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Friday, September 5, 2014

SLAMBOB - Amusement park - agreement of partnership for 10 years - failed to pay the amount as per the terms of agreement after some time - The Arbitrator published his award allowing the claim to the tune of Rs.13,94,240/- with interest at the rate of 12% per annum, but disallowed the Minimum Guaranteed amount of Rs.69,416/- per month for the remaining 69 months, commencing from July, 2003.- single judge dismissed both suits -The Division Bench of the High Court affirmed the award of the Arbitrator. The High Court particularly held that the appellant having failed to make the payment of the dues, as agreed to between the parties, cannot deny the lawful claim of the respondent and accordingly the High Court upheld the reasoning of the Arbitrator and dismissed the appeal filed by the appellant. The Division Bench of the High Court also held that the award of interest at the rate of 12% per annum was also just and reasonable and accordingly affirmed the same. In these circumstances, the appeal filed by the first respondent, being OSA No.34 of 2009, was allowed and the appeal filed by the appellant, being OSA No.140 of 2009, was dismissed by the Division Bench of the High Court.- Apex court held that Where there is an error apparent on the face of the record or the Arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail. - dismissed the appeal = CIVIL APPEAL NOS. 7128-7129 OF 2011 M/s. Navodaya Mass Entertainment Ltd. .… Appellant :Versus: M/s. J.M. Combines ....Respondents = 2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41851

SLAMBOB - Amusement park - agreement of partnership for 10 years - failed to pay the amount as per the terms of agreement after some time - The   Arbitrator published his award allowing the claim to the tune  of  Rs.13,94,240/-  with interest  at  the  rate  of  12%  per  annum,  but  disallowed  the  Minimum Guaranteed amount of Rs.69,416/- per month  for  the  remaining  69  months, commencing from July, 2003.- single judge dismissed both suits -The Division Bench of the High Court affirmed the award of  the  Arbitrator. The High Court particularly held that the appellant having  failed  to  make the payment of the dues, as agreed to between the parties, cannot  deny  the lawful claim of the respondent and accordingly the  High  Court  upheld  the
reasoning  of  the  Arbitrator  and  dismissed  the  appeal  filed  by   the appellant. The Division Bench of the High Court also held that the award  of interest at the rate of 12% per annum  was  also  just  and  reasonable  and accordingly affirmed the same. In these circumstances, the appeal  filed  by the first respondent, being OSA No.34 of 2009, was allowed  and  the  appeal filed by the appellant, being OSA No.140  of  2009,  was  dismissed  by  the Division Bench of the High Court.- Apex court held that Where there  is an error apparent on the face of  the  record  or  the  Arbitrator  has  not followed the statutory legal position,  then  and  then  only  it  would  be
justified in interfering with the award published by  the  Arbitrator.  Once the Arbitrator has applied his mind to the  matter  before  him,  the  Court cannot reappraise the matter as if it were an appeal and even if  two  views are possible, the view taken by the Arbitrator would prevail. - dismissed the appeal =

by which the High Court while allowing O.S.A. No.34  of  2009  filed
by Respondent No.1, dismissed O.S.A. No.140 of 2009 filed by  the  appellant
herein.  =
“SLAMBOB”  in  the  amusement  park
“Kishkinta” which was  maintained  by  the  appellant.  The  Agreement  also
provided  that  the  first  respondent  shall  maintain  the  equipment   by
effecting necessary repairs etc. The Agreement  further  provided  that  the
collection from the ride would be shared in the ratio of 60:40 by the  first
Respondent and the appellant  in  the  first  year  of  its  operation,  and
thereafter in the ratio of 50:50 in the subsequent years. It  also  provided
for a guaranteed minimum gross collection of Rs.10 lakhs for the first  year
and Rs.8.33 lakhs for the subsequent 9 years. The  Agreement  was  in  force
for a period of 10 years and could be renewed/terminated as  per  the  terms
thereof. Pursuant to the  Agreement,  the  first  respondent  installed  the
equipment on 16.04.1999 and it started functioning from the said  date.  The
appellant defaulted in making the payments from the year 2000-2001  onwards.=

The first respondent filed a claim for  a  sum  of
Rs.13,94,240/-  together  with  interest  on  16.10.2006.   The   Arbitrator
published his award allowing the claim to the tune  of  Rs.13,94,240/-  with
interest  at  the  rate  of  12%  per  annum,  but  disallowed  the  Minimum
Guaranteed amount of Rs.69,416/- per month  for  the  remaining  69  months,
commencing from July, 2003. =

