Delhi District Court
Oil And Natural Gas Corporation Ltd vs Planetcast Technologies Ltd on 5 April, 2021
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT-01),
SOUTH-EAST, SAKET COURTS, NEW DELHI
Presiding Officer: Sh. Raj Kumar Chauhan DHJS
OMP (Comm) No. 31/2019
In the matter of:
Oil and Natural Gas Corporation Ltd.
5, Nelson Mandela Marg,
Pandit Deen Dayal Upadhyay
Urja Bhawan, Vasant Kunj,
New Delhi - 110070.
..........Petitioner.
Vs.
Planetcast Technologies Ltd.
(Formerly Know As :
M/s Essel Shyam Technologies Ltd.)
1121, Hemkunt Chambers, 11th Floor
89, Nehru Place, New Delhi,
South Delhi DL 110019 IN.
.........Respondent
Date of institution : 18.03.2019
Date on which order was reserved : 01.04.2021
Date of pronouncement of the judgment : 05.04.2021
JUDGMENT
1. By this order, I propose to dispose of petition u/s 34 of Arbitration and Conciliation Act, wherein the Award dated 13.11.2018 has been challenged on the following grounds :-
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 1 of 67
(a) The Award suffer from various patent illegalities as the findings in the Awards are in contravention of terms of contract and also in contravention of Arbitration and Conciliation Act.
(b) The Learned Arbitrator has awarded the amount of Rs. 1 Crore with respect to respondent's claim for NPDs without assigning any reason and therefore, the awarding of such amount is contrary to Section 31 (3) of the Arbitration and Conciliation Act.
(c) Learned Arbitrator has incorrectly given the findings that Clause 7.4 of the GCC was applicable to the issue of NPDs and since the same has not been followed, the respondent was entitled to refund. The NPDs are a contractual component of calculating the value of services provided by the respondent and therefore cannot be said to be a disputed amount and therefore, Clause 7.4 of GCC is not attracted.
(d) The finding of the Learned Arbitrator that Mr. Ankush Singhal was not authorized to deal with the instant contract by the claimant / respondent as its representative in terms of contract is perverse as liable to be set aside.
(e) Learned Arbitrator has committed a patent illegality in holding that the PM reports do not reflect the default committed by the respondent.
(f) The Learned Arbitrator has committed a patent illegality in holding that NPDs could not be imposed as the PM report does not mention the quantum of NPDs.
Such findings is contrary to Clause 5.1 of Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 2 of 67 GCC, Clause 1.1.1 of the Special Terms and Conditions and Clause 2.2.3.1 of the Scope of Work.
(g) The Learned Arbitrator has acted contrary to Section 18 of the Arbitration and Conciliation Act because petitioners evidence has been disregarded without justification or reasons, whereas respondents evidence has been accepted without even considering the extensive cross-examination of respondent's witnesses.
(h) Awarding of Rs. 1,16,007/- in lieu of service tax is in contravention of provision of the Contract which specifically states that the amount of service tax reimbursable to the respondent will be as per rate quoted by the respondent in its bid i.e. 10.3%. But the Learned Arbitrator has awarded the differential amount on the basis of change in the rate to 12.3%.
(i) Awarding of Rs. 9,59,450/- in lieu of TDS on WCT is against the fundamental policy of Indian Law being contrary to the provision of the respective State VAT Act and Rules.
(j) Learned Arbitrator has committed patent illegality by holding that nature of contract between the parties is not a work contract as specified u/s 2 (ja) of the CST Act, 1956.
(k) The Award in lieu of TDS on WCT is in conflict with the fundamental policy of Indian Law because Learned Arbitrator has awarded refund of TDS on WCT on the specious ground that since the respondent was not registered under the respective State VAT Act and Rules, they could not have provided for the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 3 of 67 certificates required by the petitioner in order to not deduct TDS on WCT. The Learned Arbitrator has committed patent illegality by holding that since all invoices were raised form the NOIDA, therefore, there was intra-state sale of goods.
(l) The Learned Arbitrator has failed to consider that claim was time barred.
The petitioner has made the following prayer:-
A. Set aside the impugned Award dated 13.11.2018 passed by the Learned Sole Arbitrator Hon'ble Mr. Justice Vijender Jain (Retd.) passed in the arbitration proceedings instituted by the respondent for determination of disputes arising in relation to Contract No. DLH/CORPINFOCOM/MM/07 dated 22.05.2010.
(B) Award costs of the proceedings; and (C) Pass any other orders that may be appropriate in the facts and circumstances of the case and are deemed to be in the interest of justice.
2. The respondent herein filed a claim petition inter-alia alleging that it was engaged in the business of establishing, maintaining and operating the closed users group, domestic network vide INSAT satellite systems using VSATs (Very Small Aperture Terminals) throughout India and is a premier system integrator in the field of Microwave Radio Links, Automatic Weather Station, Hydrology, Seismology and Metrology. That the respondent / petitioner herein had invited a Tender enquiry vide their Tender Notice No. XA4PC09004 for Comprehensive Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 4 of 67 Maintenance Services (CMS) for SATCOM (Satellite Communication) Network for carrying out respondent's operation in terms of specification set forth in the scope of work. The bid of the claimant was accepted by the respondent vide Award Letter dated 04.02.2010.
3. In pursuance to Notification of Award a contract dated 25.05.2010 was executed between the claimant and the respondent / petitioner herein for a total contract price for three years for Rs. 4,67,66,797/-. The contract awarded by the respondent / petitioner herein was for rendering comprehensive maintenance for services for respondents / petitioner herein SATCOM Network wherein the claimant was provided the maintenance including the repair of already installed equipments at various sites of the respondent / petitioner herein covered under the said contract. That the respondent / petitioner herein did not provide the purchase documents of the equipments so that the claimant could get the same repaired from the original equipment manufacturer. Despite that the claimant repaired the faulty equipment and kept the sites of the respondent / petitioner herein operational with the stipulated level of uptime of 99.5%. Despite that the respondent/petitioner herein resorted to deduction of Non-Performance Deduction (NPD) which was unfair and unreasonable and in violation of term of contract. That the claimant raised the quarterly bills but the respondent / petitioner herein used to make belated payments of the said Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 5 of 67 quarterly bills without disclosing quantum of deduction. The claimant wrote various letters as mentioned in para 14 of the claim petition regarding the details of the deductions made by the respondent / petitioner herein and requested the respondent / petitioner herein to clear the outstanding payments of the details of the deductions mentioned in those letters as the deductions were made illegally. No response was received till 30.07.2011 when the first time respondent / petitioner herein informed the claimant that Non-Performance Deductions has been made on the basis of PM Reports submitted by the claimant alongwith quarterly bills. The respondents / petitioners herein first time quantified this NPD amount i.e. Rs. 1,23,78,739/-. That the PM reports does not quantify the NPD to be deducted by the respondents / petitioners herein. Thus, the deduction on account of NPD was illegal.
4. It is further stated that the respondent / petitioner herein has also failed to refund the service tax paid by the claimant to the statutory authorities on account of service rendered to the respondent / petitioner herein. The respondent / petitioner herein has thus failed to pay the service tax of Rs. 1,16,007/- to the claimant which claimant is entitled alongwith 18% interest. It is further alleged that respondent / petitioner herein has illegally made deductions on TDS on Works Contract "at source". The TDS "at source" was deducted illegally because there was no Inter State Sale. The claimant has made the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 6 of 67 following claims :-
"(i) Award a sum of Rs. 1,23,78,737/-
towards NPD illegally deducted by the respondent form the invoices of the claimant;
(ii) Award a sum of Rs. 1,16,007/- towards the service tax illegally withheld by the respondent;
(iii) Award a sum of Rs. 9,59,450/-
towards WCT - illegally deducted by the respondent from the invoices of the claimant;'
(iv) Award interest @ 18% p.a. from the date of such wrongful deduction / non- payment, pendente-lite and future interest till the date of receipt of payment by the claimant;
(v) Award legal costs quantified at Rs. 5,00,000/- alongwith costs incurred by the claimant towards the present arbitration proceedings.
(vi) Pass any other and further order(s) as the Hon'ble Sole Arbitrator may deem fit in the facts and circumstances of the present case in favour of the claimant and against the respondent."
5. The respondent (petitioner herein) has filed a statement of defence and has taken the preliminary objection to the effect that claim was barred by limitation because the claim included NPDs effected by the respondent (petitioner herein) for the first four quarters of the contract period i.e. from 05.03.2010 to 04.03.2011. The payment against the invoices raised by the claimant for this period was made prior to 18.11.2012 over 03 Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 7 of 67 years prior to the commencement of the present proceedings. Secondly, the claim petition is bereft of material facts and particulars. The Non-Performance Deductions made by the respondent (petitioner herein) to the tune of Rs. 1,23,78,737/- were made as per provision of the contract. The said deductions were on the basis of PM reports prepared by the claimant and jointly sent by the representatives of both the claimant and respondent (petitioner herein). That the TDS was deducted as per applicable law on all invoices raised. TDS on WCT was brought to the attention of the claimant vide letter dated 14.10.2011.
