Delhi District Court
M/S. Enkay Enterprises vs Union Of India (Cofmow, Indian Railway) on 17 November, 2025
IN THE COURT OF SH. AJAY PANDEY
DISTRICT JUDGE (COMMERCIAL COURT-10) CENTRAL,
TIS HAZARI COURTS, DELHI
OMP Comm 12/2025
M/s Enkay Enterprises
Through its Proprietor
605, Padma Tower-II
22, Rajendra Place,
New Delhi-110018
Email: [email protected] Petitioner
Vs
Union of India
(COFMOW, Indian Railway)
Railway Offices Complex,
Tilak Bridge,
New Delhi-110002
Email: [email protected] Respondent
Date of Institution : 26.03.2025
Date of Arguments : 08.10.2025
Date of Judgment : 17.11.2025
JUDGMENT:-
PETITION ON BEHALF OF PETITIONER UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996 AGAINST THE ARBITRAL AWARD DATED 31.12.2024/05.02.2025 PASSED BY SOLE ARBITRATOR M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 1 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:31:50 +0530
1. The present petition under section 34 of The Arbitration and Conciliation Act 1996 (hereinafter referred as The Act), has been filed by petitioner challenging the award dated 31.12.2024/05.02.2025 passed by learned Arbitrator.
ADMITTED CASE
2. Admitted facts of the case are that :-
2.1 The respondent granted tender for supply of two machines of Coil Spring Scragging and Load Deflection Testing including concomitant accessories @ 3,27,09,697/- to the plaintiff. A formal contract stipulating terms and conditions was drawn between the parties. As per the terms and conditions machinery was to be supplied within 270 days from the date of contract i.e. on or before 10.10.2020 and the installation, commissioning and proving out was to be done within 367 days i.e. on or before 15.01.2021. Petitioner supplied the machinery on 30.01.2021 and was permitted to install and commission the same on 17.01.2022.
Respondent issued proving test certificate on 11.04.2023. The warranty period as per para 3402 of the bid document was 24 months from the date of commissioning. Hence, the warranty period was expiring on 16.01.2024.
2.2 It is further the admitted case of the parties that petitioner submitted warranty bank guarantee M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 2 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:00 +0530 (WBG) to the tune of Rs.14,03,725/- on 13.07.2023 which was valid upto 20.07.2025 and was further enforceable for six months till 20.01.2026. Vide letter dated 08.04.2024 respondent decided to encash the WBG dated 13.07.2023 and directed the same to Union Bank of India vide letter dated 08.04.2024. The aforesaid WBG was encashed on 09.04.2024.
2.3 It is further admitted case of parties that aggrieved by the encashment of WBG, petitioner requested for appointment of an Arbitrator and Sh. T. Venkata Subramanian, was appointed as sole arbitrator on 31.05.2024, who entered into reference on 08.06.2024. Petitioner submitted following three claims before the learned Arbitrator :-
S. No. Brief details of Claim made Amount Claimed by Claimant (Rs.)
1. Refund of proceedings 14,03,735.00 towards the Warranty Guarantee
2. Interest @ 31% 1,10,008.33
3. Litigation Expenditure 2,50,000.00 Total 17,63,744.33 PETITIONER'S CASE
3. It is the case of petitioner that the respondent, in the letter dated 08.04.2024 had given wrong and misconceived reasons for encashment of bank guarantee that the petitioner was supposed to get the validity period of the guarantee bond extended by 06 months, but failed M/s Enkay Enterprises Vs Union of India Page no. 3 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:08 +0530 to do so which was considered as a breach of contract by the competent authority. It is stated that WBG was valid upto 20.07.2025 and was further enforceable till 21.01.2026, thus the question of delay in extension of said WBG would only arrive after 20.06.2025. Hence, the action of forfeiture of WBG was premature and uncalled for.
3.1 It is further stated that learned Arbitrator completely ignored the reasons given to the bank for encashment of WBG and only considered the letter dated 08.04.2024 from Chief Material Manager/COFMOW addressed to AFA/BG/COFMOW stating "The firm has not responded towards rectificatoin during the warranty period and even after long time. As a whole, consignee have requested for encashment of WBG."
