Bangalore District Court
Once Again Does Not Arise. It Is A Very vs Was Bound To Complete The Construction on 12 November, 2021
IN THE COURT OF LXXXV ADDL. CITY CIVIL &
SESSIONS JUDGE, AT BENGALURU (CCH-86)
THIS THE 12TH DAY OF NOVEMBER 2021
PRESENT:
SMT. M. LATHAKUMARI. M.A., LL. M.,
LXXXV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com. A.S. No. 91/2019
BETWEEN:
M/S SSJV-ZVS JOINT VENTURE,
No.25/2, 12th Floor, S.N. Towers,
M.G. Road, Bangalore-560 001,
Represented by its Power of
Attorney Holder,
Sri. Somashekar Salimath.
: APPLICANT
(Represented by Sri. Shreyas
Jayasimha - Advocate.)
AND
M/s ITD Cementation India Limited,
1st Floor, Dani Wooltex
Compound,
No.158, Vidyanagari Marg,
Santacruz East,
Mumbai-400 098,
Represented by its Managing
Director.
: RESPONDENT
(Represented by
K.S.N. Manjusha - Advocate).
Date of Institution of the 13.06.2019
suit
2
Com.A.S.No.91/2019
Nature of the suit (suit on
pronote, suit for Arbitration Suit under 34 of
declaration & Possession, the Arbitration Act
Suit for injunction etc.)
Date of commencement of
recording of evidence ---
Date on which judgment 12.11.2021
was pronounced
Total Duration Year/s Month/s Day/s
02 04 29
(M.LATHAKUMARI)
LXXXV Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This is an application filed by applicant under Section 34 of the Arbitration and Conciliation Act, 1996, against an award dated 09.03.2019 delivered by the learned arbitrator Sri. Justice G. Patri Basavana Goud (Retired) who had been appointed as sole arbitrator as per orders of Hon'ble High Court to decide the dispute between the parties arising out of the contract dated 06.02.2009.
2. The question sought to be canvassed before me is that the impugned award passed by the learned 3 Com.A.S.No.91/2019 arbitrator referred to herein above is not legal and valid as the arbitrator in spite of observing that there is no tripartite agreement between applicant/claimant, respondent and NTPC Ltd., who awarded principal contract to the applicant/claimant herein, summoned certain documents from NTPC and thereby not at all maintained the confidentiality in conducting the proceedings and also the award passed by the learned arbitrator is contrary to the Sec. 27 of the Arbitration and Conciliation Act and further the same is patently illegal and the impugned order ought to be set aside by this court on account of legal and factual infirmities in rejecting the claims of applicant and allowing the counter claims of respondent, thus meeting the grounds stipulated u/s 34 of the Arbitration and Conciliation Act, and hence pray for, to set aside the award.
3. On the other hand, the respondent canvassed that out of the work entrusted to the applicant/claimant by NTPC Ltd., a small portion of the work was given to the respondent herein i.e., construction of the up-stream cut-off wall. Since applicant failed to produce the relevant documents before learned arbitrator for adjudication of the controversy, respondent was constrained to file necessary application to summon certain documents from NTPC and that apart the work 4 Com.A.S.No.91/2019 assigned to respondent herein by the claimant who in turn performing the contract of NTPC Ltd., were all interconnected. At subsequent stage, considering the lapse on the part of applicant/claimant, the NTPC Ltd., started disbursing the amount to the respondent directly. Under such circumstances, there was no such violation of confidentiality of the parties by the learned arbitrator. After considering the records and also material placed before the arbitral tribunal, the learned arbitrator has passed the award under which he is only directed the applicant/claimant to pay the amount incurred by the respondent herein. Under such circumstances, question of perversity or illegality in passing the award does not arise. Claims of applicant has already considered in an arbitration proceedings initiated by applicant against NTPC Ltd. When such being the case, question of considering claims of applicants once again does not arise. It is a very reasoned award passed by learned arbitrator and hence prays for dismissal of this petition with cost.
4. In the light of the above submission, the question which arise for my consideration are: -
5Com.A.S.No.91/2019 (1) Whether the impugned award needs to be set aside under Sec. 34 of Arbitration and Conciliation Act, 1996? (2) What Order?
