Delhi District Court
Corporate Office:A5 vs M.L Infomap Pvt Ltd on 10 July, 2020
In the Court of Shri Sanjiv Jain,
District Judge (Commercial Court)03, Patiala House Courts
New Delhi
OMP Comm No. 02/18
GTI Infotel Private Ltd
Registered office:
S2, IInd Floor, Pocket S
Okhla Phase II, New Delhi110020
Also at:
Corporate Office:A51, Sector 8,
Noida, Uttar Pradesh 201301
... Petitioner/objector
versus
M.L Infomap Pvt ltd
Registered office:
124A, Katwaria Sarai,
New Delhi110016
... Respondent/claimant
Date of institution : 18.10.2018 Date of reserving judgment : 04.07.2020 Date of decision : 10.07.2020 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter called the 'Act' challenges the award dated 02.06.2018 passed by the Arbitrator Sh. Kartar Singh Khurana in the case titled as M/s M.L Infomap Pvt OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.1 of 60 ltd v/s M/s GTI Infotel Pvt ltd.
Brief facts:
2. Briefly the facts as stated in the petition are that M/s GTI Infotel Private ltd (petitioner) engaged in the business of software development/I.T and Tele communications, particularly development of satellite based Round Trip Distance (RTD) Route Mapping Systems and M/s M. L. Infomap Pvt Ltd (respondent) inter alia in the business of GIS survey, Mapping, Application Development and Geographical survey joined hands as bidder members forming a consortium of partners with the petitioner as the lead bidder vide "Bidder MOU" dated 24.10.2014. The consortium bid for various Indian Oil Corporation Limited (IOCL) tenders and was declared successful and awarded the contract for Maharashtra State Office vide letter of offer Ref No. MSO/OPS/GeoRTD dated 19.03.2015 for a sum of Rs. 2,03,87,155/. The petitioner thereafter, awarded the sub contract by placing a Purchase Order no.
GTI/ML/2015/001 dated 24.03.2015 to the respondent. An agreement dated 26.03.2015 was entered into between the two with the understanding that the respondent would undertake implementation of services equaling to 49.49% of the project value.
3. It is alleged that the respondent could not perform the sub contract as per its representations and the terms & conditions of the MSO/OPS/PT/GeoRTD1/1419 and ETender ID 2014_MSO_10257_1 against which the petitioner time and again OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.2 of 60 raised concern with the respondent, however, instead discharging its commitments under the contract, the respondent indulged in scuttling, subverting and finally diverting the issues so as to jeopardize the petitioner's goodwill and professionalism. It is alleged that the respondent, contrary to the covenant of the bidder MOU, bypassing the petitioner, started doing bid for the new tender for different region floated by IOCL independently for Madhya Pradesh, Tamilnadu, Assam and Rajasthan Region.
4. It is stated that vide letter dated 23.02.2016, the petitioner was constrained to terminate the Purchase Order dated 24.03.2015 on account of failure on the part of the respondent to stick to the time frame for the execution of the purchase order which was six months from the date of allotment i.e. 18.09.2015. Further, the work executed by it was substandard and not in accordance with the technical specifications, thus, not accepted by IOCL, which fact was conveyed to the petitioner by IOCL vide email dated 06.01.2016 and 22.01.2016, which were forwarded to the respondent.
5. It is stated that at the behest of the petitioner, disputes were referred to be resolved through mutual discussions in terms of the bidder MOU and accordingly one senior official each on behalf of both the companies were nominated. However, the mutual discussions could not proceed as the respondent did not show any interest.
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6. It is alleged that the respondent, erroneously relying on the email dated 07.03.2016 from Mr. N.P Sen, Executive of the petitioner, issued a notice dated 06.09.2016 as a Demandcum Arbitration under the Agreement dated 26.03.2015 and sought resolution of disputes through Arbitration. It also furnished the names of three persons to opt from as a Sole Arbitrator. It is stated that the agreement dated 26.03.2015 was only to the effect to record the understanding between them wherein the respondent company was to undertake implementation of services equaling to 49.49% of the project value, which was arising out of the "Bidder MOU" dated 24.10.2014. There was no stipulation of Arbitration under either the "Bidder MOU" dated 24.10.2014 or the Agreement dated 26.03.2015.
7. It is stated that the DemandcumArbitration notice of the respondent was promptly replied by the petitioner vide dated 13.09.2016, whereby, it was made clear to the respondent that since there was no stipulation of arbitration in the agreement, the proposal of the respondent to initiate arbitration under the Act is not acceptable to the petitioner. It was reiterated in the reply that the parties can resort to legal advice and help in resolving the disputes through mutual discussions. It is alleged that the respondent, instead of coming forth for mutual discussion to resolve the disputes in terms of the "Bidder MOU", preferred an application under Section 9 of the Act dated 14.12.2016 being 22145 of 2016 before the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.4 of 60 District and Sessions Judge for interim measures to restrain the petitioner from using source codes for the GeoRTD software supplied by it and to direct the petitioner to furnish a bank guarantee to the tune of Rs. 93,19,225/. The said application of the respondent was dismissed as withdrawn vide order dated 12.09.2017 with a germane observation, inter alia as under:
".... No Resolution of the petitioner and respondent companies authorizing their representatives for entering into the arbitral clause later to agreement is part of record."
8. It is alleged that the respondent malafidely did not bring on record the factum of the dismissal of the application as withdrawn and chose to file petition under Section 11 (6) of the Act being Arbitration Petition 207 of 2017 seeking appointment of Sole Arbitrator to adjudicate upon the disputes.
9. It is stated that the High Court, vide order dated 15.05.2017 while allowing the said petition referred the parties to Delhi International Arbitration Centre for the nomination of an Arbitrator from its panel to adjudicate the disputes mistakenly relying upon the emails dated 07.03.2016 and 09.03.2016 exchanged between the parties to inaccurately conclude that there exists an Arbitration Agreement between the parties, without appreciating the fact that the exchange of mails was general in nature and the use of the word "arbitration" was purely of common parlance and had nothing to do with the word "Arbitration" as understood under the Act. Even OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.5 of 60 otherwise, the High Court failed to appreciate that Mr. N.P Sen, one of the Executives of the petitioner did not have the mandate and/or Board resolution or authority of any nature in his favour to enter into any agreement for the arbitration for and on behalf of the petitioner. It is stated that the Delhi International Arbitration Center (DIAC) appointed Sh. Kartar Singh Khurana, ADJ (Retd.) as the Sole Arbitrator vide letter dated 23.12.2017, who accepted the offer vide letter dated 06.01.2018 and entered into reference on 12.02.2018.
10. On getting the Statement of Claims, the Arbitrator started the proceedings on12.02.2018. A fresh notice was directed to be served on to the petitioner at its registered address and the cooperate office through the Centre through registered post and email for appearance and filing reply to the Statement of Claims for 13.03.2018. Despite service of notices on to the petitioner vide orders dated 13.03.2018, 23.03.2018, 13.04.2018 and 21.04.2018, the petitioner did not appear and the case was proceeded with. Issues were framed. The claimant examined its Manager (Technical) as CW1, who tendered his affidavit and the documents including the emails supported with the certificate under Section 65B of the Evidence Act. The Arbitrator, after perusing the evidence, documents and hearing arguments, passed the impugned award.
11. One of the issue was 'whether the claim of the claimant is covered under the Arbitration agreement'. Vide impugned award, OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.6 of 60 the arbitrator observed as under:
" It is also obvious from the Letters dated 07.03.2016 and 28.04.2016 of the respondent (Petitioner herein) [Ex CW1/14 (colly)] that the respondent (Petitioner herein) had offered to resolve the disputes between the parties either by mutual reconciliation or by arbitration and since the disputes between them could not be resolve by mutual reconciliation, the claimant had sent a demandcumarbitration notice dated 06.09.2016 [Ex. CW1/15A] to the respondent (Petitioner herein). However, the respondent (Petitioner herein) vide reply dated 13.04.2016 (be read as 13.09.2016) [Ex CW 1/15) refused to appoint an arbitrator, resulting into appointment of an arbitration by Hon'ble High Court. From all the evidence, it was quite evident that there was an arbitration agreement with regard to resolving the disputes between the parties arising out of agreement dated 26.03.2015 entered between the parties."
12. It is stated that the arbitrator failed to appreciate the reply of the petitioner dated 13.09.2016 Ex. C1/15 in its true purport while giving undue importance to the contents of the mails exchanged/used in general sense that too without proper authorization/board resolution to the effect of allowing Mr. N.P Sen to enter into or agree to arbitration as a mode of resolution of disputes for and/or behalf of the petitioner and went on to make an award directing the petitioner to pay Rs. 1,07,62,430/. It is alleged that the respondent from the very beginning suppressed the information of execution of "bidder MOU" which was the master agreement governing the parties from the Judicial Forums and the Arbitrator.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.7 of 60 Objections:
13. The petitioner challenged the impugned award on the following grounds:
A) That the respondent never approached the District Court and the High Court or the Arbitrator with clean hands and suppressed the material facts from them and is guilty of suppressio veri suggesio falsi by not revealing the true and correct facts of the execution of "bidder MOU".
