Arbitral Award - Damages

Supreme Court confirms award of damages and quantum of damages awarded by an arbitrator

M/S Arun Kumar Kamal Kumar & Ors. vs. M/S Selected Marble Home & Ors. [Civil Appeal No. 8980 of 2017]

[01.10.2020] Damages and quantum off damages

Brief: This appeal concerned with grant of damages and quantum of the damages. The Supreme Court confirmed the arbitral award in both the respect. The Court confirmed that as per the agreement the Appellants were to deliver vacant possession of the shop/place and this being not done for a period of 5 years, the appellants were liable to pay commission or even rent if considered as tenant for the said period. 

Important Paragraphs

11. We have carefully considered the submissions of the learned counsel made at the Bar and perused the materials placed on record.

12. As per Clause 10 of both the Agreements, in case of any dispute, it was incumbent on the appellants to handover vacant possession of the premises to the respondents. On this issue, it is clear that disputes had arisen between the parties. However, it is an admitted position that possession of the premises was not handed over   to   the   respondents   by   the   appellants   until   the   arbitration proceedings had commenced and has, in fact, only been handed over on 13 March 2000. Therefore, the Arbitrator framed Issue No. 15­A regarding damages payable to the respondents.  The Learned Arbitrator has rejected the plea of the appellants that they had to close the business because of the obstructionist tactics adopted by the   respondents   and   for   that   reason   the   business   activities remained closed from April, 1991 to November, 1995.  On a detailed consideration of the materials on record, the Learned Arbitrator had come to the conclusion that the appellants are liable to pay the damages.

13. This   question   was   again   considered   by   the   learned   Single Judge.  The learned Single Judge noticed the plea of the appellants that the transaction between the parties was of tenancy and not licence.   After   dealing   with   this   plea,   the   learned   Single   Judge upheld   the     award   of   damages   by   the   Learned   Arbitrator.   The finding of the learned Single Judge in this regard is in paragraph 20 which reads as under:

“I find it has been the case of the respondents that the transaction between the parties was of tenancy and not of a licence.  It is so pleaded in the objections also.  Even if the respondents consider themselves to be tenants at the rent equivalent to commission @ 11%   per   month,   the   respondents   would   under Section   108   of   the   Transfer   of   Property   Act   have continued   to   remain   liable   for   payment   of   rent, notwithstanding   not   carrying   on   business   in   the premises.  It has been held by the Division Bench of this   Court   in  State   Bank   of   Patiala   v. Chandermohan –  1996 RLR 404 held that a tenant continues to be liable for rent/damages even if the premises are destroyed and the only option of the tenant if desirous to stop the running of rent is to surrender   the   premises.     Thus   as   per   the respondents own understanding of the relationship also, the respondents were liable for payment of rent.”

 

14. We do not find any error in the said finding of the learned Single Judge.

16. There is also no merit in the contention of the learned senior counsel   for   the   appellants   that   the   appellants’   statement   of accounts erroneously deducted expenses incurred on electricity and water   from   the   sales   instead   of   deducting   the   same   from commission of the respondents.  The admitted position is that there was no electricity supply and the appellants used generator set for electricity. The contention of the appellants is that the expenses incurred towards generator ought to have been deducted from the gross commission payable and not from the gross sale amount and then   the   commission   should   have   been   calculated   at   the contractually stipulated rates of  6% and 5%.  This plea has been dealt with by learned Single Judge as under:

“The   other   mistake   pointed   out   of   deduction   of expenses on diesel generator set from sales rather than from commission payable, even if made out, also cannot be permitted to be withdrawn at this stage especially when the respondents have already deducted   and   paid   taxes   on   the   basis   of   said statement.  Under the agreement the electricity and water charges of the premises were to be borne by the petitioners. Admittedly, the premises/shop on reopening   were   without   electricity   and   diesel generator set arranged.  There is no dispute that the expenses therefor were to be borne by the petitioners. The respondents while furnishing the statement to arbitrator, did direct the same.  The objections now that   such   deduction   was   wrongly   done   is   not tenable?”

 

This contention has been raised on the ground that the statement filed by the appellants was not correct since the appellants were only liable to pay commission at 6% and 5% under two agreements on the gross sales and the responsibility to provide electricity was on the respondents.  We are of the view that the appellants cannot be permitted to withdraw their own statement made before the Learned Arbitrator which is predicated to on a mode of calculation, the same not being disputed by the respondents and accepted by the   Arbitrator   as   correct.     We   are   also   of   the   view   that   the appellants are not justified in raising a contrary plea other than what   was   their   defence   and   statement   of   counter   claim   in   the arbitral proceedings.

17. We are also of the view that the Learned Arbitrator has rightly relied   on   the   appellants’   statement   of   accounts   for   awarding commission for the period when the business was restarted postclosure between November 1995 and November 1997.  The formula adopted by the Learned Arbitrator for arriving at this commission amount as well as the damages has been accepted by learned Single Judge as also the Division Bench of the High Court.

 

18. In view of above, we do not find any merit in this appeal which is accordingly dismissed.  There shall be no order as to costs.