Bangalore District Court
Bharat Heavy Electricals Limited vs M/S. Refex Energy Limited on 20 December, 2021
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 20th day of December 2021
COM.A.S.No.180/2018
Plaintiff Bharat Heavy Electricals Limited,
A company under the Companies Act
1956, registered office :
BHEL House, Siri Fort,
New Delhi110049.
(By Sri.K.D.K, Advocate)
// versus //
Defendant 1. M/s. Refex Energy Limited,
A company under the Companies Act
1956, registered office at:
No.202, 2nd Floor,
Opposite to Parel Post Office,
Jijibhoy Lane, Lalbaug,
Mumbai400012.
Represented by its Managing Director
2. Mr. B.P.Bhemanna,
S/o Pranesha Rao B.S,
No.4, Model House, 2nd Street,
Basavanagudi, Bengaluru560004.
(D1By Sri.V.P.D, Advocate
D2 Learned Arbitrator)
2
CT 1390_Com.A.S.1802018_Judgment .doc
Date of Institution of the : 30/08/2018
suit
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the : 20/12/2021
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
03 03 20
JUDGMENT
This Arbitration Suit under Section 34 of the Arbitration & Conciliation Act is filed by the plaintiff praying to set aside the award dated 23/5/2018 to the extent of rejection of the counter claim of the plaintiff and praying to allow counter claim and to award a sum of Rs.19,43,52,354/ and to reject the claim made by the defendant No.1 and to set aside the award of Rs.7,01,33,671/ in favour of the defendant No.1.
2. The plaintiff was the respondent before the learned Arbitrator and defendant No.1 was the claimant. Defendant No.2 is the learned Arbitrator.
3. The case of the plaintiff in brief is as under:
Plaintiff and defendant No.1 are the companies incorporated under the Companies Act. Plaintiff had undertaken a contract for 10 MW Solar Power Plant Project for National Thermal Power Corporation Limited (NTPC) at Unchahar Thermal Power Station, Rai Bareli. In connection 3 CT 1390_Com.A.S.1802018_Judgment .doc with the said contract plaintiff, issued four purchase orders to the defendant No.1 on 21/6/2013 and they were issued against one single tender, by splitting into 4 purchase orders. The defendant No.1 accepted the purchase order and commenced the work and time was agreed to be essence of the contract. Defendant No.1 performed the work partially and failed to execute the contract as per agreed terms and there were inordinate delays in the performance of the contract. Due to this, work was delayed and various follow up meetings were held with the defendant No.1 by the plaintiff. The defendant No.1 assured completion of the work as per the original schedule and it was also informed that the time is the essence of the contract and was also informed about the importance of the project being completed in time, as plaintiff is answerable to NTPC. In the interest of completion of the work, plaintiff agreed and made exhilarated payment to the defendant No.1 to enable the 1st defendant to make payment to third party contractors. Inspite of this, defendant No.1 again failed and neglected to expedite the works within the timeline. The project was inordinately delayed and the claimant did not perform, despite all support provided by the plaintiff. As no progress was seen and there was no inclination on the part of the defendant No.1 in expediting the works, plaintiff issued several communications and on 25/6/2014 by letter, 1st defendant was informed that the end customer NTPC has cautioned the plaintiff that the contract with the plaintiff would be terminated by NTPC. The 4 CT 1390_Com.A.S.1802018_Judgment .doc defendant No.1 was also called upon to complete all the pending works within 15 days. This letter did not invoke any positive response. The defendant No.1 being unable to make payment to the vendors/suppliers started issuing letters to the plaintiff requesting the plaintiff to make payments to such vendors and suppliers directly. This payment were made by the plaintiff, though it was not contractually obliged. The plaintiff is a company having good image from customers for timely execution of the contracts and NTPC being one of the major customers of the plaintiff. If NTPC terminate contract with BHEL, it will create bad image among customers. Hence NTPC's threat of terminating the contract was taken very seriously by plaintiff and plaintiff conveyed a meeting and thereafter plaintiff issued letter dated 12/9/2014 enclosing a list of pending works and still the defendant has not done the work and on 5/1/2015 defendant No.1 issued letter providing explanation to the correspondence issued by the plaintiff which were false and the same was replied by the plaintiff on 6/1/2015. Then defendant No.1 issued letter dated 12/1/2015 and plaintiff replied it on 16/1/2015 and highlighted that despite lapse of almost 10 days from the date of last letter there has been no progress in works and the plaintiff issued final notice to the defendant No.1 stating that if the work is not done within 30 days contract will be terminated. As the defendant did not show any progress, plaintiff terminated the contract on 2/2/2015 and same was notified to the defendant No.1. Thereafter, defendant No.1 5 CT 1390_Com.A.S.1802018_Judgment .doc issued letter dated 23/2/2015 invoking arbitration clause. Thereafter the plaintiff issued notice claiming Rs.31,13,82,821/ against defendant No.1 for the costs associated with the contract which was terminated by the plaintiff. As per the contract 2nd defendant was appointed as sole Arbitrator and the parties appeared and parties filed their statement of claims and the plaintiff filed counter claim. After termination of the contract due to non performance of defendant No.1, the plaintiff initiated action by placing various orders to sub vendors and successfully completed and executed the contact inspite of several difficulties payments were also made to sub vendors of defendant No.1. The claimant made several claims and the plaintiff has made counter claim of Rs.31,13,82,821/. After recording evidence the learned Arbitrator passed the award allowing the claim of defendant No.1 in part and also partly allowed the counter claim. Though the plaintiff initially had made claim for Rs.31,13,82,821/, subsequently, after execution of contract and construction work is completed, plaintiff filed memo in the arbitration proceedings and limited its claim to Rs.19,43,52,354/.
4. Being aggrieved by this award of the learned Arbitrator, plaintiff has filed the present suit. It is stated that the arbitral procedure was not in accordance with the law and the arbitration agreement. The parties have not agreed that the award does not require reasons to be given and in the 6 CT 1390_Com.A.S.1802018_Judgment .doc absence of such agreement arbitral award ought to have been made following the mandate of law and as such it suffers from infirmity and lacunae and deserves to be set aside. It is stated that the award is in contravention with the fundamental policy of Indian law and the principles of natural justice and is a non speaking award which is against settled principles of law. It is also stated that the basic notions of justice have been lost sight in passing of the award and arbitral award do not have any element and lacks all elements of basic requirements of a reasoned order. The facts of the case, the issues framed, the case of plaintiff and defendant etc and the reasoning on each of the issues have not been given and this court would have no material to even evaluate or examine the correctness of the award and as such very basis for passing the impugned award is missing. It is stated that it is not in accordance with the principles of natural justice and no reasoning whatsoever has been given in the award and it is totally contrary to the provisions of law. It is also stated that the tribunal has failed to appreciate the cogent documentary and oral evidence produced by the plaintiff to show that it was sufficient to dismiss the claims of the defendant as being devoid of merits and to allow the counter claims made by the plaintiff. It is stated that the award is unsustainable and bad in law and it is against settled principles of law and precedents were not followed while passing the impugned award and the same has led to miscarriage of justice. It is stated that the award is without 7 CT 1390_Com.A.S.1802018_Judgment .doc appreciation of evidence. It is stated that the evidence lead show that there is no breach of contract by the plaintiff, but the learned Arbitrator proceeded to partly allow the claim of the defendant by placing reliance upon the claim statement and as such committed grave error. It is also stated that the arbitrator has erred in relying upon the alleged admissions in the cross examination of the plaintiff witness regarding amounts due under invoices of the defendant and the documents relied by both the parties are not even referred and award has been passed without consideration and looking to the evidence. It is stated that the tribunal has erroneously awarded Rs.7,01,33,671/ towards the alleged unpaid invoices and erred in holding that unpaid invoices of the sub suppliers of the defendant No.1 to be paid directly. It is stated that the award also suffers from lack of clarity and is vague and indeterminate. It is also stated that the award amount is more than what is claimed in the claim and no reasons are given for such award for more. The tribunal has failed to consider that the plaintiff has made accelerated payments and there is breach of contract by the defendant and still awarded 8% interest. It is stated that the learned Arbitrator erred in holding that the plaintiff was not entitled to invoke risk purchase clause, as plaintiff has terminated the contract and further erred in holding that the plaintiff looses any claim with respect to the risk purchase clause. The contract between the parties clearly states that if there is a breach of contract by the defendant, the plaintiff is entitled to 8 CT 1390_Com.A.S.1802018_Judgment .doc get the work completed by a third party at the risk cost of the defendant and this clause would survive termination of contract which is only incidental to the breach of the contract. The tribunal has not held that the termination is unlawful or invalid and in such an event, holding that plaintiff is not entitled to recover the costs incurred by it due to reasons of breach by the defendant is bad in law. It is stated that arbitrator has not even referred to counter claim made by the plaintiff and has given a cryptic finding. On these grounds the award of the learned Arbitrator is prayed to be set aside.
