w w w . L a w y e r S e r v i c e s . i n



Star Track Agency Private Limited v/s Efcalon Tie Up Private Limited


Company & Directors' Information:- STAR INDIA PRIVATE LIMITED [Active] CIN = U72300MH1994PTC076485

Company & Directors' Information:- TRACK INDIA PRIVATE LIMITED [Strike Off] CIN = U74140DL1998PTC092100

Company & Directors' Information:- STAR TRACK PVT LTD [Active] CIN = U28999WB1988PTC045456

Company & Directors' Information:- TRACK PRIVATE LIMITED [Strike Off] CIN = U99999MH1951PTC008543

Company & Directors' Information:- STAR COMPANY LIMITED [Strike Off] CIN = U67120WB1927PLC005620

Company & Directors' Information:- STAR T V PRIVATE LIMITED [Strike Off] CIN = U51395UP1985PTC007023

Company & Directors' Information:- STAR OF INDIA LIMITED. [Strike Off] CIN = U99999CH1946PLC001119

Company & Directors' Information:- A. S. STAR PRIVATE LIMITED [Active] CIN = U74999RJ2016PTC056637

Company & Directors' Information:- STAR O & M PRIVATE LIMITED [Active] CIN = U74999DL2015PTC281303

Company & Directors' Information:- K. D. STAR PRIVATE LIMITED [Active] CIN = U45201GJ2011PTC067973

Company & Directors' Information:- M-TRACK INDIA PRIVATE LIMITED [Active] CIN = U51909MH2020PTC336661

Company & Directors' Information:- STAR LTD. [Dissolved] CIN = U99999MH1921PTC000957

    F.M.A. No. 919 of 2015

    Decided On, 20 May 2016

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MS. JUSTICE INDIRA BANERJEE & THE HONOURABLE MR. JUSTICE SAHIDULLAH MUNSHI

    For the Appellant: S.K. Kapoor, Sakya Sen, Aniruddha Mitra, Amritam Mondal, S. Basu, S.K. Kasera, Advocates. For the Respondent: Subyasachi Chowdhury, Swatarup Banerjee, Anirban Kar, Anindita Ghosh, Rajesh Upadhyay, Advocates.



Judgment Text

Indira Banerjee, J.

1. This appeal, under Section 37(1) of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the 1996 Act, is against a judgment and order dated 6th December, 2014, passed by the Court of the Additional 10th District Judge, Alipore, District - South 24-Parganas, allowing the application being Misc Case No.15 of 2013 filed by the respondent under Section 34 of the 1996 Act and setting aside an award dated 22nd April, 2012 of the learned Arbitrator, Shri Prabir Kr. Roychoudhury, Bat at Law, in an arbitration to adjudicate disputes between the appellant and the respondent in respect of a purported licence agreement dated 26th December, 2004 between the respondent and the appellant in relation to Premises No. P-10, Taratala Road, Kolkata-700 088, hereinafter referred to as the said premises.

2. Kolkata Port Trust is the owner of the said premises. By an indenture of lease executed by and between Kolkata Port Trust and one Das Reprographics Limited, a company within the meaning of the Companies Act, 1956, which has since been wound up, Kolkata Port Trust had leased out the said premises to the said company for a period of 29 years, 1 month and 25 days with effect from December, 1963.

3. The said indenture of lease provided option for renewal of the lease for a further term of 30 years, subject to the conditions as contained in the said indenture of lease. It appears that the company had applied for renewal of the lease some time in August, 1991 about five months before the date of its expiry. The lease was not renewed, but the company continued in possession of the said premises, without interference.

4. By an order dated 21st December, 1994, of this Court in Company Petition No.151 of 1996, the company was directed to be wound up and the Official Liquidator was directed to take possession of the assets of the company in liquidation.

5. Pursuant to an order dated 27th August, 1997, passed in the winding up proceedings, advertisements were issued for sale of the assets of the company in liquidation.

6. By an order dated 16th January, 1998 this Court accepted the offer of the respondent, Efcalon Tie Up Private Ltd., hereinafter referred to as ‘Efcalon’, of Rs.50 lakhs for purchase of the assets of the company in liquidation, having regard to an agreement made by Efcalon with the workmen of the company in liquidation, to reemploy the workmen.

7. United Bank of India filed an appeal against the said Order dated 16th January, 1998, contending that the sale of the assets had been conducted with undue haste, without trying to ensure the best price for the assets of the company in liquidation.

8. By a judgment and order dated 9th April, 2003, a Division Bench of this Court, comprising Their Lordships, the Hon’ble Justice Altamas Kabir and Hon’ble Justice Aloke Kumar Basu (as Their Lordships were) confirmed the sale of the assets in favour of Efcalon.

9. On consideration of the fact that Efcalon was going to run the factory and re-employ its workers, the Division Bench observed that it was desirable that Kolkata Port Trust, should grant a fresh lease of the said premises in favour of Efcalon, since the earlier lease had expired in the meanwhile.

10. Efcalon filed an application for modification of the order dated 9th April, 2003 and sought a direction on Kolkata Port Trust to renew the lease in favour of Efcalon or its nominee, on the same terms.

11. By an order dated 1st December, 2004, the Court modified its earlier order dated 9th April, 2003, observing that even though the initial lease had expired on 22nd January, 1992, the lease contained a clause giving the parties option of renewal.

12. Some of the relevant parts of the order dated 1st December, 2004 are extracted herein below:

".....While considering the matter we cannot lose sight of the fact that the applicant herein purchased the assets of the company (in liquidation) with the intention of running the company as a going concern as to provide employment to the workmen of the said company. It is with such objective in mind that we had requested the Kolkata Port Trust to grant a fresh lease of mutually agreed terms of the applicant despite the fact that the said property had been kept out of the purview of the auction sale. The only question we are really concerned with now is whether a fresh lease should be granted on the basis of the rates as subsisting according to the Schedule to the Major Port Trust or whether a fresh lease should be allowed to be executed on the terms and conditions as were existing in the earlier lease.

".....In our view, this substantially changes the situation as existing in 9.4.2003 when in our order we had recorded the fact that the lease had expired. We are, therefore, inclined in the larger interest of the industry as also the workmen to modify clause (h) of our order dated 9.4.2003 and to direct the Kolkata Port Trust to grant a fresh lease to the applicant on the basis of the option clause contained in the original lease dated 10.01.1994 subject to the applicant complying with the terms relating to payment of the arrears dues together with interest as suggested by the Kolkata Port Trust itself in its letters dated 7.9.92 and 13.4.95 within fifteen days from date. In other words, the Kolkata Port Trust shall inform the applicant herein of the rental arrears from the date of expiry of the earlier lease till the date of execution of fresh lease together with interest at the rate of 15% per annum within one week from date and upon such intimation the said dues are to be cleared by the applicant within seven days thereafter, and upon such dues being cleared the Kolkata Port Trust grant a fresh lease in the manner indicated herein above to the applicant within a fresh thereafter.

Accordingly the application is disposed of without any order as to costs."

13. Kolkata Port Trust filed a Special Leave Petition being SLP Civil No.571 of 2005 in the Supreme Court for Special Leave to appeal against the said order dated 1st December, 2004 of the Division Bench of this Court.