3.2 It is further stated that learned Arbitrator ignored all efforts of the petitioner to resolve the problems faced by the respondent on various occasions dated 02.04.2022, 05.04.2022, 07.04.2022, 20.07.2022, 27.07.2022, 05.11.2022, 21.12.2022, 17.01.2023 and 05.10.2023.
3.3 It is further stated that learned Arbitrator had considered and recorded that machine was under
breakdown for 81 days in the first year and 50 days in second year of commissioning but failed to consider provisions contained in para 16.8-Section V of Technical Specifications of bid document-Part I, clearly specifying M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 4 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:14 +0530 that details of "Breakdown hours" should be maintained by the respondent. Said Para 16.8 of Technical Specifications of bid documents-Part I is quoted in the petition and it is stated that the calculation of 1944 breakdown hours in the first year and 1272 hours in the second year, provided by the respondent and accepted by the learned Arbitrator was totally false and incorrect. It is further stated that the said calculation of breakdown hours has been done by assuming 07 days of the week on 24 hour per day basis including all national and State holidays which is against the terms of contract. It is further stated that the calculation should be on 08 hours shift basis for 06 days a week excluding National and State holidays as also mentioned in bid document Part-I as follows :-
"2.4 Productivity :
2.4.1 The bidder shall furnish the estimated floor to floor time of all operations for the components listed in Annexure-F of section VI.
2.4.2 The basis of the timing should be clearly given with break up of all the parameters.
2.4.3 The timing should be maintainable for regular 08 hrs shift for Double shift working 6 days a week with machine availability of 85%"
Thus the calculation should be as follows : 81 x 8 hours per day = 648 hours in the first year and 50 x 8 hours per day = 400 hours in the M/s Enkay Enterprises Vs Union of India Page no. 5 of 33 Digitally signed OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:20 +0530 second year.
3.4 It is further stated that the respondent instead of extending the warranty period by the number of days the machine was under breakdown, illegally encashed the WBG by using his dominant position without any prior show cause notice to petitioner. Para 3400 of bid documents Part-I is quoted as follows:-
"3400 WARRANTY .......
3405. All replacement and repairs that the purchaser shall call upon the contractor to deliver or perform under this warranty shall be delivered and performed by the contractor within 1 (one) weeks, promptly and satisfactorily. The warranty period will be extended by the number of days the machine remains under breakdown during the warranty period and the warranty Bank Guarantee would be returned at the end of such extended warranty period for the full machine".
3.5 It is further stated that learned Arbitrator failed to consider Proving Test Certificate/letter dated 11.04.2023 to the petitioner where the respondent admitted that the machine was received in good condition.
3.6 Judgment of Hon'ble Supreme Court in Civil Appeal no. 3699-3700 of 2018 decided on M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 6 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:26 +0530 28.07.2021, has been quoted to support submissions of the petitioner that role of learned Arbitrator is to arbitrate within the terms of contract and he has no power apart from what the parties have given him under the contract and that if he travels beyond the contract, he would he acting without jurisdiction.
3.7 It is stated in grounds of the petition that the impugned award is against principles of natural justice; that the same has been passed ignoring the entire facts raised by petitioner; that the Arbitrator failed to record and consider letter dated 05.10.2023 whereby the petitioner rectified the machine. Further ground that learned Arbitrator ignored and misinterpreted breakdown calculation as well as provisions contained in para no. 16.8 section V of Technical Specifications of bid document-Part I is taken.
3.8 Findings of learned Arbitrator are stated to be perverse and contradictory. Conclusions arrived by learned Arbitrator are stated to be arrived after ignoring settled position of law and fundamental policies of Indian laws. Following prayer is made in the petition :-
PRAYER It is, therefore, prayed that this Hon'ble Court may be pleased to :
a. set-aside the impugned award dated 31.12.2024/5.2.2025 passed by Ld. Sole Arbitrator T. Ventaka Subramanian in the arbitration proceedings M/s Enkay Enterprises Vs Union of India Page no. 7 of 33 Digitally signed OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:33 +0530 titled as "M/s. Enkay Enterprises Vs. Union of India through Central Organization for Modernization of Workshops (COFMOW)";
b. Alternatively remit the proceedings for fresh consideration before an Independent Sole Arbitrator to adjudicate rejected part of the claims of the petitioner/claimant within a time bound manner;
c. Call for complete records of arbitration proceedings from the Ld. Sole Arbitrator;
d. such other order(s) as this Hon'ble Court may be deemed fit and proper in the facts and circumstances of the case.
