Delhi High Court
Central Warehousing Corporation vs Indo Arya Logistics A Unit Of Indo Arya … on 10 March, 2026
Author: V. Kameswar Rao
Bench: V. Kameswar Rao, Manmeet Pritam Singh Arora
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 03.02.2026
Judgment delivered on: 10.03.2026
Judgment uploaded on: As per Digital Signature~
+ FAO (COMM) 75/2024 & CM APPL. 24522/2024
CENTRAL WAREHOUSING CORPORATION .....Appellant
versus
INDO ARYA LOGISTICS A UNIT OF INDO
ARYA CENTRRAL TRANSPORT LTD .....Respondent
Advocates who appeared in this case
For the Appellant : Mr. K. K. Tyagi, Mr. Iftekhar Ahmad and
Ms. Garima Tyagi, Advs.
For the Respondent : Mr. Dayan Krishnan, Sr. Adv. with Mr.
Parminder Singh, Mr. Ankit Banati, Mr.
Aryanshu Vaibhav Gautam, Mr. Sukrit Seth
and Ms. Radhika Yadav.
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
V. KAMESWAR RAO, J.
1. This appeal has been filed under Section 37 of the Arbitration and
Conciliation Act 1996 (“the Act”) challenging the order passed by the
District judge (Commercial Court-01), Patiala House Court, New Delhi
(“the District Judge”) in OMP (COMM.) No. 115 of 2021, whereby the
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learned District Judge has set aside the award dated 17.09.2018 passed by
the learned Sole Arbitrator.
2. The facts as noted from the appeal are that the appellant and the
respondent herein executed an agreement dated 20.12.2006 for providing
godowns for a period of three years on reservation dedicated warehousing
basis as per the terms of the agreement. Three godowns i.e. godown no.1-
ABC, II- ABC and III- ABC were allotted to the respondent.
3. On 18.12.2008, a major fire incident occurred in godown No.1 -A B C
at CW Dadri causing heavy damage to the building.
4. On 31.12.2008, the appellant/claimant issued a communication/notice
to the respondent stating that the respondent is liable to make good the
losses that occurred on the account of poor housekeeping prone to catching
fire unabatedly without any measures from the respondent’s side inside the
said godown to control it. On 22.01.2009, the respondent denied the
responsibility of the fire.
5. On 24.01.2009, the appellant requested the respondent to get the
demised premises repaired/reconstructed at their cost. On 26.02.2009, the
respondent vide letter dated 26.02.2009 advised the appellant to take up the
matter with their insurer. On 04.03.2009, the appellant vide a letter informed
the respondent that the demised premises would be deemed to continue with
the respondent till 12.11.2009 and the respondent would be liable to pay
storage charges for said period and thereafter handover the godown in usable
condition as per Clause 11 of the agreement.
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6. On 23.03.2009, the respondent again advised the appellant vide their
letter dated 23.03.2009 to take up the matter with the insurer.
7. On 29.05.2009, the appellant issued a legal notice dated 29.05.2009 to
the respondent demanding payment of storage charges up to 12.11.2009. It
stated that in case of any of failure of the respondent in getting the godown
constructed/ repaired, the appellant will be left with no option but to get the
work done at their risk and cost and also that the bills would be raised on the
respondent and in case of their failure to make the payment, appropriate
legal proceedings would be taken for recovery of the damages. On
30.06.2009, the respondent replying to the legal notice denied the claim
raised by the appellant. On 05.09.2009, another legal notice was issued on
behalf of the appellant.
8. The appellant floated a tender after following due process for
construction of the godown in question and the tender was awarded vide
award letter dated 24.12.2009. The work of reconstruction started from
24.12.2009 and was completed on 15.06.2010 and the Assistant Engineer
thereafter on 29.07.2010 issued completion certificate. The construction cell
of the appellant corporation handed over the godown to the Warehouse
Manager on 31.05.2010.
9. On 08.07.2011, on the basis of bills received from the Executive
Engineer, a demand for an amount Rs. 69,80,229/-, incurred for
reconstruction of the godown was raised on the respondent. On 30.07.2011,
the respondent vide a letter denied the liability to pay charges for
reconstruction and invoked arbitration.
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10. On 27.08.2011, the Regional Manager of the appellant requested the
Corporate Office to appoint an arbitrator for settlement. On 21.02.2012, the
MD, CWC appointed R.K.Gupta as an arbitrator. On 20.03.2012, the
arbitration proceedings commenced.
11. On 15.04.2014, this Court in Arbitration Petition No. 377 of 2012
allowed the application under Section 11 of the Act, filed by the respondent
and directed the parties to hold the arbitration under the aegis of the Delhi
High Court Arbitration Centre and appointed a sole arbitrator. On
17.09.2018, the award was passed by the arbitrator wherein, the claim of the
appellant was partly allowed.
12. Aggrieved by the same, the respondent filed a petition under Section
34 of the Act before the District Judge in OMP (COMM) No. 115 of 2021.
The Court vide its judgment/order dated 22.02.2024 set aside the award.
THE CASE OF THE APPELLANT
13. Mr. K.K. Tyagi, the learned counsel for the appellant submitted that
the learned District Judge in the impugned order has ignored the award
passed by the learned Arbitrator which exceeds the scope and jurisdiction
under Section 34 of the Act. He also submitted that the District Judge has in
the impugned order ignored the judgments submitted by the appellant,
wherein it has been conclusively held that, in case of destruction of
goods/premises by fire (in the premises) handed over to the bailee/tenant, it
is for the bailee/ tenant to establish that the fire and consequent damage to
the goods/premises is not because of his negligence. He referred to Section
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106 of the Indian Evidence Act, 1872, to contend, the burden of proof will
be upon bailee/tenant. He also submitted that, various High Courts have
consistently held that, in such type of cases the doctrine of res ipsa loquitur
squarely applies and on such plea being taken by the plaintiff, the burden of
proof shifts to the defendant.
14. He submitted that the District Judge has committed a serious error in
holding that the onus to prove the negligence was to be discharged by the
appellant herein and that despite repeated opportunities, the appellant did not
lead any additional evidence to prove the additional issue and the appellant
did not examine the witnesses from the Fire Department. He submitted that,
no additional evidence was required and the appellant herein had made a
statement before the Arbitrator that they would be relying upon the
evidences which are already on record.
15. He submitted that the District Judge failed to appreciate that the
appellant has established by evidence that the control and management of
the godown, maintenances of the godown was with the respondent and also
that combustible material was stored by the respondent in the godown and
all these factors makes a case for shifting of burden of proof on the
respondent by rightly applying the doctrine of res ipsa loquitur.
16. Mr. Tyagi contended that the District Judge has not only failed to
appreciate the evidence but has also relied upon pleas which were neither
pleaded nor argued inasmuch as there was a failure on the part of respondent
to explain the cause of fire, a fact within the knowledge of the respondent.
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17. With regard to the storage charges, he submitted that, there is nothing
in the claim statement that stated that the godown was taken over before
November 2009. He submitted that the godown was taken over by the
Warehouse Manager after completion of reconstruction on 31.05.2010. He
also submitted that the appellant was constrained to float a tender for the
construction of the warehouse till November 2009.
