Union of IndiaDepartment of Tele CommunicationsNow BSNL v. Tribhovandas Vendravan and Brothers

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 13.12.2011CORAMTHE HON'BLE MRS. JUSTICE R.BANUMATHIandTHE HON'BLE MS. JUSTICE R.MALAO.S.A.No.409 of 2009Union of IndiaDepartment of Tele CommunicationsNow BSNL, represented by its AGMOffice of Principle G.M.Alagesan Road, Coimbatore-641 011. .. AppellantVs.1.Tribhovandas Vendravan and Brothers Rep. by Mr.Kanaklal Abaichand Coimbatore-641 001.2.Mr.Justice E.Padmanabhan (Retd.) Sole Arbitrator. .. RespondentsOriginal Side Appeal filed under Order XXXVI Rule 1 of C.S.Rules read with clause 15 of Letters Patent, against the orderdated 03.12.2008 made in O.P.No.568 of 2007.For Appellant: Mr.K.R.Ramesh KumarFor Respondents: Mr.M.S.Krishnan, senior counsel for M/s. Sarvabhauman Associates for 1st respondentJUDGMENTR.MALA,J.This Original Side Appeal arises out of the order dated03.12.2008 made in O.P.No.568 of 2007 filed under Section 34 of theArbitration and Conciliation Act, 1996, confirming the awardpassed by the learned Arbitrator on 01.10.2006 granting the reliefto the first respondent by directing the Appellant/Petitioner topay a sum of Rs.61,45,000/- with interest at the rate of 15% perannum from 29.04.2000 on the said amount of Rs.61,45,000/- till thedate of award and thereafter, at 12% per annum till the date ofpayment and to pay a sum of Rs.1,50,000/- towards costs. https://hcservices.ecourts.gov.in/hcservices/

2.First respondent herein as Claimant, is a registeredpartnership firm and the owner of the premises bearing D.No.184,Tiruchirapalli Road, Coimbatore-45. The first respondent/Claimantleased out the said building to the Appellant/Petitioner herein 40years back and the said lease was renewed from time to time. Thelast of the renewals was on 01.04.1996 on a monthly rent ofRs.65,000/- for a period of three years. The leased premisesconsisted of ground and first floor of an extent of 2,455 sq.mtrs.(i.e.) 26,734.5 sq.ft. 3.It is also an admitted fact that on 28.02.1998, the entirebuilding was gutted by fire. Considering the damage caused, theFire Service Department estimated the claim at Rs.1.32 crores andthe fire accident was stated to be as a result of electrical shortcircuit. As per the terms of the lease deed, the first respondentcalled upon the petitioner to surrender the premises as agreedupon, in as good a condition as it was leased out. Considering thedamage caused and the failure to intimate the first respondentabout getting second service connection, which was a cause for thefire accident, the first respondent filed a suit in O.S.No.370 of1998 on the file of the District Munsif Court, Coimbatore, for adeclaration that the lease was frustrated on account of negligenceand also for an injunction restraining the Appellant/Petitionerherein from in any manner altering the physical features orremoving any of the building materials. 4.A Commissioner was appointed and he assessed the damagescaused to the tune of Rs.53,00,000/- and the cost of reconstructionwas fixed at Rs.1.10 crores and the suit in O.S.No.370 of 1998 hasended in favour of the first respondent herein. Thereafter, firstrespondent/Claimant again issued a notice to theAppellant/Petitioner to pay the damages as per the Commissioner'svaluation. On 29.04.2000, the first respondent called upon theAppellant/Petitioner to refer the matter for arbitration and theCourt appointed the learned Arbitrator herein to go into thedispute between the parties. Learned Arbitrator after consideringthe claim and reply statements and also oral and documentaryevidence, framed issues 1 to 11 and granted the award as statedabove, against which, the Appellant/Tenant herein as a petitionerfiled a petition in O.P.No.568 of 2007 under Section 34 of theArbitration and Conciliation Act. The learned Single Judge afterconsidering the relevant documents and materials on records,confirmed the award passed by the learned Arbitrator, againstwhich, the present O.S.A. has been preferred.5.Learned counsel for the Appellant/Petitioner would submitthat the accident was occurred due to the act of God. There is nonegligence or carelessness on the part of the Appellant herein. Thelearned Arbitrator has not considered the fact that due to the fire https://hcservices.ecourts.gov.in/hcservices/ accident, appellant is out of the possession of the property andhence, the Appellant/Petitioner herein is not liable to pay a sumof Rs.8,45,000/- being the loss of rental income for the unexpiredperiod of lease. He further submitted that the first respondentherein filed a suit for declaration on the lease, which stoodfrustrated on account of negligence on the part of theAppellant/Petitioner herein. In such circumstances, firstrespondent herein is not entitled to that amount of Rs.8,45,000/-.Hence he prayed for setting aside the order as well as the awardpassed by the learned single Judge and the learned Arbitratorrespectively.6.Resisting the same, Mr.M.S.Krishnan, learned senior counsel,would submit that the learned Arbitrator after considering theclaim statement, reply statement and rejoinder of theclaimant/first respondent and oral & documentary evidence framed 11issues and came to the correct conclusion that the accident notoccurred due to the act of God. But the learned Arbitrator has heldthat the fire accident has been occurred by the