Delhi District Court
Irrigation And Flood Department Gnctd vs Varun Gupta on 8 August, 2023
IN THE COURT OF Dr. KAMINI LAU: DISTRICT JUDGE
(COMMERCIAL COURT)02, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
OMP (COMM) No. 107/2023
Arbt. No. 531/18
CNR No. DLCT010124232018
1. Irrigation & Flood Control Department
Through its Secretary,
5/9, Under Hill Road,
Delhi.
2. Chief Engineer
Zone I, I & FC Department
L. M. Bund Office Complex
Shastri Nagar, Delhi.
3. The Superintendent Engineer
FC1. I & FC Department
L. M. Bund Office Complex
Shastri Nagar, Delhi.
4. The Executive Engineer
Civil Division No.IV (I&FC)
Government of Delhi
L. M. Bund Office Complex
Shastri Nagar, Delhi.
...... Petitioners
Versus
Sh. Varun Gupta
Prop. of M/s Varun Gupta & Co.
A64/3, DDA Flats,
Saket, New Delhi.
......Respondent
Irrigation and Flood Department GNCTD vs. Varun Gupta.,
OMP (COMM) No. 107/2023, Artbn. No. 531/2018,
Judgment dated: 08.08.2023 Page No. 1 of 40
Date of filing of Objections: 25.09.2018
Arguments concluded on: 21.07.2023
Date of Judgment: 08.08.2023
TABLE OF CONTENTS
Sr. No. Title Page No.
1 Brief facts/ Case of the petitioner 29
2 Case of the respondent 911
3 List of Authorities & Legal Position 1128
4 Findings & Observations 2839
5 Conclusion 3940
Present: Sh. Arpit Mandal Advocate for the petitioner.
Sh. S. Goel Advocate for the respondent.
JUDGMENT:
(1) These objections under Section 34 of the Arbitration and Conciliation Act, 1996 have been filed by the petitioners for setting aside the Award dated 24.05.2018 and Corrigendum Award dated 20.06.2018 passed by the Ld. Sole Arbitrator Sh. A. K. Singhal.
BRIEF FACTS:
Case of the Petitioner/ Objector:
(2) The petitioner no.1 is the Irrigation and Flood Department represented through Petitioner No.4 Executive Engineer. The case of the petitioners is as under:
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 2 of 40 That the petitioner no.1 Irrigation and Flood Department through petitioner no.4 Executive engineer invited tenders for construction of double storied Barat Ghar at Village Chiraga Sumali, Usmanpur, Delhi at Ghonda constituency vide notice inviting tender dated 26.09.2011 in which the Respondent Sh. Varun Gupta who is the Proprietor of M/s Varun Gupta & Co is participated.
That the quotations/ rates were accepted at amount of Rs.1,80,08,812/ and an intimation was given to the respondent/ claimant vide letter dated 13.12.2011 who was asked to submit the performance guarantee of Rs.9,00,441/ which Performance Guarantee was submitted by the respondent vide letter dated 19.12.2011 and same was duly accepted.
That the date of start of the work was 26.12.2011 which was to be completed by 25.06.2013 and construction works drawings and designs were provided to the respondent/ claimant on 03.02.2012 but the respondent/ claimant started the work only on 27.03.2012 and never submitted the analysis of rates extra/substituted items.
That the respondent/ claimant started the work only on 27.03.2012 and first measurement of execution of earth work in excavation was entered in the measurement book on 01.04.2012.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 3 of 40 That respondent/ claimant instead of submitting the analysis of rates extra/ substituted items, forged and fabricated receipts on documents/ letters dated 12.09.2013 and 31.03.2014.
That vide alleged letter dated 12.09.2013 it is stated by the claimant that the items which were not covered under any of agreement items and were payable under the term of clause 12 of the agreement, they were submitting the analysis of rates for each and every item, which letter was never given by the respondent/ claimant nor was received in the office of the petitioner and stamp and signatures purported to have been put by the Executive Engineer are forged and fabricated. That similarly the letter dated 31.03.2014 was never given by the respondent/ claimant nor it was received in the office of the Executive Engineer and the same has also been forged and fabricated.
That the claimants were fully aware of the fact that their major claims with respect to the payment of final bill, after the analysis of rates, is false and frivolous and hence, they were not entitled to the same as they have not adhered to the terms and conditions of the agreement.
That the stipulated time of completion of work as per agreement was 25.06.2013 whereas the actual date of completion was 24.04.2014 i.e a delay in work was 303 days.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 4 of 40 That the respondent/ claimant did not submit the extension of time performa (Part - I) upto 05.01.2016 in divisional officer as well as sub divisional office and the delay in work was not fully justified and only the time extension upto 24.04.2014 was approved with a levy of compensation equal to 0.5% of the tendered value of the work, which was deducted by the department from the payments of the respondent/ claimant.
That the final bill raised by respondent/claimant was done without the analysis of rates of extra and substituted items and the payment of corrected final bill on the basis of the analysis of rates of relevant extra/ substituted items amounted Rs.2,35,63,611/ was made to the respondent/ claimant out of which Rs.2,31,00,000/ was paid to the respondent/ claimant whereas the remaining amount of Rs.4,63,611/ was withheld due to non availability of funds. That being aggrieved, the respondent/ claimant moved the Hon'ble Delhi High Court for appointment of Arbitrator pursuant to which the Hon'ble High Court of Delhi directed the appointment of arbitrator and referred the matter to Delhi International Arbitration Center (DIAC) after which Sh. A.K. Singhal, Director General CPWD (Retd.) was appointed as Sole Arbitrator by DIAC to adjudicate the dispute between the parties.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 5 of 40 That the Ld. Sole Arbitrator published the Award dated 24.05.2018 and pronounced the same on 25.05.2018 and the petitioner received a copy of the same on 20.06.2018.