5. 1st defendant who was the claimant before the learned Arbitrator has filed objection to the petition stating that the petition is not maintainable and it suffers from lacunae and infirmity. It is stated that no grounds permissible under Section 34 of the Arbitration & Conciliation Act are made out and petitioner has ignored entirety of documents and the record before the learned Tribunal and is essentially seeking to plead on the claim De Novo. It is stated that the present petition is also fundamentally erroneous. It is stated that plaintiff failed to make payment of the amount payable during the terms of POs and during the arbitration, witness of the plaintiff admitted that amount due is not paid. It is stated that right from the beginning, there were huge delays on the part of the plaintiff in making payments and finally plaintiff simply refused to pay the due amounts and in 9 CT 1390_Com.A.S.1802018_Judgment .doc these circumstances the defendant had executed the scope of various purchase orders and the plant was completed and and put to use, it could not complete certain minor civil works for lack of payment. It is stated that the plaintiff has admitted the non payment of Rs.7,01,33,671/ to the 1 st defendant and therefore this amount was clearly due. It is stated that the plaintiff was in breach of contract and termination of the contract was contrary to law as rightly held by the Arbitral Tribunal. It is stated that the petition is contrary to the plaintiff's own stand before the learned Arbitrator and against the admission of the plaintiff witness and all documents produced. It is stated that the learned Arbitrator found that the plaintiff is in breach, but after holding so, learned Arbitrator ought to have passed all consequential order including loss of profit, cost of ready stock, theft of material and Central Sales Tax paid etc. as claimed. It is stated that no damages should have been awarded in favour of the plaintiff who was admittedly in breach. It is stated that for not following the consequences arising from the wrongful actions of the plaintiff and for not awarding other claims, the defendant No.1 has already filed petition under Section 34 of the Arbitration & Conciliation Act. It is stated that present petition is fundamentally erroneous and claims as allowed in favour of the defendant No.1 are rightly allowed and therefore the petition is liable to be dismissed. It is stated that the plaintiff is seeking re appreciation of facts as a court of appeal which cannot be 10 CT 1390_Com.A.S.1802018_Judgment .doc made. The 1st defendant has stated that in the present petition the plaintiff is seeking to reappreciate the fact which were already dealt by the learned Arbitrator and learned Arbitrator has come to the conclusion after considering the same and there appears to no error on the face of the record and therefore the petition is liable to be dismissed. The defendant No.1 has also stated that none of the alleged grounds made out by the plaintiff fit into the scheme of Section 34 of the Arbitration & Conciliation Act. It is stated that the tribunal has decided the dispute based on the admission by the plaintiff. It is stated that despite such admission the learned Arbitrator has failed to award the full amount claimed by the 1st defendant and therefore he has also challenged the arbitral award. It is stated that once the plaintiff admits their breach and default, all consequential reliefs must be awarded to the 1 st defendant. Hence it is stated that the present petition is to be dismissed and the petition filed by the 1st defendant is to be allowed.
6. Now the points that arise for consideration of this court are:
1) Whether the claimant/plaintiff in this case has made out any ground to set aside the award passed by the learned Arbitrator on 23/5/2018 under Section 34 of the Arbitration & Conciliation Act?
