Delhi District Court
Municipal Corporation Of Delhi vs M/S Engineering Development ... on 10 December, 2015
IN THE COURT OF MS. SAVITA RAO, ADDITIONAL DISTRICT
JUDGE01, (WEST), TIS HAZARI COURTS, DELHI
Arb No. : 06/14
In the Matter of :
Municipal Corporation of Delhi
(Now North Delhi Municipal Corporation)
.........Petitioner
Vs.
M/s Engineering Development Corporation & Anr
.........Respondent
Date of Institution : 06.06.2013
Date of Arguments : 07.12.2015
Date of Judgment : 10.12.2015
JUDGMENT
1. This is the objection petition filed by petitioner seeking setting aside of the award dated 18.3.2013. In pursuance to the floating of tender, a contract was executed between the objector and respondent for the work of construction of multi storey school building at Turkman Gate.
2. As claimed by claimant, on account of breach of contract on the part of objector, work could not be completed as the site was not made available in time and the defects were also not cleared as well as site was not cleared Arb No. : 06/2014 1/8 despite repeated letters written to the objector. Drawings furnished to the claimant were also not correct and did not conform to the layout of the site, compelling the claimant to close the contract on 8.5.2005. Bills raised for the work done till that time despite having been passed and cleared were not paid to the claimant as well as the other payments due, whereas claimant also demanded the return of security deposit and the other claims on account of delayed payments, idle staff , loss of profit and cost of arbitration etc.
3. The plea of defendant before Ld. arbitrator was that there was no hindrance at the site and the objector did not breach the contract whereas it was the claimant who failed to show required progress. According to objector, claimant was negligent and failed to perform its contractual obligations, therefore the penalty was also imposed upon it.
4. Counter claim was also preferred before Ld. Arbitrator . After the Arbitral proceedings were concluded, Ld. Arbitrator awarded claim no. A & B in favour of claimant, claim no. C was declined because of pendency of civil suit as well as claim no. D was declined, claims no. E and F were awarded in favour of claimant alongwith cost and interest, whereas the counter claim filed by objector was rejected.
5. In the objection petition before this court, it is submitted that the claim was not maintainable for want of statutory notice under section 477 and 478 of DMC Act which was also out of ambit of agreement as well as barred by limitation. The claim, as pleaded, was against the provisions of clause 25 of the contract. As stated, if there was any dispute, same could be raised as Arb No. : 06/2014 2/8 per provisions of clause 25 and the arbitrator was also requested to treat the objection under section 16 of Arbitration and Conciliation Act for rejection of the claim due to non compliance of the said clause. It was further submitted that the time was essence of the contract which the claimant failed to adhere. It was the claimant who failed to perform his contractual obligations, therefore the objector had no option than rescind or terminate the agreement . As argued, the arbitrator derives his jurisdiction only from the agreement entered into between the parties who being a creature of the agreement has to remain within the four corners of the agreement and has to take into consideration various terms and conditions of the agreement. If the parties consciously agreed to a term and condition, the same binds the arbitrator but the arbitrator in the instant matter contrary to law laid down by the courts ignored the terms and conditions of the work order and the contract and wrongly awarded the claim in favour of claimant.
6. First of all, it may be noted that the objections except for one regarding the jurisdiction of arbitrator and pertaining to decision on the claims out of ambit of agreement, all the other objections raised are in the form of appeal filed before the court which is not permissible.
7. Ld. counsel for petitioner has placed reliance upon 2014 STPL (Web) 574 SC Oil & Natural Gas Corporation Ltd. Vs. Western Geco International Ltd. wherein it was observed that " an award could be set aside if it is contrary to :
Arb No. : 06/2014 3/8
(1) fundamental policy of Indian Law (2) the interest of India ; or (3) justice of morality, or (4) in addition, if it is patently illegal
8. It was further observed that an 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 ".
9. Ld. counsel for plaintiff has further placed reliance upon ONGC Ltd.
Vs. Garware Shipping Corporation Ltd. AIR 2008 Supreme Court 456 wherein it was observed that " award based on wrong basis and perverse condition is liable to be set aside. There is no proposition that the courts could be slow to interfere with arbitrator's award, even in such cases".
10. Reliance was also placed upon 2005 (2) ARBLR 412 Gau Union of India & Anr. Vs. J.G. Engineers Pvt. Ltd. wherein the findings of Hon'ble court was that the arbitrator exceeded the scope of arbitration in as much as, he passed the award relating to the matter excepted by the terms of the contract agreement and said matters being outside the purview of the arbitration, the award passed by the arbitrator was held to be illegal being contrary to the terms of the contract and also provisions of the Act .
