Delhi District Court
M S Agilus Diagnostics Limited Formerly … vs M S Teresa Diagnostics Centre Through … on 6 April, 2026
IN THE COURT OF SH. AJAY KUMAR JAIN:
LD. DISTRICT JUDGE (COMMERCIAL COURT) -04 (Digital)
SOUTH DISTRICT, SAKET COURTS, NEW DELHI.
OMP (COMM) 59/2023
Agilus Diagnostics Limited
(Formerly known as 'SRL Limited')
Registered Office: Fortis Hospital, Sector 62,
Phase VIII, Mohali, Punjab 1660062
Corporate Office: 306, Tower-A,
Unitech Cyber Park, Sector-39,
Gurugram-122002
... Petitioner
Versus
1. M/s Teresa Diagnostic Centre Through its Partners
Office at 7, Hospital Road Agartala,
Tripura (West) 799001
2. Dr. Achintya Bhattachrjee
S/o Late Sushil Ranjan Bhattacharjee
R/o Ramnagar Road No.5, P.S. West Agartala,
District-West Tripura 799002
3. Mrs. Lili Sen
W/o Mr. Ashish Sen
R/o Pragati Road, P.S. West Agartala
District- West Tripura 799002
... Respondents
Date of filing/initiation of petition : 17.10.2023
Date when final arguments heard : 13.03.2026
Date of Judgment : 06.04.2026
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 1 of 32
Digitally M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
signed by
AJAY
AJAY KUMAR
KUMAR JAIN
JAIN Date:
2026.04.06
16:57:53
+0530
JUDGMENT
1. Vide this judgment, I shall decide the petition under section 34 of
Arbitration and Conciliation Act seeking setting aside the impugned
award dated 15.07.2023 passed by Ld. Sole Arbitrator, filed by the
petitioner.
2. Brief facts of the case as per petition are that the Petitioner is a
company incorporated under the Companies Act, 1956 and is engaged
in providing services of Pathological/Clinical tests throughout India
from its multi specialty labs situated in various parts of the country. The
Petitioner has its main laboratories at Mumbai and Gurgaon, besides
having more than 400 laboratories pan India and internationally with a
presence of over 3000 collection points. The Respondent No.1 is a
Partnership Firm having its office at 7, Hospital Road, P.S. West
Agartala, P.O. Agartala, District-West Tripura 799001, acting through
its partners, respondent no. 2 and 3. On the basis of representation of
the Respondents, the petitioner had agreed to grant License Rights to
the Respondents for setting up and operating a Lab Medicine Centre in
the name and style of the Petitioner and to operate the Laboratory from
the licensed premises in terms of the License Agreement and in
compliance of the various Standard Operating Procedures (SOPs) that
may be issued by the Petitioner, so as to maintain the goodwill of the
Petitioner. Subsequently, the Parties entered into and executed an
Agreement dated 17.10.2013 for grant of license by the Petitioner to
the Respondent for the aforesaid purpose, i.e. for setting up a Lab
Medicine Centre.
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 2 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
3. As per Clause 14.8 of the License Agreement, the Respondent
immediately ceased from doing any business in the name of the
Petitioner upon termination of the present Agreement, and shall also
handover to the Petitioner all samples collected upto the last date.
During the operation of pathology lab in the Licensed Premises, the
Petitioner provided its SOP’s and advice on installation of various
equipments to the Respondents to be installed in such lab, including
one hormone testing equipment named as ‘Centaur CP’. Since the
expenditure on the said System came to be approximately Rs.25 Lakhs,
and the said System was to be operated only by the personnel deputed
by the Petitioner. Both the parties entered into a separate agreement for
defining the terms and conditions with respect to the usage of the said
System, which Agreement expired on 31.03.2017.
4. The parties entered into another Agreement dated 01.04.2017
(‘Equipment Agreement’) in view of the foreseeability of a long-term
business relationship. As per Clause 1 of the Equipment Agreement, the
Equipment Agreement shall be effective for a period of 5 years, or till
the expiry of the License Agreement, whichever is earlier. The
Respondents started to make use of the trade name/expertise of the
Petitioner which was established over the years and earned a huge
reputation in the vicinity. Since the License Agreement was about to
expire due to efflux of time on 16.10.2018, the Petitioner informed the
Respondents of the same and shared a Renewal Agreement with the
Respondents, however, the Respondents did not sign the same on one
pretext or the other and kept assuring the Petitioner that the Renewal
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
Agreement shall be executed shortly, however despite avoiding the
signing of the Renewal agreement, the Respondents were continuing
their obligations under the said Agreements and hence, the said
Agreements were continuing by the conduct of the Parties in terms of
Clause 3.2 of the License Agreement. Respondents continued to
operate its lab under the license of the Petitioner and continued to use
the equipment placed in its lab under the Equipment Agreement, and
did not seek refund of its Security Deposit after October, 2018, thereby
making it amply clear that the said Agreements were continuing and
merely a formal renewal Agreement was yet to be executed.
5. Subsequently, Petitioner became aware that the Respondents
have entered into a business relationship with another diagnostic
laboratory without obtaining any written consent from the Petitioner.
The Respondents were in breach of Clause 24 of the License
Agreement. Further, the Respondents were also in breach of Clause 18
of the License Agreement with respect to ‘Confidentiality’.
6. After becoming aware of such breaches on the part of the
Respondents, the Petitioner conducted an internal audit of the working
of the Respondents by visiting the Licensed Premises, which Report
was released on 08.04.2019 and communicated to the Respondents as
well for necessary action on their part to remedy such breaches but no
remedial measure was undertaken by the Respondents. In lieu of the
breaches on the part of the Respondents, which were not cured by the
Respondents despite being notified thereof, the Petitioner was
constrained to exercise its right under Clause 14.5 of the License
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 4 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
Agreement, thereby terminating both the said Agreements w.e.f.
09.08.2019 vide termination notice dated 10.07.2019. Apart from
listing the reasons for termination, the said Termination Notice further
stated that as on 30.06.2019, the outstanding amount payable by
Respondents was Rs.22,78,827/- subject to reconciliation. The
Petitioner also prepared a full and final settlement as on 18.10.2019,
whereby the net outstanding amount due from the Respondents was
calculated as Rs.17,88,557/-. After adjusting the security amount, again
the outstanding amount of Rs. 4,50,767/- was pending. The Petitioner
issued a Legal Notice dated 07.08.2020 to the Respondents, thereby
calling upon the Respondents to pay the outstanding amount of Rs.
4,50,767/- with pendente lite and future interest. The Petitioner further
invoked Clause 23 of the License Agreement, i.e. the Arbitration
Clause, however no reply came from the respondent. Therefore, the
Petitioner filed an Application under Section 11 (6) of the Act before
the Hon’ble High Court of Delhi vide Arb. Petition No. 94 of 2022,
seeking appointment of a Sole Arbitrator for adjudication of disputes
between the Parties. Vide Order dated 05.05.2022, the Hon’ble High
Court of Delhi appointed Sh. Ashish Mohan, Advocate as the Sole
Arbitrator.
