Delhi District Court
M/S J.K. Enterprises vs Union Of India on 30 September, 2022
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (Comm.) No. 76/2022
M/S J.K. Enterprises
Through Jitendra Sharma (Partner)
403, Antrix Green, Kaushambi,
Ghaziabad, Uttar Pradesh-201012 ...Petitioner
versus
Union of India
Through Executive Engineer (E),
BFLD, CPWD,
79th BN, BSF Campus,
Mundra Road, BHUJ,
GUJARAT-370001 ...Respondent
Date of Institution : 13/05/2022
Arguments concluded on : 09/09/2022
Decided on : 30/09/2022
Appearances : Sh. Arvind Kumar Nagpal and Ms. Neeru Nagpal,
Ld.Counsel for petitioner.
Sh. Harinder Krishan Talwar, Ld. Counsel for respondent
with Sh. Sandeep Chandna, Advocate.
JUDGMENT
1. Petitioner had filed the present petition under Section 34 of The Arbitration and Conciliation Act, 1996 (herein after referred as The Act), seeking setting aside of the impugned arbitral award dated 17/01/2022 of Ld. Sole Arbitrator Sh. Vasdev Nainani in case no. ARB/VN/2/21 titled "M/s J.K. Enterprises vs Union of India". Ld. Sole Arbitrator awarded (1) release of the Performance Guarantee of Rs. 4,20,849/-; (2) release of Security Deposit of Rs. 1,43,099/-; (3) cost of arbitration Rs 2,00,000/-; subject to claimant submitting proof of payment of wages of OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 1 of 36 staff, EPF contributions within two months and thereafter in 45 days respondent is to make payment of award sum; else the post award interest @ 10% per annum was payable by respondent to claimant/petitioner.
2. I have heard Sh. Arvind Kumar Nagpal and Ms. Neeru Nagpal, Ld. Counsel for petitioner; Sh. Harinder Krishan Talwar, Ld. Counsel for respondent with Sh. Sandeep Chandna, Advocate and perused the record of the case, reply of respondent, the arbitral proceedings record, filed brief written arguments, relied upon precedents on behalf of parties and given my thoughtful consideration to the rival contentions put forth.
3. Following is the brief factual matrix of case of parties. Petitioner entered into Agreement No. 07/EE(E)/BFLD/Bhuj/ 2018-19 with the respondent for the work namely 'Maintenance of Border Flood Lighting works for BOP 921 to 992 along Indo- Pak Border at Tharad in Gujarat Sector (SH: Maintenance of BFL and RMO DG sets)'; consequent to acceptance of the lowest bid of the petitioner by respondent vide letter dated 16/03/2019 and issuance of the letter of commencement (award letter) on 01/04/2019, upon deposit of the Performance Guarantee by the petitioner on 20/03/2019. The stipulated date of start of the work was 31/03/2019. The work was predominantly of Operation and Maintenance nature and was to be carried out for a period of 12 months.
4. Following are the relevant material facts of the case of petitioner. The site being secure and sensitive area, under the OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 2 of 36 control of the BSF; after issuance of the entry/gate passes to the workers of the petitioner and the handing over of the site by respondent, the work actually commenced on 22/04/2019 and was to be carried out up to 21/04/2020. Petitioner successfully carried out the work for about nine months despite non releasing of the timely payments/arbitrarily and unjustifiably withholding and/or recovering considerable amount from the bills of the petitioner by the respondent. Respondent issued show cause notice no. 54(43)/BFLD/Bhuj/2020/30 dated 20/01/2020 by invoking Clause 3 of the agreement. Respondent, abruptly determined the Agreement vide letter no.
54(43/BFLD/Bhuj/2020/54 dated 31/01/2020, on the very last working day of the then Engineer-in-Charge i.e., the then Executive Engineer, before his superannuation and this happened despite of the petitioner's telephonically talking to the respondent and sending emails on 23/01/2020 and 30/01/2020 and getting positive response on phone. Petitioner vide letter dated 12/02/2020 addressed to the Additional DG (B), CPWD requested for referring the disputes enumerated by the petitioner to the Dispute Redressal Committee (DRC) in terms of Clause 25 of the agreement. Vide letters dated 19/08/2020 and 02/09/2020 petitioner requested Chief Engineer, BFLZ, CPWD for appointment of an Arbitrator. The Chief Engineer, BFLZ, CPWD vide letter dated 01/10/2020 appointed Ld. Sole Arbitrator, in terms of the powers conferred on him under Clause 25 of the agreement. Arbitral proceedings culminated into the impugned arbitral award.
