Omp No. 46/19 vs M/S Pramod Telecom Pvt Ltd on 30 June, 2020

[Cites 49, Cited by 0]

Delhi District Court

Omp No. 46/19 vs M/S Pramod Telecom Pvt Ltd on 30 June, 2020

                   In the Court of Shri Sanjiv Jain,
 District Judge (Commercial Court)03, Patiala House Courts
                         New Delhi

OMP No. 46/19
M/s Bharat Sanchar Nigam Limited
Through its AGM (SE)
Bharat Sanchar Bhawan, Janpath
New Delhi110001                                                       ... Petitioner

                           versus

M/s Pramod Telecom Pvt ltd
REgistered office at:
5, Ashok Nagar,
Gautam Budh Marg,
Lucknow226018
Uttar Pradesh

Branch office at:
Plot No. 6B,
Malviya Nagar,
Aishbagh, Lucknow226004,
Uttar Pradesh                                                       ... Respondent

Date of institution        : 22.02.2019
Date of reserving judgment : 16.06.2020
Date of decision           : 30.06.2020


                         JUDGME NT

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.1 of 60 called the 'Act' challenges the award dated 24.10.2018 passed by the Sole Arbitrator Sh. K.L Jain in the case titled as Pramod Telecom Pvt ltd v/s M/s Bharat Sanchar Nigam Ltd. whereby the arbitrator has partly allowed the claim of the respondent and dismissed all the claims of the petitioner.

2. Briefly the facts as stated in the petition are that the petitioner, M/s Bharat Sanchar Nigam Ltd (BSNL) had floated a tender bearing no. CA/CFA/CLIP/T401/201011 dated 15.03.2011 for procurement of 25,00,000 two way speaker clip feature phones, along with annual maintenance contract for three years (hereinafter referred to as 'Tender1'). The respondent was the lowest bidder and accordingly, an advance purchased order i.e. APO No. MMS/SE/APO/201112/89 dated 15.07.2011 ('APO 1') was placed to the respondent for the purchase of 50% of the tendered quantity i.e. 12,50,000 units. As per clause 27.2 of Section 4 Part A of Tender1, the respondent had to give acceptance along with performance security within 14 days from the issuance of APO. The respondent furnished two performance bank guarantees i.e. BG No. 08701GPER007911 dated 18.07.2011 for Rs. 1,72,46,000/ and B.G No. 08701GPER008211 dated 21.07.2011 for Rs. 73,95,000/ against APO1.

3. It was alleged that the respondent did not adhere to the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.2 of 60 delivery schedule as per Clause 5 of Section 5 Part B as per which it had to supply 20% of the total consignment by the end of the third month. It had only supplied around 1,00,000 units and arbitrarily started demanding payments vide letters dated 28.10.2011, 01.11.2011 and 14.11.2011.

4. It was stated that subsequent to APO1, the petitioner called upon L2 and L3 bidders for placing orders for the remaining 12,50,000 units. However, L2 and L3 bidders declined the offer and refused to provide the remaining quantity of Tender

1. It was stated that as per Clause 4 of Section 5, Part B of Tender1, respondent was obligated to supply the remaining units of Tender1 if the L2 and L3 bidders failed to do so. Therefore, another APO No. MMS/SE/APO/201112/251 dated 21.11.2011 (APO2) was placed on to the respondent for supply of balance 50% of the quantity of Tender1 i.e. 12,50,000 units. The respondent vide letter dated 30.11.2011, requested the petitioner to postpone the issuance of APO2 by 2 months vide letter dated 30.11.2011. It was alleged that the respondent did not give its unconditional and unequivocal acceptance to the APO2, and violated the terms of Tender1 as per which it was mandatorily required to deliver the remaining 12,50,000 units and accept the APO2. It was stated that the petitioner was constrained to issue a letter dated 05.07.2012 intimating the respondent the urgency of clip phones thereby rejecting the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.3 of 60 extension sought by the respondent. It was stated that the respondent vide letter dated 09.07.2012, did not unconditionally and unequivocally accept the APO2 and wrote a letter dated 23.07.2012 informing the petitioner about the letter dated 21.07.2012 issued by the bank and sought acceptance of APO2 vide letter dated 08.08.2012 which was contrary to the time stipulated in the letter dated 05.07.2012 for the acceptance of APO2. It was stated that since the respondent refused to accept APO2 unconditionally and unequivocally, it was given a second opportunity to accept the same but it failed to comply with the terms pertaining to the acceptance of APO2 which made the petitioner withdraw the APO2 vide letter dated 14.08.2012 at the risk and responsibility of the respondent.

5. It was stated that the petitioner was left with no other alternative but to float a fresh tender CA/NWPCFA/CLIP 291/T415/2012 dated 17.08.2012 for 29,00,000 units of clip phones (Tender2). The respondent also participated in the bid and was declared the lowest bidder in Tender2. Accordingly, petitioner placed the APO3 bearing no. MMS/SE/APO/2012 13/001 dated 30.01.2013 for supply of 14,50,000 units i.e. 50% of the tendered quantity on the respondent. It was stated that as per Clause 27.2 of Section 4 Part A of Tender2, the respondent had to give its acceptance along with performance security within 14 days from the issuance of APO3 which the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.4 of 60 respondent furnished in the form of bank guarantee No. 0870IGPER001513 dated 19.02.2013 for Rs. 3,72,00,000/. It was stated that the petitioner vide letter dated 15.07.2014 agreed to release the PBG furnished by the respondent in APO 1 subject to the undertaking given by the respondent that "in case any obligation related to CAMC for supply comes into notice of BSNL later, such claims may be adjusted under set off clause from the PBG submitted against current tender." It was stated that respondent vide letter dated 22.07.2014, gave the undertaking and the petitioner released the PBG given by the respondent against APO1 on 15.09.2014.

6. It was stated that the petitioner vide letter dated 13.08.2015, invoked the set off clause and called upon the respondent to deposit Rs. 1.13 crores within 14 days i.e. by 27.08.2015 with the petitioner failing which the amount would be recovered by invoking the set off clause 21 of Section 5 Part A by partially forfeiting the existing PBG or from the pending bills of the respondent. It was stated that the respondent approached the High Court under Section 9 of the Act vide OMP(1)479/2015 from where the dispute was referred to the Arbitration vide order dated 05.11.2015. It was stated that the arbitration proceedings were constituted and the Arbitrator vide order dated 26.12.2015 directed the respondent to furnish a BG for Rs. 1.13 Crores. He also directed the petitioner to return the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.5 of 60 bank guarantees in its possession.

7. In the statement of claim submitted to the arbitrator, the respondent/claimant prayed that the letter dated 13.08.2015 issued by the petitioner be declared as illegal and the petitioner be restrained from acting in pursuant thereto; petitioner be directed to return the BG dated 28.12.2015 for Rs. 1.13 crores; to declare that the petitioner has committed breach of terms of the tender dated 15.03.2011 APO1 for delay in making payments; to direct the respondent to pay Rs. 42,94,067/ as interest for the delay in payments under tender1: to declare that petitioner committed breach of terms of the tender2 dated 17.08.2012 (APO2) for delay in making payments; to direct the petitioner to pay Rs. 73,86,884/ as interest for delay in making payments under tender2 together with costs incurred by the claimant qua arbitration, together with pendentelite and post award interest @ 18% per annum on the sums claimed upto the date of actual payment.

8. In the counter claims filed by the petitioner/BSNL, it was stated that in view of the set off clause of the tender, it is entitled to a sum of Rs. 1.13 crores being EMD for which directions may be given to the bank of the claimant to release the same in favour of BSNL; it is entitled to damages on account of higher amount paid for 12.5 each clip phones amounting to Rs.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.6 of 60 12,49,12,500/ and interest @ 12% w.e.f. 21.07.2012 i.e. Rs. 5,99,58,000/.