7. On 02.08.2022, the Petitioner filed its Statement of Claim and
subsequently, on 20.08.2022, the Statement of Defense and Counter
Claims were filed by the Respondents. The Petitioner filed its rejoinder
to the Statement of Defense and reply to the Counter Claims on
17.12.2022. The Ld. Sole Arbitrator on conclusion of hearings, passed
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 5 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
the impugned award, thereafter aggrieving by the said impugned Award
the Petitioner filed the present application under Section 34 of
Arbitration and Conciliation Act as relief sought.
8. Respondents in its reply stated that the present petition is not
maintainable as petitioner failed to substantiate any ground applicable
to challenge the said impugned award dated 15.07.2023.
Submissions of counsels
9. Ld. counsel for petitioner submitted that the Ld. Arbitrator in the
impugned award observed that the agreement dated 17.10.2013 and
01.04.2017 did not govern the relationship between the parties after
16.10.2018 i.e. date of expiry by the afflux of time. Ld. Counsel
submitted that if this findings is taken as correct then the Ld. Arbitrator
had no jurisdiction to comment upon the business relationship between
the parties beyond 16.10.2018. Ld. Arbitrator wrongly held that
respondents are not liable to pay anything to the petitioner beyond
16.10.2018, thereby commenting on an issue which is beyond the scope
of reference. Ld. Arbitrator could only say that any claims beyond
16.10.2018 cannot be adjudicated by the Ld. Arbitrator, however
finding of the Tribunal that no amount is payable beyond 16.10.2018 is
perverse and beyond the scope of the submissions to the arbitration,
thus liable to be set aside under section 34 (2) (a) (iv) of the Act.
10. Ld. counsel further submitted that clause 12.5, 14.8, 14.9 and
14.11 of the license agreement and Clause 18 (c) and (d) of the
Equipment agreement required active steps to be taken by both the
parties upon termination of license agreement including return of
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 6 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
security deposit by the petitioner within 60 days of termination, ceasing
of business in the name of petitioner by the respondent, all samples
collected by the respondent to be handed over by the respondent, first
right of refusal to the petitioner to purchase of business of the
respondent, return of system by respondent to the petitioner and
settlement of account within 30 days upon 30 days, however no such
steps were taken by either of parties pursuant to 16.10.2018 which
shows parties were continuing with the business under agreement with
mutual understanding that the agreement is still continuing. The arbitral
tribunal wrongly held in ignorance of such conduct that the agreement
should expire by afflux of time on 16.10.2018 which shows non
application of mind on the part of Arbitral Tribunal.
11. The Ld. Arbitrator’s findings that the agreement expired by
afflux of time on 16.10.2018, hence as per clause 12.5 of the License
Agreement, the respondent was to receive the security deposit within
60 days of termination of the License agreement. Admittedly, no
communication was issued by the respondent seeking recovery of the
said security deposit, hence the limitation period of three years seeking
remittance of the said security deposit expired on 16.12.2021, however
the counter-claims were preferred by the respondent on 20.08.2022
thereby clearly outside limitation period. (relied upon ‘Voltas Limited
Vs. Rolta India Limited, (2014) 4 SCC 516′). Ld. Counsel for
petitioner submitted that the impugned award is against the
fundamental policy of Indian Law and is beyond the scope of reference,
hence liable to be set aside.(relied upon ‘Delhi Metro Rail Corporation
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 7 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
Limited Vs. Delhi Airport Metro Express Pvt. Ltd., (2024) 6 SCC 357′,
‘Ssangyong Engg. & Construction Co. Ltd. NHAI, (2019) 15 SCC 131
and ‘Indian Spinal Injuries Centre Vs. Escortsx heart Institute and
Research Centre Limited, Arb. P. No. 945/2023 datd 19.02.2024’)
12. Ld. counsel for respondent submitted that award based on
interpretation of contract cannot be interfered. Ld. Arbitrator examined
the clauses of the agreement, in particular Clause 3.1 in detail and on
the basis held that the agreement was expired by afflux of time on
16.10.2018, and there was no renewal/extension agreement or
correspondence mutually extending the contract. The Ld. Arbitrator
after analyzing contract clause 12.5 and the correspondence held that
the petitioner failed to prove any amount, hence the security deposit
with 6% interest was refundable to the respondent. The present
petitioner do not demonstrate that the arbitrator’s interpretation is
contrary to the express terms of the agreement or so irrational that no
reasonable persons could arrive at it.
13. Ld. counsel further submitted that the Ld. Arbitrator examined
pleadings, evidence and documents and the petitioner’s own legal
notice, claim statement, internal full and final settlement sheet, and
correspondence of December 2018 showing the renewal terms were
never agreed or signed. On these basis, the Ld. Arbitrator found that the
claimant failed to prove any amount due under the agreement beyond
16.10.2018, the ledger/account document not produced and the figures
in notice, claim and internal sheet were mutual irreconcilable. No
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payment claim for the period prior to the expire was proved so as to
justify the forfeiture of security deposit.
14. The grounds not taken before the Arbitrator cannot be raised
under section 34 Arbitration and Conciliation Act. Ld. Counsel
submitted that the petitioner has not pleaded the ground of limitation in
reply to the counter-claim. (relied upon ‘MSK Projects India Ltd. Vs.
State of Rajasthan, (2011) 10 SCC 573′).
15. Even otherwise, the counter-claim is within limitation. The
petitioner forfeited the security deposit through legal notice dated
07.08.2020 and the Arbitration was invoked in year 2020 and the
counter-claim was filed on 20.08.2022 which is within three years of
limitation. There is no requirement of separate notice under section 21
invoking arbitration for counter-claim. (relied upon ‘Bhageeratha
Engineering Vs. State of Kerala, Civil Appeal No. 39 of 2026 dated
05.01.2026 (SC)’). Ld. Counsel further submitted that there is no
infirmity in the impugned award passed by the Ld. Arbitrator, hence the
present petition is liable to be dismissed. (also relied upon ‘Mahanagar
Telephone Nigam Ltd. Vs. Fujitshu India Pvt. Ltd, 2015 SCC OnLine
Del 7437′, ‘Ssangyong Engineering and Construction Vs. NHAI,
(2019) 15 SCC 131′ and ‘Dyna Technologies Vs. Crompton Greaves,
(2019 20 SCC 1′)
16. Both the parties also filed written submissions.
17. Arguments heard. Record perused.
18. Apex Court in case title ‘Gayatri Balasamy vs M/S Isg Novasoft
Technologies Limited, 2025 INSC 605′ delineated the scope of section
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34 of the Arbitration and Conciliation Act. The relevant paragarphs are
reproduced as under :
“……..
28. Section 34(2)(a) enumerates specific grounds on which an award
can be set aside. These include – the incapacity of a party, invalidity
of an arbitration agreement in law, improper notice for appointment
of an arbitrator or arbitral proceedings, denying the opportunity to a
party to present their case, the award being beyond the scope of
submission to arbitration, and the composition of the arbitral
tribunal or the arbitral procedure not being by the agreement of the
parties in certain circumstances. The proviso to Section 34(2)(a)(iv)
outlines the concept of “severability of awards”. This has been
addressed separately in Part II of our Analysis.