Through Counsel ISHAN SACHDEVA Enrollment No. D/5850/2022 112-A, Ekta Enclave New Delhi 110087 Ph. No. 9871300094 Email: [email protected]
4. Petition has been filed through counsel and appears to have been signed only by the Advocate Sh. Ishan Sachdeva. An affidavit of one Ms. Neeru Tully mentioning herself as petitioner is filed in support of the petition. Statement of Truth in support of petition is also signed by Ms. Neeru Tully again mentioning her as petitioner.
M/s Enkay Enterprises Vs Union of India Digitally signed
Page no. 8 of 33
OMP Comm 12/2025 AJAY by AJAY PANDEY
PANDEY Date: 2025.11.17
14:32:39 +0530
5. Along with the petition, an application under section 36 (2) & (3) of The Arbitration and Conciliation Act, 1996 for stay of impugned award is also filed through counsel which is also signed only by the Advocate Sh. Ishan Sachdeva and which is supported by the affidavit of Ms. Neeru Tully mentioning her as applicant.
REPLY TO PETITION
6. Notice of the petition was served upon the respondent. Respondent filed its reply taking preliminary objections that :-
6.1 The petition is not maintainable as the same does not satisfy the scope of section 34 of The Arbitration and Conciliation Act, 1996; that this court cannot re-appreciate the reasonableness of the reasons given in the award nor can re-appreciate facts and evidence before the learned Arbitrator. It is further preliminary objected that the award cannot be challenged in view of section 34 (2A) of The Arbitration and Conciliation Act on the ground that Arbitrator had reached an incorrect conclusion as the said section provides "Provided that an award shall not be set-aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence".
6.2 It is further preliminary objected that the interpretation of the terms and conditions of contract M/s Enkay Enterprises Vs Union of India Page no. 9 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:46 +0530 agreement by the learned Arbitrator is final and binding under the law and even if two views are possible, the court shall not substitute its own evaluation over the interpretation made by learned Arbitrator.
6.3 It is further preliminary objected that the petition is not maintainable has same has not been signed by the petitioner and is signed by counsel of the petitioner only. On this sole ground, petition is stated to be not maintainable and liable to be dismissed. It is further objected that petition has been filed by the proprietorship firm in the name of firm which is again against the law as the proprietorship firm is not separate legal entity and the petition cannot be filed in the name of proprietorship.
6.4 The petitioner is stated to have not come to the court with clean hands and petition is stated to be devoid of merits without any valid legal ground.
6.5 In para-wise reply to petition, it is stated that the machine was supplied on 30.03.2021 with delay of 05 months and 20 days. Thereafter the installation commissioning and proving out of the machinery, as per the agreement, was to be done on or before 15.01.2021, however the same was done on 17.01.2022 with a delay of more than a year. It is further stated that time of delivery, installation, commissioning was the essence of contract but the same was not done within the stipulated time period.Digitally signed by AJAY
M/s Enkay Enterprises Vs Union of India AJAY PANDEY Page no. 10 of 33 OMP Comm 12/2025 PANDEY Date:
2025.11.17 14:32:52 +0530 6.6 It is admitted that section 3402 of the bid document provided that the warranty period shall expire after 24 months from the date of commissioning of machines. It is stated that as per Clause 3400 of the bid document warranty period was extendable by the number of days the machine remained under breakdown during the warranty period.
6.7 It is further stated that the machine was under breakdown condition for 169 days as on 20.02.2024 during the warranty period and despite 17 letters and reminders to the petitioner, petitioner failed to remove the problems. It is further stated that petitioner thus failed to provide any services during the warranty/extended warranty period and object of purchasing the machine was totally defeated.
