Bangalore District Court
Sundram Fasterners Ltd vs Deepak Tools Heat Treaters Pvt Ltd on 16 January, 2025
IN THE COURT OF LXXXVII ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU (CCH.88)
Present: Smt. Roopa K.N., B.Sc., LL.B.,
LXXXVII Addl.City Civil &
Sessions Judge, Bengaluru.
Dated : 16th Day of January, 2025
Com.A.P.No.207/2023
APPLICANT/S 1. Sundram Fasteners Limited,
Cold Extrusion Plant,
Harita Hosur,
Tamil Nadu - 635 109
Represented by its
General Manager - Legal,
Sri.M.Sundaresan.
(By Sri.VSK, Advocate)
-Vs-
RESPONDENTS 1. Deepak Tools Heat Treaters Private
Limited,
No.B-14 Hebbal Industrial Estates,
Metagally,
Mysore - 570 016.
Represented by its Managing Director
Sri.C.M.Subramanian
2. Sole Arbitrator in the matter of
A.C.442/2022
Sri. Justice S.R.Somashekara
(Retired District and Sessions Judge)
Arbitration and Conciliation Centre,
Bengaluru
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Com.A.P.207/2023
Domestic and International)
Khanija Bhavana,
Race Course Road,
Bengaluru - 560 001.
(R1 By Sri.AT Advocate
R2 - Sole Arbitrator)
Date of Institution of the suit 16.12.2023
Nature of the suit (suit on U/S 34 of The Arbitration
pronote, suit for declaration & Conciliation Act.
Possession, Suit for injunction
etc.)
Date of commencement of -
recording of evidence
Date on which judgment was 16.01.2025
pronounced
Total Duration Year/s Month/s Day/s
01 01 00
(ROOPA K.N.),
LXXXVII Addl.City Civil & Sessions Judge,
(Exclusive Dedicated Commercial Court)
Bengaluru.
:J U D G M E N T :
This Petition is filed by the petitioner under Sec.34 of
Arbitration and Conciliation Act, 1996 seeking set aside of
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Com.A.P.207/2023
the impugned arbitral award passed by the sole arbitrator
in A.C.No.442/2022 dated 2/9/2023.
2. The parties are referred as per their original rank
before the arbitral tribunal for the sake of clarity.
3. The brief facts leading to filing of this petition are as
follows; Both claimant and respondent are companies.
Claimant is engaged in the business of providing
components required for heat treatment to industries. It is a
small enterprises under the MSMED Act. Respondent
placed work orders with the Claimant in the year 2017 for
providing certain components required for heat treatment.
In that connection, towards the amount due to it from the
respondent, the claimant raised invoices amounting to a
sum of Rs.6,72,227.78/-. Claimant made a demand for
payment of the same and the respondent declined to make
payment on the ground that the products supplied by the
claimant were for the use of the end user by name M/s.GKN
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Com.A.P.207/2023
India, which raised a complaint stating that there was
defect in the components supplied. The 1 st respondent
herein rejected one of the component due to its quality
issue. Thereafter both parties moved before MSEFC,
Mysore where conciliation was not successful and hence
same was referred to Arbitration Tribunal. Before the
Arbitration Tribunal this petitioner being the respondent
made counterclaim and also resisted for awarding interest
in favour of claimant therein. Anyhow the Arbitration
Tribunal passed an award in favour of the claimant and
awarded interest at the rate of 20% per annum and rejected
the counterclaim of this petitioner. This became a cause of
action for the petitioner to file the present application.
4. Respondent filed objections to the main petition
denying the averments of application filed by the petitioner
and inter alia contended that the award passed by the sole
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Com.A.P.207/2023
Arbitrator is in accordance with law and hence cannot be
set aside. Respondent further denied accusations made by
the petitioner regarding fabrication of evidence, etc. and
sought for dismissal of the application.
5. After holding a detailed enquiry and on hearing both
side, the learned sole arbitrator allowed the claim petition
passing award in favour of the claimant/respondent
aggrieved by which the present petition is filed by this
petitioner.
6. Now the point that arise for my consideration are;
1. Whether, the present petition deserves to
be allowed and the impugned award dtd:
2.9.2023 passed by the sole arbitrator in
A.C.No.442/2022 requires to be set aside
under Sec.34 of Arbitration and
Conciliation Act?
