Sunday, 2 May 2021

Whether litigant must file certificate U/S 65B of Evidence Act along with electronic evidence in proceeding before an arbitrator?

 The contention that that the Arbitral Tribunal had grossly erred

in accepting the said evidence without an affidavit under Section 65B of the Indian Evidence Act, 1872 is difficult to accept. This is because of two reasons. First, in terms of Section 1 of the Indian Evidence Act 1872, the said Act is not applicable to proceedings before the arbitrator. Second, no such objection was taken on behalf of the petitioners at the appropriate stage, that is, before the Learned Arbitrator. {Para 27}

IN THE HIGH COURT OF DELHI AT NEW DELHI

 Judgment delivered on: 15.04.2021

 O.M.P. (COMM) 79/2021

MEGHA ENTERPRISES AND ORS Vs M/S HALDIRAM SNACKS PVT. LTD. 


CORAM

HON’BLE MR JUSTICE VIBHU BAKHRU


1. The petitioners have filed the present petition under Section 34

of the Arbitration and Conciliation Act, 1996 (hereinafter the „A&C

Act‟) impugning an arbitral award dated 26.10.2020 rendered by an

Arbitral Tribunal constituted by a Sole Arbitrator, Justice (Retd.) Dr

Mukundakam Sharma, a former Judge of the Supreme Court of India.

The arbitration was conducted under the aegis of Delhi International

Arbitration Centre (DIAC) and its Rules.

O.M.P (COMM) 79/2021 Page 2 of 29

2. Petitioner no.1 (hereinafter „Megha‟) is a partnership firm and

petitioner nos. 2 to 5 are its constituent partners. Megha is, inter alia,

engaged, in the business of trading Crude Palm Oil (edible grade). The

subject disputes arise out of two agreements dated 02.02.2013 and

25.02.2013, which were entered into between Megha and M/s Coral

Products Pvt. Ltd. (hereinafter „Coral‟) for sale and purchase of Crude

Palm Oil on a High Seas Sale Basis. In terms of the agreement dated

02.02.2013, Coral agreed to sell 1470 MT of Crude Palm Oil of

Indonesian origin on board the vessel, MT. Prosperity V.01/13, with

Kakinada as the port of delivery, at the rate of ₹46,600/- per MT. In

terms of the Agreement dated 25.02.2013, Coral agreed to sell 2500

MT of Crude Palm Oil on board the vessel, MT. Golden Blessing

V.1301, with Kakinada as the port of delivery, at the rate of ₹48,750/-

per MT.

3. Coral issued two separate invoices dated 02.02.2013 and

25.02.2013 for amounts of ₹6,85,02,000/- and ₹12,18,75,000/-

respectively for sale of Crude Palm Oil, in terms of the respective

agreements as mentioned above. Thus, according to Megha, an

aggregate sum of ₹19,03,77,000/- (Rupees Nineteen Crores Three

Lacs Seventy Seven Thousand only) became due and payable by

Megha to Coral.

4. In terms of a Scheme of Amalgamation under Section 391-394

of the Companies Act, 1956, Coral merged with the respondent

company (hereinafter „Haldiram‟). The said Scheme of

Amalgamation of Coral with Haldiram, was approved by this Court by

O.M.P (COMM) 79/2021 Page 3 of 29

an order dated 25.04.2014 passed in Company Petition No. 66/2014.

In terms of the said Scheme of Amalgamation, the assets of Coral

stood vested with Haldiram. These included the amount receivable

from Megha in respect of the two High Sea Sale Agreements in

question.

5. According to Haldiram, Megha took delivery of the Crude Palm

Oil at the port of delivery, Kakinada, on the basis of the documents

executed by Coral. Haldiram claims that the aforesaid amount of

₹19,03,77,000/- (Rupees Nineteen Crores Three Lacs Seventy Seven

Thousand only) remained outstanding as Megha failed and neglected

to pay the same.

6. Accordingly, by a notice dated 18.05.2016 addressed to the

petitioners, Haldiram invoked the Arbitration Clauses under the

respective High Sea Sales Agreements in question, and sought the

consent of the petitioners to appoint a Sole Arbitrator. Haldiram

suggested names of three former judges of this Court, one of whom

could be appointed as a Sole Arbitrator. In its notice, Haldiram

claimed an amount of ₹19,03,77,000/- with interest at the rate of 18%

per annum, which according to Haldiram was in terms of the said

Agreements as well as the custom and usage of trade.

7. Megha responded to the said notice by a letter dated

03.06.2016. It denied its liability to pay the amount as claimed by

Haldiram and also declined to give consent for the appointment of an

O.M.P (COMM) 79/2021 Page 4 of 29

Arbitrator. Megha further claimed that the Arbitration Clause was not

binding on any of the parties.

8. In the aforesaid circumstances, Haldiram filed a petition under

Section 11(6) of the A&C Act, being ARB.P. 421/2016: Haldiram

Snacks Pvt. Ltd. v. Megha Enterprises and Anr., seeking

appointment of a Sole Arbitrator to adjudicate the disputes in respect

of the two High Sea Sale Agreements in question. The said petition

was allowed by this Court and by an order dated 18.04.2017, this

Court referred the parties to DIAC with the direction for DIAC to

appoint an Arbitrator in accordance with the provisions of the A&C

Act and its Rules.