negligence of thepetitioner/tenant, without any consent, he has obtained additionalconnection, which lead to fire accident. Appellant/Petitioner hadnot taken any safety measures and he had not intimated about thebad wiring and hence he came to the correct conclusion that thefire accident was occurred only due to the negligence on the partof the Appellant/Petitioner/Tenant and that has been confirmed bythe learned Single Judge. A Commissioner was appointed inO.S.No.370 of 1998 on the file of the District Munsif Court,Coimbatore. Since none has filed objection, learned Arbitrator onthe basis of the Commissioner's report awarded the damage asRs.53,00,000/- and a sum of Rs.8,45,000/- being the loss of rentalincome for the unexpired period of lease, which was confirmed bythe learned Single Judge in her judgment. He further submitted thatin pursuance of the decision reported in (2006) 11 SCC 181(McDermott International Inc. v. Burn Standard Co. Ltd. andothers), the arbitral award can be set aside, only if it ispatently illegal or arbitrary, such patent illegality, however,must go to the root of the matter, unless the error of law ispatent on the face of the award. Award is not perverse. He wouldfurther submit that both the learned Arbitrator as well as learnedSingle Judge have considered both oral and documentary evidence,came to the correct conclusion and their order is not suffered byany perversity. Therefore, he prayed for the dismissal of theappeal. 7.Considered the rival submissions made on both sides andscrutinising the materials on record.8.Admitted facts are the first respondent/claimant, is aregistered partnership firm and owner of the premises and leasedout the premises to the Appellant/Petitioner herein. The building https://hcservices.ecourts.gov.in/hcservices/ was around 60 years old at the time of fire accident. Admittedly,the lease was renewed from time to time. On 01.04.1996, the lastrenewal of the lease for a period of three years on a monthly rentwas Rs.65,000/-. The lease hold premises consisted of ground andfirst floor with an extent of 2,455 sq.mtr. (i.e.) 26,734.5 sq.ft.It is also an admitted fact that there was a fire accident on28.02.1998 at 11.56 a.m. On the basis of the complaint given byone of the staff Parameshwaran, the case has been registered inCrime No.B7, Law and order, CrP.176/1998. In the F.I.R, it wasspecifically mentioned that cause of the fire accident was reportedto a short circuit in the electrical wires while cleaning withlong sticks were done. Hence the Fire is due to the ElectricalShort Circuit and no causalities were involved. It would clearlyshow that due to electrical short circuit that fire accident hasbeen occurred. Immediately, first respondent herein filed a suit inO.S.No.370 of 1998 on the file of the District Munsif Court,Coimbatore, against the Appellant/Petitioner herein for thefollowing reliefs:"a) declaring that the lease between theplaintiff and the defendant in respect of the suitproperty stands frustrated and terminated on accountof destruction of the material portion of theleasehold building fully described below in theschedule due to the fire caused due by the negligenceon the part of the defendants on 28.02.1998 and grantconsequently a permanent injunction restraining thedefendant, their men and agents from in any wayaltering the physical features of the suit propertyeither by putting up construction or otherwise.b) granting a permanent injunction restrainingthe defendant and their men and agents from removingany of the building materials which are now lying onthe suit property. "9.In the above suit, a Commissioner was appointed andinspected the property along with the Surveyor and filed a report.Since none has filed any objection, the suit was decreed exparte.As per the report given by the Fire Service Department, damageswere estimated at Rs.1.32 crores, which finds place in page-7 ofthe typed set of papers. Thereafter, the first respondent hereinfiled a claim statement claiming Rs.1,10,00,000/- with interest atthe rate of 18% per annum from the date on which notice was issuedtill payment. Appellant was also filed reply statement andrejoinder was also filed by the first respondent. First respondentherein also filed an additional claim statement claimingRs.8,45,000/- as loss of rental income. After considering thearguments of both sides and considered the evidence of C.W.1, R.W.1to R.W.3 and documents C1 to C13 and R1 to R34, learned Arbitratorhas raised 11 issues. In his award, the learned Arbitrator https://hcservices.ecourts.gov.in/hcservices/ discussed the evidence in paragraphs-31 to 37 and came to theconclusion that the accident was not occurred due to act of God andthat has been confirmed by the learned Single Judge in para-9 to 18of her judgment and came to the conclusion that the accident hasoccurred only due to the negligence on the part of theAppellant/Petitioner in not maintaining the property with propersafety measures. In the said judgment, the learned Single Judge hasstated that the learned Arbitrator held that the electricityleakage and electrical short circuit was caused by cross contact ofelectrical wires by the house keeping staff engaged in the day justbefore the fire broke out and this clearly pointed out to an act ofnegligence. The learned Arbitrator has also held that theAppellant/Petitioner is being a Government of India establishment,failed to follow even the minimum safety standards prescribed forpublic companies; that there was obvious negligence on the part ofthe Appellant/Petitioner in following the safety measures as aprudent officer. So the evidence of R.W.1 and R.W.2 and thedocuments namely, the report of the fire squad as well as FirstInformation Report, clearly indicate short circuit as the maincause. Hence we do not find any infirmity or perversity in thefindings given by the learned Arbitrator as well as learned SingleJudge that the fire accident has occurred only due to thenegligence on the part of the Appellant/Petitioner in maintainingproper safety measures. 