14. The Special Leave Petition was disposed of by an order dated 8th May, 2006, relevant parts whereof are extracted herein below:-

"....Social justice demands that the lease in respect of the factory premises be renewed by the Port Trust in favour of respondent No.1 so that the operation of the factory thereof can be commenced. However, the lease can be renewed only subject to the payment of all the arrears and dues together with interest.

"....In conclusion, we order a fresh lease indenture to be drawn from the date the company came into possession of the land (i.e. 04.08.2003) between the Port Trust and the Respondent No.1 (Efelon) with regard to the premises situated at P-10, Taratola Road, Kolkata at the rental rates contained in the present Schedule of the Kolkata Port Trust Act as soon as the dues of the liquidated company are discharged with by the respondents."

"....We are inclined to grant the lease in favour of the respondent No.1 who sought renewal of the lease with the sole object of reviving and rehabilitating its units and to re-employ its workmen thereof."

15. It appears that immediately after obtaining the order dated 1st December, 2004 from the Division Bench of this Court, on the pious assurance of running the undertakings of the company in liquidation as a going concern and rehabilitating its workers, Efcalon purported to execute an agreement dated 26th December, 2004, purporting to license the said premises out to the appellant for a term of 6 years commencing from 1st November, 2005 and expiring on 31st October, 2011, extendable by a further period of 3 years, by mutual agreement between Efcalon and the appellant, but at the sole discretion of Efcalon.

16. The said agreement executed by and between Efcalon and the appellant, also provided that if the lease of the said premises was formally renewed by Kolkata Port Trust in favour of Efcalon, Efcalon would negotiate the grant of sublease of the said premises to the licensee on the same terms and conditions, whereupon the licence would automatically come to an end. The attention of the Hon’ble Supreme Court does not appear to have been drawn to the said licence agreement between Efcalon and the appellant.

17. The said agreement provided that in case of any dispute or difference arising out of, or in connection with, or regarding the interpretation of the said agreement, which could not be settled by mutual discussion, the same would be referred to the arbitration of Mr. Prabir Kr. Roychoudhury, Bar at law, for adjudication in accordance with the provisions of the 1996 Act.

18. According to the appellant, in or about September, 2010 the Kolkata Port Trust authorities started threatening to evict the appellant on the ground of nonpayment of rent payable by Efcalon to Kolkata Port Trust.

19. Thereafter, by a letter dated 17th September, 2010, the appellant called upon Efcalon to furnish the appellant with details of the rent paid by Efcalon to Kolkata Port Trust and also the taxes payable to Kolkata Municipal Corporation. It is alleged that there was no reply to the said letter dated 17th September, 2010.

20. According to the appellant, the appellant, thereafter, made enquiries and came to know that arrears of rent exceeding Rs.2.45 Crores had not been paid by Efcalon to Kolkata Port Trust. Efcalon had not made any payment to Kolkata Port Trust since it had taken possession of the said premises with effect from 4th August, 2003.

21. The appellants contend that Efcalon had made a false representation to the appellant, of having cleared all arrears of rent, and had induced the appellant to enter into the said agreement dated 26th December, 2004 with Efcalon and thereby incur huge expenses. The claim of Efcalon of having paid the entire arrears to Kolkata Port Trust as stated in the recital of the agreement executed on 26th December, 2004 was found to be false.

22. According to the appellant, the appellant thereafter made enquiries, and came to know that arrears of rent exceeding Rs.2.45 crores had not been paid by Efcalon to Kolkata Port Trust. Efcalon’s claim of payment of the entire arrear amount to Kolkata Port Trust, as stated in the recital to the agreement, was false.

23. The appellant contends that Efcalon had induced the appellant to enter into the purported licence agreement on the basis of a false representation that the entire arrear rent had been paid to Kolkata Port Trust. Furthermore, since Efcalon had committed a breach of its fundamental obligation under the contract to pay the rent and taxes payable, past or future, in respect of the said premises, disputes arose between the appellant and Efcalon.

24. By a letter dated 18th September, 2010, the appellant referred the disputes arising out of the said purported License Agreement to the arbitration of Shri Prabir Kr. Roychowdhury, Bar-at-Law, the arbitrator named in Clause 28 of the License Agreement.

25. Later, Efcalon issued a notice dated 28th January, 2011, to the appellant under Section 106 of the Transfer of Property Act, 1882 and demanded vacant possession of the said premises.

26. The appellant filed a statement of claim before the learned Arbitrator seeking cancellation of the notice issued by Efcalon under Section 106 of the Transfer of Property Act and also claiming a money award of Rs.1,88,94,208/-.

27. Efcalon filed a counter statement and a counter claim praying for a money award for the amount of outstanding occupation charges, inclusive of interest as well as an award for recovery of vacant possession of the said premises by eviction of the appellant.

28. The appellant made an application for amendment of its statement of claim. The said amendment application was allowed on contest, as will be evident from the minutes of the meeting held before the learned Arbitrator on 20th December, 2011.

29. Efcalon agreed not to file any additional counter statement. Leave was, however, granted to Efcalon to file supplementary notes of argument. Thereafter, adjudication commenced and the appellant’s witness was examined and cross examined on behalf of Efcalon.

30. Upon consideration of the pleadings and the documents on record as well as the evidence adduced before the learned Arbitrator by the respective parties, the learned Arbitrator passed his award dated 22nd April, 2012 holding that the licence agreement dated 26th December, 2004 having been induced by misrepresentation of Efcalon that arrears of rent had been paid, the said agreement was void and liable to be delivered up and cancelled.

31. There was also an award in favour of the appellant for refund by Efcalon to the appellant, of licence fees amounting to Rs.1,51,44,208/- paid by the appellant to Efcalon with interest at 15% per annum.

32. Efcalon filed an application being Misc. Case No.298 of 2012, under Section 34 of the 1996 Act, in the Court of the learned District Judge at Alipore, District South 24 Parganas, for setting aside the award.

33. By the judgment and order dated 6th December, 2014, under appeal before us, the learned 10th Additional District Judge at Alipore has set aside the award.

34. After the judgment and order under appeal, setting aside the award, was passed, Kolkata Port Trust executed a deed of lease in favour of Efcalon, in terms of the order passed by the Hon’ble Supreme Court on 8th May, 2006, granting lease of the said premises to Efcalon for a period of 30 years with retrospective effect from 4th August, 2003.

35. Mr. Kapur appearing on behalf of the appellant argued that Efcalon had induced the appellant to execute a purported deed of licence dated 26th December, 2004 by gross misrepresentation.

36. In the context of his argument Mr. Kapur relied on Clause H of the recital of the purported deed of licence, which is set out herein below for convenience:-

"H. Although in terms of the said order the licensor duly paid the entire arrears of lease rent to the Kolkata Port trust, it has not yet renewed the leas of the said premises as directed by the order dated 1st December, 2004. Even without the lease being formally renewed in terms of the order dated 1st December, 2004, the licensor has been and continues to be in possession and occupation of the said premises, having been put in possession thereof by the Official Liquidator at the time of delivery of the structures, plant and machinery lying at the said premises to the licensor ;"

37. Mr. Kapur argued that, relying on the representation of Efcalon that the entire arrear dues had been cleared, the appellant spent a huge sum of money towards addition, alteration and renovation. According to the appellant, the appellant spent lakhs on addition, alteration and renovation of the said premises.