18. In support of this he has relied on the following judgments:-
a) McDermott International INC v. Burn Standard Co, 2006(11)
SCC 181 ;
b) NHAI v. lTD Cement India, (2015) 14 SCC 21;
c) Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail
Corporation Ltd., 2022(1) SCC 131;
d) State of Punjab v. Modern Cultivator, (1964) 8SCR 273;
e) M. Kuppusamy v. Viswanathan & Others, 1998 Madras Law
Journal Reports 768
f) Cochin Port Trust v. Associated Cotton Traders Limited &
Ors., AIR 1983 Kerala 154.
g) Jay Laxmi Salt Works (P) Ltd. v. State of Gujarat 1994 (4)
SCC 1;
h) Rashtriya Ispat Nigam Limited v. Prathyusha Resources and
Infra Pvt. Ltd., (2016) 12 SCC 405;
i) Indian Oil Corporation Ltd. v. Era Construction (India) Ltd.,
Online Del 2425 ;
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j) Indian Oil Corporation Ltd. v. SPS Engineering Ltd., 31 –
36Online Del 7756;
k) Prathyusha Associates v. Rastriya Ispat Nigam Limited Vizag
Steel Plant, 2005 SCC On Line AP 1024;
l) State of Punjab v. Modern Cultivator, (1964) 8SCR 273.
19. He seeks the prayer as made in the appeal.
THE CASE OF THE RESPONDENT
20. Mr. Dayan Krishnan, learned Senior Counsel appearing for the
respondent submitted that, on a bare perusal of the issue framed on
28.11.2016, it is clear that the onus of proof for establishing alleged
carelessness and negligence on part of the respondent with regard to the fire
incident was on the claimant/appellant, which the appellant had failed to
discharge.
21. He submitted that the appellant sought to lead evidence regarding the
aforesaid issue, however, no such evidence was produced. The appellant
even moved an application seeking a last opportunity to produce a fire report
with regard to the fire incident dated 18.12.2008. He also submitted that, for
reasons best known to the appellant, it decided not to lead any additional
evidence, which aspect has also been recorded by the Arbitral Tribunal in
the order dated 06.03.2017. Therefore, no evidence was led by the appellant
to attribute any liability on the respondent in respect of the fire incident. As
such, the said issue could not have shifted the burden of proof on the
respondent.
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22. Mr. Krishnan also stated that the District Judge has rightly observed
that there is nothing on record to show that all standard methods of fire
safety like fire extinguishers or other fire fighting instructions/devices were
installed by the appellant in the godown in question before handing over
possession of the same to the respondent. The appellant did not even bring
on record the No Objection Certificate of the Fire Department which was
obtained by it before handing over possession.
23. He submitted that the agreement was a license and not a lease. The
Arbitrator, in contradiction, erroneously held that the subject godown was in
exclusive control of the respondent. The said finding is also in direct
contravention to Clause 5 of the Agreement which required the godown to
be under “joint locking” of the parties and further provided that, it was the
duty of the appellant to provide security for the subject property. He also
submitted that neither was any staff of the appellant deputed at the godown,
nor was any issue raised regarding the material being stored in the godowns.
Moreover, the appellant was responsible for the insurance of the subject
property which was admittedly not done. The liability of respondent was
only to ensure insurance of the goods stored in the godown.
24. He contended that the Arbitrator without giving any reasons came to
the conclusion that; “the materials stacked in the demised premises was
combustible and prone to fire hazard”. As per the appellant, in para 6 of the
Evidence by way of Affidavit of CW-1, it had been averred that the items
stored in the premises “might have caused/contributed to fire incidents on
18.12.2008”. There is no basis to ascertain the same and it is only an
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averment without any basis. Even from the witness examination it was
evident that the respondent did not store anything that was not permissible
being hazardous. The finding of the Arbitrator that the goods stored by the
respondent were “hazardous” was also in direct contravention of the List of
Notified Commodities submitted to the Arbitral Tribunal by the appellant. In
fact, while holding that the “cause of the fire was unknown”, the Arbitrator
erroneously held the respondent is liable for the fire without providing any
reasons. He submitted that in view of this, the District Judge has rightly held
that the principle of res ipsa loquitur was not applicable in the present case.
25. He submitted that the Courts have repeatedly held that the principle of
res ipsa loquitur should not be applied too liberally. It is trite law that in
order to sustain an action of damages, it must, in the first instance be proved
that the respondent was negligent. The onus of proving negligence lay on the
party suing and in the absence of any evidence led by the party suing to this
effect, the case will not fall under the principle of res ipsa loquitur.
26. Agreeing with the impugned order, he submitted that the District
Judge has thus rightly observed that the respondent was not in control/
possession of the premises in question and so the award of charges for the
period, for which the respondent was not in possession, is patently illegal.
27. According to him, the award was rightly set aside as the dispute is
barred by limitation, inasmuch as, the appellant became aware of
respondent’s stand on 22.01.2009; however, it did not take any steps to
invoke arbitration within a period of three years. Infact, no notice under
Section 21 of the Arbitration and Conciliation Act, 1996 was invoked by the
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appellant.
28. In support of his submissions Mr. Krishnan has relied upon the
following judgments:-
i. Mohammad Habib vs Ram Narain Lall And Ors.,
AIR1959PAT 348 ;
ii. Madhavi v Koran, 1971 ACJ 111;
iii. Sunderlal v Firm DayalMeghji& Co., 1962 MPLJ 1 87;
iv. Dr. Sohan Singh and Ors v Sardar Joginder Singh and
Ors SB Civil First Appeal 99/1995 dated 22.04.2024
passed by Rajasthan High Court.;
v. PSA SICAL Terminal (P) Ltd. v. V.O Chidambranar
Port Trust, (2023) 15 SCC 781;
vi. Madhavi v. Koran,1970 SCC OnLIne Ker 3;
vii. Sohan Singh and Other v. Sardar Joginder Singh and
Others, 2024 SCC OnLIne Raj 3753 ;
viii. Sunderlal, v. Firm Dayalal Meghji & co., Raipur, LPA
No.40 of 1960
ix. Ramesh Kumar Jain v. Bharat Aluminium Company
Limited (BALCO), 2025 SCC OnLine SC 2857.
29. He seeks dismissal of the appeal.
ANALYSIS AND CONCLUSION.
30. Having heard the learned counsel for the parties and perused the
record, the issue which arises for consideration is whether the learned
District Judge was justified in setting aside the Arbitral Award dated
17.09.2018 passed by the Sole Arbitrator.
31. At the outset, it may be stated that the learned Arbitrator had granted
two claims in favour of the appellant – an amount of Rs.69,80,229/- and also
an amount of Rs.21,82,763/- under the head ‘Storage Charges’ for the periodSignature Not Verified
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between 01.01.2009 to 12.11.2009. The learned District Judge has set aside
both the claims. The learned Arbitrator granted the amount of Rs.
69,80,229/- primarily on the ground that the respondent herein was
responsible for the fire.
32. The claim by the appellant for the amount of Rs. 69,80,229/- is
primarily toward the reconstruction repair cost of the godown i.e., No. 1 –
ABC. The learned Arbitrator had invoked the maxim res ipsa loquitur to
hold that it was the respondent who was careless and negligent for the fire to
break out and as such the respondent is liable to pay the said amount.
33. What important is that the learned District Judge in paragraph no. 31
of the impugned order has noted the proceedings which were held before the
Arbitrator on 28.11.2016, which records that an additional issue at the
behest of the appellant was framed in the following manner:
i. Whether the fire incident dated 18.12.2008 in the premises in
question occurred due to the carelessness and negligence of the
respondent.
34. This issue as stated above was framed at the behest of the appellant
herein. While framing the issue, the learned Arbitrator observed that a
perusal of the records reveals that the parties have not placed on record any
evidence to show as to whose negligence and carelessness lead to the fire
incident on 18.12.2008 in the premises in question. He also noticed that
there is material on record to indicate that, after the fire incident, fire
brigades were called from Gautam Buddha Nagar and Greater Noida for
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controlling the fire.