6. In para-wise reply all the averments has been controverted and denied.
7. Claimant has also filed rejoinder reiterating the stand taken in the claimed petition. It is clarified in the rejoinder that the respondent (petitioner herein) by its own letter dated 05.08.2013 and 11.08.2014 has admitted that in response to service tax, payment shall be made to the claimant subject to production of relevant documents. Vide letter dated 11.08.2014, the respondent (petitioner herein) states that service tax for the first quarter has been paid but withheld for 4th and 12th quarters amounting to Rs. 17,06,902/- and the same shall be released after verification of the supported documents submitted by the claimant. The respondent (petitioner herein) only released a sum of Rs. 13,94,213/- against documents submitted for Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 8 of 67 Rs.17,06,902/-. Therefore, the respondent (petitioner herein) has deliberately failed to clarify as to how the amount of Rs. 1,16,007/- was not payable by the respondent (petitioner herein) to the claimant.
8. From the pleadings of the parties, the Learned Arbitrator has framed the following issues :-
"(i) Whether the claims made by the claimant are barred by limitation ? OPR.
(ii) Whether the claimant is entitled to refund of Non-Performance Deductions? If so, what amount? OPC.
(iii) Whether the claimant is entitled to service tax? If so, what amount ? OPC.
(iv) Whether the claimant is entitled to refund of TDS on Work Contract Tax? If so, what amount? OPC.
(v) Whether claimant is entitled to interest? If so, at what rate and for what time? OPC.
(vi) Whether the statement of claim is liable to be dismissed for want of material facts and particulars? OPR.
(vii) Whether respondent has illegally made deductions of TDS on Works Contract to the tune of Rs. 9,59,450/- from the invoices of the claimant? OPC.
(viii) Whether claimant's prayer for interest @ 18% p.a. from the date of alleged wrongful deduction / non-payment, pendent-
lite and future interest till the date of receipt Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 9 of 67 of payment by the claimant, is maintainable in view of Clause 27.6 of the contract dated 25.05.2010 executed between the parties? OPC."
9. Both the parties have filed the written brief submissions.
10. I have heard the learned counsel for parties.
11. In the written arguments as well as oral arguments of petitioner, the petitioner has challenged the Award as under :-
(A) Award of Rs. 1 Crore for return of non-
performance deduction has been given without stating as to how the respondent was entitled to the amount of Rs. 1 Crore in view of the specific finding that there was no contemporaneous data duly authenticated before the Learned Arbitrator.
(i) There is no reference of any evidence on record to indicate as to how the amount of Rs. 1 Crore is payable. Therefore, the Award of this amount is without any reason and therefore, falls to the foul of Section 31 (3) of the Arbitration and Conciliation Act and therefore Award suffers from patent illegality. Reliance has been placed on para no. 12 and 13 of "Anand Brothers Pvt. Ltd. vs. UOI (2014) 9 SCC 212", (Ref :
Para 42.2 Associate Builders vs. DDA (2015) 3 SCC 49 @ Pg.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 10 of 67 21-64 of WS, Para 40, Ssanyong Engineering & Construction Co. Ltd. vs. NHAI 2019 SC Online SC 677 judgment dated 08.05.2019 passed in Civil Appeal No. 4779 of 2019 @ Pg. 65- 106 of WS).
(ii) The onus was upon the claimant to prove the basis of his claim by providing contemporaneous data. Since respondent failed to do so, hence, there was no question of awarding the said amount. The claimant was required to prove the allegation by positive evidence.
(iii) The Award of Rs. 1 Crore has been passed on the basis of submissions made by the respondent / claimant during the course of final arguments for the first time which had no basis in the pleadings, because the finding of the Learned Arbitrator that the respondent / claimant has supplied suitable replacement for equipment which had become faulty / broken was never pleaded in the statement of claim, nor mentioned in the rejoinder despite a specific defence taken by the petitioner that the NPDs had also been made in Clause 3.11 of the Scope of Work. The evidence of RW-1 Mr. Chaitanya Mina was also ignored in this regard who has given detailed evidence as to how NPD's were made and as such it amounts to ignoring vital evidence by the Learned Arbitrator. Reliance has been placed on "Associate Builders vs. DDA (supra) and Ssanyong Engineering & Construction Co. Ltd. vs. NHAI (supra)". It is further Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 11 of 67 submitted that Learned Arbitrator did not deal with the said evidence while deciding issue no. 2 and instead it had merely held in para no. 143 that there is no material on record for that ONGC told the respondent / claimant that the equipment was not suitable. It is further stated that the Learned Arbitrator has drawn inference from the documents which are totally unreasonable as the vital evidence by ONGC was not considered. The Learned Arbitrator has traveled beyond contract extending of allegation on ONGC which is nowhere to be found in the contract.
(iv) Learned Arbitrator has completely altered the terms of the contract and essentially rewritten the contract which is impermissible because the Learned Arbitrator has held that NPD's could not have been imposed as there is no compliance of Clause 7.4 of the GCC. It is stated that in para no. 148 of the Award, the Learned Arbitrator has held that not informing the claimant of the equipment against which NPD had been deducted would amount to contravention of Clause 7.4. A bare perusal of the said clause would show that no such requirement is envisaged under the contract and such an interpretation could have been made by any reasonable person, because it has been ONGC's case that Clause 7.4 would not have been attracted to imposition of NPD's as the same would not be disputed portion, but merely a component of calculating the payment to be released. It is further submitted that the claimant / respondent was aware of the amount deducted for NPD's against each invoice which is evident from Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 12 of 67 the letter dated 05.09.2013 and 03.03.2014. It is further stated that Learned Arbitrator has completely ignored these vital evidences and therefore, committed patent illegality. It is further stated that the Award suffers from non-performance and is liable to be set aside because Learned Arbitrator has failed to deal with submissions made by ONGC regarding applicability of Clause 7.4. It is further stated that the Clause 7.4 is not applicable in the present case because the said clause only deals with the disputed invoices. In this case the deduction on account of NPDs is not disputed as it is a contractual formality for calculating the payments which is given under Clause 1.1.1 of the Special Terms of the Contract which takes precedence over the General Terms of Contract in any manner. The Award is found having been passed while ignoring the relevant clauses of the contract i.e. Clause 1.1.1 and relying upon the irrelevant clause of GCC, is liable to be set aside on this ground alone. It is further stated that the respondent was fully aware through-out the portion of the contract as to the quantum of Non Performance Deductions (NPDs) and also the reasons for such deductions, therefore, the Learned Arbitral Tribunal has completely ignored the following documents :-
"(a) The Preventive Maintenance Reports (PM Reports) for each site indicated the status of Specific Equipment and the defaults, if any, with such equipment.
(b) Letter dated 05.09.2013 (page 935, Vol. IV) and letter dated Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 13 of 67 03.03.2014 (page 941, Vol. IV) which conclusively establishes that the respondent was fully aware of the quantum of specific equipment for which non-performance deduction had been imposed.
(c) E-mail dated 19.10.2011 sent by the respondent's representative Ankush Singhal informing the exact amounts which had been passed by ONGC Finance with respect to the first quarter."
(v) The finding of Learned Arbitral Tribunal at para no. 142 of the impugned Award that the PM Reports do not show that the replacement equipment were not suitable is patently illegal as it is contrary to the material on record. Similarly, it is also stated that the finding in the same para that there is no letter on record regarding replacement equipment was not suitable is also patently illegal. It is further submitted that under the contract the respondent was required to maintain spare parts. The finding, that since the replacement equipment was taken from spares stored with ONGC they were "suitable", is a patently illegal finding as the respondent was contractually bound to replace faulty equipment with suitable equipment irrespective of whether such suitable replacements were available in the spares maintained with ONGC. For instance at site WIN a faulty Down converter was replaced by the respondent by an Up converter as a make- shift arrangement but the same cannot be considered as a suitable replacement in terms of clause 3.11. Even if this Up converter Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 14 of 67 was taken from the spares maintained by ONGC the same would not make an Up converter a suitable replacement for a Down converter.
(vi) It is further stated that finding in para 143 of the impugned Award that NPD's were deducted behind the back of the respondent is perverse and Learned Arbitrator has committed patent illegality by holding that the respondent was not informed that NPD was to be imposed for a particular equipment for a particular site for a particular period. In arriving such finding the Ld. Arbitral Tribunal has completely ignored the PM Reports filed by the Petitioner.
