Delhi District Court
Icg Medical India Private Limited vs Surinder Singh Marwah on 22 January, 2025
DLCT010060222023
IN THE COURT OF SH. M. K. NAGPAL, DISTRICT
JUDGE (COMMERCIAL COURT)-13, CENTRAL DIS-
TRICT, TIS HAZARI COURTS, DELHI
OMP (COMM) NO. :- 68/2023
CNR NO. DLCT-01006022-2023
IN THE MATTER OF :-
ICG Medical India Pvt. Ltd.
1st Floor, CRS Tower,
Plot No. 77B, Sector-18,
Gurugram-122001 [HR]
... Petitioner
Vs.
Surinder Singh Marwah
R-831, New Rajinder Nagar,
New Delhi-110060
....Respondent
ORDER
22.12.2024
1. This petition has been filed by petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') challenging the arbitral award dated 31/01/2023 (hereinafter referred to as the 'Impugned Award') passed by the Ld. sole arbitrator adjudicating upon the disputes that arose between parties in the arbitration case no. DIAC/2836/10-20 OMP (COMM) No. 68/2023 1/ 37 DLCT010060222023 titled as ICG Medical India Pvt. Ltd. Vs. Surinder Singh Marwah.
2. Vide impugned award, the Ld. arbitrator had though allowed the claim of petitioner company in respect to refund of the security deposit amount of Rs. 57,50,000/-, but had rejected its claims for some other amounts and had also simultaneously allowed the claims of respondent company for amounts of Rs. 54,00,000/- and Rs. 27,00,000/- on account of lock-in-period rent and notice period rent respectively, while disallowing their few other claims. The details of these claims of parties allowed or rejected by the Ld. arbitrator are found stated in a table contained in para 1 of this petition and the same are being reproduced herein below:-
Nature of claim Claimed Allowed/disallowed Rs. Rs.
CLAIMANT Refund of lease rent paid for 36,00,000 Disallowed the months April,20-July,20 @ 9,00,000/- pm Refund of security deposit 57,50,000 Fully Allowed Rentals for laptops hiring 29,050 Disallowed Interest on rentals paid on 2,26,829 Disallowed laptops and premises RESPONDENT Lock-in-period rent 54,00,000 Fully Allowed Notice period rent 39,67,500 27,00,000 allowed Utility reimbursement 1,18,614 Disallowed GST on above 1,88,614 Disallowed OMP (COMM) No. 68/2023 2/ 37 DLCT010060222023
3. Case of the Petitioner/Objector:
(i) It has been averred by petitioner company that it is a private company incorporated under provisions of the Companies Act, 2013 and it is classified as an "Other Service Provider" (OSP) in the IT Enabled Service Sector (ITES Sector), as per the Department of Telecommunications (DoT) and is engaged in providing recruitment related support services to its overseas clients/customers.
(ii) It is also averred by petitioner company that it required a commercial space for its business and therefore took the leased premises ad-measuring about 14,000 Sq. Ft. on rent from respondent under a lease deed dated 04.11.2015 for a period of nine years. The lease deed provided for a lock-in-period of three years and the monthly rent was Rs.11,30,000/-. This lease deed was later amended on 15.03.2019 by way of an "Addendum", whereby the monthly rent was reduced to Rs.9,00,000/- and the lock-in-period was extended up to 31st January 2021. However, rest of the terms of lease deed remained unaltered.
(iii) It is also averred by petitioner company that Clause 12 of the said lease deed provided for "force majeure" events and it conferred some special rights upon petitioner, such as suspension or non-payment of monthly rent and also for termination of lease OMP (COMM) No. 68/2023 3/ 37 DLCT010060222023 at the sole discretion of petitioner in case of specified force majeure events.
(iv) It has further been averred by petitioner company that during the wave of COVID-19, due to various lock-down and unlock restrictions, along with revised policies of the DoT, the leased premises became unusable for them and hence, the petitioner terminated the said lease by invoking above Clause 12 and handed over possession of the leased premises to respondent on 25.08.2020.
(v) It is also averred by petitioner that since a dispute arose between parties over interpretation of Clause 12 of the lease deed, hence, the same was referred for adjudication, under the aegis of DIAC, to Ld. arbitrator and the impugned award came to be passed by her.
4. Grounds of challenge to the impugned award by petitioner The petitioner company is found to have challenged the impugned award passed by Ld. arbitrator mainly on following grounds:-
(i) That the impugned award is patently illegal on the face of it and the same is against the fundamental laws of India;OMP (COMM) No. 68/2023 4/ 37
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(ii) That the impugned award is misconceived, erroneous and based on illegal findings arrived at by Ld. arbitrator as she failed to appreciate the basic facts and grossly misjudged the terms of lease deed and she also failed to apply the settled legal principles of contract and had passed the impugned award in most pedantic manner;
(iii) That though the case of petitioner company was that due to imposition of lock-down and restrictions by the Central Government and issuance of guidelines by the DoT for OSPs during the pandemic period, the purpose for which the lease deed was executed was rendered otiose and for all practical purposes the leased premises were rendered inaccessible and its terms stood frustrated, but still the Ld. arbitrator decided the issue of "inaccessibility" provided under the force majeure Clause 12 of lease deed going outside the context of said Clause and thereby causing grave miscarriage of justice to petitioner;
(iv) That the Ld. arbitrator failed to appreciate the fact that case of petitioner was that the "intended purpose" of lease deed i.e. "to accommodate about 120 employees" and to have the premises as "fixed base office", as required under the DoT requirements, stood frustrated owing to the changed circumstances and guidelines laid down and restrictions imposed by the DoT and the Central Government and to be followed during the period of lock-down;
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(v) That the Ld. arbitrator failed to appreciate the fact that Class 12 of the lease deed provided for destruction and/or inaccessibility of premises in whole or in part and the Ld. arbitrator miserably failed to determine the said issue, which was clubbed with other issues pertaining to inaccessibility. It has been submitted that the Ld. arbitrator miserably failed to consider the fact that due to lock-down and the guidelines issued by Central Government and DoT, the leased premises became wholly or partially inaccessible for petitioner at different phases of pandemic and the same were not at all used by petitioner to render its ITES services during the period from April, 2020 to August, 2020.