35. The aforesaid clearly reveal that the additional issue was a specific
issue to determine whether the fire incident had occurred due to the
carelessness and negligence of the respondent herein. The parties were given
opportunity to lead evidence. The case of the respondent for leading
evidence was by stating that they shall take a call about producing additional
evidence after the appellant concludes its evidence.
36. The learned Arbitrator granted the appellant/claimant, one more
opportunity to lead evidence. However, the appellant/claimant did not lead
any evidence on the additional issue. Resultantly, the respondent herein also
did not lead any evidence on the issue.
37. What is important is the learned Arbitrator by referring to the
judgment of the Supreme Court in State of Punjab v. Modern Cultivators
AIR 1965 17 and Syed Akbar v. State of Karnataka AIR 1979 SC 1848, has
held that the godown in question was in the exclusive control and
management of the respondent where the unusual fire incident occurred on
18.12.2008 and the entire stock of M/s Pantaloon India Ltd. as well as the
godown were destroyed. Hence, the respondent is responsible for
maintaining the demised premises – both interior and exterior, electrical and
other fittings therein in the same condition it was handed over to the
respondent.
38. He has also held that the respondent withheld material and vital
evidence of M/s Pantaloon India Ltd. Therefore, the Arbitrator through a
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presumption under Section 144G of the Indian Evidence Act, 1872, held
against the respondent to the effect that, if the said evidence was produced, it
would not have been favourable to the respondent. The Arbitrator, in this
background decided that the burden of proof shifts to the respondent for the
unusual fire incident dated 18.12.2008, and held that the incident tells its
own story and is by itself proof of carelessness and negligence on the part of
the respondent. The learned Arbitrator rejected the contention of the
respondent that the claimant/appellant had failed to prove the negligence of
the respondent, holding that the ingredients for the applicability of the
doctrine of res ipsa loquitur are made out.
39. We find that the learned Arbitrator while holding the respondent to be
negligent/careless has summed up his finding in paragraph 6.6 as under:
“6. 6. Let us apply the above principles to the facts of this case.
Here, the godown in question was in exclusive control and
management of the Respondent, where the unusual fire incident
occurred on 18.12.2008 and the entire stock of M/ s. Pantaloon
Retail India Ltd. as well as the godown were destroyed. The
Respondent was responsible to maintam the demised premises
(both interior and exterior) electrical and other fitted therein,
in good usable condition and was to hand over the same after
expiry of reservation in such condition as it existed at the time
of handing over of the possession of the premises to the
Claimant in terms of Clause 11 of the Agreement. It has further
been held that the material stacked in the demised premises
was combustible and prone to fire hazard, as is evident from
M/s. PRIL’s letter dated 26.12.2008 (Ex.’CW-1/2) to the
Respondent.
(i) The cause of fire is unknown and the Respondent
has not given any explanation for the same. The
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evidences of M/ s. Pantaloon Retail India Ltd.
Therefore, a presumption under Section 114(g) of the
Evidence Act is liable to be raised against the
Respondent, to the effect that if the said evidence was
produced, it would not have been favourable to them.
(ii) In the above background, the burden of proof shifts
on the Respondent. The unusual fire incident dated
18.12.2008 in the godown, tells its own story and it by
itself is a proof of carelessness and negligence of the
Respondent. The requisite ingredients for the
applicability of the doctrine of res ipsa loquitur are
made out and it is held that the fire incident occurred
on 18.12.2008 in the godown due to the carelessness
and negligence of the Respondent and they are liable
for the consequences thereof. The contention that the
Claimant has failed to prove their negligence, is
rejected.
(iii) The Supreme Court’s decisions goveming the law
relating to the applicability of the doctrine of res ipsa
loquitur have already been noticed above. Learned
counsel for the parties also cited various High courts’
judgments,· in support of their respective contentions.
Each case depends on its own facts and detailed
reference to these judgments is not required.”
40. The learned District Judge has in paragraph 38 to 40 of the impugned
order has held as under:
“38. As per clause 9 of the agreement, the petitioner shall see
at the time of occupation of the premises that electrical fitting
are in perfect order and nothing is broken or missing.
However, in the present case, there is nothing on record that
the all standard methods of fire safety viz fire extinguishers and
other firefighting instruments/devices were installed by the
respondent in the godown in question before handing over the
possession of the same to the petitioner. The agreement
executed between the parties is silent in this regard. Also theSignature Not Verified
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respondent has not placed on record that any No Objection
Certificate of Fire Fighting Department was obtained by the
respondent before handing over the possession of the god own
in question to the petitioner. Clause 7 of the agreement reflects
that it was the duty of the respondent to deploy round the clock
security in the warehouse campus. After the alleged fire
incident, there is nothing on record that any information about
this fire was given to the Police Department and also to the
Fire Department by the respondent. There is nothing on record
as to what efforts were made for controlling the fire. Further,
there is nothing on record as to what was · -ie possible cause of
this fire. The Ld. Sole Arbitrator has also observed in the
award that the cause of fire was unknown. Further despite
opportunity having been granted by the Ld. Sole Arbitrator, no
evidence was led by the respondent to establish that before
handing over the possession of the demised godown to the
petitioner, the respondent has installed all standard methods of
fire safety viz fire extinguishers and other firefighting
instruments/devices in the godown in question. There is nothing
on record that the cause of fire in the godown in question was
ascertained by any agency. There is also nothing on record that
the office of Fire Brigade, Gautam Budh Nagar, Greater Noida
(U.P.) which was stated to have been called to control the fire
on 18.12.2008, has submitted any report with respect to the
cause of fire in the godown in question.
39.In a case titled as Delhi Airport Metro Express Pvt. Ltd. Vs.
Delhi Metro Rail Corporation Ltd. in CA No.5628/2021
decided on 09.09.2021. the Hon’ble Supreme Court of India has
observed as follows :-
“29. Patent illegality should be illegality which goes to the
root of the matter. In olher words, every error of law
committed by the Arbitral Tribunal would not fall ·within
the expression ‘patent illegality’. I.ikewise, erroneous
application of law cannot be categorised as patent
illegality. In addition, contravention of faw not linked to
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expression ‘patent illegality’. What is prohibited is for
courts to re- appreciate evidence to conclude that the
award suffers from patent illegality appearing on the face
of the award, as courts do not sit in appeal against the
arbitral award 171e permissible grounds for interference
with a domestic award under Section 34 (2-A) on the
ground of patent illegality is ·when the arbitrator takes a
view which is not even a possible one, or interprets a clause
in the contract in such a manner which no fair-minded or
reasonable person would, or if the arbitrator commits an
error of jurisdiction by wandering outside the contract and
dealing with matters not allotted to them. An arbitral award
stating no reasons for its findings would make itself
susceptible to challenge on this account. The conclusions of
the arbitrator which are based on no evidence or have been
arrived at by ignoring vital evidence are perverse and can
be set aside on the ground of patent illegality. Also,
consideration of documents which ewe not supplied to the
other party is a facet of perversity falling within the
expression ‘patent illegality’.