(vii) With respect to finding at para no. 144 of the impugned award it is an admitted position that 99.5% performance with regard to the SATCOM as well as equipment was given by the respondent is an absolutely perverse finding because it was specifically pleaded by the petitioner that the respondent had failed to keep equipment maintenance at 99.5%. In the evidence of RW1 on behalf of petitioner herein, it has been specifically averred that the equipment was not maintained properly and all the details of such defaults have been set out.
(viii) The finding of para no. 147 that it was only vide petitioner's letter dated 30/07/2014 that the respondent came to know of the nature of non-performance deductions is perverse Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 15 of 67 and contrary to the record, patently illegal and it ignores completely the letter dated 5/9/2013 and letter dated 03/03/2014 as also the testimony of Respondent's witness- CW1
(ix) That the finding in para no. 149 that PM Reports were required to indicate quantum of NPDs is patently illegal being contrary to clause 2.2.3.1 which provides for PM Reports but does not cast any such obligations. It is stated that the Learned Arbitral Tribunal being a creature of the contract of the parties cannot travel outside the confines of the contract and imposed obligations which are not found therein.
(x) That the Learned Arbitrator has committed further illegality which has completely ignored the actual reason that the petitioner relied upon the excel working sheets; that the said working sheets were relied upon to show that the respondent was at all times in the knowledge as to how much non-performance deductions had to be imposed.
(xi) It is further submitted that the Award of Rs. 1 Crore in lieu of non-performance deductions is liable to be set aside for the above reasons.
(B) That the Award of Rs. 9,59,450/- for refund of Tax Deduction at source on Work Contract Tax is liable to be set aside being contrary to the public policy as the same has been rendered on the basis of following incorrect findings :-
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 16 of 67
(i) That the claimant was not registered under VAT Act.
This contention was never raised by the claimant in its pleadings, nor in its evidence and it was raised first time at the end of final arguments during the course of rejoinder arguments. Therefore, the Learned Arbitrator has proceeded to base his award on the oral submissions made by the counsel for the Claimant while ignoring the material on record and therefore, suffers from patent illegality.
(ii) That the finding of Learned Arbitrator that there was no intra-state transfer of goods as the invoices were all raised from NOIDA is incorrect finding because the place from which invoices were raised has no bearing on whether a transfer of goods was intra-state or inter-state. The ONGC specifically asked the Claimant to mention in its invoice as to whether the components being transferred were inter-state or intra state and also that TDS would not be deducted if the Claimant produced requisite certificates from the relevant state authorities. Therefore, in the absence of compliance by the Claimant with these requirements, under the various State VAT Acts and Rules, ONGC was required to deduct TDS or face a penalty. Therefore, the finding made by the Ld. Arbitrator is in contravention of substantive provisions of Indian law which directly and adversely affect the public policy of India.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 17 of 67
(iii) The finding of the Learned Arbitrator that there was no transfer of goods is contrary to the material on record because the replacement of components necessarily involves transfer of goods from the Claimant to ONGC.
(C) The Award of Rs. 1,16,007/- in lieu of refund of Service Tax is liable to be set aside for the following reasons :-
(i) That it ignores the binding precedents of the Hon'ble Delhi High Court to the effect that an award cannot be passed on the basis of evidence or arguments beyond the pleadings of the parties. In the statement of claim, the respondent has nowhere pleaded that it is seeking a refund of the differential amount of service tax subsequent to lowering of the service tax rate. Therefore, the Learned Arbitrator has considered the irrelevant material while making the Award because it has allowed the claim even though there is no basis of the Award in the pleadings. Reliance has been placed in para 19 and 20 of "DDA v. Krishna Constructions 2011 SCC Online Del 4134"
(D) As per Section 21 read with Section 43(2) of the Arbitration and Conciliation Act 1996, the date of commencement of the Arbitration proceedings in the present case for the purposes of limitation is 18.11.2015, wherein vide notice Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 18 of 67 dated 18.11.2015, the respondent has invoked the arbitration under clause 27.1.1 of the Contract. The prior exchange of letters between the parties cannot be taken as notices invoking arbitration as the same do not constitute a notice in terms of Clause 27.1.1 of the Contract because the parties were exploring other dispute resolution mechanism including the reference to the Outside Expert Committee. It is further stated that the claimant in the present case however included NPDs effected by the Respondent for the first four quarters of the contract period, i.e., from 05.03.2010 to 04.03.2011. Payments against invoices raised by the claimant for these periods were made on 21.10.2011 (1st Quarter), 19.01.2012 (2nd Quarter), 01.03.2012 (3rd Quarter) and 16.05.2012 (4th Quarter). The notice invoking arbitration dated 18.11.2015 which was issued more than three years after these payments had been made and the claimant had knowledge of the imposition of NPDs. Therefore, the claim is barred with respect to the imposition of the NPDs in the first 4 quarters. The Learned Arbitrator has therefore, given a patently illegal finding on this issue. It is further argued that the Learned Arbitral Tribunal has further committed error by placing reliance on the letter dated 30.07.2014 (Pg. 954, Vol. V). That the quoted extract of the said letter dated 30.07.2014 in para no. 125 of the Impugned Award (Pg.113 Vol. I) is not in reference to Non- performance Deductions as the same had attained finality in terms of the language contained in the said letter. Therefore, the finding that there is jural relationship continuing on account of Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 19 of 67 the said letter is patently illegal and the claim awarded on that account is barred by limitation.
12. Arguments on behalf of respondent / claimant.
The counsel for the respondent, on the other hand, in his written arguments has supported the Award stating that the Award passed by the Learned Arbitrator is perfectly legal and does not suffer from any patent illegality and is not in violation of public policy of India. Regarding the objection of petitioner about the Award of Rs. 1 Crore having been awarded without assigning any reasons, it is submitted that the Award on that account is perfectly legal for the following reasons :-
(A) Learned Arbitrator has given the detailed reasoning from para no. 137 to 156 on the issue of Non-Performance Deductions i.e. issue no. 2. It is stated that in para no. 129 - 156 extensive reasons has been given by the Learned Arbitrator as to why the NPDs were illegally deducted. It is further submitted that it is only on the quantum that Learned Arbitrator has held that there is no contemporaneous data before him and has quantified the same by holding that the said data has not been followed according to the contract, therefore, referring to his finding in the earlier paras regarding ONGC's failure to follow the procedure of the contract while deducting NPDs.
(B) Regarding the Award of Rs. 9,59,450/-, it is Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 20 of 67 submitted that there is no illegality in awarding the said amount for the following reasons :-
(i) Invoices from AMC services raised by the claimant where no money has been charged for goods sold to ONGC.
(Invoices pages 360 to 380 of additional documents); each Invoice raised by Planetcast (respondent herein) is for service tax on 100% CMS charges @ 10.3% and then 12.3% and has also deducted Service Tax on 100% CMS charges. If the contract was for providing services and goods then Service Tax could only have been raised @ 70% CMS charges. No invoice of AMC charges as raised is for "sale of goods" and in absence of any sale of goods, there cannot be a composite contract of service of maintenance and sale of goods. This fact is duly taken note of by the Hon'ble Arbitrator in para 132 at pages 117-118. The contention raised by ONGC is also belied by the following terms of the contract :-
"(a) Page 37-38 (Additional
Documents):-
Section-1-Annexure 1 to the contract (1) Contract Price : Parts A, B and C; Documents to be furnished with invoices-Clauses 1 and 5;
(b) Clause 3.11 - "....Substitute shall become the property of ONGC"
to be read with Price schedule Annexure-II)
(c) Pages 70-110 Provides for CMS Charges for Each Equipment which includes cost of repair and substitute.
Therefore, there is no price charged for Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 21 of 67 providing / supply of spares / substitutes etc.
(d) Even annexure II B refers to cost for providing service of change of feed / polarizer and re-orientation of earth station etc. but does not charge for material
(e) Title of contract is contract for Comprehensive Maintenance Services Pg. 12.
(f) Clause 1.9 (Pg. 14) Shall mean and include any equipment, machinery, instruments, stores, goods which contractor is required to provide to the ONGC or / under the Contract;
(g) Clause 7.0 (Pg. 19) - Corporation shall pay to Contractor for services to be provided by the Contractor as per Scope of Work (Annexure 1);
(h) Clause 8.0 of the contract shows that VAT registration and certificates are to be given wherever applicable.