6.8 Encashment of WBG is stated to be legal and in accordance with terms of contract. It is stated that finance letter dated 08.04.2024 issued to Manager Union Bank of India clearly indicated that the WBG was to be encashed due to failure of party to fulfill warranty obligations. It is further stated that the letter issued to bank for encashment is a standard format, which is used to extend validity of bank guarantee either PBG and/or WBG incase of failure of supply or failure to provide warranty obligations. It is further stated that in the last para of finance letter dated 08.04.2024, it is clearly mentioned that machine of the consignee were having M/s Enkay Enterprises Vs Union of India Page no. 11 of 33 Digitally signed OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:32:59 +0530 higher breakdown and pending warranty issues and complaints.
6.9 It is further stated that the consignee informed vide letter dated 20.02.2024 to COFMOW about failure of warranty obligation during warranty period indicating that breakdown was for more than 1000 hours annually in violation of Clause 16.8 Section V of bid document Part-II and clause 3400 of bid document Part-I. It is further stated that due to failure to attend warranty obligations during warranty period, which resulted into more hours of breakdown beyond prescribed limit under clause 16.8 of bid documents Part-II, WBG was encashed. Any misinterpretation, miscalculation, violation of natural justice or illegality by the Arbitrator in calculation of breakdown hours or otherwise, is denied. It is stated that learned Arbitrator has carefully gone through the provisions contained in the bid document which speaks about "Hours" and not "Working Hours". Allegations of the Arbitrator not considering or appreciating the documents or other material is denied. Dismissal of petition is prayed.
7. Reply to the petition is signed on every page by Mr. Aditya Aggarwal, Deputy Chief Materials Manager, COFMOW who has also filed his supporting affidavit and statement of truth in support of reply.
ARGUMENTS M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 12 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:08 +0530
8. Arguments on petition were heard from learned counsels for parties. I have also gone through the written submissions filed on behalf of petitioner. The court has carefully perused the award passed by Arbitral Tribunal filed along with petition.
9. It argued by learned counsel for petitioner that the award passed by learned Arbitrator is against principal of natural justice. The learned Arbitrator has failed to consider the calculation of breakdown hours provided by the petitioner. The learned Arbitrator has failed to consider the clauses 16.5 & 16.6 wherein no calculation was provided by the respondent before learned Arbitrator and all breakdown is calculated by mere assumptions. It is further argued that learned Arbitrator has failed to consider letter dated 05.10.2023 and the findings given by learned Arbitrator are perverse and contradictory and outside the scope of contract.
10. Learned counsel for respondent argued that the present petition is not maintainable as the same does not satisfy the scope of section 34 of Arbitration & Conciliation Act, 1996. The findings of learned Arbitrator are based on appreciation of facts, evidence and material produced by both the parties. Hence, there is no scope for interference in the said award. He has further argued that the present petition is also not maintainable on the ground that the same has not been singed by the petitioner and petition is only signed by M/s Enkay Enterprises Vs Union of India Page no. 13 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:16 +0530 learned counsel for petitioner and that the present petition has been filed by the proprietorship firm in the name of firm which is again against the law as the proprietorship firm is not separate legal entity and the petition cannot be filed in the name of proprietorship. Dismissal of petition is prayed.
FINDINGS
11. It is settled law that the objections to the Arbitral Award are required to be strictly confined to the grounds under section 34 (2) and 2A of The Act.
12. Said provision is reproduced herein below:-
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--
2(a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not M/s Enkay Enterprises Vs Union of India Page no. 14 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:21 +0530 valid under the law to which the parties have subjected it or, failing any indication thereon, underthe 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 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, wasnot in accordance with this Part; or M/s Enkay Enterprises Vs Union of India Page no. 15 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:28 +0530
(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 Digitally signed M/s Enkay Enterprises Vs Union of India AJAY by AJAY PANDEY Page no. 16 of 33 OMP Comm 12/2025 PANDEY Date: 2025.11.17 14:33:34 +0530 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.] ...........
13. There is only limited scope of interference by the court in the petitions under section 34 of the Arbitration and Conciliation Act 1996. In the case of Associate Builders Vs Delhi Development Authority (2015) 3 SCC 49, it was held by Hon'ble Supreme Court "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."