B) That the agreement dated 24.10.2014 resulting into bidder MOU and agreement dated 26.03.2015 stipulate in no uncertain terms that the mode of resolution of disputes shall only be through mutual discussions.
C) The agreement dated 24.02.2014 giving rise to another agreement dated 26.03.2015 did not provide for the invocation of third party arbitration since there was no arbitration clause.
D & E ) That the email dated 07.03.2014 from Mr. N.P Sen mentioning about the settlement of all their disputes through mutual reconciliation and arbitration has been incorrectly construed to mean arbitration. Though it was only in the context of nothing but mutual discussions between the officers of the parties to be appointed in that regard and should have been given the same meaning since there was no arbitration clause in the master agreement i.e. bidder MOU.
F) That Mr. N.P Sen was neither authorized by the petitioner company either through any board resolution or letter of authority to enter into any agreement with the respondent to get the disputes settled through arbitration and except the mail dated 07.03.2016, there is no other document enabling him to go beyond and in addition to what was already agreed vide bidder MOU dated 24.10.2014;
G) That the arbitrator erred in concluding as to the existence of arbitration between the parties merely on the mention of the word 'arbitration' by one of the officers of the petitioner in one of the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.8 of 60 emails sent by him which was purely in general sense that too, without any requisite sanction;
H & I) That the arbitrator failed to take note of the letter dated 15.05.2018 written by the petitioner through Mr. N. P. Sen intimating the arbitrator of the fact of suppression of information about the execution of the master agreement i.e. bidder MOU and breach of its terms & conditions by the respondent resulting in grave financial loss to the petitioner. He also failed to take note of the letter dated 24.05.2018 written by the petitioner apprising him of the reasons for the termination of the agreement dated 26.03.2015 and factum of counter claim of Rs. 78,71,000/.
Reply to the objections:
14. On getting notice of the petition, respondent filed its reply alleging that the objections raised by the petitioner are vague, lacking in material particulars and are liable to be rejected as by way of the present objections, the petitioner is seeking readjudication of facts and reappreciation of evidence. It is stated that the scope of judicial review under Section 34 of the Act does not permit such interference with an Arbitral Award. The court cannot supplant its opinion over that of the arbitrator as held in the case of Ssanyog Engineering & Construction Co. Ltd Vs. National Highways Authority of India (NHAI), CA No. 4779/2019, after the amendments as on 23.10.2015.
15. It is stated that the petitioner failed to raise any ground or any kind of incapacity to either represent itself before the High Court at the time of the appointment of the Arbitrator or even during the pendency of the proceedings before the arbitrator and thus, is OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.9 of 60 estopped from raising such pleas. It failed to prove that the arbitration agreement is not valid. It is stated that the parties vide emails dated 07.03.2016, 09.03.2016 and 28.04.2016 had agreed to resolve their disputes by way of the arbitration and thereafter, the respondent filed the petition under Section 11 of the Act for the appointment of an arbitrator which was duly considered. The petitioner was duly called upon but it chose not to appear as evident from the order dated 15.05.2017. It was duly served with a demand cumarbitration notice dated 06.09.2016 to which it gave a false reply dated 13.09.2016 and thereafter, the application under Section 11 of the Act was filed. It is stated that the petitioner was also given multiple opportunities during the pendency of the arbitration proceedings vide orders dated 12.02.2018, 13.03.2018, 23.03.2018, 13.04.2018 and 21.04.2018 but it chose not to appear/represent and thus, the petitioner cannot be allowed to take advantage of its own wrong or negligence of not having appeared and represented its case.
It is stated that the award does not suffer from any patent illegality and in view of the decision in the case of Ssanyog Enginnering (supra), reappreciation of evidence which is what the appellate court is permitted to do, cannot be permitted on the ground of patent illegality appearing on the face of the record. Reference is also made of the case, M/s LG Electronics India (P) ltd v/s Dinesh Kalra, FAO (OS) (Comm) 86/2016 decided on 19.03.2018, where it was held that Arbitrator is the final arbiter on facts as well as on law and even errors, factual or legal which stop short of perversity do not merit interference under Section 34 and 37 of the Act.
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16. The respondent denied the allegations of the petitioner and stated that from the emails dated 07.03.2016, 09.03.2016 and 28.04.2016, it is clear that the arbitrator had given fair opportunity to the petitioner to represent itself during the pendency of the proceedings. The objections have been filed with the sole intention to delay the execution proceedings. It is stated that even the petitioner vide letters dated 15.05.2018 and 24.05.2018 failed to raise such objections as raised by the petitioner in this petition. It shows that the petitioner was aware of the day to day proceedings of the arbitration despite which it chose not to appear and represent itself.
17. The respondent also denied that it was not able to perform the sub contract as per its representation or it indulged in scuttling, subverting or diverting issues to jeopardize the petitioner's goodwill. It is stated that the award has been passed based on a dispute, which arose between the parties with regard to the agreement and the purchase order. It denied that there was failure of any kind on its part to stick to the time frame for the execution of the purchase order as alleged. It is rather stated that scope of the purchase order was changed from time to time which was duly adhered to by it. It also denied that the work performed by it was sub standard or that the same was not accepted by IOCL at the given time. It is stated that the respondent had duly completed its scope of work within the stipulated time by uploading the routes, which were triggered and OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.11 of 60 verified from time to time. It is stated that even after, the scope of the work kept on increasing as the respondent was provided with new routes. It is stated that since the disputes were not resolved amicably, the respondent offered to resolve disputes by way of arbitration and the same was accepted by the petitioner vide emails dated 07.03.2016, 09.03.2016 and 28.04.2016. The respondent through its counsel served Demand cum Arbitration Notice dated 06.09.2016 to the petitioner but the petitioner vide reply dated 13.04.2016 refused to appoint an Arbitrator for the settlement of dispute, however, never denied the work done and the services provided by the respondent in terms of the agreement. It wrongly relied upon some other agreement, which was not the subject matter of dispute. It is stated that all these issues have already been settled by the High Court vide order dated 15.05.2017 where the petitioner chose not to appear or oppose the Section 11 of the Act petition. It is stated that when the mutual discussions with respect to the disputes relating to the purchase order could not reach to a conclusion, the respondent chose to proceed with the other remedies available to it. It is stated that the bidder MOU has no relevance whatsoever with the present dispute and petitioner has complicated the facts with a motive to misguide the Court. It is stated that the High Court in an elaborate and detailed fashion has categorically stated that the emails exchanged between the parties clearly state that there was an intention of the parties to settle the dispute by way of arbitration. Even otherwise, the petitioner ought to have assailed the order of the High Court, if at all, it was aggrieved by it.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.12 of 60 However, it despite being served and having complete knowledge of the proceedings under Section 11 of the Act and those before the Arbitrator failed to take any action and thus is estopped from raising such objection at a belated stage that too under the grab of the objections under Section 34 of the Act. It is stated that the petitioner ought to have taken part in the arbitration proceedings and given its statement of defense instead of writing to the Arbitrator vide letters dated 15.05.2018 and 24.05.2018. Moreover, the Arbitrator is not obligated to take into consideration the submissions of any of the parties, unless the same be read as a part & parcel.
Arguments & contentions:
18. I have heard Ld. Counsel Sh. Debashish Moitra for the petitioner/objector and Sh. Nitin Gupta, Ld. Counsel for the respondent/claimant.