That thereafter the respondent/ claimant on 17.06.2018 submitted an application under Section 33 of the Arbitration and Conciliation Act for incorporating some computation correction in the award, pursuant to which the Ld. Arbitrator published a corrigendum dated 20.06.2018 which was made a part of the Award published on 24.05.2018, by way of which the Ld. Arbitrator allowed all the claimants of the claimant/ respondent against claims no. 1, 2, 3, 4, 5, 7 & 8 thereby awarding the claimant/ respondent a total sum of Rs.49,22746/.
(3) Feeling aggrieved with the impugned Arbitral Award dated 24.05.2018 and corrigendum award dated 20.06.2018, the petitioner has challenged the same on the following grounds:
A) That because the Ld. Arbitrator has wrongly awarded a sum of Rs.20,57,533/ under Claim No.1 on account of non payment of part of final bill amounting to Rs.30,92,811/. Although the Arbitrator accepted the contention of the present petitioner that the claimant failed to establish their letters dated 12.09.2013 and 31.03.2014 but the Ld. Arbitrator has failed to appreciate that the department was within their right to Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 6 of 40 fix the rates of extra/substituted items under Clause 12.2 of agreement applicable in the present case and on the basis of the relevant DSR 2012. The rates reflected in the statement as full rates was tentative rates for running payments in the 6th running bill and was not approved by the competent authority and hence, the Award is not justified and is not a reasoned award.
B) That because an amount of Rs.76,000/ granted by the Ld. Arbitrator for routine testing of four piles is not justified because the test report has not been submitted by the agency till date and the Ld. Arbitrator has not given a rational view while allowing the claim no.1 and has gone beyond the scope of contract hence the amount awarded to claim no.1 against the substantive law and is liable to be set aside.
C) That because the Ld. Arbitrator while deciding Claim No.3 has failed to consider the fact that the department has justified the delay of 273 days out of total delay of 303 days while deciding the time extension of claimant and has imposed penalty of Rs.90,044/. The Ld. Arbitrator has failed to consider the submissions of the department and has wrongly concluded that the levy of compensation of 30 days of delay was non contractual, unjustified and unfair. The Ld. Arbitrator has also wrongly concluded that the entire delay of 303 days in completion of work was justified and the action of the department to levy compensation of Rs.90,044/ was Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 7 of 40 unjustified, non contractual, untenable and against the principles of natural justice.
D) That because the Ld. Arbitrator while deciding Claim No.4 decided that the claimant is entitled for refund of Rs.2,50,000/ which was wrongly withheld from 6th RA bill & 7th & final bill. The amount of Rs.1,00,000/ was withheld due to pending approval and the extension of time has been approved by the competent authority with levy of compensation but the amount for for deviation and extra items statements were not approved by the competent authority.
E) That because the Ld. Arbitrator while deciding Claim No.5 decided that the claimant is entitled for refund of Rs.5,69,501/ under Clause 10 (c) and Rs.3,77,958/ under Clause 10(CA) and Rs.7,34,583/ under Clause 10 (CC) of the agreement. The Ld. Arbitrator has wrongly concluded that the compensation in Clause No.2 was only imposed by the petition in order to deny the benefits of Clause 10 c and 10 ca to the respondent and did not consider the pleadings and arguments of the petitioner herein that no payment in increase in the cost of cement and steel is payable to the claimant under the agreement for the period beyond stipulated date of completion upto actual date of completion and accordingly, once the case of time extension of claimant was decided by the competent authority with levy of compensation under Clause 2 the question of Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 8 of 40 any payment under clause 10 c and 10 ca was not applicable and hence, the claim of claimant under this head was liable to be rejected.
F) That because the Ld. Arbitrator while deciding Claim No.7 held that the claimant is entitled for payment of pursuit, pendentelite and future interest on all claims from due date to the date of payment, which is not tenable and liable to be set aside.
G) That because the Ld. Arbitrator has wrongly awarded the cost of Rs.2,00,000/ for which no reason has been given by the Arbitrator and hence, this claim is also liable to be set aside.
H) That because the Ld. Arbitrator has gone beyond its jurisdiction in passing the impugned award which is beyond the scope of agreement and had overlooked the evidence and documents on record.
I) That because the Ld. Arbitrator failed to take into consideration the pleadings before it along with documents and evidence adduced by parties and passed the impugned award without application of judicial mind and hence, the award being against the Public Policy, is liable to be set aside.
Case of the respondent:
(4) The respondent has filed a detailed reply to the objections filed by the petitioners. The case of the respondent is as under:
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 9 of 40 That the present petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 is not maintainable in law as it fails to fulfill the basic ingredient of Section 34 (2) and (3) of the Arbitration & Conciliation Act.
That the present petition preferred by petitioners does not fall within the four corners of Section 34 (2) (a) (i) to (v) of the Arbitration & Conciliation Act. That the petition does not satisfy the test of maintainability as laid down under Section 34 (2) (b) of the Arbitration & Conciliation Act.
That the respondent had submitted the analysis of rates extra vide letter dated 12.09.2013 and 31.03.2014 and the same has been duly considered by the Ld. Arbitrator in his Award dated 26.05.2018 in para no. 4, 5 and 6.
That there was no delay on the part of the respondent in completion of work and while deciding the issue no.3 the Ld Arbitrator has given his findings with regard to the delay in completion of the work and the penalty imposed.
(5) In so far as the various grounds raised by the petitioners are concerned, the respondent has denied all the grounds. According to the respondent, the Ld. Arbitrator has elaborately decided the claims after taking note of the facts, Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 10 of 40 documents and evidence on record and the petitioner has failed to state what was the 'perversity' committed by the Ld. Arbitrator.