29. Section 34(2)(b) stipulates that an arbitral award may be set
aside 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 I 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 1996 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.
30. Section 34(2-A) stipulates that an award may be set aside when
it is vitiated by patent illegality appearing on the face of the award.
The proviso clarifies that such determination shall not be made
solely because there is an erroneous application of law or through
reappreciation of evidence. Section 34(3) provides timelines which
needs to be adhered to while filing an application under Section 34.
Section 34(4) stipulates the court’s power of remanding an award to
the arbitral tribunal. We have addressed this remand power in Part
VI of our Analysis. Section 34(5) outlines notice requirements,
while Section 34(6) mandates the expeditious disposal of Section 34
applications, setting a hard outer limit of one year from the date of
service of notice on the other party under Section 34(5).”
19. The brief summary of pleadings in arbitration proceedings that
the petitioner in the statement of claim filed before the Ld. Arbitrator
averred that since the agreement dated 17.10.2013 was about the expire
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 10 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
due to afflux of time, the petitioner informed the respondent and even
sent the renewal agreement but the same was not signed by the
respondent without giving any reason and explanation. During the
pendency of the said agreement, respondent started breaching the terms
and conditions and indulged into the activities which were violative of
various clauses of the agreement including but not limited to non-
competing clause and confidentiality clause. The claimant made all
efforts with the respondent for conciliation, rectification of breaches,
however the same failed because of the adamant attitude of the
respondent. It was realized by the claimant that the respondent
unreasonably delayed the signing of the renewal agreement for a long
time which clearly reflect the deliberate and malafide intention of the
respondent to circumvent the agreement. Considering the breaches
made by the respondent and other non-compliance, and also raised
under the internal quality non-conformity audit reports, the claimant
while exercising its right as mentioned in Clause 14.5 of agreement
dated 17.10.2013 vide termination letter dated 10.07.2019, terminated
the agreement w.e.f. 09.08.2019, and the respondents were called upon
to pay the outstanding to the claimant alongwith instruction to comply
post termination clauses. As per the statement of account/ledger
statement, an amount of Rs. 22,78,827/- (subject to reconciliation) was
due and payable by the respondent to the claimant. The respondent not
paid the outstanding amount. The claimant adjusted the security deposit
alongwith accrued interest of Rs. 13,37,791/- and post re-conciliation
of account an amount of Rs. 4,50,767/- still due and payable by the
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 11 of 32
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respondent to the claimant. Vide notice dated 07.08.2020, the demand
of outstanding amount and invoking of arbitration clause was done by
claimant. The Hon’ble High Court vide order dated 05.05.2022
constituted the Tribunal.
20. In statement of claim, the claimant raised two claims, one of
outstanding amount of Rs. 4,50,767/- alongwith interest and other is
litigation expenses.
21. The respondent in statement of defense averred that respondent
had conducted the business as per terms of the agreement dated
17.10.2013. It is agreed by the respondent that the agreement dated
17.10.2013 had expired and the same was never renewed and denied
that the agreements were mutually agreed in any terms after expired.
The respondent also denied that it has breached any terms and
conditions of the agreement and also denied of any effort from the
claimant for conciliation. The respondent also denied any discrepancies
or any audit report till date. He also denied to any renewal agreement,
therefore there is no question of delay in signing of the same. It is also
clarified that the claimant never raised any dispute with regard to their
audit report or otherwise purported termination letter dated 10.07.2019.
Neither the copy of their alleged audit report was ever supplied to the
respondent. There is no such internal quality non-conformity audit
reports. Further, there is no outstanding amount due to the claimant.
The claimant illegally adjusted the security deposit alongwith the
accrued interest to the tune of Rs. 36,79,766.74/-. The claimant never
procured the alleged statement of account/ledger statement to the
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respondent. The adjustment whatsoever is illegal. The claimant not
raised any dispute prior to the purported termination letter dated
10.07.2019. It is stated that without showing breakup and without
procuring any report, any demand raises is illegal.
22. In rejoinder to the statement of defense, it is stated that the
respondent not adhered with the SOP issued by the claimant which is
also reflected from the results drive from internal quality report dated
08.04.2019. The respondent had been availing the services of the
claimant as per agreement post October 2018 without any deviation
from the terms and conditions of the agreement. It is also denied that
there was no effort from the claimant for conciliation. It is also denied
that the claimant never raised any dispute with regard to the audit
report prior issuing the termination letter dated 10.07.2019 or any copy
of the alleged report was supplied to the respondent. The respondent
was well aware of the audit report made vide email dated 10.04.2019
and had deliberately started disobeying the SOP of the claimant
company. The respondent also failed to reply the legal notice dated
07.08.2020. The internal audit report dated 08.04.2019 was duly issued
by claimant and further shared with the respondent.
23. In counter-claim, it is averred by the
counter-claimant/respondent that by way of purported letter of
termination dated 10.07.2019, it was informed to the counter-claimant
that an amount of Rs. 22,78,827/- fell due as on 30.06.2019, however
the respondent unable to show in what manner it came to the
conclusion for outstanding amount of Rs. 22,78,827/-. There is an
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illegal adjustment of security deposit alongwith the accrued interest. No
statement of account or ledger statement procured from counter-
claimant or given to the counter-claimant. The claimant is not entitled
for any adjustment. The counter-claimant raised two claims of refund
of security deposit alongwith accrued interest as well as cost and
consequence of litigation expenses.
24. In reply to the counter-claim, it is stated that during the pendency
and post expiration of agreement dated 17.10.2013, based on multiple
non-compliance, the counter-claimant was found to in violation of
numerous terms and conditions of the agreement, therefore vide
termination letter dated 10.07.2019, the claimant called upon the
counter-claimant to pay the outstanding amount alongwith interest. As
per statement of account/ledger statement, an amount of Rs.
22,78,728/- (subject to re-conciliation) as on 30.06.2019 was due and
payable by the counter-claimant. The accrued interest being Rs.
13,37,791/- and post reconciliation of the accounts an amount of Rs.
4,50,767/- is still due. The statement of account/ledger statement, an
amount of Rs. 22,78,827/- was due and payable by the counter-
claimant and the same can be verified through the summary of payment
and the ledger account annexed as annexure-R2. The counter-claimant
was aware of audit observation made under the internal quality audit
report which was shared with counter-claimant through email. The
counter-claimant intentionally not replied to the notice dated
07.08.2020.
