BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                                        … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                            … RESPONDENT

INDEX

                                                                                                            APPELLANT

Through

XXXXXXXXXXXXXXXX

ADVOCATES FOR

XXXXXXXXXXXXXXXX

LAW FIRM AT

NEW DELHI-110008

xxxxxxxx

+91-xxxxxxxx/ Xxxxxxxx

New Delhi

xxxxxxxx

BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                                        … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                            … RESPONDENT

MEMO OF PARTIES

Xxxxxxxxxxxxxxxx

                                                                                    … APPELLANT

VERSUS

Xxxxxxxxxxxxxxxx

                                                                                                … RESPONDENT

                                                                                                            APPELLANT

Through

XXXXXXXXXXXXXXXX

ADVOCATES FOR

XXXXXXXXXXXXXXXX

LAW FIRM AT

NEW DELHI-110008

xxxxxxxx

+91-xxxxxxxx/ Xxxxxxxx

New Delhi

xxxxxxxx

BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

Xxxxxxxxxxxxxxxx

                                                                                    … APPELLANT

VERSUS

Xxxxxxxxxxxxxxxx

                                                                                    … RESPONDENT

APPEAL UNDER THE PROVISION OF SECTION 19 MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 (MSMED, ACT 2006) READ WITH THE PROVISION OF SECTION 34 SUB CLAUSE 2 OF THE ARBITRATION AND CONCILIATION ACT, 1996 READ WITH SECTION 151 OF CODE OF CIVIL PROCEDURE 1908 AS PREFERRED BY THE APPELLANT AGAINST THE ORDER AS PASSED BY THE LD SOLE ARBITRATOR WHILE ADJUDICATING THE ARBITRAL PROCEEDINGS AS PREFERRED UNDER THE PROVISION OF MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 (MSMED, ACT 2006) VIDE ORDER DATED THE 1^ST OF DECEMBER 2023

MOST RESPECTFULLY SHOWETH

A.   PURPOSE OF THE PRESENT APPEAL

1.    The Appellant before this Hon’ble Court is preferring the present appeal under the provision of Section 19 of MSMED Act, 2006 read with the Section 34(2) of the Arbitration and Conciliation Act, 1996, for short “Arbitration Act” and with Section 151 of the Code of Civil Procedure Code, 1908, for short “Civil Code”, whereby, the Appellant is challenging the Order dated xxxxxxx, for short “Impugned Order” on a limited aspect, of the fact that the Respondent was directed to pay a sum of INR xxxxx/- Inclusive of Interest alongside the Litigation Cost against a claim of INR xxxxxxxx/- inclusive of interestas filed by the Appellant before the Learned Arbitrator in the Statement of Claim. The Copy of the Impugned Judgment dated xxxxxxxxxxxxxxxx is annexed and appended as Annexure A-1 alongside the present petition.

B.   BRIEF INTRODUCTION

2.    That the Appellant is a Firm registered under the provision of Indian Partnership Act and the Appellant Firm, is an emerging firm which deals in the Manufacture of Bearings, Machines, Driving Elements and the Claimant Company is also in the Production and Manufacturing of ALU Castings for LED Street Lights, Fixtures Etc and at Present the Claimant Company is operating from the Address as mentioned in the Memo of Parties and the Present Claim Petition under the Provision of Micro, Small, Medium Enterprises Act is filed by xxxxxxxxxxxxxxxx, who’s Authority Letter is appended along-side the Present Claim Petition as Annexure A-2 alongside the present petition.

3.    That the Respondent No.1 is a Company as registered within and under an ambit of the Companies Act, 1956 as amended from time to time and at Present the Defendant No.1 Company is operating from the Address at mentioned in the memo of Parties, which xxxxxxxxx New Delhi. That the Defendant Company is having its Corporate Identification Number as xxxxxxxxxxxx and also at xxx, xxxx, xxxx, xxxxxxxxxxxxx is the office where the Books of Account and Papers are maintained by Respondent, through its director namely Sh. xxxxx Arora bearing DIN No. xxxxxxxxx, Sh. xxxxx xxxxx bearing DIN No. xxxxx nd Smt. xxx xxxx bearing DIN No. xxxxxx, who are managing the affairs of the Respondent Company. That the Screenshot from the Company of Affair qua the Respondent’s Detail is also appended as Annexure A-3 alongside the present petition.

C.   BACKGROUND OF THE PRESENT CASE

4.    That the Defendant firm through its directors in and around the beginning of 2017 approached the Appellant’s Firm and represented themselves as Directors of the Respondent Company, who were also managing the Daily Day to Day Affairs and management of the Respondent Company. Sh. xxxxxxxx, xxxxxx and Smt. xxxxxx represented to be carrying out all the management responsibilities of the Respondent Company coupled with the fact that the said mentioned directors are also entrusted with Substantial Powers of Management. 

5.    The afore-mentioned directors of Respondent Company gave personal guarantees to the Appellant Firm coupled with assuring the Appellant Firm that the Respondent Company through mentioned directors shall make the payment immediately post the receipt of Goods/Material from the Appellant Firm.

6.    That starting from the year xxxx, the Respondent through the mentioned directors started to place numerous orders to the Appellant Firm and it was mutually agreed between the parties and also as per the Tax/Retail Invoices that the payment of the due amount, being due against the goods being supplied by the Appellant’s Firm to the Respondent Company, shall be paid/remitted by the directors of Respondent No.1 within the stipulated period of days as prescribed under the Law.

7.    That starting from the year xxxx, the Respondent through its Directors personally visited the Office of the Appellants Firm and subsequently placed numerous orders. Consequent to which, all such Order/Orders of the Respondent No.1 wasduly fulfilled by the Appellants Firm. That the Appellants firm, as and when requested by the Respondent Company through its director, supplied goods to the Respondents in the same manner and as per the specifications as were requested by the Respondent Company through its director.

8.    That against the orders being placed by the Respondent Company to the Appellants Firm at their Delhi office, goods were supplied by the Appellant and such goods were accepted by the Respondent without any protest or demur of any manner whatsoever.

9.    That it is pertinent to mention that as and when an order was placed by the Respondent, the Appellants Firm subsequently delivered such goods, being of topmost quality and being as the per the specifications ordered by the Respondent, and the goods were supplied by the Appellants Firm to the Respondent by or before the time period as requested by the Respondent.

10. Apropos, to afore-mentioned the invoice(s) being issued by the Appellant Firm to the Respondent, and the Respondent accordingly made payments to the Appellant at their Delhi office on a running account basis.

11. That the Respondent Company through its directors, in light of the mutually accepted terms and conditions between the parties placed their order, and subsequently, against such order placed by the Respondent, the Appellant Firm company supplied the Goods to the Respondent in accordance to the specifications and satisfaction of the Respondent. It is pertinent to mention herein that the Respondent without any protest or demur accepted the Goods being supplied by the Appellant Firm.

12. That it is pertinent to mention that the Goods were supplied by the Appellant Firm through the medium of a transport carrier, to which the Appellant Firm had delivered the Goods to the Respondent against the invoices being issued by the Appellant Firm to Respondent and the Payments were made on the Running Account basis and the Respondent made payments to the Appellant at their Delhi office on a running account basis. The invoices are also annexed alongside the present petition.

13. That the Appellant Firm very fairly states before this Hon’ble Court that on the xx of xx xxxx, the Respondent also admitted and confirmed the Accounts and the Balance Payment i.e., the Principal Amount was outstanding to an extent of INR xxxxx/- which was to be paid by the Respondent to the Appellant Firm. That on xxxxx, the Appellant Firm by invoking the Provision of Insolvency Act, issued a Demand Notice demanding payment of an unpaid debt to an extent of INR xxxxxxxxx/- in which INR xxxxx/- was pending towards the Principal Amount and INR xxxxx/- was pending towards Interest and the said Demand Notice very specifically stated that the payments are to be made in accordance with the Provisions of MSME Act as the Appellant Firm is registered under the Provision of MSME Act and the Respondents were at continuous default of the said outstanding amount which can also be confirmed by their own admission of admitting the Liability of the Amount.

