Delhi District Court
Crafts India Homes vs Bhilangana Hydro Power Ltd on 11 April, 2022
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (Comm.) No. 190/2019
1. Crafts India Homes
Having Office at E-1,
Tara Apartments, Alaknanda,
New Delhi
2. Mr. Gautam Abrol
Having Office at E-1,
Tara Apartments, Alaknanda,
New Delhi
3. Ms. Kriti Anand
Having Office at E-1,
Tara Apartments, Alaknanda,
New Delhi ..Petitioners
versus
Bhilangana Hydro Power Ltd.
B-37, 3rd Floor, Sector-1,
Gautambudh Nagar,
Noida-201301 ..Respondent
Date of Institution : 15/10/2019
Arguments concluded on : 09/03/2022
Decided on : 11/04/2022
Appearances : Sh. Nipun Bhardwaj, Ld. Counsel for petitioner no. 2.
Ms. Shivani Malik, Ld. Counsel for petitioner no. 3.
Sh. K.C Joshi and Sh. Tarun Singla, Ld. Counsel for
respondent.
JUDGMENT
1. Petition under Section 34 of The Arbitration and Conciliation Act, 1996 (herein after referred as The Act) seeking setting aside of the impugned arbitral award dated 31/05/2019 of OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 1 of 26 Learned Sole Arbitrator Hon'ble Justice (Retired) Dr. Bharat Bhushan Parsoon in Case Ref. No. 3001/2018 titled 'M/s Bhilangana Hydro Power Limited vs Crafts India Homes & Ors' was filed. Record reveals that the above said petition was filed on behalf of three petitioners but petition itself was signed by none of the arraigned petitioners but is containing purported signatures of Ld. Counsel for petitioner no. 2. Affidavit of petitioner no. 2 was enclosed with the filed petition with the mention that he is authorized to swear the present affidavit on behalf of other petitioners. Petitioner no. 1 is stated to be dissolved partnership firm. Petitioner no. 3 had filed affidavit dated 27/11/2021 in terms of order dated 27/10/2021 stating having never authorized petitioner no. 2 to act for and on behalf of her in relation to present matter or even otherwise at any point of time. By no figment of imagination petition accordingly can be considered to have been filed by petitioner no. 3.
2. Impugned arbitral award dated 31/05/2019 stands corrected vide order dated 12/07/2019 of Learned Sole Arbitrator on application of respondent/claimant dated 15/06/2019 under Section 33 of the Act whereby Learned Sole Arbitrator held petitioners liable to pay Rs. 61,68,526/- with interest @ 12% per annum from 24/10/2017 till the date of actual payment to respondent/claimant besides which petitioners had also to pay Rs. 3,10,810/- to respondent/claimant towards reimbursement of arbitral fee paid by respondent/claimant.
3. I have heard Sh. Nipun Bhardwaj, Ld. Counsel for petitioner no. 2; Sh. K.C Joshi and Sh. Tarun Singla, Ld. Counsel for OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 2 of 26 respondent and perused the record of the case, the arbitral proceedings record, filed brief written arguments, relied upon precedents and given my thoughtful consideration to the rival contentions put forth.
4. Shorn of unnecessary details, following are the facts of the case of parties. Initially Petitioner no. 2 was sole proprietor of petitioner no. 1. Respondent/claimant gave Work Order No. PR- BIII IOM/Civil/SO-019 dated 19/11/2016 with respect to construction of Guest House cum Bachelor Hostel, Family Accommodation Block and Visitor Room cum Security Block (in short "the Work") at power plant of respondent/claimant near Village Ghuttu, Uttarakhand to petitioner no. 1 through petitioner no. 2 detailing the scope of work and all terms and conditions laid therein and accepted by petitioner nos. 1 and 2. In the course of execution of said work dispute arose between the parties. In terms of clause 57 of aforesaid contract i.e., Work Order dated 19/11/2016, Chairman-cum-Managing Director of Polyplex Corporation Limited appointed Learned Sole Arbitrator for adjudication of dispute between the parties vide letter dated 17/01/2018. Learned Sole Arbitrator entered the reference on 18/01/2018. Arbitral proceedings were conducted by Learned Sole Arbitrator. Vide consent of the parties to arbitration, duly recorded in order dated 10/12/2018, period of conducting arbitration proceedings was extended by six months under Section 29A of the Act before Learned Sole Arbitrator. Arbitral proceedings culminated in the impugned arbitral award.