38. According to the appellant, the appellant paid licence fee as stipulated in the agreement, at the rates mentioned in the agreement, till August, 2010. The appellant had stopped payment of further licence fee, on coming to know that the respondent had not paid any amount to Kolkata Port Trust.

39. Mr. Kapur submitted that the officials of Kolkata Port Trust were threatening to dispossess the appellant from the demised premises. The representation made by Efcalon and reduced to writing in the agreement dated 26th December, 2004, misled the appellant to alter its position to its detriment by incurring huge expenses.

40. Mr. Kapur submitted that after the appellant referred the disputes to the arbitration of Shri Prabir Kr. Roychoudhury, the arbitrator named in the said agreement, Efcalon issued a purported notice dated 18th September, 2010, under Section 106 of the Transfer of Property Act, 1882 and demanded vacant possession of the said premises from the appellant.

41. The appellant filed its statement of claim claiming inter alia a money award of Rs.1,88,94,208/- as also cancellation of the notice under Section 106 of the Transfer of Property Act. Mr. Kapur submitted that the statement of claim was amended to incorporate additional facts and provide better particulars of misrepresentation. The appellant also prayed for declaration that the licence agreement be declared null and void and/or for cancellation of the same. Mr. Kapur argued that the learned Arbitrator rightly found that the licence agreement was void.

42. Mr. Kapur argued that Minutes of the Meeting held on 20th December, 2011 would reveal that the amendment application was allowed by consent. The minutes recorded that Efcalon had also agreed not to file any counter-statement in response to the amended statement of claim. Leave was given to Efcalon to file supplementary notes of argument.

43. Mr. Kapur submitted that the witness of the appellant was examined and also cross-examined on behalf of Efcalon. The award has been made on consideration of the pleadings and the documents on record as well as evidence adduced on behalf of the appellant. Mr. Kapur argued that the award was not liable to be interfered with.

44. Mr. Kapur emphatically argued that the learned Arbitrator had considered the facts pleaded in details, as also the documents disclosed by the parties and had arrived at the factual finding that Efcalon had not cleared outstanding dues to Kolkata Port Trust. The representation made by Efcalon to the appellant were factually found false. The letter dated 3rd August, 2011 disclosed by the appellant had not been denied by Efcalon. The factual finding that the purported licence agreement induced by mis-representation was void and liable to be delivered up and cancelled, could not be interfered with. Mr. Kapur argued that it was not open to the Court to sit in appeal over factual findings arrived at by the learned Arbitrator.

45. Mr. Kapur further argued that the learned Arbitrator had considered the submissions made on behalf of the appellants with regard to Section 116 of the Evidence Act, and had arrived at the factual finding that the respondent had the right to grant licence or tenancy in respect of the said premises. These findings could not be interfered with.

46. Mr. Kapur also argued that the pendency of a writ petition filed by the Efcalon against Kolkata Port Trust was no ground to refuse relief to the appellants. In any case, the learned Arbitrator dealt with the assertion of Efcalon in this regard and observed that mere filing of the writ petition would not amount to grant of reliefs prayed for therein. The learned Arbitrator had further recorded the factual finding that no document had been disclosed by Efcalon regarding tendering of rent to Kolkata Port Trust or its refusal. Mr. Kapur argued that the learned Arbitrator rightly found that the licence agreement being vitiated by mis-representations and consequentially non est, as per principles of restitution amounts realised by Efcalon by way of licence fee, by misrepresentation, could not be retained by Efcalon. Mr. Kapur argued that this finding was unexceptionable.

47. Mr. Kapur submitted that the relief of eviction sought in the counter-claim of the appellant was rightly rejected by the learned Arbitrator. The agreement having been declared null and void, there could not have been any claim for eviction on the basis of such void agreement. Mr. Kapur argued that the impugned award was well reasoned. The reasons given in the award do not warrant interference.

48. Mr. Kapur argued that the scope of interference with an arbitral award was limited. An award could only be interfered with on grounds specifically enumerated in Section 34 of the 1996 Act. Mr. Kapur submitted that no grounds existed for interference with the award.

49. Mr. Chowdhury appearing on behalf of Efcalon submitted that Efcalon had purchased all the assets and properties of the company in liquidation from the Official Liquidator, pursuant to orders of this Court.

50. After purchase of the assets, it was found that one of the immovable properties sought to be sold by the official liquidator, being Premises No. P-10, Taratala Road, Kolkata - 700088, had actually been leased out to the company in liquidation by Kolkata Port Trust. The lease had expired. The company had before its liquidation applied for renewal of the lease.

51. A Division Bench of this Court had, by its Order dated 9th April, 2013, directed Kolkata Port Trust to grant fresh lease in favour of the said premises to Efcalon or its nominee. The said Order dated 9th April, 2013, as recorded was later modified by an Order dated 1st December, 2004.

52. Thereafter, under cover of a letter dated 14th December, 2004, Efcalon tendered a Bank Draft of Rs.5,93,851/- to Kolkata Port Trust towards its dues. However, admittedly, no lease was executed by Kolkata Port Trust in favour of Efcalon.

53. Efcalon claimed that it had executed the License Agreement on 26th December, 2014 on the basis of the assumption that the lease rent tendered to Kolkata Port Trust had been accepted and encashed by Kolkata Port Trust. Mr. Chowdhury submitted that the appellant had clearly been informed that there was no formal lease executed by Kolkata Port Trust in favour of Efcalon. The appellant executed the agreement, knowing fully well that there was no formal lease in favour of Efcalon.

54. Mr. Chowdhury referred to some clauses of the agreement dated 26th December, 2004 which are set out herein below :

"4. If in the mean time the Lease of the said premise is formally renewed by the Kolkata Port Trust in favour of the Licensor, it will negotiate the grant of a sub - lease of the said premise to the licensee on the same terms and conditions of this agreement and, will grant such sub - lease in its favour, whereupon the license granted hereby shall automatically come to an end." (Page 62 Paper Book)

"19. The Licensor shall bear and pay all rents and taxes payable past or future in respect of the said Premise including the rents payable to the Port Trust Authority and taxes payable to the Kolkata Municipal Corporation as municipal rates and taxes, land taxes, water taxes, scavenging taxes and commercial surcharges. The licensee shall not be responsible for payment of any of the above rates and taxes including commercial surcharge and the licensor shall at all material times keep the licensee saved, harmless and indemnified on account thereof." (Page 69 of Paper Book).

"20. In the event the licensor fails and/or neglects to pay the above mentioned rates, taxes, rents or commercial surcharge, the licensee shall be entitled to pay the same and to adjust the payments made on account thereof against the license fees payable by it."

(Page 69 of Paper Book).

55. Mr. Chowdhury also referred to the recital to the said agreement and particularly recital (h) and (i) set out herein below :

"H. Although in terms of the said order the licensor duly paid the entire arrears of Lease rent to the Kolkata Port Trust it has not yet renewed the Lease of the said premises as directed by the order dated 1st December, 2004, the licensor has been and continues to be in possession and occupation of the said premises, having been put in possession thereof by the Official Liquidator at the time of delivery of the structures, plants and machinery lying at the said premises to the licensor." (Page 60 of the Paper Book).

"I. In absence of a formal renewal of the lease, upon being approached by the licensee for the grant of a sub-lease of the said Premise, the licensor has instead agreed to grant it a license in respect thereof for a fixed term of 6 years commencing from 1st August, 2005 on the terms and conditions contained herein, which have in turn been agreed upon by the licensee." (Page 60 of the Paper Book).