List of Authorities/ Judgments relied upon by the parties:
(6) I have considered the rival contentions and have gone through the written memorandum of arguments filed by the parties. In so far as the petitioners are concerned, Ld. Counsel has not placed his reliance upon any authorities in support of his arguments.
(7) On the other hand, the Ld. Counsel for the respondent has placed his reliance upon the following authorities:
a) Union of India Vs. Susaka (P) Ltd. & Ors. reported in AIR 2018 (1) Arb. L.R. 12 (SC).
b) Maharashtra State Electricity Distribution Co. Ltd.
Vs. Datar Switchgear Ltd. & Ors. reported in 2018 (1) Arb. LR 236 (SC).
c) Ssanyog Engineering & Construction Co. Ltd. Vs. National Highways Authority of India (NHAI), reported in AIR 2019 SC 5041.
d) V.S. Ekambaram, Proprietor, Sangupani Fuels Vs. Sri Krishna Tiles & Potteries (Madras) (P) Ltd. reported in 2018 (1) Arb LR 180 (Madra) (DB).
e) NHAI Vs. BSCRBMPATI Joint Venture reported in 2018 (1) Arb. LR 570 (Delhi) (DB).
f) Municipal Corporation of Delhi Vs. Jagan Nath Ashok Kumar reported in AIR 1987 SC 2316.
Legal Position:
(8) Before coming to the merits of the grounds raised before me, I may note that Section 34 (1) of the Arbitration and Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 11 of 40 Conciliation Act, 1996 provide that the arbitral award may be set aside by the court on an application for setting aside the same being made on any grounds specified in the subsection (2) and within the time prescribed. The provisions of Section 34 (2) (a) are reproduced as under:
"....... 2 (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.'
(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, − Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 12 of 40
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.] [Explanation 2 For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute] [(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the 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.] (9) Section 34 of the Arbitration & Conciliation Act, 1996 does not empower the Courts to reappreciate and re evaluate the evidence produced before the Arbitral Tribunal and thereafter to judge if the findings of the Arbitral Tribunal are correct or wrong. The Superior Courts have repeatedly held that it is not permissible to a Court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings. The findings of fact by the Arbitral Tribunal, if based on evidence, even where a different opinion can be held on the basis of that evidence, the findings given by the Arbitrator has to be accepted and the Courts cannot substitute its opinion. The power to interpret the contract also lies with the Arbitrator. If the Arbitrator interpreted the terms of contract in a particular way based on the material before him and the evidence adduced before him, even if another view is possible to be taken on the Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 13 of 40 same materials and evidence, the Court cannot interfere the said findings of the learned Arbitrator.
(10) The Hon'ble Supreme Court in the case of G. Ramachandra Reddy & Company Vs. Union of India & Another reported in 2009 (6) SCC 414, observed that:
"..... The interpretation of a contract will fall within the realm of arbitrator, that the Court while dealing with an award would not reappreciate the evidence, that an award containing reasons may not be interfered unless they are found to be perverse or based on a wrong proposition of law.....".
(11) In another decision reported in 2009 (10) SCC 63 (Steel Authority of India Limited vs. Gupta Brothers Steel Tubes Limited), it was observed as under:
".... Once the arbitrator has constructed Clause 7.2 of the contract of the said case, in a particular manner and such construction is not absurd and appears to be plausible, it is not open to the Court to interfere with the award of the arbitrator.....".
(12) Reference is also made to another decision in the case of Parsa Kenta Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited reported in 2019 (7) SCC 236 wherein it was observed that:
"...... Once the courts reach to the conclusion that the Arbitrator has acted within its jurisdiction, even if the courts are of the view that the opinion of the arbitrator is wrong the same cannot be disturbed unless it is against the public policy...."
(13) An award warrants interference by the Court under Section 34 of the Arbitration and Conciliation Act only when Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 14 of 40 it contravenes a substantive provision of law or is patently illegal or shocks the conscious of the Court and that a plausible/reasonable view taken by an Arbitrator, even if the same is based on insufficient evidence, is not to be substituted by the Court.
(14) Moreover, umpteen number of judgments of higher Courts have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
(15) The grounds on which an interference can be made with the arbitral award by invoking Section 34 of the said Act of 1996 have been provided in subsection (2) of Section 34 itself. As can be seen from the Scheme of Section 34 of the Act of 1996 and the object of enacting the said Act of 1996, the scope of interference in a petition under Section 34 is limited only on the grounds provided in subsection (2) of Section 34 of the said Act of 1996. One more ground is provided in subsection (2A) of Section 34 of the said Act of 1996 added with effect from 23 rd October 2015.
(16) In the case of MMTC Limited Vs. Vedanta Limited reported in 2019 (4) SCC 163 the reasons for vesting such a limited jurisdiction in exercise of powers under Section 34 of the Arbitration Act has been explained by the Hon'ble Apex Court, Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 15 of 40 which observations I quote as under:
"...... 11. As far as Section 34 is concerned, the position is well settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b) (ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract...."
(17) A similar view, has been taken by the Hon'ble Supreme Court in K. Sugumar Vs. Hindustan Petroleum Corporation Ltd. reported in 2020 (12) SCC 539, which observations are reproduced as under:
"......2. The contours of the power of the Court under Section 34 of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court to interfere with an arbitral award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute resolution, they must be left to reconcile themselves to the wisdom of the decision of the arbitrator and the role of the court should be restricted to the bare minimum. Interference will be justified only in cases of commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator...."
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 16 of 40 (18) It has also been held time and again by the Hon'ble Supreme Court that if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the learned Arbitrator proceeds to accept one interpretation as against the other. In Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd. reported in 2019 (20) SCC 1, the limitations on the Court while exercising powers under Section 34 of the Arbitration Act has been highlighted by the Hon'ble Apex Court as under:
"......24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated....."