(vi) That Ld. arbitrator was of the ill-formed opinion that legal principles of the doctrine of frustration urged by petitioner would be applicable only if "inaccessibility" as mentioned in Clause 12 of the lease deed is proved. It has been submitted by petitioner that the issue of "inaccessibility" could not have been proved without applying the legal principles of "doctrine of frustration"
as expounded by the courts in India, which states as to what is to be seen by a judge when the issue of "force majeure" is involved. It has also been submitted by petitioner that the Ld. arbitrator failed to appreciate the fact that no physical server was installed in the leased premises during the said period for providing of ITES services by petitioner from these premises, as has been OMP (COMM) No. 68/2023 6/ 37 DLCT010060222023 stated in the replication, in evidence produced by petitioner company during cross-examination of its witness namely Mr. Atul Kashyap and also in flow-chart submitted during the course of arguments advanced before the Ld. arbitrator. It is the case of petitioner that the Ld. arbitrator did not consider Clause 12 of the above lease agreement in its entirety to find out the undisputed intents of parties while executing the said document and had decided the issues related thereto contrary to the well settled legal principles.
(vii) That the Ld. arbitrator had wrongly clubbed the issues no.
2,3,6 and 12 of claim statement of petitioner under the common heading of "inaccessibility /accessibility" and had erroneously arrived at a conclusion that the petitioner accessed and used not only the leased premises, but also the whole building of respondent during the period of lock-down, by blindly relying on two e-mails of the petitioner as admissions and the hollow statements of respondent as truth without even calling for any sort of proof regarding such statements. It is submitted that one of these e-mails was erroneous and the other only highlighted non-provision of utilities by respondent, along with hollow rhetorical statements of respondent claiming that they have provided everything possible. It has been averred by petitioner company that it never accessed the leased premises or its OMP (COMM) No. 68/2023 7/ 37 DLCT010060222023 equipments installed within the said premises to render its ITES services during the relevant period.
(viii) That the Ld. arbitrator had wrongly clubbed issues no. 7 and 8 of the claim statement, which dealt with interpretation of Clause 12 of the lease deed, and determined these issues on the basis of an erroneous conclusion of the "inaccessibility" issue. It has been averred that the Ld. arbitrator had grossly misdirected herself to come to conclusion that petitioner had not mentioned anywhere in the claim or its replication the fact that there was no server at all in the said premises and that it was urged only in written submissions and thus, she failed to properly appreciate the pleadings and flow-chart submitted by petitioner during the course of arguments.
(ix) That findings arrived at in the impugned award by Ld. arbitrator are contrary and the same cannot be co-exist. It has been submitted that while deciding the issue of "inaccessibility", the Ld. arbitrator had though concluded that petitioner had accessed the leased premises on ground that they had utilized the amenities provided by respondent during the above said period of April-July, 2020, which made the work from home possible for petitioner, but on the other hand while deciding the issue on "reimbursement for utilities", the Ld. arbitrator concluded that the respondent was not entitled to the same as they have failed to provide any evidence proving that they provided the said utilities OMP (COMM) No. 68/2023 8/ 37 DLCT010060222023 during above said period. It has also been submitted that the respondent failed to bring any proof of providing of these utilities/amenities to petitioner in the said premises during the above period and hence, the findings of Ld. arbitrator are not only self-contradictory, but the same are also perverse, unjust and bad in law and the impugned award being arbitrary, deserves to be set-aside.
(x) That the Ld. arbitrator failed miserably to properly decide issue no. 5 of the claim, wherein she was required to analyse the nature of lock-down and unlock restrictions and the impact of same on performance of the lease deed and she erroneously concluded that the said premises were never damaged nor destroyed in whole or in part during the said period and it was done merely on ground that the building stood intact. It has been submitted that Ld. arbitrator made no whisper regarding "constructive destruction" of property, which forms an essential part of the doctrine of frustration elucidated by court of India, which was relied upon by petitioner and she had thereby caused grave miscarriage of justice by blindly brushing aside the pleadings and submissions of petitioner and she had failed to decide the crucial issue.
(xi) That the tone and tenor of impugned award shows that Ld. arbitrator was not well versed with the commercial aspect of lease agreement and the applicable corporate law and she failed OMP (COMM) No. 68/2023 9/ 37 DLCT010060222023 to appreciate the facts that the above lease deed was not in respect of residential space, but it was in respect to a commercial space and that related to the issue of termination thereof on account of some events frustrating the performance of said contract and making its performance impossible in the given facts and circumstances of case.