9. Haldiram filed its Statement of Claims on 05.06.2017 claiming

(a) ₹19,03,77,000/- as the amount outstanding against the sale of

Crude Palm Oil (Claim No.1); (b) interest at the rate of 18% per

annum from the date the amount became due till the date of filing of

the Statement of Claim quantified at ₹14,56,38,405/- (Claim No.2); (c)

Pendente lite and future interest at the rate of 18% per annum from the

date of filing of the claim till payment of the award (Claim No.3); and

(d) costs of litigation (Claim No.4).

10. The petitioners filed their Statement of Defence raising several

contentions including that Haldiram‟s claims were barred by

limitation. The petitioners contended that the Arbitration Clause was

invoked on 18.05.2016, which was beyond a period of three years

from the date on which the amounts became payable under the

O.M.P (COMM) 79/2021 Page 5 of 29

Agreements in question. In terms of the Agreements, the payments

were to be made within ten days of the date of invoices/agreements

and thus, the period of three years from the respective invoices expired

on 12.02.2016 and 07.03.2016. The petitioners further claimed that

Megha had supplied the Crude Palm Oil to M/s Good Health Agro

Tech (P) Ltd. and M/s Nikhil Refineries (P) Ltd. at the instance of

Haldiram, as Haldiram intended to fudge its balance sheets and show

profits from its business under the brand name „Haldiram‟. The

petitioners claimed that Megha had not received any amount from the

said companies and further, the same had become a NPA (Non-

Performing Asset). The petitioners further claimed that Haldiram had

received consideration for the said products directly from M/s Good

Health Agro Tech (P) Ltd. and M/s Nikhil Refineries (P) Ltd. but had

not given credit for the said amounts to Megha.

11. Considering the pleadings, the Arbitral Tribunal framed the

following issues:

“1. Whether this Tribunal has no territorial

jurisdiction to try and decide the present

proceedings?

2. Whether the claims of the Claimant are barred by

law of limitation?

3. Whether the Claimant has already received its

entire dues as claimed in the present proceedings

and if so whether there is accord and satisfaction?

4. Whether the Claimant is entitled to claim and

receive an amount of Rs. 19,03,77,000.00 or any

part thereof and if so what amount?

O.M.P (COMM) 79/2021 Page 6 of 29

5. In the event, the aforesaid issue is answered in

favour of the Claimant, whether the Claimant

would also be entitled to claim an amount of Rs.

14,56,38,405.00 towards interest @ 18% per

annum till the date of filing the Claim Petition?

6. Whether the Claimant would also be entitled to

claim interest on the principal amount, if found

due and payable towards pendente lite and future

interest and if so at what rate and for which

period?

7. Whether the Claimant is also entitled to payment

of cost and if so, for what amount?”

12. The Arbitral Tribunal rejected the contention that it had no

territorial jurisdiction to decide the claims raised by Haldiram. It noted

that the Arbitration Clause under the Agreements expressly provided

that the arbitration would be subject to the jurisdiction of Courts at

Hyderabad/Delhi. It also noted that the two Agreements in question

had been engrossed on stamp paper purchased in Delhi. The Arbitral

Tribunal further held that the parties had specifically agreed that the

place of arbitration would be Hyderabad or Delhi and thus, both

Courts at Delhi as well as Hyderabad would have jurisdiction in

respect of the arbitral proceedings. The Arbitral Tribunal, after

evaluating the material/evidence brought on record, rejected the

defence that Haldiram had already received the entire consideration

for the sale of Crude Palm Oil in terms of the High Sea Sale

Agreements in question.

13. The Arbitral Tribunal rejected the contention that the claims

made by Haldiram were barred by limitation and accordingly, awarded

O.M.P (COMM) 79/2021 Page 7 of 29

a sum of ₹19,03,77,000/- as due and payable by the petitioners to

Haldiram. The Arbitral Tribunal also awarded interest at the rate of

9% from 01.04.2013, that is, the date from filing the Statement of

Claims till the recovery of the said amount. In addition, the Arbitral

Tribunal also awarded costs of ₹5,00,000/- in favour of Haldiram.