(19) In the case of Parsa Kente Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited reported in 2019 (7) SCC 236, adverting to the previous decisions of the Hon'ble Apex Court in McDermott International Inc. Vs. Burn Standard Co. Ltd. & Others reported in 2006 (11) SCC 181 and Rashtriya Ispat Nigam Ltd. Vs. Dewan Chand Ram Saran Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 17 of 40 reported in 2012 (5) SCC 306, it has been observed that an Arbitral Tribunal must decide in accordance with the terms of the contract, but if a term of the contract has been construed in a reasonable manner, then the award ought not to be set aside on this ground, it has been held as under:
"..... 9.1 It is further observed and held that construction of the terms of a contract is primarily for an Arbitrator to decide unless the Arbitrator construes the contract in such a way that it could be said to be something that no fairminded or reasonable person could do. It is further observed by this Court in the aforesaid decision in paragraph 33 that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.
9.2 Similar is the view taken by this Court in NHAI v. ITD Cementation (India) Ltd. (2015) 14 SCC 21, para 25 and SAIL v. Gupta Brother Steel Tubes Ltd. (2009) 10 SCC 63, para 29....."
(20) In the case of Dyna Technologies (P) Ltd. (supra), the view taken above has been reiterated in the following words:
"....25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act....."
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 18 of 40 (21) An identical line of reasoning has been adopted in the case of South East Asia Marine Engg. & Constructions Ltd. [SEAMAC Limited] V. Oil India Ltd. reported in 2020 (5) SCC 164 wherein the Hon'ble Apex Court has observed and I quote as under:
"....... 12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656] laid down the scope of such interference. This Court observed as follows : (SCC pp. 1112, para 24) "24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated."
13. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. This Court in Dyna Technologies [Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656] observed as under : (SCC p.12, para
25) Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 19 of 40
25. Moreover, umpteen number of judgments of this Court have categorically held that the Court should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act....."
(22) The Hon'ble Supreme Court has in the case of Project Director, National Highways Authority of India Vs. M. Hakeem & Anr. reported in (2021) 9 Supreme Court Cases 1 elaborately dealt with the law relating to objections under Section 34 of the Arbitration and Conciliation Act, relevant portion of which is reproduced as under:
"...... 13. Section 34 of the Arbitration Act, 1996 occurs in Chapter VII under the title "Recourse against arbitral award". We are directly concerned with subsections (1) and (4) of Section 34 which are set out hereunder.
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 subsection (3).
xxx xxx xxx (4) On receipt of an application under sub section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
xxx xxx xxx Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 20 of 40
14. What is important to note is that, far from Section 34 being in the nature of an appellate provision, it provides only for setting aside awards on very limited grounds, such grounds being contained in subsections (2) and (3) of Section 34. Secondly, as the marginal note of Section 34 indicates, "recourse" to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsections (2) and (3).
"Recourse" is defined by P Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition) as the enforcement or method of enforcing a right. Where the right is itself truncated, enforcement of such truncated right can also be only limited in nature. What is clear from a reading of the said provisions is that, given the limited grounds of challenge under subsections (2) and (3), an application can only be made to set aside an award. This becomes even clearer when we see sub section (4) under which, on receipt of an application under sub section (1) of Section 34, the court may adjourn the Section 34 proceedings and give the arbitral tribunal an opportunity to resume the arbitral proceedings or take such action as will eliminate the grounds for setting aside the arbitral award. Here again, it is important to note that it is the opinion of the arbitral tribunal which counts in order to eliminate the grounds for setting aside the award, which may be indicated by the court hearing the Section 34 application.
15. It is important to remember that Section 34 is modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, under which no power to modify an award is given to a court hearing a challenge to an award. The relevant portion of the Model Law reads as follows:
Article 34. Application for setting aside as exclusive recourse against arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (2) of this article.
xxx xxx xxx (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 21 of 40
16. Redfern and Hunter on International Arbitration (6th edition), states that the Model Law does not permit modification of an award by the reviewing court (at page
570) as follows:
"10.06 The purpose of challenging an award before a national court at the seat of arbitration is to have that court declare all, or part, of the award null and void. If an award is set aside or annulled by the relevant court, it will usually be treated as invalid, and accordingly unenforceable, not only by the courts of the seat of arbitration, but also by national courts elsewhere. This is because, under both the New York Convention and the Model Law, a competent court may refuse to grant recognition and enforcement of an award that has been set aside by a court of the seat of arbitration. It is important to note that, following complete annulment, the claimant can recommence proceedings because the award simply does not existthat is, the status quo ante is restored. The reviewing court cannot alter the terms of an award nor can it decide the dispute based on its own vision of the merits. Unless the reviewing court has a power to remit the fault to the original tribunal, any new submission of the dispute to arbitration after annulment has to be undertaken by commencement of a new arbitration with a new arbitral tribunal."
17. The statutory scheme under Section 34 of the Arbitration Act, 1996 is in keeping with the UNCITRAL Model Law and the legislative policy of minimal judicial interference in arbitral awards.
18. By way of contrast, under Sections 15 and 16 of the Arbitration Act, 1940, the court is given the power to modify or correct an award in the circumstances mentioned in Section 15, apart from a power to remit the award under Section 16 as follows:
15. Power of Court to modify award.
The Court may by order modify or correct an award
(a) where it appears that a part of, the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 22 of 40 referred; or
(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or
(c) where the award contains a clerical mistake or an error arising from an accidental slip or omission.
16. Power to remit award.
(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the award is apparent upon the face of it., (2) Where an award is remitted under sub section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under sub section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.
19. As a result therefore, a judgment in terms of the award is given under Section 17 of the 1940 Act which reads as follows:
17. Judgment in terms of award.
Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 23 of 40 accordance with, the award.