14. That the Appellant Firm Fairly states before this Hon’ble Tribunal that post the receipt of the Demand Notice, the Respondents through its director approached the Partner of the Appellant Firm and Respondent requested to settle the disputes as directors of Respondent Company assured that the Principal Amount as stated in the Demand Notice shall be paid by the Respondent to the Appellant Firm and subsequent to which, a Settlement Agreement was made and it was explicitly made clear that the Outstanding Amount shall be paid in Four Instalments vide Cheque No. xxxx, xxx, xxxx, xxxx and the Respondent through its directors confirmed that in the event of breach of payment plan/schedule, the Respondents through its director shall be liable to pay the entire amount with an interest as claimed in the Demand Notice of xx.xx.xxxx.

15. The Appellant Firm states fairly before this Hon’ble Tribunal that two instalments vide Cheque No. xxxx and xxxx was paid as the same can also be verified from the Statement of Account of the by the Appellant Firm as well as the Respondent. Subsequent to the clearance of the Afore-mentioned Cheques, the director of Respondent Company once again requested the resumption of business amongst the Parties and again on the personal assurances and representations as warranted by the Respondent, the Appellant Firm once again started the Business Trade inter se between the Parties and on request, the Cheque No. xxxxxx and xxxxx were returned back as it was assured by the Respondent that said payment shall be made during the course of the running account as the financial status of Respondent Company was not that great and only once the business of Respondent is restored back to its original then only the payments shall be released over.

16. Owing to the Cordial Business Relationship, inter se, between the Parties, the Appellant Firm started once again to supply the goods as per the specifications as rendered down upon by the Respondent and being satisfied with the quality of the Goods, the Respondent once again started making Payments qua the Running Account basis. That the Payments starting from the xx of xxx xxxx till the last invoice dated the xx of xxx xxxx, the Respondent failed to make the payment of the Amount to the Claimant Firm as required under the Provision of Section 15 of the MSMED Act.

17. As on xxxxxxx, the Total Principal Amount as rendered outstanding between the Parties to the Proceedings were to an extent of INR xxxxxx.20 and also the Interest on Delayed Payments as to be levied under the provision of MSMED Act.

18. The Appellant had no other option but to file a Claim under the Provision of Section 18 of the MSMED Act before the Facilitation Council as the Respondent failed to make the Payment under the Provision of Section 15 of the MSME Act and on failure to Pay the Interest under the Purview of Section 15 and 16, the Application under the Provision of Section 18(1) was filed before the Office of the Sub-Divisional Magistrate and the same was registered vide File No.xxxxxxxx. Notice was issued to the Respondent, who, appeared and preferred a reply before the Office of the Sub-Divisional Magistrate and the objections were taken primarily on pretext of Interest Rate coupled with Settlement, to which in reality was not even complied by the Respondent and all the other contents were not denied, hence the same becomes an admission on part of the Respondent that the Goods were delivered and that too without any protest and also the Principal Amount was admitted and the only objection was taken with regard to the Calculation of the Interest Amount.

S

19. Despite the Indulgence of the Learned Council under the Provision of 18(2) of the Act In order to conduct a conciliation in the matter or by providing an alternate dispute resolution service for conducting conciliation. Despite the best of possible assistance as rendered down up by the Learned Council and the Appellant, the Respondent miserably failed to respect the Proceeding and on failure on part of the Respondent despite the fact that the services stood rendered by the Appellant and the Respondent was not discharging the payments, the Council deemed it appropriate to refer the Matter to before the Present Arbitration Centre.

20. That all the director of the Respondent Company, as stated afore-said are jointly and severally liable to the Claimant Firm and because of the Personal Guarantees and Assurances as rendered down upon by the Respondent coupled with Fraud been played by the Respondent, the Corporate Veil is required to be lifted in the Present Matter and to clear the Legitimate dues of the Appellant Company under the Provision of Section 15 and 16 of the MSME Act which requires the Respondent to make the payment to the Appellant Company within specific days of the submission of the Invoice and the Section 15 of the Act uses the word “Shall” hence making it mandatory for the Respondent to clear the dues within the specific period of days of submission of the Appellant Invoice and in any case, it is statutorily incumbent in law that a buyer cannot exceed the period of 45 Days from the date of Acceptance of service for discharging the Payments.

21. The Compound Interest is mandated by MSMED Law and the provision also uses the word Shall, and is therefore mandatory in nature and the law has mandated that the Compound Interest has to be paid by the Buyer at Three Times of the Bank Rate as notified by the Reserve Bank of India, making the said provision applicable on all the pending dues and belated payments that stand due on the Respondent and in the issue at hand, the calculation of compound interest clock commences from the xx to xx Day of receipt of Claimants invoice by the Respondent which remained uncleared by the Respondent within the given time frame.

22. Consequent to the above, the Respondent is duty bound and obligated in law to clear and principal amount and interest of the Appellant as enshrined in Section 17 of the Act and the Respondent has miserably failed to comply with the provisions of Law and deliberately violated the same despite several reminders and no action was taken by the Respondent on payment of the dues towards the Appellant.

23. That, as such, it is clear from the above-mentioned facts, that the Respondent has failed to make payments as per the aforementioned section of the MSMED Act and as such the Appellant, approached the Ld. Tribunal, as enshrined under the relevant provision of Law.

24. The Appellant, submitted the claim, before the Learned Tribunal by virtue of the statement of claim as per the provision of MSMED Act on xx of xxx xxxx alongside the documents, which is filed and annexed as Annexure A-4 Colly.

25. The Respondent then on xx^rd of xx xxxx filed its Statement of Defence, inter alia, praying for dismissal of the Statement of Claim and at the same time the Respondent also filed a Counter Claim inter se raising a claim of INR,xxxxxx/- on account of Damage on account of loss of sale and INR xx,xx,xxx/- as claim for damages on account of Loss of reputation and mental distress plus costs and interest. The Copy of Statement of Defence alongside documents coupled with the Counter Claim as raised by Respondent is annexed and appended alongside the present petition as Annexure A-5 Colly.

26. The Petitioner then on xx of xx xxxx, filed the Rejoinder to the Statement of Defence as filed by the Respondent to the Claim Petition alongside the Statement of Defence to the Counter Claim as filed by Respondent. In addition to the same, the Petitioner then filed an affidavit of admission and denial and Evidence by way of an Affidavit before the Ld. Tribunal over an e-mail. The Copy of Documents as filed is annexed and appended alongside as Annexure A-6 Colly. The Respondent on xx of xx xxxx had filed the affidavit of admission and denial of documents and the same is annexed and appended as Annexure A-7.

27. In addition to above, the Petitioner on xx^th of xxxx filed the Evidence by way of an affidavit and the Respondent on xxxxx filed the Evidence by way of an affidavit dated xxxxxx and the same is exhibited as Annexure 8 Colly, whereas in the Counter Case, the Evidence was filed by Counter Claimant on xxxxxx and the Petitioner on Evidence in the Counter Claim case and the same is annexed and appended. It is stated that the directors of the Respondent Company were pleaded over in the said arbitration, however, an interim application seeking deletion of directors were filed, which was thus subsequently dismissed. In addition to the same, the Appellant also filed that interim application seeking permission to cross examine the AR of the Respondent, and the same was also dismissed by the Ld. Arbitrator for the reasons best known to the learned arbitrator. The Copies of the Documents as well as the order is annexed and appended as Annexure A-9 Colly.