9. On the statement of claims and counter claims, the Arbitrator framed the following issues:

1. Whether the respondent is in breach of the terms and conditions of tenders dated 15.03.2011 and dated 17.08.2012.

2. Whether the claimant is entitled to interest for delay in payments by the respondent.

3. Whether the claimant is entitled to interest pendentelite and postaward interest on the amounts claimed.

4. Whether the respondents counter claims and the right to invoke the bank guarantee dated 19.02.2013 is barred by limitation.

5. Whether the claimant is in breach of terms and conditions of tenders dated 15.03.2011.

6. Whether the respondent is entitled to invoke the bank guarantee dated 19.02.2013.

7. Whether the respondent has suffered any loss and is entitled to damages and interest thereof.

10. The parties in compliance of the orders submitted their statements, rejoinders, evidences by way of affidavit.

11. The Arbitrator after hearing the parties and perusing the record OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.7 of 60 and the evidences, gave his findings issuewise and passed the impugned award on 24.10.2018 interalia as under:

i) Issue no.1 and 6 By not issuing the fresh delivery schedule which was requirement for the bank to issue PBG, the respondent (petitioner herein) has erred, hence is in breach of the terms and conditions of tender dated 15.03.2011. In view of this, the 'set off clause' for forfeiting the equivalent PBG of withdrawn APO2 from APO3 (second tender) is not proper and justified.

ii) Issue no. 2 Claim of interest by the claimant with respect to delayed payments, and imposition of LD clause by respondent (petitioner herein) with respect to late deliveries, is not tenable.

iii) Issue no.3 The claimant is entitled for the interest on PBG of Rs. 1.13 crores from 28.12.2015 and is also entitled for post award.

iv) Issue no.4 and 5 The counter claim filed on 08.07.2016 is barred by limitation. Also on merits it is not maintainable as discussed in Issue no.1.

v) Issue no.7 In view of the discussions made in all the above issues, the respondent (petitioner herein) is not entitled to any relief.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.8 of 60 The arbitrator made the following award:

1. The respondent is directed:

a) To release the PBG of 1.13 crores with interest @ 12% within 30 days of award to M/s Pramod Telecom Pvt ltd (the claimant).

b) To pay the interest as ordered in direction (a) from 28.12.2015 upto the date of award.

c) To pay the interest from the time frame given in the award till the refund is made.

2. The counter claim filed by the respondent is rejected in toto.

3. Both parties will bear their own cost.

12. The petitioner challenged the award on the following grounds:

a) That the award violates Section 28(3) of the Act as it is in conflict with the basic notions of justice and fair play and fundamental policy of Indian Law in as much as the claim of the respondent is in contravention of the terms of the agreement.

b) That the Arbitrator erred in arbitrarily imposing an interest on the PBG of Rs. 1,13,00,000/ furnished by the respondent in terms of order dated 26.12.2015. The respondent had merely furnished a PBG and no loss was incurred by it as it was never encashed by the petitioner.

c) That the Arbitrator erred in appreciating that the petitioner breached the terms of Tender1 by not issuing a fresh delivery schedule to the respondent. It is stated that the petitioner was not obliged to delay the issuance of APO2. Further, the petitioner had offered one more opportunity vide letter dated 05.07.2012 to the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.9 of 60 respondent to accept the APO2 but the respondent did not accept within the stipulated time and thereafter, the APO2 was withdrawn.

d) That the Arbitrator failed to appreciate that the respondent had given conditional acceptance to the APO 2 which was contrary to Clause 16 of APO2 whereby the respondent had to convey its unequivocal/unconditional acceptance for all the terms of APO2.

e) That the Arbitrator failed to appreciate that grave prejudice was caused to the petitioner who suffered a huge loss due to non acceptance of APO2 by the respondent as the respondent malafidely tried to wriggle out of its liability towards the APO2 and supplied the same goods to the petitioner at a higher rate under APO

f) That the Arbitrator failed to appreciate that as per clause 21 of Section 5 Part A of the Contract, the petitioner was entitled to set off any amount with respect to the deficient supply made by the respondent.

g) That Arbitrator erred while observing that there has been delay in payments by the petitioner without appreciating the fact that the respondent inordinately delayed the supply of clip phones and did not adhere to the delivery schedule as per clause 5 leading to imposition of LD charges on the respondent.

h) That the Impugned award lacks reasoning and suffers from patent illegalities as the same has been passed without appreciating the true and correct facts and circumstances.

i) That the Arbitrator erred in interpreting the terms of the documents which were binding upon the parties.

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j) That the Arbitrator wrongly observed that the counter claim of the petitioner was time barred.

13. Alongwith the petition, an application was moved on behalf of the petitioner under Section 34 (3) of the Act for condonation of delay of 28 days in filing the objections to the impugned award. It is stated that the impugned award was passed on 24.10.2018, copy of it was received by the officer on 26.10.2018, and thereafter, the petitioner sought opinion from one of its panel advocates. Since the documents provided to the petitioner were incomplete, the counsel asked for the complete paper book and subsequently,various meetings/correspondences were made and final opinion was given by the counsel on 29.11.2018. The petitioner vide letter dated 18.01.2019 requested the counsel to file the petition challenging the award but unfortunately, the counsel had to travel for two weeks and the petitioner had to engage another panel Advocate to file the petition. It is stated that the records of the case are voluminous and considerable amount of time was taken to discuss the same with the counsel. It is stated that the petitioner is a company owned by the Govt. of India having various departments and the internal compliances required for filing the petition added to the delay. It is stated that delay in filing the petition is neither intentional nor malafide. It has a good prima facie case and grave prejudice would be caused to it if delay is not condoned.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.11 of 60

14. On getting the notice of the petition, r espondent put its appearance and filed its reply interalia that the petition is not maintainable in so far as petitioner has not complied with the mandatory requirements under Section 34 (5) of the Act as it neither issued notice to the respondent for filing of the above petition nor filed an affidavit.

15.It is stated that explanation to Section 34 (2) (3) of the Act explicitly clarifies that the test for contravention of the fundamental policy of Indian law shall not entail a review on the merits of the dispute. Similarly, the proviso of Section 34 (2A) of the Act makes it clear that even in case of an alleged patent illegality, no award shall be set aside merely on the ground of erroneous application of law or by reappreciation of evidence. It is no longer res integra that interpretation of the terms of the contract is the sole remit of the Arbitrator and Court under Section 34 of the Act cannot substitute its own view. It is stated that grounds pleaded in the instant case pertain to the merit of the dispute which would involve reappreciation of evidence and law which is not permissible.

16. It is stated that the bid security furnished by respondent in the APO1 was allowed to be replaced by petitioner and no further orders under Tender1 were intended to be placed with the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.12 of 60 respondent. While the respondent was making timely deliveries, the petitioner breached its obligations by inordinately delaying the payments contrary to the agreed payment terms which in turn severely affected the respondent's ability to make supplies as per the contractual terms. It is stated that respondent had accepted the APO2 but sought an extension of time for two months to fulfill the same in the light of production issues caused by the petitioner's own failure to make timely payments under APO1, however, no response was received from the petitioner for nearly eight months and thereafter, the respondent received a wholly illegal communication dated 05.07.2012 purportedly rejecting its request for extension of time by two months for supplying of goods under APO2 on account of urgent need of the same. This communication belies all logic given that the rejection of extension of time was communicated after completion of the original delivery schedule. It is stated that nevertheless respondent accepted the APO2 vide dated 09.07.2012 despite the inordinate lapse of time caused by callous disregard of the petitioner, but requested to provide the prospective delivery schedule in view of the fact that original delivery schedule had lapsed. It further sought assurance from the petitioner that payment would be made in terms of Clause 4 and Section 2 of the terms of the Tender1. It also approached its Banker for PBG against supply under APO2 which asked it to obtain a prospective delivery schedule from the petitioner OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.13 of 60 and accordingly vide letter dated 23.07.2012, it forwarded the bank letter to the petitioner and vide letter dated 08.08.12, it accepted the APO2 and conveyed its intention to furnish PBG against APO2 subject to availability of the prospective delivery schedule as required by the banker but the petitioner vide letter dated 14.08.2012 withdrew the APO2 at the respondent's risks and responsibilities and floated tender2 on 17.08.2012 to cover up the default.