A bare perusal of the above clauses clearly demonstrates that :
(a) Contract envisages no registration under Sales Tax/VAT Act as accompanying document to invoices which demonstrates that no VAT / Sales Tax was payable;
(b) Clause 3.11 which has to be read with other clauses of the contract, merely provides for providing of substitute which shall become the property of ONGC. However, planetcast (respondent herein) cannot bill for such substitute provided as it is Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 22 of 67 a part of cost of AMC services;
(c) When the Hon'ble Arbitrator has held that there is no sale of goods in favour of ONGC, the issue of imposition of Works Contract Tax (WCT) or deduction of TDS thereon does not arise. If WCT was to be imposed for this contract, planetcast would have been served notice by Sales Tax / VAT Department for non payment of such tax.
(d) When the terms of contract only contemplate payment for providing services and does not even contemplate raising of invoice for supply, therefore, the question of applicability of any State VAT Act or rules does not arise.
Therefore, in view of categorical findings of the Hon'ble Arbitrator that : (1) There is no sale of goods;
(2) Service Tax has been paid on 100% CMS charges whereas in Works Contract it is payable on 70% of value;
Coupled with the fact that the contract itself does not contemplate either imposition of Sales Tax / VAT and submission of registration certificate with respect thereto, the deduction of TDS on WCT was in clear violation of terms of the contract and the invoices raised by Planetcast / respondent."
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 23 of 67 (C) Regarding the objection of the petitioner that the Award is in violation of public policy, it is submitted that the petitioner except for pleading that the impugned Award is against public policy of India, has not been able to give a single cogent reason as to how the Award is against the Public Policy of India. It is further stated that there is no averment as to how the impugned Award is against substantive law of India or is in violation of settled precedent or how the same is in contravention of Arbitration and Conciliation Act, 1996.
(D) Regarding the Award having been passed in contravention of terms of Contract.
(i) It is stated that the Learned Arbitrator in para no. 142- 156 extensively dealt with not only the provisions of contract, but how the imposition of NPD was in violation of the Clause 7.4 of the contract by holding that the respondent did not notify the deductions on account of NPD under Clause 7.4. To support the above conclusion of the Learned Arbitrator, the learned counsel for respondent has referred the following extracts of the Award in para 123-124 and para no. 142, 143-145, 148 as under :-
"(Pg. 123-124-Para 142) • If claimant would have been put to notice as to on what account NPD had been imposed, it does not sound to reason that they had not objected to imposition of NPD.
• No record where-after these Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 24 of 67 excel/working sheets were sent to finance department has been produced before the Tribunal.
• I find it difficult to accept the arguments of the respondent that NPDs were proposed by the claimant itself on the basis of excel sheets.
• One thing is certain that respondent has not imposed the NPDs after giving notice to the claimant.
• Assuming that on excel sheets some deductions had been proposed by the claimant; it was incumbent upon the respondent in terms of Clause 7.4 of the contract to have given notice of such deduction to the claimant to have refuted or agreed for such deductions. There is nothing on record in this regard.
• There is no letter on record by the respondent that the equipment supplied was not suitable for the site or the same was not taken from the stores of ONGC which the claimant had to maintain for repairs and servicing.
(Para 143-145 Pg. 124-125) • I do not see any substance in the argument of the respondent that although in the PM reports it was mentioned that the NPD to be levied was nil and NA against NPD yet NPD was imposed on the basis of self assessment by the claimant no document was placed before the Tribunal duly signed by authorized representative of the claimant. .... • .... It is an admitted case of the parties that 99.5% performance with respect to SATCOM as well as equipment was Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 25 of 67 given by the claimant.
(Para 146 - Pg. 125) • In para 16 and 17 of the Statement of Claim, the claimant has specifically pleaded that in violation of terms of the contract, the respondent deducted NPD without informing the claimant details of such deduction. Clause 7 is also a part of the contract.
(Page 148-Pg. 125) • In view of these facts, it cannot be said that the claimant was aware as to on what equipment, for what period, for what fault, the NPD was imposed and therefore, that would be squarely hit by non-compliance of Section 7.4. (Para 153-Pg. 128) • Once the respondent admits that network of PM 99.5% cannot be maintained without comprehensive maintenance and timely repair of hardware and software where is the question of not performing comprehensive maintenance and timely repairs. Nowhere, in the SOD or evidence it has been brought on record that 99.5% uptime was not maintained."
(ii) It is stated that the petitioner cannot be allowed to review of construction of the terms of the contract by the Learned Arbitrator by seeking reassessment of the material on record more-so when award passed is a well-reasoned and detailed one. Reliance has been placed on "MMTC Ltd. vs. Vedanta Ltd. 2019 (4) SCC 163 (para 13-14)"
"13. It is relevant to note that after the 2015 Amendment to Section 34, the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 26 of 67 above position stands somewhat modified. Pursuant to the insertion of explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-section (2- A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian Public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
14. As far as interference with an order made under section 34, as per section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evidence that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 27 of 67 disturb such concurrent findings."
In "Oil India Limited vs. Essar Oil Ltd. 2016 AD (Del) 609 (Para 24)".
"24. It is settled law that interpretation of a contract and giving meaning to various clauses of a contract is within the domain of the Arbitral Tribunal as also appreciation of evidence concerning contemporaneous conduct of the parties. Effect of letters exchanged between the parties and inferences to be drawn is also within the domain of arbitration. Unless conclusions arrived at are manifestly perverse, while considering challenged to an award, a court is not to re- appreciate the evidence."
(E) Regarding the objection raised by the petitioner to the finding of the Learned Arbitrator that Mr. Ankush Singhal was not authorized to the deal with the instant contract is perverse; that the respondent without due notice could not take steps to rectify defaults is erroneous; and that NPD could not be imposed as PM reports did not mention quantum of NPD, is contrary to Clause 5.1 of GCC, Clause 1.1.1 of Special Terms and Clause 2.2.3 of Scope of Work.
(i) It is submitted and argued that the Learned Arbitrator while arriving at the above findings that Sh. Ankush Singhal was Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 28 of 67 not authorized representative is based on his finding that under the contract in dispute list of authorized representatives was given by claimant which did not find the name of Sh. Ankush Singhal. Learned counsel has referred para no. 142 of Award which reads as under :-
"142. The parties are at variance with regard to the admissibility and authority of Ankush Singhal according to Respondent one Ankush Singhal was the representative of the Claimant according to pleadings and the evidence on record. The Claimant's stand is that Ankush Singhal was an employee working on another Contract i.e. MFTDMA which was in two parts setting of the network and that was from 2007 to 2010 and another CMS contract for the said network which was from 2010 to 2015. Under the Contract in dispute the list of authorized representatives were given by the Claimant which did not find the name of Ankush Singhal. lt is admitted case of the parties that 99.5% network performance as well as equipment availability was achieved as per the PM report filed by the parties. The Respondent took pains to explain that NPD was deducted as per the provisions of the Contract whereas the Claimant vehemently denied that they were ever informed about the deductions of NPD during the currency of contract. l find force that when the payment was received by the Claimant on 30.08.2013 they came to know that Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 29 of 67 NPD had been imposed against each quarter and that is why the Claimant had sent a letter on 03.03.2014 i.e. almost after the expiry of one year of the Contract. If Claimant would have been put to notice as to on what account NPD had been imposed, it does not sound to reason that they had not objected to imposition of NPD. The working / excel sheet on which reliance has been placed by the Respondent, has been validly objected to by the Claimant on the ground that if the same were in existence, Respondent could have filed along with their pleading or even thereafter but to bring that as a surprise at the stage of cross- examination would lack authenticity of such working / excel sheets. The authenticity, credibility of these excel / working sheets is also shrouded in mystery as the plea taken in the SOD it was contended that RW 2 used to send the reports after deduction to the Finance Department. No record where after these excel / working sheets were sent to the Finance Department has been produced before the Tribunal. I find it difficult to accept the argument of the Respondent that NPDs were proposed by the Claimant itself on the basis of the excel sheets. One thing is certain that the Respondent has not imposed the NPDs after giving notice to the Claimant. Assuming that on the excel sheets some deductions had been proposed by the Claimant, it was incumbent upon the Respondent in terms of clause 7.4 of the Contract to Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 30 of 67 have given notice of such deduction to the Claimant to have refuted or agreed for such deductions. There is nothing on record in this regard. Arguments have been advanced by learned counsel for both the parties with regard to the suitability of an equipment which was replaced immediately as per the PM Report. According to the Respondent, the replacement of an equipment has to be of the same or equivalent make and what was provided as a replacement equipment was not suitable in terms of the Contract. I am afraid, this argument does not find support from the PM Reports. I do not want to go into various equipments and stations where NPD on account of suitability of the equipment or non-providing of the equipment has been made in detail by the parties because in doing so, I will be venturing into an area which has no legal sanctity. There is no letter on record by the Respondent that the equipment supplied was not suitable for the site or same was not taken from the stores of the ONGC which the Claimant had to maintain for repairs and servicing. The evidence on record is contrary that the equipment was taken from the stores which were to be maintained as per the Contract."