5. Arbitral award has been impugned in present petition OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 3 of 26 mainly on the following grounds. Ld. Arbitral Tribunal passed award holding petitioners never produced any evidence to prove that the defect with respect to chajja/projection was removed for which respondent/claimant had deducted Rs. 2,80,000/-. Petitioners were never given opportunity to adduce any evidence before Ld. Arbitral Tribunal. No opportunity to cross examine the witnesses was provided to petitioners in violation of principle of natural justice and per contra to law laid by Supreme Court in catena of judgments. Ld. Arbitral Tribunal failed to appreciate that respondents were supposed to purchase raw materials and start the work and had incurred an amount of Rs. 93,62,533/- out of Rs. 1,11,18,711/- and Ld. Arbitral Tribunal was wrong to hold that petitioners were liable to pay Rs. 55,55,856/- towards refund of the excess amount charged over value of work done. Ld. Arbitral Tribunal failed to appreciate that delay was caused by respondent/claimant because of the changes brought in the designs, not transferring money to account of petitioner to buy more steel required for construction of the building according to the new layout provided by respondent/claimant but on the contrary held that delay was caused by petitioners. Ld. Arbitral Tribunal failed to appreciate that petitioners worked with their utmost sincerity and dedication and wanted to complete the project assigned to them but could not complete the project because of the non cooperative attitude of respondent/claimant. Ld. Arbitral Tribunal erroneously exercised its power under the second proviso to sub section (2) of Section 38 of the Act and erroneously terminated the arbitration proceedings in respect of counter claim filed by petitioners because arbitrator's fees on behalf of petitioners was paid by respondent/claimant. Learned OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 4 of 26 Sole Arbitrator should not have rejected the counter claim and may have a lien on arbitral award for unpaid costs of the arbitration under Section 39(1) of the Act. Ld. Arbitral Tribunal failed to appreciate that the contractual terms of the Work Order dated 19/11/2016 were prima facie one sided, unfair and unreasonable making the contract void under Section 23 of The Indian Contract Act, 1872 as being against the public policy. Ld. Arbitral Tribunal failed to appreciate that according to Clause 18 of the Work Order in question, petitioners were not entitled to any compensation/time extension for any variation of any quantity indicated in the BOQ and any change in the BOQ shall not result in change in the contract value, which stands fixed on lump basis. The quantity of the steel was changed according to the whims and fancies of respondent/claimant. Ld. Arbitral Tribunal failed to appreciate that the payment of steel was made by respondent to the vendor and thereby increasing the cost of raw materials and it was telephonically assured by respondent to petitioners that petitioners may buy the extra steel as required and respondent will reimburse and therefore, in order to avoid the delay petitioners bought the steel so as to avoid any kind of delay. Ld. Arbitral Tribunal failed to appreciate several reminders of petitioners regarding increase in the freight in transportation of shuttering material whereas respondent/claimant assured the reimbursement of Rs. 50,000/- vide letter dated 11/05/2017 and instructed the petitioners to submit a fresh representation in regard to the incremental cost of freight of shuttering material. Ld. Arbitral Tribunal failed to appreciate that petitioners informed respondent regarding increase in freight price by emails dated 17/04/2017, 19/04/2017, 25/04/2017, 09/05/2017 and reply OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 5 of 26 to emails from respondent was received on 12/05/2017 when additional steel was already purchased and petitioners had purchased the material otherwise it would have caused delay. Ld. Arbitral Tribunal failed to appreciate that petitioners were fraudulently forced to finalize the deal with the vendor. Ld. Arbitral Tribunal failed to appreciate that respondent/claimant never denied the fact, in reply to the emails, that they had agreed to approve the purchase of the steel from the vendor mentioned in email dated 17/04/2017. Ld. Arbitral Tribunal failed to appreciate that the condition in the Work Order according to which no extension of time had to be allowed was against the provisions of law as site was situated at a place where the temperature goes even below zero degree in the months of November, December and January and Ld. Arbitral Tribunal failed to appreciate that such adverse weather condition would fall within the force majeure clause of the Work Order. Ld. Arbitral Tribunal failed to appreciate that petitioners had slowed down the speed of the work for some time because of the adverse weather conditions and thus the consequent delay. Ld. Arbitral Tribunal failed to appreciate that exposure of the workmen to such harsh weather conditions would have led to the infringement of the fundamental rights of the workmen guaranteed to them under Article 21 of The Constitution of India. Ld. Arbitral Tribunal failed to appreciate that deficiency in the chajja/projection was removed and respondent/claimant had retained an amount of Rs. 2,80,000/- from RA-2 Bill on account of deficiency and had not paid it till yet. Ld. Arbitral Tribunal failed to appreciate that petitioners were forced to leave the work as respondent/claimant was not giving sanction to procure more OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 6 of 26 steel as was required to cast the second floor slab of family accommodation block. Ld. Arbitral Tribunal failed to appreciate that measurement book maintained by respondent/claimant was used to record the work done by workmen who were employed by petitioners and was also used to record the daily consumption of the raw material used in the construction of the Guest House- cum-Bachelor Hostel, Family Accommodation Block and Visitor Room-cum-Security Block and respondent fraudulently got the measurement book, not updated according to the actual consumption, signed by the blue collar of supervisor of the petitioners. It is prayed in the petition to set aside the impugned arbitral award and also to allow the counter claim of the petitioners.