5. Petitioner has impugned the arbitral award mainly on the OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 3 of 36 following grounds. Impugned award is in violation of principles of natural justice as no opportunity was afforded by Ld. Sole Arbitrator to petitioner/Counsel to present his case, apart from taking Statement of Claim of petitioner and Rejoinder to the Counter Statement of Facts of respondent on record. Ld. Sole Arbitrator abruptly published the award in a clandestine manner, at the back of the petitioner, after only three sittings/hearings held on 15/03/2021, 13/09/2021 and 07/01/2022 without following any procedure even for ensuring to make available the complete and legible documents sought by petitioner; without any admission and denial of documents; without framing of issues; without affording opportunity to parties to lead evidence; without affording opportunity to parties to arbitration/Counsel to address arguments, whether oral or written; without adjudicating the pending objections of petitioner, specifically made vide letter dated 07/01/2022. No fair opportunity was given to petitioner to present its case, whereas, full opportunity should have been given to petitioner to present its case as per Section 18 of the Act. Petitioner had raised concern about the genuineness of copies of some documents produced/supplied by respondent and had sought production of original documents; whereas no directions were ever issued to respondent for the same. Ld. Sole Arbitrator was biased. In-equal treatment was given to parties. The approach of Ld. Sole Arbitrator was selective. Defaults/serious lapses on the part of respondent in adherence to the contact were very conveniently controlled by him and where adherence of contract by the petitioner was questioned by the respondent, Ld. Sole Arbitrator selectively relied on the contract. Ld. Sole Arbitrator was in so hurry to favour the respondent that he even OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 4 of 36 forgot to fix his fees. Petitioner came to know about the impugned arbitral award only through letter dated 05/02/2022 of respondent. Award is in conflict with public policy and is vitiated by patent illegality. Ld. Sole Arbitrator has not given any reason which is proper, intelligible or adequate reason for acceptance or rejecting the individual claims whereas the discussions of the claims are not proper. Even the contentions made by petitioner, during the only opportunity it got i.e., in the Statement of Claim and the Rejoinder to the Counter Statement of Facts have not at all been considered by Ld. Sole Arbitrator. Award is tainted due to taking on record and relying on the reply, as also the voluminous documents, authenticity of which is questionable, enclosed with the reply submitted by respondent to the Rejoinder of the petitioner, on its own volition, without the leave of Ld. Sole Arbitrator. Impugned arbitral award was made despite of the pending decision on the strong objections raised by the petitioner vide letter dated 07/01/2022, as also, orally during the hearing on 07/01/2022 which were recorded in the proceeding sheet dated 07/01/2022. Ld. Sole Arbitrator had relied heavily on the aforesaid reply of respondent to the Rejoinder of petitioner above said and documents enclosed with it as is evident from the award. Ld. Sole Arbitrator did not give any finding and decision against claim no. 1. Ld. Sole Arbitrator did not appreciate the fact that finding on claim no. 1 had larger implications and after deciding as to whether the determination of the agreement under Clause 3 was correct or not, the decision on consequential benefits viz. release of the Performance Guarantee and the Security Deposit, as also the interest on that amount could be taken. If this claim of the petitioner succeeded, then only the consequential benefits OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 5 of 36 could flow. Ld. Sole Arbitrator without deciding the said claim, allowing the consequential benefits to the petitioner (Claim nos. 4 and 5), but with some riders, which do not germinate from the agreement and have no connect with those claims and appear to have been put just to frustrate the benefits of those reliefs. Ld. Sole Arbitrator wandered outside the contract and thus committed the error of jurisdiction. By not taking into account the terms of the agreement, Ld. Sole Arbitrator violated Section 28 (3) of the Act. Ld. Sole Arbitrator gave vague finding while deciding Claim nos. 2 and 3 and did not award any sum against these claims of petitioner claimant and even did not give any reason for his such finding and decision. Ld. Sole Arbitrator simply endorsed the stand of respondent by selectively relying only on the Clauses/terms and conditions of the agreement which suited the respondent and these Clauses/terms and conditions too have been erroneously construed by Ld. Sole Arbitrator in favour of respondent, while conveniently, ignoring to appreciate or even discuss the Clauses/terms and conditions of the agreement pointed out by the petitioner in his Statement of Claim and Rejoinder to the Counter Statement of Facts. Ld. Sole Arbitrator erred in deciding the Claim nos. 4 and 5; though he decided the said claims in favour of petitioner and awarded Rs. 4,20,949/- and Rs. 1,43,099/- respectively but had made the award conditional. Ld. Sole Arbitrator had put a condition regarding submission of proof of payment of wages and EPF contributions; whereas as per Clause 1 and Clause 1A of the agreement, no such rider can be attached. Ld. Sole Arbitrator had gone beyond the scope of agreement. Ld. Sole Arbitrator gave no reason for denying Claim no. 7. Huge recovery of Rs. 11,04,700/- is said to OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 6 of 36 be on account of absence of the staff deployed by the petitioner. Despite repeated requests, copies of the original attendance registers maintained at site were not provided to the petitioner. Ld. Sole Arbitrator had placed reliance on the copies of the fabricated computerized consolidated monthly attendance sheets provided by the respondent despite protest of the petitioner. Ld. Sole Arbitrator erred in denying Claim nos. 8, 9, 10, 11 without giving any reason which was proper, intelligible, adequate reason. Ld. Sole Arbitrator also erred in putting a very perverse and illogical rider for release of Rs. 2,00,000/- against Claim no. 12, thus bringing the relief granted to naught. Ld. Sole Arbitrator entered into reference on 01/10/2020 and made award abruptly on 17/01/2022 i.e., way beyond 12 months period. The form and contents of award were not proper. Impugned arbitral award neither states reasons of acceptance or rejection of each claim nor it states the place of arbitration. Impugned arbitral award is in conflict with the most basic notions of morality or justice and is vitiated by patent illegality appearing on the face of the award. Ld. Counsel for petitioner argued in terms of grounds of impugned arbitral award and prayed for setting aside the impugned arbitral award accordingly, relying upon the followed precedents:-
1. State of Chhattisgarh & Ors. Vs Sal Udyog Private Limited, MANU/SC/1036/2021;
2. Delhi Airport Metro Express Pvt. Ltd. vs Delhi Metro Rail Corporation Ltd., MANU/SC/0623/2021;
3. Ssangyong Engineering & Construction Co. Ltd. vs National Highways Authority of India (NHAI) MANU/SC/0705/2019;
4. Dyna Technologies Pvt. Ltd. vs Crompton Greaves Ltd., OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 7 of 36 MANU/SC/1765/2019;
5. Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49;
6. Som Datt Builders Ltd. vs State of Kerala, MANU/SC/1635/2009 and
7. Oil & Natural Gas Corporation Ltd. vs SAW Pipes Ltd., MANU/SC/0314/2003.
6. Respondent in filed reply averred and was so argued by Ld. Counsel for respondent that arbitral proceedings were held in accordance with the provisions of the Act and Ld. Sole Arbitrator settled the arbitration within the stipulated period of one year and there was no violation of the provisions of the Act. Following are the relevant averments of respondent and the arguments of Ld. Counsel for respondent. Baseless allegations were made by petitioner about the neutrality and impartiality of Ld. Sole Arbitrator. Ld. Sole Arbitrator was appointed as per proposal dated 30/09/2020 submitted by the petitioner. Ld. Sole Arbitrator was eligible to be appointed as Sole Arbitrator as per Section 12 of the Act. Impugned arbitral award was published by Ld. Sole Arbitrator following due process of law. Impugned arbitral award is reasoned award in accordance with Section 31 of the Act. The award is lawful and there is no ground to set aside the award. Petitioner was given sufficient opportunity to present its case. It is evident from the following facts:-
(a) The Petitioner attended the first hearing on 15.03.2021.