14. In the case of Navodaya Mass Entertainment Ltd VS J.M. Combines MANU/SC/0735/2014, it was held :-
M/s Enkay Enterprises Vs Union of India Page no. 17 of 33 OMP Comm 12/2025 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:40 +0530 "scope of interference of the Court is very limited. Court would not be justified in reappraising the material on record and substituting its own view in place of the Arbitrator's view. Where there is an error apparent on the face of the record or the Arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail. (See: Bharat Coking Coal Ltd. Vs. L.K. Ahuja, (2004) 5 SCC 109; Ravindra & Associates Vs. Union of India, (2010) 1 SCC 80; Madnani Construction Corporation Private Limited Vs. Union of India & Ors., (2010) 1 SCC 549; Associated Construction Vs. Pawanhans Helicopters Limited, (2008) 16 SCC 128; and Satna Stone & Lime Company Ltd. Vs. Union of India & Anr., (2008) 14 SCC".
15. In the case of M/s Arosan Enterprises Ltd Vs Union of India & Anr MANU/SC/0595/1999, it was held:-
"that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. In the event of there being M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 18 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:33:47 +0530 no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law: In the event however two views are possible on a question of law as well, the Court would not be justified in interfering with the award. The common phraseology `error apparent on the face of the record' does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record: The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined. In this context, reference may be made to one of the recent decision of this Court in the case of State of Rajasthan v. Puri Construction Co. Ltd. (1994 (6) SCC
485) wherein this court relying upon the decision of Sudarsan Trading Co.'s case case (Sudarsan Trading Co. v. Government of Kerala and Anr. (1989 (2) SCC 38) observed in paragraph 31 of the Report as below:- "A court of competent jurisdiction has both right and duty to decide the lis presented before it for adjudication according to the best understanding of law and facts involved in the lis by the judge presiding over the court.
Such decision even if erroneous either in factual determination or application of law correctly, is a valid one and binding inter parties. It does not, therefore, stand to reason that the arbitrator's award will be per se M/s Enkay Enterprises Vs Union of India AJAY Digitally signed by AJAY PANDEY Page no. 19 of 33 OMP Comm 12/2025 PANDEY Date: 2025.11.17 14:33:54 +0530 invalid and inoperative for the simple reason that the arbitrator has failed to appreciate the facts and has committed error in appreciating correct legal principle in basing the award. An erroneous decision of a court of law is open to judicial review by way of appeal or revision in accordance with the provisions of law. Similarly, an award rendered by an arbitrator is open to challenge within the parameters of several provisions of the Arbitration Act. Since the arbitrator is a judge by choice of the parties and more often than not a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act and the legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act. Over the decades, judicial decisions have indicated the parameters of such challenge consistent with the provisions of the Arbitration Act. By and large the courts have disfavoured interference with arbitration award on account of error of law and fact on the score of misappreciation and misreading of the materials on record and have shown definite inclination to preserve the award as far as possible. As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the courts were impelled to have fresh look on the ambit of challenge to an award by the arbitrator so that the award does not get undesirable immunity. In recent times, error in law and fact in basing an award has not been given the wide immunity as enjoyed earlier, by expanding the import and implication of M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 20 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:34:09 +0530 "legal misconduct" of an arbitrator so that award by the arbitrator does not perpetrate gross miscarriage of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. Precisely for the aforesaid reasons, the erroneous application of law constituting the very basis of the award and improper and incorrect findings of fact, which without closer and intrinsic scrutiny, are demonstrable on the face of the materials on record, have been held, very rightly, as legal misconduct rendering the award as invalid. It is necessary, however, to put a note of caution that in the anxiety to render justice to the party to arbitration, the court should not reappraise the evidences intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate court with power to reverse the finding of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. Where the error of finding of facts having a bearing on the award is patent and is easily demonstrable without the necessity of carefully weighing the various possible viewpoints, the interference with award based on erroneous finding of fact is permissible. Similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aise by holding that there has been a legal misconduct on the part of the arbitrator. In ultimate analysis it is a question of delicate balancing between the M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 21 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:34:23 +0530 permissible limit of error of law and fact and patently erroneous finding easily demonstrable from the materials on record and application of principle of law forming the basis of the award which is patently erroneous. It may be indicated here that however objectively the problem may be viewed, the subjective element inherent in the judge deciding the problem, is bound to creep in and influence the decision. By long training in the art of dispassionate analysis, such subjective element is, however, reduced to minimum. Keeping the aforesaid principle in mind, the challenge to the validity of the impugned award is to be considered with reference to judicial decisions on the subject."