D.   ISSUES AS FRAMED BY THE LEARNED TRIBUNAL

28. The Learned Arbitrator post the perusal of the pleadings of the case inclusive of Arbitration as well as Counter Claim framed the following Questions to adjudicate the present matter which is evident as per Para 9A of the Impugned Judgment which are as follows-

i.             Whether the parties come under the purview of MSMED Act, 2006 or not? Whether the Claimant is not entitled to get any relief through this MSME Arbitral Tribunal, being registered with MSEFC Subsequent of date of entering into contract as well as subsequent of rendering its said services to respondent, as contended by Ld. Counsel for respondent.

ii.            Whether claimant is not entitled to seek remedy from this platformi.e. MSME Arbitral Tribunal, being an unregistered partnership firm as barred under section 69 Partnership Act, 1932?

iii.           Whether the bills/invoices raised by claimant to respondent andbasing upon instant claim is raised, are bogus and not genuine?

iv.           Whether the claim raised herein by claimant, is time barred, ascontended by respondent?

v.            Whether under effect of Novation of Contract, as provided undersection 62 Indian Contract Act, 1872, being resumption of businesswith it by claimant after having terminated of settlement-agreement,respondent was not to perform the original (said settlement-agreement)agreement?

vi.           Whether Clause Force Majeure applies to the present matter or not?

vii.         Whether defence of respondent that goods received to it from claimant were of inferior quality / low grade is plausible and sustainable in view of documentary evidences available on record?

viii.        Whether, respondent is liable to pay entire claim amount with interest of INR xxxxxxxx/-, if not, then how much?

E.    FINDINGS BY THE LD. ARBITRATOR

29. Pursuant to the question as framed under the arbitral proceedings, the Ld. Arbitrator dealt with the questions perusal of the agreements and on the basis of documents on record. With Respect to Serial no (i) the Ld. Arbitrator held as under

As argued by the learned counsel for the claimant, the claimant is a legitimate enterprise as it is a Company· registered with the Ministry of MSME, India, under its Udyog Aadhaar No.xxxxxxxx dated xx xx, xxxx (subsequently replaced by Udyam Registration No. xxxxxx-xxxxx). The company, structured as a partnership firm, specializes in the manufacturing and supply of bearings, machines, driving elements, and aluminium castings for LED street lights and fixtures, operating from its base in xxxxxxx, Delhi.

Given this information, it is clear that the claimant is a valid supplier under the MSMED Act, 2.006, even during the ongoing business relationship with the respondent. This business relationship commenced in xxxx and continued until xx xxx, xxxx, the date of the last invoice. raised. While the learned counsel for the respondent has challenged the maintainability of the instant claim petition under the provisions of the MSMEP Act, 2006, arguing non-compliance with Section 8 of the MSMED  Act, 2006, due to the absence of a required memorandum filed by the claimant, this contention is misplaced. The claimant is not obligated to file such a memorandum as mandated in Section 8 of the MSMED Act, 2006, since it is optional for Micro & Small Enterprises to file it.

Also, this issue has been set at rest as Hon 'ble High Court of Delhi in its latest judgement titled as "xxxxxxxx Vs xxx xxxxxxx &Anr. W.P.(C) xxxx/xxxx, CM APPL. xxxx/xxxx decided on xx.xx.xxxx by Justice Prathiba M. Singh" which held that even if during the course of supply, if supplier gets itself registered with the MSEFCthen also that supplier will be entitled to seek its due claim under the provisions of MSMED Act 2006.

The aforesaid legal proposition is further upheld by the Hon'ble bench of Delhi High Court in LPA No. xx/xxxx titled as "xxxxxxxxx &Anr. decided by Jxxxxxxxxxxxxxxxx  (Delhi-DB).

In light of all the above considerations, it is evident that the respondent's argument challenging the claimant's recourse to the MSMED Act, 2006 is untenable. Despite the claimant's admission that their registration occurred on xx xx, xxxx, it is an undisputed fact that the business relationship with the respondent, commencing in xxxx, continued until xx xx, xxxx, well after the claimant's registration with the MSEFC under the MSMED Act, 2006.

Furthermore, the learned counsel for the respondent contends that since the claimant, being a partnership firm, is not a .registered firm, it does not qualify as a valid supplier under Section 2(n)(iii) of the MSMED Act, 2006.

However, this contention of the respondent is not sustainable. As observed, Section 2(n)(iii) of the MSMED Act, 2006 stipulates -that a supplier can be any company, cooperative society, trust, or a body that is registered or constituted under any law currently in force, and is engaged in the production of goods by micro or small enterprises and in rendering services. In this case, the claimant, though not a registered partnership firm, is constituted under the provisions of The Partnership Act, 1932, and its registration for conducting business is not mandatorily required. Moreover, this tribunal concurs with the claimant's counsel that Section 2(n)(iii) of the MSMED Act, 2006, in addition to the terms "company, cooperative society, and trust," also includes the phrase "or a Body," which encompasses the Claimant. Thus, the claimantsatisfies the definition and requirements of Section 2(n)(iii) of the MSMED Act, 2006.

Therefore, this tribunal, in its considered observation and opinion, determines that the claimant is indeed entitled to avail the benefits of the .MSMED Act, 2006 for its claim before this arbitral tribunal. Consequently, the present question is resolved in favor of the claimant and against the respondent.

30. With Regard to Issue No.(ii) i.e. No Entitlement of claimant to seek remedy from this MSME Arbitral Tribunal being not registered partnership firm, as required under section 69 The Partnership Act, 1932, the Learned Arbitrator held as under

The learned counsel for the respondent has raised an objection based on Section 69 of The Partnership Act, 1932, arguing that claimant is not a registered partnership firm, it cannot seek any remedy under its firm name. As the claim herein is filed in the name of the firm, the counsel contends that it should be dismissed or rejected.

In contrast, the counsel for the claimant submits that while the registration certificate could not initially be placed on record, the claimant is indeed a registered partnership firm since xxxx as evidenced by the registration certificate issued under No.xxxxxxx dated xx xx xxxx by the office of the commissioner of industries, Delhi. The Claimant has subsequently produced this certificate.

The learned counsel for the respondent has strongly objected to the inclusion of this registration certificate in the records, arguing that the matter is not at the stage of final arguments and that at this late stage, no new document should be accepted. This tribunal concurs with the submission of the learned counsel for the respondent in this regard. However, it is observed that even if the said registration certificate of the claimant is not admitted into the record, the claimant is still entitled to seek a remedy from this platform. The reason being the present proceedings are arbitration proceedings and cannot be equated to or treated as a lawsuit.

Further, as this Arbitral Tribunal in no case is a "Court" ,as per definition of Section 2 of Arb. & Cone. Act, 1996, so also it is quite clear that Section 69 of The Partnership Act, 1932 doesn't apply to any proceeding before this tribunal. Reliance may derived from judgment titled as "Dattatray N. Sawant &Anr. Vs. Nitida A. Mehta & Ors.- 2015(6) ALL MR 552(Bom.)".

It is thus, this question is answered in negative against the respondent and in favour of claimant by holding that claimant well entitled to seek claimed remedy before this platform, this arbitral tribunal.

31. With Regard to Issue No.(iii) i.e. bills/invoices raised by claimant to respondent. are bogus and not genuine, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below

This tribunal finds the submission of the respondent to be wholly misconceived and untenable. The reasoning for this conclusion lies in the fact that the respondent, having acknowledged its liability, entered into and executed a settlement agreement on xx xx, xxxx., Subsequently, it is inconsistent and contradictory for the respondent to challenge the bills, especially after entering into a settlement. Moreover, all invoices in question are GST-paid invoices, and there is no indication from the respondent that it has not taken or availed of the GST inputs from these bills/invoices. Furthermore, the respondent’s own ledger indicates and outstanding balance of INR xxxxxx/-. Consequently, the respondent’s characterization of the claimants bills as bogus is an incorrect submission. Therefore, this question is resolved in the negative against the respondent and in favour of the claimant, affirming that the bills/invoices are not bogus and false.