(b) The Petitioner submitted statement of claims on 15.03.2021.
(c) The Respondent submitted the documents sought by the Petitioner vide letter dated 01.04.2021 and also resubmitted on 23.04.2021.
(d) The Petitioner attended the second hearing on 13.09.2021.OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 8 of 36
(e) The Petitioner submitted Rejoinder to CSF on 13.09.2021.
(f) The Respondent submitted reply to Rejoinder on 02.11.2021.
(g) The Petitioner attended the final hearing on 07.01.2022.
There is no evidence on record that petitioner was not given opportunity to present his case nor the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81 nor it is in contravention with the fundamental policy of Indian law or in conflict with the most basic notions of the morality or justice. There is no evidence that the impugned award is in conflict with the public policy of India. There is no contravention of any of the provisions made in the Act and hence the award is not vitiated by patent illegality. As such, no ground is available with petitioner under Section 34 of the Act to seek setting aside of the impugned award. Ld. Sole Arbitrator passed award in favour of petitioner subject to submission to proof of payment of wages of his staff for the period from 22/08/2019 to 31/01/2020 and EPF contributions by the petitioner. Petitioner did not submit proof of payment of wages of his staff and proof of payment of EPF contributions. Respondent is ready to release the amount of Rs. 29,18,212/- to the petitioner on receipt of the proofs as specified in the impugned arbitral award. Respondent even requested petitioner to implement the award vide letter dated 05/02/2022 and letter dated 04/04/2022. The jurisdiction of the Court to interfere with an award of arbitrator is limited one. While considering the objections against award, Court is not obliged to reassess the evidence and to sit in conclusion of the Arbitrator by re- examining and re-appreciating the evidence considered by the Arbitrator as if sitting in appeal over the award. This Court is OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 9 of 36 also not empowered to substitute its own view or finding in place of the view taken or the findings recorded by Ld. Sole Arbitrator. The Court cannot take upon itself the task of adjudicating the dispute which was referred to Ld. Sole Arbitrator like an Arbitrator or a court of original jurisdiction. Ld. Counsel for respondent relied upon the judgments of Delhi High Court in the cases of (i) M/s L.G. Electronics India (P) Ltd. vs Dinesh Kalra, decided on 19/01/2018; (ii) MTNL vs FUJITSHU India Private Limited, decided on 20/02/2015 in FAO(OS) 63/2015 and CM No. 2069/2015 and (iii) Jhang Cooperative Group Housing Society Ltd. vs Pt. Munshi Ram and Associates Pvt. Ltd, decided on 09/05/2013 in FAO (OS) 582/2012 and argued that it is settled law that where the Arbitrator has assessed the material and evidence placed before him in detail, the court while considering the objections under Section 34 of the Act does not sit as a court of appeal and is not expected to re-appreciate and re-assess the case of the parties. The jurisdiction under Section 34 of the Act is not appellate in nature and an award passed by an Arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court; another view is possible. The duty of the court in these circumstances is to see whether the view taken by the Arbitrator is a plausible view on the facts, pleadings and evidence before the Arbitrator. Even if on the assessment of the material, the court while considering the objections under Section 34 of the Act is of the view that there are two views possible and the Arbitral Tribunal has taken one of the possible views which could have been taken on the material before it, the court would be reluctant to interfere. The court is OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 10 of 36 not to substitute its view with the view of the Arbitrator if the view taken by the Arbitrator is reasonable and plausible. Ld. Counsel for respondent relied upon the case of MMTC Ltd. vs M/s Vedanta Ltd., Civil Appeal No. 1862 of 2014 decided by Supreme Court on 18/02/2019 and argued that Supreme Court revisited the position of law with regard to scope of interference with an arbitral award and had observed that Court does not sit in appeal over the arbitral award and may interfere on the merits under Section 34 of the Act on the limited grounds provided therein including if the award is against the public policy of India or there being in existence of patent illegality. Ld. Counsel for respondent also argued that a similar view was taken by Supreme Court in the cases of (i) K. Sugumar & Anr. Vs Hindustan Petroleum Corporation Ltd. & Anr., Civil Appeal No. 419 of 2018 decided on 16/01/2018; (ii) M/s Dyna Technologies Pvt. Ltd. vs M/s Crompton Greaves Ltd., Civil Appeal No. 2153 of 2010 decided on 18/12/2019; (iii) Union of India vs M/s Susuka Pvt. Ltd, Civil Appeal No. 8530 of 2009 decided on 08/12/2017. Ld. Counsel for respondent argued for dismissal of the present petition and also relied upon the case of National Thermal Power Corporation Ltd. vs Wig Brothers Builders and Engineers Ltd., OMP No. 16/2003 decided by Delhi High Court on 17/04/2009.
7. An arbitral award can be set aside on the grounds set out in Section 34 (2) (a), Section 34 (2) (b) and Section 34 (2A) of the Act in view of Section 5 of the Act and if an application for setting aside such award is made by party not later than 3 months from the date from which the party making such application had OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 11 of 36 received the signed copy of the arbitral award or if a request had been made under Section 33 of the Act, from the date on which that request had been disposed of by the Arbitral Tribunal. If the Court is satisfied that the applicant was prevented by sufficient cause from the making the application within the said period of three months it may entertain the application within further period of 30 days, but not thereafter.
8. Section 34 (1) (2), (2A) and (3) of The Arbitration and Conciliation Act, 1996 read as under:-
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 12 of 36 tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 13 of 36
9. Supreme Court in Suo Moto Writ Petition (Civil) no. 3 of 2020, In Re: Cognizance For Extension Of Limitation vide order dated 10/01/2022 has excluded the period from 15/03/2020 till 28/02/2022 for computing the period of limitation for any suit, appeal, application or proceedings and the petition under Section 34 of The Act is also eligible for the same.
