Bombay High Court
M/S. Madhav Structural Engineering Ltd vs M/S Maharashtra State Road Development ... on 19 December, 2019
Author: G.S. Patel
Bench: G.S. Patel
Madhav Structural Engg Ltd v MSRDC
arbp333-2017-F2.doc
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 333 OF 2017
Madhav Structural Engineering
Ltd,
29/1, Juhu Supreme Shopping Centre,
Gulmohar X Road No 9, JVPD Scheme, Mumbai ...Petitioner
400049
~ versus ~
Maharashtra State Road
Development Corporation Ltd,
Nepean Sea Road, Priyadarshini Park, Nepean Sea
Road, Mumbai 400036 ...
Respondent
A PPEARANCES
FOR THE Mr Rakesh Chavan, Constituted Attorney
PETITIONER of the Petitioner, in person.
FOR THE Mr Prashant Chavan, Advocate, i/b
RESPONDENT Reshmarani Jethanand Nathani.
CORAM : G.S. PATEL, J.
JUDGMENT RESERVED ON : 22nd November 2019
JUDGMENT PRONOUNCED ON : 19th December 2019
JUDGMENT:
Page 1 of 27
19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc A. INTRODUCTION
1. The Petitioner, represented by its Constituted Attorney, Mr Rakesh Chavan appearing pro se, challenges an arbitral award dated 17th December 2016 by a sole arbitrator. The challenge is mounted principally under Section 34(2A) and Section 34(2)(b)(ii) of the Arbitration & Conciliation Act, 1996.
2. This Court admitted the Petition on 13th December 2017. Having now heard both sides and carefully considered the material on record, in my judgment, the Petition must fail. I have dismissed the Petition. My reasons follow.
B. BACKGROUND FACTS
3. The Respondent, the Maharashtra State Road Development Corporation Ltd ("MSRDC"), a government-owned company, invited tenders for upgrading and improving a 49.90 km stretch of the Loni-Nagzari-Kherda-Karanja road corridor to National Highway standards. The Petitioner, Madhav Structural Engineering Ltd, placed the winning bid of Rs.15.56 crores -- MSRDC accepted its bid on 2nd February 2001. A work order of 2nd March 2001 followed. The project completion period was 24 months. The contract works had to be completed by 1st March 2003. The Page 2 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc contract specifed certain milestones. The Petitioner had to be meet these, i.e. it had to complete specifed works by scheduled dates.
4. On 18th October 2002, on the ground that the Petitioner was in breach, had not commenced work, and had not met these milestones, MSRDC terminated the contract. The Petitioner invoked arbitration. It fled an application under Section 11 of the Arbitration Act.1 That was allowed by a judgment and order dated 8th July 2010.2 MSRDC carried the matter in appeal to the Supreme Court.3 The Supreme Court dismissed the Special Leave Petition by its order dated 24th April 2012. On 16th May 2012, MSRDC appointed DK Sankaran, former Chief Secretary to the Government of Maharashtra as the sole arbitrator. He entered upon the reference to his arbitration and, ultimately, made and published an award dated 17th December 2016.
C. THE AWARD IN BRIEF
5. The arbitrator dismissed the claim. He held the Petitioner to be solely responsible for the delay in the progress of the work. MSRDC had fulflled its obligation, including in handing over the project site within the contractually stipulated six months. He also rejected the Petitioner's contention that MSRDC had not issued usable drawings and instructions. He also found that the appointment of the Project Management Consultant or PMC by 1 Arbitration Application No. 100 of 2007. 2 Per SJ Vazifdar J, as he then was.
