BG would not have arisen. During the oral arguments, the Learned
Counsel for the Respondent submitted that the segregation of the
total amount into Franchisee charges and other charges is
incorrect and the amount is actually different. However, there is no
material on record to prove the same. A careful consideration of
the statement of account shows that the Franchisee Fee due is Rs.
49,74,94.11- and towards service charges Rs.16,56,845 /-. Once
the statement of account has been proved containing entries of
Franchisee Fee and other charges including reimbursements and
the Respondent having not shown how the entries are incorrect or
that these were even questioned or challenged by the Respondent
prior to the present proceedings, the defense of the Respondent
cannot be believed.
59. Thus I have no hesitation in holding that the Claimant is
entitled to an amount of Rs. 66,31,7871- from the Respondent
which comprises of Rs. 49,74,941/- towards Franchisee Fee and
Rs. 16,56,845 /- towards other reimbursements.
Issue No.2.
2. Whether the. Respondent is liable to clear the tax liability
of Rs. 6,89,272/- towards TDS deducted from payments made
to the Claimant in addition to any other incidence of tax,
such as interest, penalty etc. which may be imposed on
account of nondeposition of TDS in a timely fashion? OPC
60. In order to prove this claim, the Claimant has filed Exhibit
CW2 I 3 being the chart of calculation of the TDS liability of the
Respondent on the basis of Form 26-A.S. In defence the
Respondent denies the liability in view of its submission that the
Claimant has been paid in excess. However, as already held that
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the Respondent has not been able to prove any excess payment, the
said defence cannot come to the rescue of the Respondent.
61. The Claimant has, in its affidavit, proved the said chart Exhibit
CW2/3 being the chart of calculation of the TDS liability. The
Respondent has not controverted the said calculation stated to
have been based on Form 26AS.
62. In view of the above, I hold that the Respondent is liable to pay
the amount of Rs. 6,89.272 /- towards TDS deducted frorn the
payments but not reflected in Form 26-AS or paid to the Claimant.
Issue No.4
Whether the Respondent is liable to be restrained from
operating a coaching business from the centre bearing 1st
and 2nd Floor, Patel Chowk, Saili Road, Pathankot, Punjab
till 07. 05.2022? OPC
63. The aforesaid Claim of the Claimant has become infructuous.
The Claim with respect thereto is therefore dismissed
Issue No.5
Whether the Claimant is entitled to an award in a sum of
Rs.15,00, 000/- towards loss of business and reputation and
Rs. 1,27,94,634/- towards student fees in accordance with
Clause 5. S(b) of the Franchise Agreement? And if yes,
whether the Claimant is entitled to interest upon such
amounts and for what period arid at what rate? OPC
64. In view of my finding that the Claimant has terminated the
Contract and the Respondent did not exit therefrom, the question of
awarding Rs. 15,00,000/- towards loss of business and reputation
and Rs. 1,27,94,634/- towards 100% students fee in terms of
Clause S.S(b) does not arise. The said claim is rejected.
65. The Claimant has not claimed Rs. 15,00,000 /- under Clause
S.S of the in its statement of Claim but made oral/written
submission for the first time that in the alternative, in case it is
held that the Claimant terminated the Contract and the Respondent
did not exit, the Claimant be awarded an amount of Rs. 15,00,000/-
as compensation in terms of Clause of the of Article 5.5. However,
no such pleading or prayer has been made in the Amended
Statement of Claim and therefore the question of awarding an
amount not claimed in the pleading does not arise. Even the
evidence led on the quantum of compensation by CW1 and CW2 is
based on the midsession by the Respondent as envisaged under
Article 5.5 (b) and not of the of the Franchisee Agreement. The
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evidence for compensation for business loss and damages under
Article 5.5 of the on the termination of the agreement by the
Claimant has not been led by either of the Claimant‟s witnesses.
Issue No.6
Whether the Claimant is entitled to an award in a sum of Rs.
7,73,974/- from the Respondent towards refundable student
securitly deposit fee? And if yes, whether the Claimant is
entitled to interest upon such amounts and for what period
and at what rate? OPC
66. The submission of the Learned Counsel for the Claimant is that
the security deposit collected by the Respondent from the students
is refundable and it ranges between Rs. 2000/- to Rs.5000/- per
student. According to him, the Respondent is liable to pay the
Claimant the said security deposit.