56. Mr. Chowdhury argued that the parties were well aware that formal renewal was yet to be executed. Efcalon accordingly granted license for a term of 6 years from 1st November, 2005. Mr. Chowdhury argued that the use of the word ‘if’ in Paragraph No. 4 of the License Agreement clearly indicates that, at the time of signing the license agreement, the parties were uncertain whether a formal lease would be executed.

57. Mr. Chowdhury submitted that the appellant was inducted under the Agreement dated 26th December, 2004, and started paying the monthly license fee to Efcalon. The appellant continues to be in possession. However, the appellant has admittedly not paid any license fee since October, 2010.

58. Mr. Chowdhury further submitted that Kolkata Port Trust had filed a Special Leave Petition in the Supreme Court without encashing the pay orders tendered by Efcalon. On the date of execution of the licence agreement, that is, on 26th December, 2004, Efcalon did not know that Kolkata Port Trust had not encashed the bank draft, which had been made over to the Kolkata Port Trust on 14th December, 2004.

59. Mr. Chowdhury submitted that the Special Leave Petition was finally disposed of on 8th May, 2006 by directing Kolkata Port Trust to execute a lease in favour of Efcalon on the terms specified in the order dated 8th May, 2006. Kolkata Port Trust filed an application for clarification and/or modification of the order dated 8th May, 2006 which was finally dismissed as withdrawn on 29th January, 2008. Thereafter, Kolkata Port Trust filed an application for review of the order dated 8th May, 2006, which was finally dismissed on merits on 7th May, 2008.

60. Mr. Chowdhury argued that in spite of efforts of Efcalon to have the lease executed by Kolkata Port Trust and to pay the outstanding amounts, it could not do so, since Kolkata Port Trust kept on making applications one after the other before the Hon’ble Supreme Court instead of executing the lease deed in terms of the order dated 8th May, 2006, passed by the Hon’ble Supreme Court.

61. Since Kolkata Port Trust refused to execute a deed of lease in favour of Efcalon in spite of the order of the Supreme Court, Efcalon filed a writ petition in this Court being WP No.1313 of 2010 praying for various reliefs including directions upon Kolkata Port Trust to execute a formal lease in respect of the premises in question in favour of Efcalon. The writ application is still pending.

62. Mr. Chowdhury argued that even though the appellant claimed that the appellant came to know that Efcalon had not paid rent to Kolkata Port Trust in December 2009, the appellant continued to tender rent to Efcalon till September, 2010 and enjoyed the demised premises in terms of the lease agreement dated 26th December, 2004 and even after expiry of the licence it continues to enjoy the property till date.

63. In or around October, 2010 the appellants stopped paying rent in terms of the agreement dated 26th December, 2004, on the ground that Efcalon had not paid arrears to Kolkata Port Trust and as such the appellant was liable to pay the same to Kolkata Port Trust. The appellant alleged that the appellant had directly been tendering rent to Kolkata Port Trust and as such not liable to pay rent to Efcalon. Mr. Chowdhury submitted that no payment has actually been made by the appellant to Kolkata Port Trust.

64. Mr. Chowdhury submitted that Efcalon approached the learned Arbitrator to prevail upon appellant to make payment of the licence fees. At this stage, Efcalon learnt that Mr. Pradip Churiwal, director of the appellant was a regular client of the learned Arbitrator and close to his family. Thus, by a letter dated 18th August, 2010, Efcalon requested the learned Arbitrator to withdraw from the proceeding.

65. The learned Arbitrator, however, did not withdraw from the proceedings, after which Efcalon filed an application under Section 14 of the 1996 Act challenging the mandate of the learned Arbitrator. Even though the learned Arbitrator admitted that he had appeared in some matters in this Court on behalf of the appellant, he did not withdraw from the proceedings.

66. Mr. Chowdhury argued that after Efcalon had completed its arguments before the learned Arbitrator and filed written notes of arguments on 1st December, 2011, the appellant sought to amend its Statement of Claim to seek cancellation of the agreement dated 26th December, 2004 and for declaration that the agreement was null and void.

67. Mr. Chowdhury submitted that in spite of knowledge of the application filed by Efcalon under Section 14 of the 1996 Act, the learned Arbitrator continued with the arbitration proceedings ex parte and finally proceeded to pass the award. Mr. Chowdhury submitted that the award has rightly been set aside by the Court below.

68. By the impugned award the learned Arbitrator held that the agreement dated 26th December, 2004 was null and void and directed Efcalon to refund the entire licence fees received under the agreement dated 26th December, 2004 to the appellant. No order was passed for eviction of the appellant, as prayed for by Efcalon in its counter claim. Mr. Chowdhury argued that the effect of the award was that, the appellant was allowed to continue to be in possession of and enjoy the premises in question without making payment of any further licence fees.

69. Mr. Chowdhury argued that the award was passed by the learned Arbitrator on the basis that Efcalon had no right in the property. Such a finding was beyond the scope of the agreement, as the right of Efcalon was recognised in the agreement. The award was thus opposed to the order of this Court as also the Order of the Supreme Court wherein the right of Efcalon to have a lease executed in its favour was recognised.

70. Mr. Chowdhury submitted that the award dealt with a dispute not contemplated by or not falling within the terms and submission to arbitration. A portion of the award was, therefore, beyond the scope of arbitration. It was further argued that the award was opposed to settled principles of law, in that the award has been passed on the basis that Efcalon had no right in the premises in question.

71. Mr. Chowdhury referred to Section 116 of the Indian Evidence Act, 1872 set out herein below :

"116. Estoppel of tenant; and of licensee of person in possession. - No tenant of immovable property, or person claiming through such tenant, shall, during the continuance of the tenancy, be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, a title to such immovable property and no person who came upon any immovable property by the licence of the person in possession at the time when such licence was given."

72. Mr. Chowdhury argued that a person inducted into the premises and paying rent could not challenge the title of the landlord. Referring to the judgment of the Privy Council in Kumar Raj Krishna Prosad Lal Singha Deo v. Baraboni Coal Concern Ltd. & Ors. reported in AIR 1937 Privy Council 251, where the Privy Council held that the principles of Section 116 of the Evidence Act were also applicable in the case of a license, Mr. Chowdhury argued that the defect in the title of the licensor had been made known to the appellant at the time of execution of the agreement dated 26th December, 2004 and, thereafter, the appellant was put into possession of the said premises.

73. Mr. Chowdhury also cited Vashu Deo v. Balkishan reported in (2002) 2 SCC 50 and State of Andhra Pradesh & Ors. v. D. Raghukul Pershad (Dead) by Lrs. & Ors. reported in (2012) 8 SCC 584, to argue that a tenant was estopped from denying the landlord’s title as long as he was in possession. Mr. Chowdhury also cited Anar Devi (Smt) v. Nathu Ram reported in (1994) 4 SCC 250. Mr. Chowdhury argued that the finding of the learned Arbitrator that the respondent had no right, title or interest in the premises in question, was beyond the scope of the reference.

