TaxTMI 
TaxTMI 
2026 (6) TMI 1216
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.... On 24.06.2013 the parties to the lis entered into an Accidental Cover Agreement (for short 'agreement') whereby the petitioner was to provide Accidental Damage Cover (for brevity 'ADC') for laptops sold by the respondent. By an addendum dated 08.07.2013 the hundred percent attachments of the laptops and the other items mentioned therein were brought within the ambit of the cover. On 12.09.2013 a supplementary agreement was signed to include mobile phones marketed by the respondent under the ADC programme. As per the procedure prescribed under the agreement the respondent had to provide the details of laptops and mobile phones to be covered by ADC and pay the premium within stipulated time. 2.2 There were differences between the parties for enhancement of the premium amount and for change in terms and conditions of ADC. The petitioner on 13.06.2014 issued a notice terminating the agreement with immediate effect. Pursuant to the notice, the respondent issued customer communications that the ADC programme shall cease to have effect from 01.07.2014. The respondent insisted that the petitioner should honour the agreement for laptops and mobiles sold till 30.06.2014. There was disput....
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....s. 9,75,54,755/-. The respondent was held entitled to a total of Rs. 12,41,20,902/- along with simple interest at the rate of eight percent per annum with effect from 01.07.2014 i.e., the date after the contract came to an end till payment is made. Hence, the present petition. 3. Learned counsel for the petitioner contends that there are contradictory findings in the award. The tribunal recorded that the respondent defaulted in complying with the terms and conditions of the agreement yet proceeded to award the claim made for ADC. The submission is that the tribunal erred in ignoring the fact that the quantification of the claim was not done by the expert. Further that neither the claims were proved before the expert nor evidence was adduced before the tribunal to support the claims. Contention is that the tribunal erred in relying on the expert report objected to by the respondent. The grievance is that the tribunal went beyond the terms of the agreement rendering the award patently illegal. The termination of the agreement is defended being in accordance with the terms of the agreement. 3.1 Reliance is placed upon the decisions of the Supreme Court in the case of State of Ra....
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....ote the relevant clauses of the agreement: "2. THE DUTIES OF SONY c) Sony shall pay WSP, the accidental cost cover undertaken with WSP on monthly basis along with details of laptop as one time charges against the consolidated invoice issued by WSP. Only those laptops will be covered, whose payment and details have been received by WSP. The details of the laptops sold with the accidental cover policy shall be shared on fortnightly basis by Sony with the WSP. However, WSP has agreed for the grace period of 15 days to be provided to Sony for the above said purpose." "4. PAYMENT TERMS Sony to pay WSP @ Rs. 449 plus service tax per Laptop towards the premium amount for the Accidental Damage Protection Cover. In the event of any variation in the price during the currency of this agreement, both the parties shall mutually agree for such revisions." "6. TERMS AND RENEWAL/TERMINATION This Agreement will commence on July 17th 2013 and shall remain valid thru July 16th 2014 (Both days inclusive). Both the parties shall have the right to terminate this agreement without cause by service a prior notice of 3 month's noti....
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....ake, storm, hurricane or other natural disaster. Further this Accidental cover policy does not/shall not over the cases of theft and/or burglary. Replacement will be subject to only when the cost of repair is beyond economical value and will be determined by Sony engineer. In the event of repairs of accidental damage, documents required: Duly stamped and signed repair bill along with original invoice Note: In case of Total Loss, reimbursements against such losses will be made to Sony as per the following deduction schedule: • Up to 3 months : NIL • 3 to 6 months : 10% • 6 to 12 months : 15% 4. Accidental Cover fee collection Sony forwards WSP Identification numbers of Laptops to be covered on monthly basis for registration under the program. The coverage shall commence from the date of sale of laptop to the customer. Only those laptops will get coverage whose payment and details have been received by WSP. The details of the laptops sold with the accidental cover policy shall be shared on fortnightly basis by Sony with the WSP. However, WSP has agreed for the grace period o....
