FAO (COMM) 75/2024 Page 1 of 41

* 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

FAO (COMM) 75/2024 Page 2 of 41

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 respondentvidea 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 ofres 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 ;

FAO (COMM) 75/2024 Page 7 of 41

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.

FAO (COMM) 75/2024 Page 8 of 41

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 ofres ipsa loquiturwas not applicable in the present case.

25.He submitted that the Courts have repeatedly held that the principle of

res ipsa loquiturshould 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 ofres 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

FAO (COMM) 75/2024 Page 10 of 41

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 period

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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 maximres ipsa loquiturto

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 inState of Punjab v. Modern Cultivators

AIR 1965 17andSyed 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 ofres ipsa loquiturare 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

Respondent has also withheld material and vital

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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 the

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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

public policy or public interest is beyond the scope of the

FAO (COMM) 75/2024 Page 16 of 41

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

liable to pay damages for the reconstruction and repair of the

FAO (COMM) 75/2024 Page 17 of 41

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

ofres ipsa loquitur,has relied upon the judgment of the Rajasthan High

Court inSohan 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 the

FAO (COMM) 75/2024 Page 18 of 41

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

FAO (COMM) 75/2024 Page 19 of 41

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

FAO (COMM) 75/2024 Page 20 of 41

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

FAO (COMM) 75/2024 Page 21 of 41

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 ofState of Punjab (Supra)had

applied the rule ofres ipsa loquiturby 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 beprima facieproof 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 ofres

ipsa loquiturmay not apply where it is known how or what caused the

damage, as was held inBarkway v. South Wales Transport Co. Ltd. 1951,

All India Eng Report 392.

43.Similarly, inSyed 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 maximres ipsa loquiturno less important a requirement is

that theresmust 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

FAO (COMM) 75/2024 Page 22 of 41

State of UP v. Mcdowell Limited, 2022 (6) SCC 223, referring to the

principle ofres ipsa loquiturhas 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

FAO (COMM) 75/2024 Page 23 of 41

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 ofres ipsa

loquiturin 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.

83.Shyam Sunder and Ors. v. The State of Rajasthan:

(1974) 1 SCC 690had 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

the defendant. The mere fact that the cause of the

FAO (COMM) 75/2024 Page 24 of 41

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. InPushpabai 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: -

FAO (COMM) 75/2024 Page 25 of 41

“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

FAO (COMM) 75/2024 Page 26 of 41

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

FAO (COMM) 75/2024 Page 27 of 41

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 :-

FAO (COMM) 75/2024 Page 28 of 41

“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(6

th

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.

FAO (COMM) 75/2024 Page 29 of 41

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

203in 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

occurred and the cause of the accident is primarily

within the knowledge of the defendant. The mere fact

FAO (COMM) 75/2024 Page 30 of 41

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 or

FAO (COMM) 75/2024 Page 31 of 41

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

FAO (COMM) 75/2024 Page 32 of 41

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.”

FAO (COMM) 75/2024 Page 33 of 41

49.It is to be noted that the Supreme Court in both the decisions has

referred to its earlier decision inShyam 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 maximres ipsa loquiturapplies.

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 maxim

FAO (COMM) 75/2024 Page 34 of 41

res ipsa loquiturto 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 maximres ipsa loquiturto

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 ofres ipsa loquituris

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

FAO (COMM) 75/2024 Page 35 of 41

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

FAO (COMM) 75/2024 Page 36 of 41

and management.

57.On the issue of the applicability ofres 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 maximres ipsa loquitur.

59.The learned District Judge had also held that, there is nothing on

record placed by the claimantthat, any NOC from the Fire Department was

obtained before handing over the subject property to the respondent herein.

FAO (COMM) 75/2024 Page 37 of 41

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 ofres ipsa loquiturdoes 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 loquitursuffer from patent illegality.

61.Having noted the above, we find that the conclusion of the learned

District Judge that the invocation of the doctrine ofres ipsa loquiturby 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 inShyam Sunder (supra). This we also say for the reason

FAO (COMM) 75/2024 Page 38 of 41

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

ofres 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.

FAO (COMM) 75/2024 Page 39 of 41

63.The learned District Judge has relied uponDelhi 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 inGayatri

FAO (COMM) 75/2024 Page 40 of 41

Balasamy v Ms. ISG Novasoft Technologies Limited, SLP(C) Nos. 15336-

15337/2021wherein 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

onlyif (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 inDelhi 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

FAO (COMM) 75/2024 Page 41 of 41

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 inShyam Sunder

(supra), which has been reiterated by the Supreme Court in aforesaid two

judgments inMcdowell Limited (supra)andSanjay 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