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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)