10. It is the case of petitioner and was so argued by Ld. Counsel for petitioner that petitioner came to know about the impugned award only through letter dated 05/02/2022 of respondent. Ld. Counsel for petitioner sent email dated 10/02/2022 to Ld. Sole Arbitrator with attachment of two letters, one each for two cases of arbitration seeking clarification regarding present status of the ongoing arbitration proceedings. At page no. 427 is Annexure A- 48 in arbitral proceedings record which is a communication dated 18/02/2022 of Ld. Sole Arbitrator purportedly sent to petitioner and Counsel by speed post and email with mention inter alia of having sent original copies of award dated 17/01/2022 of the two cases through speed post booked on 17/01/2022 inter alia to petitioner whereas neither as stated in said communication copy or speed post receipt of dispatching the impugned award to petitioner is attached/enclosed therein nor anywhere else in arbitral proceedings record, so as to infer even sending of signed copy of arbitral award by Ld. Sole Arbitrator to petitioner. In any event as per order dated 10/01/2022 in Suo Moto Writ Petition (Civil) no. 3 of 2020, In Re: Cognizance For Extension Of Limitation, Supreme Court has excluded the period from 15/03/2020 till 28/02/2022 for computing the period of limitation OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 14 of 36 for any suit, appeal, application or proceedings; for which the present petition also qualifies. So the present petition is within the period of limitation.
11. Supreme Court in case of Associate Builders vs. Delhi Development Authority (supra) has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
Also was held therein that:
"33. "...when a court is applying the 'public policy' test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award.... Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts.."
12. Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India (supra) has held that under Section 34 (2-A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 15 of 36 the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
13. Supreme Court in the case of Dyna Technologies Pvt. Ltd. vs Crompton Greaves Ltd.(supra) inter alia held that arbitral award is to be set aside on the grounds of insufficiency and inadequacy of reasoning being unintelligible and therefore unsustainable.
14. Supreme Court in the case of Delhi Airport Metro Express Pvt. Ltd. vs Delhi Metro Rail Corporation Ltd. (supra) held :-
"25. 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 at by ignoring vital evidence are perverse and can be set aside on OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 16 of 36 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'."
15. Supreme Court in the case of Patel Engineering Limited vs North Eastern Electric Power Corporation Limited, (2020) 7 SCC 167 inter alia held that wherein the findings of Ld. Arbitrator are arrived at by taking into account irrelevant facts and by ignoring the vital clauses, the same suffers from the vice of irrationality and perversity and that the award will be liable to be set aside when while interpreting the terms of the contract, no reasonable person could have arrived at such a conclusion and the award passed by the arbitrator suffers from the vice of irrationality and perversity.
16. Supreme Court in the case of MMTC Ltd. vs Vedanta Ltd. (supra) inter alia held that as per the proviso to Section 34 (2A) of the Act, an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
17. In the impugned arbitral award after recording in brief submissions of claimant and respondent separately, following claim-wise findings and decision was given by Ld. Sole Arbitrator:-
"1.0 Claim No. 01: Withdrawal of Notice of Final Action under clause 3 of the Agreement issued on 31.01.2020 and giving all consequential benefits:
.......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 17 of 36 are as under:
(1) The issue of release of Performance Guarantee is dealt under claim no. 4.
(2) The issue of release of Security Deposit is dealt under claim no. 5.
In view of above, I award Nil against claim no. 1 2.0 Claim No. 02: Payment of Pending 3rd bill up to 31.01.2020- Rs. 35,80,605 (Rs. Thirty Five Lacs Eighty Thousand Six Hundred and Five Only):
......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) The brief details of the bills are as under:
Item 1st R/A 2nd R/A 3rd &
Final
Related to Operating staff like 2162365 2929196
DG Set Operator, Wireman,
Khallasi
Related to Cable, HDPE Pipe 1422369 948246
items
Related to supply of electrical 44460 286434 123306
accessories like HPSV Choke,
Ignitor, Lamp
Credit for buy back of (-) 4847 (-) 13528
dismantled material
Total 1466829 2443952 3987220
Less:10.5% Discount 154017 256615 418658
Gross Value of work done 1312812 2187337 3568563
Recovery for absence of staff 196700 908000
Recovery for non laying Cable, 240030
HDPE Pipe
Gross Value of work done 1312812 1990637 2420533
Income Tax 26256 39813 48411
Labour Cess @ 1% 13128 19906 24205
Security Deposit @ 2.5% 32820 49766 60513
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 18 of 36
GST @ 2% 26256 39814 48412
Withheld for non submission of 870893 2123520
proof of payment of wages
Withheld for non submission of 10744 20000
proof of payment of EPF
contribution
Net Payment 1214352 959701 95472
Voucher No.& Date No. 26 Dt No. 13 Dt No. 32 Dt
15.06.2019 29.11.2019 21.03.2020
(2) There is a provision in agreement terms and conditions no.
14.1 (e) (Page 34 of NIT / page 175 of agreement) that "Proof of payment of wages to the staff though documents of banking transaction".
(3) There is a provision in agreement terms and conditions no.
14.1 (d) (Page 34 of NIT / page 175 of agreement) that "Proof of deposit of EPF and ESI in respect of staff deputed at site as applicable".
(4) There is a provision in agreement terms and conditions no.
11.2 (Page 32 of NIT / page 173 of agreement) that "Recovery shall be made from the contractor bill at the following rates towards absence of the staff".
a) Wireman Rs. 750/- per shift of 08 Hours.
b) Khallasi Rs. 550/- per shift of 08 Hours.
c) DG Operator Rs. 750/- per shift of 08 Hours.
(5) Claimant has not yet complied with the terms and conditions no. 14.1 (d) & (e) regarding submission of proof of payment of EPF contributions (Ref. 2Nd R/A bill and 3rd& final bill) and proof of payment of wages through bank transactions (Ref. 3rd& final bill).
(6) The issue of withheld amount on account of EPF contribution is dealt under Claim no. 3.