16. It is thus clearly established by catena of judgments of Hon'ble Supreme Court and Hon'ble High Courts 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. The Arbitrator is master of the quality and quantity of the evidence. The court would not be justified in re-appraising the material on arbitral record and substitute its own view in place of the view of learned Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the court cannot re- appraise the matter as if it was an appeal and even if two views are possible, the view taken by Arbitrator would prevail. No interference in the award is required unless M/s Enkay Enterprises Vs Union of India Page no. 22 of 33 OMP Comm 12/2025 Digitally signed AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:34:29 +0530 there is existence of total perversity in the award or the judgment is passed on wrong proposition of law. Even when the Arbitrator makes a mistake either in law or in fact but such mistake does not appear on the face of award, the award is good not withstanding the mistake and would not be remitted or set-aside.
17. It is further rightly submitted by learned counsel for respondent that court would not construe the nature of claim by adopting too technical an approach or by indulging into hair-splitting, otherwise the whole purpose behind holding the arbitration proceedings as an alternative to Civil Courts forum would stand defeated as was held by Apex Court in the case of Sangamner Bhag Sahakari Karkhana Ltd Vs Krupp Industries Ltd, AIR 2002 SC 2221. Further in the case of P.R. Shah, Shares & Stock Brokers Pvt Ltd Vs B.H.H. Securities Pvt Ltd & Ors, (2012) 1 SCC 594, it was held by Hon'ble Supreme Court that in order to provide the balance and to avoid excessive intervention, the arbitration award is not to be set-aside merely on the ground of erroneous application of law or by re-appreciating evidence.
18. In the case of NTPC Ltd Vs Maratho Electric Motors India Ltd, 2012 SCC Online Del 3995, it was held that appreciation of evidence by the Arbitrator is never a matter which the court considers in the proceedings under section 34 of The Act as the court is M/s Enkay Enterprises Vs Union of India Page no. 23 of 33 OMP Comm 12/2025 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2025.11.17 14:35:04 +0530 not sitting in appeal over the adjudication of the Arbitrator and the court do not act as court of appeal. An error relatable to interpretation of the contract by an Arbitrator is an error within his jurisdiction and such error is not amenable to the correction by courts as such error is not an error on the face of the award.
19. In the recent judgment of Delhi Airport Metro Express Pvt. Ltd Vs Delhi Metro Rail Corporation Ltd., Civil Appeal No. 5627 of 2021, AIR ONLINE 2021 SC 708, Hon'ble Apex Court, keeping in view the amendment of the Arbitration and Conciliation laws by the Arbitration & Conciliation Act 1996 decided the Contours of the court's power to review arbitral awards. Relevant principles can be summarized amongst others, as follows:-
- One of the principal objectives of the 1996 Act is to minimize the supervisory role of courts in the arbitral process.
- An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the 1996 Act.
- While deciding applications filed under Section 34 of The Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law.
M/s Enkay Enterprises Vs Union of India Page no. 24 of 33 OMP Comm 12/2025 AJAY Digitally signed by AJAY PANDEY PANDEY Date: 2025.11.17 14:35:10 +0530 - As it is only such arbitral awards that shock
the conscience of the court that can be set aside on grounds under section 34.
- There must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law.
- Reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
- The construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair- minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take.
- 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.
- There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. Several judicial pronouncements of the Court would M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 25 of 33 by AJAY OMP Comm 12/2025 AJAY PANDEY PANDEY Date:
2025.11.17 14:35:30 +0530 become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
- Every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'.
- 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.