(ii) It is further argued that the above findings are based upon appreciation of claimant's submissions and upon cogent appreciation of evidence. It is further argued that the Learned Arbitrator is the final judge of evidence led before him as he is Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 31 of 67 the only ultimate master of the quality and quantity of the evidence to be relied upon and it is not for this Court to re-assess or re-appreciate such evidence. Reliance has been placed upon "Sutlej Construction vs. UT of Chandigarh 2018 (1) SCC 718", of which para no. 13 is relevant and is reproduced hereunder:-
"13. The learned single Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court. In fact, even in second appeals, only questions of law are to be determined while the first appellate court is the final court on facts. In the present case the learned single Judge has, thus, acted in the first appeal against objections dismissed as if it was the first appellate court against a decree passed by the trial court."
In "P.R. Shah, Shares and Stock Brokers Private Limited vs. B.H.H. Securities Private Limited & Ors. (2012) 1 SCC 594", of which para no. 21 is relevant and is reproduced hereunder.
"21. A court does not sit in appeal over the award of an arbitral tribunal by re- assessing or re-appreciating 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 second respondent and the appellant are liable. The case as put forward by the first respondent has been Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 32 of 67 accepted. Even the minority view was that the second respondent was liable as claimed by the first 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 finding of the majority is that the appellant did the transaction in the name of 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 find out whether a different decision can be arrived at."
(F) Regarding the Award of Rs. 1,16,007/- towards Services Tax and objection of the respondent that the said Award is contrary to contract.
(i) It is submitted that Clause 21 of the contract (page 28) of the additional documents clearly provides that ONGC shall indemnify the contractor of any increase in the taxes. It is submitted that in para no. 130 of the Award, learned Arbitrator has dealt with this issue and the said finding is based upon the appreciation of evidence and admitted documents on record. It is further submitted that ONGC while making the above submissions has concealed Clause 21 of the contract which makes it obligatory upon ONGC to pay any increase in tax.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 33 of 67 (G) Regarding the finding of the Learned Arbitrator that the respondent herein had provided suitable equipment was illegal and without any basis in the pleadings and that the Learned Arbitrator has failed to appreciate the evidence of RW-1.
(i) It is stated that the para no. 7 - 17 of the Submission of Claim r/w para 48 and 81-85 of additional documents and finding of Learned Arbitrator in para no. 144-145, 151, 153 of the Award clearly shows that the Learned Arbitrator has considered not only the pleadings but also the evidence of RW-1 before arriving at the finding that the Planetcast (respondent herein) had provided suitable equipment.
(H) Regarding the arguments that Learned Arbitrator has accepted the testimony of respondent / claimant at face value and the ONGC's testimony without justification despite extensive cross-examination has not been considered.
(i) It is submitted that this ground is baseless and highly malicious as it seeks to allege bias against the Learned Arbitrator who was appointed by the petitioner itself. It is further submitted that a bare perusal of the award shows that the Learned Arbitrator has not only considered the submissions of both parties but has analytically examined the evidence led by both parties to arrive at Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 34 of 67 a reasonable and cogent award. Since the petitioner has not given any reasons in support of this ground and the same deserves to be out rightly rejected.
13. Analysis Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could 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 set aside are those mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
14. An Arbitral Award can be set aside on the grounds set out in Sections 34(2)(a), (b) and (2A) of the Act in view of Section 5 of the Act.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 35 of 67
15. Section 34 (1), (2) and (2A) of The Arbitration and Conciliation Act, 1996 read as under :-
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 36 of 67 arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 37 of 67 arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence."
16. Hon'ble Supreme Court in case of "Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49"
has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature. It was also held that :-
"33. "...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 Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 38 of 67 to be relied upon when he delivers his arbitral award.... Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts.."
17. Hon'ble Supreme Court in case of "Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677" has held that under Section 34 (2A) of the Act, a decision which is perverse 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. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify 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 characterized as perverse. It is held that 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.
18. Hon'ble Supreme Court in the case of "Patel Engineering Ltd. vs. North Eastern Electric Power Corporation Ltd., MANU/SC/0447/2020" inter alia held that wherein the finding of Ld. Arbitrator are arrived at by taking into account irrelevant facts and by ignoring the vital clauses, the same suffer from the vice of irrationality and perversity and that Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 39 of 67 the award will be liable to be set aside when while interpreting the terms of the contract, no reasonable person could have arrived at a different conclusion other than that the awards passed by the arbitrator suffer from the vice of irrationality and perversity.
19. In the case of "Ministry of Defence, Govt. of India vs CENREX SPZ.O.O & Ors., (2015) SCC Online Del. 13944", relying upon the law laid in the case of " Oil & Natural Gas Corporation Ltd. Vs Saw Pipes Ltd.,(2003) 5 SCC 705 (supra)", it was inter alia held that once the nature of contract is such that losses cannot be easily calculated, the amount claimed as liquidated damages can be claimed as per Section 74 of the Indian Contract Act, 1872 without proving and showing how much loss has been caused. The subject matter of the contract therein was supply of parachutes and was of the type where how much loss caused to the petitioner/Ministry of Defence, Government of India for delay for its supplies cannot be calculated because how the Army of this country would have been affected by non delivery of parachutes on time and what would have been the alternative arrangements made due to delay deliveries and expenses accordingly which had to be incurred on account of non availability of parachutes on time, was impossible to calculate.
20. In the case of "Swan Gold Mine vs Hindustan Copper, MANU/SC/0849/2014", the law laid in the case of Oil Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 40 of 67 & Natural Gas Corporation Ltd. vs Saw Pipes Ltd., (2003) 5 SCC 705 was discussed and inter alia held that when the parties have entered into concluded contract, agreeing terms and conditions of the said contract, they cannot back out and challenge the award on the ground that the same is against the public policy and the Court was precluded from re-appreciating the evidence and to arrive at different conclusion by holding that the arbitral award is against the public policy.
21. In the case of "M/s Arosan Enterprises Ltd vs Union of India & Anr., MANU/SC/0595/1999", it was inter alia held that reappraisal of evidence by the Court is not permissible in the proceeding under the Arbitration Act. In the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on wrong proposition of law. In the event, however, two views are possible on a question of law as well, the Court would not be justified in interfering with the award. Also was held that the Court as matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of arbitrator is a possible view the award or the reasoning contained therein cannot be examined. The decisions in the cases of "State of Rajasthan vs Puri Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 41 of 67 Construction Co. Ltd, MANU/SC/0865/1994" and "Sudersan Trading Company vs Government of Kerala & Anr., MANU/SC/0361/1989" were relied. Also was held therein that where an Arbitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside.
22. In the case of "MCD vs Harcharan Dass Gupta Construction Pvt. Ltd., MANU/DE/4010/2018", the pronouncements in the case of "Associated Builders vs Delhi Development Authority, (2015) 3 SCC 49" were relied upon. In aforesaid case of Associated Builders, it was inter alia held that:
"xxxx xxxx xxxx
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. Once it is found that the arbitrators Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 42 of 67 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: 2011 LAWPACK(SC) 50505: 2011(6) R.A.J. 27], 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 first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first 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 finding 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 find out whether a different decision can be arrived at.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 43 of 67 xxxx xxxx xxxx"
23. Now, I proceed to discuss the findings of the Learned Arbitrator on different issues in view of the submissions of the parties and analysis of relevant provisions and relevant law as discussed in the preceding paras.
24.1 Issue No. 1 Regarding limitation has been dealt with from para no. 124 to 127 by the Learned Arbitrator, wherein detailed discussion has been made regarding the evidence and contentions of the respective parties, provisions of law and contents of the contract between the parties. It is find recorded in para no. 126 that the letter to the respondent dated 13.07.2004 as a matter of fact "acknowledges the existence of jural relationship and disputes to be resolved". The concluding observation of the Learned Arbitrator in para no. 127 is very relevant and is reproduced as under :-
"127. In view of the aforesaid dicta of the Supreme Court the contention of the respondent that it is only as the reference has been made and relies on the letter dated 28.12.2015 in response to the arbitration notice dated 18.11.2015 wherein the claimant has requested or proposed to explore the possibility of resolution of the dispute through outside expert committee and they have invoked the arbitration clause vide letter dated 16.11.2016 the first 4 quarters claim would be time barred is Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 44 of 67 not tenable. In this case, the claimant had invoked the arbitration clause pursuant to their letter dated 28.03.2014 wherein the claimant had mentioned the head and the amount due, therefore, it cannot be said that the claimant has invoked the arbitration only in 2016. Therefore, issue no. 1 is decided against the respondent. "
24.2 In view of the observation of the Learned Arbitrator and the detailed finding on this issue, I do not find any force in the arguments advanced on behalf of the petitioner regarding the finding that there is a jural relationship continuing on account of letter dated 30.07.2014 is patently illegal. The finding of the Learned Arbitrator on this issue is based on cogent reasons, dexterous appreciation of facts and evidence and contentions raised by the parties and there is nothing to conclude that the said finding suffers from patent illegality or legal perversity and therefore, is in conflict with the public policy of India.