2) What order?11
CT 1390_Com.A.S.1802018_Judgment .doc
7. Heard both the counsels. Perused records..
8. My answer to the above points are :
POINT No.1 : In the Affirmative.
POINT No.2 : As per final order for the following:
REASONS
9. POINT No.1 : Present arbitration suit is filed by the plaintiff to set aside the award passed by the learned Arbitrator by which claim of the claimant was partly allowed and in the counter claim made by the present plaintiff only part of the counter claim is allowed and remaining counter claim have been rejected. Admitted facts of the case are that the plaintiff BHEL has undertaken the contract of 10 MW Solar Power Plant Project for NTPC. In connection with the said work, plaintiff issued four purchase orders to the defendant No.1 and the defendant No.1 accepted the purchase order and commenced the work. Since there were delay in completion of the work and there were differences, alleging that inspite of reminders work is not completed by defendant No.1 and by stating that the time was essence of the contract, after giving notice, plaintiff terminated the contract on 17/2/2015. Thereafter, 1st defendant invoked arbitration clause making claim on several heads and contended that the termination is illegal. The present plaintiff filed counter claim initially for Rs.31,13,82,821/ under different heads and subsequently after getting unfinished work completed through third party or on its own, plaintiff 12 CT 1390_Com.A.S.1802018_Judgment .doc restricted the counter claim to Rs.19,43,52,354/. The learned Arbitrator allowed claim partly and directed the present plaintiff to pay Rs.7,01,33,671/. Among the counter claim the learned Arbitrator has held that the claimant and the respondent have to equally share the total cost of Rs.7,51,04,302/ and other counter claims made by the plaintiff are rejected. Aggrieved by this award the present petition has been filed. Even the defendant No.1 who was the claimant before the learned Arbitrator is not satisfied with the award and has filed petition under Section 34 of the Arbitration & Conciliation Act praying to set aside the award in AS No.176/2018. Therefore both the parties are not happy and not satisfied with the award passed by the learned Arbitrator.
10. Jurisdiction of the court to set aside an arbitral award is limited to the grounds set out in Section 34 of the Arbitration & Conciliation Act 1996. Even if a contrary view based on the facts before the Arbitral Tribunal is possible, in the absence of any compelling reasons, court cannot interfere with the view taken by the learned Arbitrator. Grounds on which the award of learned Arbitrator can be set aside by court is clearly mentioned in Section 34(2) and 34(2A)of the Arbitration & Conciliation Act. It is well established principle that the court sitting U/S.34 of the Act is not supposed to go for reappreciation of evidence or impose its view as against the view of learned Arbitrator and the power of the court is 13 CT 1390_Com.A.S.1802018_Judgment .doc only to set aside the award, if it is coming under one of the grounds mentioned in the said section. In the presence of these basic principles, grounds urged by the plaintiff and the award of the learned Arbitrator are to be looked into.
11. On looking to the records of arbitration, it is clear that the claimant had made claim under several heads including loss of profits for theft of the articles pending RA bills etc. Similarly the present plaintiff who was the respondent before the learned Arbitrator had also made several claims as counter claim. Claimant along with the claim petition has produced documents in 7 volumes in which upto volume 5 there are 1063 pages of documents and in volume No.7 there are 322 pages. Therefore, 1400 pages of documents were furnished by the claimant and similarly respondent has also produced the documents. Evidence affidavits were filed before the learned Arbitrator on both sides. The parties appears to have submitted voluminous documents and lead evidence. However the award of the learned Arbitrator is consisting of only 9 pages. Though number of pages of award is not of much consequence, even for making reference to these voluminous documents and evidence some space is necessary. It is to be seen whether this award is on appreciation of evidence and documents placed before the learned Arbitrator and whether the provision of Arbitration & Conciliation Act have been complied by the learned Arbitrator while passing the award.
14CT 1390_Com.A.S.1802018_Judgment .doc
12. In this connection the learned counsel for the plaintiff has referred to the decision of Hon'ble Supreme Court reported in 2015(3) SCC 49 (Associate Builders v. Delhi Development Authority) in which in para 42.2 and 42.3 the Hon'ble Supreme Court has held that:
"42.2. Contravention of the arbitration act itself would be regarded as a patent illegalityfor example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside.