6. Petitioner no. 2 through Ld. Counsel argued in terms of above said grounds impugning the arbitral award. It was argued that petitioner no. 2 could not file the present petition within three months of receipt of impugned award dated 31/5/2019 as the partnership firm, petitioner no. 1 got dissolved and petitioner no. 2 was not having sufficient money to engage an Advocate whereas when petition was drafted then it was inadvertently filed by junior associate of the Counsel before High Court of Delhi on 05/09/2019 and was returned after few objections, who without apprising the main counsel refiled on 13/09/2019 and 26/09/2019. It was only when respondent/claimant filed application before Court of Ld. Additional District Judge, Patiala House Court for execution of impugned award, then only petitioner no. 2 came to know that award was modified on 12/07/2019 and so petitioner no. 2 seeks condonation of five days OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 7 of 26 delay. Also was argued by Ld. Counsel for petitioner no. 2 that initially only single building was supposed to be constructed and based on that basis of that only rates were given which lead to a consolidated rate of Rs. 2.02 crores which respondent/claimant calculated at the rate 1900 approximately rate per square feet but then the Managing Director of respondent/claimant made changes in the design from one building to two buildings along with a guard room and of such changes cost of construction was increased. It was argued by Ld. Counsel for petitioner no. 2 that the Managing Director of respondent/claimant telephonically modified the building which was to be constructed and petitioners received email dated 19/07/2016 but no further BOQ was ever provided by respondent/claimant to petitioners despite repeated requests of the petitioners evident from email dated 21/07/2016 sent by petitioner no. 1 to representative of respondent/claimant. Ld. Counsel for petitioner no. 2 argued that respondent/claimant told the petitioners that they have revised the BOQ from one building to two buildings comprising of ground floor, first floor and second floor and another comprising of ground floor, first floor and on half floor to be constructed on the terrace along with one security room but then and there petitioner no. 2 told respondent/claimant that there will be some difference in the cost of construction and extra steel will be required. It was argued by Ld. Counsel for petitioner no. 2 that thereafter respondent told petitioner no. 2 that the revised BOQ will be provided and extra cost of construction and requirement of extra steel will be considered. It was argued by Ld. Counsel for petitioner no. 2 that petitioner no. 2 sent an email dated 04/12/2016 to the representative of respondent that he was facing OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 8 of 26 major issues for the construction which were discussed on 07/10/2016 at the time of finalizing and accepting the order whereas the major concern of petitioner no. 2 was for the supply of the material which was supposed to be supplied by one Jitender Sajhwan referred by respondent itself to cut down the freight but later on petitioner no. 2 came to know from one Sanjiv (one of the representative of respondent) that the crusher had closed down. Ld. Counsel for petitioner no. 2 argued that no opportunity was given to petitioner no. 2 by Learned Sole Arbitrator to cross examine the respondent/claimant per contra to law laid by Supreme Court in the catena of judgments. Ld. Counsel for petitioner no. 2 also argued that Ld. Arbitral Tribunal failed to appreciate that petitioners were supposed to purchase raw materials and start work, whereas petitioners had incurred amount of Rs. 93,62,533/- out of Rs. 1,11,18,711/- and Ld. Arbitral Tribunal was wrong to hold that petitioner no. 2 was liable to pay Rs. 55,55,856/- towards refund of the excess money charged over value of work done. Ld. Counsel for petitioner no. 2 argued that petitioner no. 2 never delayed the work, on the contrary it was petitioner no. 2 who had worked with utmost sincerity whereas the delay has been caused by respondent because of the changes brought in the designs, not transferring money to petitioner no. 1 account to buy more steel required for construction of the building according to the new layout provided by respondent/claimant. Ld. Counsel for petitioner no. 2 prayed for setting aside the impugned arbitral award and to allow the counter claim of the petitioners.