32. With Regard to Issue No.(iv) i.e. Claim is time barred or not, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below

The respondent contends that the claim raised by the claimant is time-barred because the business relations commenced on xx xx, xxxx (the date of the first invoice), and the claim petition was filed before this tribunalon xx xx, xxxx. They argue that even considering the execution of the settlement agreement on xx xx, xxxx, the claim petition is still time-barred as it was filed well beyond the permissible three-year period, which would have expired in xx xxxx.

Countering this, the learned counsel for the claimant submits that the claim petition is within the limitation period and, therefore, is not barred by time. He argues that since there was an unchallenged running account of the respondent being maintained by the claimant, and there were demands based on that account, Article 1 of the Schedule of the Limitation Act, 1963 applies. According to Article 1, the last cause of action arises at the close of the year when the last entry of the transaction is made in that account. In this case, the ledger of the respondent {Exb.CW-1/ 1) pages 122 to 127 of SOC shows the last transaction made via Voucher no.177 on June 14 2022. Therefore, the claim petition filed on xx xx, xxxx, falls well within the three-year limitation period ending on xx xx, xxxx.

Consequently, this question is answered in the negative against the respondent and in favour of the claimant, confirming that the claim petition is not time-barred.

33. With Regard to Issue No.(v) i.e. Respondent's No Liability to honour Settlement- Agreement under effect of Novation of Contract being resumption of business by claimant with it as per section 62 Contract Act, 1872, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below-

The learned counsel for the respondent argues that the resumption. of business relations with the claimant after the non­compliance of the settlement agreement dated xx xx, xxxx, constitutes a novation of the contract. They contend that, by virtue of Section 62· of the Indian Contract Act, .1872, the. respondent is not obligated to perform or honor the said settlement agreement, thereby absolving them of any liability towards the claimant.

In response, the learned counsel for the claimant counters this submission by referring to Clauses 6 and 7 .3 of the said settlement agreement dated xx xx, xxxx. They point out that Clause 6 permits any modification of the agreement only through a written document signed by both parties. Since there is no such document that is written and signed by both parties, they argue, there has been no novation of the settlement agreement. Furthermore, Clause 7 .3 of the settlement agreement stipulates that it is an irrevocable agreement and cannot be dissolved under any circumstances.

Thus, based on the provisions of the settlement agreement and the absence of a written and mutually signed document indicating any modification or novation, the claimant's counsel asserts that the original terms of the settlement agreement remain binding and enforceable.

However, it is an acknowledged fact between the parties that despite the non-compliance with the settlement agreement, given that the respondent failed to pay the last two instalments of Rs. Xxxxx each within the scheduled timeframe specified in the agreement and has only made a part-payment to the claimant during an extended period of approximate 5 months. It is also a recognized fact that the claimant has accepted this part-payment from the respondent without objection Furthermore, the parties resumed their transactions, with the claimant making the last sale on xx xx, xxxx, and the respondent completing the last payment to the claimant via bank transfer on xx xx, xxxx

In light of the aforementioned circumstances, this tribunal holds the considered view that the settlement agreement between the parties has been duly complied with and concluded after the claimant received the ·1ast • payment on xx xx, xxxx. Therefore, the claimant is not entitled to reopen the issue of delayed payments for transactions that occurred before xx xx xxxx. Subsequent transactions, which resumed from xx xx xxxx, are not part of the settlement agreement between the parties and are conducted under a mutual understanding without any formal agreement.

Thus, this question is resolved in favor of the respondent, specifically regarding the finding that the respondent has fulfilled the obligations of the settlement amount as per the settlement agreement and is not liable to pay the claimant for any transactions that occurred before August 8, 2020.

34. With Regard to Issue No.(vi) i.e. Filing of claim petition by authorized person o.r not, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below-

In response, the learned counsel for the claimant referred to Paragraph 1 of the claim petition and argued that the claim petition was filed by Mr. xxxxxxxx, who is one of the partners of the claimant firm, and therefore, it was filed properly by an authorised person.

There is no doubt that Mr. xxxxxxxx is a properand authorized individual to file the claim on behalf of the claimant firm.

                   Consequently, the present question is resolved against the respondent and in favor of the claimant, affirming that the claim petition was properly filed by an authorized person.

35. With Regard to Issue No.(vii) i.e. Applicability of Force-Majeure into the present matter, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below-

                   This tribunal, in its findings on the related issues in 9.B.v observes that the settlement agreement between the parties was effectively concluded after the respondent made the last part-payment on xxxxxxxxx. Additionally, the business transactions that resumed from xxxxxxxx continued until xxxxxxxxxx, with the claimant receiving the last payment on xxxxxxxxxxxx, without any protest or objection. Therefore, there was no basis to invoke a plea of force majeure in the current proceedings, and any such claim is deemed to be without merit.

36. With Regard to Issue No.(viii) i.e. Plausibility of respondent’s defence of receiving low-graded/inferior quality goods from claimant, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below-

The tribunal observes that the respondent's own ledger records an outstanding principal amount of Rs. xxxxxx /-owed to the claimant, raising questions about the legitimacy of the alleged rejections of goods worth Rs. xxxxxxxxx /-. Besides a single email, the respondent has not provided substantial evidence regarding the quality of the goods supplied by the claimant or any direct loss suffered due to the alleged inferior quality. Therefore, the tribunal concludes that the respondent has failed to substantiate its claim that the goods supplied by the claimant were of inferior quality or low-grade

Consequently, this question is resolved in the negative against the respondent and in favour of the claimant.

37. With Regard to Issue qua the Liability of respondent to pay the entire claim amount of Rsxxxxxx/-(Rs. xxxxxxxxx/-as principal amount and balance as interest, to which the Ld. Arbitrator post the perusal of the documents coupled with arguments as addressed gave the finding as below-

Therefore, considering the facts of the present case, this tribunal views that the claimant is only entitled to delayed payment interest as per the provisions of the MSMED ACT, 2006 from xx xx,xxx, the date of the last payment received from the respondent and only on the principal amount of INR xxxxxxx. The Claimant’s request for interest amounting to INR xxxxx.xx, as per its calculation sheet is deemed misconceived and is thus rejected

38. The Learned Arbitrator, now while adjudicating the Counter claim as filed by Respondent and on the pleadings the Ld. Arbitrator rightly came to the conclusion that upon consideration of all submissions, pleas and contentions of respective parties and evidences on record, the Learned tribunal has found that it is clear that counter-claim based upon claim of suffering loss of sales / revenue to the tune of INR xxxxxxx/- is not supported with any documentary evidence which may substantiate or even reflect the actual loss suffered to CC, more particularly only because of claimed reason of non-receiving back the alleged defective/ low-graded material at the end of Appellant. Said emails nowhere stand out a case that Respondent had directed or demanded Appellant to take back the alleged defected materials from it. Also, thereis not on record that alleged supply of defective goods/material was brought to the notice of Appellant within time, nor even any debit note is supplied/ issued to the Appellant and same is also not reflecting into / account-statement of Appellant maintained by Respondent. Henceforth, the Learned Tribunal in total agreement of the plea of Appellant that for claiming damages, the breach of contract is a pre-condition and in this whole issue, there is not any allegations of Respondent that contract was breached by Appellant in any manner or any given point of time.

39. Henceforth. The Learned Tribunal rightly, held that the whole onus to prove its Counter Claim was lying upon the Respondent and the Respondent failed to prove the case as alleged by Respondent before the Learned Arbitrator as the Counter claim grounds were similar to what was raised in the Statement of Defence and henceforth the Ld. Tribunal without any doubt pleased to dismiss the Counter Claim of Respondent.