19. Ld. Counsel for the petitioner reiterated what has been stated in the petition and referred the bidder MOU dated 24.10.2014, the primary agreement between the two and the agreement dated 26.03.2015. Ld. Counsel stated that certain disputes had arisen on account of failure of the respondent to render service in terms of the specifications provided to it as well as on its nonadherence to the time frame for the performance of the same, which made the petitioner terminate the agreement vide letter dated 23.02.2016. The parties exchanged the emails dated 07.03.2016 and 09.03.2016 in respect of modes of resolution of the disputes and it was agreed that OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.13 of 60 "mutual discussion" mode as mentioned in bidder MOU shall only be adhered to. Arbitration was also suggested as an alternative, which was not agreed by the parties in as much as the respondent in its email dated 09.03.2016 had stated the arbitration to be the last option and sought the board resolution from the petitioner in favour of Sh. N. P. Sen to initiate for negotiation. Ld. Counsel contended that there was no resolution in favour of Sh. N. P. Sen by the petitioner company. Ld. Counsel contended that the respondent never turned up for mutual discussions but instead arbitrarily chose to serve a Demand cum Arbitration Notice dated 06.09.2016 through its advocate seeking to import arbitration into the transaction between them, which notice was promptly replied by the petitioner vide dated 13.09.2016 denying the existence of the Arbitration Agreement thus disagreeing for arbitration. Ld. Counsel contended that the petition filed by the respondent under Section 9 of the Act was dismissed as withdrawn vide order dated 12.09.2017, wherein, it was observed that "no resolution authorizing the representative of the parties for entering into the arbital clause letter to agreement is part of record". Ld. Counsel contended that before the said petition was disposed of, the respondent filed a petition under Section 11 of the Act before the High Court, from where, vide order dated 15.05.2017, matter was referred to DIAC, which appointed the Arbitrator. Ld. Counsel contended that the respondent concealed the order dated 12.09.2017 passed by the ADJ and the master agreement/bidder MOU from the Arbitrator. Further, the petitioner vide letters dated 15.05.2018 and 24.05.2018 had informed the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.14 of 60 Arbitrator that there is no arbitration agreement between them, thus, the Arbitrator lacked the jurisdiction to adjudicate, however, he passed the impugned award, which was also beyond the terms and scope of the contract, agreement and the purchase order. Ld. Counsel contended that the email dated 07.03.2016 by Sh. Sen only suggested modes of resolution, which was not even appreciated by the respondent as evident from the reply dated 09.03.2016. Further, Dr. Sen was neither the signatory to the bidder MOU or the agreement nor was authorized to send this email as there was no resolution to that effect in his favour. Ld. Counsel contended that the Demand cum Arbitration Notice was sent by the Advocate, who had no authority to create any arbitration agreement/agreement clause on the basis of email of an unauthorized person of the company.
Therefore, the Arbitrator reached to a wrong and perverse conclusion that there was an arbitration agreement between the two arising out of the agreement dated 26.03.2015.
20. Ld. Counsel further contended that the respondent was entitled to payments only, if the petitioner received the payments from IOCL. The conclusion reached by the Arbitrator without any proof/ascertainment from IOCL that the petitioner must have received payment from IOCL is nothing but the figment of imagination by him. Ld. Counsel contended that the award passed by the Arbitrator is not only perverse but void ab initio, on account of various concealment and suppression of facts being against the Public Policy of India and in conflict with the basic notions of OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.15 of 60 morality or justice. In support of his contentions, Ld. Counsel placed reliance on the case Jagdish Chander Vs. Ramesh Chander & Another, (2007) 5 SCC 719 and S. P. Chengalvaraya Naidu Vs. Jagannath, (1994) 1 SCC 1.
21. Ld. Counsel contended that the Supreme Court in catena of judgments while deliberating on the doctrine of perversity has held that a decision is perverse or irrational, if no reasonable person could have arrived at it in the given set of facts and circumstances and where a finding is based on "no evidence" or if an Arbitral Tribunal takes into account something irrelevant and "ignores vital evidence", such decisions would necessarily be perverse. Reference is made of the cases H. B. Gandhi, Excise & Taxation OfficerCum Assessing Authority Vs. Gopi Nath & Sons, 1992 Supp (2) SCC 312(at P317), Kuldeep Singh VS. Commissioner of Police (1999) 2 SCC 10, Patel Engineering Ltd Vs. North Eastem Electric Power Corporation Ltd, SLP (C) No. 358485 of 2020 and Dyna Technologies Pvt Ltd Vs. Crompton Greaves Ltd (2019) SCC OnLine SC 1656. Ld. Counsel contended that the award could be set aside, if it is contrary to Fundamental Policy of Indian Law or the interest of India or justice or morality or it is patently illegal or is contrary to the substantive provisions of law and against the terms of the contract as held in the case of Venture Global Engg. Vs. Satyam Computers Service Ltd, (2008) 4 SCC 190, MMTC Ltd. Vs. M/s Vedanta Ltd, CA No. 1862/2014, Associated Builders Vs. Delhi Development Authority, 2014 (4) Arb. LR 307 (SC) and Lifelong Meditech (P) Ltd Vs. United OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.16 of 60 India Insurance Co. Ltd, 2018 (1) Arb. LR 34 (Delhi). Ld. Counsel contended that findings of fact as well as of law of the Arbitrator are ordinarily not amenable to interference under Section 34 & 37 of the Act as held in the case of NHAI Vs. BSCRBMPati Joint Venture, 2018 (1) Arb. LR 570 (Del). It is only where the finding is either contrary to the terms of the contract between the parties or exfacie perverse that interference by the Court is necessary.
22. Ld. Counsel referred the case of Uttrakhand Purv Sainik Kalyan Nigam Limited Vs. Northern Coal Field Limited (2020) 2 SCC 455 and stated that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction including determining all jurisdictional issues and the existence or validity of the arbitration agreement in terms of Section 16 (1) of the Act.
23. Ld. Counsel further referred the case of Lion Engg.
Consultants Vs. State of M. P. (2018) 16 SCC 758, where, it was held that legal pleas which are purely legal in nature, even if not raised before the Arbitral Tribunal can be raised at the stage of Section 34 of the Act petition. Thus, the petitioner could raise the objections to the jurisdiction of the Arbitrator in the wake of non existence of arbitration agreement/clause. Ld. Counsel stated that non participation in the arbitral proceedings will not preclude the petitioner from raising such a plea at a later stage.
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24. Ld. Counsel further contended that there was no dispute prior to the legal notice. Ld. Counsel contended that the respondent did not make any verification from IOCL, whether the petitioner had received the payment or not. Ld. Counsel stated that the petitioner is liable to pay only after getting the payment from the IOCL. Ld. Counsel stated that in this case, the petitioner did not get any payment from IOCL of the work done by the respondent and the Arbitrator made the assumptions without any substance that the petitioner must have received the payments, which assumptions are based on surmises and conjectures. Ld. Counsel stated that till the issuance of letter dated 06.09.2016, there was no arbitration agreement and by that time, the contract had already been terminated.
25. Ld. Counsel for the respondent per contra reiterated what has been stated in reply to the petition and stated that the petitioner had raised purchase orders dated 24.03.2015 for line items no. 3 & 6 of the table for Rs. 48,92,357/, which were duly completed and the petitioner was informed about the same but the payment was not released by the petitioner. The scope of the work delineated in line item no. 7 of the table was duly performed by the respondent within the stipulated period for Rs. 2,21,775/ and the petitioner was duly informed about the same but the payment was not released by the petitioner. The respondent also completed the work for line item no. 1 of the table for Rs. 32,05,093/. The petitioner was duly informed about the same but the payment was not released. The respondent then sent an email dated 08.11.2015 to the petitioner requesting for OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.18 of 60 releasing the payments, however, the respondent did not make the payments. Several communications were exchanged and meetings were held but the dispute could not be resolved. Thereafter, petitioner vide email dated 07.03.2016 and 28.04.2016 proposed to resolve and adjudicate the dispute through arbitration, which was accepted by the respondent. Ld. Counsel contended that the petitioner unilaterally terminated the agreement vide notice of termination dated 23.02.2016, without any reasonable cause. The respondent thereafter, sent Demand cum Arbitration Notice dated 06.09.2016, however, the petitioner chose to send a vague reply dated 13.09.2016 to the same. Ld. Counsel contended that on the petition filed under Section 11 of the Act for the appointment of the Arbitrator, despite service, the petitioner did not appear and the High Court vide order dated 15.05.2017 observing that there exists an arbitration agreement between the parties referred the parties to Delhi International Arbitration Centre, from where the Arbitrator was appointed. Ld. Counsel contended that the Arbitrator had given multiple opportunities to the petitioner to represent its case but despite service, petitioner failed to appear before the Arbitrator.
26. Ld. Counsel contended that the petitioner was fully aware of the arbitral proceedings, which fact is evident from its letters dated 15.05.2018 and 24.05.2018 to Delhi International Arbitration Centre but chose not to appear before the Arbitrator. Ld. Counsel stated that the Arbitrator after appreciating the documents on record has passed a reasoned award, which does not call for interference.