40.Besides being no evidence Jed by the respondent before the
Ld. Sole Arbitrator, no material was placed before the Ld. Sole
Arbitrator to establish the possible cause of this fire. There is
no material to show that it was an accident due to the
negligence on the part of the petitioner. No fact or evidence
came to the knowledge of the court that there was any
negligence on the part of the petitioner. Once the respondent
has failed to discharge the initial burden to prove the aforesaid
issue and also has not proved on record that it had installed all
fire safety measures in the godown in question before handing
over the possession of the same to the petitioner or that any
agency has submitted the report qua the cause of fire in the
godown in question, the court is of the opinion that it would be
wholly unjustified to arrive at the conclusion that it was due to
the negligence on the part of the petitioner, the fire incident has
taken place in the godown in question or that the petitioner is
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demised godown to the respondent due to fire incident. Hence,
the Law relating to the applicability of the doctrine of res ipsa
loquitur docs not apply to the facts of the present case and the
petitioner cannot be held responsible for the fire in the godown.
The findings given by the Ld. Sole Arbitrator on res ipsa
loquitur suffer for patent illegality.”
41. Mr. Dayan Krishnan, in support of his submission that the learned
District Judge is justified in holding that the Arbitrator has erred in
concluding that the respondent was careless and negligent on the principle
of res ipsa loquitur, has relied upon the judgment of the Rajasthan High
Court in Sohan Singh and Others (Supra), wherein the learned Single
Judge has held as under:
“10. In Mohammad Habib v. Ram Narain Lall, AIR 1959 Pat
348; the plaintiff had let out his house to the defendant on
monthly rental. The defendant was a fruit seller. In February,
1949 the rented premise was burnt by a fire and the case of
plaintiff was that the fire was caused due to the negligence of
the defendant. The trial court dismissed the suit on the ground
that the plaintiff failed to prove negligence on the part of the
defendant, however, the first appellate court reversed the
finding of the trial court and the matter went before Hon’ble
Patna High Court in second appeal. In Para-3 of the judgment,
Hon’ble Patna High Court succinctly discussed the legal
position, especially, applicability of the dictum of principle of
res ipsa loquitur. Para-3 of the judgment is being reproduced
below:–
“3. In our opinion, the lower appellate court misdirected
itself on a point of law in throwing the onus of proof upon
the defendant to show that there was absence of negligence.
It was argued on behalf of the respondents that the doctrine
of res ipsa loquitur applies to this case and so it is sufficient
for the plaintiffs to prove the accident and nothing more,
and unless a satisfactory explanation is given by theSignature Not Verified
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defendant, the plaintiffs are entitled to a decree for
damages. We do not think that this argument is correct. The
doctrine of res ipsa loquitur has been explained by Erle
C.J., in the leading case of Scott v. London Docks Co.,
(1865) 3 H. and C. 596 (at p. 601) as follows:
‘There must be reasonable evidence of negligence, but
where the thing is shown to be under the management of
the defendant or his servants and the accident is such as
in the ordinary course of things does not happen if those
who have the management use proper care, it affords
reasonable evidence, in the absence of explanation by the
defendant, that the accident arose from want of care.”
The doctrine has been held to apply in a case where bags of
flour fell from warehouse windows (Bynre v. Boadle, (1863)
2 H. and C. 722) and also in a case where stones were
found in edible commodity (Chaproniere v. Mason, (1905)
21 TLR 633) and similar other situations. But in the present
case it is obvious that the doctrine cannot apply and unless
the plaintiffs establish negligence on the part of the
defendant, no decree for damages can be granted to the
plaintiffs in tort. In Sochacki v. Sas, (1947) 1 All ER 344) it
was observed by lord Goddard C.J. as follows:
“Counsel for the defendants argued that I am bound to
apply the doctrine of res ipsa loquitur, but I do not think
this is a case of res ipsa loquitur. Everybody knows fires
occur through accidents which happen without
negligence on anybody’s part. There is nothing here to
show that the plaintiffs left any improper fire in his room,
any larger fire than usual, a fire which was too large for
the grate, or anything like that. There was a fire burning
in his room. He left his room for two or three hours. I do
not consider that the doctrine of res ipsa loquitur could
possibly apply to a case such as this.”
We are, therefore, of opinion that the doctrine of res ipsa
loquitur does not apply to this case and the normal rule
of evidence must prevail. The onus of proving negligence
lay on the plaintiffs and in the absence of any evidence
led by the plaintiffs to this effect the case must fail. The
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finding of the lower appellate court in the present case is
that the plaintiffs’ version of the origin of the fire must be
rejected and so also the defendants’ version with regard
to the origin of the fire cannot be accepted. The finding,
therefore, is that nobody knows as to how the fire started
and in these circumstances we think that the onus which
lay on the plaintiffs for proving negligence on the part of
the defendant has not been discharged.
In this view we are supported by the decision of the
Madras High Court in the East India Distilleries and
Factories Ltd. v. P.F. Mathias, ILR 51 Mad 994 : (AIR
1928 Mad 1140) where the plaintiff lot his house to the
defendant Company to be used as liquor warehouse, and
during the period of the lease, one night in the absence of
a watchman, the liquior store, room and the whole house
were destroyed by fire. It was held in these circumstances
that though under a general covenant lessee would under
the English law be liable for all damage, including one
arising from fire, yet under Section 108(e) of the Indian
Transfer of Property Act, he is not liable for damage by
fire in the absence of proof that the fire was due to his
negligence.”
11. In Mrs. Kalyani Raj an v. Indraprastha Appollo Hospital,
(2024) 3 SCC 37 : (AIROnline 2023 SC 927), though, a case of
medical negligence and claim for damages; the Hon’ble
Supreme Court in para-29 stated as follows:–
“29. Insofar as me applicability of principles of Res Ipsai
Locutor, in the fact and circumstances of the case, it is to
bear in mind that the principles get attracted where
circumstances strongly suggest partaking in negligent
behaviour by the person against whom an accusation of
negligence is made. For applying the principles of Res Ipsa
Locutor, it is necessary that a ‘Res’ is present to establish
the allegation of negligence. Strong incriminating
circumstantial or documentary evidence is required for
application of the doctrine.”
12. Considering legal position above and the facts of this case,
it is evident that there is complete lack of evidence that the fire
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took place due to negligence of the defendant even to the extent
expected of a prudent person to take precaution to prevent
damage to his own property. Therefore the plaintiff has failed
to establish the duty on the part of the defendant, failure to
maintain whereof the incident took place.
Point No. 2:– As noticed above, principle of res ipsa loquitur
would not apply in the facts and circumstances of this case in
absence of evidence on record disclosing strong incriminating
circumstantial evidence. No expert opinion was taken to
establish the reason of fire.
13. Learned counsel for the appellant has relied upon the
judgment of Hon’ble Madhya Bharat High Court in Gwalior
and Northern Indian Transport Co. Ltd. v. Dinkar Durga
Shankar Joshi, AIR 1955 MB 214. The judgment was delivered
in quite different facts and circumstance of that case, which
was a case of motor vehicle accident resulting into death and
claim for damages. Even in Northern Indian Transport Co. Ltd.
(supra), Hon’ble High Court said that the maxim res ipsa
loquitur is merely a rule of evidence affecting onus. It does not
alter the general rule that the burden of proof of the alleged
negligence rests upon the plaintiff.
14. Learned counsel for the appellant has next relied upon the
case of Bondar Singh v. Nihal Singh, (2003) 4 SCC 161 : (AIR
2003 SC 1905) for his submission that in absence of pleading
evidence cannot be looked into.