7. Respondent/claimant in filed reply averred and in arguments OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 9 of 26 through Ld. Counsel argued that petition was barred by limitation; view taken by Ld. Arbitral Tribunal was possible, not subjected to judicial review even if the contract is capable of more than one interpretation; under Section 34 of the Act this Court is not to sit in an appeal nor re-appreciate the evidence nor scrutinize the reasonableness of the reasons given by Arbitrator nor to entertain the defence/plea not raised before Learned Arbitrator whereas this Court can set aside the impugned award only if grounds under Section 34 of the Act are made out. It was argued by Ld. Counsel for respondent that petitioner has failed to make out any ground stated in Section 34 of the Act. Ld. Counsel for respondent argued that respondent/claimant had claimed Rs. 71,68,385/- under claim no. 1, out of which Learned Sole Arbitrator vide award dated 31/05/2019 read with correction order dated 12/07/2019 awarded sum of Rs. 55,82,276/- to claimant/respondent. Ld. Counsel for respondent argued that respondent did not pay fees of arbitrator for counter claims; therefore, in exercise of power conferred under second proviso of sub section (2) of Section 38 of the Act, Learned Sole Arbitrator did not consider the counter claims and terminated the proceedings in respect of counter claims. It was argued by Ld. Counsel for respondent that the findings arrived at by Ld. Arbitral Tribunal were neither patently illegal nor perverse nor irrational nor interpretation of Arbitral Tribunal to the contractual clauses was unjustified or unfounded nor the award suffers from lack of application of judicial mind. Ld. Counsel for respondent argued that it is not the case that the award is not based on evidence or that Ld. Arbitral Tribunal ignored any evidence while passing the impugned award nor it is the case that claims made OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 10 of 26 by respondent before Learned Sole Arbitrator were either meritless or frivolous or were act of afterthought. It was argued by Ld. Counsel for respondent that terms and conditions agreed between the parties were recorded in the Work Order dated 19/11/2016, which is part of record. It was argued by Ld. Counsel for respondent that in fact petitioner abandoned the work/site and did not resume the work despite repeated requests of respondent. Ld. Counsel for respondent argued that after execution of Work Order dated 19/11/2016, respondent/claimant did not change the quantity of material required to the detriment of petitioner. Respondent/claimant also denied of having violated the terms and conditions of the Work Order. Respondent gave its full support to petitioner for performing the work. Ld. Counsel for respondent/claimant argued that as per Section 19(2) of the Act, parties were free to agree on the procedure to be followed by the Arbitral Tribunal in conducting the proceedings, whereas parties with mutual consent decided not to conduct cross examination of witnesses of each other and such mutual decision of parties is duly recorded in order dated 06/09/2018 of Learned Sole Arbitrator and in accordance thereof cross examination of witnesses of both sides was rightly dispensed with by Learned Sole Arbitrator. Respondent/claimant denied of petitioner having spent Rs. 93,62,533/- for procuring raw material for the work or material such worth ever reached the site. Ld. Counsel for respondent argued that respondent/claimant had to make payment of work executed at the site and not for the alleged amount spent by petitioner in procuring material whereas petitioner had not left any material except steel measuring not more than 3 MT at the time of abandoning the site. Respondent/claimant denied of OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 11 of 26 having caused delay by bringing changes in the design or by delaying payments to petitioner. Respondent/claimant also submitted that after execution of Work Order dated 19/11/2016, respondent/claimant did not make any change in any specification or design of the work to be carried out. Ld. Counsel for respondent argued that petitioner cannot allege delay in payment by respondent for the simple reason that petitioner always took advances from respondent. Ld. Counsel for respondent argued that number of opportunities were given by Learned Sole Arbitrator to petitioner for payment of arbitral fee on counter claim but petitioners did not pay the same and accordingly, Learned Sole Arbitrator rightly exercised power under second proviso to sub section (2) of Section 38 of the Act and rightly terminated the arbitration proceedings in respect of counter claims made by petitioner. Respondent/claimant denied that Work Order dated 19/11/2016 was against the public policy or was void. Ld. Counsel for respondent/claimant argued that Work Order dated 19/11/2016 is a commercial contract between the parties for performance of specific work on agreed terms at an agreed consideration. No element of unreasonableness or unconscionability can be attributed to Work Order dated 19/11/2016. Ld. Counsel for respondent argued that petitioners cannot raise new pleas which were not raised before Learned Sole Arbitrator and petitioners cannot equate itself to a flat buyer and respondent to a real estate project builder. Ld. Counsel for respondent argued that Learned Arbitrator was bound to decide disputes between the parties by taking into account the terms of the contract in accordance with Section 28(3) of the Act and had no jurisdiction to modify agreed terms of the contract, which OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 12 of 26 even cannot be done by this Court. Respondent/claimant through Ld. Counsel averred that respondent/claimant never