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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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