15. Contention of learned counsel is that the trial court has
accepted the evidence of defendant-respondent, though, it was
not pleaded. Since the trial court judgment is not being
sustained for aforesaid reason it is not necessary to delmn into
that. Learned counsel for the appellant has next relied upon the
judgment of RM. Vishwanathan v. Mandattil Geetha, 2017 SCC
OnLine Ker 30853 : (AIR Online 2017 KER 70). In
Vishwanathan’s case the fire had taken place in a bakery. It
was observed that undisputedly Oven was working at the time
of fire. Evidently the said case is distinguishable in the facts of
the present case.
16. In view of the discussions made above and conclusions on
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points raised, this Court does not find any reason to interfere in
the impugned judgment and decree, hence, this appeal is
dismissed being devoid of any merit.”
42. The Supreme Court in the case of State of Punjab (Supra) had
applied the rule of res ipsa loquitur by holding that in the case therein the
canal was admittedly in the management of the defendant therein and the
canal banks would not have been breached if those in management had
taken proper care. The Supreme Court held that in such a case, the rule
would apply and the breach itself would be prima facie proof of negligence
(Stock v. London Dock Co.). But it also observed that the defendants should
show the breach was due to an act of God or an act of a third party or any
other reason,which would show that it was not negligent, which the
defendant therein failed to do. The Court also clarified that the rule of res
ipsa loquitur may not apply where it is known how or what caused the
damage, as was held in Barkway v. South Wales Transport Co. Ltd. 1951,
All India Eng Report 392.
43. Similarly, in Syed Akbar (Supra), the Supreme Court was
considering a matter where the accused was called in for an offence under
Section 304A of Indian Penal Code, 1860 (IPC) was driving a bus causing
an accident resulting in the death of a child who was crossing the road. The
Court accepted the explanation given by the accused in his defence that the
accident was not caused on account of his negligence, and held that for
application of the maxim res ipsa loquitur no less important a requirement is
that the res must not only speak negligence but pin it on the defendant.
44. We find that the Supreme Court in its latest opinion in the case of
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State of UP v. Mcdowell Limited, 2022 (6) SCC 223, referring to the
principle of res ipsa loquitur has stated that there are cases in which an
accident speaks for itself. In such cases, it would suffice for the plaintiff to
prove the accident and nothing more. It will be then for the defendant to
establish that the accident happened due to some other cause than of his own
negligence. The genesis of the litigation in this case was that, a fire accident
took place in the godown of the distillery of the respondent company on
10.04.2003 and 35462 cases of Indian Made Foreign Liquor (IMFL) of
different brands were destroyed in the fire. After receiving initial reports that
the fire possibly took place due to short circuit of electricity, the government
proposed to recover the amount of excise duty lost, due to such destruction
of liquor from the respondent company.
45. The respondent company contended that there was no negligence on
its part and, therefore, no case of recovery of alleged loss of excise duty was
made out under Rule 7(11) of the Uttar Pradesh Bottling of Foreign Liquor
Rules, 1969 (the 1969 Rules) and Rule 709 of the Uttar Pradesh Excise
Manual (the Excise Manual). However, the Excise Commissioner by order
dated 11.07.2006 rejected the submission of the respondent and raised a
demand of Rs.6,38,32,449.44 towards loss of excise revenue on account of
destruction of liquor. Accordingly, the District Magistrate, Shahjahanpur
asked the respondent company to deposit the amount within one week.
46. The High Court in its impugned order dated 10.04.2017 had allowed
the writ petition filed by the respondent company with the finding that, Rule
11(a) of the 1969 Rules and Rule 709 of the Excise Manual was not
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applicable in the matter because there was no wastage in handling operations
of bottling and storage of IMFL; and that Rule 709 of the Excise Manual
was not attracted for which negligence was required to be shown and the
order passed by the Excise Commissioner was based on conjectures and
without any cogent evidence about negligence on the part of the writ
petitioner/respondent company; and that the incident was nothing but as an
act of God. The High Court accordingly, set aside the impugned orders and
demand of recovery towards loss of excise revenue.
47. In appeal, the Supreme Court by invoking the principle of res ipsa
loquitur in paragraphs 82-89 and 93 held as under:-
“Res ipsa loquitur
82. In order to understand the operation of the maxim res
ipsa loquitur, we may usefully refer to a couple of the
decisions of this Court. Of course, these decisions related
with vehicular accidents but the principles therein remain
fundamental in operation of res ipsa loquitur.
(1974) 1 SCC 690 had been a case where the victim was
travelling in a truck whose engine got fire and while
jumping from the vehicle, he struck against a stone on the
side of the road and died on the spot. The High Court in that
case held that merely for the truck catching the fire would
not be evidence of negligence on part of the driver; and that
res ipsa loquitur had no application. However, this Court,
inter alia, pointed out and held as under:-
“9…. The maxim res ipsa loquitur is resorted to when
an accident is shown to have occurred and the cause
of the accident is primarily within the knowledge of
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accident is unknown does not prevent the plaintiff
from recovering the damages, if the proper inference
to be drawn from the circumstances which are known
is that it was caused by the negli-gence of the
defendant. The fact of the accident may, sometimes,
constitute evidence of negligence and then the maxim
res ipsa loquitur applies.”
84. This Court then quoted the following passage from the
case of Scott v. London & St. Katherine Docks: (1865) 3
H&C 596, 601: –
“… where the thing is shown to be under the
management of the defendant or his servants, and the
accident is such as in the ordinary course of things
does not happen if those who have the management use
proper care, it affords reasonable evidence, in the
absence of explanation by the defendants, that the
accident arose from want of care.”
85. This Court further explained the operation of this maxim
for importing strict liability into negligence cases and
observed:-
“10. …..The mere happening of the accident may be
more consistent with the negligence on the part of the
defendant than with other causes. The maxim is based
on commonsense and its purpose is to do justice when
the facts bearing on causation and on the care
exercised by defendant are at the outset unknown to the
plaintiff and are or ought to be within the knowledge of
the defendant (see Barkway v. S. Wales Transo [(1950)
1 All ER 392, 399]).”
86. In Pushpabai Purshottam Udeshi and Ors. v. M/s.
Ranjit Ginning & Pressing Co. (P) Ltd. and Anr. (1977) 2
SCC 745, this Court again explained the application of the
principle of res ipsa loquitur and explained various features
thereof in the following words: –
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“6. The normal rule is that it is for the plaintiff to prove
negligence but as in some cases considerable hardship is
caused to the plaintiff as the true cause of the accident is not
known to him but is solely within the knowledge of the
defendant who caused it, the plaintiff can prove the accident
but cannot prove how it happened to establish negligence
on the part of the defendant. This hardship is sought to be
avoided by applying the principle of res ipsa loquitur. The
general purport of the words res ipsa loquitur is that the
accident “speaks for itself” or tells its own story. There are
cases in which the accident speaks for itself so that it is
sufficient for the plaintiff to prove the accident and nothing
more. It will then be for the defendant to establish that the
accident happened due to someother cause than his own
negligence. Salmond on the Law of Torts (15th Ed.) at p.
306 states:
“The maxim res ipsa loquitur applies whenever it is so
improbable that such an accident would have happened
without the negligence of the defendant that a reasonable
jury could find without further evidence that it was so
caused”. In Halsbury’s Laws of England, 3rd Ed., Vol. 28,
at p. 77, the position is stated thus:
“An exception to the general rule that the burden of
proof of the alleged negligence is in the first instance
on the plaintiff occurs wherever the facts already
established are such that the proper and natural
inference arising from them is that the injury
complained of was caused by the defendant’s
negligence, or where the event charged as negligence
‘tells it own story’ of negligence on the part of the
defendant, the story so told being clear and
unambiguous”.