42.3. An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a terms of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to do something that no fair minded or reasonable person could do."
13. In another decision of Hon'ble Supreme Court reported in (2019) 15 SCC 131 (Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India) the Hon'ble Supreme Court 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 15 CT 1390_Com.A.S.1802018_Judgment .doc liable to set aside on the ground of patent illegality. It is also held that if an arbitrator is alleged to have wandered outside the contract and dealt with matters not allotted to him, this would be a jurisdictional error which could be corrected on the ground of patent illegality. It is also stated that if the award is patently against the statutory provisions of substantive law which is in force in India or without giving any reasons in a case where parties have not agreed that no reasons are to be recorded, it would be against statutory provision. In all such cases the award is required to be set aside on the ground of patent illegality.
14. In the subsequent judgment reported in (2020) 7 SCC 167 (Patel Engineering Limited v. North Eastern Electric Power Corporation Limited) the Hon'ble Supreme Court has held that if the decision of the arbitrator is found to be perverse or so irrational that no reasonable person would have arrived at the same or that view of the arbitrator is not even a possible view then it would be patent illegality and is the ground available to set aside the domestic award. In latest decion reported in (2021) 9 SCC 1 (Project Director, NHAI Vs M. Kakeem), Hon'ble supreme Court has held that Section 34 of Arbitration and Conciliation Act cannot be held to include power to modify an award. Therefore, Court under section 34 of the Act cannot modify the award and can only set aside an award. In the light of these decisions the award of the learned Arbitrator is to be seen.
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15. As stated above, parties have produced voluminous documents and made claim under several heads. Both the parties have made allegation against each other. The plaintiff contended that the time was essence of the contract and 1 st defendant has failed to show progress in the work and as the plaintiff was a contractor under NTPC and it was required to complete the work within time, it was always under pressure to get the work done as per the time schedule. It is stated that the 1st defendant has slow down the work and has not made progress inspite of reminders and letters. It is also contended by the plaintiff that the plaintiff has issued notice and finally terminated the contract. The 1 st defendant also contended that the payment are not received in time from the plaintiff and due to non payment, 1st defendant could not proceed with the uncompleted minor works and contended that major work was completed and was already operational. In the presence of these contentions the parties have made their claim before the learned Arbitrator. The learned Arbitrator in page No.3 of the award has stated that the facts of the case pleading, claim, counter claim, documents marked for evidence, cross examination proceedings and arguments putforwarded are not reproduced for the sake of bravity. By saying so, the learned Arbitrator has not discussed the pleading, document or evidence and the cross examination. The learned Arbitrator has made some observation as seen in page 3 to 5 in para 1 to 6 and then took up the issue No.1 to 17 CT 1390_Com.A.S.1802018_Judgment .doc 8 which are framed by him. Thereafter the learned Arbitrator has proceeded to give finding.
16. On looking to the entire award containing page No.1 to 9, it cannot be made out as to how the learned Arbitrator came to the conclusion which he has arrived. Reasons for arriving at a particular decision is prima facie wanting in the award. As stated above both the parties are not satisfied with the award passed by the learned Arbitrator. The entire award do not disclose as to on what basis and what evidence the findings are arrived. In the observations of the tribunal, as mentioned in the award, it is stated that there are defects in the purchase order and parties not entering into separate contract has been highlighted. It is mentioned that tribunal is of the opinion that for such major contract, consolidated major purchase order or binding contract agreement has to be entered into between the parties, apart from individual purchase order and it is mentioned that the respondent has not entered into such agreement and claimant has not demanded for such agreement. It is also observed that service purchase order is not interlinked with remaining purchase order. It is observed that the payment for the supply made by the claimant have been inordinately delayed without any justification and this has affected progress of the contract, payment not released to the suppliers of the claimant etc. On what basis such observation has been made and what is the evidence placed 18 CT 1390_Com.A.S.1802018_Judgment .doc by the parties and what are the documents that has been relied by the learned Arbitrator to find fault with the plaintiff in not making payment for the supply made by the claimant is not explained in the entire award.