5. Case of the Respondent Respondent in his reply filed to the above objections of petitioner has contested the case of petitioner mainly on following grounds:-
(i) That there exists no cause of action whatsoever in favour of petitioner and against the respondent for filing of the present application/petition seeking setting aside of the impugned award as this petition does not disclose any ingredients as envisaged in Section 34 (2) and (2A) of the Arbitration and Conciliation Act for setting aside such an award.
(ii) That the impugned award is the most reasoned award passed by Ld. arbitrator and the same has been given within the ambit of lease deed dated 04.11.2015 r/w its addendum dated 15.03.2019 and after considering not only the facts, but also the issues involved and evidence led by parties before the Ld. arbitrator. It is also submitted that the Ld. arbitrator had given due consideration to the submissions made on behalf of parties at the time of final arguments.OMP (COMM) No. 68/2023 10/ 37
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(iii) That the impugned award does not dealt with any of the issues or disputes which were not contemplated by or were not as per the terms of submissions to arbitration and the said award also does not contain any decision on any such matter, which was beyond the scope of submissions to the arbitration.
(iv) That the impugned award is neither in conflict with the public policy nor it contravenes the fundamental policy of Indian Laws and it is also not in conflict with any notions of morality or justice and it even does not suffer from any patent illegality on the face of it.
(v) That issues in the arbitration proceedings were framed with consent of parties and the impugned award is a reasoned award as it deals with all issues and merely because the Ld. arbitrator had not accepted the erroneous view point of petitioner on some of the issues, it does not give any cause of action to petitioner to challenge the said award. It is also his submission that as per law, an award cannot be set-aside merely on the ground of any erroneous application of law or by re-appreciation of evidence. It is further the submission of respondent that a bare perusal of impugned award shows that the Ld. arbitrator did not travel beyond the scope of arbitration.
OMP (COMM) No. 68/2023 11/ 37DLCT010060222023
(vii) That the present application filed by petitioner is gross abuse of the process of law and an extreme example of misadventure by petitioner merely with an intent to delay the payment of legitimate amounts awarded to the petitioner in terms of the impugned award.
(viii) That while deciding the main issue in dispute between parties with respect to "accessibility/inaccessibility" of the tenanted premises, the Ld. arbitrator had extensively dealt with the issue involved and it is clear from the observations made and findings given by her in impugned award on the basis of pleadings and evidence of parties, and also the submissions made from both sides, that she had arrived at correct findings on said issues and had rightly gone to held that the said premises were neither destroyed nor substantially/permanently or even partly damaged or destroyed or were rendered unfit, as stipulated in terms of the force majeure conditions contained in Clause 12 of the said agreement.
(ix) That the execution of lease deed between parties had nothing to do with change of policy guidelines of the Government of India with respect to the business of petitioner and the same could have any bearing on the said lease deed only if due to the same, the leased premises could have become completely prohibited or restricted to use in business of petitioner and since the petitioner failed to prove the said fact, the Ld. OMP (COMM) No. 68/2023 12/ 37 DLCT010060222023 arbitrator was right in holding that the said premises were not destroyed or rendered inaccessible, partly or substantially and the petitioner had been conducting its business activities from the said premises during the relevant period and hence, there was no situation for invocation of Clause 12 of the lease deed by petitioner.
(x) That the ground taken and contention raised by petitioner in present application with regard to the intended purpose of said lease lease to accommodate 120 persons is not only beyond the contents of said lease deed, but the said ground was not taken and no submission about the said ground was made before the Ld. arbitrator also and for this reason, no issue with regard to the same was even framed by her.
(xi) That the "force majeure" conditions provided in Clause 12 of the lease deed were applicable only if the rendered premises stood destroyed or damaged or the same were rendered inaccessible, completely or partially, during continuance of the lease deed due to given acts or circumstances and this Clause never provided for waiver of any rent or maintenance charges etc. in case the said conditions were not made out.
(xii) That the notice dated 03.08.2020 served by petitioner upon respondent terminating the said lease deed, when there was no such alleged impediment, permanent or temporary, to OMP (COMM) No. 68/2023 13/ 37 DLCT010060222023 accessibility of the said premises was given with malafide intents and it was misconceived and ill advised and was given by falsely invoking the doctrine of frustration or force majeure Clause 12 of the said deed. It is also his submission that the doctrine of frustration came into play only in case of excecutary contracts and not in case of executed contracts, as is the present case.
6. I have heard the extensive arguments advanced by Sh. T.K.A. Padmanadhan, Ld. Counsel for petitioner and Sh. N. Kumar, Ld. Counsel representing the respondent. I have also carefully perused the entire case record, including the written submissions filed on behalf of parties.
Arguments of Ld. Counsels for parties and appreciation thereof
7. The admitted position of facts which emerges out from record and the submissions made by Ld. Counsels for parties is that the above lease deed in respect to the tenanted premises was executed between parties on 04.11.2015 and it was to be operative w.e.f. 01.02.2016 and the duration of the said lease was for a period of 9 years. The rate of rent on which the leased premises were let out by respondent to petitioner herein was Rs. 11,50,000/- pm, excluding the service tax, maintenance and water charges etc, and the petitioner had also given an interest free security of Rs. 57,50,000/- to respondent, which was to be OMP (COMM) No. 68/2023 14/ 37 DLCT010060222023 refunded on expiry of the term of lease. Further, the said lease also contained a provision for enhancement of rent @ 15% of the last paid rent after every three years and a lock-in-period of 33 months was also provided therein.