assured to pay extra money to petitioner nor cost of raw material was increasing for the petitioner. Ld. Counsel for respondent argued that respondent/claimant was not liable to pay anything over and above the consideration mentioned in the Work Order dated 19/11/2016 to petitioner and demand of petitioner for increased freight or for alleged extra steel was wrong. It was argued by Ld. Counsel for respondent that Learned Sole Arbitrator had to read the contract/work order "as it is" without any addition, subtraction or modification, which he rightly read. It was argued by Ld. Counsel for respondent that there is no law which mandates providing of extra time to the contractor for performing the work. It was also argued by Ld. Counsel for respondent that dropping of temperature in winter season at site does not amount to force majeure conditions whereas such temperature in winter season at the site is a normal event which was in the knowledge of the parties prior to entering into the agreement and no such plea was ever raised before Learned Sole Arbitrator and so cannot be raised in this petition before this Court. It was argued by Ld. Counsel for respondent that adverse weather conditions referred to by petitioners were normal conditions of site in winter season whereas respondent denied that such weather conditions did not allow for carrying out the work at the site and such plea was never raised before Learned Sole Arbitrator so cannot be raised in this forum. It was argued by Ld. Counsel for respondent that Learned Sole Arbitrator rightly held that petitioners have failed to produce any material on record to show that they had removed the deficiency in chhajja/projection. Respondent/ OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 13 of 26 claimant denied that petitioners left the work due to alleged failure of respondent to give sanction for procurement of more steel. It was argued by Ld. Counsel for respondent that whatever steel was required was to be procured by petitioners at their own cost and no sanction of respondent was required whereas petitioners had abandoned the site and despite several notices/ requests petitioners neither resumed the work at site nor made any communication with respondent till the commencement of arbitral proceedings. It was argued by Ld. Counsel for respondent that measurement book was to be maintained by petitioner whereas in any case, on 01/11/2017 engineer of respondent physically inspected the site, took photographs of the site, conducted videography of the site and took measurement of the site for computation of work carried out by petitioners. It is averred by respondent that vide letter dated 21/11/2017 respondent sent the photographs, videography in CD and measurements to petitioners for their reference and record and invited petitioners with their original measurement book and other relevant documents for discussions in case petitioners do not agree to the measurements taken by representative of respondent/claimant. Nothing of the sort was done by petitioners. Ld. Counsel for respondent argued that the petition is barred by limitation as maximum period for filing the petition is three months and subsequent 30 days is only the period which can be so condoned whereas the petition has been filed with delay of 47 days and Section 5 of The Limitation Act has no applicability for any condonation of delay in petition under Section 34 of the Act whereas there is no justifiable premise laid by petitioners for applicability of Section 14 of The Limitation Act as what was OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 14 of 26 filed before Delhi High Court by the petitioner was bunch of papers of only 28 pages which cannot be considered to be appropriate petition under Section 34 of the Act. Ld. Counsel for respondent/claimant prayed for dismissal of the petition with cost relying upon the following precedents:-
1. Sh. Tarsem Jain vs Bharat Forge Limited & Anr., 2019 LAWPACK (Del) 77042;
2. State of Goa vs M/s Western Builders, 2006(3) R.A.J. 1 (SC);
3. Chief Engineer of B.P.D.P./R.E.O., Ranchi vs Scoot Wilson Kirpatrick India Pvt. Ltd., 2007 (1) R.A.J. 63 (SC) and
4. M/s Prakash Atlanta JV vs National Highways Authority of India, 2016 (4) R.A.J. 428 (Del)
8. An arbitral award can be set aside on the grounds set out in Section 34 (2) (a), Section 34 (2) (b) and Section 34 (2A) of the Act in view of Section 5 of the Act and if an application for setting aside such award is made by party not later than 3 months from the date from which the party making such application had received the signed copy of the arbitral award or if a request had been made under Section 33 of the Act, from the date on which that request had been disposed of by the Arbitral Tribunal. If the Court is satisfied that the applicant was prevented by sufficient cause from the making the application within the said period of three months it may entertain the application within further period of 30 days, but not thereafter.
9. Section 34 (1) (2), (2A) and (3) of The Arbitration and Conciliation Act, 1996 read as under:-
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 15 of 26
section (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 16 of 26 contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
10. Supreme Court in case of Dakshin Haryana Bijli Vitran Nigam Ltd. vs M/s Navigant Technologies Pvt. Ltd, 2021 SCC OnLine SC 157 has held that the date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Act. It is from this date that: "(a) the period of '30 days' commences for filing an application under Section 33 for correction and interpretation of the award, or for additional award; (b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act; (c) the period of limitation for filing objections to the award under Section 34 commences."