17. It is stated that the respondent participated in APO3 process and furnished PBG dated 19.02.2013 being a conditional guarantee to be invoked in terms of breach of APO3 which was subsequently extended till 31.12.2015 on the request of the petitioner. It is stated that respondent had already completed its supplies under APO1 as far back in April, 2013 and any delay in supply was on account of delay in payments by the petitioner for which requests for extension of time were approved by petitioner from time to time and vide letter dated 15.07.14, petitioner finally agreed to return the PBG for APO1 subject to an undertaking that in case any objection related to CAMC or supply comes into the notice of BSNL later, such claims may be adjusted in set off clause from PBG submitted against current tender which the respondent had given vide letter dated 22.07.14. Accordingly, the petitioner vide letter dated 15.09.14 released the PBG's for the APO1 by unequivocally stating that OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.14 of 60 the contractor has completed contractual duties/obligations against supplies meaning thereby that there was no question of the same being invoked against the APO3. It is stated that even the supplies against APO3 were delayed on account of delay in payments by the petitioner and as such respondent completed all the supplies under APO3 in December, 2014. It on the request of the petitioner, extended the PBG for APO3 upto 31.12.2015. It is stated that when the respondent came to know of the petitioner's intention to invoke the PBG for APO3, it immediately wrote to the bank on 11.08.15 bringing to its notice the fraud intended to be committed by the petitioner by invoking PBG for APO3 against alleged non acceptance of APO2. It is stated that vide letter dated 13.08.15, petitioner called upon the respondent to deposit Rs. 1.13 Crores within 14 days failing which, this amount would be recovered invoking set off clause 21 of Section 5 Part A partially forfeiting the existing PBG and/or from pending bills under APO3. It is stated that PBG in respect of APO2 could not be provided due to the petitioner's failure to provide a prospective delivery schedule and infact, it was due to the petitioner failure to make timely payments as per the contract, respondent was constrained to seek an extension of time under APO2 as liquidity was required to continue production and supply. It is stated that in view of the illegal and arbitrary action of the petitioner, respondent approached for the arbitration and the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.15 of 60 arbitrator passed the award which is in accordance with the law and the same is not liable to be set aside under Section 34 of the Act.

18. In response to the application for condonation of delay, it is stated that delay of 28 days in filing petition ought not be condoned as petitioner failed to fully explain the reasons for the same. Neither the legal opinion dated 29.01.2018 nor the letter dated 18.01.2019 has been placed on record to demonstrate the petitioner's bonafide and vague and frivolous excuses have been taken by the petitioner in the impugned application.

19. I have heard ld. counsels Sh. Jaskaran Singh along with Sh.

Sunil Dalal for the petitioner and Ms. Mansi Sood for the respondent through video conferencing. The parties also filed their written submissions.

20. Ld. counsel for the petitioner reiterated what has been stated in the petition and submitted that the respondent committed the first breach of contractual obligations when it did not adhere to the delivery schedule as per Clause 5 of Section 5 Part B. It had only supplied around 1,00,000 units and arbitrarily started demanding payments vide letters dated 28.10.2011, 01.11.2011 and 14.11.2011. It committed the second breach when it failed to adhere to the timelines given to it by the petitioner for not OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.16 of 60 unequivocally accepting APO2 and arbitrarily tried to stall the deliveries thereby causing loss to the petitioner. It failed to submit the PBG against the APO2 and informed the petitioner about the letter dated 21.07.2012 issued by the bank and thereafter, sought acceptance of APO2 vide letter dated 08.08.2012 contrary to the time stipulated in the letter dated 05.07.2012 for acceptance of APO2 which was of no consequence. Ld. counsel stated that the petitioner left with no other alternative floated the fresh tender in which the respondent was again the L1. Ld. counsel stated that the deferred and belated supplies of units against APO1 were completed on 30.04.2013 amounting to third breach of contract. Ld. counsel stated that the petitioner vide letter dated 15.07.2014 agreed to release the PBG furnished for APO1 subject to the undertaking that in case any obligation related to CAMC or supply comes to the notice of BSNL later, such claims may be adjusted under set off clause from PBG submitted against current Tender2. Ld. counsel stated that on the undertaking given, the petitioner released the PBG against APO1 on 15.09.2014. The petitioner vide letter dated 13.08.2015 invoked the set off clause and called upon the respondent to deposit Rs. 1.13 crores within 14 days, failing which, the amount would be recovered by invoking the set off Clause 21 of Section 5 Part A partially forfeiting the existing PBG and/or pending bills against Tender2. The respondent OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.17 of 60 then approached the High Court from where the dispute was referred to the arbitration vide order dated 05.11.2015 and the Arbitrator vide order dated 26.12.2015 directed the respondent to furnish a PBG for Rs. 1.13 crores and restrained the BSNL from encashing the said bank guarantee.

21. Ld. counsel contended that the Arbitrator arbitrarily imposed the interest on the PBG of Rs. 1.13 crores which relief was never sought by the respondent in the claim and further, the PBG was never in possession of the petitioner nor the petitioner derived any benefit out of the said PBG nor it encashed at anytime nor any loss was caused to the respondent. Ld. counsel further contended that the Arbitrator while deciding Issue no.1 and 6 did not go through the conditions of the tender and held that the petitioner was under an obligation to provide a revised delivery schedule under APO2 whereas, the tender contained no such condition and thus, rewrote the terms of the tender which is not permissible as per law. Ld. counsel further contended that the respondent did not give unconditional and unequivocal acceptance to APO2 and instead, requested the petitioner to delay the issuance of APO2 by two months which the petitioner was not obligated and further, the petitioner offered one more opportunity to the respondent vide letter dated 05.07.2012 to accept the APO2 which the respondent did not accept within the stipulated time and thereafter, the petitioner OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.18 of 60 was constrained to withdraw the APO2 vide letter dated 14.08.2012 which caused undue loss to the petitioner. Ld. counsel contended that as per Clause 21 of Section 5 Part A General conditions, the petitioner was entitled to set off any amount with respect to the deficient supply made by the respondent. Ld. counsel contended that the Arbitrator wrongly observed that there was delay in payments by the petitioner rather, it was the respondent who breached its obligation by inordinately delaying the supplies and did not adhere to the delivery schedule. Ld. counsel stated that the impugned award lacks reasoning and suffers from patent illegalities which has been passed without appreciating the true and correct facts of the case and further, he arbitrarily imposed an interest of 12% per annum on PBG furnished by respondent pursuant to the order dated 26.12.2015 which was never encashed by the petitioner, thus no loss was caused to the respondent.

22. While summing up, Ld. counsel did not raise objection as to the release of Bank guarantee of Rs. 1.13 crores and other claims made in the statement of counter claim but laid emphasis on the interest awarded by the arbitrator on the bank guarantee of Rs. 1.13 crores denying its liability.

23. In support of his contentions, ld. counsel placed reliance on the cases, Airport Authority of India v/s Hotel Leela Venture Ltd, OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.19 of 60 2016 (4) ARBLR360 (Delhi) ,Bharat Coking Coal ltd v/s Annapurna Construction, AIR 2003 SC 3660, Continental Construction Company Ltd v/s State of Madhya Pradesh, AIR 1988 SC 1166, Indian Oil Corporation Ltd & ors v/s Subrata Borah Chowlek Etc, CA Nos. 97269727 of 2010, K.P Poulose v/s State of Kerala & ors, AIR 1975 SC 1259, and The State of Bihar and ors v/s Bihar Rajya Bhumi Vikas Bank Samiti, AIR 2018 SC 3862. On delay, ld. counsel referred the case of Collector Land Acquisition, Anantnag & anr v/s Mst. Katiji & ors, 1987 SCR (2) 387. Ld. counsel contended that the court must be liberal in condoning delay when sufficient grounds have been mentioned in the application for condonation of delay. Ld. counsel stated that the petitioner is a government entity and the file passed through many hands, legal opinion was sought and thereafter, the petition was filed. Ld. counsel stated that there was no deliberate and intentional delay on the part of the petitioner.