8. It is also the admitted case of parties that in terms of Clause 2 of the said lease deed, the lease could not have been terminated by petitioner company during the lock-in-period, except in terms of the provisions contained in Clauses 6 and 12 of the said deed, and in case the petitioner company terminated it during the lock-in-period and otherwise than as provided by Clause 12 of the lease deed, then it was liable to make payment of the balance rent for lock-in-period to respondent. However, in terms of Clause 4 of the said deed, lease could have well been terminated by petitioner company after expiry of the lock-in- period, either by giving a written notice of three months to respondent of its intention to do so or by paying him rent equivalent to this notice period.
9. It is also the admitted case of parties that Clause 12 of the above lease deed provided for some force majeure events and on the happening thereof and if the leased premises stood destroyed or damaged or were rendered inaccessible, wholly or in part, for the reasons stated therein, then the respondent herein was required to remove such impediment to accessibility of the said OMP (COMM) No. 68/2023 15/ 37 DLCT010060222023 premises and the rent and maintenance charges for said premises were to remain suspended until the said premises were rendered fit for occupation and use or were made accessible for petitioner company. The said Clause also gave an exclusive right to petitioner company to terminate the lease deed at its option and without incurring any financial obligation of either giving of a termination notice or the payment of any rent or other charges in respect to the said premises.
10. It is further the admitted case of parties that one addendum dated 15.03.2019 to the above lease deed dated 04.11.2015 was made executed between parties later on and it is found mention in this addendum that the lock-in-period earlier provided through the original lease deed was of three years and its stood already expired on 31.01.2019. Through this addendum, the rate of rent for said premises stood decreased from Rs. 11,50,000/- pm to Rs. 9,00,000/- pm and a fresh lock-in-period of two years was again provided by parties, which commenced on 01.02.2019 and was to expire on 31.01.2021. It is also a matter of record and the admitted case of parties that the tenancy created through above lease deed in favour of petitioner company stood terminated by it through an e-mail dated 03.08.2020 w.e.f. 17.08.2020, i.e. while the above fresh lock-in-period of two years has yet not expired and the same was still in operation.
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11. It is also the admitted case of parties that while the above lease deed as amended by the above said addendum, was still in operation and the fresh lock-in-period created thereby has not yet expired, the country suffered the out break of corona virus inducted COVID-19 pandemic and it resulted in complete lock- down of the country and on all business activities and movement of individuals initially and then to the restricted activities and movements in terms of the lock-down orders and guidelines issued by the Government from time to time. The basic case of petitioner company is that due to the said lock-down orders and guidelines issued by the Government, it was practically not able to have access to the leased premises after 23.03.2020 and hence, same stood damaged or destroyed or were rendered inaccessible, wholly or in part, for it in terms of the force majeure conditions provided by Clause 12 of the lease agreement and since its officials had not been working from the said premises and they were working from home as per the guidelines issued by Government, after the initial lock-down period of 21 days imposed vide order dated 24.03.2020 was over, it was not liable to pay rent for the months of April, 2020 to July, 2020 @ of Rs. 9,00,000/- per month to the respondent and amounting to Rs. 36,00,000/- in total and, thus, it was entitled to refund of the said amount of rent paid by it to respondent. It is also the case of the petitioner company that it was even entitled to refund of the security deposit amount of Rs. 57,50,000/- from respondent, OMP (COMM) No. 68/2023 17/ 37 DLCT010060222023 besides refund of the amount of Rs. 29,050/- being rentals for some laptops hired by it during the said period and also the interest amount on rentals paid on laptops and premises being Rs. 2,26,829/-.
12. These were the amounts which are found claimed by petitioner company through its claim lodged with the Ld. arbitrator.
13. It is necessary to mention here that before resorting to the termination of lease deed and before paying the above amount of rent for the month of April, 2020 to July, 2020, the petitioner company had also requested the respondent to waive the rent for a period of three months from April, 2020 on above said ground of COVID, and in terms of the provision contained in Clause 12 of the lease deed, but the said request of petitioner was declined by respondent and hence, it has been stated that the petitioner company was compelled to pay the said rent. It is further found reflected in the impugned award that the petitioner company had also tried to remove some equipments from the leased premises during the said period, but the respondent had not permitted it on the ground that the petitioner company could not do it without paying the outstanding dues of respondent.
14. As far as the counter claims lodged by respondent before the Ld. arbitrator are concerned, he had claimed Rs. 54,00,000/-
OMP (COMM) No. 68/2023 18/ 37DLCT010060222023 as the balance rent for lock-in-period of six months i.e. from August, 2020 to January, 2021 and Rs. 39,67,500/- as rent for the notice period of three months @ of Rs. 13,22,500/- pm and it was so claimed on the basis of a further Clause provided in the above addendum, which stipulated that the above reduction in rate of rent through the said addendum was for a period for two years only w.e.f. 01.02.2019. It is also the admitted case of parties that except the above amendments and modifications, rest of the terms of original lease deed remained unaltered. The other amounts which were claimed by respondent in his counter claim are the amount of Rs. 1,18,614/- on account of reimbursement for utilities provided and also an amount of Rs. 1,88,614/- on account of GST.