Submissions

14. Mr Gupta, learned Senior counsel appearing for the petitioners

has assailed the impugned order on the solitary ground that Haldiram‟s

claim is barred by limitation and the Arbitral Tribunal‟s conclusion to

the contrary, is patently illegal. He submitted that the High Sea Sale

Agreements in question, were entered into, on 02.02.2013 and

25.02.2013. The invoices for the same were also issued on the same

date; that is, Invoice dated 02.02.2013 for 1470 MT of Crude Palm Oil

(edible grade) for a sum of ₹6,85,02,000/- and Invoice dated

25.02.2013 for 2500 MT of Crude Palm Oil (edible grade) for a sum

of ₹12,18,75,000/-. In terms of Clause 11 of the High Sea Sales

Agreement, which are identically worded, the payment for the same

was required to be arranged on expiry of ten days from the date of the

Agreement. Thus, undisputedly, the payment of ₹6,85,02,000/- against

the Invoice dated 02.02.2013 was to be paid by 12.02.2013 and the

payment of ₹12,18,75,000/- against the Invoice dated 25.02.2013 was

required to be paid by 07.03.2013. The notice invoking arbitration was

issued on 18.05.2016. Mr Gupta contended that since the said notice

was beyond the period of three years from the agreed dates of

payment, Haldiram‟s claim was barred by limitation. He contended

O.M.P (COMM) 79/2021 Page 8 of 29

that the Arbitral Tribunal had grossly erred in accepting that during

the said period the respondent had issued any acknowledgement of the

amount payable under the said invoices. It is stated that the Arbitral

Tribunal had accepted Haldiram‟s contention that one Mr Avneesh

Agarwal of Coral had received the letter dated 31.05.2013

acknowledging the said liability. He contended that the said letter was

not signed and therefore, could not have been considered as an

acknowledgement under Section 18 of the Limitation Act, 1963

(hereinafter „the Limitation Act‟). He submitted that the said letter

purportedly did not bear any signatures but it was only scribbled „for

Shekhar‟ against the authorized signatory. He submitted that there was

no evidence that any person named Shekhar was employed by Megha.

He submitted that the Arbitral Tribunal had erred in accepting that the

said letter had been sent by electronic mode as there was no evidence

to the aforesaid effect. He also submitted that the said letter could not

be relied upon as the necessary affidavit of evidence under Section

65B of the Evidence Act, 1872 was not submitted.

15. Next, Mr Gupta contended that an email dated 04.06.2013

purportedly forwarding the balance confirmation letter dated

31.05.2013, was purportedly forwarded by one Mr Mohan Maganti of

M/s KGF Cottons Pvt. Ltd. to one Avneesh Agarwal. He stated that

the said communication could not be construed to extend the period of

limitation as it had not been sent by any of the constituent partners of

Megha (petitioner nos. 2 to 5). There was no evidence that Mr Mohan

Maganti was an employee of Megha. Further, the email itself indicated

O.M.P (COMM) 79/2021 Page 9 of 29

that it was sent on behalf of M/s KGF Cottons Pvt. Ltd and a

communication by a third party (in this case, an incorporated

company) could not be considered as an acknowledgement by the

petitioners or on their behalf.

16. Mr Goswami, learned counsel appearing for Haldiram

countered the aforesaid submissions. He submitted that the Arbitral

Tribunal had carefully examined the evidence on record and

concluded that Megha had acknowledged the debt owed against the

two Invoices in question. He submitted that the Arbitral Tribunal had

seen the email dated 04.06.2013 as well as the letter dated 31.05.2013

attached therewith. He contended that the Arbitral Tribunal had also

examined the question whether the acknowledgement dated

31.05.2013 required to be signed. The Arbitral Tribunal had followed

the decision of the Karnataka High Court in Sudarshan Cargo Pvt.

Ltd. v. Techvac Engineering Pvt. Ltd.: 2014 Company Cases 71,

wherein the Court had held that emails can be construed and read as

due acknowledgment of debt and, the same would meet the parameters

as laid down under Section 18 of the Limitation Act.

Reasons and Conclusion

17. It is apparent from the above that the petitioner‟s case is

founded on the assumption that the Arbitral Tribunal has grossly erred

in (a) evaluating the evidence led in the case; and (b) misapplying the

provisions of Section 18 of the Limitation Act.

O.M.P (COMM) 79/2021 Page 10 of 29

18. The relevant extract of the impugned award setting out the

reasoning of the Arbitral Tribunal on the issue of limitation is set out

below:-

“29. The Claimant relies on the ledger account of Megha

Enterprises wherein an outstanding balance of Rs.19,

03,77,000/- is shown still outstanding in terms of the

aforesaid ledger account. My attention was also drawn

to the email dated 04.06.2013 sent by Mohan Maganti

with his email address mentioned therein as

mohan@goodhealthgroup.com to Avneesh Agarwal,

representative of the Claimant. In order to appreciate

the exact nature of admission made therein as alleged

by the Claimant, I extract the entire contents of the

said email hereunder:

"From: Mohan Maganti [mail to:

mohan@goodhealthgroup.com]

Sent: Tuesday, June 4, 2013 4:56PM

To: Avneesh Agarwal

Subject: Kind Attn Mr Avneesh Agarwalji- Please find

enclosed Balance Confirmation letters of KGF Cottons

P.Ltd and Megha Enterprises as on 31.03.2013.

Kind Attn Mr Avneesh Agarwalji- Please find enclosed

Balance Confirmation letters of KGF Cottons P. Ltd and

Megha Enterprises as on 31.03.2013.

Please refer your balance confirmation letters and email

from Shri Mohit dua asking us our balance confirmation

letters, Please find enclosed Balance Confirmation letters

in the Books of Megha Enterprises and KGF Cottons

P,Ltd.

Thank You,

for K.G.F. COTTONS PVT. LTD.