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....imbursed. Accidental damage is defined as sudden and unforeseen accidental damage. In case of total loss the procedure is prescribed in clause 3 of the annexure. Under clause 4 the respondent on a monthly basis had to provide identification numbers of the laptops to be covered under ADC but the coverage was to commence from the date of sale of the laptop to the customer. It is stipulated that ADC shall cover only the laptops for which the payment and details were received by the petitioner on fortnightly basis with a grace period of fifteen days. The petitioner had the right to carry out an audit of the claims to ascertain correct compliance of the self-authorization requirement. 9. The tribunal noted the procedure to be followed for availing ADC. The respondent had to pay the premium amount to the petitioner for each item to be covered under ADC. The information was to be given to the petitioner on a monthly basis with regard to the sales of item covered under the scheme and detailing of the particulars sufficient to identify the items to be covered. The ADC was for one year in the case of laptops and six months for mobile phones. On repair of the damaged products the invoice o....
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....g further it would be fruitful to reproduce the relevant portion of the order of the tribunal dated 18.08.2016 appointing the expert and detailing the terms of reference: "The following terms of reference are also finalized: 1. Annexure C/16 contains the tabulation of claims of the Claimant and Annexure C/17 are the documents supporting the said claims. These documents have to be examined and verified according to the claims. It has to be further examined by the expert whether Annexure C/17 is in accordance with Annexure C/16. (Claimant) 2. Clause 2 specifically required that the repair or replacement of components be carried out at a Sony authorized service/repair centre. Therefore, the expert may peruse Annexure C/17 to verify if the repair jobs/replacements were carried out at the authorized service centre of the Claimant. (Claimant) 3. The expert may also verify whether or not the details given in Annexure C/16 like ASC name, ASC code, Job number, Purchase date, Model code, part details etc. relate to the invoices/service job sheets filed as Annexure C/17. (Claimant) 4. Whether or not Annexure C/17 contains document duly stamped and ....
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....f evidence to substantiate the claim renders the award unsustainable. 13. The tribunal while dealing with the issue of the claim to be awarded factored that the respondent failed to timely share the details of the products sold and to pay the premium. The payments for January 2014 and February 2014 were made in April 2014 instead of being made on a monthly basis and the identification details of the mobile phones sold in February 2014 were given to the petitioner on 05.05.2014. The data of the laptops for the month of March 2014 was sent on 06.05.2014. The identification details of the mobile phones sold in the month of March 2014 was forwarded but the premium was not paid. In view of ongoing negotiations between the parties for enhancement of the premium both the parties were held to be at fault for delay in payment of premium. Further the parties mutually agreed that the premium would be retrospectively enhanced to Rs. 504/- per laptop including service tax. The tribunal noted that the petitioner accepted payment on 30.05.2014 at the enhanced rate. It was held that the delay in payments with regard to laptops occurred due to negotiations. The petitioner was held to be bound by....
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..... It would be apposite to note that difficulty in calculation cannot be equated with impossibility and hence the reason recorded for resorting to guesswork is not in accordance with law. 17. The award of tribunal is contradictory having held that there was breach of terms and conditions by the respondent yet the laptops and mobile phones were held to be covered under ADC. 18. Looking from another angle, clause 2(c) of the agreement provides that payment of the premium on a monthly basis along with details of the laptops is to be shared on a fortnightly basis with a grace period of fifteen days. Only those laptops were covered for which payments and details were received by the petitioner. It cannot be lost sight of that the parties may have been negotiating for revision of premium for laptops but the obligation to provide identification details was not in issue and the details were not provided in time. This requirement continued to operate as a condition for coverage under ADC. It was not the case of respondent that the details furnished to the petitioner during the period were not accepted. The relevant portion of clause 2(c) is quoted below: "2. c) ... Only those ....
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....e onus was on the respondent to prove that the repairs were consequent to the accidental damage. It would be pertinent to note that filing of invoices for repair in itself is not a proof to support the claim and even as per the terms of the agreement the petitioner could audit the claims. The decision relied upon by the learned counsel for the petitioner in Ferro Concrete Construction Private Limited (supra) lends support to the contention of the learned counsel for the petitioner. The relevant paragraph of the judgment is reproduced below: "55. While the quantum of evidence required to accept a claim may be a matter within the exclusive jurisdiction of the arbitrator to decide, if there was no evidence at all and if the arbitrator makes an award of the amount claimed in the claim statement, merely on the basis of the claim statement without anything more, it has to be held that the award on that account would be invalid. Suffice it to say that the entire award under this head is wholly illegal and beyond the jurisdiction of the arbitrator, and wholly unsustainable." (emphasis supplied) 24. From the perusal of the record it is evident that neither the sale invoice no....