15. As already discussed, though the Ld. arbitrator through her impugned award had fully allowed the refund of security amount of Rs. 57,50,000/- to the claimant/petitioner herein, but the petitioner's claim regarding refund of the rent amount of Rs. 36,00,000/- for the months of April-July, 2020 and its other claims of Rs. 29,050/- and Rs. 2,26,829/- were disallowed. Similarly, though the counter claim of respondent for rent for the balance lock-in-period amounting to Rs. 54,00,000/- was fully allowed, but his claim for rest of the three months' notice period was allowed partially only, as it was allowed for a sum of Rs. 27,00,000/- @ rent of Rs. 9,00,000/- pm and not on the increased OMP (COMM) No. 68/2023 19/ 37 DLCT010060222023 rate of Rs. 13,22,500/- pm and the other counter claims of respondent for amounts of Rs. 1,18,614/- and Rs.1,88,614/- are also disallowed.
16. Thus, the crux of arguments advanced by Ld. Counsel for petitioner/objector is that the Ld. arbitrator had failed to appreciate the facts and circumstances of case as brought on record before her and had arrived at wrong findings regarding inaccessibility/accessibility of the leased premises in question and though the pleadings and evidence on record clearly reflected that the said premises became inaccessible for petitioner company during the relevant period of four months affected by the COVID-19 pandemic, but she had arrived at contrary findings on the above aspect. It is also his contention that in terms of Clause 12 of the lease deed, it was enough if the said premises stood destroyed or damaged or were rendered inaccessible in whole or in part due to different acts of God or terrorism and war etc. or due to the acts of Government, local bodies or courts, as stated therein, and the Ld. arbitrator failed to consider the fact that a case of waiver of rent for the months from April, 2020 to June, 2020 was duly made out from record and the petitioner company was entitled to refund of rent for the said months, which it was forced to pay to respondent under the given circumstances.
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17. It is also the submission of the Ld. Counsel for petitioner that the Ld. arbitrator was not right in awarding an amount of Rs. 54,00,000/- to respondent on account of balance rent of the locking period on one hand and awarding an amount of Rs. 27,00,000/- on the other hand on account of failure of petitioner company to give three months' notice in advance for termination of the lease as both these amounts could not have been awarded simultaneously. It is also the contention of Ld. Counsel for petitioner that Ld. arbitrator had failed to properly appreciate the terms and conditions of above lease agreement and had awarded the above sums in gross violation of the terms of the said agreement and the impugned award, thus, not only contravenes the fundamental policy of Indian law, but it also suffers from patent illegality appearing on the face of it and going to root of case and the said award cannot be legally sustained.
18. In support of his above contentions Ld. Counsel for petitioner has also relied upon certain observations made in judgment of the Hon'ble Supreme Court in case of Ssangyong Engineering and Construction Company Ltd. Vs. National Highways Authority of India, (2019) 15 SCC 131, which are being reproduced as under:-
"37. 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 OMP (COMM) No. 68/2023 21/ 37 DLCT010060222023 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 back door when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate courtis permitted to do, cannot be permitted under the ground of patent illegality appearing on the face ofthe award.
39. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of thesubstantive 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 noreasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount toa patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated inparagraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of acontract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in amanner 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, hecommits an error of jurisdiction. This ground of challenge will now fall within the new ground addedunder Section 34(2A).30.
41. What is important to note is that a decision which is perverse, as understood in paragraphs 31and 32 of Associate Builders (supra), while no longer being a ground for challenge under "publicpolicy of India", would certainly amount to a patent illegality appearing on the face of the award.Thus, a finding OMP (COMM) No. 68/2023 22/ 37 DLCT010060222023 based on no evidence at all or an award which ignores vital evidence in arriving at itsdecision 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 arbitratorwould also qualify as a decision based on no evidence inasmuch as such decision is not based onevidence led by the parties, and therefore, would also have to be characterised as perverse...."
19. He has also relied upon the following observations made by the Hon'ble Supreme Court in case of Delhi Metro Rail Corporation Ltd. Vs. Delhi Airport Metro Express Pvt. Ltd., 2024 SCC OnLine SC 522:-
"44. In the case at hand, the Division Bench found the award to be perverse, irrational and patently illegal since it ignored the vital evidence of CMRS certification in deciding the validity of termination. This, the Division Bench held, overlooked the statutory certification deeming it irrelevant without reasons and thus the award was patently illegal according to the test in Associate Builders (supra).
46. .......The award overlooked the express terms of clause 29.5.1(i) which stipulated that if "effective steps" were taken during the cure PART G period by DMRC, the contractual power to terminate could not be exercised. This Court incorrectly considered the CMRS certificate to be irrelevant to the validity of the termination.
55. The erroneous and misleading framing of the issue as noted above led to the ignoring of vital evidence relevant to the issue of termination. The arbitral tribunal held that since the Commissioner imposed conditions of inspection and speed restrictions, this meant that the defects were not fully cured."
20. Besides the above, judgments in following cases, which were referred the Ld. arbitrator, have also been referred to and OMP (COMM) No. 68/2023 23/ 37 DLCT010060222023 placed on record by Ld. Counsel for petitioner in support of his above arguments:-
1) Energy Watchdog Vs. Central Electricity Regulatory Commission & Ors., (2017) 14 SCC 80;
2) Ramanand & Ors. Vs. Dr. Girish Soni, AIR 2020 Del 80;
3) Stayabrata Ghose Vs. Mugneeram Bangur & Co. & Ors., AIR 1954 SC 44;
4) TGV Projects & Investments Pvt. Ltd. Vs. National Highways Authority of India, 2018 SCC OnLine Del 13264; and
5) Sales Tax Officer, Banaras & Ors. Vs. Kanhaiya Lal Saraf, AIR 1959 SC 135.