The Division Bench of the High Court affirmed the award of  the  Arbitrator.
The High Court particularly held that the appellant having  failed  to  make
the payment of the dues, as agreed to between the parties, cannot  deny  the
lawful claim of the respondent and accordingly the  High  Court  upheld  the
reasoning  of  the  Arbitrator  and  dismissed  the  appeal  filed  by   the
appellant. The Division Bench of the High Court also held that the award  of
interest at the rate of 12% per annum  was  also  just  and  reasonable  and
accordingly affirmed the same. In these circumstances, the appeal  filed  by
the first respondent, being OSA No.34 of 2009, was allowed  and  the  appeal
filed by the appellant, being OSA No.140  of  2009,  was  dismissed  by  the
Division Bench of the High Court.=
Where there  is
an error apparent on the face of  the  record  or  the  Arbitrator  has  not
followed the statutory legal position,  then  and  then  only  it  would  be
justified in interfering with the award published by  the  Arbitrator.  Once
the Arbitrator has applied his mind to the  matter  before  him,  the  Court
cannot reappraise the matter as if it were an appeal and even if  two  views
are possible, the view taken by the Arbitrator would prevail.  (See:  Bharat
Coking Coal Ltd. Vs. L.K. Ahuja, (2004) 5 SCC  109;  Ravindra  &  Associates
Vs. Union of India,  (2010)  1  SCC  80;  Madnani  Construction  Corporation
Private Limited Vs. Union of India & Ors.,  (2010)  1  SCC  549;  Associated
Construction Vs. Pawanhans Helicopters  Limited,  (2008)  16  SCC  128;  and
Satna Stone & Lime Company Ltd. Vs. Union of India &  Anr.,  (2008)  14  SCC
785.)
We have also perused the  clauses  of  the  said  Agreement,  in  particular
clauses 3 & 5 of the Agreement. We find that  the  reasoning  given  by  the
Division  Bench  of  the  High  Court  cannot  be  said  to   be   perverse.
Furthermore, the appellant never terminated the Agreement or  requested  the
first respondent to take back the machinery. Now, at  this  stage  it  would
not be proper for us to express further  opinion  in  the  matter  when  the
matter/dispute has already been concluded by the Arbitrator  and  the  award
has been affirmed by the High Court. Under these circumstances, we do not find that there is any merit  in  these appeals. The same stand dismissed. However, the  parties  shall  bear  their
own costs.
2014 - Aug. Part - http://judis.nic.in/supremecourt/filename=41851
                                                     REPORTABLE


                        IN THE SUPREME COURT OF INDIA


                        CIVIL APPELLATE JURISDICTION





                    CIVIL APPEAL NOS. 7128-7129  OF  2011


M/s. Navodaya Mass Entertainment Ltd.                .… Appellant


                                  :Versus:


M/s. J.M. Combines
....Respondents




                               J U D G M E N T

Pinaki Chandra Ghose, J.


These appeals have been filed assailing the common judgment and order  dated
1.9.2009 passed by the Madras High Court in O.S.A. Nos.34 of  2009  and  140
of 2009 by which the High Court while allowing O.S.A. No.34  of  2009  filed
by Respondent No.1, dismissed O.S.A. No.140 of 2009 filed by  the  appellant
herein.  The facts of the case briefly stated are as follows:





The appellant offered a business proposal to  the  first  respondent  herein
and they entered into an agreement on July 30, 1998, whereby it  was  agreed
that the first respondent shall procure, install and  operate  an  amusement
ride for both adults and children called “SLAMBOB”  in  the  amusement  park
“Kishkinta” which was  maintained  by  the  appellant.  The  Agreement  also
provided  that  the  first  respondent  shall  maintain  the  equipment   by
effecting necessary repairs etc. The Agreement  further  provided  that  the
collection from the ride would be shared in the ratio of 60:40 by the  first
Respondent and the appellant  in  the  first  year  of  its  operation,  and
thereafter in the ratio of 50:50 in the subsequent years. It  also  provided
for a guaranteed minimum gross collection of Rs.10 lakhs for the first  year
and Rs.8.33 lakhs for the subsequent 9 years. The  Agreement  was  in  force
for a period of 10 years and could be renewed/terminated as  per  the  terms
thereof. Pursuant to the  Agreement,  the  first  respondent  installed  the
equipment on 16.04.1999 and it started functioning from the said  date.  The
appellant defaulted in making the payments from the year 2000-2001  onwards.
Despite repeated demands, the appellant failed to make the  payments,  hence
notice was served to the appellant calling upon the  appellant  to  pay  the
outstanding amount, along with interest at the rate of 24% per annum.