(7) The issue of recovery is dealt under Claim no. 7.
In view of above, I award Nil against claim no. 2. Claimant is directed to carry out his obligations such as submission of proof of payment of wages of staff and EPF contributions within two months of award. Respondent shall release the withheld amounts within 45 days after Claimant submitted the proof.
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 19 of 363.0 Claim No. 03: Release of the withheld amount - Rs.
10,744/- plus the amount which may have been withheld from the 3rd Bill, the details of which are not with the Claimant.
........................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) Rs.10,744/- (2nd R/A bill) Plus Rs. 20,000/- (3rd & Final bill) = Rs. 30,744/- was withheld by Respondent on account of non-submission of proof of payment of EPF Contribution by Claimant.
(2) There is a provision in agreement terms and conditions no.
14.1 (d) (Page 34 of NIT / page 175 of agreement) that "Proof of deposit of EPF and ESI in respect of staff deputed at site as applicable".
(3) Claimant has not yet complied with the terms and conditions no. 14.1 (d) regarding submission of proof of payment of EPF contributions.
In view of above, I award Nil against claim no. 3. However, Claimant shall carry out his obligations such as submission of proof of payment of EPF contributions within two months. Respondent shall release the withheld amounts within 45 days after Claimant submitted the proof.
4.0 Claim No. 04: Release of the performance guarantee Rs.
4,20,849/- (Rs. Four Lac Twenty Thousand Eight Hundred Forty Nine only).
.......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) Claimant has deposited Rs. 4,20,849/- as Performance Guarantee.
(2) The work is primarily of operation & maintenance nature.
The stipulated date of start and completion of the work was 31.03.2019 & 30.03.2020 respectively. Claimant started the OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 20 of 36 work on 22.04.2019 and carried out the work till 31.01.2020.
(3) Claimant has not yet complied with the terms and conditions no. 14.1 (d) & (e) (Page 34 of NIT / page 175 of agreement) regarding submission of proof of payment of wages and EPF contributions.
In view of above, I award an amount of Rs. 4,20,849/- against claim no. 4 provided that Claimant shall carry out his obligations such as submission of proof of payment of wages and EPF contributions within two months of award. Respondent shall release the awarded amount within 45 days after Claimant carries out his obligations.
5.0 Claim No. 05: Release of Security Deposit Rs. 32,820/- Plus Rs. 49,766/- Plus the amount which may have been deducted from the 3rd bill, the details of which are not with the claimant.
.......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) Following recoveries has been made from the bills as Security Deposit.
(a) 1st R/A Bill - Rs. 32,820/-
(b) 2nd R/A Bill - Rs. 49,766/-
(c) 3rd& Final Bill - Rs. 60,513/-
Total - Rs. 1,43,099/-
(2) The work is primarily of operation & maintenance nature.
The stipulated date of start and completion of the work was 31.03.2019 & 30.03.2020 respectively. Claimant started the work on 22.04.2019 and carried out the work till 31.01.2020.
(3) Claimant has not yet complied with the terms and conditions no. 14.1 (d) & (e) (Page 34 of NIT / page 175 of agreement) regarding submission of proof of payment of wages and EPF contributions.
In view of above, I award an amount of Rs. 1,43,099/- against claim no. 5 provided that Claimant shall carry out his obligations such as submission of the proof of payment of wages and EPF contributions within two months of award. Respondent shall OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 21 of 36 release the awarded amount within 45 days after Claimant carries out his obligations.
6.0 Claim No. 06: On account of Reduction in the agreement scope of work / loss of overhead & profit for not getting the work executed for the complete period Rs. - 1,73,297/- (Rs. One Lac Seventy Three Thousand Two Hundred Ninety Seven Only):
........................................................................................................... My Findings & Decision:
Hon'ble Delhi High Court, in a case (Indian Oil Corporation vs Lloyds Steel Industries Ltd. decided on 31.08.2007) has held that ".........Settled principles warrant not to award a compensation where no loss is suffered, as one cannot compensate a person who has not suffered any loss or damage ..... provided the basic requirement for award of compensation, viz. the fact that he has suffered some loss or damage is established.......". As no loss or damage has been established, no compensation can be given.
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, I award Nil against claim no. 6.
7.0 Claim No. 07: On account of Wrongful Recoveries made -
Rs. 1,96,700/- plus the amount which may have been recovered from the 3rd bill, the details of which are not with the claimant.
........................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) There is provision in agreement terms and conditions no. 11.2 (Page 32 of NIT / page 173 of agreement) that "Recovery shall be made from the contractor bill at the following rates towards absence of the staff".
a) Wireman Rs. 750/- per shift of 08 Hours.
b) Khallasi Rs. 550/- per shift of 08 Hours.
c) DG Operator Rs. 750/- per shift of 08 Hours.
(2) Item Nos 3 [ (a), (b), (c) ] of Schedule of work of the agreement involves supplying and laying of HDPE pipe. Item OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 22 of 36 Nos 4 [ (a), (b), (c) ] & 5 [ (a), (b), (c) ] of Schedule of work of the agreement involves supplying and laying of under ground cables. The Agreement rate of these items includes rate for both supply & laying. Claimant supplied the cables, HDPE pipes and payment for supplying the cables & HDPE pipes are settled in 1 st R/A & 3rd R/A bills. Claimant did not lay the cables & HDPE pipes and recoveries from Agreement rate are made in 3rd R/A bill for non laying of the cables & HDPE pipes.
(3) The recovery made from the bills on account of absence of staff and on account of non laying of cables, HDPE pipes are considerate and reasonable.
(4) Hence, nothing is payable against claim no. 7.
In view of above, I award Nil against claim no. 7.
8.0 Claim No. 08: On account of not allowing the claimant to take away from site (not issuing gate pass etc.) the T & P Articles and the buyback material - Rs. 91,375/- (Rs. Ninety One Thousand Three Hundred and Seventy Five Only):
.......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
As the T&P, dismantled items were under the custody of Claimant and there is no evidence that Claimant applied for gate pass or there is any requirement of gate pass to take away the dismantled materials or T&P items, hence nothing is payable against this claim.