3 Special Leave Petition (Civil) No. 31993 of 2010.
Page 3 of 2719th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc MSRDC was not delayed. Both sides knew, from the time of the tender, that there were existing obstructions on the site, and these had to be removed. In any case, as the Court held in the order dated 8th July 2010 made on the Section 11 application, the PMC was an agent of the MSRDC, not the Petitioner, nor of the two parties jointly. On facts and the material before him, the arbitrator returning a fnding that MSRDC had issued several notices to the Petitioner to expedite the works -- MSRDC's engineer reported that the Petitioner had completed only about 5% of the work when the contract demanded a 59% completion. He rejected the Petitioner's reasons for failure to meet the milestones (monsoons, etc) as being untenable. These were not unknown or unexpected. There was also the fact that the Petitioner virtually abandoned the contract: its lenders re-possessed the machinery and equipment necessary for the project. After it terminated the agreement on 18th October 2002, MSRDC's engineer asked the Petitioner to be present on site for fnal measurements. The Petitioner did not attend. On 29th November 2003, MSRDC informed the Petitioner that fnal measurements had been taken. The Petitioner had a contractual option to seek a review. He never did. Indeed, for the next three years he did nothing, and it was not until as late as 2005 that the Petitioner raised claims, and not until 2007 that the Petitioner fled his arbitration application under Section 11 of the Arbitration Act.
D. THE CHALLENGE TO THE AWARD
6. The grounds of challenge can broadly be classifed in three:
(1) allegations against the arbitrator of lacking impartiality; (2) Page 4 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc alleged procedural lacunae including the manner of conducting arbitration meetings and maintaining minutes; and (3) that the award does not consider crucial material and evidence.
I Allegations against Arbitrator and procedure
7. The allegations of bias against the arbitrator and assailing his procedure both in the petition and in the written submissions are not only generalised and vague but without factual foundation. After the sole arbitrator held his frst meeting on 20th July 2012, the Petitioner on 28th September 2012 proposed to MSRDC that there be a conciliation process. The Petitioner claims the sole arbitrator did this on his own, but that hardly matters, for there is no doubt that some conciliation was indeed attempted. That is hardly a reason to question the arbitrator's independence and impartiality. In any event, no one seems to have objected to the proposal; and MSRDC indeed agreed to it. The sole arbitrator therefore held these arbitration proceedings in abeyance pending the conciliation. The conciliation was unsuccessful. On 24th September 2013, MSRDC reported this and asked the sole arbitrator to proceed with the arbitration. He held a meeting on 25th November 2013 noting that the conciliation had failed and that the arbitration would now start. He also noted that time had been lost. The Petitioner fled some further Afdavits and sought to lead oral evidence. The sole arbitrator raised some queries which the Petitioner promised to address and the matter went over to 4th January 2014. By end- August 2014 the Petitioner had concluded his arguments and the arbitration was adjourned to 10th September 2014 for MSRDC to Page 5 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc fle its written arguments. It was at this stage that the Petitioner said that he would not lead any evidence but would rely only on documents. The Petitioner never fled any Afdavit of Evidence despite taking time for that reason and the arbitrator then fxed the next meeting sometime in the third week of March 2016.
8. Now, as we have seen, this was an arbitration that had commenced in 2012 and by this time four years had already elapsed.
9. It is at this stage the matters took a very dramatic turn. This Petitioner, who had himself fled a Application under Section 11, had succeeded in opposing MSRDC's Special Leave Petition in the Supreme Court against that order under Section 11, and later participated in the conciliation, now fled an Arbitration Petition No. 584 of 2016 under Section 14 of the Arbitration Act for an order terminating the arbitrator's mandate. The Petitioner requested a postponement of the arbitration hearings which the arbitrator declined, in my view correctly, since the matter was already very old. He closed the matter for declaration of the Award on 26th April 2016. On 16th June 2016, after a lengthy hearing, this Court (RD Dhanuka J) dismissed the Petitioner's Arbitration Petition No. 584 of 2016 and held that it had not made out any case for terminating the mandate. It is after this that the arbitrator pronounced the impugned Award.
10. Notably, the same grounds as were taken in the Section 14 petition are taken before me today. There is no material distinction. It is difcult in these circumstances to see how any weight can be Page 6 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc attached to the Petitioner's submissions against the arbitrator. As the foregoing narrative shows arbitral awards cannot be impugned merely on the basis of these fanciful allegations. In this particular case the Petitioner did seek termination of the mandate and failed in that endeavour. It is simply not open to the Petitioner to raise these issues again at this stage.