24. Ld. counsel for the respondent per contra argued that the limitation period under Section 34 (3) of the Act is strict and parties must satisfy the higher threshold of demonstrating due diligence. Casual explanations of delay cannot suffice and the entire delay must be explained. Ld. counsel further contended that Govt. entities are not entitled to any special treatment or latitude for internal compliances and delay cannot be OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.20 of 60 mechanically condoned as a matter of course when no cogent reasons or documents have been provided to explain the delay. Ld. counsel contended that there is a delay of 28 days without sufficient cause for such delay and a very casual approach has been adopted by the petitioner.

i) Ld. counsel reiterated what has been stated in reply to the petition and stated that under Section 34 of the Act, the court does not sit in appeal over the arbitral award and cannot go into an extensive review of the merits of the case either on law or facts. The interpretation of the terms of the contract is the sole remit of the arbitrator and the court cannot substitute its own view barring exceptional cases where the award goes against the basic notions of morality and injustice or unless, there is patent illegality going into the root of the matter. Ld. counsel contended that the court cannot reappreciate the facts and evidence and the requirement to give reasons under Section 31 (3) cannot be equated with giving of a detailed judgment, Where the arbitrators are qualified technical persons and experts, they cannot be expected to adhere to the same standards of award writing as a judicial arbitrator. Ld. counsel contended that the award in the present case is not in contravention of the fundamental policy of Indian law, it clearly sets out the facts followed by the issues and proceeds to deal with each of them giving reasons for each conclusion. Ld. counsel contended that the Ld. Arbitrator has correctly awarded interest OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.21 of 60 on the PBG which is within his power and discretion. The basis of such interest is not the loss suffered but the fact that party being awarded interest was deprived of the use of its money for the said period. In support of her contentions, ld. counsel referred the cases :

i) ONGC Ltd v. Joint Venture of SREE and MEIL, 2019 SCC Online Del 10456.

ii) Postmaster General v. Living Media India Ltd., (2012) 3 SCC

563.

iii) Union of India v. Wishwa Mittar Bajaj, (2007) 141 DLT 179.

iv) MCD v. Madhu Kishan Gupta, MANU/DE/8898/2007.

v) M/s Lifelong Mediatech Pvt ltd v/s M/s United India Insurance Co Ltd, 2018 SCC Online Del 9559.

vi) Associate Builders v/s DDA, (2015) 3 SCC 49.

vii) Ssangyong Engineering & Construction Co. ltd v/s NHAI, 2019 SCC Online SC 677.

viii) Hiedelberg Cement India Ltd v/s The Indure Pvt ltd, OMP (Comm) No. 413/2019 decided on 29.01.2020 by the Hon'ble Delhi High Court.

ix) MCD v/s M/s Jagan Nath Ashok Kumar, (1987) 4 SCC 497.

x) Dyna Technologies Pvt ltd v/s Crompton Greaves Ltd, 2019 SCC Online SC 1656.

xi) Sate of West Bengal v/s Pam Development Pvt ltd, 2020 SCC Online Cal 558.

xii) MCGM v/s Prestress Products, 2002 SCC Online Bom 798.

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xiii) Union of India v/s Royal Construction, 2001 SCC Online Cal 476.

xiv) Larsen and Toubro ltd v/s HPCL, 2016 SCC Online Bom 8341.

xv) Tamil Nadu Civil Supplies Corporation Ltd v/s M/s Albert & Co, 2000 (III) CTC 83.

xvi) Secretary v. G.C Roy, (1992) 1 SCC 508

25. I have considered the submissions made by ld. counsels for the parties and gone through the award and the relevant documents as well as the case laws (supra).

26. Section 34 (3) of the Act provides a limitation period of three months for filing objections against an arbitral award. Proviso to Section 34 (3) of the Act provides an extended period of 30 days for filing the application and the court has the discretion to condone the delay, provided sufficient cause is shown by the party which prevented it from approaching the court in the limitation period of three months. In the case of DDA v/s Durga Construction, (2013) SCC Online Del 4451, it was held that although the courts have the jurisdiction to condone the delay, the approach in exercising such jurisdiction cannot be liberal and the conduct of the applicant will have to be tested on the anvil of whether the applicant acted with due diligence and dispatch. The applicant would have to show that the delay was OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.23 of 60 on account of reasons beyond the control of applicant and could not be provided despite all possible efforts by the applicant.

27. The proviso to Section 34 (3) of the Act is similar to that of Section 5 of the Limitation Act. It also relates to extension of period of limitation. In the instant case, the petitioner in the application for condonation of delay of 28 days in filing has pleaded that the award was received by the concerned officer after two days of passing of the award. The petitioner then sought the legal opinion from one of its Panel Advocate for the steps to be taken to challenge the award. Since the documents provided to the petitioner were incomplete, the counsel requested for the complete paper book and subsequently various meetings and correspondences were held and formal opinion was given by the counsel on 29.11.2018 i.e. after about one month and three days. The petitioner vide letter dated 18.01.2019 i.e. within the period of 90 days, requested the counsel to file the petition challenging the award but since the counsel for the petitioner had to travel for two weeks, it engaged another counsel who took considerable time to discuss the same, besides the record of this case was voluminous. The petitioner is a company owned and controlled by the Govt. of India having various departments, thus, time was taken for internal compliances which added to the delay.

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28. Admittedly, this petition has been filed beyond the period of 90 days but within the extended period of 30 days as provided under Section 34 (3) of the Act. There is no denial of the fact that the petitioner is a company owned and controlled by the Govt. of India having different departments and internal compliances are made which are time consuming. It has also been pleaded on behalf of the petitioner that the record is voluminous and further, considerable time was taken to complete the file and seek the legal opinion as to the filing of objections to the award. It was also stated that since the erstwhile counsel had to travel for two weeks, the services of another Advocate was taken which also led to the delay.

29. I am in agreement with contention of the counsel for the respondent that the Govt. entities are not entitled to any special treatment or latitude for internal compliances but there is no denial of this fact that in Govt. entities, file passes through many hands and internal compliances are required to be made. In this case, the petitioner had initiated the process very promptly as it had taken the legal opinion of the panel Advocate by providing the record and after taking the opinion, it had asked the counsel to prepare the objections but since the erstwhile counsel had to travel for two weeks, it added to the delay and made the petitioner contact another counsel who studied the case, understood the details, went through the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.25 of 60 records which were voluminous and then, drafted the petition. That being the position, sufficient cause has been explained by the petitioner for filing the objections beyond the period of 90 days as contemplated under the act. The act of the petitioner seems to be bonafide and it cannot be said that there was intentional delay on the part of the petitioner to file this petition.

30. In the case of ONGC ltd v/s Joint Ventures (supra), the application was for seeking condonation of delay of 27 days beyond the extended period of 30 days after the three months period prescribed under Section 34 (3) of the Act. It was held that the applicant failed to show the sufficient cause and further, the petition filed on the last day of the 30th days beyond the three months period was nonest when there is delay in filing and is beyond a period of 120 days, the court has no power to condone the delay and thus, application deserves to be dismissed. In the case of Postmaster General & ors (supra), there was an unexplained delay of 427 days by the Postal Department in filing SLP. In the case of Union of India v/s Wishwa Mitar Bajaj (Supra), the objections were filed beyond the period permissible for condonation of delay and thus, the application was dismissed. In the case of Municipal Corporation of Delhi (supra), the grounds of procedural lapses were pleaded which were not satisfactorily explained and the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.26 of 60 application for condonation of delay was dismissed being having no sufficient cause. In the case of Lifelong Mediatech P.ltd (supra), condonation of 65 days delay was sought which was not permissible under the law. In the present case, the petitioner has satisfactorily explained the delay.