74. Mr. Chowdhury submitted that the learned Arbitrator lacked jurisdiction to decide any issue pertaining to Efcalon and Kolkata Port Trust, particularly since the agreement had expired on 31st October, 2011. It is, however, not understood what relevance the expiry of the agreement has, with the jurisdiction of the Arbitrator to decide an issue raised before the Arbitrator. In terms of the arbitration clause in the licence agreement, the authority of the Learned Arbitrator to decide disputes, was of the widest amplitude.

75. It was also argued that the arbitrator had no jurisdiction to decide the issue pertaining to the respondent and Kolkata Port Trust in view of the order of the Hon’ble Supreme Court dated 8th May, 2006. Significantly, neither the orders of the High Court nor the order dated 8th May, 2006 authorise Efcalon to license out the premises to a licensee. On the other hand, it is patently clear that the High Court, as also the Supreme Court was concerned with the revival of the company and the running of the company as a going concern, as it involved the question of livelihood of the workers. The Courts proceeded on the basis that the premises was required by Efcalon for the purpose of running the factory of the company that had gone into liquidation.

76. Mr. Chowdhury referring to Sections 18 and 19 of Contract Act argued that there was no mis-representation whatsoever on the part of Efcalon since, as observed above, Efcalon had tendered arrear rent to Kolkata Port Trust by bank draft, under cover of a letter dated 14t December, 2004.

77. Sections 18 and 19 of Contract Act, referred by Mr. Chowdhury are set out herein below for convenience:-

"18. "Misrepresentation" defined - "Misrepresentation" means and includes -

(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is subject of the agreement.

19. Voidability of agreements without free consent. - When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

A party to contract, whose consent was caused by fraud or mis-presentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true."

78. Mr. Chowdhury also referred to Sections 64, 65, 66 and 67 of the Contract Act which are also set out herein below for convenience:-

"64. Consequence of rescission of voidable contract - When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he had received any benefit thereunder from another party to such contract restore such benefit, so far as may be, to the person from whom it was received.

65. Obligation of person who has received advantage under void agreement, or contract that becomes void - When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore, it, or to make compensation for it, to the person from whom he received it.

66. Mode of communicating or revoking rescission of voidable contract - The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of the proposal.

67. Effect of neglect or promise to afford promisor reasonable facilities for performance - If any promisee neglects or refuses to afford the promisee reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to non-performance caused thereby."

79. Referring to the various provisions of the Contract Act, cited above, Mr. Chowdhury argued that a mis-representation which did not cause the consent of the party to whom the mis-representation was made, does not render the contract voidable. In any case, a person whose contract to an agreement is caused by mis-representation, has the option to avoid the contract or to insist that the contract be performed.

80. Mr. Chowdhury argued that the rescission of a voidable contract has to be communicated in the same manner and subject to the same rules that apply to the communication or revocation of a proposal. In this case, there was no rescission in the eye of law, inasmuch as the rescission was not communicated to Efcalon. Furthermore, the appellant having derived benefit under the contract was bound to restore any benefit or advantage that it might have received under the contract.

81. Mr. Chowdhury argued that the learned Arbitrator was biased. The respondent’s counter-claim for possession of the said premises had not been dealt with by the learned Arbitrator, in his award. The claim was, therefore, still alive. Mr. Chowdhury submitted that any proceedings initiated by Efcalon for recovery of possession would be barred by res judicata in view of the findings of the learned Arbitrator in the impugned award.

82. Mr. Chowdhury finally argued that the learned Arbitrator evinced bias by not withdrawing from the proceedings even though an application had been filed before him under Section 12 of the 1996 Act, questioning his authority to continue with the reference, on the ground of his personal relationship with Mr. Pradip Churiwal who was a tenant under the learned Arbitrator. Mr. Chowdhury submitted that all legal matters of Mr. Pradip Churiwal, director of the appellant, were handled by the learned Arbitrator.

83. Mr. Chowdhury submitted that the learned Arbitrator having held the agreement to be void, the learned Arbitrator had no further jurisdiction in the matter. The learned Arbitrator lacked jurisdiction to direct Efcalon to refund the amount paid by the appellant towards licence fees. The direction for refund was contrary to settled principles of law.

84. Mr. Chowdhury argued that the learned Arbitrator should, in any case, have directed the restoration of status quo ante on the date of the execution of the agreement, declaring the agreement to be void. The appellant ought to have been directed to make over possession to the respondent.

85. Mr. Chowdhury argued that the lease executed by Kolkata Port Trust is for 30 years from 4th August, 2003 out of which 12 years have already elapsed. Mr. Chowdhury also argued that, if the award is upheld, Efcalon will not be able to gain possession, although Efcalon is entitled to such possession.

86. In this case, the learned Arbitrator being an Arbitrator named in the arbitration agreement, his authority could not have been questioned on the ground of his having been known to and/or close to any of the parties to the agreement.

87. Arbitrators are Judges appointed by the parties and, therefore, an award passed by an Arbitrator/Arbitral Tribunal is not to be interfered with lightly. As observed above, the arbitration clause in the licence agreement is of the widest amplitude.

88. It is well-settled that in proceedings under Section 34 of the 1996 Act, the Court does not sit in appeal over an award by reanalysing the evidence. In P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. reported in (2012) 1 SCC 594 the Supreme Court held:-

"21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. .............. Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."

89. Sections 34(1) and (2) of the 1996 Act, provides as follows:-

"34. Application for setting aside arbitral award.-(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if-

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity; or

(ii) The arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation.-Without prejudice to the generality of sub clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."

90. As observed by the Supreme Court in Associate Builders v. Delhi Development Authority reported in (2015) 3 SCC 49 cited by Mr. Kapur, the 1996 Act was enacted to provide for an arbitral procedure, which is fair, efficient and capable of meeting the needs of arbitration, to provide that the Arbitral Tribunal gives reasons for an arbitral award, to ensure that the Arbitral Tribunal remains within the limits of its jurisdiction and to minimise the supervisory role of Courts.

91. Section 5 of the 1996 Act provides that notwithstanding anything contained in any other law for the time being enforce, in matters governed by Part 1, no judicial authority is to intervene, except where so provided in the said part.

92. Section 34, read in conjunction with Section 5 makes it clear that an arbitral award that is governed by Part 1 of the 1996 Act, can only be set aside on grounds mentioned in Section 34(2) and (3) and not otherwise.

93. None of the grounds contained in Sub-section 2(a) of Section 34 permit the Court to adjudicate the merits of the decision rendered by an arbitral award. The merits of an award might only be looked into under certain specified circumstances, when an award is found to be in conflict with the public policy of India, as held by the Supreme Court in Associate Builders (supra).

94. In Renusagar Power Co. Ltd. v. General Electric Co. reported in 1994 Supp (1) SCC 644 the Supreme Court held that the expression ‘Public Policy’ in the context of a foreign award, would have to be construed to mean an award contrary to (i) the fundamental policy of the Indian law; or (ii) the interest of India; or (iii) justice or morality. Such an award would have to be set aside as contrary to the public policy of India.

95. In ONGC Ltd. v. Saw Pipes Ltd. reported in (2003) 5 SCC 705 the Supreme Court held :

"The phrase "Public Policy of India" is not defined under the Act. Hence, the said term is required to be given meaning in context and also considering the purpose of the section and scheme of the Act. It has been repeatedly stated by various authorities that the expression "public policy" does not admit of precise definition and may vary from generation to generation and from time to time. Hence, the concept "public policy" is considered to be vague, susceptible to narrow or wider meaning depending upon the context in which it is used. Lacking precedent the Court has to give its meaning in the light and principles underlying the Arbitration Act, Contract Act and Constitutional provisions."