11. The allegations in paragraphs 4(C), 4(E), 4(G) are all allegations of bias against the arbitrator and accusations of moral turpitude. Not only is it impossible to examine these but the Petitioner as we have seen sought a termination of the arbitral mandate on precisely these grounds. He failed. That order is conclusive and cannot be reopened. It is not permissible for the Petitioner to constantly re-agitate these arguments.
II The challenge under Section 34
12. On law, the Petitioner attempts to position his case under Section 34(2A) and Section 34(2)(b)(ii) of the Arbitration Act. It is not necessary to examine any larger question of the applicability of Section 34(2A) in view of the Supreme Court decision in Board for Cricket Control in India v Kochi Cricket Pvt Ltd:4 The Award itself is of 17th December 2016, and this Petition was fled in 2017, and is therefore a proceeding in court fled well after the 2015 amendment to the Arbitration Act that came into efect on 23rd October 2015 introducing inter alia Section 34(2A).
4 (2018) 6 SCC 287.
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13. The question however is strictly one of law, to wit, the extent of a Court's remit under either of these sections. The most authoritative pronouncement on both these sections is the decision of the Supreme Court in Associate Builders vs Delhi Development Authority.5 The Court considered specifcally what falls within the heads of 'public policy of India' under Section 34(2)(b)(ii) and what could be covered by the concept of 'patent illegality' within the meaning of Section 34(2A). A few extracts should sufce.
Fundamental Policy of Indian Law
27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will frst deal with the head "fundamental policy of Indian law". It has already been seen from Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding efect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.
28. In a recent judgment, ONGC Ltd. v. Western Geco International Ltd. [(2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , this Court added three other distinct and fundamental juristic principles which must be understood as a part and parcel of the fundamental policy of Indian law. The Court held: (SCC pp. 278-80, paras 35 & 38-40) "35. What then would constitute the 'fundamental policy of Indian law' is the question. The decision in ONGC [(2003) 5 5 (2015) 3 SCC 49.
Page 8 of 2719th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc SCC 705 : AIR 2003 SC 2629] does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression 'fundamental policy of Indian law', we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law. The frst and foremost is the principle that in every determination whether by a court or other authority that afects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi-judicial determination lies in the fact that so long as the court, tribunal or the authority exercising powers that afect the rights or obligations of the parties before them shows fdelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bona fde and deals with the Page 9 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against faws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge.
38. Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated audi alteram partem rule one of the facets of the principles of natural justice is that the court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-
application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.
39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a Page 10 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 All ER 680 (CA)] principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available.
40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a defnition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modifed depending upon whether the ofending part is or is not severable from the rest."
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29. It is clear that the juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective.
31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:
(i) a fnding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.
32. A good working test of perversity is contained in two judgments. In Excise and Taxation Ofcer-cum-Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312] , it was held: (SCC p. 317, para 7) "7. ... It is, no doubt, true that if a fnding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the fnding so outrageously defes logic as to sufer from the vice of irrationality incurring the blame of being perverse, then, the fnding is rendered infrm in law."
Page 12 of 2719th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10 : 1999 SCC (L&S) 429] , it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the fndings would not be interfered with."
33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score [ Very often an arbitrator is a lay person not necessarily trained in law. Lord Mansfeld, a famous English Judge, once advised a high military ofcer in Jamaica who needed to act as a Judge as follows: "General, you have a sound head, and a good heart; take courage and you will do very well, in your occupation, in a court of equity. My advice is, to make your decrees as your head and your heart dictate, to hear both sides patiently, to decide with frmness in the best manner you can; but be careful not to assign your reasons, since your Page 13 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc determination may be substantially right, although your reasons may be very bad, or essentially wrong". It is very important to bear this in mind when awards of lay arbitrators are challenged. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. [(2012) 1 SCC 594 : (2012) 1 SCC (Civ) 342] , this Court held: (SCC pp. 601-02, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. The case as put forward by the frst respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the frst respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye- law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The fnding of the majority is that the appellant did the transaction in the name of the second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to fnd out whether a diferent decision can be arrived at."