31. For the aforesaid reasons, I am of the view that it is a fit case where the application moved by the petitioner for condonation of delay of 28 days be allowed. I order accordingly and condone the delay.

32. Now, coming to the objections raised in the arbitral award dated 24.10.2018

33. The scope of enquiry in Section 34 proceeding is restricted to consideration whether any one of the grounds mentioned in Section 34(2) exists for settingaside the award.

34. Section 34(2) of the Arbitration and Conciliation Act reads 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 OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.27 of 60 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 arbi- tral award which contains decisions on matters not submitted to arbi- tration 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, 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 -I- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."

ii) It is in contravention with the fundamental policy of Indian law;

iii) It is in conflict with the most basic notions of morality or justice.

Explanation-II- 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. [2 (A) An arbitral award arising out of arbitrations other than inter- national commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appear- ing 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.

35. Normally, the general principles are that the Arbitrator is a Judge of the choice of the parties and his decision unless there is an error apparent on the face of the award which makes it un sustainable, is not to be set aside even if the court as a court of OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.28 of 60 law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the court in exercise of the power vested in it. Where the arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into considera tion the technical aspects of the matter, the court would gener ally not interfere with the award passed by the arbitrator.

36. In the case titled G. Ramchandra Reddy v. Union of In dia (2009) 6 SCC 414 the Apex court asserted that courts should not normally interfere with the award of an arbitrator, unless there was a gross error apparent on the face of the record.

37. In Sudarsan Trading Co. v. Government of Kerela & Anr.

1989 AIR 890, the observations of the Supreme Court have been that Court cannot substitute its own evaluation of the con clusion of law or fact to come to the conclusion that the arbitra tor had acted contrary to the bargain between the parties. OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.29 of 60 Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in the case. By purporting to construe the contract the court, could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdic tion.

38. In the case of Hiedelberg Cement India Ltd (supra), the High Court observed:

39. In the case of Associate Builders v/s Delhi Development Authority, (2015) 3 SCC 49, the Supreme Court has held as under:-

"19. When it came to construing the expression the public policy of India contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 :

held:

31. Therefore, in our view, the phrase public policy of India used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal.

The result would beaward could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.30 of 60 Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.

74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if 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 O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.

(2) The court may set aside the award:

(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,

(ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.

(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or

(d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.31 of 60 In McDermott International Inc. vs. Burn Standard Co. Ltd. & Ors. (2006) 11 SCC 181, the Supreme Court has held as under:-

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 O.M.P. (COMM) 413/2019 Page 33 of 37 opting for arbitration as they prefer the expediency and finality offered by it.

44. In the very recent judgment, the Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held as under:-

35. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the Renusagar understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).

36. It is important to notice that the ground for interference insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the most basic notions of morality or justice. This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.

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37. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)

(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.

38. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2A), added by the Amendment Act, 2015, to Section 34. Here, 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. In short, what is not subsumed within the fundamental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.

39. Secondly, it is also made clear that re-appreciation 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.

40. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent illegality on the face of the award.

41. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that 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. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).

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42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), 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. Thus, 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. Additionally, a finding based on documents taken behind the back of the parties by 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 characterised as perverse.

45. Recently, in Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as under:-

55. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for - see Associated Construction v. Pawanhans Helicopters Limited. (2008) 16 SCC 128 at paragraph 17.

56. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd. v. NHAI 2019 SCC OnLine SC 677, after the 2015 Amendment Act, this Court cannot interfere with an arbitral award on merits. "

40. In the back drop of the above, let me now examine the objections against the impugned award agitated by Ld. counsel for petitioner, visavis the contentions of Ld. counsel for respondent, in support of the award.

41. In the instant case, there is no objection or dispute relating to appointment of the Arbitrator to whom respondent / claimant OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.34 of 60 had submitted his statement of claim. The petitioner herein had joined each and every arbitration proceeding and filed reply to the claim of the respondent. The arbitration proceedings and attendance sheet, confirm that the petitioner as well as the respondent had regularly appeared before the Arbitrator and were given due opportunities to defend and / or plead their respective cases. Only thereafter the impugned award was made by the Arbitrator, which is a reasoned award dealing with each of the claims, rival contentions and the findings thereon. It is not for this Court to sit in appraisal of the evidence led before the Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Arbitrator which was subject matter of dispute. The Arbitrator has decided upon the issues under reference which were within his competency and as per the agreement entered into between the parties.

42.Though, there are allegations that the arbitrator went beyond the terms of the contract/reference but on a perusal of the arbitration proceedings as well as award, I find that the same was not only within the confines of terms of reference but also was based on the terms and conditions of admitted contract agreement. The Arbitrator has duly explained the reasons for arriving at his decisions and the petitioner/ objector before this Court has failed to bring its case within the contours of Section OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.35 of 60 34(2) of the Arbitration and Conciliation Act, 1996. It is evident on perusal of objections made by the petitioner/objector that the challenge is on substantive questions of facts which is not permissible under law. Even otherwise, from a careful perusal of the arbitration proceedings and the award therein, it is evident that the Arbitrator has given his findings only after considering the pleadings, documents and arguments advanced before him, that too after taking into account the oral and documentary evidence. Further, the scope and purview of deciding the present objections being limited one does not permit this Court to replace the finding given by the Arbitrator, by its own by reappreciating the evidence produced before the Arbitrator. However, in order to see as to whether the Arbitrator had travelled outside the terms and conditions of the contract agreement, as alleged by petitioner. I deem it appropriate to consider the real controversy between the parties, which gave rise to the cause of action for filing the claim and the manner in which it was appreciated by the Arbitrator in reference to the terms of contract agreement.

43. On a perusal, I find that the commercial dispute between the parties had erupted based on the contract of supply of clip phones by the petitioner to the respondent/claimant. The tender document floated on 15.03.2011 for supply of 25,00,000 pieces culminated into the issue of APO which were termed as APO1 OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.36 of 60 and APO2 of 12,50,000/ pieces each. Both the parties alleged that the other one faulted in compliance to the terms and conditions which resulted into dispute. It is a matter of record that the contract terms provided for submission of PBG. It transpires that since the supply of the goods in response to the tender document of March, 2011 (Tender1) ran into rough weather, another tender (tender2) was floated in the month of August, 2012 for which separate APO3 was issued and corresponding bank guarantee was taken.

Issue no.1 and 6

44. Findings of the Arbitrator: The Arbitrator in the impugned award has observed that after getting the APO2 by the claimant for 12,50,000/ clip phones in lieu of non acceptance by L1 and L2 bidders, which is as per the tender condition, the claimant had requested for postponement of APO2 by two months which was to be accepted within the period of 14 days. The postponement was requested mainly due to non receipt of timely payments affecting their production which request was not aceded to and the claimant was given last chance after lapse of 7 months to accept APO2. On receipt of this letter dated 05.07.2012, the claimant accepted the offer and asked for the fresh delivery schedule for enabling to get the required PBG as the bank had given its inability to process the PBG since the delivery schedule given in the APO in question was to elapse OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.37 of 60 on 20.07.2012. Even on repeated requests, the respondent failed to give the fresh delivery schedule and the APO was withdrawn vide letter dated 14.08.2012. It was held that by not issuing the fresh delivery schedule which was requirement for the bank to issue PBG, the respondent erred and hence committed breach of terms and conditions of Tender dated 15.03.2011 and thus, set off clause for forfeiting the equivalent PBG of withdrawal APO2 from APO3 i.e. the second tender is not proper and justified.