24.3 Issue No. 2 has been dealt with by the Learned Arbitrator from Para no. 137 to 156 which is reproduced as under:-
"137. That brings me to the Issue No. 2 whether the Claimant is entitled to refund of non-performance deduction? If so to what amount?
138. Lengthy arguments were advanced by both the parties on this issue. I examined the pleadings, Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 45 of 67 evidence and the arguments of both the parties in the light of the provisions in the Contract regarding imposition of NPD and whether contractual provisions were applied in the case in hand or not. The case of the Claimant was that NPD has not been deducted on the equipment which were pre CMS and were not in the scope of the Contract. It was also contended before me that onus to prove the issue was on the Claimant.
139. It was contended that strictly the Claimant was required to maintain all the records pertaining to Contract including PM report, call logging reports, site availability report and the Claimant has not produced these documents which as per contractual requirement he was required to maintain and in this regard Respondent relied on Dr.Arun Subba Rao vs. M/s Rizvi Builders and Others (2009) 6 Bom CR 745, Central Bank of India vs. R.S.G. Agarwal (2003) 11 Bom CR
264. It was contended that the Respondent had submitted the PM report and pre-CMS report and on this basis the Claimant has chosen to build his case and the Respondent has also filed a chart indicating the exact reasons for deduction of NPD and also the charges paid for the equipment against which NPD had been made.
140. Another argument of the Respondent was that parties have understood the context on the basis of Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 46 of 67 the provisions of the Contract and the necessity of maintaining a SATCOM network was put keeping in mind its communication requirement, data applications like SKADA surveillance, SAT mail, internet and requirement of voice activity on various offshore and onshore work centres and as an experienced contractor, the Claimant was awarded the work of CMS and he knew at the time of tender as to what was the exact nature of the equipment at the site of the Respondent and what was the make, model and description of the SAT equipment as an expert in the field. Both the parties were aware of technical parameters and decisions were taken on technical issues in a professional manner.
141. It was contended that Contractor was to maintain the network as well as equipment. It was contended that in terms of clause 2.4.1, the Scope of Work envisaged average assured network performance of 99.5% over the quarter, equipment availability of 99.5% and also station availability of 99.5% per quarter was to be maintained. It was contended that the PM Report will have to be read in terms of clause 3.11 with clause 2.4.1.1. To understand as to what was the stand of the Respondent in their SOD with regard to the deductions. Paragraph 5(i) of SOD is relevant. Same is reproduced earlier. Following extract from the said paragraph is important to decide the controversy:
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 47 of 67 "In most cases, the PM reports, prepared and signed by the Claimant had all the information regarding defaults and equipment present at each of the 42 locations, the Claimants were at all times aware the deductions that were to be made, including the quantum thereof. It is also submitted that all calculations for quarterly payments, including calculations of NPDs, were made in the presence of the Claimant's representatives who had been deputed for coordination activities at the Respondent's office in SCOPE Minar, New Delhi. Therefore, it is denied that the Claimant was not aware of the reason and quantum of NPD deductions." (Emphasis Supplied)"
142. The parties are at variance with regard to the admissibility and authority of Ankush Singhal according to Respondent one Ankush Singhal was the representative of the Claimant according to pleadings and the evidence on record. The Claimant's stand is that Ankush Singhal was an employee working on another Contract i.e. MFTDMA which was in two parts setting of the network and that was from 2007 to 2010 and another CMS contract for the said network which was from 2010 to 2015. Under the Contract in dispute the list of authorized representatives were given by the Claimant which did not find the name of Ankush Singhal. lt is admitted case of the parties that 99.5% network performance as well as equipment Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 48 of 67 availability was achieved as per the PM report filed by the parties. The Respondent took pains to explain that NPD was deducted as per the provisions of the Contract whereas the Claimant vehemently denied that they were ever informed about the deductions of NPD during the currency of contract. l find force that when the payment was received by the Claimant on 30.08.2013 they came to know that NPD had been imposed against each quarter and that is why the Claimant had sent a letter on 03.03.2014 i.e. almost after the expiry of one year of the Contract. If Claimant would have been put to notice as to on what account NPD had been imposed, it does not sound to reason that they had not objected to imposition of NPD. The working / excel sheet on which reliance has been placed by the Respondent, has been validly objected to by the Claimant on the ground that if the same were in existence, Respondent could have filed along with their pleading or even thereafter but to bring that as a surprise at the stage of cross-
examination would lack authenticity of such working / excel sheets. The authenticity, credibility of these excel / working sheets is also shrouded in mystery as the plea taken in the SOD it was contended that RW 2 used to send the reports after deduction to the Finance Department. No record where after these excel / working sheets were sent to the Finance Department has been produced before the Tribunal. I Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 49 of 67 find it difficult to accept the argument of the Respondent that NPDs were proposed by the Claimant itself on the basis of the excel sheets. One thing is certain that the Respondent has not imposed the NPDs after giving notice to the Claimant. Assuming that on the excel sheets some deductions had been proposed by the Claimant, it was incumbent upon the Respondent in terms of clause 7.4 of the Contract to have given notice of such deduction to the Claimant to have refuted or agreed for such deductions. There is nothing on record in this regard. Arguments have been advanced by learned counsel for both the parties with regard to the suitability of an equipment which was replaced immediately as per the PM Report. According to the Respondent, the replacement of an equipment has to be of the same or equivalent make and what was provided as a replacement equipment was not suitable in terms of the Contract. I am afraid, this argument does not find support from the PM Reports. I do not want to go into various equipments and stations where NPD on account of suitability of the equipment or non-providing of the equipment has been made in detail by the parties because in doing so, I will be venturing into an area which has no legal sanctity. There is no letter on record by the Respondent that the equipment supplied was not suitable for the site or same was not taken from the stores of the ONGC which the Claimant had to maintain for repairs and Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 50 of 67 servicing. The evidence on record is contrary that the equipment was taken from the stores which were to be maintained as per the Contract.
143. I do not see any substance in the argument of the Respondent that although in the PM reports it was mentioned that the NPD to be levied was nil and NA against NPD yet NPD was imposed on the basis of self-
assessment by claimant no document was placed before the Tribunal duly signed by authorized representative of claimant. If NPD on the basis of the PM report were mentioned nil, may be there is no bar from charging the NPD thereafter by the respondent but can NPD be charged at the back of the claimant. Claimant was to be informed that for this particular equipment at this particular site, for this particular period, the ONGC is proposing to charge the NPD which was not done in this case.
Therefore, it is not necessary for me to go into the minute detail of the equipments, its replacement whether it was suitable or not as there is nothing on record to show that when a particular equipment was replaced, the ONGC has given a notice to the claimant that this equipment was not suitable or performance has not been achieved.
144. My finding becomes important in view of the fact that it is an admitted case of the parties that 99.5% performance with regard to the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 51 of 67 SATCOM as well as equipment was given by the Claimant. It was incumbent upon the Respondent to have notified the Claimant that a particular replacement is not suitable or it has brought down the efficiency parameter of 99.5% of SATCOM or of equipment.
145. An interesting argument was raised by the Respondent before me that Claimant has not made out a case of non-compliance clause 7 of the Contract in their pleadings and the Claimant was in the knowledge of NPD being deducted and has not challenged the same as these two arguments will go to the root of the controversy and thirdly the Claimant knew as work sheets were prepared by the Claimant that on what basis the NPDs have been deducted from the invoices of the Claimant.
Reliance was placed on Question 140 put to RW 1.
Q140. I put it to you that without comprehensive maintenance and timely repair of SATCOM hardware and software, it is not possible to maintain 99.5% uptime for the entire SATCOM network. What do you have to say?
Ans. Yes, it is correct.
146. In Para 16 and 17 of the Statement of Claim, the Claimant has specifically pleaded that in violation of the terms of the Contract, the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 52 of 67 Respondent deducted NPD without informing the Claimant details of such deductions. Clause 7 also is a bar of the Contract.
147. The payment of first two quarters was received on 21.10.2011 and 19.01.2012. It was only vide letter dated 30.07.2014 first time the Respondent informed the Claimant and that is how they came to know about such deductions were made. From the perusal of the PM reports it shows that the details of default are not mentioned, period of default and quantum actually proposed to be deducted.