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40. We now come to the fourth head of public policy, namely, patent illegality. It must be remembered that under the Explanation to Section 34(2)(b), an award is said to be in confict with the public policy of India if the making of the award was induced or afected by fraud or corruption. This ground is perhaps the earliest ground on which courts in England set aside awards under English law. Added to this ground (in 1802) is the ground that an arbitral award would be set aside if there were an error of law by the arbitrator.
.........
42. In the 1996 Act, this principle is substituted by the "patent illegality" principle which, in turn, contains three subheads:
42.1. (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)
(a) of the Act, which reads as under:
"28. Rules applicable to substance of dispute.--(1) Where the place of arbitration is situated in India--
(a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;"Page 15 of 27
19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc 42.2. (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality -- for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside.
42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:
"28. Rules applicable to substance of dispute.--(1)-(2)*** (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction."
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair- minded or reasonable person could do.
(Emphasis added)
14. As the emphasized portions show, the Supreme Court has clearly categorised these classes of challenge. To take the second limb frst, 'patent illegality' has three possible components: i) a contravention of the substantive law of India; ii) a contravention of the Arbitration Act and iii) a violation of Section 28(3) of the Page 16 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc Arbitration Act. The Petitioner cannot demonstrate that his case falls in any of these sub-categories.
15. The challenge on the ground of patent illegality under Section 34(2A) fails.
16. As to the question of public policy the test appears to be that the award must display a judicious approach, one not palpably perverse. It must not be against justice or morality. No question morality arises in this case, and while the Petitioner may insist that there has been great injustice, the test is not that what shocks a litigant but rather what the Court fnds unconscionable. The requirements that there be no demonstrable perversity, and that the approach must be judicious may both be taken to be facets of fairness, reasonableness, non-arbitrariness and, above all, plausibility. The test is not one of wrongness, or perceived wrongness. Mere wrongness is not perversity. The applicable test has to be the one derived from Associated Provincial Picture Houses Ltd vs Wednesbury Corporation.6 This is the well-known test of 'Wednesbury unreasonableness'. Now whether, in administrative law especially, but also in the jurisprudential forks that have since come into being in relation to judicial intervention in arbitral awards, one considers the Wednesbury unreasonableness test or the doctrine of proportionality really makes little diference. It is hard to conceive of a situation that fails one standard but not the other. The fundamental test is that for a challenge to succeed the arbitral decision must be so unreasonable that no rational person could have 6 (1948) 1 KB 223 Page 17 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc ever arrived at it. On its own, this carries a secondary requirement:
there must be a facial demonstration of perversity and Wednesbury unreasonableness failure. If one is required to go through some convoluted process of reasoning, then there can simply be no question of perversity.
17. The other side of this coin is that a plausible or potential view, interpretation or evidentiary appreciation will not allow judicial intervention. The mandate of Section 5 is clear: judicial intervention in arbitral awards is to be held to the minimum. 7 This is perhaps the one overriding criterion that defnes the role of a Section 34 Court.
We fnd this explicitly stated in paragraph 33 of Associate Builders: a Section 34 Court does not function as a court of appeal. 8 Associate Builders was cited by the Supreme Court in MP Power Generation Co vs Ansaldo Energia Spa & Anr.9 This Court also reiterated the restrictions on the powers of a Section 34 Court including the following:
"(a) The court under Section 34(2) of the Act, does not act as a court of appeal while applying the ground of "public policy" to an arbitral award and consequently errors of fact cannot be corrected.
(b) A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the sole
7 The Associate Builders court said in paragraph 15: "This section [34] in conjunction with Section 5 makes it clear that an arbitration award that is governed by Part I of the Arbitration and Conciliation Act, 1996 can be set aside only on grounds mentioned under Sections 34(2) and (3), and not otherwise." 8 See also: Hindustan Construction Company vs Union of India, Writ Petition No. 1074 of 2019, paragraph 50; Ssangong Engineering & Construction Co Ltd v NHAI, 2019 SCC OnLine 677, paragraphs 28 and 76. 9 (2018) 16 SCC 661.