20. Thus, under the scheme of the old Act, an award may be remitted, modified or otherwise set aside given the grounds contained in Section 30 of the 1940 Act, which are broader than the grounds contained in Section 34 of the 1996 Act.
21. It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. This has been decided in MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, at 167 as follows:
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section
34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.
22. Likewise, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, this Court under the caption "Section 34(2)(a) does not entail a challenge to an arbitral award on merits" referred to this Court's judgment in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 [the "New York Convention"] and various other authorities to conclude that there could be no challenge on merits under the grounds mentioned in Section 34 (see paras 34 to 48). This Court also held, in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133 (at 170), that the court hearing a Section 34 petition does not sit in appeal (see para 51).
23. As a matter of fact, the point raised in the appeals stands concluded in McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, where this Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 24 of 40 Court held:
51. After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the arbitrator has an obligation to raise the said question before the arbitrator.
Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the arbitrator would be the subjectmatter of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal there against was provided for under Section 37 of the Act.
52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.
24. This statement of the law was followed in Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328 at page 334 (see para 15).
25. Also, in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, this Court held:
36. At this juncture it must be noted that the legislative intention of providing Section 34(4) in the Arbitration Act was to make the award enforceable, after giving an opportunity to the Tribunal to undo the curable defects. This provision cannot be brushed aside and the High Court could not have proceeded further Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 25 of 40 to determine the issue on merits.
37. In case of absence of reasoning the utility has been provided under Section 34(4) of the Arbitration Act to cure such defects. When there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Arbitration Act. The power vested under Section 34(4) of the Arbitration Act to cure defects can be utilised in cases where the arbitral award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured so as to avoid a challenge based on the aforesaid curable defects under Section 34 of the Arbitration Act. However, in this case such remand to the Tribunal would not be beneficial as this case has taken more than 25 years for its adjudication. It is in this state of affairs that we lament that the purpose of arbitration as an effective and expeditious forum itself stands effaced......"
(23) In so far as the aspect of Rate of Interest is concerned, the observations of the Hon'ble Supreme Court in the case of Ambica Constructions Vs. Union of India reported in 2017 (14) SCC 323 are very relevant which I quote as under:
"...... A perusal of the conclusions drawn by this Court in the above judgment, rendered by a three Judge Division Bench, leaves no room for any doubt, that the bar to award interest on the amounts payable under the contract, would not be sufficient to deny payment of pendente lite interest. In the above view of the matter, we are satisfied, that the clause relied upon by the learned Counsel for the Union of India, to substantiate his contention, that pendente lite interest could not be awarded to the Appellant, was not a valid consideration, for the proposition being canvassed. We are therefore satisfied, that the arbitrator, while passing his award dated 28.6.1999, was fully justified in granting interest pendente lite to the Appellant. Accordingly, while affirming the award passed by the arbitrator on the issue of pendente lite interest, as also, the determination rendered by the learned single Judge in his order dated 6.9.2001, we set aside the impugned order Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 26 of 40 passed by the Division Bench of the High Court, on 17.06.2005, on the question of pendente lite interest. The pendente lite interest determined by the arbitrator, shall be paid to the Appellant, within two months from today...."
(24) Also, in the case of Reliance Cellulose Products Ltd. Vs. Oil and Natural Gas Corporation Ltd., reported in AIR 2018 SC 3707 the Hon'ble Supreme Court observed and I quote as under:
"...... 22. A conspectus of the decisions that have been referred to above would show that under the 1940 Act, an arbitrator has power to grant prereference interest under the Interest Act, 1978 as well as pendente lite and future interest. However, he is constricted only by the fact that an agreement between the parties may contain an express bar to the award of prereference and/or pendente lite interest. Since interest is compensatory in nature and is parasitic upon a principal sum not having been paid in time, this Court has frowned upon clauses that bar the payment of interest. It has therefore evolved the test of strict construction of such clauses, and has gone on to state that unless there is a clear and express bar to the payment of interest that can be awarded by an arbitrator, clauses which do not refer to claims before the Arbitrators or disputes between parties and clearly bar payment of interest, cannot stand in the way of an arbitrator awarding prereference or pendente lite interest. Thus, when one contrasts a Clause such as the Clause in the Second Ambica Construction Case (supra) with the Clause in Tehri Hydro Development Corporation Ltd. (supra), it becomes clear that unless a contractor agrees that no claim for interest will either be entertained or payable by the other party owing to dispute, difference, or misunderstandings between the parties or in respect of delay on the part of the engineer or in any other respect whatsoever, leading the Court to find an express bar against payment of interest, a Clause which merely states that no interest will be payable upon amounts payable to the contractor under the contract would not be sufficient to bar an arbitrator from awarding pendente lite interest under the 1940 Act. As has been held in the First Ambica Construction Case Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 27 of 40 (supra), the grant of pendente lite interest depends upon the phraseology used in the agreement, clauses conferring power relating to arbitration, the nature of claim and dispute referred to the Arbitrator, and on what items the power to award interest has been taken away and for which period. We hasten to add that the position as has been explained in some of the judgments above Under Section 31(7) of the 1996 Act, is wholly different, inasmuch as Section 31(7) of the 1996 Act sanctifies agreements between the parties and states that the moment the agreement says otherwise, no interest becomes payable right from the date of the cause of action until the award is delivered.....".
(25) By application of the above principles of law to the facts of the present case, I now proceed to decide the objections raised by the objectors/ petitioners.