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27. As regards the objections that the respondent did not disclose bidder MOU dated 24.10.2014 and that in the bidder MOU dated 24.10.2014 and the agreement dated 26.03.2015, mode of resolution was through mutual discussions and not arbitration, Ld. Counsel submitted that the bidder MOU was entered into prior to the award of the work by IOCL, which was to record the broad understanding between the parties to deal with the tenders issued by IOCL containing the mutual terms on which, the parties would execute the work. Ld. Counsel stated that in accordance with the understanding as contained in the bidder MOU, a specific agreement dated 26.03.2015 for the specific services was executed, thus, the bidder MOU was superseded by the specific agreement and therefore, there was no occasion to refer or rely upon the bidder MOU, and thus, there was no concealment of fact. Ld. Counsel contended that mode of resolution as contained in the bidder MOU was superseded by the subsequent agreement. Ld. Counsel stated that despite several communication and discussions, the dispute could not be resolved and thereafter, the petitioner vide emails dated 07.03.2016 and 26.04.2016 proposed to resolve the disputes through arbitration, which was accepted by the respondent.
28. As to the objections that email dated 07.03.2016 issued by Mr. N. P. Sen regarding adjudicating the dispute through arbitration was without any authority and the said email meant mutual discussions and not arbitration, Ld. Counsel stated that it is an OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.20 of 60 afterthought. On the one hand, the petitioner states that Mr. N. P. Sen did not have any authority but on the other hand, it relies on the letters dated 15.05.2018 and 24.05.2018 issued by Mr. N. P. Sen to Delhi International Arbitration Centre alleging that the same were not taken into consideration.
29. Qua the objections that the letter dated 15.05.2018 of Mr. N. P. Sen to the DIACof suppression of bidder MOU and the letter dated 24.05.2018 of Sh. N. P. Sen giving reasons for the termination of the agreement and counter claims were ignored by the Arbitrator, Ld. Counsel submitted that the Arbitrator had given multiple opportunities to the petitioner to represent itself in the arbitration proceedings but the petitioner failed to appear before the Arbitrator and thus is estopped for raising this issue at this stage and for this reason, the Arbitrator rightly did not take cognizance of the said letters.
30. As to the objection that no valid arbitration agreement or arbitration clause exists between the parties, Ld. Counsel referred Section 7 (4) (b) of the Act, emails dated 07.03.2016 and 28.04.2016 and the case Mahanagar Telephone Nigam Limited Vs. Canara Bank & Ors (CA No. 62026205/2019 and contended that the arbitration agreement need not be in a particular form. What is required to be ascertained is the intention of the parties to settle their disputes through arbitration. Section 7 (4) (b) of the Act states that an arbitration agreement can be derived from exchange of letters, OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.21 of 60 telex, telegram and other means of communication including through electronic means. Even though, the other party may not have signed a formal contract, it cannot be absolved from its liability under the agreement. Ld. Counsel stated that in the petition under Section 11 of the Act for the appointment of the Arbitrator, the above emails were duly considered and it was observed by the High Court vide order dated 15.05.2017 that the petitioner was served but none appeared and that there exists an arbitration agreement between the parties and thereafter referred the parties to Delhi International Arbitration Centre. Ld. Counsel stated that the order of the High Court was not challenged by the petitioner and thus has attained finality and it cannot be challenged under Section 34 of the Act. Even the Arbitrator while deciding issue no. 2 had considered whether the claims of the respondent are under arbitration agreement or not and decided in favour of the respondent.
31. Ld. Counsel contended that the grounds raised by the petitioner are much beyond the scope of Section 34 of the Act in view of the judgment in the case of Ssangyong Engineer (supra). Ld. Counsel stated that the law firm had authority from the respondent, so the Demand cum Arbitration Notice dated 06.09.2016 sent by the law firm can be acted upon. Ld. Counsel stated that the petitioner nowhere in the objections claimed that he did not get any money from the IOCL for the work undertaken in this project. This objection has been raised for the first time, during the arguments, which cannot be permitted at this stage. As to the observations of the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.22 of 60 Additional District Judge on the petition filed by the respondent under Section 9 of the Act, Ld. Counsel stated that since, the High Court had appointed the Arbitrator, Section 9 of the Act application was withdrawn. As to the objection that as per the contract, the services were to be rendered by the respondent for five and half years, Ld. Counsel stated that the work was completed within six months. The bills were raised against which the respondent did not get any payment despite correspondences.
Adjudication/findings:
32. I have considered the submissions as above and gone through the impugned award and the relevant documents as well as the case laws (supra).
33. Section 34 of the Arbitration and Conciliation Act reads as under:
"34.Application for setting aside arbitral award (1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and sub sec tion (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 in dication thereon, under the law for the time being in force; or OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.23 of 60
(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 contem plated by or not falling within the terms of the submis sion 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 submit ted, 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 accor dance with this Part; or
(b) the court finds that
(i) the subjectmatter of the dispute is not capable of settlement by arbitration under the law for the time be ing in force, or
(ii) the arbitral award is in conflict with the public pol icy of India.
Explanation I For the avoidance of any doubt, it is clar ified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of Indian law;
iii) It is in conflict with the most basic notions of moral ity or justice.
ExplanationII For the avoidance of doubt, the test as to whether there is a contravention with the fundamen tal policy of Indian law shall not entail a review on the merits of the dispute.
[2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.24 of 60 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.
34. Normally, the general principles are that the decision of the Arbitrator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or miscon duct is cited, the award will not call for interference by the court in exercise of the power vested in it.
35. In Sudarsan Trading Co. v. Government of Kerela & Anr .
1989 AIR 890, it was observed that Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the par ties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in the case. By purporting to construe the contract, the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.25 of 60 court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
36. In the case of Hiedelberg Cement India Ltd Vs. The Indure Pvt Ltd, OMP (Comm) No. 413/2019 decided on 29.01.2020, it was held that law of judicial review and interference in proceedings un der Section 34 of the Act is no more res integra. Reference of the case Associate Builders v/s Delhi Development Authority, (2015) 3 SCC 49 was made, where the Supreme Court has held as under: "19. When it came to construing the expression the pub lic policy of India contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : held: (SCC pp.
72728 & 74445, paras 31 & 74)
31. Therefore, in our view, the phrase public policy of India used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/deci sion is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal.
The result would be award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.26 of 60 the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the il legality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.
74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any in dication 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 contem plated by or not falling within the terms of the O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbi tration, or it contains decisions on matters beyond the scope of the submission to arbitration.
(2) The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) fail ing such agreement, the composition of the Arbitral Tri bunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with:
(a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.27 of 60 aside the award on the ground of composition of Arbi tral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate.
(c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the pub lic policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently il legal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act.......
44. It was held that in the very recent judgments, the Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. Na tional Highways Authority of India Ltd. 2019 SCC On Line SC 677, the Supreme Court has held as under:
35. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of As sociate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the Renusagar under standing of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as ex plained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitra tor has not adopted a judicial approach, the Court's in tervention would be on the merits of the award, which OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.28 of 60 cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as con tained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).
36. It is important to notice that the ground for interfer ence insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be under stood as a conflict with the most basic notions of moral ity or justice. This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as un derstood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in para graphs 36 to 39 of Associate Builders (supra). Explana tion 2 to Section 34(2)(b)(ii) and Explanation 2 to Sec tion 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Asso ciate Builders (supra), and paragraphs 28 and 29 in par ticular, is now done away with.
38. Insofar as domestic awards made in India are con cerned, an additional ground is now available under subsection (2A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality ap pearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within the funda mental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.29 of 60 cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
39. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permit ted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
40. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substan tive law of India, by itself, is no longer a ground avail able to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and con travenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent illegality on the face of the award.
41. The change made in Section 28(3) by the Amend ment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator con strues the contract in a manner that no fairminded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the ar bitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of juris diction. This ground of challenge will now fall within the new ground added under Section 34(2A).
42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of As sociate Builders (supra), while no longer being a ground for challenge under public policy of India, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Addi tionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.30 of 60 as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as per verse.
45. It was also observed that recently, in Hindustan Con struction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as under:
55. Further, this Court has repeatedly held that an appli cation under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for see Associated Construction v. Pawanhans Helicopters Limited. (2008) 16 SCC 128 at paragraph 17.
56. Also, as has been held in the recent deci sion Ssangyong Engineering & Construction Co. Ltd. v. NHAI 2019 SCC OnLine SC 677, after the 2015 Amendment Act, this Court cannot interfere with an ar bitral award on merits. "
37. In the backdrop of the above, let me now examine the objec tions against the impugned award agitated by Ld. counsel for peti tioner, visavis the contentions of Ld. counsel for respondent, in support of the award.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.31 of 60
38. A perusal of record shows that the parties had entered into a bidder MOU dated 24.10.2014, whereby, they wished to work together on mutually exclusive basis with the understanding that the petitioner shall act as a prime bidder for all the dealing with IOCL, on behalf of the bidder and the respondent would be the bidder partner for the execution of work. It was valid for 66 months. It was also agreed that all the technical, commercial and financial terms of the tender, other than pricing and termination for the project will be on back to back unless, otherwise agreed; the petitioner shall release payments due to the respondent after receipt of the corresponding payment by the petitioner on back to back basis. It was stated in clause 8 & 9 that any matter, which is not stipulated in the agreement, shall be settled in good faith by discussions amongst the parties in the spirit of understanding and cooperation and all disputes or differences whatsoever arising between the parties regarding the MOU shall be settled through mutual discussions. It was also agreed that none of the parties can execute the tender independently going out of the bidder. The MOU was signed by Mr. Jaya Kumar, Director, for the petitioner and Dr. Monosi Lahari, Managing Director, for the respondent.