148. In view of these facts, it cannot be said that the Claimant was aware as to on what equipment, for what period, for what fault, the NPD was imposed and therefore, that would be squarely hit by non-compliance of Section 7.4. Clause 7.4 to the Contract is to the following effect:
"7.4 In the event of any dispute m a portion or whole of any invoice, the CORPRATION shall make payment of undisputed portion and shall promptly notify the CONTRACTOR'S representative in writing for the remaining portion in CONTRACT to mutually resolve the dispute and if resolved in part or full, payment shall be made to the Contractor within 30 days of such settlement."
149. l will not go into the controversy Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 53 of 67 whether the equipment was suitable or not as there is no material on record, that the Respondent ever communicated to the Claimant' that a particular equipment was not suitable or because of nonsuit ability of such equipment the performance parameters of 99.5% in terms of SATCOM and equipment was not achieved. Let us take a few examples. The PM report for Uran No NPD was to be imposed. If the payment was to be processed on the basis of PM report then without mention of the amount of deduction on account of NPD and details thereof no NPD could have been deducted by Respondent.
150. Thereafter, the Tribunal put a question to the counsel that in absence of 1st quarterly report and in the absence of the status of SSPA No. 5253 was faulty equipment, how the same was brought in any quarter. For that the report of 5th quarter was important and relevant. There were another query by the Tribunal that once it was declared faulty in the pre- CMS survey report, why it was used in the first instance in the 1st quarter itself yet there was enquiry by the Tribunal that if it was pre CMS faulty, CMS charges were not paid as it was not within the contract as contemplated under clause 2.3.4 and in the absence of any letter from Respondent asking the Claimant that the faulty equipment be used after repair or letter of the Claimant that they will use the faulty equipment after repair the link is not established. More so, in view of the fact that no CMS charges have been paid by Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 54 of 67 the Respondent for the faulty equipment. Nothing was brought on record by the Respondent in this regard.
151. To demonstrate some of the facts it would be important to observe from the minutes of the record maintained by me on 02.10.2018:
"Coming to the merit of deductions, the learned counsel for the Respondent argued first for the site at Heera. According to him, the PM Report starts from page 387 to 467 Vol. II Respondent's documents. He says that the report for 1 stand 5th quarters are not on record. The report for 2ndquarteris incomplete. The learned counsel for the Respondent contended that the report for the 3rd quarter is from pg. 391 to 394 and at page 394 it has been mentioned that as SSPA No. 5253 was at the site and it means that the same was brought back on the site and it has been mentioned that the SSPA No. 5254 became faulty and, in its place, ADVANTECH make of SSPA was used. Thereafter, the learned counsel for the Respondent took the Tribunal to SOD Vol.II pg. 413 for quarter 6 which is of 5 th June, 2011 upto 04.09.2011. Thereafter, the Tribunal put a question to the counsel that in absence of 1st quarterly report and in the absence of the status of SSPA No. 5253 was faulty equipment, how the same was brought in any quarter. For that the report of 5th quarter was important and relevant. There were another query by the Tribunal that once it was declared faulty in the pre-CMS survey report, why it was Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 55 of 67 used in the first instance in the 1st quarter itself yet there was enquiry by the Tribunal that if it was pre CMS faulty, CMS charges were not paid as it was not within the contract as contemplated under clause 2.3.4 and in the absence of any letter from Respondent asking the Claimant that the faulty equipment be used after repair or letter of the Claimant that they will use the faulty equipment after repair the link is not established. More so, in view of the fact that no CMS charges have been paid by the Respondent for the faulty equipment. At this stage, Mr. Puri says he would like to see the record and if there is some letter or correspondence, the same shall be brought to the Tribunal."
"Coming to NPD imposed on site at BPA it was contended by Shri Puri, that the approx. amount of Rs.23 lakhs was imposed as NPD on SSPA and approx about Rs.5 lakhs on equipment i.e. Kilomux, down converter, E&M circuit and satellite data modem. It was contended that the NPD was imposed for 3rd quarter to 12th quarters. It was contended that as per PM Report at page 318 Respondent's document Vol. II, C- Band SSPA no. 8400 was faulty. Relying on excel sheet, It was contended that although it has been mentioned at page 322 of the PM Report that preventive maintenance of VSAT system of BPA was carried out successfully, however, the breakdown of the equipment was not mentioned and the NPD was imposed on the basis of the excel sheet which was Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 56 of 67 provided by the Claimant itself (admissibility of excel sheet has been strictly objected to by the Claimant) and on the basis of the excel sheet at page 61, NPD has been imposed for 77 days in the sum of Rs.11,935/- and for 4th quarter NPD has been imposed at Rs.14,11,050/-. It was contended that there was miscalculation and that was subsequently corrected. Therefore, it was contended that the NPD was imposed in terms of 2.4.2.3 and that the deductions is as per the contract clause of the contract."
152. It is a matter of fact, when the Respondent's witness RW 2 was put specific questions with regard to different cites about the performance of the contract for the entire period. Invariably he answered that he will check and revert. When the same questions were put to him again on the next date of hearing, he answered that it was correct that overall availability uptime of 99.5% was maintained but with all questions he answered that there were other obligations which were to be performed under the contract to say the least this part of his evidence does not inspire and pertains.
Following are the relevant questions and answers:
Q103. Is it correct that the Heera site maintained an overall availability/ uptime of 99.5% during the entire period of Contract? Ans. I will check and revert Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 57 of 67 Then RW 1 was again asked the same question as Question 125 Q 125. Can you now answer Q. No. 103? Ans. Yes. It is correct. However, there were other obligations to be performed under the contract by the Claimant for which action was taken against the Claimant.
Q104. Is it correct that the Hazira, Cambay and Rajamundry sites maintained an overall availability/ uptime of 99.5% during the entire period of Contract? Ans. I will check and revert Q. 126. Can you now answer Q. No.104? Ans. Yes. It is correct. However, there were other obligations to be performed under the contract by the Claimant for which action was taken against the Claimant.
Q105. Is it correct that the WIN, NEELAM, VASUDHARA BHAWAN, sites maintained an overall availability/ uptime of 99.5% during the entire period of Contract?
Ans. I will check and revert.
Q. 127. Can you now answer Q. No.105? Ans. Yes. It is correct. However, there were other obligations to be performed under the contract by the Claimant for which action was taken against the Claimant.
Q. 106. Is it correct that the ICP, Jodhpur and Agartala sites maintained an overall availability/ uptime of 99.5% during the entire period of Contract?
Ans. I will check and revert.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 58 of 67 Q. 128. Can you now answer Q. No.106? Ans. Yes. It is correct. However, there were other obligations to be performed under the contract by the Claimant for which action was taken against the Claimant.
Q.140. I put it to you that without comprehensive maintenance and timely repair of SATCOM hardware and software, it is not possible to maintain 99.5% uptime for the entire SATCOM network. What do you have to say?
Ans. It is correct."
153. Once the Respondent admits that network of PM 99.5% cannot be maintained without comprehensive maintenance and timely repair of hardware and software where is the question of not performing the comprehensive maintenance and timely repairs. Nowhere in the SOD or in evidence it has been brought on record that 99.5% uptime was not maintained.
154. I hold that Respondent did not notify the deductions on account of NPD under the clause 7.4 of the contract.
155. As stated above, the deductions are not made on the basis of PM report. However, certain working sheets which were brought on record, the authenticity, authorisation and calculations are not consistent with the PM report as according to the clause of the Contract, the person Ankush Singhal on which reliance has been placed by the Respondent, was not authorised to deal with the instant Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 59 of 67 Contract by the Claimant as its representative in terms of the Contract. The clause 7.4 of the Contract contemplates that the Respondent shall make payment of undisputed portion and shall promptly inform the Contractor's representative in writing for the remaining portion in the Contract. The words "according to clause 7.4 that the Respondent has to notify promptly Contractor's representative in writing for the remaining portion in the Contract which has not been paid, includes if remaining portion of the invoice is not paid in terms of the invoice then the Claimant was to be informed in writing". No such record is available on record of any intimation sent by Respondent to the Claimant. The deductions were simply made de hors PM reports and violates not only the principle of natural justice but Contract clause 7.4 of the Contract.