O.M.P (COMM) 79/2021 Page 11 of 29

M. Mohan"

30. The said document was sent by Mohan Maganti to the

Claimant attaching therewith the balance confirmation

letter of KGF Cotton Pvt. Ltd. and Megha Enterprises

as on 31.3.2013. The email further stated that the

balance confirmation letter in the books of Megha

Enterprises is enclosed with the said email. The

balance confirmation letter is marked 'Y' which is

dated 31.5.2013. That letter is in the letter head of

Megha Enterprises and addressed to the Director of

M/s Coral Products Pvt. Ltd. The contents of the said

letter are also extracted hereunder:

MEGHA ENTERPRISES

Date: 31st May '13.

To,

The Director,

M/s. Coral Products Pvt. Ltd.

R0:2032-34, Katra, Lachhu Singh

Chandni Chowk,

Delhi-110006.

Dear Sir,

Sub: Confirmation of Credit Balance of Rs.

19,03,77,000/- (Due to you)

As on 31.03.2013-Reg.

As part of our Closure of Our Accounts and Audit for

the Assessment year 2013-14. We, do hereby

inform/confirm that the balance amount Due to your

company is Rs.19.03.77,000/- (In Words: Nineteen

Crores Three Lakhs Seventy Seven Thousand Only) as

reflected in our books of account closing as on

31.03.2013.

Please confirm the Balance with in 7 days on the

receipt of the letter and notify the discrepancy if any. If

O.M.P (COMM) 79/2021 Page 12 of 29

no communication is received from you we assume that

the said balance is confirmed by you.

Thanking you,

Yours faithfully,

for MEGHA ENTERPRISES.,

Sd/-

(Authorised Signatory)

31. This document clearly indicates that in the said letter

Megha Enterprises, the Respondent has clearly

confirmed that the balance amount due to the

Claimant company is Rs.19,03,77,000/- as reflected in

the books of account of Megha Enterprises as on

31.3.2013. This letter was attached with the

electronically generated mail and is also a part of the

electronically generated documents.

32. The email dated 04.06.2013 was sent to M/s Coral

Products Pvt. Ltd. through Shri Avneesh Agarwal by

Shri Mohan Maganti from email ID being

mohan@gpodhealthgroup.com. M/s Good Health

Agro Pvt. Ltd. is a part of a group of companies

including the Respondent No.1. This is admitted

position by the witness of the Respondent in cross

examination (Q.No.11). He has also admitted that M/s

Good Health Agrotech Pvt. Ltd. has email accounts

with one of the domain name "goodhealthgroup.com".

He evaded to answer the specific question as to

whether Shri Mohan Maganti was an employee of M/s

Good Health Agrotech Pvt. Ltd. When asked he

replied in his answer to question No.12 in cross

examination that he did not remember. Therefore, he

did not specifically deny the suggestion that Shri

O.M.P (COMM) 79/2021 Page 13 of 29

Mohan Maganti was not an employee of M/s. Good

Health Agrotech Pvt. Ltd. The entire evidence when

read in proper perspective, it makes it amply clear that

the aforesaid email dated 04.06.2013 was sent by and

on behalf of the Respondent admitting and

acknowledging the balance confirmation of

Rs.19,03,77,000/-, the amount which is specifically

mentioned in the letter dated 31.05.2013 issued in the

letterhead of the Respondent. This letter was an

attachment to the electronically generated email dated

04.06.2013.

33. Both the documents, therefore; marked 'Y' and 'Z'

which is the email dated 04.06.2013 are found to be

admissible in evidence in terms of the various

provisions including Section 4 of the Information and

Technology Act. In this regard reference can be made

to the decision of the Karnataka High Court in the

case of Sudarsan Cargo Pvt.Ltd. vs. M/s Techvac

Engineering Private Limited, reported in (2014)

Comp Cases 71. The following paragraphs being

relevant to the issue in question are extracted:-

"10. Section 18 does not provide that

acknowledgement has to be in any particular

form or to be express. Even a statement which, if

literally construed, does amount to an

acknowledgment, may be sufficient, if it implies

an admission of liability. A narrow interpretation

should not be put on what constitutes

acknowledgement under Section 18. An

acknowledgement is an admission by the debtor

to the creditor indicating that he owes money to

the creditor. The acknowledgement requires to

be examined in the light of surrounding

circumstances by an admission that the writer

owes a debt. Generally speaking, a literal

construction of the statement on which the

O.M.P (COMM) 79/2021 Page 14 of 29

acknowledgement is sought to be founded should

be given. If there is an admission of fact of which

the liability in question is a necessary

consequence, it should be taken as an

acknowledgement. The term 'acknowledgement'

has to be construed in its plain literary sense. In

Oxford Dictionary II Edition, it has been defined

as under:

"acknowledgement" - acceptance of the

truth or existence of something;

recognition of the importance or quality

of something; the expression of gratitude

or appreciation for something; the action

of showing that one has noticed someone

or something; a letter confirming receipt

of something."

In Black's Law Dictionary 9th Edition, it has been

defined as:

"acknowledgement" - a recognition of something

has been factual; an acceptance 'of responsibility;

the act of making it known that one has received

something; a formal declaration made in the

presence of an authorised officer, such as a Notary

public, by someone who signs a document and

confirms that the signature is authentic.