5. My answer to the above points are: -
Point No.1 - In the Negative Point No.2 - As per final order for the following REASONS
6. POINT NO.1: - It is not in dispute that the applicant herein who was a claimant before the arbitral tribunal in CMP No.118/2011 is a joint venture between SSJV and M/s. Zarubezhvodstroy. The applicant is a Bengaluru based company incorporated under the Companies Act. Whereas the later is incorporated under the Laws of Russia as mentioned in para-6 of this petition. It is also not in dispute that the claimant/ applicant's joint venture was formed in order to enter into a contract for the construction of barrage and destilting chamber package for the Tapovan Vishnugad Hydro Electric Project (project for short). The applicant was awarded the construction work of the project by M/s. NTPC Ltd., (hereinafter referred to as NTPC) on the 6 Com.A.S.No.91/2019 river Dhauliganga in Chamoli District, Uttaranchal State under the contract dated 23.3.2007. The total cost of the project under the contract being Rs.2,76,91,55,240/-. That the time stipulated for completion of the said project being 44 months ending on 23.9.2010. The said project work also included the construction of up-stream cut-off wall of the value of Rs.5,14,00,000/- as per the contract signed between the applicant and the NTPC. For the said work the applicant entered into contract with the respondent herein on 06.02.2009. The value of the contract entered by the applicant and the respondent herein was Rs.16,81,80,400/-. As per the contract entered into between the applicant and the respondent herein, the respondent was bound to complete the construction work within a span of four months from the date of handing over the site on 24.4.2009. It is not in dispute that the respondent herein however competed the work on 23.9.2010 i.e., at a belated stage than the time originally agreed between the parties. It is not in dispute that the NTPC which later convened meeting with the claimant/applicant and the respondent herein with regard to said portion of work assigned by the applicant to the respondent due to delay of payment made by applicant herein, accepted the work 7 Com.A.S.No.91/2019 completed by the respondent herein and also issued completion certificate to the respondent herein. However, in the meantime the remaining work which was assigned to the applicant herein i.e., the main project was not having been completed by the applicant herein, the NTPC terminated its contract with the claimant. It is not in dispute that in this regard the applicant and NTPC resolved their dispute in an arbitration proceedings amongst themselves. However, the applicant/claimant alleging latches on the part of the respondent herein for termination of his contract by the principal contractor i.e., NTPC approached the arbitral tribunal claiming certain amounts from the respondent herein. The respondent who appeared before the learned arbitrator resisted the applicant's claim and also summoned certain documents from NTPC. After summoning of document it is not in dispute that the applicant withdraw some of his claims against respondent herein. It is the contention of learned applicant counsel that in para-14 of the award the learned arbitrator categorically observed that the claimant had also initiated parallel arbitral proceedings against NTPC at Delhi in relation to the very termination of the contract between the claimant and the NTPC. Award has come to be passed in that regard. Since one 8 Com.A.S.No.91/2019 of the parties herein i.e., respondent was not a party to the said arbitral proceedings at Delhi opined that it is not permissible for the tribunal to refer to anything that happened before the said arbitral tribunal at Delhi or as to what the tribunal held therein and in spite of such observation summoned the documents from NTPC and not at all maintained the confidentiality of the parties in conducting the proceedings. As far as summoning of documents from NTPC by the respondent admittedly the applicant herein challenged the same before City Civil Court, Bengaluru by filing its objections and also before Hon'ble High Court of Karnataka. Further it is not in dispute that before Hon'ble High Court considering the order passed by the City Civil Court with regard to summoning of documents, NTPC submitted the documents called from it and thereafter learned arbitrator proceeded with the matter since there was no stay. Since the date of the main contract awarded in favour of applicant herein by NTPC a portion of contract for a meager amount was assigned to respondent herein. The contract awarded to the applicant was for Rs.2,76,91,55,240/- whereas the applicant herein awarded a portion of contract i.e., construction of up- stream cut-off wall by the respondent herein. The value of the contract was Rs.16,81,80,400/-. Considering the 9 Com.A.S.No.91/2019 lapse on part of applicant the principal contractor NTPC started making payments directly to the respondent herein and also convened meeting with respondent along with the applicant herein. Though there is no tripartite agreement herein between the applicant, respondent and NTPC it is not in dispute that at later part all these parties convened meeting together and discussed about the execution of contract in time and other issues. Applicant herein having settled its claim with NTPC in an