11. Order VI Rule 14 read with Section 141 of The Code of OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 17 of 26 Civil Procedure, 1908 ( in short CPC) and Rule 4 of Part C of Chapter 1 of Volume I of Delhi High Court Rules mandate pleadings/application/petition must be signed by the party, or, if the reason of absence or other good cause the applicant/party is unable to sign it, then by his duly authorized agent. Petition contains no whisper of any reason of absence or for other good cause petitioner no. 2/applicant was unable to sign the petition.
Also with the petition no Statement of Truth in the form of an affidavit of petitioner no. 2 is appended so as to be an affidavit in terms of Appendix I under First Schedule in terms of Order VI Rule 15A; Order XI Rule 1 (3) read with Section 141 of CPC for commercial dispute of a specified value and for doing the same is the mandate of legislature.
12. It was observed in the order dated 29/01/2022 that on 28/01/2022 petitioner no. 2 through Counsel in an envelope filed list of documents, Statement of Truth and affidavit under Section 65B of The Indian Evidence Act but without any appropriate application. It was also observed in said order dated 29/01/2022 that present petition under Section 34 of the Act was instituted way back in October, 2019 and what above said has been filed on 28/01/2022 was without any appropriate application, so cannot be taken on record belatedly and after more than two years; so therefore, Ahlmad was directed to keep it aside. No application was filed even thereafter by petitioner no. 2 for taking on record the said list of documents compliant of Order XI CPC for commercial dispute of a specified value; Statement of Truth and affidavit under Section 65B of The Indian Evidence Act.
OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 18 of 2613. Since petition filed on 15/10/2019 was so filed without above said (i) Statement of Truth in form of an affidavit in terms of Appendix I under First Schedule in terms of Order VI Rule 15A; Order XI Rule 1 (3) read with Section 141 of CPC; (ii) signatures of petitioner(s) on each page; (3) list of documents as per Order XI Rule 1(2) read with Section 141 CPC; it is a nonest filing in a commercial dispute for specified value and cannot stop limitation and cannot be a ground to condone delay in terms of law laid in the cases of (i) Oil and Natural Gas Corporation Limited vs Joint Venture of Sai Rama Engineering Enterprises (Sree) & Megha Engineering & Infrastructure Limited (Meil), 2019 SCC Online Del 10456; (ii) Indira Gandhi National Open University vs Sharat Das & Associates Pvt. Ltd., MANU/DE/1280/2020; (iii) Director-Cum-Secretary vs Sarvesh Security Services Pvt. Ltd., 2019 SCC OnLine Del 8503. Even there was no honest attempt by any of petitioners to cure the defects by moving any appropriate application to take on record duly signed petition on each and every page with appropriate Statement of Truth and appropriate list of documents for commercial dispute of a specified value well within the period of limitation or within the condonable period of 30 days later to expiry of three months period of limitation from the date of receipt of the copy of the award. It also brings into fore the premise for dismissal of present petition accordingly.
14. In arbitral proceedings record is the arbitration proceedings dated 06/09/2018 bearing at the bottom the signatures of petitioner no. 2 in token of receipt of copy of said order wherein it is mentioned by Learned Sole Arbitrator that Ld. Counsel for OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 19 of 26 respondent/claimant as well as petitioner no. 2 for himself and petitioner no. 1 had expressed their intent not to cross examine the witnesses of the opposite parties. Impugned arbitral record also accordingly so reflects in para no. 8 of parties to the arbitration having expressed intention not to cross examine the witnesses of each other on 06/09/2018. Accordingly, it does not lie in the mouth of petitioner no. 2 to cry hoarse for not given opportunity to cross examine the witnesses of respondent/ claimant in violation of principle of natural justice. Section 19 of the Act embodies the determination of rules of procedure and in terms thereof Arbitral Tribunal is not to be bound by The Code of Civil Procedure, 1908 or The Indian Evidence Act, 1872 whereas it also embodies therein that the party to the arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings. When parties to arbitration proceedings expressed their intent and desire not to cross examine the witnesses of opponent before Arbitral Tribunal, where is the scope for Arbitral Tribunal to ask or force the parties/Counsel to cross examine the witnesses of opponents to the parties?