Findings & Observations:
(26) Now coming to the grounds raised by the petitioners/ objectors. I may note that the petitioners have challenged the impugned Award dated 20.05.2018 and its Corrigendum dated 20.06.2018 only in respect of Claims no.1, 3, 4, 5 and 7. I have gone through the original arbitral record. I now proceed to deal with the various objections as under:
CLAIM NO.1:
Claim on account of non payment of part of final bill amounting to Rs.30,92,811/ which was mainly on account of differences of rates/ quantities of some of the extra/ substituted items paid in the 6th RA Bill and 7th & Final Bill:
(27) The case of the petitioners is that the Ld. Arbitrator has wrongly awarded a sum of Rs.20,57,533/ under Claim No.1 Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 28 of 40 which was on account of nonpayment of part of final bill amounting to Rs.30,92,811/. According to the petitioners, though the Ld. Arbitrator had accepted the contention of the petitioners that the claimant/ respondent has failed to establish their letters dated 12.09.2013 and 31.03.2014 but the department was within their right to fix the rates of extra/ substituted items under Clause 12.2 of the agreement applicable in the present cases and on the basis of relevant DSR 2012. As per the allegations, the Ld. Arbitrator has not given a rational view while allowing the claim No.1 and has gone beyond the scope of contract.
(28) In this regard, I may observe that the Ld. Arbitrator has duly considered the documents filed before me and after hearing the parties, passed a detailed award after observing that the Claimant was paid less by Rs.96,000/ by virtue of incorrect/ deleting the measurements in the 7th and Final bill. The conclusions arrived at by the Ld. Arbitrator in respect of claim no.1 are reproduced as under:
"...... After perusal of the documents, I find that when the Respondent had paid the cost of Routine testing of four piles in 6th RA Bill then the same should have been included in the 7th & Final bill also. I therefore consider & decide that Rs.76,000/ (Rs.19,000/ pier pile x 4) are also payable to the Claimant on account of deleting the payment of four Routine Tests on piles in the 7 th & Final Bill.
Therefore, it is observed that the Claimant was paid less by Rs.96,000/ (Rs.20,000/ + Rs.76,000/) by virtue of incorrect/ deleting the measurements in the 7 th & Final bill. I consider and decide that the sub claim (A) of the claimant regarding incorrect measurements is justified to the extent of Rs.96,000/...."
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 29 of 40 (29) Similarly, for the balance claim of Rs.19,61,532.94, the Ld. Arbitrator found that the claim of the claimant was fully justified since the claimant was paid less and in this regard detailed calculations were made by the Ld. Arbitrator in the Award (page 29). The relevant portion of the conclusion arrived at by the Ld. Arbitrator is quoted as under:
".......Therefore, I consider & decide that the Claimant should have been paid the items of RMC30 in the same manner as was done by the Respondent while making the payment of 6th RA Bill. Accordingly in the above table payment of substituted item made in 7th & Final Bill has been recovered and the payment of this item in agreement item no.8 and extra item no.1 as was done by the respondent while making the payment of 6th RA Bill has been restored.
Therefore, I find that by reducing the rates of extra items & substituted items in 7th & Final Bill as compared to the rates specified by the Respondent in 6 th RA Bill, the claimant was paid Rs.19,61,532.94/ day Rs.19,61,533/ less than the justified amount payable to the Claimant. The sub claim (B) is thus justified to the extent of Rs.19,61,53/ Considering sub heads (A) & (B) together I find that the claimant was paid Rs.20,57,533/ (Rs.96,000/ + Rs.19,61,533/) less in the 7th & Final Bill. Therefore, the Claim No.1 is justified to the extent of Rs.20,57,533/ and accordingly I award Rs.20,57,533/ (Rs. Twenty Lakhs fifty seven thousand five hundred thirty three only) in favour of Claimant against this claim...."
(30) It is apparent from the above that the Ld. Arbitrator while arriving at the conclusions, as above, has acted within the contractual clauses and law. In fact, the petitioner/ objector has failed to specifically highlight the violation of principles of law as alleged by them and hence, no interference is required.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 30 of 40 CLAIM NO.3:
Refund of Rs.90,044/ for wrong imposition of penalty for delay in completion of work:
(31) According to the petitioners, the Ld. Arbitrator while deciding the Claim No.3 has failed to consider that the department has justified the delay of 273 days out of the total delay of 303 days while deciding the time extension of the claimant. The case of the petitioners is that the Ld. Arbitrator has wrongly concluded that the entire delay of 303 days which took in completion of work was justified and the action of the department to levy compensation of Rs.90,044/ as unjustified, non contractual, untenable and against the principles of natural justice.
(32) In this regard, I may note that after perusing the Hindrance Register the Ld. Arbitrator has observed that the present petitioners did not consider the correct completion cost for working out the justified delay on account of extra work. The Ld. Arbitrator also observed that as per the Hindrance Register the justified period of 273 days was worked out by considering the completion cost as Rs.2,29,01,140/ whereas accordingly to the final bill prepared and paid by the respondent itself the completed cost was worked out as Rs.2,35,63,611/ and hence, the justified delay of extra additional work comes to 208 days against 183 days. The relevant portion of the conclusions of Ld. Arbitrator are reproduced as under:
"......... Further, as decided by me against Claim No.1 there was an additional work of Rs.20,57,533/ which was Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 31 of 40 executed by the Claimant but was not paid to the Claimant by the Respondent in 7th & Final Bill. If this additional work would have also been considered by the Respondent for calculating the justified delay on account of extra/ additional work then the justified delay would have been much more than 303 days. Incidentally in that case the justified delay on account of additional work itself would have been 285 days and total justified delay based on hindrance register would have been 375 days against the actual delay of 303 days.
Therefore, from the above mentioned facts & circumstances it is evident that entire delay which took place in completion of work was completely justified and the action taken by the Respondents was non contractual, unjustified, against the principles of natural justice & arbitrary, I, therefore, consider and decide that the entire period of delay which took place in the completion of work was justified and the action of the respondents to levy compensation amounting to Rs.90,044/ for delay in completion of work was unjustified, non contractual, untenable and against the principles of natural justice. I accordingly set aside the compensation amounting to Rs,90,044/ levied by the Respondents for delay in completion of work. The Respondent is directed to refund the amount of Rs.90,044/ (Rs. Ninety thousand forty four only) to the Claimant....".