Where the maxim is applied the burden is on the
defendant to show either that in fact he was not negligent
or that the accident might more probably have happened
in a manner which did not connote negligence on his
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part…..
87. For what has been discussed hereinabove, this much is
apparent that in this case, the warehouse in question
indeed got engulfed in fire and that led to destruction of
the liquor stored therein. Here, the respondent company
could be held liable to pay the excise duty on the liquor
destroyed in fire only if it could be held negligent in not
ensuring safe custody of the stored liquor. As regards this
aspect, the fact that Department had control and
supervision over the distillery and godown would not
absolve the respondent of its liability. Further, the fire
incident in question cannot be termed as an “act of God”.
88. The matter then boils down to the question if the fire
incident could be said to be an inevitable accident. For that
matter, we need to examine as what had been the normal
and reasonable requirement for safe custody of the liquor in
question and as to what could be deduced from the
surrounding factors.
88.1. One of the basic factors to be noticed is that the goods
in question were not ordinary goods but had been
containing alcohol which, by its very nature, is highly
inflammable. Therefore, a particular nature of care which
might be sufficient as regards ordinary goods may not be
adequate or sufficient for the goods in question.
88.2. On 19.09.2002, the Assistant Electricity Inspector who
conducted periodical inspection of the premises in question
made two observations. One of them was a minor aspect
that ‘Caution’ plate was not placed at certain prominent
place but the other observation was a significant one that at
one point of distribution panel, earth wiring was found with
thin wire; and it was suggested that same should be
removed and strip earthing should be done.(vide paragraph
7.1 supra) On 01.03.2003, while issuing No Objection
Certificate, the Fire Brigade Officer, inter alia, observed
that firefighting equipments were at right place and were in
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working condition but in future, they should be tested in fire
station Shahjahanpur before refilling; and it was also
suggested that Foam Installation should be provided for
better management of firefighting arrangements.(vide
paragraph 7.3 supra.)
88.3. From the material placed on record, it is not
forthcoming if strip earthing had indeed been carried out,
though the respondent company generally stated in its letter
dated 23.09.2002 that what was pointed out by the Assistant
Electricity Inspector had been carried out. As to when strip
earthing was done and in what manner is not forthcoming.
Further, it is also not forthcoming if Foam Installations
were provided, as suggested by the Fire Brigade Officer. In
view of extra care required of the highly inflammable
material, significance of none of these aspects could be
gainsaid.
88.4. Though it is true that as per the suggestions made in
the reports relating to the fire incident in question, exact
cause of fire could not be ascertained but there had been
indications that the officers, including the Excise Officer
and Station House Officer had seen burnt wires; and it was
reported that the fire ‘possibly’ took place because of short
circuit. Taking note of these facts as also the other facts that
godown was an old one and the roof of the godown was
made of asbestos sheets, the Excise Commissioner, in his
order dated 11.07.2006, inferred that short circuit could
have taken place in old electric wiring in the godown and in
that context, observed that the licencee had not arranged
the fire proof electric equipments of good quality, which led
to the incident in question.
89. A few words as regards ‘short circuit’ would also be
apposite at this juncture.
89.1. Short circuit is explained in the Dictionary of
Technical Terms19 by F.S. Crispin as follows :-
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“Short circuit (elec.): A path of low resistance placed
across an electrical circuit causing an abnormal flow
of current.”
89.2. In McGrow-Hill Encyclopedia of Science and
Technology(6th Edition, volume 16, p 387), the relevant
features of short circuit are stated as under:-
“An abnormal condition (including an arc) of
relatively low impedance, whether made accidentally
or intentionally, between two points of different
potential in an electric network or system. SEE
CIRCUIT (ELECTRICITY); ELECTRICAL
IMPEDANCE. Common usage of the term implies an
undesirable condition arising from failure of electrical
insulation, from natural causes (lightning, wind, and
so forth), or from human causes (accidents, intrusion,
and so forth). From an analytical viewpoint, however,
short circuit represent a severe condition that the
circuit designer must consider in designing an electric
system that must withstand all possible operating
conditions. The short circuit thus is important in
dictating circuit design parameters (wire size and so
on) as well as protective systems that are intended to
isolate the shorted element. SEE ELECTRIC
PROTECTIVE DEVICES; ELECTRICAL
INSULATION; LIGHTNING AND SURGE
PROTECTION.”
89.3. In the present case, even when the exact cause of fire
could not be ascertained, the indications in the reports like
that of Assistant Excise Commissioner dated
02.08.2003(vide paragraph 11 supra) that burnt cables
were seen in the debris and possibility had been of short
circuit, the only inference could be about some fault or
shortcoming in electric installations (equipments and/or
wiring) which led to the abnormal flow of current and
thereby, to the fire incident in question.
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90 to 92 xxx xxx xxx
93. Hence, we have no hesitation in disapproving the order
of the High Court and in endorsing the views of the Excise
Commissioner in the order dated 11.07.2006.”
48. Similarly, in another recent opinion, the Supreme Court in the case of
Sanjay Gupta & Others v. State of Uttar Pradesh & Others, (2022) 7 SCC
203 in paragraph 53 to 56 held as under:-
“53. The argument of Mr Bhushan that the Court
Commissioner has not given any conclusive finding on the
cause of the fire is not relevant in determining the civil
liability. The maxim res ipsa loquitur would be applicable
as organising an exhibition of such substantial magnitude
without proper and adequate safety factors which may
endanger the life of the visitors, has been rightly found by
the Court Commissioner, an act of negligence including
negligence of the officers of the State.
54. In Shyam Sunder v. State of Rajasthan,(1974) 1 SCC
690 this Court observed that the maxim res ipsa loquitur is
resorted to when an accident is shown to have occurred and
the cause of the accident is primarily within the knowledge
of the defendant. The mere fact that the cause of the
accident is unknown does not prevent the plaintiff from
recovering the damages, if proper inference to be drawn
from the circumstances which are known is that it was
caused by the negligence of the defendant. It was observed
as thus: (SCC pp. 693-94, paras 9-11)“9. The main point for consideration in this appeal is,
whether the fact that the truck caught fire is evidence
of negligence on the part of the driver in the course of
his employment. The maxim res ipsa loquitur is
resorted to when an accident is shown to have
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that the cause of the accident is unknown does not
prevent the plaintiff from recovering the damages, if
the proper inference to be drawn from the
circumstances which are known is that it was caused
by the negligence of the defendant. The fact of the
accident may, sometimes, constitute evidence of
negligence and then the maxim res ipsa loquitur
applies
10. The maxim is stated in its classic form by Erle, C.J,
Scott v. London & St Katherine Docks, (1865) 3 H&C,
601 where the thing is shown to be under the
management of the defendant or his servants, and the
accident is such as in the ordinary course of things
does not happen if those who have the management use
proper care, it affords reasonable evidence, in the
absence of explanation by the defendants, that the
accident arose from want of care.
The maxim does not embody any rule of substantive
law nor a rule of evidence is perhaps not a rule of any
kind but simply the caption to an argument on the
evidence Lord Shaw remarked that if the phrase had
not been in Latin, nobody would have called it a
principle. The maxim is only a convenient label to
apply to a set of circumstances in which the plaintiff
proves a case so as to call for a rebuttal from the
defendant, without having to allege and prove any
specific act or omission on the part of the defendant.