15. In para 10.24 of impugned arbitral award Learned Sole Arbitrator appreciated Clause 6 of the Work Order. Following is the Clause 6 of the Work Order:-
"6. All Contractor's equipment, manpower, tools and tackles brought by the Contractor on to the site shall be deemed to be intended to be used exclusively for the execution of the Works. The Contractor shall not remove the same from the site without the employer's consent that such equipment is no longer required for the execution of the Works. In the event, the Contractor does not complete the work in a timely manner, the employer shall be within its rights to use the OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 20 of 26 Contractor's facilities and material of the Contractor to undertake and complete the Works without any compensation to the Contractor."
16. Clause 6 of the Work Order in question embodies that the contractor i.e., petitioner shall not be compensated if he fails to complete the work. In view of above elicited Clause 6 of the agreement/Work Order inter se parties to the lis; petitioner no. 2 cannot claim set off of the material which they bought and kept at the work place. Finding of Learned Sole Arbitrator was accordingly well within the four corners of the terms of the contract and as per Section 28(3) of the Act. Accordingly, petitioners were not entitled for any kind of set off of Rs. 93,62,533/- for all the material claimed to have been purchased by them.
17. Perusal of arbitral proceedings record makes it vivid and clear that several opportunities were granted by Learned Sole Arbitrator to petitioner nos 1 and 2 for payment of fees of Arbitrator. No fees of arbitrator was paid by petitioners. Vide arbitration proceedings dated 13/08/2018 Learned Sole Arbitrator directed respondent/claimant to deposit share of arbitration fees of petitioner nos. 1 and 2 by next date of hearing as well. Respondent/claimant also did not deposit the share of arbitration fees of petitioner nos. 1 and 2. In this fact of the matter, no fault can be found with the finding of Learned Sole Arbitrator for termination of arbitration proceedings in respect of counter claim of petitioner under the second proviso to sub section (2) of Section 38 of the Act.
OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 21 of 2618. Petitioner/Counsel failed to elucidate/prove as to which contractual terms of the Work Order dated 19/11/2016 were (i) forbidden by law or (ii) is of such a nature that, if permitted, would defeat the provisions of any law; or is fraudulent; or (iii) involves or implies, injury to the person or property of another; or (iv) the Court regards it as immoral, or opposed the public policy; to make it a premise for a contract to be void under Section 23 of The Indian Contract Act, 1872. With open eyes petitioner no. 2 for petitioner no. 1 contracted with the respondent/claimant and accepted the Work Order dated 19/11/2016 and now cannot cry hoarse so as to defeat the terms thereof. It had been the argument of Ld. Counsel for respondent/ claimant that after entering into the contract of Work Order dated 19/11/2016 there had been no change in BOQ.
19. Clause 21 of Work Order dated 19/11/2016 reads as under:-
"21. The Running Bill shall be submitted along with Measurement Book(s) giving sufficient details in support of the calculations for the work done. Any clarification required for the purpose of verifying the bills shall be promptly submitted by the Contractor."
20. Following are the excerpts of findings of Learned Sole Arbitrator in the impugned arbitral award:-
"10.36 Reference to Clause 21 of the work order reveals that it was obligation of the respondents to maintain the measurement book but it remains a fact that the respondents have not maintained the same. Had it been maintained, the same could have been produced before this Tribunal. The respondents have not led any evidence to discredit the measurement/videography placed on record along with letter dated on 21.11.2017 (Ex. C-17) by the claimant. Therefore, it can be accepted that measurements and videography which are part of record as Ex. C-17, are good to be believed.OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 22 of 26
10.37 The Claimants have specifically pleaded that the respondents have not done any work other than the work for which RA Bill Nos. 1 & 2 have been raised. In any case, it was obligation of the respondents to prove that they have done some work in excess of the work covered by first and second RA Bill. However, the respondents have led no evidence in this regard.
10.38 Respondents have pleaded that they have spent a sum of Rs. 93,62,533/- in execution of the work order and this expenditure includes expenditure for procurement of material which had been delivered at the site. Respondents have relied upon several bills in support of their claim regarding expenditure on material. Respondents have sought adjustment of aforesaid expenditure from the amount sought by the claimant. ......................................................................................................... 10.46 Respondents contended that they had procured the material for the released amount and also started work but due to non-cooperation of claimant which they assured before execution of work order and allegation of missing of steel from the site became instrumental for their exit; the work remained incomplete. These contentions of the respondents cannot be accepted completely as they are not assigned for procurement of material.
10.47 Even Clause 6 of the Work Order stipulates that the contractor shall not be compensated for the work, if he fails to complete the work. The relevant clause has been appended in the earlier part of this Award."