39. The petitioner issued a Purchase Order (PO) to the respondent for Standard GIS software & GIS Map against IOCL tender i.e. "Geodatabase Creation for Round Trip Road Distance Determination And Verification for Maharashtra & Goa State OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.32 of 60 Office" Bid No. Tender No. MSO/OPS/PT/GEORTD1/1419 and Etender ID 2014 MSO 10257 1 vide letter dated 24.03.2015. As per PO, the contract was valid for a minimum period of five years & six months, thereafter, on back to back basis, as per NIT to provide after sales support, updates on software supplied by the respondent on back to back basis. The respondent was also asked to deposit Rs. 10.0 lacs with the petitioner for the entire duration of the contract on which, the respondent would be entitled to bank rate of interest. An agreement between the parties was entered into on 26.03.2015 and it was agreed upon that the respondent would raise invoices to the petitioner for items as listed in BOQ and it will be responsible for delivery. On receipt of payment from IOCL by the petitioner, respondent will raise a bill on the petitioner for the amount and the petitioner will make the payment for the same within 5 working days. This agreement was signed by Mr. Rohit Kumar (Authorized Signatory) for the petitioner and Dr. Atul Kapoor, General Manager for the respondent. The estimated cost of the work to be executed by the respondent was Rs. 1,00,91,543/ (49.49% of the total value of the work of Rs. 2,03,87,155/ as tabulated under:
Line Description of work Amount
Item (In Rs.)
1 Generation of Spatial Database for RTD
(2) Manmad Terminal (510 Nos RTD) 1,22,537/
(11) Akola Depot (214 Nos RTD) 5,12,566/
(12) Khapri Depot (262 Nos RTD) 6,27,535/
(13) Miraj Depot (242 Nos RTD) 5,79,631/
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.33 of 60
(15) Dhule Deopt (100 RTD) 2,39,517/
(16) Chandrapur Depot (102 RTD) 2,44,307/
3 Development of software for Intranet
including training 22,31,057/
5 New RTD verification approximately "72
customer/ROs per month, for 5 years after 15,52,318/
satisfactorily completion of work at Sl.
No. 1 to 4
6 Digital Maps 26,61,300/
7 Cost of procurement 2,21,775/
Total 1,00,91,543/
40. The respondent pursuant to the agreement executed the work, however, the petitioner vide letter dated 23.02.2016 terminated the contract alleging that the aforesaid work was awarded to the respondent with the clear stipulation of completion within six months i.e. 18.09.2016, which even after six months is incomplete and technically uncomplied in many respect not limited to as below (A) the completion period (refer scope of works Para 4.2 at Page 42/109 of NIT) (A1) works even on the date 18.02.2016 i.e. time over run of over 50% end product is not complete even 10% and uncomplied. It was stated that the items as mentioned in the above letter have not been accepted by IOCL vide mails dated 06.01.2016 and 22.01.2016 already forwarded to it.
41. The correspondences and the emails would show that after the agreement, the respondent had carried out the work. The invoices OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.34 of 60 were also raised by the petitioner from the IOCL for the work done.
Although, the termination letter has a reference of the unsatisfactory work by the respondent but no such mails of IOCL are on record. Correspondences show that the petitioner had not made the payment to the respondent for the works carried out by it. Nothing can be inferred from the emails that the respondent prior to the termination of agreement never asked for the payments. The email of the respondent dated 04.03.2016 shows that the respondent had asked the petitioner to make payments for the work done and deliveries made which was replied by the petitioner referring the agreement that the payment would be released in a week's time on receipt from IOCL for line items accomplished by ML INFO MAP (Respondent herein).
42. During the meetings, Mr. N. P. Sen sent an email dated 07.03.2016 to the respondent inter alia as under:
Thanks, we will always go by agreement alredy agreed between both parties, now that agreement stands terminated, let us resolve all issues in one go and decide all payments due to each or either party as per agreement. This could be done by
1. Mutual reconciliation
2. Arbitration Pl decide the method to be adopted we will be open for either to be decided by you.
43. In response thereof, in the email dated 09.03.2016, it was stated that ML Infomap agrees that arbitration should be the last option, it may have to look at the other options also. For Dr. Lahiri to negotiate with Dr. Sen, please send them a notarized Board OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.35 of 60 Resolution authorizing him to negotiate. This is necessary as Dr. Sen is not signatory to any agreement between ML Infomap & GTI. Also he is not the designated authorized official in the agreement.
44. Dr. N. P. Sen sent another email dated 28.04.2016 asking to discuss and resolve all the issues in one go after the termination of contract within the provisions of contract conditions to the best satisfaction of both parties and in case, this reconciliation is not to satisfaction of both parties, they can go for arbitration within the provision of contract for which can agree to specific name of arbitrator.
45. It is true that the bidder MOU dated 24.10.2014 and the agreement dated 26.03.2015 do not bear the signature of Mr. N. P. Sen but the mails especially the mails dated 07.03.2016 and 28.04.2016 clearly show that he had position in the company and had authority to negotiate with the respondent on behalf of the petitioner.
46. It is true that the respondent had asked the petitioner to send a notarized Board Resolution authorizing Mr. Sen to negotiate being not the signatory in the agreement nor being the designated OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.36 of 60 authorized official but subsequent mails of Mr. Sen, which the petitioner has referred and emphasized in the objections to the impugned award would show that he had an implied authority on behalf of the petitioner to resolve the disputes in respect of the said agreement.
47. It is also true that neither in the bidder MOU nor in the agreement, it was stipulated that in case of dispute, the matter would be referred to arbitration but there are mails dated 07.03.2016 & 28.04.2016 of Mr. Sen on behalf of the petitioner, wherein, he had offered to refer the dispute to the arbitration. I fully agree with the contention of Ld. Counsel for the respondent that contrary stand has been taken by the petitioner as on the one hand it has stated that Mr. N. P. Sen did not have any authority and on the other hand it has relied upon the letters dated 15.05.2018 & 24.05.2018 issued by Mr. Sen alleging that the same were not taken into consideration. It is pertinent to mention that in the said letters, the petitioner had laid counter claims and stated that they do not agree to pay any arbitration fee and are not in financial position have a lawyer to contest the case.
48. In the instant case, after the receipt of emails dated 07.03.2016 and 28.04.2016 from the petitioner proposing to resolve and adjudicate the disputes and differences through arbitration, the respondent sent Demand cum Arbitration Notice dated 06.09.2016 suggesting the name of the Arbitrators, which was responded by the petitioner.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.37 of 60
49. Section 7 (4) (b) of the Act states that "an arbitration agreement is in writing if it is contained in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement". It was held in the case of Mahanagar Telephone Nigam Limited (supra) that the arbitration agreement need not be in any particular form. What is required to be ascertained is the intention of the parties to settle their disputes through arbitration. The essential elements or attributes of an arbitration agreement is the agreement to refer their disputes or differences to arbitration, which is expressly or impliedly spelt out from a clause in an agreement, separate agreement, or documents/correspondence exchanged between the parties. Section 7 (4) (b) of the Act states that an arbitration agreement can be derived from exchange of letters, telex, telegram or other means of communication, including through electronic means. The 2015 Amendment Act inserted the words "including communication through electronic means" in Section 7 (4) (b). If it can prima facie be shown that parties are ad idem, even though the other party may not have signed a formal contract, it cannot absolve him from the liability under the agreement.
50. I am not in agreement with the contentions of Ld. Counsel for the petitioner that there was no dispute prior to the termination of agreement nor the petitioner raised the invoices before the termination, perusal of the record i.e. mail dated 08.11.2015 Ex.
CW1/12 reveals that the respondent had requested for the payment OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.38 of 60 even prior to the termination of agreement; however, the payments were not made. After the termination of the agreement, the respondent raised the invoices and asked for the payments and when the dispute could not be resolved mutually through meetings, the respondent sent the Demand cum Arbitration Notice mentioning the details of the work done by it.