The principal function of the maxim is tu prevent
injustice which would result if a plaintiff were
invariantly compelled to prove the precise cause of the
accident and the defendant responsible for it even
when the facts bearing on these matters are at the
outser unknown to him and ten within the knowledge of
the defendant. But though the parties relative access to
an influential factor, it is not controlling Thus, the fact
that the much at a loss to explain the accident orSignature Not Verified
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himself died in it does not preclude an adverse
inference against him if the odds otherwise point to his
negligence (see John Fleming, The Law of Torts 4th
Edn, p. 264). The new happening of the accident may
be more consistent with the negligence on the past of
the defendant than with other causes. The maxim is
based on commonsense and is purpose is to do justice
when the facts bearing on causation and on the care
exercised by dolendant are at the outset unknown to
the plaintiff and are or ought to be withen the
knowledge of the defendant.
11. The plaintiff merely proves a result, not any
particular act of omission producing the result. If the
result, in the circumstances in which he proves it,
makes it more probable than not that it was caused by
the negligence of the defendants, the doctrine of res
ipsa loquitur is said to apply, and the plaintiff will be
entitled to succeed unless the defendant by evidence
rebuts that probability.”
55. Further, this Court in Pushpabai Purshottam Udeshi v.
Ranjit Ginning & Pressing Co. (P) Ltd. held that where the
plaintiff can prove the accident but cannot prove how it
happened to establish negligence on the part of the
defendant, such hardship is sought to be avoided by
applying the principle of res ipsa loquitur. It was observed
thus: (SCC pp. 750-51, para 6) Page: 245
“6. The normal rule is that it is for the plaintiff to prove
negligence but as in some cases considerable hardship
is caused to the plaintiff as the true cause of the
accident is not known to him but is solely within the
knowledge of the defendant who caused it, the plaintiff
can prove the accident but cannot prove how it
happened to establish negligence on the part of the
defendant. This hardship is sought to be avoided by
applying the principle of res ipsa loquitur. The general
purport of the words res ipsa loquitur is that the
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accident speaks for itself” or tells its own story. There
are cases in which the accident speaks for itself so that
it is sufficient for the plaintiff to prove the accident and
nothing more. It will then be for the defendant to
establish that the accident happened due to some other
cause than his own negligence. Salmond on the Law of
Torts (15th Edn.) at p. 306 states:
The maxim res ipsa loquitur applies whenever it is so
improbable that such an accident would have
happened without the negligence of the defendant that
a reasonable jury could find without further evidence
that it was so caused.”
In Halsbury’s Laws of England 3rd Edn. Vol 28, at p.
77. para 79 the position is stated thus:
79. Inference of defendant’s negligence. An exception
to the general rule that the burden of proof of the
alleged negligence is in the first instance on the
plaintiff occurs wherever the facts already established
are such that the proper and natural inference arising
from them la that the injury complained of was caused
by the defendant’s negligence, or where the event
charged as, negligence “tells it own story of negligence
on the part of the defendant, the story so told being
clear and unambiguous. Where the maxim is applied
the burden is on the defendant to show either that in
fact he was not negligent or that the accident might
more probably have happened in a manner which did
not connote negligence on his part.
56. The said aspect of res ipsa loquitur has also been
commented upon by the Court Commissioner holding the
Organisers and the State liable to apportion the liability.
Thus, we are of the opinion that the report of the one-man
Commission is not suffering from any infirmity so as to
absolve the Organisers from their responsibility of
organising the exhibition.”
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49. It is to be noted that the Supreme Court in both the decisions has
referred to its earlier decision in Shyam Sunder and Others (supra) which
has also been referred to by the learned Arbitrator. A reading of the
judgment would reveal that when an accident is shown to have occurred and
the circumstances of the cause of action is primarily within the knowledge
of the defendant, then the mere fact that the cause of the accident is
unknown does not prevent the plaintiff from recovering the damages. If
proper inference can be drawn from the circumstances which are known to
the defendant, it can be concluded that the accident occurred because of the
negligence of the defendant. In other words, sometimes the fact that the
accident occurred may itself constitute evidence of negligence. It is then
that the maxim res ipsa loquitur applies.
50. In both the cases, cited above, the Supreme Court has highlighted
negligence through surrounding circumstances.
51. In the case in hand, though the cause of fire is unknown, the plea of
the appellant was that inflammable materials were stored in the godown and
the respondent was in exclusive possession of the demised premises and the
defendant / respondent has the knowledge of the circumstances of the fire.
52. Now, the questions would be:
(i) whether in the circumstances, an inference could be
drawn that the fire was caused by the negligence of the
respondent/ defendant. In other words, whether the accident itself
constitutes any negligence on the part of the respondent for maximSignature Not Verified
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res ipsa loquitur to apply;
(ii) whether the learned District Judge has erred in
appreciating the plausible view taken by the learned Arbitrator in
holding that the demised premises (godown) was in the exclusive
possession of the respondent and that itself constitutes
surrounding circumstances for the maxim res ipsa loquitur to
apply in the facts of the case in hand.
53. In the above cited cases of the Supreme Court, there were material
facts available on record (surrounding circumstances) to draw inference
against the respondent(s) therein. When the doctrine of res ipsa loquitur is
applied, the initial onus will be on the respondent/defendant to prove that
there is no negligence on its part for the onus to then shift to the appellant
/plaintiff to prove otherwise.
54. To answer the above two issues, we need to examine the arbitral
award. It is seen that the learned Arbitrator in paragraph 6.3 of the award
held that the respondent under Clause 5 (b) & (c) read with Clauses 6, 8 &
11 of the agreement was in exclusive control and management of the
godown in question. In paragraph 6.3(v) of the award, the learned Arbitrator
has held, the claimant had no power to go inside the godown for inspection
except with prior permission of the respondent and only during the
reasonable hours, whenever necessary under Clause 8. Whereas, the
respondent was entitled to operate the godown as per Clause 13 & 14 of the
agreement. The Arbitrator also held that the respondent had separate electric
meter and permission to install their own generator and under Clause 11, it
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was the respondent’s responsibility to maintain the demised premises,
(interior and exterior) electrical and other fittings therein in good usable
condition. The Arbitrator held that, as per the clauses in the agreement, it is
abundantly clear that the demised premises was in exclusive control and
management of the respondent and the claimant only had a limited right to
conduct inspection with prior permission of the respondent.
55. On the issue of ‘joint locking’, the learned Arbitrator has held that, it
is not the respondent’s case that the subject property was not in their
exclusive control and management during the relevant time. All the clauses
of the document are to be read together as a whole, giving each clause a
meaningful interpretation. According to him it has already been held that
when the components (b) & (c) of Clause 5 are read with Clauses 6, 8 & 11
of the agreement, it abundantly shows that the respondent was in exclusive
control and management of the godown in question during the relevant
period. According to him, the expression ‘joint locking’ in Clause 5,
component (a) is to be read harmoniously with the other clauses of the
agreement and when so read, it would only mean that the respondent was in
exclusive control and management of the demised premises and the claimant
was in constructive possession (in terms of the agreement dated 20.12.2006).
56. The learned Arbitrator reading Clause 11 of the agreement held that
the respondent’s submission that, it was only required to maintain the
electrical fittings and not the godown, is liable to be rejected and that there is
no evidence to show that the respondent has ever carried out any
maintenance of the demised premises which was in their exclusive control
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and management.
57. On the issue of the applicability of res ipsa loquitur, the Arbitrator
held that the godown in question was in exclusive control and maintenance
of the respondent and the respondent was responsible for the maintenance of
the subject property under Clause 11 of the agreement and the respondent
was also liable to hand over the property in a good usable condition. The
cause of fire being unknown and in this background the burden of proof
shifts upon the respondent.