45. Discussions: A perusal of the record reveals that as per the Tender1, Clause 4, Section2 Tender information, the BSNL had to make 95% payment against acknowledged delivery and release the balance 5% within 6 months from the date of supply of the equipments in case there are no damages. As per Clause 6.4, of Section 5 Part A, extension of delivery period against the purchase order if any could be granted, subject to the condition that BSNL shall have the absolute right to revise the price and also to levy penalty for the delayed supplies. As per Clause 21 of Section 5 Part A, any sum of money due and payable to the supplier including security deposit under this contract may be appropriated by the purchaser or the BSNL and set off against any claim of the purchaser of BSNL for payment of a sum of money arising out of the contract.

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46. Section 5 Part B Special Conditions of Contract provided for quantity distribution i.e. L1 50%, L2 30% and L3 20% and in event of L3 or L2 refusing to accept, BSNL reserved the right to place the order for entire quantity to the L1 bidder and it was mandatory for the L1 bidder to accept such an offer and perform the whole contract. The schedule delivery period was also given which was of 8 months.

47. In the instant case, the first tender was floated on 15.03.2011.

The validity period of bid was fixed as 150 days from the tender opening date. Bidder was required to furnish a bid security of the amount as specified in the tender document. As per Clause 12.7, the bid security could be forfeited if the bidder withdraws his bid during the period of bid validity or if the bidder fails to sign the contract in accordance with Clause 28 of furnish performance security in accordance with Clause 27 and in both the case, the bidder will not be eligible to participate in the tender for the same item for 1 year from the date of issue of APO.

48. Perusal of record shows that the APO1 was issued to the claimant/respondent on 05.07.2011 for supply of 12,50,000 clip phones (50% quantity). The claimant was also directed to furnish bank guarantee. Delivery schedule was given which was of 8 months. The claimant unequivocally accepted the offer OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.39 of 60 against APO1 and submitted the PBG of the requisite amount vide dated 18.07.2011 and 21.07.2011. The claimant vide letter dated 28.10.2011, wrote to the BSNL that they have supplied about 1,00,000 clip phones worth Rs. 3.95 crores, they have huge stock piled up at their factory for future supplies but in the absence of BSNL not releasing capital funds, their cash flow rotation has stopped and they are into deep crisis. Again, the claimant sent a letter dated 01.11.2011 qua non receipt of payment till date. A letter dated 14.11.2011 was also written showing the outstanding payments to be released.

49. Record further states that when the supplies against APO were being made against which the claimant was not getting payment, the department/BSNL issued APO2 dated 21.11.2011 for the supply of balance 12,50,000 clip phones in terms of the Tender1 document. Delivery schedule was also given which was of 8 months to be effective from date of APO

2. The claimant vide letter dated 30.11.2011 requested that they are in the process of execution of APO1 and thus, the APO2 may be postponed by 2 months as it would reduce financial burden on BSNL as well as non timely release of payment has been affecting their production. It was however stated that they would continue the supplies and start supplies from April against new APO. Surprisingly, the said letter was responded after about 7 months by the BSNL vide dated OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.40 of 60 05.07.2012 asking the claimant to submit unconditional acceptance along with the requisite PBG within 14 days from the date of issue of APO. The request of the claimant was declined and it was stated that the clip phones are urgently required by the field units of BSNL. The claimant was given final opportunity to submit unconditional acceptance along with requisite PBG within 7 days from the date of the letter, lest, it shall be deemed to be withdrawn automatically without assigning any reason at its risk and responsibilities and as per the terms of the tender. The claimant immediately responded to the letter vide letter dated 09.07.2012 reiterating that they are MSME and are in process of execution of APO1 and they are not being paid their dues as per Section 2 of Clause 4 of the Tender. It was stated that they are willing to perform the obligations and they be given delivery schedule of additional supply of 12,50,000 clip phones. Bank of Baroda vide letter dated 21.07.2012 had also informed the claimant that the delivery schedule has elapsed on 20.07.2012 and as per the bank guidelines, fresh prospective delivery schedule is required to be taken from BSNL. The claimant immediately wrote to the BSNL vide letter dated 23.07.2012 and 08.08.2012 to provide the fresh delivery schedule but the BSNL vide letter dated 14.08.2012 observing that the claimant failed to submit the unconditional acceptance with the requisite PBG in the stipulated time, withdrew the APO2 at the risk and OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.41 of 60 responsibility of the claimant. Thereafter, the BSNL invited second tender vide dated 17.08.2012 for 29,00,000 clip phones in which the claimant again became the L1. It is pertinent to mention that when the withdrawal against APO2 was made, supplies against APO1 were in progress and were completed on 30.04.2013. BSNL from time to time granted the time extension without levying any penalty.

50. As evident from the record, the department had already initiated the process of inviting fresh tender after accessing the requirement of clip phones i.e. 29,00,000/. It belies the department's contention that it was compelled to float the second tender for the alleged non supply under APO2 which was of 12.5 lakhs clip phones. The timing of tender2 indicates that the letter dated 05.07.2012 and 14.08.2012 were issued by the department after initiation of the process in respect of tender2.

In the instant case, the department was only required to provide a simple prospective delivery schedule in respect of APO2 which it failed to provide. Furthermore, the fact that the claimant was permitted to participate in the second tender demolishes the department's case that the floating of the second tender was on account of the claimant's purported failure to accept the APO2. The High Court in its order has also observed that it has been found albeit on a prima facie examination that the respondent (petitioner herein) OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.42 of 60 has acted fraudulently in seeking to invoke the PBG for APO3. In tender2 also, the claimant was declared L1. APO3 was accordingly issued to the claimant vide letter dated 30.01.2013 for supply of 14,50,000 clip phones. The correspondences and the record reveal that there was no grievance of the department nor the claim as to the withdrawal of APO2 against the claimant and for this reason, the claimant was allowed to participate in the bidding process of tender2 for supply of the similar item within the period of one year as against Clause 12.7, Clause 27 and 28 of Tender1. The department also finalized the bills against APO1 and released the payments. PBG against APO1 was released on 15.09.2014. EMG of Rs. 1.13 crores had also elapsed and it was never renewed by the claimant.

51. It is to be noted that when the supplies were finalized and PBG against APO1 was released, there was no claim of BSNL. The claim of Rs. 1.13 crores was made for the first time on 13.08.2015 only after inspection of the audit team interalia that as per Clause 4.6 Section 5 Part B, it failed to accept the second APO by not submitting the requisite PBG and therefore, as per Clause 12.7 (b) (ii) of Section 4 part A of the tender, the bid security be forfeited if the bidder failed to furnish security in accordance with Clause 27 Section 4 Part A of the Tender document which was 1.13 crores. Bid security in the instant case had expired on 31.10.2011. Since EMBG had expired, the claimant was directed to deposit Rs. 1.13 crores within 14 days OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.43 of 60 failing which, the amount would be recovered by invoking set off clause under Clause 21 of Section 5 Part A by partially forfeiting the existing PBG or from the pending bills under Tender2/APO3. The claimant vide letter dated 15.07.2014 had given an undertaking that in case, any obligation related to CAMC or supply come into notice of BSNL later, such claims may be adjusted under set off clause from PBG submitted against current tender. On this letter, the BSNL had agreed to return the PBG against APO1.

52. It is clear from the correspondences and the record that when the APO2 was issued, the claimant was making supplies against APO1 meaning thereby that the supplies against APO 1 were not yet completed and the same were completed on 30.04.2013. The department had given extension of time from time to time and levied no penalty. Further, as evident from the letters, there was delayed payment against the supplies, though as per the terms and conditions, the department was obliged to release 95% of payment against deliveries. The letters and correspondence further show that the claimant never refused to give supplies against APO2. Since its payment was delayed and there was crunch of liquidity, it had sought time and the fresh delivery schedule, however the claimant was willing to give supplies against APO2 on the same terms and conditions, The department floated Tender2 which was accepted on a OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.44 of 60 higher rate for the same type of instrument.

