M/S NAVODAYA MASS ENTERTAINMENT LTD. Vs M/S J.M.COMBINES
Bench: M.Y. EQBAL,PINAKI CHANDRA GHOSE
Case number: C.A. No.-007128-007129 / 2011
Diary number: 38191 / 2009
Advocates: ANISH KUMAR GUPTA Vs
RAKESH K. SHARMA
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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.
1. 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:
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2. 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
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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.
3. 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
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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.
4. 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.
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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.
5. 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
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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.
6. 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
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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.)
7. 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.
8. 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)