"acknowledgement of debt" - recognition by a

debtor of an existence of a debt; an

acknowledgment of debt interrupts the running of

prescription’’

If the intention of the parties is to acknowledge a preexisting

debt within the period of limitation, then it is an

acknowledgment under the Limitation Act, 1963.

O.M.P (COMM) 79/2021 Page 15 of 29

An unconditional acknowledgment implies a promise to

pay because that is the natural inference if there is no

other contrary material."

"14. Section 18 of the Limitation Act prescribes that

acknowledgement of liability if made in writing before

the expiration of the prescribed period, a fresh period of

limitation has to be computed from the time when the

acknowledgement was so signed. Thus, essential

requirements of a valid acknowledgment under

Section18 of the Limitation Act, 1963 are:

(a) It must be in writing;

(b) Must be signed by the party against whom

such right is claimed;

The word 'writing' employed in Section 18 refers to paper

based traditional manual writing."

"15. However, the Information Technology Act,

2000 (hereinafter referred to as 'IT Act, 2000'

[or brevity) provides for legal recognition [or

transactions carried out by means of electronic

data/electronic communication which involve

the use of alternatives to paper based methods

of communication and storage of information.

The IT Act, 2000 came in to force with effect

from 17.10.2000. On account of advanced

technology taking giant steps and the business

transactions being conducted through the use of

digital technology and communication systems,

said Act came into force. It also requires to be

noticed that on account of the business

community as well as individuals increasingly

using computers to create, transmit and store

information in the electronic form instead of

traditional paper documents and tor facilitating

O.M.P (COMM) 79/2021 Page 16 of 29

e-commerce and e-governance, the above said

Act came into force. It would be necessary to

note the Statement and Objects of IT Act, 2000

for better understanding of the said enactment

and the relevancy of its application to the facts

on hand and for answering the point formulated

herein above. It reads as under:

"New communication systems and digital technology

have made dramatic changes in the way we live. A

revolution is occurring in the way people transact

business. Businesses and consumers are increasingly

using computers to create, transmit and store

information in the electronic form instead of traditional

paper documents. Information stored in electronic form

has many advantages.

It is cheaper, easier to store, retrieve and speedier to

communicate. Although people are aware of these

advantages, they are reluctant to conduct business or

conclude any transaction in the electronic form due to

lack of appropriate legal framework. The two principal

hurdles which stand in the way of facilitating electronic

commerce and electronic governance are the

requirements as to writing and signature for legal

recognition. At present many legal provisions assume

the existence of paper based records and documents

and records which should bear signatures. The Law of

Evidence is traditionally based upon paper based

records and oral testimony. Since electronic commerce

eliminates the need for paper based transactions, hence

to facilitate ecommerce, the need for legal changes

have become an urgent necessity. International trade

through the medium of e-commerce is growing rapidly

in the past few years and many countries have switched

over from traditional paper based commerce toecommerce.

O.M.P (COMM) 79/2021 Page 17 of 29

2. xxx

3. There is need for bringing in suitable, amendments in

the existing laws in our country to facilitate ecommerce.

It is, therefore, proposed to provide tor

legal recognition of electronic records and digital

signatures. The will enable the conclusion of contracts

and the creation of rights and obligations through the

electronic medium. It is also proposed to provide for a

regulatory regime to supervise the Certifying

Authorities issuing Digital Signature Certificates. To

prevent the possible misuse arising out of transactions

and other dealings concluded over the electronic

medium, it is also proposed to create civil and criminal

liabilities for contravention of the provisions of the

proposed legislature.

4. With a view to facilitate Electronic Governance, it is

proposed to provide for the use and acceptance of

electronic records and digital signatures in the

Government offices and its agencies. This will make the

citizens interaction with the Government offices hassle

free.

5. It is also proposed to make consequential

amendments in the Indian Penal Code and the Indian

Evidence Act, 1872 to provide for necessary changes in

the various provisions which deal with offences relating

to documents and paper based transactions. It is also

proposed to amend the Reserve Bank of India Act, 1934

to facilitate electronic fund transfers between the

financial institutions and banks and the Bankers' Books

Evidence Act, 1891 to give legal sanctity for books of

account maintained in the electronic form by the banks.

6. xxx

7. xxx

O.M.P (COMM) 79/2021 Page 18 of 29

Electronic Mail, most commonly referred to as, is a method

of exchanging digital messages from one person to another

person or from an author to recipient. Modern email

operated across internet by computer network and it is

based on store and forward modem. E-mail is an

electronically transmitted correspondence between two or

more persons. Thus, any communication between the

sender and the recipient would result in privity of

transaction. Some of the provisions which have relevance

to the word 'e-mail' under IT Act, 2000 are extracted

herein below:

"2. Definitions. - (1) In this Act unless the context

otherwise requires,

(b) "addressee" - means a person who is intended

by the originator to receive the electronic record

but does not include any intermediary;

(r) "electronic form", with reference to information

means any information generated, sent, received,

or stored in media, magnetic, optical, computer

memory, micro film, computer generated micro

fiche or similar device;

(t)"electronic record" means data, record or data

generated, image or sound stored, received or

sent in electronic form or micro film or computer

generated micro fiche.