96. An award would be set aside if it was contrary to (a) the fundamental policy of Indian law; (b) the interest of India or (c) justice or morality or (d) if it was patently illegal. In ONGC Ltd. v. Saw Pipes Ltd. (supra) the Supreme Court made it clear that it was open to the Court to interfere with an award on the ground that it was patently illegal and therefore, opposed to the public policy of India.

97. An award might be set aside as patently illegal, provided the illegality goes to the root of the award. If the illegality is of a trivial nature it cannot be said that the award is against public policy. This proposition was reaffirmed by the Supreme Court in Hindustan Zinc Ltd. v. Friends Coal Carbonization reported in (2006) 4 SCC 445.

98. In ONGC v. Saw Pipes Ltd (supra) the Supreme Court held that an award could also be set aside, if it was so unfair and unreasonable, that it shocked the conscience of the Court.

99. In view of the judgment in ONGC Ltd. v. Saw Pipes Ltd. (supra) it has to be held that the award could be set aside if it was in contravention of the provisions of 1996 Act or any other substantive law governing the parties or was against the terms of the contract. Of course the award could be set aside on the ground of patently illegality, subject to the condition that the illegality went to the root of the award. It is now also settled law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same, would be liable to interference under Section 34 of the 1996 Act.

100. In Associate Builders v. Delhi Development Authority (supra) the Supreme Court held that it must be clearly understood that when a Court is applying ‘public policy’ test to an arbitral award, it does not act as a Court of appeal and consequently the errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to be accepted as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon, when he delivers his arbitral award. Thus, an award based on little evidence or no evidence, which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators’ approach is not arbitrary or capricious then he is the last word on facts.

101. Patent illegality may render an award to be in conflict with the public policy of India. Under the explanation to Section 34(2)(b) an award may be said to be in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

102. In McDermott International Inc. v. Burn Standard Co. Ltd. reported in (2006) 11 SCC 181, the Supreme Court held:-

"112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. [See Pure Helium India (P) Ltd. v. ONGC and D.D. Sharma v. Union of India]."

103. In MSK Projects (I) (JV) Ltd. v. State of Rajasthan reported in (2011) 10 SCC 573 the Supreme Court held that if the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error. Extrinsic evidence is admissible in such cases, because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence extrinsic to the award. Reference may in this context, also be made to the judgment of the Supreme Court in Gobardhan Das v. Lachhmi Ram AIR 1954 SC 689, Thawardas Pherumal v. Union of India AIR 1955 SC 468, Union of India v. Kishorilal Gupta & Bros. AIR 1959 SC 1362, Alopi Parshad & Sons Ltd. v. Union of India AIR 1960 SC 588, Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji AIR 1965 SC 214 and Renusagar Power Co. Ltd. v. General Electric Co. (1984) 4 SCC 679 : AIR 1985 SC 1156.

104. In Indu Engineering & Textiles Ltd. v. Delhi Development Authority reported in (2001) 5 SCC 691, the Supreme Court held that the Arbitrator being a Judge appointed by the parties, the award passed by him is not to be interfered with lightly. When the view taken by the arbitrator was a possible or a plausible one, on his analysis of evidence and interpretation of contractual and/or statutory provisions and did not suffer from any manifest error, it was not open to the Court to interfere with the award.

105. Even though the judgment in Indu Engineering & Textiles Ltd. (supra) was rendered in the context of an application under Section 30 of the Arbitration Act 1940, for setting aside of an award, the same principle would apply to an application for setting aside an award, under Section 34 of the 1996 Act.

106. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, reported in (2012) 5 SCC 306, the Supreme Court held that when a clause in a contract was capable of two interpretations and the view taken by the arbitrator was clearly a possible if not a plausible one, it was not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, Court could not interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator.

107. In Sumitomo Heavy Industries Ltd. v. ONGC Ltd. reported in (2010) 11 SCC 296 the Supreme Court held:

"43. ... The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg. Corpn. v. Central Warehousing Corpn. the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding."

108. In the judgement and order under appeal, the learned Court has made remarks of bias against the learned Arbitrator which are unsubstantiated, unjust and uncalled for, without even reading the award carefully. The learned Court misconstrued facts, as well as the law.

The learned Court inter alia recorded:

"In the impugned order the ld./ Arbitrator directed the Port Trust to grant the fresh lease to the respondent no. 1 of the Arbitration proceeding subject to the respondent no. 1 complying with the terms relating to the payment of arrear dues together with interest @ 15% p.a. a suggested by the Kolkata Port Trust in its letter dated 07-03-1992 and 13-10-1995. The ld. Arbitrator also directed the Port Trust to grant a fresh lease in favour of the respondent no. 1 on the basis of schedule rate from the date of possession on 04-08- 2003. The ld. Arbitrator also directed the Port Trust to Efcalon Tie Up Pvt. Ltd., respondent no. 1 of the Arbitration proceeding of the rental arrears together with an interest as suggested by the Kolkata Port Trust in its letter dated 07-03-1992 and 13-10-1995 within four weeks from the date of the letter."

109. The orders directing the Kolkata Port Trust to grant fresh lease to Efcalon were passed by the High Court and the Supreme Court and not by the learned Arbitrator. The order is full of errors, some of which were corrected after about three months on an application of Efcalon.

110. The patent errors in the order under appeal, reflect complete non application of mind. The Court has dealt with the application under Section 34 of the 1996 Act, in a careless and slipshod manner.

The learned Court further held:

"There was a litigation between the Kolkata Port Trust and the present petitioner with regards to grant of license to the present petitioner in the petition which ultimately culminated in passing of an order dated by the Hon’ble Supreme Court whereby the Supreme Court directed the Kolkata Port Trust to grant (leave or lease etc.) in favour of the petitioner who was also in possession of the said premises and terms of such lease was also recorded in the said order. The Kolkata Port Trust refused to execute the formal lease in the said property in petitioner’s favour in spite of the order of the Hon’ble Supreme Court and refused to accept the lease rent tendered by the petitioner as per direction of the Hon’ble Supreme Court. So, the petitioner filed the writ petition against the Kolkata Port Trust in the Hon’ble High Court at Calcutta which is still pending. The Kolkata Port Trust had applied for clarification and thereafter for review of the said order of the Hon’ble Supreme Court including the clarification to the effect that the petitioner could not have inducted occupants in the said property, such applications of the Kolkata Port Trust were dismissed.

In spite of knowledge of the aforesaid facts, the ld. Arbitrator started administering the clear bias in favour of the respondent. For that reason, the petitioner was compelled to file an application before the Arbitrator U/sec. 12 of the Arbitration and Conciliation Act, 1996 and thereafter an application U/sec. 14 of the said act seeking his removal. But during the pendency of the petitioner’s application U/sec. 14 of the Arbitration and Conciliation Act, 1996, the ld. Arbitrator passed the undated award. The petitioner came to know that the Arbitrator was a first friend of Pradip Churiwala, a director of the respondent and they used to go for a morning walk, and the said Churiwala was a tenant under the Arbitrator himself. It is also contended by the petitioner that when an application for interim relief was filed by the respondent of the Arbitration proceeding, the ld. Arbitrator passed the order dated 29-02-2012 passing the interim award in favour of the respondent allowing him directly to start depositing rent of the Kolkata Port Trust.

