M/S Crompton Greaves Ltd v. M/S Centre for Development of Telematics (C-Dot)

PRATEEK JALAN, J

S. RAVINDRA BHAT, J JANUARY 22, 2019 "pv"

* IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 31.10.2018 Pronounced on: 22.01.2019 + FAO (OS) (COMM) 10/2017 & CM APPL. 997/2017 M/S CROMPTON GREAVES LTD ..... Appellant Through: Mr. Parag Tripathi, Sr. Advocate with Mr.Prashanto Sen, Sr. Advocate with Mr.Udayan Verma, Mr.Srinivasan R., Mr.Kaustubh Singh & Mr.Shivanshu Singh, Advocates. versus M/S CENTRE FOR DEVELOPMENT OF TELEMATICS (C-DOT) ..... Respondent Through: Mr. J.C. Seth, Advocate. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE PRATEEK JALAN MR.JUSTICE PRATEEK JALAN % 1. The present appeal is directed against a judgment dated 16.12.2016 whereby the appellant's petition under Section 34 of the Arbitration and Conciliation, 1996 (hereinafter, "the Act") was dismissed. The learned Single Judge declined to set aside an interim award dated 16.11.2016 passed by a Sole Arbitrator, under which the appellant Crompton Greaves Ltd. (hereinafter, "CGL" was directed to pay ₹1.85 crores alongwith interest to the respondent, Centre for Development of Telematics (hereinafter, "C-DOT"). Facts 2. The dispute between the parties arises out of agreements dated 01.11.1991, 10.10.1997 and 14.04.1999 under which C-DOT transferred technology to CGL for the consideration provided therein, including certain upfront payments and payment of royalty. C-DOT addressed a letter dated 13.11.2006 to CGL claiming dues of ₹2,05,02,722/- towards royalty for the period 01.04.2001 to 31.03.2007. By a subsequent letter dated 08.10.2007, C-DOT revised its claim for the period 2004-07. CGL disputed the claims, which were ultimately referred to arbitration on 05.03.2008. 3. Before the learned arbitrator, C-DOT claimed ₹6,05,05,444/- towards unpaid royalty for the period 2001-07, and ₹73,50,653/- toward interest until 31.03.2007. During the pendency of proceedings, C-DOT amended its royalty claim to ₹7,86,48,180/-. CGL disputed the claim and provided certificates of a Chartered Accountant certifying the royalty payable to C-DOT during the period 2004-09 as well as its balance sheet for these years. It counter claimed for ₹6,08,29,788. CGL also subsequently filed the certificates of its statutory auditors, which revealed an outstanding liability of ₹20,09,403/- towards royalty. 4. The respondent's first attempt to secure an interim award was rejected by an order of the learned arbitrator dated 05.09.2012 holding that an interim award was unwarranted when claims and counter claims were both pending for adjudication. CGL also made an application for an interim award, closing or restricting some of the claims of C-DOT, on the strength of the Chartered Accountants' certificate submitted by it. This application was also rejected by the learned arbitrator by order dated 19.01.2013 on account of the fact that the auditor's certificates had been disputed by C-DOT, therefore, required adjudication on evidence. CGL submitted a further affidavit dated 14.05.2013 wherein royalty for the period 2003-04 to 2006-07 was again confirmed relying upon the auditor's certificates. 5. C-DOT filed another application on 25.02.2014 seeking an interim award to the tune of ₹2,60,79,640/- alongwith interest, claiming that the same was an admitted liability. By an order dated 03.05.2014, the learned arbitrator appointed one Mr. J.S. Kochar, an independent Chartered Accountant, to examine the books of accounts and audited financial statements of CGL for the years 2001-02 to 2006-07 and submit a report. The report was submitted by Mr. Kochar on 19.01.2015. The learned arbitrator passed an interim award dated 27.05.2015 in favour of C-DOT for sum ₹2,18,59,011/- with interest at the rate of 8% pa from 31.03.2007. After recording the contentions of the parties and the course of proceedings, the learned arbitrator compared the figures disclosed in CGL's affidavit and Chartered Accountant's certificates for each year, with the corresponding figures in Mr. Kochar's report. It appears that the learned arbitrator, for the