(v) "information" includes data, message, text,

images, sound, voice, codes, computer

programmes, software and databases or micro

film or computer generated micro fiche.

(za)"originator" means a person who sends,

generates, stores or transmits any electronic

O.M.P (COMM) 79/2021 Page 19 of 29

message; or causes any electronic message to be

sent, generated, stored or transmitted to any other

person but does not include an intermediatery

4. Legal recognition of electronic records - Where

any law provides that information or any other

matter shall be in writing or in the typewritten or

printed form, then, notwithstanding anything

contained in such law, such requirement shall be

deemed to have been satisfied if such information

or matter is –

a) rendered or made available in an

electronic form; and

(b) accessible so as to be usable for a

subsequent reference.

Section 4 of The IT Act, 2000 provides that if

information or any other matter is to be in writing

or in the typewritten or printed form, then,

notwithstanding anything contained in such law,

the requirement is deemed to have been satisfied if

such information or matter is rendered or made

available in an ·electronic form' and same is

accessible to be used for a subsequent reference.”

"21. A harmonious reading of Section 4 together

with definition clauses as extracted hereinabove

would indicate that on account of digital and new

communication systems having taken giant steps

and the business community as well as individuals

are undisputedly using computers to create,

transmit and store information in the electronic

form rather than using the traditional paper

documents and as such the information so

generated, transmitted and received are to be

construed as meeting the requirement of section

18 of the Limitation Act, particularly in view of

O.M.P (COMM) 79/2021 Page 20 of 29

the fact that section 4 contains a non obstante

clause. Since respondent does not dispute the

information transmitted by it is in electronic form

to the petitioner by way of message through the

use of computer and its network as not having

been sent by it to the petitioner, the

acknowledgement as found in the e- mails dated

14.01.2010 and 06.04.2010 originating from the

respondent to the addressee namely, petitioner,

such e-mails have to be construed and read as a

due and proper acknowledgement and it would

meet the parameters laid down under section 18

of the Limitation Act, 1963 to constitute a valid

and legal acknowledgement of debt due.

"22. For the reasons aforestated and in view of

the discussion made herein above, I am of the

considered view that point formulated herein

above requires to be answered by holding that an

acknowledgement of debt by e-mail originating

from a person who intends to send or transmit

such electronic message to any other person who

would be the 'addressee' would constitute a valid

acknowledgment of debt and it would satisfy the

requirement of Section 18 of the Limitation Act,

1963 when the originator disputes having sent the

e-mail to the recipient."

34. When these documents are considered, it is clearly

proved that the Respondent had acknowledged and

admitted the dues payable by the Respondent to the

Claimant to the extent of Rs.19,03,77,000/- as on

31.3.2013. Besides, the witness of the respondent was

asked the following question in his cross as question

No.51 to which he has replied as follows:

“Q51: Can you inform as to what amount

has. been paid/remitted by the

O.M.P (COMM) 79/2021 Page 21 of 29

Respondent firm to M/s. Coral

Products Pvt. Ltd. or the claimant for

the two purchases made by the

Respondent of Crude Oil worth Rs.

19,03,77,000/-?

A. The Respondent firm has remitted payments of Rs.1.50

crores to the directors of M/s. Coral, Products Pvt.

Ltd.”

In this answer also there is practically an admission of the

dues payable of the amount of Rs.19,03,77,000/- by the

Respondent. Therefore, the said amount which is claimed

in the Claim Petition is found due and payable to the

Claimant by the Respondent. The claim raised by the

Claimant through their letter of invocation of arbitration

dated 18.05.2016 (Ex.CW1 /13) and the acknowledgment

having been sent by letter dated 31.5.2013 and email

dated 4.6.2013, the claim is also held to be within the

period of limitation. Issue No.2 is accordingly decided in

favour of the Claimant.”

19. It is apparent from the above that the Arbitral Tribunal had

examined the question of limitation in some detail. It had first of all

accepted, on evaluation of evidence led before it that the email dated

04.06.2013 had been sent by one Mohan Maganti from the email

address, mohan@goodhealth.com, to Avneesh Agarwal, representative

of Haldiram. The contents of the said email clearly indicate that the

balance confirmation letters of M/s KGF Cottons Pvt. Ltd. and Megha,

as on 31.03.2013, were forwarded pursuant to the request made by one

Mohit Dua. The letter dated 31.05.2013, which was stated to be

attached along with said email, clearly confirms that a sum of

₹19,03,77,000/- was outstanding in the ledger accounts of Megha as

O.M.P (COMM) 79/2021 Page 22 of 29

on 31.03.2013. The Arbitral Tribunal also concluded that Good Health

Agro Pvt. Ltd. was a part of the same Group as Megha. This was

conceded by the witness examined by the petitioners. In this

perspective, the Arbitral Tribunal concluded that it was sent on behalf

of one of the employees of the group company and thus, obviously on

behalf of Megha.