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25. In rejoinder, it is denied that the claimant made any effort with
the counter-claimant for conciliation and rectification of breaches. It is
reiterated that the agreement dated 17.10.2013 was not renewed after
its expiry. The counter-claimant also submitted that the statement of
account of Rs. 22,78,827/- is apparently manufactured one, however
even if it is assumed to be a correct statement without admitting, the
same also do not support the claim of the respondent that prior to
30.03.2019, the amount of Rs. 22,78,827/- was due to be paid by the
counter-claimant. Rather it discloses that an amount of Rs. 17,88,557/-
is shown to be due and an amount of Rs. 13,37,751/- was adjusted
against the security deposit. Therefore, the claimant has no right to
adjust Rs. 36,79,766/- as disclosed in notice dated 07.08.2020. He
further stated that none of the emails dated 10.04.2019 served to the
counter-claimant. The internal audit report is never brought before the
counter-claimant at any point of time. The claimant has no authority to
issue purported termination letter dated 10.07.2019 as the agreement
was no longer in existence. It is also stated that counter-claimant kept
on requesting the claimant to enter upon the fresh written agreement,
however the claimant was reluctant to issue a document, therefore the
agreement automatically terminated. It is also stated that no re-
conciliation of accounts in terms of the express provision of the
contract dated 17.10.2013 was ever been initiated.
26. The respondent in affidavit of admission/denial of documents of
the claimant filed before the Ld Arbitrator admitted the agreement
dated 17.10.2013, 01.04.2017 and also admitted to have received the
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termination notice dated 10.07.2019 and legal notice dated 07.08.2020.
Respondent/counter-claimant not filed any document during the
arbitration proceedings which requires any admission/denial.
27. Before adverting to the contentions of the parties, the relevant
paragraphs of the impugned award dated 15.07.2023 passed by Ld.
Sole Arbitrator are reproduced as under :
“…………
The Claimant filed Claim Petition on 02.08.2022 and the Respondent
filed its Statement of Defence and Counter Claim on 20.08.2022. The
Claimant/Respondent in the Counter Claim thereafter filed its
rejoinder w.r.t. the Claim Petition as well as the Statement of Defence
to the Counter Claim on 17.12.2022. The Counter Claimant filed
rejoinder w.r.t. Counter Claims on 24.02.2023. Parties also filed their
respective affidavits of admission and denial of documents. The
matter was listed on 04.03.2023 and the following points of
determination were framed:
1.Whether the Agreement dated 17.10.2013 read with the Agreement
dated 01.04.2017 remained alive and continued to govern the
relationship between the parties after 16.10.2018?
2. Whether the Respondent is liable to pay any amount to the
Claimant for the period after 16.10.2018 and if so, what would be the
quantum of such amount?
3. Whether the Claimant was entitled to forfeit an amount of
Rs. 22,78,827/- out of the security deposit made by the Respondent in
terms of the Agreement dated 17.10.2013?
4. Whether the Claimant is entitled to an award of Rs. 4,50,767/-?
5. Whether the Claimant is entitled to interest and if so at what rate?
6. Whether the Respondent/Counter-Claimant is entitled to an award
of Rs. 36,79,766.74/- towards refund of Security deposit and interest
thereon?
7. Relief.
Upon inquiry, Ld. Counsel for both the parties stated that they do not
wish to lead oral evidence and the present arbitration proceedings may
be decided on the basis of pleading and documents on
record. Accordingly, the matter has been heard on the basis of the
record and the present award is being passed. At this stage it is also
worth mentioning that vide order dated 11.07.2023, the Tribunal had
taken on record the factum of change of name of the Claimant
from SRL Limited to AGILUS DIAGNOSTICS LTD.
Case of the Claimant
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The Claimant contends that it is a company incorporated under
the Companies Act, 1956 and is engaged in providing services of
pathological/ clinical testing throughout India. It has inter alia entered
into an agreement dated 17.10.2013with the Respondent whereby a
licence was granted to the Respondent for setting up a modern
pathological lab at the latter’s premises situated at 7, Hospital Road,
PS West Agartala, PO- Agartala, District West Tripura 799001. In
terms of clause 3 of the Agreement, the same would be effective from
the date of execution thereof or the date on which the Respondent has
completed the conditions precedent and the centre becomes fully
operational and would continue for a period of 5 years. The agreement
was extendable further on such terms and conditions as would be
mutually agreed to between the parties during the initial tenure of the
agreement. The Claimant further contends that another agreement was
executed between the parties on 01.04.2017 pursuant to a request
made by the Respondent to the Claimant to provide and place a
hormone testing equipment known as “Centaur C P” to be installed in
a lab set up pursuant to the initial agreement dated 17.10.2013. Clause
1 of the 2017 agreement provided that the said agreement would be
effective for a period of 5 years from 01.04.2017 or till expire of the
initial license agreement dated 17.10.2013, whichever was earlier. It is
the case of the Claimant that since the agreement dated 17.10.2013
was about to expire due to efflux of time, the Claimant informed the
Respondent and also sent a renewal agreement but the same was not
signed by the Respondent. However, the Claimant contends that the
parties continued working together on the same terms and conditions
as envisaged under the agreement dated 17.10.2013. The Ld. Counsel
for the Claimant argued that the Respondent subsequently started
breaching the terms and conditions of the agreement and inter alia
violated the non-compete clause and confidentiality clause. Further,
the Claimant noticed discrepancies as reflected in the audit conducted
by the Claimant and consequently due to these aforesaid breaches the
Claimant terminated the agreements vide termination letter dated
10.07.2019 with effect from 09.08.2019.
In terms of clause 12.5 of the agreement dated 17.10.2013 r/w clause
5 of the agreement dated 01.04.2017 the Claimant had in its
possession an amount of Rs. 13,37,791/- as security deposit on which
interest has also accumulated. As opposed to this the Claimant
contends that as per statement of account/ Ledger account maintained
by the Claimant in ordinary course, an amount of Rs. 22,78,827/-
[subject to the reconciliation] was due and payable by the Respondent.
The Claimant accordingly adjusted the security deposit along with
accrued interest and is now claiming the balance outstanding which is
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 17 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
alleged to be Rs. 4,50,767/- by way of the present arbitration
proceeding along with pendente lite interest @24% p.a.
Case of the Respondent
The Respondent on the other hand contends that the agreement dated
17.10.2013 expired by efflux of time with effect from 16.10.2018 and
the same was never renewed. The supplementary agreement dated
01.04.2017 being co-terminus with the agreement dated 17.10.2013
also came to an end on the same date i.e., 16.10.2018. Thus, according
to the Respondent, the termination letter dated 10.07.2019 is in any
case of no consequence as the agreement between the parties had
already come to an end w.e.f. 16.10.2018 as no renewal agreement
was ever signed or executed between the parties nor is there anything
on record to suggest that the parties had mutually extended or renewed
their agreement. The Respondent also contends that no dispute
regarding outstanding dues had ever been raised by the Claimant prior
to the purported termination letter dated 10.07.2019 nor was any
alleged audit report ever supplied to the Respondent. It is argued that
the Claimant has failed to established that any amount was due or
payable by the Respondent to the Claimant.
Thus, the security deposit of the Respondent was wrongly and
illegally adjusted and is liable to be refunded to the Respondent.
Consequently, the Respondent apart from contesting the Claimant’s
claim, has also made a counter claim for an amount of Rs.
36,79,766.74/- [rounded upto Rs. 36,79,767/-] along with pendente
lite and future interest.