51. Record reveals that, before filing the petition under Section 11 of the Act for the appointment of Arbitrator, the respondent had filed an application under Section 9 of the Act in the District Court, notice of which was given to the petitioner. The respondent in the meantime, filed the petition under Section 11 of the Act in the High Court seeking appointment of the Arbitrator to refer the dispute for adjudication, notice of which was also sent to the petitioner. Despite service of notice, the petitioner chose not to appear before the High Court and the High Court passed the order dated 15.05.2017 inter alia under:
2. It is the case of the petitioner (respondent herein) that the respondent(petitioner herein) placed a purchase order on 24.03.2015 for Geo Database Creation for Route Mapping and Round Trip Road Distance Determination and verification in the State of Maharashtra and Goa. On 26.03.2015 and agreement took place between the parties. On 23.02.2016, the respondent(petitioner herein) is said to have terminated the agreement. The petitioner(respondent herein) relies upon an email dated 07.03.2016 received from the respondent(petitioner herein) whereby the respondent(petitioner herein) offered that the matter can be settled by mutual conciliation or arbitration.
However as per the reply of the petitioner(respondent OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.39 of 60 herein) dated 09.03.2016, the petitioner(respondent herein) agreed for arbitration as their last option, Reliance is also placed on a notice dated 06.09.2016 invoking the arbitration proceedings where certain names of arbitrators were also proposed. The respondent(petitioner herein) replied to the notice stating that at this stage, they do not agree for appointment of a formal arbitrator to resolve the disputes.
3. The petitioner(respondent herein) has filed an affidavit of service whereby the respondent(petitioner herein) are served. None has appeared for the respondent(petitioner herein).
4. There exists an arbitration agreement between the parties as evidenced from the exchange of mail by the parties. Accordingly, the petition is allowed. The parties are referred to Delhi International Arbitration Centre. The said Centre may nominate an arbitrator from its panel to adjudicate the dispute between the parties. The arbitration shall be held under the aegis of the said Centre.
52. From the emails dated 15.05.2018 and 24.05.2018 sent by Dr. N. P. Sen on behalf of the petitioner to Delhi International Arbitration Centre, it is also evident that the petitioner was aware of the order of the High Court but despite being served, it chose not to appear before the Arbitrator and therefore, he is estopped from raising such issue. Further, the order passed by the High Court was not challenged by the petitioner and it has attained finality. It was only after the order of the High Court, respondent withdrew the application from the District Court as evident from the proceedings dated 12.09.2016. Although, there are observations of the District Court that no resolution of the parties authorizing their OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.40 of 60 representative for entering into the arbitral clause later to agreement is part of record and the computer generated copies of the emails are not supported by any requisite certificate under Section 65B of the Evidence Act but there was no finding of the District Court on merit. The application under Section 9 of the Act was permitted to be withdrawn with liberty to file afresh, if need be. I am not in agreement with the contention of Ld. Counsel for the petitioner that the material information was concealed from the Court and the respondent is guilty of fraud. The impugned award and the proceedings reveal that the respondent had submitted the requisite certificate in support of the emails under Section 65B of the Evidence Act during the arbitral proceedings.
53. In the instant case, after the dispute was referred to the arbitration, the Arbitrator had again sent notices to the petitioner of the claims, which were duly served but despite that the petitioner chose not to appear before the Arbitrator and participate in the proceedings. The case was accordingly proceeded with vide order dated 21.04.2018. The Arbitrator on the basis of material on record framed the issues including issue no. 2, inter alia as under:
2) Whether the Claim of the Claimant is covered under the Arbitration Agreement?
54. The Arbitrator in the impugned award referred the agreement dated 26.03.2015, Ex. CW1/3, purchase order dated 24.03.2012 Ex. CW1/4, affidavit of the authorized representative of the claimant Ex.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.41 of 60 CW1/3 inter alia that the claimant had asked for release of payment vide email dated 08.11.2015 Ex. CW1/12 and termination letter dated 23.02.2016 Ex. CW1/13 and observed that it is obvious from the letters dated 07.03.2016 and 28.04.2016 Ex. CW1/14 (colly) that the respondent (petitioner herein) had offered to resolve the disputes between the parties, either by mutual reconciliation or arbitration. Since, the dispute between the parties could not be resolved by mutual reconciliation, the claimant sent a Demand cum Arbitration Notice dated 06.09.2016 Ex. CW1/15A, which was replied vide dated 13.09.2016 Ex. CW1/15, refusing to appoint an Arbitrator resulting into appointment of an Arbitrator by the High Court. It was concluded that from the above evidence, it is quite evident that there was an arbitration agreement with regard to resolving the dispute between the parties arising out of agreement dated 26.03.2015 entered between the parties.
55. As regards the contention of Ld. Counsel for the petitioner that the respondent suppressed the bidder MOU dated 24.10.2014, (Master Agreement) from the High Court and the Arbitrator, whereby, it was agreed that all dispute or differences whatsoever arising between the parties regarding the MOU shall be settled through mutual discussions, perusal of record reveals that it was a general MOU between the parties. Pursuant to the said MOU, the petitioner issued the purchase order in favour of the respondent and thereafter, an agreement dated 26.03.2015 was entered into for the IOCL project in the states of Maharashtra and Goa. Since, the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.42 of 60 dispute arose qua the payments in respect of the work executed under the said agreement, meetings were held. On the emails sent by Mr. Sen offering to settle the dispute through arbitration, the respondent agreed for the arbitration and filed the petition under Section 11 of the Act. I agree with the submissions of Ld. Counsel for the respondent that the bidder MOU was entered into prior to the award of the work by IOCL and it was for recording the broad understanding between the parties to deal with the tender issued by IOCL, containing the mutual terms on which, the parties would execute the work in the event, the work is awarded. Later, in accordance with the understanding, a specific agreement dated 26.03.2015 for specific services was executed and therefore, the bidder MOU stood superseded by the specific agreement. Since, there was specific agreement, there was no occasion or rely upon the bidder MOU. That being the position, it cannot be said that there was concealment of fact as alleged by the petitioner. Non reference to a document, which has been superseded by a subsequent agreement is of no consequence.
56. As evident from the record, when the dispute arose, the petitioner sent the emails dated 07.03.2016 and 28.04.2016 and proposed to resolve and adjudicate the dispute through arbitration, which was accepted by the respondent. Thus, this mode of adjudication through arbitrator was offered by the petitioner and accepted by the respondent.
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57. It is manifest from the record that the petitioner neither appeared before the High Court on the petition filed under Section 11 of the Act nor before the Arbitrator nor raised any objection during the arbitration proceedings that there existed no arbitration agreement. Thus, at this stage of petition, it cannot be allowed to state that since, there was no arbitration agreement between them and as per the agreement/MOU, disputes were to be resolved through mutual discussions, the award passed by the Arbitrator is non est.
58. There is no quarrel on the issue that legal pleas can be raised at any time even at the stage of Section 34 of the Act petition and the non participation in the arbitral proceeding would not preclude the petitioner from raising such a plea at a later stage but in this case, there is a categorical finding from the High Court, from where, the matter was referred to the arbitration and that of the Arbitrator that there existed the arbitration agreement between the parties by virtue of the emails exchanged and Section 7 of the Act also provides that the arbitration agreement can be derived from exchange of letter, telex, telegrams and other means of communication including through electronic means even though, the other party may not have signed a formal contract. That being the position, there is no illegality in whole of the proceedings.
59. Now coming to the claims, the claimant/respondent had filed OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.44 of 60 a Statement of Claims running into 31 pages before the Arbitrator referring the emails and the documents and also stated on oath about entering into an agreement dated 26.03.2015 with the petitioner Ex. CW1/3, the petitioner placing the order for the development of software etc. dated 24.03.2015 Ex. CW1/4 and the mails dated 05.08.2015, 10.08.2015 & 27.08.2015 Ex. CW1/5 (colly), dated 01.10.2015 & 24.08.2015 Ex. CW1/6 (colly) & Ex. CW1/7, mails dated 08.06.2015 & 11.06.2015 Ex. CW1/8 (colly), mails dated 21.08.2015 & 26.08.2015 Ex. CW1/10 (colly), mails dated 11.02.2016 & 12.02.2016 Ex. CW1/11 (colly) and mail dated 08.11.2015 Ex. CW1/12. It also proved the letter dated 06.09.2016 demanding dues and for the appointment of arbitrator Ex. CW1/15A. It has stated that the Statement of Claim filed by the claimant/respondent is correct and the claimant is entitled to recover the amount. The authorized representative had tendered the affidavit in evidence Ex. CW1/A.