53. It is also pertinent to mention that the work against APO3 was awarded to the same claimant, which was successfully completed in December, 2015. Payments were released. The department/BSNL never laid any claim for the higher rates of the same type of instrument supplied by the claimant when the supplies were in progress and the said claim was raised for the first time in the counter claim filed by the department before the Arbitrator.

54. For the aforesaid reasons, I do not find any error in the observations of the Arbitrator while deciding the Issues no.1 and 6 that the respondent has erred by not issuing the fresh delivery schedule which was the requirement of the bank to issue PBG and thus, committed breach of terms and conditions of tender dated 15.03.2011 and that the set off clause for forfeiting the equivalent PBG of withdrawal APO2 from APO 3 was not proper and justified.

There is no denial of the fact that the department in view of set off clause and the undertaking given by the claimant could invoke the set off against the supplies made in respect of APO1 but since, the respondent was in breach of the terms and conditions of the tender dated 15.03.2011, it was not entitled to invoke the set off claim by forfeiting the equivalent PBG of withdrawn APO2 from OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.45 of 60 APO3.

55. In the instant award, the Arbitrator has covered all the aspects of the claim and counter claims, records and the proceedings and thereafter, given the findings. It is pertinent to mention that the Arbitrator is a technical person and is well versed with the rules and regulations of the BSNL being the exemployee of the BSNL. It is not the case that he was bias or he misconducted the proceedings or whatever observations he has made were beyond the scope of the contract/agreement. He interpreted the contract and the terms and conditions and thereafter, passed a reasoned award which is not against the public policy nor the award smells of any fraud which requires review by the court under Section 34 of the Arbitration and Conciliation Act, 1996.

Issue no.2

56. Findings of the Arbitrator: It was observed by the Arbitrator that there has been delays on the part of both the parties in terms of payments and deliveries. As per paragraph 17 of the claim petition, cause of action arose only after the respondent issued a letter dated 13.08.2015. This makes it clear that both the parties had no issue regarding the claim of interest nor of any loss or damages due to any reason before this date. Hence, claim of interest by the claimant with respect to the delayed payments and imposition of LD clause by the respondent with OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.46 of 60 respect to the late deliveries is not tenable.

57. Discussions: It has already been discussed in issue 1 and 6 that there had been delays on the part of the parties in terms of payments and deliveries. When the bills of the claimant were finalized, on 30.04.2013 against APO1, there was no claim of interest for delay. The claimant had sought extension of time which was granted by the department and on the undertaking given by the claimant, PBG against APO1 was released on 15.09.2014. Till the release of PBG, there was no claim of the department as to the delayed supply or loss. This claim in respect of non execution of APO in tender1 for the first time was made vide letter dated 13.08.2015 when the work against Tender2/APO3 was in progress. I am of the view, the Ld. Arbitrator has rightly held that the claimant is not entitled to interest for the delayed payments by the respondent, as no such claim was made when the payments against APO1 were finalized and the PBGs were released. Further, the claimant and the respondent have not raised any objection/grievance against the above findings.

Issue no.4 and 5

58. Findings of the Arbitrator:It was observed by the Arbitrator that the breach of contract, if any, is not from the date OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.47 of 60 05.12.2011 as given by the claimant in the written submissions dated 05.02.2018 but is from 14.08.2012, the date of withdrawal of APO2. Thus, the counter claim filed on 08.07.2016 is barred by limitation. Also on merits, it is not maintainable as discussed in Issue no.1.

59. Discussions: It is true that the dispute was in respect of APO 2 which was withdrawn on 14.08.2012. The counter claim was filed by the department only on 08.07.2016 i.e. after about 4 years. It was also observed that there was no breach of terms and conditions of the tender dated 15.03.2011 by the claimant. Nothing has come out from the record that there was any error apparent on the face of record while deciding the above issue. Even on merits, it has been observed by the arbitrator in other issues that it was the department which breached the terms and conditions and both the parties were responsible for the delays and delayed payment. It was held that the claimant cannot be faulted as to the withdrawal of APO2 as the department failed to issue the fresh delivery schedule to the company. It is not the case that claimant was not willing to execute the APO2 rather, it had given acceptance and requested for the fresh delivery schedule which was also the requirement of the bank to issue the PBG. Surprisingly, the department finding it conditional withdrew the offer. Though, there was nothing conditional. It is also to be mentioned that on the one hand, department was OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.48 of 60 contemplating that urgent supplies are required but on the other hand, it had already started the process of inviting Tender2. So, tender2 was not consequential to tender1. I am of the view that the department is not entitled to any counter claim as to the increase in price of the clip phone nor the interest as claimed.

Issue no.7

60. Findings of the Arbitrator: It was observed by the Arbitrator that it was the respondent which failed to issue the fresh delivery schedule after the acceptance of APO2 by the claimant, which was necessary for the issuance of PBG as per the bank requirement. The reply to request of the claimant for postponement of APO2 by two months which was responded after 7 months and subsequent its withdrawal clearly indicates that there was no urgency felt. Further, in view of these discussions made in all the above issues, the respondent is not entitled to any relief.

61. Discussions: As observed earlier, the department had responded to the letter of the claimant for delaying APO2 by 2 months after a period of about 7 months giving no extension and asked the claimant to give the acceptance within 7 days along with PBGs without giving the fresh delivery schedule which was requirement of the bank. When the claimant asked for the fresh delivery schedule referring the letter issued by the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.49 of 60 bank, the department instead withdrew the APO2 holding that it was conditional and not unequivocal. It is not understood how it was conditional and unequivocal when the supplies against APO1 were still continuing and had not been completed. It is true that the respondent suffered loss as it issued the APO3 for supply of same type of instrument at the higher rate but it could have been avoided, had the department not withdrawn the APO2 holding it conditional. I am of the view that it was not conditional rather it was the requirement of the bank to submit the fresh delivery schedule. It was thus rightly held that the response made by the department after seven months and its subsequent withdrawal clearly indicated that there was no urgency felt and the respondent is not entitled to any relief.

Issue no.3

62. Findings of the Arbitrator: In my view, the claimant is entitled for the interest on PBG of Rs. 1.13 crores, from 28.12.2015 and is also entitled for post award.

63. Discussions: It is true that the claimant has not specifically pleaded that it is entitled to interest on the PBG which was given by the Ld. Arbitrator pursuant to his directions vide dated 24.02.2018 but it has been pleaded in the relief clause that pendentelite and post awarded interest @ 18% per annum on OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.50 of 60 the sums claimed herein upto the date of actual payment may be paid.

64. It was submitted on behalf of the petitioner that the said PBG of Rs. 1.13 crores furnished by the respondent in terms of order dated 26.12.2015 passed by the Arbitrator was never in possession of the department. It was deposited by the claimant merely on the express directions given by the Arbitrator. No loss was incurred to the claimant as the same was never encashed by the department and therefore, imposition of interest on an amount that was never received by it is illegal and arbitrary.

65. Per contra, it is submitted on behalf of claimant/respondent that arbitrator has power and discretion to award interest, including pendentelite and post awarded interest on any of the claims made in the arbitral proceedings. The basis for such interest is not the loss suffered but the fact that the party being awarded interest was deprived of use of its money for the said period. No evidence of loss is necessary for the awarding of interest. Ld. counsel referred the case of Secretary v/s G.C Roy (supra), wherein it was held that where a money claim is referred to an arbitrator, it would include the claim of interest as well. It was observed that a person deprived of the use of money to which he is legitimatily entitled has a right to be compensated for the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.51 of 60 deprivation call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of Section 34 CPC and there is no reason or principle to hold otherwise in the case of arbitrator which is an alternative forum for resolution of disputes having the same power to resolve all the disputes. It was held that where the agreement between the parties does not prohibit grant of interest and where a party claims interest and the dispute is referred to the arbitrator, he shall have power to award interest pendentelite. It is a matter within his discretion to be exercised keeping the ends of justice in view. Ld. counsel also referred the case of Heidelberg (supra) wherein it was held that it is a settled law that the grant of interest is in the discretion of the arbitrator. The tribunal has in its discretion on analyzing the conduct of the parties and quality and quantity of the evidence award the interest and this court cannot interfere in the award of interest.