156. Therefore, I hold that the imposition of NPD is against the Contract clause as the same has been imposed without any notice in terms of Section 7.4 of the Contract. That brings me to the last conclusion as to how much amount Claimant is entitled to under Issue No. 2. The claim of the Claimant is for Rs.1,23,00,000/-. It was vehemently contended by the Claimant that for a total Contract value for which invoices have been raised of a sum of Rs.3.69 crores, the total deductions are 1/3rd of the amount and no prudent Contractor would have entered into such a Contract. From the side of the Respondent, it was contended Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 60 of 67 that it being a specialised Contract for maintaining SATCOM services, the deductions are on the higher side and it has no co-relation with the CMS charges paid on the equipment. Taking this argument of the Respondent to its logical conclusion, it is manifestly clear that under the imposition of charges for deductions, greater responsibility of the employer to notify the Contractor that in the event of such evaluation he is liable to pay NPD charges. As I have held that in view of no notice, the imposition of NPD is illegal and arbitrary. As no procedure has been followed allow the claim of the claimant. However, I do not have the contemporaneous data before me duly authenticated as the procedure has not been followed according to the Contract, therefore, I allow this claim to the extent of Rs.1,00,00,000/- (Rupees One crore) only."
24.4 The petitioner has challenged the said finding primarily on the ground that the finding of the Learned Arbitral Tribunal at para no. 142 of the Impugned Award to the effect that PM Reports do not show that the replacement equipment were not suitable is patently illegal and is contrary to the material on record; the finding that there is no letter on record that replacement equipment was not suitable is also patently illegal. It is further submitted that finding at para no. 143 of the Impugned Award to the effect that NPDs were deducted behind the back of the respondent is perverse. It is further argued that the Arbitral Tribunal has further committed patent illegality by holding that Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 61 of 67 respondent was not informed that NPD was to be imposed for a particular equipment for a particular site for a particular period because the Learned Arbitral Tribunal has completely ignored the PM Reports filed by the Petitioner before the Learned Arbitral Tribunal which clearly gives notice to the above particulars. It is further argued that the finding in para no. 147 is perverse contrary to the record as it completely ignores letter dated 05.09.2015 and letter dated 03.03.2014 and also the testimony of respondent's witnesses. Lastly, it is submitted that the Learned Arbitral Tribunal has committed patent illegality and has completely ignored the actual reason that the petitioner relied upon the excel working sheets which were relied upon to show that the respondent was at all times in the knowledge as to how much non-performance deductions had to be imposed. All these arguments raised before this Court has been dealt with by the Learned Arbitrator in detail giving cogent reasons having appreciated the documentary evidence as well as oral evidence and the contentions raised by the parties. Reliance can be safely placed on "Associate Builders vs. DDA (supra)" wherein it was held that the Learned Arbitrator is ultimately a master of the quality and quantity of the evidence while drawing the arbitral record. The patent illegality must go to the root of the matter and cannot be of trivial nature.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 62 of 67 (NHAI) 2019 SCC Online SC 677", it was held that the Court should not go into the merits of the case by re-accessing or re- appreciating the evidence before the Learned Arbitral Tribunal. The arguments raised by learned counsel for petitioner are having a thrust for seeking re-appreciation of the evidence by this Court notwithstanding that the Learned Arbitrator has dealt with each aspects in detail by giving a well reasoned finding on this issue. Admittedly, in view of the law referred above, the Court cannot re-assess or re-appreciate the evidence which has been rightly and cogently appreciated and considered by the Learned Arbitrator while making this reasoned Award. Therefore, the finding on this issue does not suffer from any patent illegality, legal perversity so that it can be concluded that said finding is in conflict with public policy of India.
24.6 The issue no. 3, 4, 6 and 7 has been dealt with by the Learned Arbitrator in para no. 128 to 136 of the Award. Regarding issue no. 3 entitlement of the claimant / respondent to the Service Tax amount in para no. 130, it is observed by Learned Arbitrator that all the invoices are placed on record alongwith payment challans demonstrates that 100% Service Tax was paid on CMS Services therefore, it cannot be said that only 70% of the CMS Charges at which Service Tax had to be paid. The respondent was rightly directed to make payment of the difference of Service Tax from the 10.3% to 12.3% and a claim of Rs. 1,16,007/- has been rightly awarded.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 63 of 67 24.7 Regarding issue no. 4 and 7, the Learned Arbitrator in para no. 132 observed as under :-
"132. ......I find force in the argument of the claimant that the certificate from the competent authority could not have been obtained by the claimant as only a contractor who is registered under the said VAT Act and selling goods in that territory of the State of Gujarat can get registration under the VAT Act. From the perusal of the forms and the evidence in relation to cross- examination of CW 2 it is manifestly clear that there was no occasion for the claimant to obtain a certificate from the competent authority as claimant was not registered under the VAT Act. Question No. 37 put to RW 2 and 38 are important to decide the controversy as follow:-
Q.37. I put it to you that all the invoices were raised by the claimant from their NOIDA office. What do you have to say?
Ans. Yes, it is true as per record. Q.38. I put it to you that TDS on WCT can be charged only on another State transaction. What do you have to say?
Ans. It is correct.
133. When respondent themselves agreed that TDS on WCT charges only on state transaction and it is the admitted position that invoices were raised from NOIDA and nothing was sold in the territory of Gujarat or for Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 64 of 67 any other state the TDS on WCT could not have been deducted and the deduction of TDS on WCT was illegal. As a matter of fact, the reliance by the respondent on Exb. R-18 dated 11.10.2011 page 67 of SOD Vol. III would demonstrate that respondent was asking for a certificate which was not to be given under the relevant rules by the claimant to the respondent. At Sl. No. 3 in the said letter:
(i) Claimant provide a certificate of material (value of goods purchased from which state)
(ii) Material value of goods purchased form outside state.
134. Insistence on the part of the respondent to provide a certificate of material was totally improper and against the VAT Rules of the State of Gujarat. Therefore, I allow the claim of the claimant for this amount of Rs.
9,59,450/- TDS on work contract which has been withheld by the respondent. I decide the issue in favour of the claimant."
24.8 It was argued by the petitioner that the finding on this issue is perverse and contrary to the material on record as well as to the statute on the following ground : -
That the claimant was not registered under the VAT Act. It is stated that this contention was not raised by the claimant in the pleadings nor in its evidence. It is submitted that Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 65 of 67 Learned Arbitrator has considered the oral submissions of the claimant in that regard. It was contended by the counsel for claimant / respondent that law is not required to be pleaded in the pleadings and the same was rightly argued at the appropriate stage and has been appreciated by the Learned Arbitrator by giving a cogent reasoning. It was further argued that the finding of the Learned Arbitrator that there was no inter-state transfer of goods as the invoices were all raised from the NOIDA therefore, there was no transfer of goods and as such the respondent was not legally entitled to deduct TDS on WCT is contrary to record and legally perverse. As is evident from the observation of the Learned Arbitrator reproduced above, the finding of the Learned Arbitrator on that aspect is well reasoned and cogent. There is nothing to conclude that the same suffers from perversity and patent illegality.
25. Relying upon the law laid in the cases of (i) Associate Builders (supra); (ii) Ssangyong Engineering & Constructions Co. Ltd. (supra); (iii) Ministry of Defence, Govt. of India (supra); (iv) Swan Gold Mine vs Hindustan Copper (supra); (v) Oil & Natural Gas Corporation Ltd. vs Saw Pipes Ltd., (supra); (vi) M/s Arosan Enterprises Ltd (supra); (vii) Patel Engineering Ltd. (supra); (viii) Sutlej Construction vs Union Territory of Chandigarh (supra) and
(ix) MMTC Ltd. vs Vedanta Ltd. (supra), it can be said that not only the reasoning of the Ld. Arbitrator are logical, but all the Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 66 of 67 material and evidence were taken note of by the Ld. Arbitrator and this Court cannot substitute its own evaluation of conclusion of law or fact to come to the conclusion other than that of the Ld. Arbitrator. Cogent grounds, sufficient reasons have been assigned by Ld. Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot reappraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by Ld. Arbitrator. Re-appraisal of the matter cannot be done by this Court. No error is apparent in respect of the impugned award. I do not find any contradiction in the observations and findings given by Learned Arbitrator. There is no patent illegality or legal perversity in the Award. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is made out. None of the grounds raised by the petitioner attract Section 34 of the Act.
26. For the foregoing reasons, the petition is hereby dismissed. The parties are left to bear their own costs.
File be consigned to record room.
Announced in the open Court RAJ Digitally signed by RAJ KUMAR KUMAR CHAUHAN on 05.04.2021. CHAUHAN Date: 2021.04.05 15:54:22 +0530 (RAJ KUMAR CHAUHAN)
District Judge (Commercial Court-01) South East/Saket Courts New Delhi.
Oil and Natural Gas Corporation Ltd.
vs. Planetcast Technologies Ltd. OMP (Comm) No. 31/19 (RAJ KUMAR CHAUHAN) District Judge (Commercial Court) SE/Saket/ND/05.04.2021 Page 67 of 67