So, from the aforesaid discussion, it can be considered that the ld. Arbitrator acted in a biased manner which was prejudicial to the rights of the parties. So, in that ground, the award should be set aside U/sec. 34(V) of the Arbitration and Reconciliation Act, 1996."

111. The learned Court below completely overlooked the fact that Mr. Prabir Kr. Roychowdhury, Bar at law, being the named arbitrator, under the arbitration agreement, the challenge thrown to the authority of the learned Arbitrator, by Efcalon on the ground of the learned Arbitrator being known or close to the appellant, was misconceived. It was nobody’s case that the learned Arbitrator had any vested interest in the subject matter of arbitration.

112. A perusal of the award reveals that the learned Arbitrator has considered in details the facts pleaded and documents disclosed by the parties and made specific reference to the letter dated 3rd August, 2011, issued by Kolkata Port Trust, to arrive at the factual finding that Efcalon had not cleared the outstanding dues of Kolkata Port Trust.

113. From the award impugned, it appears that while the arbitration proceedings were going on, the appellant filed an application under Section 17 of the 1996 Act, before the learned Arbitrator, for withdrawal of occupation charges, that had been deposited by the appellant in a separate account under earlier orders of this Court, for payment to Kolkata Port Trust and other expenses.

114. The learned Arbitrator made an interim award, permitting withdrawal of Rs.3,20,000/- per month, for direct payment of occupation charges to Kolkata Port Trust, to whom payment was admittedly due. It further appears from the award, that soon after the interim award was made, Efcalon stopped appearing before the learned Arbitrator, on the pretext that its application filed in Court under Section 14 of the 1996 Act for termination of the mandate of the learned Arbitrator was pending.

115. From the impugned award, it appears that the application made by Efcalon before the learned Arbitrator under Section 12 of the 1996 Act, challenging the authority of the learned Arbitrator to proceed with the reference, was withdrawn. As recorded in the impugned award there was no order of Court in the application under Section 14 of the 1996 Act, restraining the learned Arbitrator from further proceeding with the reference. The finding of the learned Court that the learned Arbitrator acted in a biased manner during the pendency of the Section 14 application is not supported by the materials on record.

116. Furthermore, the learned Court has not noticed the reference in the impugned award, to orders of a Division bench of this Court, directing the learned Arbitrator to proceed ex parte if any party did not appear in spite of peremptory notice, and to conclude the proceedings expeditiously.

117. The Arbitral Award records that by an Order dated 28th September, 2011, the Division Bench of the High Court directed the learned Arbitrator to complete the arbitration proceedings within two months after the Puja vacation. By an Order dated 27th December, 2011, the time to complete the arbitration was extended by 45 days and ultimately the Division Bench directed that the arbitration proceedings be completed within 31st March, 2012.

118. The learned Arbitrator also recorded that the Division Bench of the High Court had, by an Order dated 21st December, 2011 directed that, in the event any of the parties failed to appear before the learned Arbitrator, in spite of a peremptory notice, it would be open to the learned Arbitrator to proceed with the arbitration proceedings in the absence of the defaulting party and if necessary, the proceedings would be held from day to day. The observations of the learned Court, against the learned Arbitrator, of bias are, to says the least, unfair.

119. The finding of the learned Court below that the learned Arbitrator had travelled beyond the scope of adjudication by declaring the agreement null and void is unsupported by reasons, and in any event incorrect in view of the wide scope and ambit of the arbitration clause in the agreement.

120. The impugned award records that Efcalon had filed a writ petition for directions on Kolkata Port Trust to execute the Deed of Lease, which was pending in this Court during the arbitration proceedings. The learned Arbitrator rightly observed that the mere filing of a writ petition did not give Efcalon the status of a lessee or tenant in respect of the premises. No order had been passed in the writ petition.

121. The finding of the learned Court that the learned Arbitrator evinced bias by proceeding with the reference and arriving at his decision, disregarding litigations between the Kolkata Port Trust and Efcalon is preposterous.

122. The arbitrator was bound and obliged to comply with orders of Court. In any case, arbitration proceedings could not be stalled just because a party to the arbitration was locked in litigation with its superior landlord, who was not a party to the arbitration.

123. The learned Arbitrator found on facts that no documents been disclosed by Efcalon regarding tendering of rent to Kolkata Port Trust or refusal of Kolkata Port Trust to accept rent in respect of the said premises. The learned Arbitrator further found on facts that the representation made by Efcalon to the appellant, as recorded in the recital to the agreement dated 20th December, 2004 was false. The learned Arbitrator concluded that Efcalon had induced the appellant to enter into the said agreement, by misrepresentation.

124. An arbitrator is the master of facts. This Court cannot sit in appeal over the factual findings arrived at by the learned Arbitrator on consideration of the materials on record, including in particular, the letter dated 3rd August, 2011 of Kolkata Port Trust, disclosed by the appellant, which showed that Efcalon had not cleared the outstanding dues of Kolkata Port Trust. This Court cannot re appreciate the evidence to arrive at a different finding.

125. Similarly, as recorded by the learned Arbitrator, the Division Bench of this Court had directed Kolkata Port Trust to grant lease in favour of Efcalon subject to Efcalon paying all outstanding dues to Kolkata Port Trust. The factual finding of the learned Arbitrator that such dues of Kolkata Port Trust, not having been paid, by Efcalon, no right had accrued to Efcalon in respect of the said premises is also unexceptionable and does not warrant interference. The learned Arbitrator found that Efcalon was an interloper at the said premises.

126. The learned Arbitrator observed that Efcalon had issued notice under Section 106 and claimed possession of the said premises on the ground that the appellant had stopped payment of licence fees and rent from 1st October, 2010. The learned Arbitrator held that since Efcalon had no right to the said premises, which belonged to Kolkata Port Trust, there was no legal obligation on the part of the appellant to pay the fees/rent to Efcalon. This finding also does not call for interference by Court. The learned Arbitrator also observed that Efcalon had not pressed its counterclaim. In effect, the learned Arbitrator held that by not pressing its counter-claim, Efcalon had abandoned its claim to an award of eviction.

127. The learned Arbitrator further held, and rightly, that the said premises being the property of the Board of Trustees of Kolkata Port Trust, the said premises was governed by the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. The learned Arbitrator, however, erred in holding that the provisions of the Transfer of Property Act would not apply. The Act of 1971 Act, which is a special Act for summary eviction of unauthorized occupants, is in addition to and not in derogation of the Transfer of Property Act. In any case, the provisions of the 1971 Act cannot be invoked by a tenant or an occupant of the public premises to evict a licencee inducted by such tenant and/or occupant. However, this error does not go to the root of the award.

128. The factual finding of the learned Arbitrator, on the basis of the materials then available, that Efcalon had no right to licence out the said premises is unexceptionable and not liable to interference by Court.

129. Section 116 of the Indian Evidence Act, 1872 provides that no tenant of immovable property, or person claiming through such tenant, shall, during the continuation of the tenancy, be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, title to such property and no person who came upon any immovable property by the licence of the person in possession thereof, shall be permitted to deny that such person had a title to such possession at the time then such licence was given. The learned Arbitrator duly dealt with the arguments of Efcalon with regard to Section 116 of the Evidence Act and arrived at the finding that the Section was not applicable. The learned Arbitrator’s interpretation of Section 116 is a plausible one.