(33) The above findings of the Ld. Arbitrator cannot be said to be against the provisions of the contract. It is a settled law that the Court cannot undertake an independent assessment of the merits of the award and where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. The findings as reflected above, are reasoned and do not suffer from any infirmity or error. No interference is required with the regard to the above conclusions arrived at by the Ld. Arbitrator.
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 32 of 40 CLAIM NO.4:
Refund of a sum of Rs.2,50,000/ which was wrongly withheld from 6th RA Bill and 7th & Final Bill:
(34) It has been alleged that the Ld. Arbitrator has wrongly decided the claim of Rs.2,50,000/ for refund which was withheld by the petitioner from the 6 th, 7th and final bill of the respondent. According to the petitioners, the amount of Rs.1,00,000/ for extension of time was withheld due to pending approval and extension of time has been proved by the competent authority with levy of compensation of Rs.90,044/ with balance amount of Rs.9,956/ was justified whereas rest of the amount of Rs.1,00,000/ + Rs.50,000/ for deviation and extra items statements were not approved by the competent authority. (35) In this regard, I may note that the petitioners have failed to show as to who this ground of objection falls within the parameter of Section 34 (2) of the Arbitration and Conciliation Act. Even otherwise, the Ld. Arbitrator has duly considered the contentions of the parties and the documents placed before him after which he had held the present respondent entitled to the refund of Rs.2,50,000/. The relevant portion of the conclusions of the Ld. Arbitrator is reproduced as under:
"...... After perusal of the Statement of Claim (SoC), Reply to the Respondent to the Statement of Claim (RoC), Rejoinder, additional documents submitted by both the parties and hearing them at length during the oral submissions, I find that as admitted by the Respondent itself Rs.2,50,000/ can be refunded to the Claimant after settlement of other demand by the Respondent. I find that presently there is no demand of the Respondent which is pending with the Claimant and accordingly there is no counter claim to the Respondents. It clearly shows that Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 33 of 40 presently there is no demand of the respondent pending with the Claimant. I therefore consider and decide that Rs.2,50,000/ is refundable to the Claimant by the Respondent and accordingly award of Rs.2,50,000/ (Rs. Two Lakh fifty hundred only) in favour of claimant against this claim.....".
(36) It is evident from the above that the Ld. Arbitrator had passed the detailed award after dealing with each and every aspect of the claim. The above findings of the Ld. Arbitrator cannot be said to be wrong and erroneous and hence, no interference is required.
CLAIM NO.5:
Sum of Rs.5,69,501/ under clause 10 (C), R.3,77,958/ under clause 10 (CA) and Rs.7,34,583/ under clause 10 (CC) of the agreement as submitted by the claimant along with the Final Bill:
(37) The case of the petitioner is that the basis of the award of this amount was because the Ld. Arbitrator has justified the delay caused by the claimant in completion of the work and has wrongly concluded that the compensation in Clause 2 was only imposed by the respondent in order to deny the benefits of clause 10C and 10 CA to the respondent and did not consider the pleadings and arguments of the present petitioners that no payment of increase in the cost of the wages of labour and increase in the cost of cement & steel is payable to the claimant under the agreement for the period beyond stipulated date of completion upto actual date of compensation. According to the petitioners, once the case of time extension of claimant was Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 34 of 40 decided by the competent authority with levy of compensation under clause 2 hence, the question of any payment under clause 10 (C) and 10 (CA) does not arise.
(38) In so far as claim no.5 is concerned, I may observe that the Claimant (present respondent) had raised a claim for a total sum of Rs.16,82,042/ under this head and the Ld. Arbitrator had decided the part of the claim of Rs.9,47,459/ under Clause 10 (C) and Clause 10 (CA) in favour of the claimant/ respondent after rejecting the claim of Rs.7,34,583/. The Ld. Arbitrator has specifically observed that since there was a delay in completion of work on the part of present petitioner, therefore, there was a justified delay during that period by the present respondent as a result of which the claimant is entitled for payment of increase in the cost of wages of labour and increase in the rate of steel and cement under clause 10 (C) and 10 (CA). The relevant portion of the findings of the Ld. Arbitrator under this head is reproduced as under:
"....... The present case is different. In this case no breach of contract is established. There was delay in completion of work i.e. 303 days mainly because the scope of work had increased and the Claimant executed the extra work without any reservation. Therefore in this the Claimant is entitled for payment of his claims as per the terms of the contract agreement only. The contract agreement clearly specifies that stipulated completion period being 18 months clause 10CC is not applicable. Further as the clause 10CC was not applicable therefore the same was deleted in the contract agreement at the time of call of tender itself. Therefore as per the contract agreement the Claimant is not entitled to the escalation under clause 10CC for the contract period & extended period even if the total period of execution exceeded 18 months period."
Considering the claim in totality I find that the claim is justified to the extent of Rs.9,47,459/ Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 35 of 40 (Rs.5,69,501/ under clause 10 'C' + Rs.3,77,958/ under clause 10 CA + Nil amount under clause 10 CC). I accordingly award Rs.9,47,459/ (Rs. Nine lakhs forty seven thousand four hundred fifty nine only) in favour of the claimant against this claim......".
(39) It is evident that the Ld. Arbitrator has duly explained and elaborated the reasons for arriving at his decisions. It is not for this Court to sit in appraisal of the evidence lead before the learned Arbitrator. The above findings of the Ld. Arbitrator are based upon facts of the case and cannot be interfered with by this Court while exercising its jurisdiction under Section 34 of the Arbitration and Conciliation Act.