60. A perusal of the evidence would show that as per the terms of the tender, the claimant/respondent had made the term deposit of Rs. 10.0 lacs and completed its work delineated in the agreement as detailed in Para 10 of the Statement of Claims. It was stated that as per line item no. 1 of the agreement, it was required to provide 1430 RTD. It was stated that it regularly uploaded RTDs on IOCL servers, which is evident from the mails dated 05.08.2015, 10.08.2015 & 27.08.2015 confirming that the routes of different locations have been uploaded by the IOCL servers. It was stated that vide mail OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.45 of 60 dated 27.08.2015, it had informed the petitioner about uploading of 1407 routes. It was stated that during the operation of the agreement, certain numbers of routes increased/decreased and thus, the claimant duly completed its scope of work in respect of line item no. 1 within the stipulated time by uploading the routes, which were triggered and verified from time to time. It was stated that even after uploading the routes, the scope of work kept on increasing, which was duly honored as evident from the mail dated 01.10.2015.
For line items no. 3 & 6 i.e. development of software for intranet including training and digital maps, it was stated that such work was duly completed by it. On 03.08.2015, it deployed GeoRTD application alongwith Maps and informed the petitioner vide mail dated 10.08.2015, which in turn informed the IOCL. After the deployment, it requested the petitioner to prepare the delivery challan, since, the same was to be delivered to IOCL vide email dated 24.08.2015 meaning thereby that the claimant had developed the software and deployed the same on the server of IOCL. It also prepared the presentation and conducted the training sessions for IOCL, which is evident from the mail dated 08.06.2015 & 11.06.2015. It was stated that as per the agreement, the claimant had to provide the DATA delineated in the table in hardcopy and the petitioner was required to make the payment for the cost incurred. It was stated that it duly provided all the services in the hardcopy i.e. DVDs to the petitioner, which on the basis of the work done by the claimant received the payment from the IOCL, which fact was also informed by Mr. Mayank Bhargava, the representative of the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.46 of 60 petitioner. It was stated that vide email dated 07.03.2016, the claimant requested the petitioner to release the money as per the agreement. It stated that after completion of work, the petitioner raised invoice to IOCL, which was confirmed by email dated 21.08.2015 sent by the petitioner to the claimant after which, the IOCL processed the invoice for payment and sent an email dated 26.08.2015 to the claimant and the petitioner confirming the processing of payment. It was stated that for line item no. 7 i.e. cost of procurement of maps, it duly performed the work within the stipulated time for Rs. 2,21,775/ and intimated the petitioner, however, till date, it has not received the payment. It was stated that for line item no. 5, it was always ready and willing to continue, however, the petitioner unilaterally stopped communicating with the claimant, due to which, its manpower became idle resulting into monetary losses to it. It was stated that it has invested copious amount of time, money and effort in developing the software and making it operational and perform its obligation under the agreement diligently. It had also handed over the source code for the software, so generated by it to the petitioner on 11.02.2016 as evident from the mails dated 11.02.2016 & 12.02.2016. It repeatedly requested the petitioner to execute the licence agreement regarding the software, however, no heed was given by the petitioner to such request. It regularly requested the petitioner to release payment for the work done by it as evident from the mail dated 08.11.2015, however, the petitioner neglected to pay the amount qua the work done despite repeated reminders and unilaterally terminated the agreement vide OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.47 of 60 notice dated 23.02.2016 without any reasonable cause.
61. As evident from record, the testimony of the claimant/respondent remained unchallenged as the petitioner never contested the arbitral proceedings. While passing the 'impugned award', the Arbitrator discussed the table of distribution of responsibilities annexed with the agreement and the amount of payment for each head of work and held that the claimant had performed its part of the contract and had advanced a sum of Rs. 10.0 lacs vide cheque dated 26.03.2015 drawn on Standard Chartered Bank and also completed the works relating to line item no. 1, 3, 6 & 7 of the table. He observed that from the email dated 21.08.2015 Ex. CW1/10 (colly) it is evident that after the completion of work, the petitioner had raised three invoices to IOCL. The petitioner would not have raised invoices to IOCL, in case, the claimant would not have completed the works as assigned to it in the table. Vide the email dated 08.11.2015 Ex. CW1/12, the claimant had requested for the release of payment but the petitioner instead resolving the disputes through mutual discussion terminated the contract vide termination letter dated 23.02.2016 Ex. CW1/13. For the first time in the said letter, the petitioner had alleged that the works relating to line item nos. 1, 3, 6, & 7 as delineated in the table have neither been completed within six months as stipulated in the agreement nor the same has been accepted by the IOCL. The said assertion of the petitioner runs contrary to its earlier conduct. In case, the claimant had not completed the work within the stipulated OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.48 of 60 period of six months, the petitioner could not have raised three invoices through IOCL as is evident from the email dated 21.08.2015 Ex. CW1/10. Moreover, there is no mention in the said email that IOCL had not accepted the works was assigned to the claimant. In the said email, the petitioner had only mentioned about certain changes to be made in the invoices. He, therefore, held that the claimant had performed its part of the contract and completed the works as assigned to it under the agreement. It was rather the petitioner, which committed breach of contract by not making payment of the works completed by the claimant. It was held that the claimant had paid Rs. 10.0 lacs to the petitioner towards earnest money, which was to be kept in the bank for a period of six years, since the bank was to furnish the bank guaranty through the IOCL for six years. It was held that since, after the termination of contract, the contractual relations between the two came to an end, the petitioner is bound to return the said amount to the claimant alongwith interest @ 9 % per annum from 23.02.2016 to 01.06.2018, keeping in view the current rate of interest being paid by the public banks and the provisions of Section 31 (7) (b) of the Act.
For claim no. 3, the Arbitrator observed that from the purchase order Ex. CW1/4, it is evident that the petitioner had placed order in respect of line item nos. 3 & 6 of the table for Rs. 48,92,357/. From the evidence of CW1, it is obvious that the claimant had developed the software and deployed the same on the server of IOCL on 03.08.2015 as evident from email dated 10.08.2015 Ex. CW1/5 (colly). The petitioner was also intimated OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.49 of 60 about it on 03.08.2015, which fact also finds corroboration from the email dated 24.08.2015 Ex. CW1/7, wherein, the claimant had requested the petitioner to prepare the delivery challan of three DVDs containing the requisite DATA for sending to IOCL. It also prepared the presentation and conducted the training program for IOCL employees as evident from the emails dated 08.06.2015 Ex. CW1/8 and 11.06.2015 Ex. CW1/8. It was held that since the work relating to item nos. 3 & 6 of the table was completed well within time on 24.08.2015, the claimant was entitled to claim the amount of Rs. 48,92,357/ from the petitioner and after deducting the management services, in view of clause 6 of the agreement, the claimant is entitled to recover a sum of Rs. 43,05,274/. It was observed that as per clause 7 of the agreement, the claimant was to raise invoice in respect of the work done but since, the petitioner terminated the contract, it could not raise the invoice. It was observed that from the email dated 26.08.2015 Ex. CW1/10 sent by the IOCL, it was quite obvious that on receipt of the corrected bills for supply of server, IOCL had started process for making the payment to the petitioner and consequently the petitioner must have received the payment from IOCL in the ordinary course of business and was therefore, liable to make the payment of Rs. 43,05,274/ to the claimant.
For claim no. 4, the Arbitrator observed that from the email dated 07.03.2016 Ex. CW1/19, it is crystal clear that the claimant had supplied the requisite DATA in the hardcopy & DVDs to the petitioner, who in turn delivered the same to the IOCL and received OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.50 of 60 the payment. The email dated 07.03.2016 also suggest that the payment was received by the petitioner from the IOCL, who was bound to pay the same to the claimant, which after deducting 12 % towards management service comes to Rs. 1,95,162/, which the petitioner is liable to pay to the claimant.
In respect of claim no. 5, it was observed that the claimant had successfully completed the spatial data base for 1407 RTDs in respect of line item no. 1 and regularly uploaded RTDs on IOCL server as evident from the various emails. From the statistical data, it is clear that some number of routes have increased or decreased. The email dated 27.08.2015 clearly suggests that the claimant had uploaded the routes and completed the work within the stipulated period of six months and proportionately it is entitled to Rs. 32,05,093/(1407 lines) as against Rs. 34,25,093/ (1430 lines).
62. It was observed that although, the claimant could not raise bills on the petitioner due to termination of the contract but from the material placed on record including the emails dated 26.08.2015 Ex. CW1/10 sent by IOCL that they are processing the bills for payment, the petitioner must have received the payment in the usual course of business in respect to the works completed by the claimant. In reply to the Demand cum Arbitration Notice, the petitioner never took the plea that the claim cannot be paid since the payments of bills have not been received from the IOCL. It was held that after deducting 12 % towards maintenance service, the petitioner is liable to pay Rs. 28,20,482/ in respect of the works done of the line item no. 1 of the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.51 of 60 table.
63. For claim no. 6, it was held that in terms of the agreement, the petitioner was liable to make payment within five working days. Since, the payment has not been made so far and has been withheld without any justified reasons; the claimant is entitled to interest on the due amount @ 9 % per annum from 15.09.2015 to 01.06.2018. For claim no. 7, the Arbitrator observed that it appears from the record that the claimant has paid Rs. 3,92,458/ towards its share of arbitration fees and secretarial expenses as well as the share of the petitioner, he is inclined to grant Rs. 4,50,000/ towards the costs of the legal proceedings.