10.As per the F.I.R., value of the property was not mentioned,but whereas the report issued by the Director of Fire Services,Coimbatore on 28.02.1998, value of the damage is Rs.1.32 crores. Itis appropriate to consider the report filed by the Commissioner,who assessed the value of the damage as Rs.53,00,000/- and thecosts of reconstruction of a building as Rs.1,10,00,000/-.Considering documents C7 and C8, copies of Commissioner's Reportand Inspection Report respectively, learned Arbitrator came to theconclusion that even though reconstruction of the building wasestimated at Rs.1,10,00,000/-, but expert assessed the value ofdamage at Rs.53,00,000/- and hence, awarded Rs.53,00,000/- towardsdamage and that has been confirmed by the learned Single Judge inpara-21 of her order. So we do not find any perversity in thefindings by awarding Rs.53,00,000/- towards damages. Hence wehereby confirm and concur with the findings that the firstrespondent is entitled to Rs.53,00,000/- as damages for thebuilding.11.Learned counsel appearing for the Appellant wouldforcefully argue that both the learned Arbitrator and learnedSingle Judge have erroneously awarded Rs.8,45,000/- as loss towardsrental income for unexpired portion of lease. The first respondenthimself filed a suit in O.S.No.370 of 1998 on the file of theDistrict Munsif Court, Coimbatore, for declaration that the leaseis frustrated and terminated on account of destruction of the https://hcservices.ecourts.gov.in/hcservices/ material portion of the leasehold building due to the fire causedby the negligence on the part of the Appellant/Petitioner on28.02.1998 and consequently, for an injunction. Since he himselfsought for a declaration for frustration and termination of leasedeed, he is not entitled to any loss of rental income. Therefore,he prayed for setting aside the findings given by the learnedArbitrator as well as learned Single Judge.12.As per the dictum laid down in (2001) 8 SCC 482(Maharashtra State Electricity Board v. Sterilite Industries(India) and another), unless the findings of the Arbitrator aswell as the learned Single Judge suffers from any irregularity orerror of law is patent on the face of the award or finding isperverse, then only the Court would interfere with the award of thelearned Arbitrator as well as the order of the learned SingleJudge. In such circumstances, it is appropriate on the part of thisCourt to consider the order passed by the learned Arbitrator aswell as the learned Single Judge. The learned Arbitrator in hisaward in para-81 held that the monthly rent as per the lease deedunder Ex.C2 is Rs.65,000/- per month and that lease was enteredinto between them from 01.04.1996 to 31.03.1999. But the fireaccident was occurred on 28.02.1998. From 01.03.1998 to 31.03.1999,first respondent is entitled to the loss of rental income and thathas been awarded in para-99 as Rs.8,45,000/- being the loss ofrental income for the unexpired portion of lease. That aspect hasbeen considered and confirmed by the learned Single Judge in herjudgment in para-22 and 23 and held that the lease commencing from01.04.1996, Appellant/Petitioner would have continued to pay renttill 31.03.1999. Due to the fire accident, the first respondenthas suffered loss of rental income for 13 months. Hence the losswas calculated as per the rent agreed by the Appellant, which comesto 8,45,000/-. It is true, in the Civil Court, Appellant hereinobtained an exparte decree for declaration that the lease isfrustrated and terminated on account of destruction of the materialportion of the leasehold building, which will not determine theright of the first respondent to claim rental income, damages,since the fire accident occurred due to the negligence on the partof the Appellant/Petitioner herein. Hence the learned single Judgeconsidered this aspect and came to the correct conclusion that thefirst respondent is entitled to Rs.8,45,000/- towards loss ofrental income for unexpired period of lease and that has beenconfirmed by the learned Single Judge. So we do not find any reasonwarranting interference with the findings of the learned SingleJudge and hence, we hereby confirm the order passed by the learnedSingle Judge. https://hcservices.ecourts.gov.in/hcservices/

13.In the result, confirming the order dated 03.12.2008 madein O.P.No.568 of 2007, this Original Side Appeal is dismissed withcosts. Consequently, connected Miscellaneous Petitions are closed.kjSd/-Asst. Registrar//True Copy//Sub Asst. RegistrarToThe Sub Assistant Registrar, Original Side, High Court, Madras.+ 1 cc to M/s. Sarvabhauman Associates, Advocate SR No.76549+ 1 cc to M/s. K.R. Ramesh Kumar, Advocate SR No.76177MP(CO)SR/11.1.2012 Judgment made in O.S.A.No.409 of 2009