arbitral proceedings is under obligation to settle the respondent's amount. It is not the case of applicant that the evidence placed by applicant to the effect that its main contract with NTPC came to be terminated in pursuance of delay in execution of contract by the respondent and same has not been considered by the learned arbitrator. The confidentiality discussed under the provisions of Sec. 75 of Arbitration and Conciliation Act is altogether different. As per this provision, it is mentioned that the conciliator and the parties shall keep confidential of the matters relating to the conciliation proceedings. This does not mean that applicant can withhold the documents which is necessary for adjudication of the controversy. In Associate Builders vs. DDA case the Hon'ble Apex Court observed that, "arbitrator is the sole judge of quantity 10 Com.A.S.No.91/2019 and quality of evidence. When he delivers arbitral award and once it is found that arbitrators' approach is neither arbitrary nor capricious then there is no scope for interference u/s 34 of the Arbitration and Conciliation Act". Further, it is observed that "interference is permissible only when findings of arbitrator are arbitrary, capricious or perverse or when conscience of the court is shocked or when illegality is not trivial but goes to root of the matter, not when merely another view is possible". It is not the case of the applicant that respondent not at all completed his work, admittedly there was no termination of contract between applicant and respondent herein and respondent completed the work assigned to him at later date than was originally agreed. The contention of the applicant that its execution of work with NTPC was dependent on the completion of construction of up- stream to cut-off wall work assigned to the respondent herein has already been considered by the learned arbitrator. At later part with applicant, respondent and also applicant's principal contractor NTPC convened meeting together discussed about the project, question of confidentiality as alleged by the applicant does not arise. It is all in the interest of project, parties convened meeting together and discussed a about 11 Com.A.S.No.91/2019 execution of the work. It is not the case of applicant that learned arbitrator suo moto called for records from NTPC. The respondent herein preferred an application before Civil Court seeking production of certain documents by NTPC for adjudication of the controversy before the arbitral tribunal. Prior to making such exercise asked the applicant to produce such documents by itself. Since the applicant failed to produce the same, respondent was made to approach civil court. Before civil court, the applicant herein appeared and contested the said application by filing its objections. Application of summoning the document was considered on merits. When such being the case, the contention taken by applicant that the award passed by learned arbitrator amounts to patent illegality holds no water. The learned arbitrator framed as many as 22 points based on the contentions taken up by respective parties. The learned arbitrator after hearing parties to the dispute after allowing them to lead their evidence to produce documents in support of their contentions delivered his award and rejected the claim made by the applicant herein and allowed the counter claim of the respondent herein and thereby directed the applicant to pay Rs.6,65,55,228/- to the respondent herein along with interest thereon at the 12 Com.A.S.No.91/2019 rate of 12% p.a., from 07.11.2013. The applicant not being satisfied with the aforesaid small relief awarded in the award in favour of respondent preferred this petition and invoked powers of this court u/s 34 of the Act to get the award set aside. Let us examine the powers of the Court under section 34 of the Act. Section 34(1) of the Act provides that arbitral award may be set aside by the Court on application for setting aside the same being made on any grounds specified in the sub-section (2) and within the time prescribed. Sub-section 2(a) thereof further provides that party making such application shall furnish proof to the Court in support of such application. The Court is entitled to set aside the award only, if grounds mentioned in sub-section(2) of section 34 read with grounds stated in section 3 and section 16 of the Act are proved to its satisfaction by the party making application for setting aside the award and too if satisfy the Court that the allegations are true. The onus to prove that the grounds as per sub-sections (2) of section 34 of the Act exists and that award is liable to be set aside, lies on the party making application. Arbitral award is not invalid merely because on the basis of some inferences and some arguments it may be alleged that Arbitral Tribunal has committed some mistake in arriving at its conclusion on merits of the 13 Com.A.S.No.91/2019 dispute referred to it for adjudication. When the Court is called upon to decide the objections raised by a party against the arbitral award, the jurisdiction of the Court is limited, as expressly indicated in section 34 of the Act and it has no no jurisdictions to sit in appeal and to examine the correctness of the award on merits with reference to the material produced before the Arbitral Tribunal. The Court cannot sit in appeal over the view of