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(c) Insufciency of evidence cannot be a ground for interference by the court. Re-examination of the facts to fnd out whether a diferent decision can be arrived at is impermissible under Section 34(2) of the Act.
(d) An award can be set aside only if it shocks the conscience of the court.
(e) Illegality must go to the root of the matter and cannot be of a trivial nature for interference by a court. A reasonable construction of the terms of the contract by the arbitrator cannot be interfered with by the court. Error of construction is within the jurisdiction of the arbitrator. Hence, no interference is warranted.
(f ) If there are two possible interpretations of the terms of the contract, the arbitrator's interpretation has to be accepted and the court under Section 34 cannot substitute its opinion over the arbitrator's view."
(Emphasis added)
18. I note this because every single ground, bar none, is in the nature of a ground of challenge to an original decree in a regular frst appeal.
19. It is difcult to understand the relevance of the Petitioner's reliance on Kerala State Electricity Board vs Hindustan Construction Company Ltd.10 It appears to have no application to the facts of this case.
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20. This now takes me to an examination of the challenge on merits, to the extent permissible. There is no doubt that on 8th May 2001 Consulting Engineers Services (India) Ltd was appointed as an engineer in charge. The contract conditions had two parts. The second part had conditions of particular application and it is here that we fnd the stipulated milestones and the time schedule for the achievement of each. The tabulation is comprehensive and specifes the amount of cubic meters to be achieved, the roadwork in length, the widening in units and the number of minor bridges to be constructed. There were three milestones time-periods: from 2nd March 2001 to 1st November 2001, 2nd November 2001 to 1st July 2002 and 2nd July 2002 to 1st March 2003.
21. It appears from the Award and from the record that in 17 months the Petitioner achieved only a 5.31% completion against a contractual target of 66.89%. This is what triggered MSRDC's pre- termination notice of 27th September 2002 forfeiting the performance securities and retention money. There can be no doubt that the submissions of the Petitioner before the arbitrator -- and which he reiterates before me in paragraphs 4(A) to 4(T) -- are entirely fact-based. It is not possible to enter into this controversy, for reasons already set out. These are fndings of fact and matters of appreciation of evidence. It must frst be shown that these allegations fall within the remit of the Court of its power under Section 34. If they do not, then there is no simply point in pursuing them further.
22. It is not demonstrated that any fnding of the learned arbitrator sufers from a patent illegality or violates the public policy Page 20 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc of the country as defned by Associate Builders. What the Petitioner seems to argue is that a contrary view is possible and the sole arbitrator ought to have taken the contrary view, i.e. one supporting the Petitioner.
23. The essence of the case seems to be this: (i) The Petitioner did not have detailed drawings with which to work. That is a matter of evidence. It cannot be examined in a Section 34 Petition. (ii) During the contract period, it rained. In the monsoon, this is known to happen. It is expected. Indeed, it is awaited. It is certainly not something that could have taken the Petitioner by surprise. The tender itself and the description of the work as also the projected completion date clearly contemplated working even in the monsoon period. This would not even constitute a force majeure event of any kind whatsoever, nor provide sufcient exculpatory reason for failure to perform. (iii) The Petitioner says, and says repeatedly, that he has fallen on hard times. He used to have many contracts with MSRDC and even with other statutory corporations. He had machinery deployed at many sites. He was awarded many of these contracts because of his competitive bidding. I understand this to mean that the Petitioner quoted very low and was operating on dangerously thin margins. This is no ground to upset an arbitral fnding.
24. What the Petitioner alleges is that the sole arbitrator ignored something 'vital' in evidence in arriving at his decision. But the Petitioner is unable to pinpoint what exactly this might be. He repeats the ground that allowance should have been made for the monsoon, for the site not being fully handed over to him, and that Page 21 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc there were insufcient drawings to work with. But none of this constitutes a failure to appreciate evidence. To the contrary: it is very much an appreciation of evidence, just not an appreciation to the Petitioner's liking.