21. The proceedings under Section 34 of the Act are summary in nature and the scope of enquiry in the proceedings under Section 34 of the Act is restricted to specified grounds for setting aside only, as was held in the case of Canara Nidhi Limited vs M. Shashikala & Ors., 2019 SCC Online SC 1244. The Court would not construe the nature of claim by adopting too technical an approach or by indulging into hair-splitting, otherwise the whole purpose behind holding the arbitration proceedings as an alternative to Civil Court's forum would stand defeated, as was held in the case of Sangamner Bhag Sahakari Karkhana Ltd. vs OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 23 of 26 Krupp Industries Ltd., AIR 2002 SC 2221. An award is not open to challenge on the ground that the arbitrator had reached a wrong conclusion or had failed to appreciate some facts, but if there is an error apparent on the face of the award or if there is misconduct on the part of the arbitrator or legal misconduct in conducting the proceedings or in making the award, the court will interfere with the award; as was held by Supreme Court in the case of Oil & Natural Gas Corporation vs M/s Wig Brothers Builders & Engineers Pvt. Ltd., (2010)13 SCC 377. Reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under the Arbitration Act; as was held by Supreme Court in the case of Ispat Engineering & Foundry Works vs Steel Authority of India Ltd., (2001) 6 SCC 347. In order to provide a balance and to avoid excessive intervention, the award is not to be set aside merely on the ground of an erroneous application of the law or by re-appreciating evidence; as was held by Supreme Court in the case of P.R Shah, Shares & Stock Brokers Pvt. Ltd vs B.H.H. Securities Pvt. Ltd. & Ors., (2012) 1 SCC 594. At global level the doctrine of 'Contra Proferentem' is generally applied by the Judges/Arbitrator in the cases where a contract appears ambiguous to them; the Judges/Arbitrator in India have appreciated and adopted similar line of reasoning in the cases involving ambiguous contract wherein it is believed that 'an ambiguity is needed to be resolved' in order to find the correct intention of the contract. If the conclusion of the arbitrator is based on a possible view of the matter, the court is not expected to interfere with the award and if the Arbitrator relies on a plausible interpretation out of the two possible views, OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 24 of 26 then it would not render the award perverse; as was held by Supreme Court in the case of M/s Sumitomo Heavy Industries Ltd. vs Oil & Natural Gas Commission of India, 2010 (11) SCC
296. Award is not open to challenge on the ground that the Arbitral Tribunal had reached a wrong conclusion or had failed to appreciate the facts; the appreciation of evidence by the arbitrator is never a matter which the Court considers in the proceeding under Section 34 of the Act, as the Court is not sitting in appeal over the adjudication of the arbitrator.; as was held by Delhi High Court in the case of NTPC Ltd vs Marathon Electric Motors India Ltd., 2012 SCC OnLine Del 3995. Supreme Court in the case of Associate Builders vs Delhi Development Authority, (2015) 3 SCC 449 has restricted the scope of public policy, so the Court does not act as a Court of appeal and consequently errors of fact cannot be corrected. An error relatable to interpretation of the contract by an arbitrator is an error within his jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award; as was held by Supreme Court in the case of Steel Authority of India Ltd. vs Gupta Brother Steel Tubes Ltd., (2009) 10 SCC
63.
22. Relying upon the law laid in the precedents above said, it can be said that not only the reasonings of Learned Sole Arbitrator are logical, but all the material and evidence were taken note of by Learned Sole Arbitrator and this Court cannot substitute its own evaluation of conclusion of law or fact to come to the conclusion other than that of Learned Sole Arbitrator. Cogent grounds, sufficient reasons have been assigned by OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 25 of 26 Learned Sole Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot re-appraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by former Learned and Hon'ble Judge, Punjab & Haryana High Court, Chandigarh and who was competent to make assessment, while taking into consideration the facet of the matter. Re-appraisal of the matter cannot be done by this Court. No error is apparent in respect of the impugned award. I do not find any contradiction in the observations and findings given by Learned Sole Arbitrator. The impugned award does not suffer from vice of irrationality and perversity. The conclusion of the Learned Sole Arbitrator is based on a possible view of the matter, so the Court is not expected to interfere with the award. Even impugned award passed by Learned Sole Arbitrator cannot be set aside on the ground that it was erroneous. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is made out. None of the grounds raised by the petitioner attract Section 34 of the Act. For the foregoing reasons, the petition is hereby dismissed.
23. The parties are left to bear their own costs.
24. File be consigned to record room.
Digitally signed by GURVINDER PAL GURVINDER SINGH
PAL SINGH Date: 2022.04.11
15:17:37 +0530
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
On 11th April, 2022. Patiala House Court, New Delhi.
(DK) OMP (Comm.) No. 190/2019 Crafts India Homes & Ors. Vs Bhilangana Hydro Power Ltd. Page 26 of 26