the Arbitral Tribunal by re-examining and re- appreciating the material. It is well settled that the parties constituting the arbitral tribunal as the sole and final judge of the dispute arising between them and they bind themselves as a rule to accept the arbitral award as final and conclusive. That apart the arbitral award in question has been passed after permitting the parties to lead their evidence to produce documents and after hearing them on merits, it is a detailed reasoned award. None of the grounds urged by the applicant enables this court to interfere with the said award. Further the learned counsel for applicant canvassed that the respondent herein came up with a different methodology which made the applicant's contract suffer. Whereas regarding said methodology adopted by the parties was also considered by learned arbitrator. The learned counsel for the applicant relied 14 Com.A.S.No.91/2019 upon as many as three judgments with regard to jurisdiction u/s 27 of the Arbitration Act i.e., (1) National Insurance Company Limited vs. M/s. S.A. Enterprises reported in 2015 SCC Online Bom 5063, (2) Thiess Iviinecs India vs NTPC Limited & Anr. Delhi HC, O.M.P. (E) (Comm.) 12/2016, Date of decision: March 28, 2016, and (3) Motana Developers Pvt. Ltd vs. Aditya Developers and others , 2016(6) MhLJ 660. In these three citations it is observed that it is in the arbitration suit as to whether a particular document or presence of particular witness would be necessary for the proper adjudication of the dispute between the parties or not, if any such application made by the parties to the arbitral proceedings. In these proceedings u/s 27 of the Arbitration Act, this court cannot decide whether provision of such documents or presence of such witnesses was warranted or not. Section 27 of the Arbitration and Conciliation Act deals with court assistance in taking evidence. As per this provision the arbitral tribunal or a party with the approval of the arbitral tribunal may apply to the court for assistance in taking evidence and seeking assistance to produce document or property to be inspected. As I have already stated there was no scope for applicant herein to withhold any document which is necessary for 15 Com.A.S.No.91/2019 adjudication of the controversy. That apart out of the main contract entered between applicant and NTPC a portion of the work assigned to respondent herein by the applicant. It is not the case of applicant that immediately after applicant entering into contract with NTPC, applicant entered into contract with respondent herein. As per the facts of the case, mentioned in this petition at para-6 applicant entered into contract with NTPC on 23.3.2007. Whereas after lapse of two years applicant entered into sub-contract with respondent herein i.e., on 6.2.2009. If at all work assigned to respondent was very important for the applicant to continue its remaining part of work, it is probable that applicant would not have waited for 2 years to assign a portion of the important work to the respondent herein. Considering all these circumstances the learned arbitrator has passed a very reasoned award. The applicant without there being any ground for interference by this court is making futile exercise just to evade its liability. Same is not the scope of Section
34. Admittedly with regard to summoning of documents as per Sec.27 of the Arbitration and Conciliation Act the applicant has preferred an appeal before Hon'ble High Court of Karnataka, however the same became infructuous since NTPC send the documents sought by 16 Com.A.S.No.91/2019 the respondent herein. This will not enable the applicant to approach this court for setting aside the award by re-agitating said summoning of documents before this court. There is absolutely no ground made out by the applicant to setting aside the impugned award in question. Under the explanation to Sec. 34(2)
(b) of the Arbitration and Conciliation Act, an award is said to be in conflict with the public policy of India viz., patent illegality, if the making of the award was induced or adopted by fraud or corruption or if there was an error of law applied by the arbitrator. The applicant having established its claim against NTPC in a separate arbitral proceeding cannot evade its obligation towards respondent herein. That apart the respondent has completed the work assigned to him. It is not the case of the applicant that after lapse of four months applicant rescind the contract. Further, the citation of Patel Engineering Ltd., relied upon by the learned applicant counsel, it was observed that the Arbitrator has taken into various factors, irrelevant in coming to the decision. Whereas it is not the case of the applicant in the case on hand. Considering these facts and circumstances, I have answered Point No.1 in the 'Negative'.
17Com.A.S.No.91/2019
7. POINT NO.2: - In view of my answer to point No.1, I proceed to pass the following ORDER Application filed by the applicant under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside the award dated 09.03.2019 passed in CMP No. 118/2011 is dismissed with costs.
The impugned award dated 09.03.2019 is accordingly upheld.
(Dictated to the Judgment Writer, transcribed by him, corrected and pronounced in the open court on 12th day of November 2021).
(M.LATHAKUMARI) LXXXV Addl. City Civil & Sessions Judge, Bengaluru.