In view of above, I award Nil against claim no. 8.
9.0 Claim No. 09: Interest @ 15% P.A. on the amount of Rs.
8,70,893/- wrongly withheld from 2nd R.A. Bill on 31/11/2019 and released on 25/02/2020 - Rs. 31,495/- (Rs. Thirty One Thousand Four Hundred Ninety Five Only):
......................................................................................................... My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 23 of 36 are as under:
(1) There is a provision in agreement terms and conditions no.
14.1 (e) (Page 34 of NIT / page 175 of agreement) that "Proof of payment of wages to the staff though documents of banking transaction".
(2) There is no major delay in releasing the withheld amount on 25.02.20 after receipt of complete details by Respondent on 03.02.20.
(3) Hence, nothing is payable against claim no. 9.
In view of above, I award Nil against claim no. 9.
10.0 Claim No. 10: Interest @ 15% P.A. on the amount of Rs.
10,744/- wrongly withheld from 2nd R.A. Bill on 30/11/2019 and still not released - The amount to be calculated. .........................................................................................................
My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) There is a provision in agreement terms and conditions no.
14.1 (d) (Page 34 of NIT / page 175 of agreement) that "Proof of deposit of EPF and ESI in respect of staff deputed at site as applicable".
(2) Claimant has not yet submitted proof of payment of EPF contributions.
In view of above, I award Nil against claim no. 10. However, Claimant shall submit the proof of payment of EPF contributions within two months and thereafter Respondent shall release the withheld amount within 45 days.
11.0 Claim No. 11: Interest @ 15% P.A. on account of delays in making quarterly payments as per the terms and conditions of the agreement for running bills and the final bill or any blocked payment i/c performance guarantee, security deposit etc. etc. from the date when the respective amount became due till realization, pre-suit, pendent lite and future interest on all amounts-the amount to be calculated.
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 24 of 36...........................................................................................................
My Findings & Decision:
After going through the history of the case and pleadings, arguments and documents placed before me by both the parties and in due consideration of contractual and legal position, my findings are as under:
(1) There is no major delay in settlement of the bills.
(2) Following are the withheld amounts in the bills:
(a) There is no withheld amount in 1st R/A bill.
(b) The withheld amount of Rs. 8,70,893/- in 2 nd R/A bill was released by Respondent on 25.02.20 after receipt of proof of payment of wages from Claimant on 23.01.20 and 03.02.20.
(c) The withheld amount of Rs. 10,744/- in 2nd R/A bill is not released by Respondent as Claimant has not yet submitted proof of payment of EPF contribution.
(d) The withheld amount of Rs. 21,23,520/- in 3rd& final bill is not released by Respondent as Claimant has not yet submitted proof of payment of wages.
(e) The withheld amount of Rs. 20,000/- in 3 rd& final bill is not released by Respondent as Claimant has not yet submitted proof of payment of EPF contribution.
(3) There is a provision in agreement terms and conditions no.
14.1 (e) (Page 34 of NIT / page 175 of agreement) that "Proof of payment of wages to the staff though documents of banking transaction".
(4) There is a provision in agreement terms and conditions no.
14.1 (d) (Page 34 of NIT / page 175 of agreement) that "Proof of deposit of EPF and ESI in respect of staff deputed at site as applicable".
(5) Claimant has not yet submitted proof of payment of wages & EPF contributions (ref. 2nd & 3rd R/A bills) (6) Release of Security & PG are dealt under claim no. 4 & 5.
(7) Hence, nothing is payable against claim no. 11.
In view of above, I award Nil against claim no. 11.
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 25 of 3612.0 Claim No. 12: On account of unnecessarily compelling the claimant to make expenses on seeking legal advice, expenses on drafting letters, correspondence, arbitration expenses, counsel fees and allied expenses - Rs. 500000/- (Rupees Five Lakh only).
My Findings & Decision:
I have perused the submission of the parties. Having regard to the provision of section 31 (8) of the A&C Act and the fact that the claimant was forced to seek arbitration, Claimant is entitled to be compensated for cost incurred by him in litigation. I award a cost of Rs. 2,00,000 to Claimant."
18. At page no. 54 of arbitral proceedings record is the copy of attendance sheet of first date of hearing 15/03/2021 before Ld. Sole Arbitrator and it reads as under:-
" ATTENDANCE SHEET CASE No. ARB/VN/1/21 dt 22/01/2021 DATE OF HEARING - 15/03/20221 Ist Hearing CLAIMANT:-
1) SH ARVIND KUMAR NAGPAL COUNSEL FOR CLAIMANT - Sd/-
2) SH JITENDRA SHARMA PROP. M/S J.K. ENTERPRISES - Sd/-
RESPONDENT:-
1) SH RAJESH KUMR
EE/BFLD/CPWD/BHUJ - Sd/-
15.03.2021
(EE/BFLD, Bhuj)
CPWD
V. NAINANI
Arbitrator
15/3/21
Sd/-"
19. At page no. 53 of arbitral proceedings record as Annexure A-5 is the printout of email dated 19/03/2021 sent by Ld. Sole Arbitrator to parties to arbitration and its text reads as follows:-
"Annexure A-5 OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 26 of 36 Fri, Mar 19, Vasdev Nainani<[email protected]> 2021 at 12.40 PM To: [email protected], Bfld Cpwdbhuj <[email protected]>, SEE BFLZ <[email protected]>, [email protected] Dear All Greetings N/w :-1) Maintenance of Border Flood Lighting works for BOP No. 1061 to 1097 along Indo-Pak Border at Bhuj in Gujarat Sector, SH-Maintenance of BFL and RMO DG Sets Agmt No. 0/8/EEE/Bhuj/2018-19 N/w :-2) Maintenance of Border Flood Lighting Works for BOP No. 921 to 992 along Indo-Pak Border at Tharad in Gujarat Sector. SH-Maintenance of BFL and RMO DG Sets Agmt No:-
07/EEE/BFLD/2018-19 The first hearings in both the cases were held on 15.03.2021, from 2.30 PM to 5.00 PM at IBC, Sector VI R K Puram N. Delhi, when both the parties argued their matters.