CLAIM NO. 7:
Payment of pursuit, pendentelite and future interest on all the claims from the due date to the date of payment of the award:
CLAIM NO. 8:
Cost of Arbitration - Rs.2,00,000/:
(40) According to the petitioners, the Ld. Arbitrator has wrongly awarded the payment of pursuit, pendentelite and future interest and also the cost of arbitration of Rs.2,00,000/. The case of the petitioners is that the Ld. Arbitrator has not given any reasons in favour of the claimant and against the petitioner for imposition of cost in the award.
(41) In so far as the aspect of payment of pendentelite and future interest is concerned, I note that as per the provisions of Section 31 (7) (a) of the Arbitration and Conciliation Act, the arbitral tribunal may award interest where the award is for the Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 36 of 40 payment of money, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. The Ld. Arbitrator was well within his jurisdiction to award the interest in favour of the claimant/ respondent.
(42) Further, in so far as the aspect of cost of arbitration (Claim No.8) is concerned, it is a settled law that an Arbitrator is the Sole Judge of the quality and quantity of evidence and his estimations are not subject matter of scrutiny under Section 34 of the Arbitration and Conciliation Act. The findings given by the Ld. Arbitrator are reasoned and does not suffer from any infirmity.
(43) In so far as the other grounds raised by the petitioners are concerned, I note that it is settled law that this Court cannot go into the merits of the findings of the Arbitrator. Despite having alleged that the impugned award dated 20.05.2018 and the Corrigendum dated 20.06.2018 is against public policy i.e. being violative of the provisions of Section 34 (2) (b) (ii) of the Arbitration and Conciliation Act 1996, the petitioners/ objectors have failed to show that the award in question is in conflict with the public policy in India or that the impugned award is based upon no reasons. Rather, the award dated 20.05.2018 contains elaborate discussion and reasoning for the conclusions so arrived at by the Ld. Arbitral Tribunal.
(44) The arbitration award dated 20.05.2018 is a reasoned award and does not suffer from any infirmity or error apparent on Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 37 of 40 the face of the award. It is not open for this Court to sit in appraisal of the evidence lead before the learned Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the learned Arbitrator which was subject matter of dispute. In the present case the learned Arbitral Tribunal has decided upon the issues under reference which were within their competency and as per the agreement entered into between the parties. There are no allegations against the learned Arbitrator regarding misconduct nor of having misconducted the proceedings which have either been alleged by the petitioner or established. The Ld. Arbitrator has duly explained and elaborated the reasons for arriving at his decisions and the petitioner/ objector before this Court has failed to bring its case within the provisions of Section 34(2) of the Arbitration and Conciliation Act, 1996 and I find no ground to intervene. (45) Ergo, I hold that the petitioner/ objector has miserably failed to bring its case within the provisions of Section 34 (2) of the Arbitration and Conciliation Act, 1996 and to establish that the petitioner/ objector was in some incapacity; or that the Arbitration agreement was not valid; or that he was not given a proper notice or was otherwise unable to present his case; or that the arbitral award dealt with a dispute not contemplated by or not falling within the terms of submission to arbitration, or it contains decisions on matters beyond the scope of submission to arbitration. The petitioner/ objector has also failed to establish that the composition of arbitral tribunal or the arbitral procedure was not in accordance with the agreement between the parties or Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 38 of 40 that the subject matter of dispute was not capable of settlement by arbitration under the law for the time being in force or that the arbitral award was in conflict with public policy of India.
CONCLUSIONS:
(46) It is settled law as reported in the case of Associated Engineering Company vs. Govt. of Andhra Pradesh, reported in 1992 SC 232 that an arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract and has sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. However, if he has remained within the parameters of the contract and has construed the provisions of the contract his award cannot be interfered. The petitioner has failed to establish that the Arbitrator has failed to arbitrate the terms of the contract or has travelled beyond the same. Ergo, I hold that the arbitration award dated 20.05.2018 is a reasoned award as well as the Corrigendum dated 20.06.2018 does not suffer from any infirmity or error apparent on the face of the award. It is not for this Court to sit in appraisal of the evidence lead before the learned Arbitral Tribunal and this Court will not open itself to the task of being a judge on the evidence placed before the learned Arbitrator which was subject matter of dispute.
(47) Further, I am of the view that the interpretation of the relevant clauses of the Act and the conclusions arrived at by the Ld. Arbitral Tribunal, are possible and plausible and merely Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 39 of 40 because another view is possible, would be no ground to interfere in the conclusions of the Ld. Arbitral Tribunal. It is the mandate of provisions under Section 34 of the Arbitration and Conciliation Act to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law and any frequent interference with the arbitral award in the usual course on factual aspects, the commercial wisdom behind opting for alternate dispute resolution would stand frustrated. The reasoning provided in the Award is just, fair and reasonable. (48) The Arbitral Tribunal has duly explained the reasons for arriving at its decisions and the petitioner/ objector before this Court has failed to bring its case within the provisions of Section 34(2) of the Arbitration and Conciliation Act, 1996 and I find no ground to intervene.
(49) Therefore, I hereby hold that the petitioner has failed to make out any case for requiring any interference with the award under Section 34 of the Arbitration and Conciliation Act, 1996 and accordingly the objections, being devoid of merits, are hereby Dismissed. Parties are directed to bear their own costs. (50) Original arbitral proceedings be sent back.
(51) File be consigned to Record Room.
Announced in the open court (Dr. KAMINI LAU)
Dated: 08.08.2023 District Judge (Commercial Court)02,
Central, Tis Hazari Courts, Delhi
Irrigation and Flood Department GNCTD vs. Varun Gupta., OMP (COMM) No. 107/2023, Artbn. No. 531/2018, Judgment dated: 08.08.2023 Page No. 40 of 40