ANALYSIS AND FINDINGS
I propose to deal with the pleadings and documents filed by the parties
in an issue-wise manner as set out hereunder:
1. Whether the Agreement dated 17.10.2013 read with the Agreement
dated 01.04.0217 remained alive and continued to govern the
relationship between the parties after 16.10.2018?
&
2. Whether the Respondent is liable to pay any amount to the
Claimant for the period after 16.10.2018 and if so, what would be the
quantum of such amount?
Issues no. 1 and 2 are inter connected and are being taken up for
adjudication together. For better appreciation of the term and scope of
the agreement it is necessary to refer to the following clauses:
Agreement dated 17.10.2013
“3. COMMENCEMENT DATE
3.1 This Agreement shall be effective from the date of execution of the
Agreement or the date on which the Licensee has completed the
conditions precedent as mentioned in clause 2 above and the Center
becomes fully operational and functional, whichever is later and shallOMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 18 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
continue for the period of 5 years. Licensee shall inform in writing the
date of commencement of commercial operations to Licensor to
enable to determine the “Commencement Date”
3.2 This Agreement may be extended for such further period and on
such terms and conditions, as shall be mutually agreed to between the
Parties hereto during the tenure of the said Agreement.”
“12.5 Security Deposit: The Licensee has paid to the Licensor a sum
of Rs. 10,00,000/- (Rupees Ten Lacs only) as a refundable security
deposit at the time of signing of this agreement. The Licensor reserve
its sole right to increase the security deposit amount from time to time.
The said security deposit would entitle the Licensee an interest of 6%
per annum. The interest after deducting TDS on Security Deposit shall
be accrued to the principal amount at the end of the year. On
termination/expiration of this Agreement, the Licensor shall refund the
said security deposit along with interest if any within 60 days after
acceptance of termination and deducting all the dues and outstanding
of any nature and applicable taxes.”
“23. ARBITRATION
If any dispute, differences or claim arise between the Parties in
connection with this Agreement or the validity, interpretation,
implementation or alleged breach of this Agreement or anything done,
omitted to be done pursuant to this Agreement, the Parties shall first
endeavor to resolve the same through conciliation and negotiation.
However, if the dispute in not resolved through conciliation and
negotiation within 30 days after the commencement of such
conciliation or within such period mutually agreed in writing, then the
Parties may refer the dispute for resolution to the sole Arbitrator to be
appointed by SRL i.e. Chief Executive Officer of the Licensor or any
other authorised person as may be appointed from time to time. Such
arbitration shall be in accordance with the provisions of the
Arbitration & Conciliation Act, 1996 or any statutory modification or
re-enactment for the time being in force. The arbitration will be held
in Delhi in English language. ”
Agreement dated 01.04.2017
“1. The Agreement shall be effective for a period of Five (5) years
effective from 1st April, 2017 or tin the expiry of the “License
Agreement” whichever is earlier (hereinafter referred to as
the “Period”).”
“5. In consideration of placing the System at Licensee’s premises, the
Licensee has deposited Security deposit amounting to Rs. 5,00,000/-
(Rupees Five Lakh only) (“Security Deposit”) vide earlier agreement.
The said Security Deposit will be carried forwarded under this
Agreement for the extended period. The said security deposit would
entitle to interest @ 6% per annum, subject to applicable TDSOMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 19 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
prevailing as per tax laws at the time of payment. Security deposit
with interest will be returned to Licensee at the time of expiration or
earlier termination of this Agreement. On the termination of the
Agreement, SRL reserves the right to adjust the Security Deposit
against the amount due to SRL. ”
“24. Dispute Resolution & Arbitration
If any dispute, differences or claim arise between the Parties in
connection with this Agreement or the validity, interpretation,
implementation or alleged breach of this Agreement or anything done,
omitted to be done pursuant to this Agreement, the Parties shall first
endeavor to resolve the same through conciliation and negotiation.
However, if the dispute in not resolved through conciliation and
negotiation within 30 days after the commencement of such
conciliation or within such period mutually agreed in writing, then the
Parties may refer the dispute for resolution to the sole Arbitrator to be
appointed by SRL. Such arbitration shall be in accordance with the
provisions of the Arbitration & Conciliation Act, 1996 read with
Arbitration and Conciliation Amendment Act, 2015 or any statutory
modification or re-enactment for the time being in force. The
arbitration will be held in New Delhi in English language. ”
It is apparent from a reading of clause 3.1 of the agreement dated
17.10.2013 that the agreement would remain valid only for a period of
5 years i.e., till 16.10.2018. The agreement could be extended for
“such further period and on such terms and conditions, as shall be
mutually agreed to between the parties.” The Claimant has not filed
any correspondence on record to indicate that the agreement was
extended for any period beyond 16.10.2018. In fact, there is neither
any renewal agreement/ extension agreement placed on record nor is
there any form of correspondence mutually extending the agreement.
Rather, the Claimant has itself filed emails dated 14.12.2018 and
17.12.2018, which are internal emails and which clearly suggest that
parties were not in agreement on the terms of renewal of the existing
agreement as a consequence of which the renewal agreement was
never signed. Thus, it cannot be held that the parties renewed their
contractual relationship on any mutually agreeable terms.
Consequently, this tribunal is of the opinion that the Claimant has
failed to establish that the agreement was extended mutually as
contemplated under clause 3.2 of the agreement. Thus, the
incontrovertible position is that the agreement expired by efflux of
time on 16.10.2018.
As far as the agreement dated 01.04.2017 is concerned the same was
to be effective for a period of 5 years w.e.f. 01.04.2018 or till expiry
of the “license agreement” i.e., the agreement dated 17.10.2013. Since
this agreement was co-terminus with licence agreement dated
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 20 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
17.10.2013 the same is also deemed to have elapsed by efflux of time
on 16.10.2018.
Accordingly, the inescapable conclusion is that the agreements dated
17.10.2013 and 01.04.2017 did not govern the relationship between
the parties beyond 16.10.2018. A fortiori, it must be held that the
Respondent was not liable to pay any amount to the Claimant for the
period after 16.10.2018 in terms of the aforesaid agreement. The
Claimant has also not brought on record anything, to show
continuance of business arrangement between the parties beyond
16.10.2018 on any other terms.
3. Whether the Claimant was entitled to forfeit an amount of Rs.
22,78,827/- out of the security deposit made by the Respondent in
terms of the Agreement dated 17.10.2013?
Clause 12.5 of the agreement dated 17.10.2013 provides for a security
deposit of Rs. 10 lacs which was to accrue interest @6 p.a. Further
clause 5 of the agreement dated 01.04.2017 provides that pursuant to
the initial licence agreement the licensee has provided a security
deposit amounting to Rs. 5 lacs which would be treated as the Security
deposit for the second agreement also. As oppose to this, the Claimant
in para 13 of the claim statement states that “the Claimant adjusted the
security deposit along with the accrued interest being Rs. 13,37,791/-.