67. The case set up in the Amended statement of Claim is that the
cause for seeking payment of these amounts arose only upon exit of
the Respondent from the Franchise Agreement. According to the
Claimant, the books of account maintained by it in the ordinary
course of business through the fee management software a sum of
Rs. 7,73,974/- has been retained by the Respondent towards
security deposit. It is not the case of the Claimant that any student
has made any demand from the Claimant towards refund of
security deposit. The Respondent has denied the said liability on
the ground that there is to provision in the Franchisee Agreement
for Refund of the security deposit to the Claimant.
68. The learned Counsel for the Claimant also could not point out
any provision in the Franchisee Agreement entitling it to the
refund of Security deposit as claimed. Nor is there any material on
record to show any such demand made by any student. The said
issue is thus decided against the Claimant with the direction that In
case any student makes any claim for refund of security deposit,
the Respondent shall be alone liable to pay the said amount, if
payable, in accordance with its inter-se contract between the
student and the Respondent.
69. The Counter Claim was filed belatedly by the Respondent and
accordingly Issue No. 6A was framed vide common order dated 21
/09/2022 and 21/09 /2022 as follow:
Issue No: 6A:
“Whether the Respondent is entitled to the claim in a sum of
Rs.73,56,313/- as prayed for in the Counter Claims? OPR/
Counter Claimant.”
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Counter Claim No.1:
70. The Respondent/ counter Claimant claims a sum of
Rs.35,754,957.00 towards loss on account of expenses incurred for
infrastructure during the subsistence of the agreement. It is the
case of the Respondent that the agreement does not cater to the
expenses incurred towards upkeeping the infrastructure during the
subsistence of the agreement. The details of the claims are
provided in para 1.2 to 1.5 of the Counter Claim. The Respondent
refers to email dated 26.02.2020 and 24.04.2022 to submit that the
Claimant terminated the agreement before its term and therefore
liable to make payment for the infrastructure etc. The Respondent
also relies upon the bills for the. Period 06.08.2016 to 21.09.2016.
71. Recital 3 of the Franchisee Agreement very clearly provides
that the center has to be run by the Franchisee at its own costs and
expenses. Article 3 of the said Franchisee Agreement envisages
that the expenses incurred in meeting the obligations of the
Respondent/ Counter Claimant including to provide suitable
infrastructure would be borne by them. Similarly Article 2
contemplates no obligation on the part of the Claimant in this
regard. Furthermore the bills filed on record by the Respondent
are for the period 06.08.2016 to 21.09.2016, except for two bills of
3.10.2016 and 11.12.2016, which clearly indicates that the bills
relate to the initial setting up of the center and not running
/refurbishment of the center. Nor do the bills add up to the amount
claimed.
In view of the above, the said claim stands rejected.
Claim No.2
72. This claim relates to refund of the pro-rata Franchisee Fee.
The Respondent Claims an amount of Rs.11,20,000/as
proportionate refund as the agreement was terminated by the
Claimant. The agreement has been rightfully terminated by the
Claimant on account of breach by the Respondents of its obligation
as discussed above. The Claimant was well within its rights to
terminate the agreement on account of the default of the
Respondent‟s obligation. Having defaulted in its obligation, the
Respondent cannot seek refund of pro-rata Fee as claimed.
Claim No.3:
73. The Respondent Claims expenses and charges levied beyond
the Agreement. The record reveals that the Respondent has from
time to time acknowledged its liability of Rs.74,41,533 as on
31.12.2019, which is reflected in the ledger account filed by the
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Claimant. In view of the admission of the Respondent of the
outstanding amount due, the question of now claiming any excess
payment allegedly charged beyond the agreement in untenable. At
no time, prior to the present proceedings, did the Respondent raise
any issue of any excess amount charged. The Respondent has been
unable to show as to when and how the amounts charged were
disputed or for which period or any details thereof. The
Advertising and marketing charges were payable by the
Respondent under. Article 2.6. The Audit Charges are also payable
under Article 4.5 of the Agreement. The Final Audit Report is also
duly signed by the Respondent. No details of the alleged additional
charges have been shown from the record. The Corporate
recruitment and Training Charges are also to be payable by the
Respondent under Article 2.5 of the Agreement. This Claim being
frivolous is Rejected.