Attendance Sheet is attached.
It was decided that the next hearings for both the cases will be held on 24.05.2021 for which would be arranged by the Respondent.
Regards V. Nainani"
20. At page no. 55 of arbitral proceedings record as Annexure A-6 is the printout of email dated 21/03/2021 sent by Counsel for petitioner to Ld. Sole Arbitrator with the mention of first hearing date on 15/03/2021 in the said two cases, wherein petitioner/Counsel had submitted Statement of Claims (SOC) for both the two cases and also handed over their copies to the respondent and these facts did not find mention in the proceeding sheet wherein it was requested that necessary correction may please be made in the proceeding sheets of the two cases.
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 27 of 3621. At page no. 56 of arbitral proceedings record as Annexure A-7 is copy of email dated 23/03/2021 sent by Ld. Sole Arbitrator to the parties and the Counsel with the text that he gratefully acknowledges that during the hearings (i.e., on 15/03/2021) the SOCs for both the cases were handed over and copies of the SOCs were also provided to the respondent EE.
22. At page no. 241 of arbitral proceedings record as Annexure A-13 is stated copy of attendance sheet for hearing held on 13/09/2021 and it reads as under:-
"Annexure A-13 Before Sole Arbitrator Sh. Vasudev Nainani In re :-
Case NO :- ARB/VN/1/21 Present: Sh. A.K. Nagpal, Advocate for claimant Sd/-
13/09/2021 Sh. Jitender Sharma, claimant Sd/-
13/09/2021 Sh. Chiranjiv Kumar Cl. for Respondent Sh. Rajesh Kumar, EEBFLD, Bhuj, Respondent Sd/-
13.09.2021 Rejoinder filed by the claimant & the copy of the same has been supplied to the Respondent.
Next date of hearing will be 08/11/2021 Sd/-
V. Nainani Arbitrator"
23. At page nos. 383 to 386 as Annexure A-45 in arbitral proceedings record are the handwritten and true typed copy of the daily order sheet of hearing held on 07/01/2022 issued by Ld. OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 28 of 36 Sole Arbitrator and its text reads as under:-
"(TRUE TYPED COPY OF DAILY ORDER SHEET) Before Sh. Vasudev Nainani : Sole Arbitrator Case No. ARB/VN/2/21 M/s J.K. Enterprises vs UOI Present: Sh. A.K. Nagpal counsel for the claimant along with claimant in person.
Sh. Chiranjiv Kumar counsel for Respondent along with Sh. Rajesh Kumar, E.E. BFLD.
Reply to the Rejoinder has already been filed by the Respondent and the copy of the same has already been supplied to the claimant.
The claimant has filed the objections to the reply Dt. 2/11/21 filed by the Respondent to the Rejoinder Through post. The Claimant states that there is neither any provision of filing Reply to the Rejoinder nor there is any such practice. The claimant also states in his objections dt -7/1/22 that he has not been supplied the complete documents sought by him. The claimant has also sought some additional documents from the respondent.
The Respondent submits that all the related documents have already been supplied /filed along with the reply to the rejoinder dt. 2/11/21 & the claimant disputes this fact.
Sd/-
(VASUDEV NAINANI) SOLE ARBITRATOR"
24. In internal page 3 at para 0.6 of impugned arbitral award there is mention by Ld. Sole Arbitrator that the hearings were held on 15/03/2021, 13/09/2021 and 07/01/2021 which were attended by both parties. Para 0.5 therein also finds mention that in the preliminary (first) meeting held on 15/03/2021, it was decided that the arbitral proceedings shall be conducted as per the Act (as amended).
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 29 of 3625. Sections 18 and 24 of the Act read as under:-
"18. Equal treatment of parties.--The parties shall be treated with equality and each party shall be given a full opportunity to present his case.
..........................................................................................................
24. Hearings and written proceedings.-- (1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held:
Provided further that the arbitral tribunal shall, as far as possible, held oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournment unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.
(3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties."
26. In arbitral proceedings record with respect to hearings held on 15/03/2021 and 13/09/2021 there are no separate proceeding sheet or order-sheet, except as above said the attendance sheets containing the text, elicited herein above in the preceding paragraphs. The text in arbitral proceedings record with respect to the hearings in arbitral proceedings held on 15/03/2021 and 13/09/2021 clearly reflect of rejoinder filed by the claimant and copy of it having been supplied to the respondent on 13/09/2021. So even before 13/09/2021 pleadings were not completed in the arbitral proceedings before Ld. Sole Arbitrator.