11. Reliance was further placed upon 2014 STPL (Web) 578 SC Harsha Constructions Vs. Union Of India & Ors. by Ld. counsel for petitioner wherein it was observed that " Arbitration arises from a contract and unless Arb No. : 06/2014 4/8 there is specific written contract, a contract with regard to arbitration cannot be presumed. Section 7 (3) of the act clearly specifies that the contract with regard to arbitration must be in writing. If a non arbitrable dispute is referred to an Arbitrator and even if an issue is framed by the Arbitrator in relation to such a dispute, there cannot be a presumption or a conclusion to the effect that the parties had agreed to refer the issue to Arbitrator. It was accordingly held that it was not open to the Arbitrator to decide the issues which are not arbitrable and the award, so far as it relates to disputes regarding non arbitrable disputes, is bad in law and is liable to be quashed " .
12. In the instant matter, as already noted, except for one objection regarding the claim made before Ld. Arbitrator beyond the scope of arbitration, others are in the form of appeal and therefore this court is not empowered to treat the objection petition as appeal as there cannot be any denovo trial or appreciation of evidence. It has been held by Hon'ble Supreme Court continuously that a court should approach an award with a view to support it, if that is reasonable, rather than to destroy it by calling it illegal and further that a court cannot substitute its own evaluation to come to the conclusion that arbitrator had acted contrary to the bargain between the parties. Reliance is placed upon 2002 (65) DR J400 UOI Vs. Hakam Chand and Co. and AIR 1989 SC 1263 Food Corporation of India Vs. Joginder Pal Mahinder Pal.
13. In the instant matter, none of the ground mentioned in the authorities Arb No. : 06/2014 5/8 (supra) relied upon by counsel for petitioner are available on the basis of which an award can be set aside .
14. In Baron International Ltd. vs. Startron Video P. Ltd. And Anr. OMP No. 124/2009 decided on 25.02.2010 and 2008(3) R.A.J. 612(Del) and Hindustan Lever Ltd. vs. Shiv Khullar interalia, it was observed that "a commonly held belief that while considering objections U/s 34 of the Act, the Court cannot look into the evidence before the Arbitrator also needs to be clarified. There is a difference in reappreciating evidence and considering whether material evidence has been ignored. Whereas the former would be an activity prohibited while considering objections U/s 34 of the Act for the reason an Arbitrator is a chosen forum by the parties to conclude rival issues of fact between the parties, the latter would be an activity to find out whether learned Arbitrator has acted within his mandate for the reason the mandate of the Arbitrator is to decide on facts after considering all the relevant facts and not ignoring the same."
15. Besides this court, not sitting in appeal, therefore cannot reappreciate the evidence but also there is no material evidence having not been considered by Ld. Arbitrator which may call for setting aside of the award. Reliance is placed upon AIR 2012 Supreme Court 1866 P.R. Shah, Shares & Stock Broker (P) Ltd. Vs. M/s B.H.H. Securities (P) Ltd. & Ors. , (2006) 7 Supreme Court Cases 700 Rajasthan State Road Transport Vs. Indag Rubber Ltd and 198 (2013) Delhi Law Times 738 National Arb No. : 06/2014 6/8 Highways Authority of India Vs. Oriental Structure Engineers Ltd. wherein interalia it was observed that " merits of decision of Arbitral Tribunal Award cannot be challenged by a party to contract merely because the interpretation given by Arbitral Tribunal to contract terms is not to its liking. If two interpretations are possible and the interpretation given by Arbitral Tribunal is a possible view upon which the court may have a different view, yet award will not be interferred with by court under section 34 of Arbitration and Conciliation Act. It was further observed that the court cannot sit in appeal and disturb the finding of fact recorded by arbitrator after considering all the material on record and factual controversy not covered by such material is disallowed to be raised " .
16. The objection pertaining to the claim being beyond the ambit of arbitration is also not sustainable as this court does not find any deviation from the terms of contract and particularly clause 25 with regard to reference of dispute to arbitrator.
17. It is pertinent to mention here that even otherwise, application under section 11 of the Arbitration and Conciliation Act was moved before Hon'ble High Court and vide order dated 8.3.2006, Hon'ble High court while declining the plea of objector directed for reference of the dispute to the Arbitrator under clause 25 of the agreement between the parties. The said aspect in fact having already been considered by Hon'ble High Court , Ld. counsel for objector is not permitted to reagitate the same before this court. Arb No. : 06/2014 7/8
18. With respect to the pendency of civil suit, the objection raised by Ld. counsel for petitioner that Ld. Arbitrator could not have adjudicated upon that claim is already answered by Ld. Arbitrator while declining claim no.3 of the claimant due to pendency of the civil suit.
19. Accordingly, finding no merits in the objection petition, same is dismissed. A copy of this order alongwith arbitral record be sent to Ld. Arbitrator. File be consigned to record room.
Announced in Open Court
on 10.12.2015 ( SAVITA RAO )
Additional District Judge01(West)/Delhi
Arb No. : 06/2014 8/8