Claim No.4
74. The Respondent claims damages due to arbitrary stoppage of
services. The record of the correspondence clearly shows the
default on the part of the Respondent in not adhering to payment
schedule, amongst others. Repeated reminders by the Claimant
were not complied
with.
75. The Claimant was fully entitled under the agreement to stop the
services and even terminate the contract for the default on the part
of the Respondent. Since the Claimant exercised its rights under
the said agreement, the question of payment of damages to the
Respondent under this claim does not arise. Even otherwise, there
is nothing on record or proved that the Respondent suffered any
loss. This claim too stands rejected.
ISSUE NO. 7
Whether the Claimant is entitled to costs of the
present arbitration? OPC
76. In the facts and circumstances of the case, there is no order as
to costs.
Relief?‟‟
77. In view of the aforesaid finding, the Claimant is entitled to a
sum of Rs. 66,31,787/- along with reasonable interest at the rate of
10% p.a. from the date of termination of the Agreement on
11.05.2020 till actual payment.
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BHATIA
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This Award is being typed on a stamp paper of Rs. 200 of, the
Claimant is directed to make good the deficiency in stamp duty in
Accordance with law.”
14. As is evident from a perusal of the said Award, the entire
factual gamut of the inter se dispute between the parties was raised
and considered dispassionately by the learned Arbitrator. Upon
examining the issues in detail, the learned Arbitrator painstakingly
rendered an issue-wise determination on each of the contentions
advanced by both sides.
15. Learned Arbitrator also considered the rival submissions
advanced, bearing in mind the statement of defence & counter-claim
as filed by the Appellants herein, before him. He also meticulously
examined each and every correspondence as exchanged between the
parties and has come to the conclusion that the Appellants herein had
admitted to having entered into an agreement and also acted in terms
of the same.
16. We also consider it apposite to extract the relevant portion of
the Impugned Order dated 19.04.2024, particularly since the challenge
mounted by the Appellants is a composite one. The relevant extract
from the impugned Order dated 19.04.2024 reads as under:
21. In the instant matter, the arbitral proceedings had commenced
on 29.06.2020. Entire period of covid i.e. from 15.03.2020 till
28.02.2022 is required to be excluded from the period available
with Ld. Arbitrator for conclusion of proceedings. Thereby, after
01.03.2022, period of one year was available with Ld. Arbitrator
to conclude the proceedings. Award had been passed on
09.02.2023 and final award was dated 06.3.2023 which was within
the extended period of limitation after considering the accord of
benefit provided as per judgment of Hon’ble Apex Court.
22. Ld. counsel for petitioner also submitted that ail the bills,
vouchers etc. were self generated documents of respondent.
Petitioners had been charged and awarded the amount which was
not even part of contract. Ld. Arbitrator referred to the emails
showing the quarterly balance for the respective periods which
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were confirmed by the petitioner vide emails dated 19.8.2019,
29.10.2019 and 15.03.2020. It was noted that
respondent/petitioner herein had confirmed the balance at the end
of each quarter by signed and stamped balance confirmation letter.
The last balance confirmation was dated 31.12.2019 which entries
had not been challenged in the pleadings or otherwise proved to be
wrong. Ld. Arbitrator also observed that respondent/petitioner
herein had never denied its liability whenever the
claimant/respondent demanded the outstanding through emails but
only sought time to make the payment. It was noted that once the
statement of account had been proved containing entries of
franchisee fee and other charges and respondent had not shown
how the entries were incorrect nor were ever questioned or
challenged by the respondent/petitioner herein, defence of the
respondent/petitioner herein could not be believed.
23. Contention of Ld. counsel for petitioner that respondent was
„God‟ to them who could not have been displeased, therefore, there
could not have any controversion to emails etc. does not found
merit with this court. Parties were in business relationship with
each other. It was open for the petitioner to controvert or assert its
own rights wherever required. Having admitted its liability, later
on petitioner would not be in position to withdraw the same.