In these circumstances, dispute arose between the parties which was  covered
under  the  said  Agreement  by  arbitration  clause  and   accordingly   an
Arbitrator was appointed. The first respondent filed a claim for  a  sum  of
Rs.13,94,240/-  together  with  interest  on  16.10.2006.   The   Arbitrator
published his award allowing the claim to the tune  of  Rs.13,94,240/-  with
interest  at  the  rate  of  12%  per  annum,  but  disallowed  the  Minimum
Guaranteed amount of Rs.69,416/- per month  for  the  remaining  69  months,
commencing from July, 2003.  Aggrieved  by  the  award  in  respect  of  the
disallowed claim, the first  respondent  challenged  the  award  before  the
Madras High Court under by filing O.P. No.37 of 2007 and aggrieved over  the
entire award, the appellant challenged  the  same  before  the  Madras  High
Court by filing O.P. No.362 of 2007 under Section 34 of the Arbitration  and
Conciliation Act, 1996. The learned Single Judge of the  Madras  High  Court
dismissed both these applications. Aggrieved by  the  order  passed  by  the
learned Single Judge of the High Court,  appeals  were  filed  by  both  the
parties before the Division Bench of the High Court.  The High  Court  by  a
common judgment and order dated 1.9.2009 dismissed the appeal filed  by  the
appellant but allowed the appeal filed by the first respondent  herein.  The
High Court after scrutinizing all the materials placed  before  it  came  to
the conclusion that it is not in controversy that the Agreement was  entered
into between the parties on July 30, 1998. The parties also  agreed  to  the
ratio in which the collection of the amusement ride was  to  be  shared  and
the said Agreement was in force for a  period  of  10  years  and  was  also
renewable. The Agreement also stipulated  for  a  guaranteed  minimum  gross
collection of Rs.10 lakhs for the first  year  and  Rs.8.33  lakhs  for  the
subsequent 9 years.


The Division Bench of the High Court affirmed the award of  the  Arbitrator.
The High Court particularly held that the appellant having  failed  to  make
the payment of the dues, as agreed to between the parties, cannot  deny  the
lawful claim of the respondent and accordingly the  High  Court  upheld  the
reasoning  of  the  Arbitrator  and  dismissed  the  appeal  filed  by   the
appellant. The Division Bench of the High Court also held that the award  of
interest at the rate of 12% per annum  was  also  just  and  reasonable  and
accordingly affirmed the same. In these circumstances, the appeal  filed  by
the first respondent, being OSA No.34 of 2009, was allowed  and  the  appeal
filed by the appellant, being OSA No.140  of  2009,  was  dismissed  by  the
Division Bench of the High Court.


We have perused the order passed by the Division Bench of  the  High  Court.
We have also heard the learned counsel  for  the  parties.  Learned  counsel
appearing on behalf of the appellant submitted that the Arbitrator  and  the
Courts have failed to appreciate the fact that the claim was not on  revenue
sharing basis i.e. the gross income but it  was  on  the  basis  of  minimum
guaranteed amount stated in the  petitions.  Learned  counsel  appearing  on
behalf of the appellant tried to argue before us that the alleged  Agreement
was not legal, valid and enforceable. He further  submitted  that  the  same
was one-sided Agreement. He also submitted that the Division  Bench  of  the
High Court ignored and overlooked clause 14 of  the  Agreement  which  deals
with the termination of the Agreement by the conduct of the parties. We  are
afraid that such points, as has been tried to be  contended  before  us,  it
appears, were never urged before the learned  Single  Judge  or  before  the
Division Bench of the High Court.  The dispute between the parties has  been
adjudicated upon by the Arbitrator and the award  has  been  published.  The
Division Bench of the High Court has found that the award cannot be said  to
be perverse or that there is any cogent reason to set aside the same.


In our opinion, the scope of interference of  the  Court  is  very  limited.
Court would not be justified in reappraising  the  material  on  record  and
substituting its own view in place of the Arbitrator’s view. Where there  is
an error apparent on the face of  the  record  or  the  Arbitrator  has  not
followed the statutory legal position,  then  and  then  only  it  would  be
justified in interfering with the award published by  the  Arbitrator.  Once
the Arbitrator has applied his mind to the  matter  before  him,  the  Court
cannot reappraise the matter as if it were an appeal and even if  two  views
are possible, the view taken by the Arbitrator would prevail.  (See:  Bharat
Coking Coal Ltd. Vs. L.K. Ahuja, (2004) 5 SCC  109;  Ravindra  &  Associates
Vs. Union of India,  (2010)  1  SCC  80;  Madnani  Construction  Corporation
Private Limited Vs. Union of India & Ors.,  (2010)  1  SCC  549;  Associated
Construction Vs. Pawanhans Helicopters  Limited,  (2008)  16  SCC  128;  and
Satna Stone & Lime Company Ltd. Vs. Union of India &  Anr.,  (2008)  14  SCC
785.)


We have also perused the  clauses  of  the  said  Agreement,  in  particular
clauses 3 & 5 of the Agreement. We find that  the  reasoning  given  by  the
Division  Bench  of  the  High  Court  cannot  be  said  to   be   perverse.
Furthermore, the appellant never terminated the Agreement or  requested  the
first respondent to take back the machinery. Now, at  this  stage  it  would
not be proper for us to express further  opinion  in  the  matter  when  the
matter/dispute has already been concluded by the Arbitrator  and  the  award
has been affirmed by the High Court.


Under these circumstances, we do not find that there is any merit  in  these
appeals. The same stand dismissed. However, the  parties  shall  bear  their
own costs.

….....…..…………………..J.
(M.Y. Eqbal)

New Delhi;                                          ...........…………………….J.
August 26, 2014.                        (Pinaki Chandra Ghose)

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