21. Further, it is also the contention of Ld. Counsel for petitioner that the impugned award to the extent of allowing counter claim of respondent for an amount of Rs. 27,00,000/- on account of three months' notice period is liable to be severed and set aside by this court even if the entire award is not set aside and on this aspect judgments in cases of National Highways Authority of India Vs. Trichy Thanjavur Expressway Ltd., 2023 SCC Online Del 5183 and NHPC Ltd. Vs. Jaiprakash Associates Ltd., 2024 SCC Online Del 1319 have also been referred to and relied upon by him.
22. Per Contra, the crux of contentions made by Ld. Counsel for respondent is that the findings arrived at by Ld. arbitrator regarding accessibility or inaccessibility of leased premises during the COVID-19 effected period are perfectly as per the documents and material placed on record before her and the same OMP (COMM) No. 68/2023 24/ 37 DLCT010060222023 are not liable to be interfered with by this court as this court cannot replace the same with its own findings and it has no powers to interfere with or to set aside the impugned award on the grounds taken by petitioner. It is also his submission that the grounds taken in petition or contentions being raised on behalf of petitioner do not make any case for holding the said award in conflict with public policy of India or the fundamental policy of Indian Laws or to be vitiated on the ground of patent illegality as the discrepancies being pointed out by Ld. Counsel for petitioner in the impugned award cannot be termed as patent illegalities or those going to root of the case. It is also his submission that in terms of proviso to Section 34(2A) of the Arbitration & Conciliation Act, 1996, which was inserted by the Amendment Act, 2015, an award cannot be set aside merely on the ground of erroneous application of law or by re-appreciation of evidence and this has even been held and reiterated even in the judgments in cases of Ssangyong Engineering and Construction Company Ltd. (Supra) & Delhi Metro Rail Corporation Ltd. (Supra) being relied upon by Ld. Counsel for petitioner. It is further his submission that if two views about interpretation of provisions of an agreement are possible and Ld. arbitrator had taken one of the views, which is plausible from the facts and circumstances of case, then the impugned award cannot be set aside on the ground that he or she should have taken the other view. It is also his submission that it was also rightly held by the OMP (COMM) No. 68/2023 25/ 37 DLCT010060222023 Ld. Arbitrator that the forced majeure conditions provided by Clause 12 of the agreement were not there and no case for suspension or waiver of rent as per the said Clause or in view of the judgment in case of Ramanand (Supra) was made out, which judgment was relied upon by Ld. Counsel for petitioner himself in the arbitral proceedings.
23. As is clear from above discussion, the challenge by petitioner to the impugned award is mainly on two grounds and firstly, it has been challenged on ground that the findings arrived at by Ld. arbitrator regarding inaccessibility or accessibility of the leased premises for petitioner company during the relevant period of COVID were not correct and the same were against the documents and material placed before her and also the submissions made during course of arguments. On this aspect, the attention of this court has also been drawn by Ld. Counsel for petitioner to some depositions made by petitioner's witness produced and examined during the arbitral proceedings and further to some flow-chart stated to have been submitted before the Ld. arbitrator in support of case of the petitioner company and it is submitted that though some equipments of petitioner were lying in the leased premises during the said period and the same were not permitted to be removed by respondent, but no server in the said premises was installed by petitioner company and the employees of petitioner had been working from home OMP (COMM) No. 68/2023 26/ 37 DLCT010060222023 only as per the guidelines issued by Government and DoT. It is, thus, the submission of Ld. Counsel that leased premises stood damaged or destroyed or were rendered inaccessible for petitioner in terms as stated in Clause 12 of the lease deed as the intended purpose of lease stood defeated due to the lock-down and restrictions imposed by Government.
24. However, a bare perusal of the impugned award shows that the Ld. arbitrator had discussed all the relevant documents and material on record and the rival submissions and contentions of parties on the above aspect in detail and it is only thereafter that she had arrived at a finding to the effect that the leased premises were not damaged or destroyed or rendered inaccessible, wholly or in part, during the relevant period of COVID as the same had been in possession of the petitioner company throughout during the said period and except the initial mandatory lock-down period of 21 days, the restricted working of petitioner company from the said premises was allowed in view of the guidelines issued by Government and DoT on the above subject. Even if for a moment, it is believed that the deposition made by PW-1 before the Ld. arbitrator regarding there being no server installed in the leased premises are taken as true, it will not change the things as it was the admitted case of petitioner company, and also deposed by the said witness specifically, that all the assets of company like furniture, equipments etc. were lying in the said premises OMP (COMM) No. 68/2023 27/ 37 DLCT010060222023 under the supervision of a security guard and the company was in possession and full control of the said premises.