20. It is relevant to note that Megha did not produce its books of

accounts or its ledger to otherwise contest the contents of the said

email. Thus, no evidence was produced by Megha to establish that the

assertion made in the letter dated 31.05.2013, that its ledger accounts

reflected a sum of ₹19,03,77,000/- as outstanding towards

Coral/Haldiram, was wrong. This was, plainly, evidence within the

control of Megha.

21. The affidavit filed by the witness on behalf of Haldiram (CW1)

affirmed that the written acknowledgement dated 31.05.2013 was sent

through an email dated 04.06.2013 and it had confirmed that the credit

balance of ₹19,03,77,000/- was standing in the books of accounts of

Megha as on 31.03.2013. The Arbitral Tribunal had accepted the

same.

22. The petitioners, essentially, impeach the impugned award on the

ground that (a) that the Arbitral Tribunal had grossly erred in

evaluating the evidence led by the parties. According to the

petitioners, the evidence led by the respondent did not establish that

Megha had authorized anyone to forward the letter of

O.M.P (COMM) 79/2021 Page 23 of 29

acknowledgement confirming the balance outstanding in its ledger

accounts by the letter dated 31.05.2013. Further, according to the

petitioners, the said letter was not attached to the email dated

04.06.2013. And, the said email had not been sent on behalf of Megha.

Mr Gupta had drawn attention to CW1‟s response to Question no. 7

which indicates that CW 1 had stated that the email dated 04.06.2013

did not show any attachment. Mr Gupta also emphasized that the

requisite evidence, as required in terms of Section 65B of the Indian

Evidence Act, had not been filed.

23. As noticed above, the Arbitral Tribunal had after considering

the evidence, returned the finding that the letter dated 31.05.2013 was

sent electronically by an email sent on 04.06.2013.

24. In view of aforesaid, one of the principal controversy is

whether there was any evidence to establish that the letter dated

31.05.2013 was sent as an attachment to the email dated 04.06.2013.

CW1‟s response to Question no. 7 put to him in his cross examination

is at the heart of this controversy. Question no. 7 and CW1‟s response

is reproduced below:

“Q. I put it to you that there is no attachment of the

document attached alongwith the email marked Z. what do

you have to say?

A: Yes, it is correct that there is no attachment in the said

email but in the earlier part of the said email it is shown

that a balance confirmation was sent.”


25. CW 1‟s response does indicate that on being confronted with

the e-mail dated 04.06.2013 CW 1 had conceded that it did not show

any attachment. In view of the aforesaid, this Court had granted an

additional opportunity to Haldiram to advance arguments/file a reply.

This was also in view of Mr Gosawmi‟s contention that Megha

established before the learned Arbitrator that the letter of

acknowledgement dated 31.05.2013 was attached to the e-mail dated

04.06.2013.

26. Along with its reply, Haldiram filed an additional document

purporting to be the e-mail dated 04.06.2013, which showed the letter

dated 31.05.2013 as an attachment. This was objected to, by Mr Dhruv

Gupta. He contended that additional documents could not be accepted

at this stage. In this regard, Mr Goswami explained that he had not

produced the said document as additional evidence but merely to

demonstrate that if a print-out of an email is taken from the electronic

mail service hosted by Google Inc, G-mail, it reflects an attachment to

the e-mail but if a printout is taken from Outlook Express (Microsoft

Office software), the attachment is reflected at the beginning of the

chain of e-mails and not as an attachment to the initial mail (the

trailing mail). This was also demonstrated over video conferencing. It

is necessary to record that after the demonstration, Mr Dhruv Gupta

conceded that the email dated 04.06.2013 did reflect the letter dated

31.05.2013 as an attachment. He however, contended that the other

objections regarding the evidentiary value of such an attachment,

remained.


27. The contention that that the Arbitral Tribunal had grossly erred

in accepting the said evidence without an affidavit under Section 65B of the Indian Evidence Act, 1872 is difficult to accept. This is because of two reasons. First, in terms of Section 1 of the Indian Evidence Act 1872, the said Act is not applicable to proceedings before the arbitrator. Second, no such objection was taken on behalf of the petitioners at the appropriate stage, that is, before the Learned

Arbitrator.

28. Thus, in substance, Megha‟s challenge in this regard is limited

to the learned Arbitral Tribunal‟s evaluation of the evidence led by

parties.

29. As noted above, the scope of examination of an arbitral award

under Section 34 of the A&C Act is extremely limited. It is trite law

that this Court would not undertake the exercise of re-appreciation of

evidence on the ground of patent illegality.

30. In the present case, no case has been made out by the petitioner

that the arbitral award is contrary to the Fundamental Policy of India.

The arbitral award cannot by any stretch be considered to be opposed

to justice or morality. The dispute in the present case relates to a

simple transaction of sale and purchase of goods. All that the Arbitral

Tribunal has done is, after having found that the petitioners had not

paid for the goods purchased by them, awarded that the said

consideration be paid with interest. It is trite that a delay in filing a

claim only bars the remedy, it does not extinguish any debt. Viewed in

O.M.P (COMM) 79/2021 Page 26 of 29

this perspective, the Arbitral Tribunal has after evaluating the

material, rejected Megha‟s contention that Haldiram be denied its

remedy to seek what it claimed to be legitimately due to it.