40. The Learned Arbitrator while awarding the interest to the amount as held in one of the questions before the Ld. Arbitrator, more particularly, to the issue which was held against the Appellant, the Ld. Arbitrator relied upon the provision of MSMED Act, by placing reliance upon Section 16 and 17 of MSMED Act to award interest at three times of rate of 5.15% per annum which stands out to be at 15.45% and hence the Ld. Tribunal awarded the interest of INR xxxxxx/- against the interest as claimed by Appellant before the Ld. Arbitrator, the fact which is under challenge before the Ld. Arbitrator as the same finding of the Ld. Arbitrator is patently wrong and to be interfered with.

41. The said order under the provision of Arbitration Act as impugned before this Hon’ble Court is challenged primarily on the below mentioned grounds which are as follows.

F.    GROUNDS

42. BECAUSE,the Learned Arbitrator failed to note the Clauses of the Settlement Agreement and more particularly, Clause No.3.1, inter alia, which states and records that the Respondent agrees and confirms alongside acknowledged to pay an amount of INR xxxxxx/- to the Appellant in order to amicably resolve the present matter, in accordance with the payment schedule and in lieu of which Four Cheques of INR xxxxxxx/- were issued over by Respondent to the Appellant.

43. BECAUSE, the Ld. Arbitrator failed to acknowledge the Clause No.3.2 of the Settlement Agreement, inter alia, which records that the Respondent irrevocably agreed and confirmed that the Demand Notice dated xxxxx shall remain in effect and continuance until the payment of the entire dues as mentioned in Clause 3.1.

44. BECAUSE, the Ld. Arbitrator failed to appreciate and take a note of the Legal Notice as mentioned aforenoted i.e., xxxxxxxx, wherein the total amount of debt was of INR xxxxxxx/- out of which INR xxxxxxxx/- was the amount outstanding for Principal and INR xxxxxxxx/- was for Interest. It is an admitted fact that the said amount of INR xxxxxxx/- was an admitted amount by the Respondent resulting which only the Settlement Agreement as afore-mentioned was entered upon by the parties to the present petition. Perusal of the settlement agreement would reveal that the said settlement agreement was binding upon on the parties to the present arbitration, their successors in interest, and present and future affiliates, subsidiaries, assignees or acquirers, including any acquirer of substantially all of an asset. 

45. BECAUSE, the Learned Arbitrator failed to note and acknowledged Clause 3.3 of the Settlement Agreement, which inter alia, and more specifically stated that the Respondents will pay the sum of INR xxxxxxxx/- in accordance with the payment schedule as mentioned in Clause 3.1 above, the Appellant had agreed to amicably resolve the present matter in an amount of INR xxxxxxxx/-. The Learned Arbitrator patently failed to note the furtherance of the clauses of the settlement agreement which connoted the intent of the parties to the present petition as the Respondent vehemently agreed that in event of breach of payment plan/schedule as mentioned in Clause 3.1 of the Settlement Agreement, the Respondent shallbe liable to pay the entire amount with interest as claimed in the Demand Notice of xxxxxx for an amount of INR xxxxxx/- after deducting the amount already paid by the Respondent.

46. BECAUSE, the Learned Arbitrator failed to appreciate the statement of defence on record wherein the Respondent themselves admitted to the Settlement Agreement and the Amount of the Legal Notice dated xxxxxxxxxx and also the fact that the Cheques, as mentioned above were handed over.

47. BECAUSE, The Learned Arbitrator in its order gave a very categorically finding qua one of the issues which is co-related to the second issues, in which the Learned Arbitrator despite adjudicated the issues in the favour of Appellant, turned the clock against the Appellant. The Ld. Arbitrator as held the submissions of the Appellant to be correct to an extent that the claim as filed by the Appellant was well within time and the Ld. Arbitrator had also post the perusal of the pleadings on records and post the submissions has rightly held that it is an admitted and acknowledged fact between the parties that “despite thenon-compliance with the settlement agreement, given that the Respondent failed to pay the last two instalments of INR xxxxx/- each within scheduled timeframe specified in the agreement and has only made a part payment to the Appellant.

48. BECAUSE, the Learned Arbitrator despite having a conclusive finding qua the fact that the settlement agreement which was entered upon by the parties by their free will was anyway not complied with by the Respondent and hence the Respondent violated the Clause 3.3 of the Settlement Agreement inter alia by which it was now on Respondent to pay the entire amount of the demand notice minus the amount already paid, the Learned Arbitrator gave a perverse and patently wrong finding qua the fact that since the parties to the petition resumed their transaction, with the Appellant making last sale on October 16^th, 2021 and Respondent completing the last payment to the Appellant on xxxxxxx coupled with the fact that the Appellant did accept the part-payment from Respondent without objection and hence such the Appellant is not entitled to re-open the issue of delayed payments for the transaction that happened before hand.

49. BECAUSE, the said afore-mentioned findings by the Ld. Arbitrator is in complete contradiction to the documents on record and moreover the admissions which are quite evident from the documents as filed by Respondent to an extent that there was no question of Appellant accepting or denying the part-payments (if any), the parties to the contract was very well governed by the Clause of 3.3 of the Settlement Agreement which specifically made it clear that if the Respondent failed to pay the entire amount with interest as claimed in the Demand Notice after deducting the amount already paid by the Respondent.

50. BECAUSE, the Appellant without prejudice to the rights and contention of Appellant states that the total amount as claimed in the demand notice dated xxxxxxx was INR xxxxxxxxxxx/- and even if we believe the version of the Respondent and also the fact which has been acknowledged by Ld. Arbitrator that the payments of First Two Instalments for an amount of INR xxxxxxx/- has been paid and Appellant without prejudicing the right also if state that even if the payment if we take from xxxxxxx till xxxxxxxxxx which were of INR xxxxxx/- coupled with INR xxxxxxxx/-, INR xxxxxxxxx/-, INR 5xxxxxxxx/-, INR xxxxxxx/- and INR xxxxxxx/-, the total of which shall come at INR xxxxxxxxxx/-, henceforth leaving a balance of INR xxxxxxx/- , by which the Ld. Arbitrator also affirmed that the settlement agreement has not been complied, therefore Clause 3.3 shall be attracted which the Ld. Arbitrator failed to appreciate and the result of which the Respondent was under an obligation to pay INR xxxxxxxxxx.1/- i.e., { INR xxxxxxxxxxxxxx13- INR xxxxxxxxxx/- minus INR xxxxxxxxxx/-} and by adding an amount of INR xxxxxxxxxxxxx/- coupled with interest at the rate as prescribed under the provision of MSMED Act.

51. BECAUSE, the Learned Arbitrator out of 9 issues has rightly awarded and held seven issues to be in favour of the Appellant, however the Ld. Arbitrator had patently failed to acknowledge the remaining two issues in light of the documents as well as submissions of the Respondent which makes the present judgment to be perverse and patently wrong, hence making it in conflict with the public policy of India and in conflict with the most basic notions of morality and justice. Henceforth, the present Appeal under the relevant provision of Law is limited to those two findings as rendered by the Ld. Arbitrator as the last issues is read in conjunction with issue no.5 as the Learned Arbitrator at one place mentions that there was a default on part of Respondent and at the other side rules in favour of the respondent by saying that the respondent has fulfilled the obligations of the settlement agreement.

52. BECAUSE, The term “patent illegality” was explained in detail and brought within the scope of public policy of India for the first time by the Apex Court in ONGC Vs. SAW Pipes [(2003) 5 SCC 705]. However with the amendments to Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the said Act), made by the Arbitration and Conciliation Amendment Act, 2015, with effect from 23rd October, 2015, the expansion of the term public policy of India as interpreted by Courts previously has been done away with.