The Claimant along with the claim statement has not filed any account
statement reflecting the amount of security deposit available with it;
however, in the notice invoking arbitration dated 07.08.2020 the
Claimant states that:
“I am informed that My Client had no option but to adjust the security
deposit alongwith accrued interest thereof being Rs. -3679766.74 and
post adjustment an amount of Rs. 4,50,767 (Four Lakh Fifty Thousand
Seven Hundred Sixty Seven Only) is still due and payable by you to
My client.”
It appears from the aforesaid legal notice that the Claimant has in its
possession a security deposit amount of Rs. 36,79,766.74/- [round it
off to Rs. 36,79,767/-] which the Claimant has purportedly adjusted. It
is another matter that it is inconceivable as to how the Claimant
claims to have adjusted an amount of Rs. 36,79,767/- against claim
dues of Rs. 22,78,827/- and still claims an amount of Rs. 4,50,767/- as
due and payable from the Respondent. In para 13 of the Claim
Statement the Claimant has made a significant departure from the
stand taken in the aforementioned Legal notice and has pleaded as
follows:
13. That when the Respondent failed and neglected to clear the
outstanding, left with no alternative, the Claimant adjusted the
Security Deposit along with accrued interest being Rs. 13,37,791/-
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 21 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
and post reconciliation of the account, an amount of Rs. 4,50,767/- is
still due and payable by the Respondent to the Claimant.
Thus, whereas the legal notice states the amount of security deposit as
Rs. 36,79,766.74/-, the Claim statement mentions the available
security deposit Rs. 13,37,791/-. The former ex facie appears to be a
mistake & does not even comport with the amounts mentioned in
clause 12.5 of the Agreement dated 17.10.2013. Nevertheless, in both
documents the amount claimed to be outstanding as per the ledger
account maintained by the Claimant is stated to be Rs. 22,78,827
[subject to reconciliation]. If the tribunal were to proceed on the
numbers on the amount stated in the legal notice dated 07.08.2020, it
would imply that the claimant would owe an amount of Rs.
14,00,939.74/- to the Respondent whereas if the tribunal proceeds on
the amounts mentioned in the claim statement the Respondent would
owe an amount of Rs. 9,41,036/- to the Claimant. In neither of the two
circumstances is the tribunal able to arrive at the figure claimed to be
due from the Respondent by the Claimant which is alleged to be Rs.
4,50,767/-. Therefore, clearly there is no way to reconcile the amount
claimed to be due as per the ledger account of the Claimant, the
amount of the security deposit and the amount claimed to be due by
the Claimant in the present arbitration proceedings. It is also pertinent
that even the ledger account which appears to be the fulcrum of the
Claimant’s case has not been placed on record by the Claimant. The
Claimant has instead, alongwith the Rejoinder/ Statement of Defence
to the Counter Claim placed on record a document titled as
“Franchisee- AGARTALA (M/s. TERESA DIAGNOSTIC CENTRE)
Full & Final Settlement as on 18th Oct. 2019” which reflects the
alleged outstanding amount as Rs. 17,88,557/- and the available
security deposit as Rs. 13,37,791/-. However, the Claimant has not
taken any steps to amend or clarify the claim statement in terms
thereof nor is it clear as to what is the genesis of this document. It
appears only to be an annexure to an internal quality audit [Annexure
A-2 to the Statement of Defence of AGILUS DIAGNOSTICS LTD. to
counter claim]. The document has apparently not been communicated
to the Respondent at any stage prior to the present arbitration
proceedings in any correspondence or otherwise and has also not been
proved before this tribunal.
In any event there is nothing on record to show that the amounts
claimed even as per the document titled as “Franchisee- AGARTALA
(M/s. TERESA DIAGNOSTIC CENTRE) Full & Final Settlement as
on 18th Oct 2019”, are for any period prior to 16.10.2018 when the
contract expired by the efflux of time. In the aforesaid circumstances
this tribunal is constrained to come to the conclusion that the claimant
has failed to prove any amount due or payable by the Respondent to
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 22 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
the Claimant under the agreement dated 17.10.2013 and 01.04.2017.
Since no amount has been proved to be due and payable by the
Respondent to the Claimant, the necessary sequitur is that the
Respondent was not entitled to forfeit the security deposit available
with it towards such alleged outstanding.
4. Whether the Claimant is entitled to an award of Rs. 4,50,767/-?
&
5. Whether the Claimant is entitled to interest and if so at what rate?
In view of my findings on Issue no. 3 above, the Claim of the
Claimant for an amount of Rs. 4,50,767/- is rejected. Accordingly, the
claim for interest is also obviously rejected.
6. Whether the Respondent/ Counter-Claimant is entitled to an award
of Rs. 36,79,766.74/- towards refund of Security deposit and interest
thereof?
The Respondent / Counter-Claimant has made this counter claim
essentially based on the statement contained in the legal notice dated
07.08.2020 where the Claimant is stated to have adjusted the security
deposit along with the accrued interest being Rs. 36,79,766.74/-. The
Respondent/ Counter Claimant has however not placed on record any
evidence to show that it ever deposited any amount over and above
Rs. 10 lacs towards refundable security deposit as contemplated under
clause 12.5 of the agreement dated 17.10.2013. Significantly, there is
no positive assertion made by the Counter Claimant in its pleadings
regarding the quotation of Security deposit & interest being Rs.
36,79,766.74/-. The tribunal also has to bear in mind that the Claimant
has stated in para 13 as well as 20 of its Claim Statement that the
security deposit available with it along with accrued interest was only
Rs. 13,37,791/- in this light, the amount mentioned in the legal notice
dated 07.08.2020 i.e., Rs. 36,79,766.74/- appears to be a mistake. This
is especially so since the figure of Rs. 13,37,791/- as mentioned in the
Claim Statement would be equivalent to the amount of the security
deposit in term of clause 12.5 of the agreement along with
accumulated interest @6% p.a. [as per clause 12.5] till 18.10.2019.
Thus, in the absence of any evidence in the contrary the Tribunal is
proceeding on the basis that the amount of security deposit with the
Claimant was infact only Rs. 10 lacs. which was obviously deposited
in terms of clause 12.5 of the agreement dated 17.10.2013 and this
amount inclusive of interest, as on 18.10.2019 stood at Rs. 13,37,791/-
as admitted by the Claimant in the claim statement.
This tribunal has already come to the conclusion under issues no. 3, 4
& 5 that the Claimant AGILUS DIAGNOSTICS LTD. has failed to
establish or prove any amount as due and outstanding from the
Respondent in terms of the agreements dated 17.10.2013 and
01.04.2017. Thus, and in view of the said findings, the tribunal holds
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 23 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
that the Respondent/ Counter Claimant are entitled to refund of the
security deposit made by them with the Claimant. As evident from
clause 12.5 of the agreement dated 17.10.2013, the principal amount
of security deposit was Rs. 10 lacs. The Counter Claimant are entitled
to interest thereon @6% p.a. with effect from 17.10.2013 under clause
12.5 of the agreement which as on date comes to Rs. 5,80,000/-.