66. I have considered the submissions and perused the record.

67. In the case of MSK Projects (I) (JV) Ltd v/s State of Rajasthan & anr, 2011 (8) JT 37 (SC), it was held that Arbitrator is competent to award interest for the period commencing with the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.52 of 60 date of award of the date of decree or date of realization, which ever is earlier. While the amount of interest is a matter substantive law, the grant of interest for the part award period is matter of procedure. In terms of Section 3 of the Interest Act, 1978, Arbitrator is competent to award interest at the rates prevailing in banking transaction. Thus, impliedly, the court has power to vary the rate of interest agreed by the parties. It was held in the case of Mehta Teja Singh & Co v/s Fertilizer Corporation of India, AIR 1968 Del 188 that if the erroneous part of the award is severable, the proper or good part of the award may be sustained.

68. In the instant case, the arbitrator has given an interest on the bank guarantee furnished by the claimant pursuant to the directions vide order dated 26.12.2015 by the arbitrator qua the letter dated 13.08.2015 issued by the department claiming Rs. 1.13 crores towards forfeiture of EMD in respect of APO2 for non execution of work from the PBG submitted in APO 3/Tender2/running bills in view of the undertaking given when the PBG against APO1 was released. It was not against any sum deducted/withheld by the BSNL/petitioner.

69. A bank guarantee represents an independent contract between the bank and the beneficiary, both the parties would be bound by the terms contained therein. A contract of guarantee by the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.53 of 60 bank is a separate and independent contract as between the parties. Therefore, any dispute between the parties in regards to the performance of the contract cannot affect the right of the bank. In M.G.S.S.K v/s National Heavy Engg. Coop Ltd, AIR 2007 SC 2716, it was explained that if the bank guarantee furnished is an unconditional and irrevocable one, it is not open to bank to raise any objection whatsover to pay the amounts under the guarantee.

70. The banks give performance guarantee (or performance bond) on behalf of a party to a contract. The bank giving such a guarantee is bound by the obligation undertaken by it. The performance guarantee is an autonomous contract and imposes an absolute obligation on the bank in its terms. A bank guarantee for all purposes should be taken to be a credit note issued by the bank in favour of the person in whose favour the bank guarantee has been issued and it should be encashable just like a credit note ordinarily unless, the intention of a party is otherwise. Bank guarantee is a tripartite contract between the issuing bank and the beneficiary.

71.Question now arises, whether interest, pendentelite and future is payable on the bank guarantee. As per the banking rules, the bank guarantee is given by the bank on behalf of a party who has an account or dealing with the bank or has been availing OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.54 of 60 overdraft facilities or having deposits in the form of FDR. The bank verifies the credit of the party, his assets and liabilities and issues the bank guarantee against capital, FDR or O.D limits as the case may be and charges a nominal commission as to the maintenance/operation.

72. In the instant case as evident from the proceedings and the record that when the letter dated 13.08.2015 was issued by the department/petitioner, as to the claim of Rs. 1.13 crores in respect of Tender1 to be set off from the running bill/bank guarantee of the claimant in Tender2, the claimant approached the High Court from where the arbitrator was appointed. The arbitrator after hearing the parties vide order dated 26.12.2015 directed the BSNL to return the bank guarantee in its possession pertaining to this dispute and directed the claimant to furnish a fresh bank guarantee of the sum of Rs. 1.13 crores. The claimant accordingly furnished the bank guarantee and the department released the payments of the claimant. There is no evidence to show that the claimant had paid an interest on the bank guarantee. He had only incurred the minimal nominal expenses on issuance of the bank guarantee in its favour by paying the commission and maintenance charges which in any circumstances could not be more than 1 or 2% of the amount. It is an admitted case of the party that during the arbitral proceedings or thereafter, the department never encashed the OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.55 of 60 bank guarantee nor derived any benefit out of the bank guarantee. Further, there is nothing on record to show that the money of the claimant was blocked. Thus, no loss has been caused to the claimant as to the interest etc except the commission and the maintenance charges which the claimant is entitled to.

73.It is true that the arbitrator within his power can grant interest, pendentelite and future of any claim but since the bank guarantee furnished was not a claim but a security for the claim for which no loss was caused to the claimant nor any gain was caused to the department/petitioner and only the miscellaneous and ancillary charges have been incurred on the bank guarantee, the interest given by the arbitrator is patently illegal and is against the basic notions of justice shocking the conscience of the court.

74. Section 33 of the Act provides that the arbitrary tribunal can make correction in the award if any, do interpretation on specific points of the award and make an additional award.

75. In the light of what has been stated above, I am of the view that the award passed by the arbitrator as to the release of bank guarantee is a reasoned one which requires no intereference from the court as the court has not been sitting in the appeal.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.56 of 60 However, the award as to payment of pendentelite and future interest on the bank guarantee is patently illegal and against the basic norms of justice which is liable to be set aside. Only the incidental/maintenance charges incurred by the claimant towards making of the bank guarantee of Rs. 1.13 crores are payable to the claimant.

Conclusion:

76. In the instant case, most of the grounds raised by the petitioner to challenge the award are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that 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 facts 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 quality and quantity of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or no evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.57 of 60 on facts. (P.R Shah, Shares & Stock Brokers (P) Ltd v. B.H.H Securities (P) Ltd. [(2012) 1 SCC 594).

77. A bare perusal of the arbitral award shows that the arbitrator examined all the relevant aspects of the contract, the correspondences made by the parties, the terms of the contract and the conduct of the parties. He has remained inside the parameters of the contract and has construed the provisions of the contract. The petitioner has failed to establish that the arbitrator has travelled beyond the terms of the contract.

78. Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award except the award of interest on the PBG does not call for any interference. This Court cannot reappreciate evidence or interpret the Articles of the Agreement which the petitioner is calling upon the Court to do. The contentions of the petitioner are thus rejected having no merit. I hold that the arbitration award is a reasoned one except the award of interest on the bank guarantee and does not suffer from any infirmity or error apparent on the face of the record. It is not for this Court to sit in appraisal of the evidence lead before the learned Arbitrator and this Court will not open itself to the task of being a judge on the evidence OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.58 of 60 placed before the learned Arbitrator which was subject matter of dispute. In the present case, the learned Arbitrator has deliberated on the issues under reference which were within his competency and as per the agreement entered into between the parties. There are no allegations against the learned Arbitrator who was an expert being well versed to deal with the dispute before him, of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that the award violates Section 28 (3) of the Act or that, it is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or that it lacks reasoning as pleaded in the petition.

79. For the aforesaid reason, the view taken by the Ld. Sole Arbitrator while giving his findings on issue no.1 to 7 except on issue no.3 are upheld. The findings on the issue no.3 as to the interest is set aside and modified. The respondent is directed as under:

a) To release the PBG of 1.13 crores within 30 days to M/s Pramod Telecom Pvt ltd (the claimant) along with the ancillary/incidental charges incurred by the claimant towards the PBG.

OMP No.46/19 M/s Bharat Sanchar Nigam Ltd v/s M/s Pramod Telecom Pvt ltd Page No.59 of 60 Parties are left to bear their own costs. File be consigned to record room.

Announced in open court                                   (Sanjiv Jain)
today i.e. 30th June, 2020                                 District Judge
                                                       (Commercial Court)03
                                                             New Delhi




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Omp No. 46/19 vs M/S Pramod Telecom Pvt Ltd on 30 June, 2020