20. Learned counsel for the petitioner has relied upon the judgment of Hon'ble Supreme Court in Satyanarayan Construction Company Vs Union of India (UOI) and Ors. MANU/SC/1687/2011, to submit that the Arbitrator cannot rewrite the terms of contract.
21. In Indian Oil Corporation Vs Shree Ganesh Petroleum Rajgurunagar, MANU/SC/0127/2022, it was held by Hon'ble Supreme Court :-
44. An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 26 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:35:36 +0530 terms of a contract.
45. However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.
46. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse.
Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one.
47. In Associate Builders (supra), this Court held that an award ignoring the terms of a contract would not be in public interest. In the instant case, the award in respect of the lease rent and the lease term is in patent disregard of the terms and conditions of the lease agreement and thus against public policy. Furthermore, in Associate Builders (supra) the jurisdiction of the Arbitral Tribunal to adjudicate a dispute itself was not in M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 27 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:35:46 +0530 issue. The Court was dealing with the circumstances in which a Court could look into the merits of an award.
48. In this case, as observed above, the impugned award insofar as it pertains to lease rent and lease period is patently beyond the scope of the competence of the Arbitrator appointed in terms of the dealership agreement by the Director (Marketing) of the Appellant. agreement and thus against public policy. Furthermore, in Associate Builders (supra) the jurisdiction of the Arbitral Tribunal to adjudicate a dispute itself was not in issue. The Court was dealing with the circumstances in which a Court could look into the merits of an award.
48. In this case, as observed above, the impugned award insofar as it pertains to lease rent and lease period is patently beyond the scope of the competence of the Arbitrator appointed in terms of the dealership agreement by the Director (Marketing) of the Appellant.
49. The lease agreement which was in force for a period of 29 years with effect from 15th April, 2005 specifically provided for monthly lease rent of Rs.1750 per month for the said plot of land on which the retail outlet had been set up. It is well settled that an Arbitral Tribunal, or for that matter, the Court cannot alter the terms and conditions of a valid contract executed between the parties with their eyes open.
22. In Civil Appeal No. 369-3700 of 2018 decided on 28.07.2021, it was held :-
Digitally signedM/s Enkay Enterprises Vs Union of India AJAY by AJAY Page no. 28 of 33 OMP Comm 12/2025 PANDEY PANDEY Date: 2025.11.17 14:35:53 +0530 "85. It has been held that the role of the Arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction.
86. It will also be apposite to refer to the following observations of this Court in the case of Md.
Army Welfare Housing Organization v. Sumangal Services (P) Ltd. MANU/SC/0797/2003 "43. An Arbitral Tribunal is not a court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference."
87. It has been held that an Arbitral Tribunal is not a Court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its powers ex debito justitiae. It has been held that the jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference.
88. In that view of the matter, we are of the considered view, that the impugned Award would come under the realm of 'patent illegality' and therefore, has been rightly set aside by the High Court."
Digitally signedM/s Enkay Enterprises Vs Union of India AJAY by AJAY PANDEY Page no. 29 of 33 OMP Comm 12/2025 PANDEY Date: 2025.11.17 14:36:00 +0530
23. Learned counsel for petitioner, relying upon the above judgments submitted that the Arbitral Award is passed in complete violation of clause 16.8 of the contract.
24. Now coming back to the facts of the present case, both the parties agree that the learned Arbitrator cannot travel beyond the clear terms of contract. Any interpretation of any clause cannot be contrary to the terms and conditions of the contract/document.
25. Reason for encashment of the bank guarantee was the failure of the petitioner to rectify the defects in the machine. As per clause 16.8 of section V of the Technical Specifications of Bid Document Part-I, the bank guarantee can be encashed if there was a breakdown period exceeding 1000 hours annually. Learned Arbitrator calculated the total breakdown hours considering 24 hours per day.
26. Court is not in agreement with the submissions of learned counsel for respondent that the findings of learned Arbitrator in calculating the breakdown period on the basis of 24 hours per day are in accordance with contract. Clause 16.8 specify that the penalty shall be levied on the bidder for breakdown period on working day basis after discounting for the grace period. Clause 2.4.3 of the bid document Part-I provided that the timing should be maintainable for regular 08 hour shift for double shift working 06 days a week with machine M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 30 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:36:07 +0530 availability of 85%.