Therefore, the tribunal concludes that the Counter Claimants are
entitled to refund of a total amount of Rs. 15,80,000/- [interest
calculated till 17.06.2023]. Accordingly, the Claimant is directed to
pay the aforesaid sum of Rs. 15,80,000/- [interest calculated till
17.06.2023] to the Respondent within a period of 90 days from the
date of passing of this Award. In the event of default, the Claimant
shall further be liable to pay future interest on the aforesaid amount of
Rs. 15,80,000/- @9% p.a. from the date of this Award till payment is
actually made by Claimant to the Respondent.
7. Relief.
1. Claims of the Claimant are hereby dismissed.
2. The counter claim is allowed in part. The Claimant is directed to
pay a sum of Rs. 15,80,000/- to the Respondent within a period of 90
days from the date of passing of this award. In the event of default, the
Claimant shall further be liable to pay future interest on the aforesaid
amount of Rs. 15,80,000/- @9% p.a. from the date of this Award till
payment is actually made by Claimant to the Respondent.
3. Parties to bear their own costs.
28. Issue no. 1 & 2 :
1.Whether the Agreement dated 17.10.2013 read with the Agreement
dated 01.04.2017 remained alive and continued to govern the
relationship between the parties after 16.10.2018?
2. Whether the Respondent is liable to pay any amount to the
Claimant for the period after 16.10.2018 and if so, what would be the
quantum of such amount?
29. While dealing with issue no. 1 and 2, Ld. Arbitrator observed
that it is apparent from the reading of clause 3.5 of the Agreement dated
17.10.2013 that the agreement would remain valid only for a period of
five years i.e. till 16.10.2018, infact there is neither any
renewal/extension agreement placed on record nor is there any form of
correspondence agreement or mutual agreeing agreement rather the
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 24 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
claimant itself filed email dated 14.12.2018 and 17.12.2018, which are
internal emails clearly suggesting that the parties were not in agreement
on terms of renewal of existing agreement as a consequence of which
renewal agreement was never signed. The agreement was not extended
mutually as contemplated under Clause 3.2 of the agreement, therefore
incontrovertible position is that the agreement was expired by afflux of
time on 16.10.2018. The agreement dated 01.04.2017 is also co-
terminus with license agreement dated 17.10.2013, and therefore also
deem to have elapsed by afflux of time. The agreement dated
17.10.2013 and 01.04.2017 did not govern the relationship between the
parties beyond 16.10.2018. Therefore, the respondent is not liable to
pay any amount to the claimant for the period after 16.10.2018 in terms
of the said agreement.
30. This court in present petition cannot re appreciate the evidence
nor look into the merits of the case. No oral evidence lead in this case
and the matter is decided on the basis documents filed by the parties.
Ld. Arbitrator categorically observed that neither any
renewal/extension agreement placed on record nor any form of
correspondence mutually extending the agreements placed on record.
On the other hand, there are email stated 14.12.2018 and 17.12.2018
filed by the claimant which suggests that the parties were not in
agreement on the terms of renewal of the existing agreement.
Therefore, the incontrovertible position that the agreement is expired
by afflux of time on 16.10.2018. This observation of the Ld. Arbitrator
cannot in any manner held to be perverse or unreasonable. There is
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
nothing to fault with this reasoning of the Ld. Arbitrator. No ground
made out to interfere in the findings of these issues by Ld. Arbitrator.
31. Issue no. 3 as under :
3. Whether the Claimant was entitled to forfeit an amount of
Rs. 22,78,827/- out of the security deposit made by the Respondent in
terms of the Agreement dated 17.10.2013?
32. While dealing with the issue no. 3, Ld. Arbitrator observed that
clause 12.5 of the agreement dated 17.10.2013 provide for a security
deposit of Rs. 10 lakhs which accrues interest @ 6 % per annum.
Further, Clause 5 of the agreement dated 01.04.2017 provided security
deposit of Rs. 5 Lakhs. As opposed to this, the claimant in para 13 of
the claim statement states that it adjusted the security deposit alongwith
the accrued interest being Rs. 13,37,791/-. The claimant alongwith
claim statement has not filed any account statement reflecting the
amount of security deposit available with it, however in the notice
invoking arbitration dated 07.08.2020 states that he had no option but
to adjust the security deposit alongwith accrued interest, thereof of
being Rs. 36,79,766.74/- and post adjustment an amount of Rs.
4,50,767/- due on the respondent. The Ld. Arbitrator also observed that
how the claimant has adjusted an amount of Rs. 36,79,767/- against the
claim dues of Rs. 22,78,827/- and still claims Rs. 4,50,767/-. The legal
notice mentions the amount of security deposit of Rs. 36,79,766.74/-,
the claim statement mentions the available security deposit of Rs.
13,37,791/-. The former ex-facie appears to be mistake and does not
even comport with the amounts mentioned in clause 12.5 of the
agreement dated 17.10.2013. It is also observed that if the Tribunal is to
OMP (COMM) 59/23 Dt. 06.04.2026 Page nos. 26 of 32
M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
proceeds on the legal notice dated 07.08.2020, it would imply that the
claimant would owe an amount of Rs. 14,09,039.74/- to the respondent
whereas if Tribunal proceeds on amount mentioned in the claim
statement, the respondent would owe an amount of Rs. 9,41,036/- to
the claimant, however in both the scenario, the Tribunal could not
arrive at figure of Rs. 4,50,767/- due in favour of claimant. Therefore,
there is no way to reconcile the amount claim to be due as per the
ledger account of the claimant, the amount of security deposit, the
amount claim to be due by the claimant in present arbitration
proceedings.
33. Ld. Arbitrator observed that the ledger account which appears to
be fulcrum of the claimant case has not been placed on record by the
claimant. The claimant placed on record the document titled ‘full and
final settlement’ dated 18.10.2019 which reflects the alleged
outstanding amount of Rs. 17,88,557/- and available security deposit of
Rs. 13,37,791/-, however the claimant has not taken any steps to
amend or clarify the claim statement nor it is clear what is the genesis
of the document. It appears to be annexure to internal quality report in
the statement of defense to the counter-claim. The said document never
communicated to the respondent. It is also observed that in any event
there is nothing on record to show that the amounts claimed even as per
the documents i.e. full and final settlement dated 18.10.2019 are for
any period prior to 16.10.2018 when the contract expire by afflux of
time. The claimant not able to prove the amount due and payable by
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
the respondent to the claimant. Therefore, the necessary sequitur is that
the respondent is not entitled to forfeit the security deposit.
34. The claimant not filed any ledger account to substantiate the
amount due and further made the inconsistent outstanding amount due
in claim statement and the notice involving arbitration. There is no
clarification, amendment or modification of that inconsistency amount
in the arbitration proceedings. The claimant merely produced a
document title full and final settlement dated 18.10.2019, however the
genesis of the same is not substantiated through the ledger account. The
service of internal audit report is denied by respondent. The claimant
also not filed any proof of service. The said report has not been duly
proved before the Ld. Arbitrator. Therefore, there is nothing perverse or
patent illegality in rejecting the entitlement of the claimant to forfeit the
security deposit.