130. It is well settled that, then an Arbitrator interprets a statutory provision, and that interpretation is a plausible interpretation, the Court would not interfere in proceedings under Section 34 of the 1996 Act only because the Court prefers a different interpretation to the same provision.

131. From the award, it is clear that the possession of Efcalon was not disputed. It was also not disputed that the appellant had obtained possession from Efcalon. The learned Arbitrator held that Efcalon had no right whatsoever over the property.

132. The learned Arbitrator found that the appellant not being a tenant of the said premises, and Efcalon not being the landlord, the first part of Section 116 would not be attracted. Furthermore, the appellant had not denied the right of Efcalon to possession of the said premises, as purchaser of the assets of the company in liquidation, armed with orders of Court.

133. What was argued by the appellant before the learned Court was that the contract had been induced by the misrepresentation of Efcalon that the arrear rent had been paid, which was later found false. The argument was accepted by the learned Arbitrator. Furthermore, the learned Arbitrator found on facts that Efcalon had not been able to establish its right to license out the said premises.

134. The learned Arbitrator on consideration of the materials on record, including the notes of argument filed on behalf of Efcalon, held that Efcalon whic

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h had only purchased the assets of the company in liquidation, had no right to the said premises, since the lease in respect of the said premises had long expired. Efcalon could not, therefore, have granted any licence in respect of the said premises in favour of the appellant. The finding in effect that the appellant could not be said to be a licencee of Efcalon also does not warrant interference by Court. 135. The learned Arbitrator rightly held that the mere filing of a writ petition for directions on Kolkata Port Trust to execute a lease in favour of Efcalon did not confer the status of lessee on Efcalon. The learned Arbitrator found that no documents had been disclosed by Efcalon to show that Efcalon had tendered rent to Kolkata Port Trust or that Kolkata Port Trust had refused such rent. 136. The learned Arbitrator arrived at the finding, and rightly, that since the said premises belonged to Kolkata Port Trust, Efcalon could not earn any rent or license fee in respect of the said property from the appellant. The finding that Efcalon was only an interloper in respect of the said premises at the material time, was also not liable to interference under Section 34 of the 1996 Act. 137. The learned Arbitrator found that Efcalon had filed a counter statement but that counter statement was not pressed. Since Efcalon had not appeared in spite of peremptory notice, the learned Arbitrator was obliged to continue in view of the Order dated 21st December, 2011 of the Division Bench of this Court. Since the counter statement was not pressed, it is not open to Efcalon to now contend that the learned Arbitrator erred in not making an award for eviction as prayed for in the counter claim of Efcalon. 138. The learned Arbitrator found that the appellant had paid license fees, security deposit and other payments totalling Rs.1,88,94,208/- to Efcalon. Out of the aforesaid sum, Rs.37,50,000/- was spent by the appellant for addition, alteration, repair and renovation of the said premises. Since the appellant had enjoyed the fruits of addition, alteration, repair and renovation, the claimant was not permitted to get back the amount paid for addition, alteration, repair and renovation. 139. The learned Arbitrator found that the balance Rs.1,51,44,208/- was paid by the appellant to Efcalon on the understanding that Efcalon would pay the rent, past and future, to Kolkata Port Trust, so that the appellant’s possession could be treated as lawful. As Efcalon had not paid any such payment to Kolkata Port Trust, the payment was made by the appellant to Efcalon under a void contract. 140. An arbitration clause in a contract is an independent agreement, unrelated to the performance of the other terms and conditions of the contract. The arbitration agreement survives even if the contract is terminated or comes to an end. The arbitration clause in a deed or instrument in relation to immovable property, remains unaffected even if the deed or instrument is invalid and enforceable. 141. In case of a contract, voidable at the option of a party, the arbitration clause/arbitration agreement would be enforceable unless there are good reasons to hold the agreement in its entirety, including the arbitration agreement voidable, for example then execution of an agreement to sell property is coerced by threat to life or physical injury and the agreement is repudiated on that ground. This view finds support from the judgment of the Supreme Court in SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd. reported in 2011 (14) SCC 66. 142. On finding that the appellant had been induced to pay Rs.1,51,44,208/- under a void agreement, the learned Arbitrator held that the amount was, of Rs.1,51,44,208/- liable to be refunded by Efcalon to the appellant along with interest @ 15% on the said sum from the date of payment till refund. The claim of the appellant to compound interest was rejected as Simple Interest was payable to Kolkata Port Trust. 143. From the award, it appears that the appellant had also claimed damages of Rs.50,00,000/-. The learned Arbitrator rightly disallowed the claim for damages observing that the appellant had not been able to substantiate its contention of having suffered damages. 144. By the impugned award the learned Arbitrator directed Efcalon to refund of Rs.1,51,44,208/- to the appellant with interest at the rate of 15% per annum from the date of payment till refund. The claim of the appellant for damages Rs.50,00,000/- was rejected. The learned Arbitrator also declared the agreement dated 26th December, 2004 null and void and directed delivery up and cancellation thereof. The appellant was awarded costs assessed at Rs.1,00,000/-. 145. Having regard to the limited scope of interference with an award, in an application under Section 34 of the 1996 Act, the factual findings arrived at by the learned Arbitrator, that arrears of rent had not been paid by Efcalon to Kolkata Port Trust; that Efcalon had no right to license out the said premises and that the contract had been induced by misrepresentation are not liable to be interfered with. 146. The learned Arbitrator’s interpretation of Section 116 of the Indian Evidence Act, if not a correct interpretation, is certainly a plausible one. There is no infirmity in the interpretation. In our view, the learned Arbitrator’s finding that Section 116 of the Indian Evidence Act is not applicable in this case, does not warrant interference. 147. We do not agree with most of the reasons recorded by the learned Court below for setting aside of the award. However, it does not permit the conscience of this Court, to sustain an award, which in effect and substance allows the appellant, who had no right whatsoever to the said premises, to remain in occupation of the said premises without payment of any occupation charges. If, as rightly held by the learned Arbitrator, Efcalon had no right to license out the said premises, the appellant who had been inducted into the said premises, had no right to be in occupation of the said premises. 148. It is a fundamental principle of law, as enunciated in Section 64 and 65 of the Indian Contract Act, that a party rescinding a voidable contract is obliged to restore the benefits derived from the contract. Even if a contract were ab initio void, all benefits received thereunder would have to be restored. The appellant was obliged to pay occupation charges for the period during which the appellant was in occupation, if not to Efcalon, at least to Kolkata Port Trust, the owner of the said premises. 149. In our view, the learned Arbitrator committed a fundamental error of law in not directing the appellant to restore the status quo ante at the time the appellant was put into possession of the said premises. 150. The award is, in our view, patently illegal, in so far as the award allows the appellant to remain in the said premises, enjoy the said premises and/or carry on business thereat without being saddled with any obligation whatsoever. The impugned award is unconscionable and thus, against public interest. It is well settled that an award which is unconscionable, should be set aside. 151. For the reasons discussed above, we dismiss the appeal. Photostat certified copy, if applied for, be delivered to the learned counsel for the parties, upon compliance of all usual formalities. Appeal dismissed.
O R