27. Clause 16.8 also provided that a record of breakdown (duly signed by shop incharge) in hours shall be maintained on quarterly basis.
28. By reading these two clauses together it is clear that the record of breakdown hours has to be maintained on hourly basis. For that the availability of the machine should be considered for working shifts only. Hence, the calculation of the learned Arbitrator by converting the alleged number of breakdown days to breakdown hours by a multiplication factor 24 is not in accordance with the terms of contract and clearly violates the conditions under clause 16.8 and clause 2.4.3.
29. As per the judgments discussed above, if the interpretation of the terms and conditions of the contract by the learned Arbitrator cannot be a possible view, the award may be set-aside. Reliance in this respect is also placed upon the judgment of Hon'ble Supreme Court in Civil Appeal No.3699-3700 of 2018 decided on 28.07.2021, in which the Hon'ble Supreme Court held that role of learned Arbitrator is to Arbitror within the terms of contract and he has no power apart from what the parties have given him under the contract and if he has travelled beyond the contract he would be acting without jurisdiction. The Arbitration award may not be sustainable on this ground.
30. The court is however of the opinion that the award M/s Enkay Enterprises Vs Union of India Digitally signed by Page no. 31 of 33 OMP Comm 12/2025 AJAY AJAY PANDEY PANDEY Date: 2025.11.17 14:36:12 +0530 cannot be set-aside on the basis of present petition as it is not possible for the court to verify authority of the person filing the present petition.
31. As already discussed, the petition has been signed only by Shri Ishan Sachdeva, Advocate. It do not bear the signature of any person related to or authorized by M/s Enkay Enterprises. In the memo of parties it is reflected that petition is filed through proprietor of M/s Enkay Enterprises. However, neither the name of proprietor is disclosed nor signature of any person except the Advocate appear in the petition. The petition as well as accompanying application is supported by some Neeru Tully wife of Shri Krishan Tully who states herself as the petitioner. Ms. Neeru Tully has also not disclosed in her affidavit as to how she claims herself as the petitioner. Whether she is authorized representative or the proprietor of M/s Enkay Enterprises has not been disclosed. Even from the impugned award the court cannot verify the authority of Ms. Neeru Tully for M/s Enkay Enterprises. It is pertinent to mention that the statement of claims before the learned Arbitrator was signed by one Shri Nitin Tully. The respondent has taken an objection that the statement of claim was not maintainable because Shri Nitin Tully had not produced any authorization in support of his claim that he was the authorized person. Learned Arbitral Tribunal noted that Shri Nitin Tully appeared along with his Advocate before M/s Enkay Enterprises Vs Union of India Digitally signed Page no. 32 of 33 OMP Comm 12/2025 AJAY by AJAY PANDEY PANDEY Date: 2025.11.17 14:36:19 +0530 the learned Tribunal. Objection of the respondent was rejected because at no point of time appearance of Shri Nitin Tully was challenged before the learned Arbitrator.
32. Hence, the person swearing the affidavit in support of present petition is different from the person contesting the claim before the learned Arbitrator. As per the Commercial Courts Act, 2015 the petition needs to be signed on each page and verified by the competent person. The petition contains narration of facts which should not be verified by an Advocate.
33. Not disclosing the name of proprietor, non-signing the petition by the proprietor or any person authorized by him, goes to the root of matter and such petition has to be treated as non-est.
34. Hence, in humble opinion of this court, the petition warrants dismissal on this technical ground.
35. Petition under section 34 of The Arbitration & Conciliation Act as well as application under section 36(2) and (3) of The Act for stay of operation of impugned award are accordingly dismissed.
36. File be consigned to record room after due compliance.
Digitally signedAnnounced in the open court AJAY by AJAY PANDEY on the 17th day of November, 2025 PANDEY 14:36:28 +0530 Date: 2025.11.17 (Ajay Pandey) District Judge (Commercial Court-10) Central, Tis Hazari Courts, Delhi.
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