Obviously, there is no question of such an approach offending any

sense of morality as is embodied in the expression „public policy‟ as

used in Section 34(2)(6) of the A&C Act.

31. Insofar as the ground of patent illegality is concerned, it would

be relevant to refer to the oft quoted passage from Associate Builders

v. Delhi Development Authority: (2015) 3 SCC 49, as set out below:

“33. It must clearly be understood that when a court is

applying the “public policy” test to an arbitration award,

it does not act as a court of appeal and consequently

errors of fact cannot be corrected. A possible view by the

arbitrator on facts has necessarily to pass muster 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

on evidence which does not measure up in quality to a

trained legal mind would not be held to be invalid on this

score [ Very often an arbitrator is a lay person not

necessarily trained in law. Lord Mansfield, a famous

English Judge, once advised a high military officer in

Jamaica who needed to act as a Judge as follows:

“General, you have a sound head, and a good heart; take

courage and you will do very well, in your occupation, in

a court of equity. My advice is, to make your decrees as

your head and your heart dictate, to hear both sides

patiently, to decide with firmness in the best manner you

can; but be careful not to assign your reasons, since your

determination may be substantially right, although your

reasons may be very bad, or essentially wrong”. It is very

important to bear this in mind when awards of lay

O.M.P (COMM) 79/2021 Page 27 of 29

arbitrators are challenged.] . Once it is found that the

arbitrators approach is not arbitrary or capricious, then he

is the last word on facts. In P.R. Shah, Shares & Stock

Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. [(2012) 1

SCC 594 : (2012) 1 SCC (Civ) 342] , this Court held:

(SCC pp. 601-02, para 21)

“21. A court does not sit in appeal over the

award of an Arbitral Tribunal by reassessing or

reappreciating the evidence. An award can be

challenged only under the grounds mentioned in

Section 34(2) of the Act. The Arbitral Tribunal

has examined the facts and held that both the

second respondent and the appellant are liable.

The case as put forward by the first respondent

has been accepted. Even the minority view was

that the second respondent was liable as claimed

by the first respondent, but the appellant was not

liable only on the ground that the arbitrators

appointed by the Stock Exchange under Bye-law

248, in a claim against a non-member, had no

jurisdiction to decide a claim against another

member. The finding of the majority is that the

appellant did the transaction in the name of the

second respondent and is therefore, liable along

with the second respondent. 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.”

32. As is apparent from the above, the evaluation of evidence by the

Arbitral Tribunal may be erroneous and perhaps this Court may have

taken a different view but that is not the scope of examination under

Section 34 of the A&C Act and, this Court cannot interfere with the

arbitral award merely on the ground that it does not concur with the

O.M.P (COMM) 79/2021 Page 28 of 29

inference drawn by the Arbitral Tribunal from the evidence led by the

parties.

33. In Ssangyong Engineering and Construction Company Ltd. v.

National Highway Authority of India (NHAI): (2019) 15 SCC 131,

the Supreme Court had authoritatively held as under:

“38. Secondly, it is also made clear that reappreciation of

evidence, which is what an appellate court is permitted to

do, cannot be permitted under the ground of patent

illegality appearing on the face of the award.”

34. In view of the above, this Court is unable to accept that any

interference in the arbitral award is warranted on the ground that the

Arbitral Tribunal has arrived at an erroneous conclusion on the

evidence led by the parties.

35. The second aspect of the arguments advanced on behalf of the

petitioners is that the Arbitral Tribunal has misapplied Section 18 of

the Limitation Act.

36. As noticed above, the Arbitral Tribunal had proceeded on the

basis that an electronic communication acknowledging the debt would

sufficiently meet the parameters of Section 18 of the Limitation Act.

The Arbitral Tribunal had drawn strength from the decision of the

Karnataka High Court in Sudarshan Cargo Pvt. Ltd. v. Techvac

Engineering Pvt. Ltd. (supra). Plainly, the said view is a plausible

view and this Court is unable to accept that the said view warrants any

interference under Section 34 of the A&C Act. In Ssangyong

O.M.P (COMM) 79/2021 Page 29 of 29

Engineering and Construction Company Ltd. v. National Highways

Authority of India (NHAI) (supra), the Supreme Court had

authoritatively clarified that a mere erroneous application of law

would also not warrant any interference on the ground of patent

illegality as available under Sub-section (2A) of Section 34 of the

A&C Act. Paragraph 37 of the said decision is relevant and is set out

below:

“37. Insofar as domestic awards made in India are

concerned, an additional ground is now available under

sub-section (2-A), added by the Amendment Act, 2015,

to Section 34. Here, there must be patent illegality

appearing on the face of the award, which refers to such

illegality as goes to the root of the matter but which does

not amount to mere erroneous application of the law. In

short, what is not subsumed within “the fundamental

policy of Indian law”, namely, the contravention of a

statute not linked to public policy or public interest,

cannot be brought in by the backdoor when it comes to

setting aside an award on the ground of patent illegality.”

37. In view of the above, this Court finds no reason to interfere with

the impugned award. The petition is, accordingly, dismissed.

VIBHU BAKHRU, J

April, 15, 2021


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