E. A BRIEF ANALYSIS OF THE AWARD
25. A copy of the Award itself is at Exhibit "A" to the Petition from pages 32-63. The Award is detailed. In paragraph 11, the sole arbitrator noted the complaint of the Petitioner inter alia about the delay in appointing the Project Management Consultant. He also noted the other grievances of the Petitioner such as that the land not been acquired, a defective report, adverse soil conditions and so on. In paragraph 13, the learned sole arbitrator listed other reasons cited before him by the Petitioner for failure to fulfl the milestones. Each of the reasons has been noted against each of the milestones and carefully considered. The Petitioner made altogether about 15 claims. All these were listed and then the arbitrator considered the response of the MSRDC. Paragraph 45 shows that the arbitrator considered all the material before him and carefully considered the documents placed and the other material or evidence on record. He made a detailed reference to various provisions of the contract.
26. As an example of the care taken by the arbitrator it would be useful to reproduce paragraphs 51 to 56 of the Award:
"51. The Exhibits furnished by the Claimants also expose many delays and inadequacies on their part. They were informed of wrong information conveyed to them by the Page 22 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc Claimants. The documents at Exh. R-27 and R-28 show and drew the attention to the Claimants to the non-fulfllment of Clause - 14 programme. They were also alerted that they had stopped work on C.D. works and minor bridges since 2.9.2001 without informing the Engineer. The Claimants were informed by letter dated 17.9.2001 that the revised programmed submitted by them on 5.9.2001 were not realistic and full of inadequacies. Further, a list of lab equipments which were not provided till then were listed. They were asked to procure these as per BOQ. There were reminders from the Engineer about pending procurement of lab equipments by them.
52. The delays and inadequacies in the work carried out by the Claimants has been chronicled meticulously by the Respondent or his Agents. They cast doubts on the intentions of the Claimant. It is clear that a responsible contractor would not resort to such delaying tactics. Having been informed at every stage, meticulously about every delay and inadequacy, the action taken in the end by the Respondent cannot have come as a bolt from the blue.
53. Further, the Engineer accused the Claimant of preparing unrealistic programmes on paper without deployment of resources at the site. That this is not contested by the Claimant, ipso-facto points to their acceptance of this defect. Exh.C-62 is a submission of revised programme on account of their failure to execute as per their earlier programme because of inadequate and late deployment of resources.
54. The list of failures and inadequacies, pointed out by the Engineer and uncontested and therefore accepted by the Claimant is long. They were notifed about their failure in material procurement as per their revised programme dated 3.12.2001. It was pointed out to the Claimant that they had Page 23 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc procured pipes only for 6 culverts as against the required 28, till January 2002. By a letter dated 10.12.2001 the Engineer informed the Claimants that the relevant equipments provided by them in the laboratory were no working. They were asked to make alternate arrangements to testing by Engineering college by 17.12.2001 on 11.2.2001
- Ex. R-42 - the Engineer informed the Claimant about reduction in their staf strength at site after Diwali festival and were asked to deploy adequate staf so that the quality of work is not afected. Further by a letter dated 14.12.2001
- Exh. R-43 - the Engineer reminded the claimant about their repeated failure in commissioning crusher from 15.7.2001. They were asked to take immediate action.
55. It is seen from the exhibits that the Engineer of the Respondent informed the Claimants regarding the inadequate machinery at the work site. Similarly the shortfall in the progress of the work of the Claimants as compared to the revised program of 3.12.2001 was communicated. This communication mentioned that the delay in progress is because of the inadequate machinery and equipment procured by the Claimants. The failure of the Claimants to increase the number of shifts from one to two and not working for seven days in a week is also communicated to the Claimants. Similar letters dated 15.12.2001, 18.12.2001, 22.12.2001, 24.12.2001, 25.12.2001,
27.1.2002, 29.1.2002 and 1.2.2002 also detailed inadequacies in various materials like pipes, concrete vibrators, roadworthy machinery, etc. Thus, it will be seen that time and again the Respondent has communicated the shortfall in his work. The Engineer even recorded the fact that the insurance policy submitted by the Claimants had many shortfalls.