53. BECAUSE, The Law Commission examined and submitted its 246th Report on "Amendments to the Arbitration and Conciliation Act, 1996" in August, 2014 and recommended various amendments in the said Act. The proposed amendments were intended to facilitate and encourage Alternative Dispute Mechanism, especially arbitration, for settlement of disputes in a more user-friendly, cost effective and expeditious disposal of cases since India is committed to improve its legal framework to obviate in disposal of cases.The 246th Report of the Law Commission recommended considerable changes to Section 34 of the said Act. The 246th Law Commission Report proposed amendments to the said Act, narrowing down the grounds of challenge the Arbitral Award, apart from providing for appointment of independent, impartial and neutral arbitrators, amongst several other amendments. The judgment in ONGC’s case stated supra along with the judgment in ONGC v. Western Geco International Ltd. (2014) 9 SCC 263 : (AIR 2015 SC 363) has been expressly done away with.

54. BECAUSE, Both Sections 34 and 48 of the said Act have been brought back to the position of law contained in Renusagar Power Plant Co. Ltd. v. General Electric Co. (1994) Supp (1) SCC 644 : (AIR 1994 SC 860), where "public policy" will now include only two of the three grounds set out therein, i.e., "fundamental policy of Indian law" and "justice or morality" in addition to the ground where making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81 as provided in Section 34 of theamended Act . The ground relating to "the interest of India" stated in the said Judgment is no longer available as valid ground. "Fundamental policy of Indian law" is now to be understood as laid down in Renusagar (supra). Meaning of "Justice or morality" has been tightened and is now to be understood as only basic notions of justice and morality i.e., such notions as would shock the conscience of the Court as understood in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49 : (AIR 2015 SC 620). The main object of the amendment of 2015 is to speed up the arbitration process and to minimize the intervention of the Courts which would ultimately ease doing business in India.

55. BECAUSE, the Amendment of 2015 clearly defines the term public policy of India and has introduced a new ground, namely Section 34(2A) for setting aside domestic arbitral awards on the ground of patent illegality. This ground will be applicable only to arbitrations taking place in India and not to International Commercial Arbitrations as can be make out from the wording of the section which says “other than International commercial arbitration.

56. BECAUSE, In one of its earlier decisions in Gherulal Parekh v. MohadeodasMaiyain AIR 1959 SC 781, the Hon’ble Supreme Court gave a narrow interpretation of public policy. It held that within public policy of India, lay certain determinate specified heads and that it would not be prudent to begin search for new heads. However, in Central Inland Water Transport Corp Ltd v Borjo Nath Ganguly, the Hon’ble Supreme Court promoted a wider stance by interpreting the term public policy on the pillars of public conscience, public good and public interest.

57. BECAUSE, the Petitioner states that such awards, without an iota of reasoning, are rendered patently illegal and also in violation of public policy of India. On this basis, it was submitted that this was a sufficient ground under Section 34 of the Arbitration Act, for setting aside the impugned awards.

58. BECAUSE, The MSME Act was introduced with the purpose of facilitating the promotion and development of micro, small and medium enterprises as well as ensuring their competitiveness. It aims at ensuring timely and smooth flow of credit to such enterprises as well as minimizing instances of sickness among them. Further, the Act itself provide statutory remedy of appeal under Section 19 of the MSME Act.

59. BECAUSE , In support of the above contentions, Appellant relied upon various judgments of Apex Court in the cases of Tirupati Steels vs. Shubh Industrial Component and Ors. reported in (2022)7 SCC 429, Modern Industries Versus Steel Authority of India Limited and Others reported in (2010) 5 SCC 44: 2010 LAWPACK(SC) 48090, United Bank of India Versus SatyawatiTondon and Others reported in (2010)8 SCC 110: 2010 LAWPACK(SC) 48508, Snehadeep Structures Private Limited Versus Maharashtra Small Scale Industries Development Corporation Limited reported in (2010)3 SCC 34: 2010 LAWPACK(SC) 47743: 2010(1) R.A.J. 532, Goodyear India Limited Versus Norton Intech Rubbers Private Limited and Another reported in (2012)6 SCC 345: 2012 LAWPACK(SC) 51351, Gujarat State Disaster Management Authority Versus Aska Equipments Limited reported in (2022)1 SCC 61: 2021 LAWPACK(SC) 65628, Sri Paravathi Parmeshwar Cables and Others Versus Andhra Pradesh Transmission Corporation Limited and Another reported in (2013)10 SCC 693: 2012 LAWPACK(SC) 51904: 2013(1) R.A.J. 148 and Authorized Officer, State Bank of Travancore and Another Versus Mathew K.C. reported in (2018)3 SCC 85: 2018 LAWPACK(SC) 60356. Reliance is also placed upon judgment of this Court in Sanghi Industries Ltd. and Anr. Verus Micro Small Enterprises Facilitation Council and Anr. (SBCWP No.988/2018) which has been upheld by Division Bench also in DBSAW No.591/2018 titled as Sanghi Industries Ltd. and Anr. Verus Micro Small Enterprises Facilitation Council and Anr.. Relying upon the same, the Appellant submits that the MSME Act is a special and beneficial piece of legislation and has an overriding effect over other laws, in terms of Section 24 of MSME Act; and Section 15 of the MSME Act imposes a liability on buyer to make timely payment and Section 16 of the MSME Act imposes heavy interest liability for the delay. It is submitted that when provisions of Section 18 and 19 of the MSME Act prescribe a statutory and specific mechanism, the same cannot be bye passed. In the present facts and circumstances, on merits as well as as per statutory mechanism, the learned Arbitrator has, legally and factually, committed an error in entertaining the the two issues and by relaxing the provision of MSMED Act and Indian Contract Act, is is contrary to the above cited judgments of Apex Court.

60. BECAUSE, It is only when the interpretation of contractual provisions is patently unreasonable or perverse, or contradictory to well settled principles governing interpretation of contracts, that the court would interfere. Further, it is equally well settled that an arbitral tribunal being a creature of a contract, is bound to act in terms of the contract. An award can be said to be patently illegal where the arbitral tribunal has failed to act in terms of the contract or has ignored the specific terms of the contract. In this regard reference may be made to the judgment of the Supreme Court in Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum, (2022) 4 SCC 463: 2022 LAWPACK(SC) 66156: 2022(2) R.A.J. 100 wherein it has held as under:

"43. An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract.

44. However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.

45. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one.

61. BECAUSE, Similar observations have been made by the Supreme Court in UHL Power Co. Ltd. v. State of H.P., (2022) 4 SCC 116: 2022 LAWPACK(SC) 65937: 2022(1) R.A.J. 193; Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1: 2019 LAWPACK(SC) 63557: 2020(1) R.A.J. 33; State of Chhattisgarh v. SAL Udyog (P) Ltd., (2022) 2 SCC 275: 2021 LAWPACK(SC) 65698: 2021(6) R.A.J. 154; ParsaKente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236: 2019 LAWPACK(SC) 62577: 2019(5) R.A.J. 1 and South East Asia Marine Engg. & Constructions Ltd. (SEAMEC LTD.) v. Oil India Ltd., (2020) 5 SCC 164: 2020 LAWPACK(SC) 64119: 2020(3) R.A.J. 234.

62. BECAUSE, it is a settled law that only where the interpretation of the contractual covenants is plainly unacceptable, or contradictory to well settled principles governing interpretation of contractual covenants, or the interpretation accorded by the Arbitral Tribunal to a contractual covenant would be contrary to other covenants of the same contract, that the Section 34 Court can interfere.