Nevertheless, this court does not possess appellate powers and it is
not open for this court to reappreciate the evidence as the
objections u/s 34 have to be established on the basis of ground
enumerated therein.
24. Reliance is placed upon following:
1. Associate Builders Vs. Delhi Development Authority,
2014 (4) Arb. LR 307 (SC):
“When a court is applying the „Public Policy‟ test to an
arbitration award, it does not act as a cou1t of appeal and
consequently errors of facts cannot be corrected. A possible
view by the arbitrator on the facts has necessary to pass
muster as the arbitrator is the ultimate master of the quantity
and quality of evidence to be relied upon when he delivers his
arbitral award. Thus, an award based on little evidence or on
evidence which does not measure up in quality to a trained
legal mind would not be held to be invalid on this scope.
Once it is found that the arbitrator‟s approach is not
arbitrary or capricious, then he is the last word on facts”.
“An arbitral tribunal must decide in accordance with the
terms of the contract, but if an arbitrator construes a terms of
the contract in a reasonable manner, it will not mean that the
award can be set aside on this ground. Construction of the
terms of a contract is primarily for an arbitrator to decide
unless the arbitrator construes the contract in such a way
that it could be said to be something that no fair minded or
reasonable person could do”.
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“The expression ‘justice’ when it comes to setting aside an
award under the public policy ground can only mean that an
award shocks the conscience of the court”.
2. Ssangyong Engineering & Construction Co. Ltd. Vs.
National Highways Authority of India, Judgement dated
08.05.2019, SLP(C) no. 19033 of 2017:
“it is clear that public policy of India is now constricted to
mean firstly, that a domestic award is contrary to the
fundamental policy of Indian law and secondly, that such
award is against the basic notions of justice or morality.
Explanation 2 to Section 34 (2) (b) (ii) and Explanation 2 to
section 48 (2) (b) (ii) was added by the Amendment Act only
so that Western Geco (Supra), as understood in Associate
Builders (supra), and paragrpahs 28 and 29 in particular, is
now done away with. In so far as domestic awards made in
India are concerned, an additional ground is now available
tinder sub-section (2A). added by the Amendment Act, 2015,
to section 34. Her, there must be patent illegality appearing
on the fact of the award, which refers to such illegality as
goes to the root of the matter but which does not amount to
mere erroneous application of the law. In sh01t, what is not
subsumed within “the fundamental policy of India Law”,
namely, the contravention of a statute not linked to public
policy or public interest, cannot be brought in by the
backdoor when it comes to setting aside an award on the
ground of patent illegality.
Secondly, it is also made clear that re-appreciation of
evidence, which is what an appellate court is permitted to do,
cannot be permitted under the ground of patent illegality
appearing on the face of the award.
To elucidate, para 42.1 of Associate Builders (supra), namely
a mere contravention of the substantive law of India, by itself,
is no longer a ground available to set aside an arbitral
award. Paragraph 42.2 of Associate Builders (supra),
however, would remain that if an arbitrator gives no reasons
for an award and contravenes section 31 (3) of the 1996 Act,
that would certainly amount to a patent illegality on the face
of the award. The change made in section 28 (3) by the
Amendment Act really follows what is stated in paragraphs
42.3 in Associate Builders (supra), namely, that the
construction of the terms of a contract is primarily for an
arbitrator to decide, unless the arbitrator construes the
contract in a manner that no fair minded or reasonable
person would; in short take or the arbitrator’s view is not
even a possible view to take. Also, if the arbitrator wanders
outside the contract and deals with matters not allotted him,
he commits an error of jurisdiction. This ground of challenge
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(2A)”.
3. National Highway Authority of India Vs. IRB Goa
Tollway Pvt. Ltd. 2022 (288) DLT 533:
“77. The position in law. as regards the scope of interference
by a count, exercising jurisdiction under section 34 of the
1996 Act, with an arbitral award is, by now, fossilised
through a number of judicial authorities, of which one may
take due stock of the judgments in Sangyong Engineering &
Construction Co. Ltd. Vs. NHAI (20 19) 15 SCC 131: 2019
LAWPACK (SC)62532:20 19 (3) R.A.J,. 323 and Delhi
Airport Metro Express Pvt. Ltd. Vs. DMRC (2022) I SCC 131
: 2021 LAWPACK (SC)65432: 2021 (5) R.A.J. 54. These
decisions clearly hold that the court, exercising jurisdiction
under, section 34, is to interfere only in cases of “patent
illegality” or perversity in the Award under challenge.