58. The learned District Judge while considering the issue, discussed the
legal principle with regard to the liability arising out of or due to negligence,
and was of the opinion that the question whether the respondent was liable
because of its negligence could not have been determined without dealing
with the other aspects related with exceptions and defence to the allegation
of negligence. The Court held that the initial burden of proof is upon the
plaintiff under Section 101 of the Indian Evidence Act, 1872. It observed
that under Section 3 of the Act, the fact which is neither proved nor
disproved is not proved and accordingly, the issue “whether the fire incident
dated 18.12.2008 in the premises in question occurred due to the
carelessness and negligence of the respondent? OPC” is neither proved nor
disproved and hence not proved. Therefore the learned Arbitrator could not
have decided the issue on the basis of the maxim res ipsa loquitur.
59. The learned District Judge had also held that, there is nothing on
record placed by the claimant that, any NOC from the Fire Department was
obtained before handing over the subject property to the respondent herein.
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The Court not agreeing with the findings of the Arbitrator held that the
claimant has the onus to establish that before handing over the godown, it
had installed all the fire safety equipment/devices.
60. The learned District Judge with regard to the finding of the Arbitrator,
held that there is no proof or material to show that the accident was due to
the negligence of the respondent. It also held that, once the claimant that is
the appellant, has failed to discharge the initial burden to prove the aforesaid
issue and also has not proved on record that, it had installed all fire safety
measures in the godown in question before handing over the possession or
that any agency has submitted the report qua the cause of fire in the godown
in question, it would be wholly unjustified to arrive at the conclusion that, it
was due to the negligence on the part of the respondent herein, or that the
respondent herein is liable to pay damages for the reconstruction and repair
of the demised godown to the appellant due to fire incident. The learned
District Judge also held that the law relating to the applicability of the
doctrine of res ipsa loquitur does not apply to the facts of the present case
and the respondent herein cannot be held responsible for the fire in the
godown. It was also held that the findings given by the learned Arbitrator on
res ipsa loquitur suffer from patent illegality.
61. Having noted the above, we find that the conclusion of the learned
District Judge that the invocation of the doctrine of res ipsa loquitur by the
learned Arbitrator was not necessary, as in the facts, the onus to prove that it
was not negligent was on the appellant, is the contrary to the judgment of the
Supreme Court in Shyam Sunder (supra). This we also say for the reason
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that there is some basis for the learned Arbitrator to conclude that in the
facts it is apparent that the onus to prove was not on the appellant but on the
respondent. If that be so, it is erroneous for the learned District Judge to rely
upon Sections 101 and 3 of the Evidence Act, 1872 to arrive at the
conclusion that the Arbitrator could not have decided the issue on the basis
of res ipsa loquitur.
62. The learned District Judge was exercising the jurisdiction not as a
regular Appellate Court but under Section 34 of the Act of 1996 and unless
the conclusion drawn by the learned Arbitrator was contrary to public policy
or was patently illegal, the learned District Judge could not have interfered
with the award. It is trite law that in a petition under Section 34 of the Act,
even if the Court finds that two views are plausible, it shall not substitute the
view taken by the Arbitrator with its own view, unless the former is patently
illegal or in conflict with the public policy of India. Merely by saying that
the conclusion of the Arbitrator is patently illegal, the conclusion cannot be
construed to be illegal, that too, without proper findings. It is not understood
as to how the learned District Judge concluded that the appellant had failed
to prove that it had installed all necessary safety measures, when it has come
on record that M/s Pantaloon India Ltd. had asked for NOC of the Fire
Department, which communication was denied by the respondent. Even
otherwise, it was not the case of the respondent before the Arbitrator that the
appellant had not provided/installed necessary safety measures, or that
despite its requests, the same were not provided. In the absence of any such
case put forth by the respondent, the learned District Judge could not have
arrived at the conclusion he did.
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63. The learned District Judge has relied upon Delhi Airport Metro
Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd. in CA no.
5628/2021 decided on 09.09.2021, wherein the Supreme Court has held as
under:-
“29. Patent illegality should be illegality which goes to
the root of the matter. In other words, every error of
law committed by the Arbitral Tribunal would not fall
within the expression ‘patent illegality’. Likewise,
erroneous application of law cannot be categorised as
patent illegality. In addition, contravention of law not
linked to public policy or public interest is beyond the
scope of the expression ‘patent illegality’. What is
prohibited is for courts to re-appreciate evidence to
conclude that the award suffers from patent illegality
appearing on the face of the award, as courts do not sit
in appeal against the arbitral award The permissible
grounds for interference with a domestic award under
Section 34 (2-A) on the ground of patent illegality is
when the arbitrator takes a view which is not even a
possible one, or interprets a clause in the contract in
such a manner which no fair-minded or reasonable
person would, or if the arbitrator commits an error of
jurisdiction by wandering outside the contract and
dealing with matters not allotted to them. An arbitral
award stating no reasons for its findings would make
itself susceptible to challenge on this account. The
conclusions of the arbitrator which are based on no
evidence or have been arrived al by ignoring vital
evidence are perverse and can be set aside on the
ground of patent illegality. Also, consideration of
documents which are not supplied to the other party is
a facet of perversity falling within the expression
‘patent illegality.”
64. We may refer to the recent judgment of the Supreme Court in Gayatri
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Balasamy v Ms. ISG Novasoft Technologies Limited, SLP(C) Nos. 15336-
15337/2021 wherein it was held that Section 34(2)(b) of the Act stipulates
that an arbitral award may be set aside only when the subject matter of the
dispute cannot be settled by arbitration per the applicable law or if the
arbitral award conflicts with the public policy of India. Explanation 1 to
Section 34(2) clarifies that an award can conflict with public policy of India
only if (i) the award is induced or affected by fraud, corruption or is in
violation of Section 75 or Section 81 of the Act; (ii) when it is in
contravention with the fundamental policy of Indian law; or (iii) when it
conflicts with the most basic notions of morality or justice. Explanation 2
mandates that no review on the merits shall be undertaken when determining
a contravention of the fundamental policy of Indian law.
65. We must state that there is no contravention of law by the learned
Arbitrator as stipulated under Section 34(2)(b) of the Act. Even any error
committed by the Arbitrator as erroneous application of law also cannot be
categorised as patent illegality. There is nothing on record to show that the
learned Arbitrator has contravened any law linked to the public policy or
public interest. Hence, the conclusion drawn by the learned Arbitrator that
the award is patently illegal, cannot be sustained.
66. Suffice to state, the learned District Judge has misapplied the ratio of
the judgment in Delhi Airport Metro Express Pvt. Ltd. (supra) in the facts
of this case.
67. Further, it is not a case where reasons have not been given by the
learned Arbitrator. The plea that a specific issue was framed but no evidence
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was produced by the appellant would not have any bearing, insofar as the
conclusion drawn by the learned Arbitrator is concerned. The same was
keeping in view the law laid down by the Supreme Court in Shyam Sunder
(supra), which has been reiterated by the Supreme Court in aforesaid two
judgments in Mcdowell Limited (supra) and Sanjay Gupta & Others
(supra).
68. In view of our above discussion, the conclusion drawn by the learned
District Judge in his order dated 22.02.2024 is clearly erroneous and the
same is liable to be set aside. We order so and dispose of this appeal by
restoring the award dated 17.09.2018 passed by the learned Arbitrator, by
holding that the Section 34 petition filed by the respondent is without any
merit and is dismissed. The pending application, if any, is disposed of as
having become infructuous.
V. KAMESWAR RAO, J
MANMEET PRITAM SINGH ARORA, J
MARCH 10, 2026/sr/rk
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