63. BECAUSE, It is a well settled principle of contractual interpretation that if a contractual provision is unambiguous, the same has to be given effect to. Only if there is any ambiguity, will it be permissible to resort to internal aids to resolve the ambiguity. Only if internal aids prove insufficient, recourse to external aids is permissible. In Pandit Chunchun Jha v. Sheikh Ebadat Ali (supra), it has been held as under:

"6. The first is that the intention of the parties is the determining factor: see Balkishen Das v. Legge. But there is nothing special about that in this class of cases and here, as in every other case where a document has to be construed, the intention must be gathered, in the first place, from the document itself. If the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used. If, however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended.

64. BECAUSE, A document, as is well known, must primarily be construed on the basis of the terms and conditions contained therein. It is also trite that while construing a document the court shall not supply any words which the author thereof did not use.

65. BECAUSE, The primary rule of construction of a document is the intention of the executants, which must be found in the words used in the document. The question is not what may be supposed to have been intended, but what has been said. We need to carry on the exercise of construction or interpretation of the document only if the document is ambiguous, or its meaning is uncertain. If the language used in the document is unambiguous and the meaning is clear, evidently, that is what is meant by the executants of the document. Contemporary events and circumstances surrounding the execution of the document are not relevant in such situations.

66. BECAUSE, An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract.

67. BECAUSE, If the meaning of the word or phrase or sentence is clear, extrinsic evidence is not admissible. It is only when there is latent ambiguity that extrinsic evidence in the shape of interpreting statement in which both parties have concurred should be admissible. The parties themselves might not have been clear as to the meaning of the word or phrase when they entered into the contract. Unanticipated situation might arise or come into the contemplation of the parties subsequently which would sharpen their focus and any statement by them which would illuminate the darkness arising out of the ambiguity of the language should not be shut out. In the case of an ambiguous instrument, there is no reason why subsequent interpreting statement should be inadmissible.

G.   NON-FILING PARA

68. The Appellant fairly  states before this Hon’ble Court, that inadvertently, the present Appeal was initially filed, within time, before the Ld. District and Session Court, West District and the same was marked to the Court of District Judge-04 vide Case bearing Number xx xxx, in which notice and reply was also received, however, the said petition was withdrawn to be filed before this Hon’ble Court and the Appellant is also preferring a separate application under the provision of Limitation Act as the petition before the Ld. District Court West District  was contested by the Appellant with due diligence, in good faith and under a bonafide mistake.

69. The present Appeal is being filed within the period of limitation as prescribed by the Provisions of the Act and within the time frame as provided under the Arbitration as well as the MSMED Act, however as mentioned supra, a separate application is also filed alongside the present petition.

70. That the Requisite Court Fee in accordance with the Valuation in the Statement of Claim has been affixed with the Present Appeal. It is stated that 34(5) of Arbitration Notice compliance has been dealt with.

71. The Appellant reserves its right and otherwise craves liberty and indulgence of this Hon’ble Court to file such other documents, applications and affidavits to add to and supplement it’s present Appeal.

72. This appeal is made bonafide and in the interest of justice.

73. PRAYER

It is, therefore, most respectfully prayed that this Hon’ble Court may be pleased to

A.     Allow the Instant Appeal and Set Aside the Impugned Order which is under Challenge qua the amount as granted by the LD. Arbitrator.

B.     Pass such other and further orders as this Hon’ble Court may be deem just and fit in the facts and circumstances of the present matter.

APPELLANT

Through

XXXXXXXXXXXXXXXX

ADVOCATES FOR

XXXXXXXXXXXXXXXX

LAW FIRM AT

NEW DELHI-110008

xxxxxxxx

New Delhi

xxxxxxxx

BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                            … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                … RESPONDENT

AFFIDAVIT

1.    I am the Authorized representative/Partner of the Appellant Company in the above Suit and competent to swear this Affidavit.

2.    I say that I have signed, verified and instituted the present Appeal for and on behalf of the deponent.

3.    I say that the contents of paragraphs of the accompanying Appeal under section 19 of MSME Act read with section 34 sub clause 2 of the Arbitration and Conciliation Act, have been drafted by my counsel as per my instructions and the contents of the same have been duly read and understood by me and after fully understanding the contents of the same, I hereby state that the facts stated therein are all true and correct to my knowledge.

     DEPONENT

I, Ravinder Luthra, the deponent named hereinabove, solemnly affirm and verify that the contents of the above Affidavit are true and correct to my knowledge. No part of it is false, and nothing material has been concealed therefrom.

Verified at Delhi on this ___day of  August, 2024

DEPONENT

BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                                        … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                            … RESPONDENT

STATEMENT OF TRUTH

Under the First Schedule, Order VI-Rule 15A and Order XI Rule 3

1.    I am the Authorized representative/Partner of the Appellant Company in the above Suit and competent to swear this Affidavit.

2.    I am extremely conversant with the facts of the case and have also examined all relevant documents and records.

3.    I say that the statements made in____paragraphs are true to my knowledge, statements made in _ _ _ _ _ paragraphs are based on information received that I believe to be correct, and statements made in—-—paragraphs are based on legal advice.

4.    I say there is no false statement or concealment of any material fact, document, or record. I have included information relevant to the present Suit under Reply, which is based on records.

5.    All the documents in my power, possession, control, and custody pertaining to the facts and circumstances of the proceedings initiated against me have been disclosed. Copies thereof are annexed to the Suit, and the Deponent prefers an Application under the Provision of Order XI Rule 1(4) as amended by the Commercial Courts, Commercial Appellate Division of the High Courts Act, 2015, read with Section 151 of the Code of Civil Procedure, 1908

6.    The above-mentioned Suit consists of __ pages, each of which I have duly signed.

7.    The Annexures hereto are true copies of the documents I referred to and relied upon.

8.    I am aware that for any false statement or concealment, I shall be liable for action taken against me under the law for the time being in force.

(DEPONENT)

VERIFICATION:

I, Ravinder Luthra, the deponent named hereinabove, solemnly affirm and verify that the contents of the above Affidavit are true and correct to my knowledge. No part of it is false, and nothing material has been concealed therefrom.

Verified at Delhi on this ___day of  August, 2024

DEPONENT

BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                                        … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                            … RESPONDENT

INTERIM APPLICATION FOR ON BEHALF OF THE APPLICANT/APPELLANT UNDER THE PROVISION OF SECTION 5 READ WITH SECTION 14 OF THE LIMITATION ACT TO CONDONE THE ______ DAYS OF DELAY IN FILING OF THE PRESENT APPEAL BEFORE THIS HON’BLE COURT

MOST RESPECTFULLY SHOWETH

1.    The Appellant before this Hon’ble Court prefers the present application in the afore-mentioned, which is filed under the provision of Section 19 of MSMED Act, 2006 read with the Section 34(2) of the Arbitration and Conciliation Act, 1996, for short “Arbitration Act” and with Section 151 of the Code of Civil Procedure Code, 1908, for short “Civil Code”, whereby, the Appellant is challenging the Order dated xxxxxxxxxxxx, for short “Impugned Order” on a limited aspect, of the fact that the Respondent was directed to pay a sum of INR xxxxxxxxx/- Inclusive of Interest alongside the Litigation Cost against a claim of INR xxxxxxxxxxx/- inclusive of interest as filed by the Appellant before the Learned Arbitrator in the Statement of Claim under the relevant provision of Section 5 read with Section 14 of the Limitation Act, 1963.

2.    The Appellant/Applicant inadvertently filed the present Appeal before the Ld. District and Session Judge, West District, Tis Hazari Courts, on xxxxxxxx, i.e., within the period of Limitation as prescribed under the Ambit of Arbitration and Conciliation Act, 1996, as amended from time to time, and the Ld. District Judge-04 vide Order dated xxxxxxxx, pleased to issue Notice qua the same. The Copies of the Order as passed are appended alongside Annexure A-1 Colly.