2. What Order?
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Com.A.P.207/2023
7. My findings on the above Points are as under:
Point No.1 : In the “Negative”.
Point No.2: As per the final order for the
following reasons
-: R E A S O N S :-
8. Point No.1 :- On careful perusal of the LCR received
from the Arbitration Tribunal. The petitioner herein was
the respondent before the Arbitration Tribunal. The
claimant / respondent filed claim petition before the
Arbitration Tribunal on the basis of a reference made by
MSEFC by its order dated 13/5/2022 in case No.37/19
and this reference was made under section 18(3) of MSME
Act. I have gone through the averments of the present
petition. Petitioner herein who was the respondent before
the Tribunal never disputed its liability to pay
Rs.6,72,227.78 which is the principal amount payable to
respondent. The only dispute is regarding claim of
interest. The petitioner herein sought for set aside of the
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Com.A.P.207/2023
award passed by the sole Arbitrator on the ground that the
award is in contravention of fundamental policy of Indian
Law and in conflict with the most basic notion of morality
and justice. According to petitioner the sole Arbitrator has
not considered the fact that respondent No.1 clearly
admitted before the Tribunal that there is no documentary
evidence to claim that this petitioner was misusing the test
reports and 1st respondent fabricated the evidence to obtain
a favourable award and ignored the fact that 1 st respondent
failed to refund an amount of Rs.19,41,330/- which was
debited by GKN India. It is also urged that Arbitrator failed
to appreciate that 1st respondent did not had the right to
withhold the petitioners fixtures in the absence of any lien
agreement between the parties and also ignored that the
son of PW1 was the sender of email under Ex.R1. Both
learned counsel for petitioner and respondent addressed
their arguments on merits. The learned counsel for
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Com.A.P.207/2023
petitioner drawn the attention of this court to the
observation made by the Tribunal in para 46 to 51 and
argued that the Tribunal only relied on delivery challans
produced by the respondent and invoices produced by the
claimant and awarded interest against to the provision of
clause A of section 31(7) of Arbitration and Conciliation
Act. He further argued that his counterclaim was rejected
by the Tribunal by saying that it is barred by time and
hence the award needs to be set aside. On the other hand
counsel for respondent submitted to the court that
conciliation was failed before MSME and hence the
statutory reference was made to Arbitration Tribunal
though there was no arbitration agreement between the
parties. According to him invoices are the most important
documents which was relied by the Arbitration Tribunal
while passing award. Hence he sought for dismissal of the
petition.
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Com.A.P.207/2023
9. On careful perusal of the Arbitration award, the
learned sole Arbitrator by referring into the documents and
the rival pleadings of both parties had framed totally 8
issues, amongst them, issue No.1, 2, 7 were framed casting
burden on the claimant to prove those issues and on the
other hand issue No.3 to 6, 8 were framed on the
respondent. An award was passed wherein the Tribunal
directed this petitioner who was the respondent to pay
interest at 20% per annum on the invoices marked as
Ex.P17 to Ex.P52 and rejected the counterclaim of this
petitioner. On perusal of the award it is very clear that a
reference was made before the Arbitration Tribunal under
section 18(3) of MSMED Act and the said provision will
apply to a reference made under the said Act similar to an
agreement under section 7(1) of the Arbitration and
Conciliation Act and further section 23(2a) of the
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Com.A.P.207/2023
Arbitration and Conciliation Act enables the respondent to
make counterclaim or plead set off. The Tribunal also
observed in para 7 that the petitioner herein who was the
respondent never disputed payment of principal amount of
Rs.6,72,227.78 to the respondent but claim of interest is
denied. In this regard Tribunal framed issued No.1 and 2
and while answering these issues the Tribunal observed
that Ex.P59 to 94, Ex.R10 to Ex.R34 were delivery
challans. Further the Tribunal relied on section 15 and 16
of MSMED Act and it was observed in para 46 of the award
that the Arbitration Tribunal shall rely on section 31(7) of
the Act not section 16 of MSMED Act. In para 48 to 50 the
Tribunal has observed that while awarding interest 3
periods are to be considered: (1) From the date of cause of
action to the date of claim petition (2) From the date of
claim petition to the date of award (3) From the date of
award to the date of payment.