27. In terms of elicited contents of Section 24 of the Act, it was for the Arbitral Tribunal to decide whether to hold hearings for OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 30 of 36 the presentation of evidence or for oral arguments, or whether the proceedings shall be conducted on the basis of documents and other materials. In the deposited arbitral proceedings record, no fact is borne out as what was the decision of the Arbitral Tribunal on the facet of hearings and written proceedings; except for the fact mentioned in para 0.5 at internal page 3 of impugned arbitral award of having been decided in preliminary (first) meeting held on 15/03/2021 that the arbitral proceedings shall be conducted as per the Act (as amended). Arbitral proceedings record is bereft of it having been agreed by parties per contra to Section 24 of the Act. The material placed on record with respect to hearings held on 15/03/2021 and 13/09/2021 as well as hearing held on 07/01/2022 makes it thread bare and crystal clear of no oral hearings having been held before Arbitral Tribunal; there was no presentation of evidence; there were no oral arguments addressed by the parties or their respective Counsel. Arbitral proceedings record simply reflect of the filing of pleadings before Ld. Sole Arbitrator by the parties/Counsel and exchange of their copies to the opposite party/Counsel. There was also no decision of the Arbitral Tribunal whether to hold oral hearings for the presentation of evidence or for oral argument or whether the proceedings shall be conducted on the basis of documents and other materials. I find force in the contentions/arguments of Ld. Counsel for petitioner that in the last hearing before Ld. Sole Arbitrator on 07/01/2022 the claimant/Counsel had disputed of supply of related/relevant documents by the respondent Counsel wherein also claimant petitioner had also sought some additional documents from the respondent. On 07/01/2022, in the last hearing before Arbitral Tribunal, the facet of dispute over supply OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 31 of 36 of relevant/additional documents to claimant by respondent was not adjudicated by the Arbitral Tribunal nor on that facet also any opportunity for hearing was given to the parties/Counsel. There is absolutely no whisper in the proceedings/attendance sheets with respect to hearings held on 15/03/2021, 13/09/2021 and 07/01/2022 before Arbitral Tribunal that any arguments, oral or in writing were addressed by the parties to arbitration or by the Counsel for the parties to arbitration before Arbitral Tribunal at any stage of the matter after completion of pleadings. Accordingly in para 0.8 at page no. 3 of internal page of impugned arbitral award, the mention of Ld. Sole Arbitrator of having heard both the parties at length, is contrary to the arbitral proceedings record. I find from the perusal of arbitral proceedings record that there is complete violation of principle of audi alteram partem embodied in Sections 18 and 24 of the Act, elicited above. Neither petitioner/Counsel were given full opportunity to present their case nor were treated with equality with respondent/Counsel whereas when the reply to Rejoinder of claimant was filed by respondent before Ld. Sole Arbitrator without obtaining leave of Ld. Sole Arbitrator; such reply to Rejoinder of claimant was taken on record by Ld. Sole Arbitrator despite vehement opposition by claimant/petitioner/ Counsel and even objections of claimant/petitioner for non supply of relevant and additional documents was not adjudicated before passing the impugned arbitral award. The record of arbitral proceedings is bereft of any agreement by the parties to arbitration to adjudicate their disputes in arbitral proceedings without oral arguments/oral hearings only on the basis of their pleadings and filed documents. The addressing of arguments by OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 32 of 36 claimant and/or respondent/Counsel as mentioned in impugned award while giving claim-wise findings and decision by the Arbitral Tribunal is not borne from arbitral proceedings record where there is no mention of any oral or written arguments having been advanced by the parties to arbitration/Counsel.
28. Precedents relied upon by Ld. Counsel for respondent are not applicable in the present case as they embody facts and circumstances entirely different and distinguishable to the facts and circumstances of case in hand.
29. In the fact of the matter, in view of forgoing discussions and relied upon precedents, the impugned award is liable to be set aside under Section 34 (2) (a) (iii) and Section 34 (2-A) of the Act since it is also vitiated by patent illegality appearing on the face of record as the decision of Ld. Sole Arbitrator is perverse Accordingly, the impugned award is set aside.
30. Delhi High Court in case of Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games, 2014 SCC OnLine Del 4834 had inter alia held:-
34. A party like the Organizing Committee which has its claims rejected, except a part, but which subsumes into the larger amount awarded in favour of the opposite party, even if succeeds in the objections to the award would at best have the award set aside for the reason the Arbitration and Conciliation Act, 1996 as distinct from the power of the Court under the Arbitration Act, 1940, does not empower the Court to modify an award. If a claim which has been rejected by an Arbitral Tribunal is found to be faulty, the Court seized of the objections under Section 34 of the Arbitration and Conciliation Act, 1996 has to set aside the award and leave the matter at that. It would be open to the party concerned to commence fresh proceedings (including arbitration) and for this view one may for purposes of convenience refer to sub-Section (4) of Section 43 of the Arbitration and Conciliation Act, 1996. It OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 33 of 36 reads: -
"43. Limitations-
(1) xxxxx (2) xxxxx (3) xxxxx (4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963, for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted."
31. Aforesaid pronouncements of Delhi High Court in the case of Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games (supra) found approval of Supreme Court in case of The Project Director, National Highways No. 45 E AND 220 National Highways Authority of India vs. M. Hakeem & Anr., Civil Appeal No. of 2021 [Arising out of SLP (Civil) No.13020 of 2020] decided on 20/07/2021.
32. Division Bench of Delhi High Court in the case of Mahanagar Telephone Nigam Limited vs Fujitshu India Private Limited, MANU/DE/0459/2015 inter alia appreciated the following law laid by Supreme Court in the case of McDermott International Inc. v. Burn Standard Co. Ltd. and Ors., MANU/SC/8177/2006:(2006) 11 SCC 181 :-
"The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."
33. Supreme Court in the case of Kinnari Mullick & Anr. vs OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 34 of 36 Ghanshyam Das Damani, Civil Appeal No. 5172 of 2017 [Arising out of SLP (Civil) No. 2370 of 2015 decided on 20/04/2017 appreciated the legal position expounded in the case of McDermott International Inc. vs Burn Standard Ltd., (supra) wherein it was observed that parliament had not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under sub-section (4) of Section 34 of the Act. It was also held therein that the limited discretion available to the Court under Section 34(4) of the Act can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. It is crystal clear that the Court cannot exercise this limited power of deferring the proceedings before it suo moto.
34. Delhi High Court in the case of Steel Authority of India Limited vs Indian Council of Arbitration & Anr., LPA 103/2016 decided on 28/03/2016 placed reliance upon the decision of Supreme Court in the case of McDermott International Inc. vs Burn Standard Ltd. (supra), wherein it was held that once an award has been set aside, the parties would be free to begin the arbitration once again.
35. Accordingly, consequent to setting aside of the impugned Arbitral Award; parties to this lis have all their rights and remedies as available in law including under The Act including under Section 43 of The Act and may take recourse to appropriate remedies permissible in law.
OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 35 of 3636. The parties are left to bear their own costs.
37. File be consigned to record room.
Digitally signed by GURVINDER PAL GURVINDER SINGH
PAL SINGH Date: 2022.09.30
12:06:03 +0530
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
th
On 30 September, 2022. Patiala House Court, New Delhi.
(DK) OMP (Comm.) No. 76/2022 M/S J.K. Enterprises vs Union of India Page 36 of 36