3.    The Appellant/Applicant instituted the appeal before Respondent, preferring a Section 34 Petition before the Ld. District Judge Commercial Court-04 Central Delhi, which was subsequently filed by Respondent. However, the Appellant/Applicant reserves the right to dispute the jurisdiction; however,with an intent to finally adjudicate the said issue on merits, the Appellant/Applicant vide order dated xxxxxxxx, pleased to withdraw the said Appeal from the Ld. District Judge-04, West District Tis Hazari Courts New Delhi, with liberty to file the Appeal before this Hon’ble Court. The Said Appeal was subsequently filed immediately on xxxxxxxx, before this Hon’ble Commercial Court.

4.     That there is no delay; however, as an abundant precaution, the Applicant prefers the present delay application under the provision of Section 5 read with Section 14 of the Limitation Act, seeking condonation of 183 Days.

5.    It is a settled proposition of Law, as even held down by the Hon’ble Supreme Court, that Section 14 of the Limitation Act would apply to the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 if the petition under Section 34 (at the first instance) were filed within time.

6.    The Hon’ble Supreme Court in Oriental Insurance Co. Ltd versus M/s Teparas Associates & Exports Pvt Limited[1] dealt with an issue “whether the presentation of the petition before the Judge, Jodhpur, should be considered as a fresh petition and the explanation for the entire period from the original limitation period i.e., from the date of the award is to be considered for the purpose of condonation of delay for prosecuting in an alternate jurisdiction, while considering the application under Section 14 of the Act.” And held as under

Though the judgment in Simplex Infrastructure Ltd. vs. Union of India, (2019) 2 SCC 455 was relied upon to contend that Section 5 of the Limitation Act has no application to a petition challenging the arbitral award under Section 34 of the Act, 1996, the bench noted that the same judgment indicated that Section 14 of the Limitation Act is applicable to an application submitted under Section 34 of the Act, 1996 seeking for exclusion of certain period if the application under Section 34 of the Act, 1996 is at the first instance filed within the limitation period provided under Section 34(3) of the Act, 1996. While allowing the appeal, the bench observed:

"In the instant case as already indicated above the condonation of delay sought is not for filing the petition under Section 34 of the Act, 1996 for the first time. The petition filed under Section 34 of the Act, 1996 at Jaipur was within the period of limitation and the delay regarding which explanation is put forth is for the period of 8 days in re-presenting the petition beyond the date fixed after it was returned under Order 7 Rule 10 of the Civil Procedure Code. Therefore, in that circumstance even if the term "sufficient cause" as contained under Section 5 of the Limitation Act is taken note, in the present facts the same is not with reference to petition under Section 34 of Act, 1996 for condonation of delay beyond the period prescribed under Section 34(3) of the Act, 1996. Though that be the position what is necessary to be taken note herein is that the application filed for excluding the time is under Section 14 of the Limitation Act. In addition to the very decisions cited above indicating that Section 14 of the Limitation Act would be applicable to the proceedings under Section 34 of the Act, 1996 subject to the petition under Section 34 being filed within time, the learned counsel for the appellant has also relied upon the decision in the case of M/s Consolidated Engineering Enterprises vs. The Principal Secretary, Irrigation Department & Ors. (2008) 7 SCC 169 wherein the same position is reiterated

7.    Recently, the Hon’ble Delhi High Court in National Seeds Corporation versus Ram Avtar Gupta[2]has held that Section 14 of the Limitation Act, which provides for exclusion of time consumed in civil proceedings initiated before a Court not having the jurisdiction, applies to proceedings under Section 34 of the A&C Act, whereby the Analysis of the Hon’ble Court was as follows

Analysis by the Court

The Court thoroughly analyzed the case in light of relevant Supreme Court judgments. It acknowledged the undisputed chronology of events, wherein the petitioners challenged the award through a Section 34 petition within the stipulated 3-month period. The Court then examined the diligence displayed by the petitioners in their pursuit of legal remedies. Notably, the petitioners' initial filing was under the genuine impression that the jurisdictional threshold was met. The Court observed that this filing was done well within the statutory period.

Considering the arguments put forth by both parties, the Court addressed the respondent's contention about the exclusion of the limitation period under Section 14 of the 1963 Act. The Court found that the petitioners fulfilled the conditions set by the Supreme Court in 'Suryachakra Power Corporation Limited v. Electricity Department Represented by its Superintending Engineer, Port Blair and Others, (2016) 16 SCC 152', establishing their diligent and good faith efforts.

The respondent's opposition to the Section 14 benefit was countered by the Court, which emphasized that the petitioners' actions were not indicative of unnecessary delay. The Court also examined the respondent's arguments concerning the condonable period under the proviso to Section 34(3). The Court clarified that the petitioners' reliance on the Supreme Court's exclusion order (Re: Cognizance for Extension of Limitation) and Section 14 allowed their filing to be well within the extended limitation period.

The Court refuted the respondent's claim that the extension only applied to the limitation period and not the condonable period, stating that irrespective of this interpretation, the petitioner's filing on 31.01.2022 was within the extended period (28.02.2022). In conclusion, the Court held that the present petition was filed within the limitation period and granted the application, disposing of the matter.

8.    That the Applicant states that the Applicant, bonafidely, filed the Petition before the District and Session Judge, West District instead of filing it under the purview of Section 10(3) of the Commercial Act, 2015 before the Ld. Commercial Courts. The Notice was issued and also the Reply was filed and due to which, the Applicant had to be spend 183 Days i.e., from Filing of the Petition till xxxxxxxx and thereafter the Applicant had filed the Section 34 Petition before this Hon’ble Court.

9.    That the Appellant states that the Appeal of the Appellant is filed within the time and there is no delay, however as an abundant precaution, owing to the Objection as raised by the Respondent, the Appellant is preferring the Present Application condoning the delay of 183 Days if any and the delay if any has been caused on the pretext of the reasons as stated in the above paragraph of the Petition.

10. It is stated that this application is bonafide and in the interest of justice and no prejudice shall be caused to Respondent if the Present Application is allowed and the matter be heard on merits.

11. PRAYER

In the light of the foregoing submissions and circumstances of the case, it is most humbly prayed that this Hon’ble Court be pleased to:

A.   Allow the Present Application and Condone the Delay of 183 Days in filing of the Present Appeal &

B.    Pass such other and further orders as this Hon’ble Court may be deem just and fit in the facts and circumstances of the present matter.

APPELLANT

Through

XXXXXXXXXXXXXXXX

ADVOCATES FOR

XXXXXXXXXXXXXXXX

LAW FIRM AT

NEW DELHI-110008

xxxxxxxx

New Delhi

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BEFORE THE HON’BLE DISTRICT JUDGE COMMERCIAL COURTS, CENTRAL DISTRICT, TIS HAZARI COURTS AT NEW DELHI

O.M.P COMM  _________ OF 2024

IN THE MATTER OF

XXXXXXXXXXXXXXXX                                            … APPELLANT

VERSUS

XXXXXXXXXXXXXXXX                                … RESPONDENT

AFFIDAVIT

1.    I am the Authorized representative/Partner of the Appellant Company in the above Suit and competent to swear this Affidavit.

2.    I say that I have signed, verified and instituted the present Appeal for and on behalf of the deponent.

3.    I say that the contents of paragraphs of the accompanying Application, have been drafted by my counsel as per my instructions and the contents of the same have been duly read and understood by me and after fully understanding the contents of the same, I hereby state that the facts stated therein are all true and correct to my knowledge.

DEPONENT

VERIFICATION:

I, Ravinder Luthra, the deponent named hereinabove, solemnly affirm and verify that the contents of the above Affidavit are true and correct to my knowledge. No part of it is false, and nothing material has been concealed therefrom.

Verified at Delhi on this ___day of  August, 2024

DEPONENT