64. A perusal of the impugned award, documents and the proceedings would show that the Arbitrator before proceeding on the claims of the respondent/claimant had given ample opportunities to the petitioner to file objections and the counter claims but the petitioner chose not to appear before the Arbitrator, despite service. It is not the case that the petitioner was not aware of the arbitral proceedings. The emails sent on behalf of the petitioner to DIAC, vide dated 15.05.2018 and 24.05.2018 show that it was aware of the proceedings but it intentionally did not participate in the proceedings. Even, the petitioner was served of the notice of the petition under Section 11 of the Act for the appointment of the Arbitrator but it chose not to appear before the Arbitrator. Although, in the letter dated 24.05.2018, it had stated about the counter claim OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.52 of 60 of Rs. 78,71,000/ but it did not give the details of the claims nor submitted the counter claims to the Arbitrator for adjudication nor submitted any document in support of its claim. Since, the counter claims were never laid before the Arbitrator, so the Arbitrator rightly did not take note of it.
65. On a perusal of award, I find that the Arbitrator has considered all the relevant documents, Statement of Claims, affidavit and the agreement dated 24.03.2015 and passed the impugned award giving the detailed reasons, which does not call for interference from this Court, in view of the settled proposition of law as discussed above in the preceding paras. Scope of Judicial review under Section 34 of the Act does not permit such interference with the arbitral award. The petitioner has failed to show as to how the award suffers from patent illegality or is against the Fundamental Policy of India or the finding of the Arbitrator is perverse.
66. As regards the contentions that as per the agreement, the petitioner had to make the payment on back to back basis with respect to the items within five days of receipt of payment from IOCL and since, the petitioner did not get any payment from IOCL in respect of the works executed by the respondent, which were declared substandard, the respondent is not liable to pay any sum, perusal of the award and the documents would show that the petitioner had raised bills in respect of the works executed by the respondent, which were also processed by the IOCL. It is beyond OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.53 of 60 anyone's comprehension /imagination rather improbable that the petitioner had not raised the bills or received the payments from the IOCL of the works, executed/carried out during the said period by the respondent. It is not the case that the respondent did not carry out the works. It has given the details of the works executed by it, which also have references in the emails exchanged by the parties, during the said period. The emails show that the work was completed promptly within time period and all the DVDs as to the data were handed over to the IOCL after the successful completion of the work. The emails also show that the works against number of items were taken up and the petitioner was informed from time to time. The claimant had also requested for the release of payments. It is true that the claimant did not raise invoices before the termination of agreement but in terms of the agreement, it was incumbent upon the petitioner to release the payment, after getting the payments from the IOCL. That being the position, it was rightly observed by the Arbitrator that the petitioner might have received the payment against the items carried out by the respondent.
67. As regards the contention that the contract was for a period of five and half years, perusal of the termination letter dated23.03.2016 would show that the work was to be executed within the period of six months. According to the claimant/respondent, it had completed the work within time; however, the payments against the work were not released. In the Statement of Claims and the evidence, the claimant had given the details of the work done. In the absence of OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.54 of 60 any evidence contrary to this fact, no inference can be drawn that the work was not carried out by the respondent. In whole of the proceedings, there is not a single document to show that the petitioner had not received any payment in respect of the work done as alleged.
68. As regards the contention that the respondent contrary to the bidder MOU started bidding for the new tenders for different regions floated by IOCL, thus, indulged in scuttling, subverting and finally diverting the issues to jeopardize the petitioner's goodwill, there is not a single document or correspondence to show that the respondent had acted contrary to the terms of the bidder MOU or the agreement.
69. In the instant case, the respondent had disclosed all the material facts to the Arbitrator. The Arbitrator had considered all the documents and thereafter passed the reasoned award. There is no document indicating that the respondent did not render the services in terms of the specifications provided to it or did not adhere to the time frame for the performance of the contract. It was not for the Arbitrator to ascertain from the IOCL whether the petitioner had received any payment from the IOCL. The emails clearly show that the bills were raised. It was for the petitioner to explain why it did not receive the payments. Since, the petitioner chose not to participate in the proceedings, the Arbitrator concluded from the record that the bills were raised by the petitioner from IOCL towards the works executed by the respondent. So, it cannot be said that the OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.55 of 60 award passed by the Arbitrator is perverse or void ab inito or in conflict with the basic notions of the morality or justice or the finding of the Arbitrator is based on no evidence or he took into account something irrelevant and he ignored the vital evidence or it is against the Fundamental Policy of India.
70. In the instant case, the pleadings before the Arbitrator were limited, however, but vide this petition, the respondent has sought to expand the scope of disputes raised before the Arbitrator to get fresh adjudication from this Court. If this Court would start analyzing the disputes raised and interpreting the terms & conditions thereof, it will be nothing else than sitting in appeal over the arbitral award, which is not permissible.
71. As regards the interest, the Arbitrator has awarded an interest @ 9 % per annum from 15.09.2015 to 01.06.2018 on the amount withheld by the petitioner. The Arbitrator has directed to pay a sum of Rs. 1,07,62,432/ (Rs. 10,00,000/ + 2,04,410/ +43,05,274/ + 1,95,162/ + 28,20,482/ + 17,87,104/ + 4,50,000/), within 60 days of the date of award, failing which to pay simple interest @ 18 % per annum on the said amount from the date of award till payment.
Section 31 (7) of the Act provides that the Arbitrator is competent to award interest for the period commencing with the date of award or the date of realization, whichever is earlier. In terms of Section 3 of the Interest Act, 1978, also the Arbitrator is competent to award interest at the rates OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.56 of 60 prevailing in the banking transactions. In the case of MSK Projects (I) (JV) Ltd v/s State of Rajasthan & anr, 2011 (8) JT 37 (SC), it was held that Arbitrator is competent to award interest for the period commencing with the date of award of the date of decree or date of realization, which ever is earlier. While the amount of interest is a matter substantive law, the grant of interest for the part award period is matter of procedure. Thus, impliedly, the court has power to vary the rate of interest. In the case of Vedanta Limited vs. Shenzhen Shandong Nuclear Power, Civil Appeal No. 10394 of 2018, the Hon'ble Supreme Court held that the courts may reduce the interest rate awarded by an Arbitral Tribunal where such Interest rate does not reflect the prevailing economic conditions or where it is nor found reasonable, or promotes the interests of justice.
72. Looking into the prevailing banking interest and from an economic standpoint, I am of the view that the award directing the petitioner to pay the simple interest @ 18 % per annum on the said amount from the date of award till payment is on the higher side. I, therefore, modify the future rate of interest and direct the petitioner to pay a simple interest @ 9 % per annum on the said amount from the date of award till the payment is made.
73. As to the cost of award, the Arbitrator has considered all the aspects and directed the petitioner to pay Rs. 4,50,000/ towards the costs of the legal proceedings, which does not call for interference from this Court.
OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.57 of 60 Conclusion:
74. Now to sum up in the instant case, most of the grounds raised by the petitioner to challenge the award are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts. (P.R Shah, Shares & Stock Brokers (P) Ltd v. B.H.H Securities (P) Ltd. [(2012) 1 SCC 594).
75. A perusal of the arbitral award shows that the arbitrator has examined all the relevant aspects of the agreement, the correspondences made by the parties, the terms of the contract and the conduct of the parties. He has remained inside the parameters of the contract and has construed the provisions of the contract. The petitioner has failed to establish that the arbitrator has travelled beyond the terms of the contract.
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76. Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award except the award of future interest does not suffer from any infirmity or error apparent on the face of record. It is not for this Court to sit in appraisal of the evidence led before the learned Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Arbitrator which was subject matter of dispute. In the present case, the Arbitrator has deliberated on the issues under reference which were within his competency and as per the agreement entered into between the parties. There are no allegations against the Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that award is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or it lacks reasoning as pleaded in the petition.
77. For the aforesaid discussions, I am of the view that the impugned award does not call for interference except the future rate of interest, which is modified from 18% to 9% and the petitioner is directed to pay future interest as simple interest @ OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.59 of 60 9 % per annum on the said amount from the date of award till the payment is made.
78. The petition is disposed of accordingly. Parties are left to bear their own costs.
79. File be consigned to record room.
Announced in open court today i.e. 10th July, 2020 (Sanjiv Jain) District Judge (Commercial) 03 Patiala House Courts, New Delhi OMP Comm No.02/18 GTI Inoftel Pvt ltd v/s Infomap Pvt ltd Page No.60 of 60