25. It is also observed by this court from record that the above decision of Ld. arbitrator regarding complete accessibility of the leased premises to petitioner company was taken on consideration of various other facts and circumstances as reflected on record and it included the fact that ITES companies were permitted, after the initial lock-down period, to resume their work on expiry of the said period subject to some restrictions and further, another material fact that the petitioner company had itself taken and charged license fee in respect to a part of the leased premises, which it had given on rent to a third party namely M/s Avanta, upto the month of June, 2020 and having done so and by their conduct in not giving any suspension or waiver of license fee to the said company on the above said grounds of COVID related conditions or restrictions, it could not have justified its claim for the said benefit or for suspension or waiver of rent for itself from respondent. It is necessary to mention here that a portion of the leased premises was further given on rent by petitioner company to the above third party on license basis and against some amount to be paid as license fee and respondent claims that he had honestly and bonafidely believed the submission of petitioner company that the said portion of premises remained unused and the above third party OMP (COMM) No. 68/2023 28/ 37 DLCT010060222023 was an associate company of the petitioner. Hence, the Ld. arbitrator had taken the view that if the petitioner company itself had charged license fee from the above third party in respect to a portion of the said premises, its claim for waiver of the rent for same period was not justified.
26. Moreover, the Ld. arbitrator had also taken a view on the basis material placed before her that even no case for waiver of rent for above said period was made out by petitioner company as the conditions prescribed by Clause 12 of the lease deed were not made out and it was possible to hold on its basis that the said premises stood damaged or destroyed or were rendered inaccessible in any manner for petitioner company as the force majeure conditions provided in the said Clause were not there. The Ld. arbitrator is also found to have rejected the submission of Ld. Counsel for petitioner for application of the doctrine of frustration of a contract in the given sense and in view of the law laid down by the Hon'ble Supreme Court in case of Raja Dhruv Dev Chand Vs. Raja Harmohinder Singh and Anr. (1968) 3 SCR 339, which was relied upon by Ld. Counsel for respondent and was also found referred to in the judgment in case of Ramanand & Ors. (Supra) being relied upon by Ld. Counsel for petitioner during the arbitral proceedings, as it was held in the said case that the said doctrine of frustration was not applicable to executed contracts and the same could have been applied only OMP (COMM) No. 68/2023 29/ 37 DLCT010060222023 for executory or incompleted contracts. The Ld. arbitrator took the view that the present case was a case of completed or executed contract and not of an executory contract.
27. Coming to the other ground of challenge to impugned award by petitioner, it is again a view taken by the Ld. arbitrator and interpretation given by her to the terms contained in above lease agreement that since termination of the lease deed by petitioner company through its letter/e-mail dated 03.08.2020 w.e.f. 17.08.2020 within the continuance of lock-in-period was not as per the terms contained in above lease agreement, and specially Clause 12 thereof providing for some force majeure events, the petitioner company was liable to pay to respondent not only the rent amount of Rs. 54,00,000/- for the balance lock- in-period from April, 2020 to July, 2020, as provided by Clause 4 of the said deed, but also the rent of three months for the notice period provided by Clause 4 of the said agreement. This view of or the finding arrived at by Ld. arbitrator on this aspect may also though be factually or legally erroneous as both these amounts could not have been granted by her to the respondent on termination of lease in respect to the said premises, but this again is only one of the views which could have been permissible to be taken by her on interpretation of the said terms and simply because she took the above view and the same may be erroneous, it is not a ground to hold that the impugned award is against OMP (COMM) No. 68/2023 30/ 37 DLCT010060222023 public policy or the fundamental policy of Indian Laws or that the same is vitiated due to a patent illegality caused because of the said view.
28. As is now well settled and as was also held in the case of Ssangyong Engineering (supra), which is being relied upon from both sides, to construe or to interpret the terms of an agreement or contract is primarily the job of an arbitrator and the court cannot substitute its own findings in place of the findings which have been arrived at by Ld. arbitrator in respect to the said terms as while deciding a petition under Section 34 of the above said Act, this court does not sit in appeal or work in a supervisory manner. Reference in this regard can also be made to a decision of the Hon'ble Supreme Court in case of Quality Manufacturing Corporation Vs. Central Warehousing Corporation, (2009) 5 SCC 142 and even to another judgment of the Hon'ble Supreme Court in case of SAIL Vs. Gupta Brothers Steel Tubes Ltd., (2009) 10 SCC 63.
29. Further, in terms of the provisions contained in said Section, the scope of interference by this court with an arbitral award under challenge before it is very limited and the court can only interfere with or set-aside such an award if a case for doing so is made out in terms of provisions and grounds contained in Section 34 (2) and (2A) of the said Act and admittedly, the said award has not been assailed by petitioner company on grounds OMP (COMM) No. 68/2023 31/ 37 DLCT010060222023 contained in Section 34 (2) (a) (i) (ii) (iii) (iv) & (v) or even under Section 34 (2) (b) (i) of the said Section and it has been assailed or challenged only under Section 34 (2) (b) (ii) and Section 34 (2A) of the said Act on grounds that it is in conflict with the public policy of India or the fundamental policy of Indian Law, as provided in explanation 1 (ii) of above clause (b)
(ii) of Section 34 (2) and further that the same is a vitiated award on account of patent illegality appearing on the face of it.
30. However, as already discussed, simply because the Ld. arbitrator had interpreted the terms of an agreement in a given manner or had taken a particular view which may be erroneous, though another view was also possible from the facts and material on record, these are not the grounds to interfere with or to challenge the said award. Hence, this court is of considered opinion that no case has been made out from the submissions made and contentions raised on behalf of petitioner before this court on the above issue of inaccessibility or accessibility of leased premises to hold that the view taken by Ld. arbitrator on said issue amounted to or was in contravention to the public policy of India or the fundamental policy of Indian Laws or it amounted to a patent illegality appearing on face of award and going to root of the case and rendering the said award to be illegal or against the terms as contained in the above lease agreement.