35. Issue no. 4 and 5 as under :
4. Whether the Claimant is entitled to an award of Rs. 4,50,767/-?
5. Whether the Claimant is entitled to interest and if so at what rate?
36. With regard to issue no 4 and 5, Ld. Arbitrator observed that in
view of findings in the above issues, the claim of Rs. 4,50,767/- and
consequent of claim of interest are rejected. There is also no perversity
or patent illegality in deciding the issue no. 4 and 5.
37. Issue no. 6 as under :
6. Whether the Respondent/Counter-Claimant is entitled to an award
of Rs. 36,79,766.74/- towards refund of Security deposit and interest
thereon?
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
38. With regard to issue no. 6, Ld. Arbitrator observed that the
counter-claimant on the basis of legal notice dated 07.08.2020 stated
the claimant adjusted the security deposit alongwith interest accrued
being Rs. 36,79,766.74/-, however claimant not placed on record any
evidence to show that it ever deposited any amount over and above Rs.
10 lakhs. Ld. Arbitrator observed that the claimant in statement of
claim stated that security deposit available with it alongwith accrued
interest of Rs. 13,37,791/-, therefore amount mentioned in legal notice
appears mistake. This amount of Rs. 13,37,791/- also equivalent the
amount of security deposit in terms of Clause 12.5 of the agreement
alongwith accumulated interest @ 6 % per annum till 18.10.2019.
Therefore, it is an admission on the part of the claimant to have the
security deposit with interest of Rs. 13,37,791/-. The claimant, however
not able to prove any outstanding amount due from the respondent,
therefore the respondent entitled for security deposit of Rs. 10 lakh
alongwith interest 6 % per annum w.e.f. 17.10.2013 which comes
around Rs. 5,80,000/- till 17.06.2023, therefore claimant is directed to
pay total sum of Rs. 15,80,000/- within 90 days and in case of default
the future interest @ 9 % per annum till the date the payment is made.
39. There is no issue framed before the Ld. Arbitrator on the aspect
that the counter-claim is barred by limitation. This issue of limitation is
raised first time before this court in the present petition under section
34 of Arbitration and Conciliation Act.
40. Hon’ble Punjab and Haryana High Court in case title ‘Housing
Board Haryana and Another Vs. M/s Comfits Marketing and Others,
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
FAO No. 4329 of 2004, dated 13.08.2019, 2019 (2) I.L.R 481’ held that
the issue of limitation not raised by the parties in the arbitration
proceedings can be raised first time while deciding the petition under
section 34 of the Act. The relevant paragraph is reproduced as under :
“……..
(11) The next question which this court is to answer is that if a
party fails to raise the issue of limitation in respect of any of the
claim in the arbitration petition or in the written statement, whether
the same can be raised in a petition filed under Section 34 of the
Act? In this regard, in the case of Binod Bihari Singh versus Union
of India5, the Supreme Court has held that the bar of limitation may
be considered even if such plea has not been specifically raised.
Limitation Act is a statute of repose and bar of a cause of action in
a court of law, which is otherwise lawful and valid, because of
undesirable lapse of time as contained in the Limitation Act, has
been made on a well accepted principle of jurisprudence and public
policy. Similarly, in the case of Sealand Shipping & Export Pvt.
Ltd. versus Kin-ship Services (India) Pvt. Ltd.,6 , the Supreme
Court has held that even if the plea of limitation is not specifically
raised in the arbitration petition, the court is bound to consider such
plea while considering a petition under Section 34 of the Act and
there cannot be any waiver on the issue of limitation. The decisions
rendered in the case of Binod Bihari Singh versus Union of India
(supra) was subsequently followed by the Supreme Court in the
case of Oil and Natural Gas Corporation Ltd. versus Essar Oil
Limited (supra). So, it is clear that if the plea of limitation is not
raised by a party in the arbitration petition or in the written
statement, even then plea of limitation can be considered by the
court while deciding a petition under Section 34 of the Act.”
41. Therefore, in view of the mandate of the judgment, this court has
a jurisdiction to decide the issue of limitation in filing of the counter-
claim, even if it is not raised before the Ld. Arbitrator. The
respondent/counter-claimant in affidavit of admission/denial of
documents filed during the arbitration proceedings do not dispute the
correctness of the agreement dated 17.10.2013 and 01.04.2017, and
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
also not disputed the receiving the termination notice dated 10.07.2019
and 07.08.2020. The respondent/counter-claimant not replied to the
termination notice dated 10.07.2019 and legal notice dated 10.08.2020.
In the legal notice dated 07.08.2020, the claimant stated that an amount
of Rs. 22,78,827/- was due and after adjusting the security deposit, a
sum of Rs. 4,50,767/- is due towards claimant. There is nothing in this
legal notice that the security deposit is forfeited and it is only the
adjustment of the security deposit. The argument is raised by the
counter-claimant/respondent that vide legal notice dated 07.08.2020,
the claimant forfeited the security deposit is found contrary to the
language of the legal notice dated 07.08.2020 which only states that the
security deposit is adjusted. Therefore, the plea of counsel for counter-
claimant that the limitation period for filing of counter-claim begins
from 07.08.2020 and the counter-claim filed on 20.08.2022, is within
three years of limitation not tenable.
42. Admittedly, there is nothing on record that the counter-claimant
has ever demanded the security deposit or made any communication
which suggests that the counter-claimant is demanding the security
deposit. The counter-claimant ever not filed its ledger account
statement. On the other hand, the counter-claimant despite admitting of
receiving termination notice dated 10.07.2019 not ever replied to the
said notice of termination or the legal notice dated 07.08.2020. In these
circumstances, the limitation period for claiming security deposit of 3
years will begin after 60 days of the date of termination of the
agreement by efflux of time on 16.10.2018 i.e. on 16.12.2018. The
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M/s Agilus Diagnostics Ltd Vs. M/s Teresa Diagnostics Centre
three years limitation, thereafter expired on 16.12.2021, however the
counter-claim for release of security deposit is filed on 22.08.2022
which is beyond the period of limitation. Hence, the findings of the Ld.
Arbitrator to release the security deposit to the respondent is perverse
and liable to be set-aside.
43. This court has the power to set aside the impugned award
partially when valid and invalid portions are separable. (relied upon
‘Gayatri Balasamy vs M/S Isg Novasoft Technologies Limited, 2025
INSC 605′ and NHAI v. Trichy Thanjavur Expressway Ltd. (“Trichy
Thanjavur”), (2023) 304 DLT 357′).
44. Accordingly, in view of the above discussions, this court finds no
infirmity in the impugned award over the issue no. 1 to 5, however the
issue no. 6 decided by the Ld. Arbitrator is not sustainable in law as the
counter-claim is barred by limitation. The impugned award is partially
set aside qua issue no. 6. The present petition is disposed of
accordingly.
45. File be consigned to record room after necessary compliance.
Digitally
Announced in open court signed by
AJAY
AJAY
on 06th April 2026 KUMAR
KUMAR JAIN
(Ajay Kumar Jain) JAIN Date:
2026.04.06
District Judge, Comm-04 (Digital) 16:58:03
+0530
South District, Saket Courts, Delhi
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