Mistakes of fact or law, or the predilection of the section 34
court to incline to a view contrary to that expressed by the
Arbitral Tribunal, cannot constitute a basis for interference.
Section 34 Court does not substitute its subjective view in
place of the view of the arbitral tribunal”.
4. Technofab Engineering Ltd. Vs. Tesla Transformers Ltd.
2021 LAWPACK (DEL) 84751:
“14. …..
Construction and interpretation of the terms of the contract is
primarily for the Arbitrator to decide and the legal position
with respect to the exercise of jurisdiction under section 34 of
the act, is now well established. This court cannot merely on
an erroneous application of law, re-appreciate the evidence
as it would be an encroachment upon the domain of the
learned Arbitrator. The Supreme Court has also repeatedly
observed that the scope of interference under section 34 of
the Act is extremely narrow, and the court must be
circumspect whilst dealing with cases”.
25. Having discussed as above, the award passed by Ld.
Arbitrator does not suffer from any patent illegality,
perversity or against the public policy, calling for any
interference from this court in objections u/s 34 of
Arbitration and Conciliation Act. Accordingly, instant
petition stands dismissed. File be consigned to record room
after completion of necessary formalities.
17. We are of the view that there is no infirmity in either the Award
or the Order impugned therein. We firmly believe that the learned
Arbitrator has judiciously examined each and every aspect raised by
the parties and has thereafter rendered in law. The law in respect ofSignature Not Verified
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scope of challenge to an Award & Order as rendered under Section 34
of the A&C Act is fully crystallized. It is well-known that there is an
extremely limited scope within which Courts can interfere with
arbitration proceedings under Section 37 of the A&C Act.
18. We have already referred to the proceedings of the Hon’ble
Supreme Court in Cognizance for Extension of Limitation, In re
(supra) and paragraph 5 thereof hereinbefore and are of the view that
the main issue in the present Appeal as to whether or not the Award
was vitiated by the non-compliance with the express provisions of
Section 29A of the A&C Act stands fairly covered against the
Appellants.
19. We are also of the view that the other arguments raised by the
Appellants pertain to an equitable consideration in his favor, despite
the settled principle that there is no scope for equity in inter se
contractual relationships between private parties. Given the
established clarity of law on this point, we do not consider it necessary
to undertake a detailed examination of the various arguments
advocating for an equitable interpretation of the contract terms in
favor of the Appellants.
20. We are further of the opinion that the learned Arbitrator has
comprehensively evaluated all material facts, including the
correspondence exchanged between the parties and their respective
conduct, and has thereafter proceeded to render the Award in a
reasoned and judicious manner.
21. It would also be relevant to mention herein that the learned
counsel for the Appellants admits the fact that there is no patent
illegality in the present Award but what he stresses upon is that,
considering the facts & circumstances especially in relation to Covid-
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19 period, the Appellants’ contentions should be looked upon with
leniency as it would otherwise be condemned to bear what he believes
is the adversity of the Award.
22. Having regard to the legal position and upon a comprehensive
evaluation of the record, we are of the considered view that neither the
Impugned Order nor the Arbitral Award warrants interference in the
present appeal.
23. Along with the present appeal, it is pertinent to note here that,
an application has also been moved seeking condonation of a delay of
360 days in re-filing the appeal. While such an inordinate delay would
ordinarily not be condoned, we have not examined the merits of the
condonation application, as the appeal itself has been examined and is
found to be unsustainable on merits.
24. In view of the above facts and circumstances, the present
Appeal, along with pending application(s), if any, stands dismissed.
ANIL KSHETARPAL
(JUDGE)
HARISH VAIDYANATHAN SHANKAR
(JUDGE)
AUGUST 7, 2025/tk/rk/ds/kr
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BHATIA
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