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31. On this aspect, it is also relevant to refer here to the observations made by the Hon'ble High Court in its recent decision dated 19.11.2024 in case titled as Netaji Subhash Institute of Technology Vs. M/s Surya Engineers and Anr., OMP (COMM.) 40/2020 and I.A. No. 1401/2024,
87. The law with regard to interpretation is no longer res-integra. It is settled law that where the arbitrator has taken a possible/plausible view, the court would refrain from interfering with the Award under section 34 of the Arbitration and Conciliation Act, 1996. The same can also be seen in view of the judgment of the Hon'ble Supreme Court in NTPC Ltd. v. Deconar Services (P) Ltd., (2021) 19 SCC 694. The operative portion of the judgment reads as under:--
"12. Further, it is also a settled proposition that where the arbitrator has taken a possible view, although a different view may be possible on the same evidence, the court would not interfere with the award. This Court in Arosan Enterprises Ltd. v. Union of India [Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC 449], held as follows : (SCC p. 475, paras 36-37) "36. Be it noted that by reason of a long catena of cases, it is now a well-settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as OMP (COMM) No. 68/2023 33/ 37 DLCT010060222023 well, the court would not be justified in interfering with the award.
37. The common phraseology "error apparent on the face of the record" does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined."
13. From the above pronouncements, and from a catena of other judgments of this Court, it is clear that for the objector/appellant in order to succeed in their challenge against an arbitral award, they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the court [seeState of U.P. v. Allied Constructions [State of U.P. v. Allied Constructions, (2003) 7 SCC 396]; Ravindra Kumar Gupta & Co. v.Union of India [Ravindra Kumar Gupta & Co. v. Union of India, (2010) 1 SCC 409 : (2010) 1 SCC (Civ) 130] and Oswal Woollen Mills Limited v. Oswal Agro Mills Ltd. [Oswal Woollen Mills Limited v.Oswal Agro Mills Ltd., (2018) 16 SCC 219 : (2019) 1 SCC (Civ) 426] ].
32. The above cited prepositions laid down in case Delhi Metro Rail Corporation Ltd. (Supra) being relied upon by Ld. Counsel for petitioner on the above aspects can be distinguished in view of the fact that in the said case, some vital evidence and the specific terms of contract between parties were found ignored by the Ld. arbitral tribunal in arriving at the findings contained therein, whereas in the present case the impugned award is found OMP (COMM) No. 68/2023 34/ 37 DLCT010060222023 to have been given after taking into consideration all the relevant facts and material placed before the Ld. arbitrator. Again, merely because some issues were clubbed for adjudication by the Ld. arbitrator and findings were collectively given on these issues, it cannot amount to a patent illegality going to root of the case or effecting the legality of the impugned award as it is observed that the issues which were clubbed by the Ld. arbitrator were identical issues and same facts or evidence were/was required to be appreciated and considered for arriving at findings on these issues.
33. The judgment of the Hon'ble Supreme Court in SAIL's case is also relevant on the aspect that once the Ld. arbitrator had construed the terms of a contract in a particular manner and the said construction is not absurd and it appears to be a plausible one, then it is not open to the courts to interfere with the said award. It was observed by their lordships in this case that the legal position is no more res integra that the arbitrator having been made the final arbiter of resolution of disputes between the parties, the award is not open to challenge on the ground that the arbitrator had reached at a wrong conclusion. This legal position has also been followed and reiterated by the Hon'ble Supreme Court as well as by the Hon'ble High Courts subsequently in various cases. It is also settled that under the provisions of Section 34 of the above said Act, this court has no powers to OMP (COMM) No. 68/2023 35/ 37 DLCT010060222023 modify an award pronounced by the arbitrator. Reference in this regard can be made to a decision dated 20.07.2021 of the Hon'ble Supreme Court in case The Project Director, National Highways Nos. 45E and 220, National Highways Authority of India Vs. M. Hakeem and Others.
34. As far as the judgments in cases of National Highways Authority of India (Supra) and NHPC Ltd. (Supra) being referred by Ld. Counsel for petitioner are concerned, it is observed that the same have been given with reference to provisions or the ground contained in Section 34 (2) (a) (iv) of the above said Act, where the Ld. arbitrator happened to deal with certain issues which were not contemplated by or did not fell within the terms of the submission to arbitration, whereas in the present case the impugned award has been delivered after a thoughtful and elaborated consideration of only the disputes which were contemplated by and arose from the arbitral reference and the claim and counter claim of parties.
35. Therefore, in view of above discussion, the impugned award is being upheld and the challenge made to it by petitioner company through the present petition is being dismissed. This petition filed by petitioner company under Section 34 of Arbitration and Conciliation Act, 1996 stands dismissed and disposed off accordingly.
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36. File be consigned to the Record Room and arbitral record be sent back after due compliance Digitally signed by M K NAGPAL MK NAGPAL Date:
2025.01.22 Announced in the open court 16:27:40 Dated: 22.01.2025 +0530 (M. K. Nagpal) District Judge, Commercial Court-13 Central District, Tis Hazari Courts, Delhi/22.01.2025 OMP (COMM) No. 68/2023 37/ 37