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Com.A.P.207/2023
10. The Tribunal has also in para 50 observed that in
delivery challans produced by this petitioner which were
marked as Ex.R10 to Ex.R34 there was a note at the end
that bills remaining unpaid after 7 days will be charged
interest at 20% per annum and on this basis Tribunal
awarded interest at 20% per annum pertaining to invoices
Ex.P17 to Ex.P52. On perusal of these observations I hold
there are no grounds in favour of this petitioner to hold
that the sole Arbitrator has committed patent illegality so
as to set aside the award.
11. Coming to the question of rejection of counterclaim of
this petitioner, the learned sole Arbitrator while answering
issue No.6 has observed that in the present case since it is
a reference under MSMED Act there is no agreement at all
and therefore what is required to be examined is whether
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Com.A.P.207/2023
the counterclaim pleaded by the respondent before the
Tribunal has any relation with the claim made by the
claimant. The Tribunal held that the counterclaim pleaded
by this petitioner is in respect of very same transaction and
not a different one. This petitioner being the respondent
made a counterclaim of Rs.12,69,102.22 out of which this
petitioner admitted the claim of claimant before the
Tribunal to an extent of Rs.6,72,227.78 GKN India issued a
debit note for Rs.19,41,330/- on the ground that
components supplied by the claimants were not of quality
and giving deduction to the admitted claim the respondent
has made the above counterclaim. In para 24 of the award
Arbitration Tribunal has relied on Ex.R1 which is a mail
dated 28/3/2017 sent by the respondent therein which
was admitted by the claimant in his cross-examination.
The Tribunal by relying on the documentary evidence on
record clearly held that claimant never admitted that there
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Com.A.P.207/2023
was any deficiency in the components supplied to
respondent and it was also observed that respondent
before the Tribunal did not placed any evidence by
examining a person concocted that GKN India who was
competent by having technical knowledge and also
inspected the materials. In my opinion the learned sole
Arbitrator has properly appreciated the oral and
documentary evidence adduced by both parties and passed
an award under the provisions of MSMED Act by awarding
interest as shown in Ex.R10 to Ex.R34. Further I have also
gone through the decisions relied by the learned counsel
for petitioner reported in (2018) 9 SCC 472 State of Bihar
and others Vs. BRBV Bank Samithi and decision
reported in (2021) 18 SCC 250 Misc.Pet.No.665/2021.
The learned counsel for petitioner drawn the attention of
this court to para 8.1 in the 2nd decision in M.A.665/2021
wherein Hon’ble Apex Court has observed that period from
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Com.A.P.207/2023
15/3/2020 till 2/10/2021 shall stand excluded while
computing the period of limitation for any suit, appeal,
application or proceeding. In my opinion the decision
relied by the applicant cannot be relied upon as the facts
and circumstances differs. In my opinion petitioner has
not made out any reasonable grounds to set aside the
award passed by the learned sole Arbitrator. Accordingly
I answer point No.1 in the “Negative”.
12. Point No.2:- For the aforesaid reasons, I proceed to
pass the following:
ORDER
The petition filed by the petitioner
under Sec.34 of Arbitration and
Conciliation Act, 1996 is hereby
dismissed.
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Com.A.P.207/2023Office to issue Soft copy of this
Judgment to both sides by e-mail if
furnished.
(Dictated to the Stenographer, typed by her, corrected and then pronounced by me
in open Court on this the 16th day of January, 2025).
(ROOPA K.N.),
LXXXVII Addl.City Civil & Sessions Judge,
(Exclusive Dedicated Commercial Court)
Bengaluru.
/16/
Com.A.P.207/2023(Judgment pronounced in the
open court vide separate
detailed Judgment)ORDER
The petition filed by the
petitioner under Sec.34 of
Arbitration and Conciliation
Act, 1996 is hereby dismissed.
/17/
Com.A.P.207/2023Office to issue Soft copy of
this Judgment to both sides by
e-mail if furnished.
LXXXVII ACC & SJ, Bengaluru.
(16.01.2024), (CCH-88)
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