56. There are a number of letters from the Claimants, admitting delay in progress owing to various reasons Page 24 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc including the Claimants fnancial difculties and under- lying his attempt to fund the project. Some of these are Exh. C-83/3 and 85/2; Exh. R-74 and Exh. R-80. In reply to the Claimants letter the Engineer has time and again in April, May and June 2002 pointed out the work was standstill and there was no activity at site. Only 25% of the required machinery were remaining at the site. All the hired materials have been taken away by the original owner. Final progress achieved was only 5.13% as against the contract of 58.61 at a pointed time. It was emphasized that the Claimant has failed to achieve the target and there was no activity at the site from April 2002 onwards. Exhibits list number of other inadequacies like missing vibratory soil compactor."
27. Again before the arbitrator the Petitioner blamed the monsoon and this is how the arbitrator dealt with the arguments:
"59. I see no merit in the arguments of the Claimant blaming the monsoon as one of the reasons for not fulflling the three mile stones. This cannot be accepted as a valid argument. Monsoon occur every year during a particular period and it has been factored into the agreement and documents. It is clear that the Respondent has fulflled his part of the contract obligation. The Claimant committed delay. There was a breach of contract on his part and the Respondent cancelled the contract following the provisions of the contract. Thus it will be valid and legally sustainable. As such, the Claimant is not entitled to any compensation from the Respondent."
28. The arbitrator fnally concluded:
"60. It will be clear from the arguments discussed that the Respondents pointed out the defciencies and failure to Page 25 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc execute contractual obligations at every turn. Sufcient opportunity was given to the Claimant to improve his performance. Notwithstanding some improvements in bits and pieces, the Claimant was not able to meet contractual obligations. Ample opportunity was given to the Claimant and he was regularly informed of shortcomings. He was given opportunity at every stage to improve his performance and come up to the contractual requirements. He was, for reasons best known to himself, not able to meet his obligations. There is, thus, no merit in the arguments of the Claimant and no relief can be given to him. His plea fails in toto. The Respondent has acted in good faith and strictly acted within the contractual terms. The termination of the Contract is as per terms and conditions of the original contract and M/s. MSRDC has to pay no amount to M/s. Madhav Structural Engineering Ltd."
29. It is impossible from this Award to say that the arbitrator was in error on any of the grounds available in law. There is no question of wrongly appreciating the evidence. There is little point in saying that a particular document should have been read in this or that fashion. That is nothing but an attempt to have the evidence re- appreciated. I believe the Award is completely correct and the view taken by the arbitrator is not only a plausible view but is only the possible view and without doubt the view that any Court would taken had this been a regular civil suit.
F. CONCLUSION & ORDER
30. It is impossible in the course of a Section 34 Petition, one that does not give the Court an expansive power to order as the Page 26 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 ::: Madhav Structural Engg Ltd v MSRDC arbp333-2017-F2.doc Petitioner submits a refund of the security deposit or the performance deposit or to grant what the Petitioner says is a Petition for mercy. That is simply not the law. The Petitioner has prosecuted very many litigations against this Respondent and against the other corporations. Even if its cash fows were disrupted by MSRDC defaults despite the Petitioner performing according to the contract, this was a matter within the arbitral remit, and squarely a question of fact and evidence. Having gone to an arbitration the Petitioner itself invoked, the Petitioner cannot carry on and on like this, presenting what is, to all intents and purposes, a frst appeal, and acting as if it is exempt from the law of the land. Short of demonstrating perversity or patent illegality within the narrow confnes of Associate Builder, it is simply not possible to re- appreciate the evidence and to take another view merely because it is possible or even preferable. That is not the law or the policy relating to arbitration law in this country.
31. The result is plain. The Petition must fail. It does. No costs.
(G.S. PATEL, J.) Page 27 of 27 19th December 2019 ::: Uploaded on - 20/12/2019 ::: Downloaded on - 20/12/2019 23:57:00 :::