17. What was the payment that was due and when the invoices were present and whether the invoices were cleared for payment and whether inspite of clearing the invoices for payment, payment is not made by the plaintiff in time are also not stated by the learned Arbitrator. Similarly whether there is such delay in payment and what is the quantum of delay and what is the amount for which the delay is caused and whether such delay has resulted in slowing down of the progress of the contract and if so how much it contributed is also not discussed in the entire award. Regarding payment to the sub suppliers of the claimant, there is no clarity as to who are the sub suppliers and what are the documents produced by the parties regarding such dues of the sub suppliers and from what time such dues are pending and whether plaintiff is responsible for non payment to the sub suppliers etc are also not clearly stated in the entire award. There is only one sentence that during the cross examination the respondent i.e the present plaintiff has admitted to the outstanding payment of supply POs to the claimant and also furnished statement of invoice verified but not paid. Learned counsel for the plaintiff submits that there is no evidence to show that the invoices were cleared for payment and it is argued that only 19 CT 1390_Com.A.S.1802018_Judgment .doc submitting the invoice will not prove the entitlement of the claimant for the amount. After finding fault with the present plaintiff, for not making payment in time on the cleared invoice, without any clarity and details, the learned Arbitrator holds that though such delay in payment would suffer and affect the operation and cash flow statement of the claimant, act of the claimant in not paying the sub supplier and leaving site establishment unattended is unacceptable in any contract. Even for this observation, no basis is found in the award. Who are the suppliers for whom payment is not made and whether the non payment of the amount by the plaintiff has resulted in non payment of the sub suppliers and whether the claimant has left the site establishment unattended and what is the evidence on that is also not clear.
18. After these observations, learned Arbitrator comes to the conclusion that there has been breach of contract by both the parties which has affected the total project. These lapses on the part of either the claimant or the present plaintiff are not crystalised and are not clearly explained. Appreciation of any evidence or documents to come to the conclusion that there is breach of contract by both the parties cannot be made on going through the award. The learned Arbitrator next came to imposing of penalty and damages on the claimant which the plaintiff had suffered at the hands of its customer NTPC. The learned Arbitrator has held that there were no back to back condition incorporated in the 20 CT 1390_Com.A.S.1802018_Judgment .doc purchase orders placed on the claimant. It appears that the arbitrator is holding that plaintiff cannot recover amount, as purchase order do not say that if the plaintiff was imposed penalty by its employer, it can pass it on to the claimant though the lapses are due to the claimant. This is also not supported by any evidence and whether there is such evidence lead and document produced and whether such document or evidence has been looked into by the learned Arbitrator also cannot be made out.
19. The next point observed by the learned Arbitrator is of risk purchase clause. The learned Arbitrator has held that since the plaintiff has terminated four purchase orders, contract has come to an end and plaintiff will not be having any hold on the claimant and as such, it appears that the learned Arbitrator is holding that, the plaintiff is not entitle for the amount for getting incomplete work done through third party as risk purchase. This observation is also not based on any reasoning as could be seen from the award. After holding so the learned Arbitrator came to the conclusion that the termination of the purchase order should not have been resorted and thereby held that the termination is not valid. After these observations, learned arbitrator proceeded to give answer on issues.
20. On issue No.1 it is mentioned that respondent has admitted the outstanding payment towards the supplies and that also they furnished statement of outstanding invoice 21 CT 1390_Com.A.S.1802018_Judgment .doc which were over due. By holding so the learned Arbitrator has held that the claimant is entitle for an amount of Rs.7,01,33,671/. What is the admission of the plaintiff and when the invoices were sent by the 1st defendant to the plaintiff and what is the calculation and when the invoices were certified for payment and what is the total amount due etc and the response of respondent on the claim of the plaintiff are not mentioned in the award. The finding on issue No.1 holding that the claimant is entitle for award of Rs.7,01,33,671/ is a cryptic finding and this finding is not supported by any reasons. How the learned Arbitrator came to this amount is also not clear. It is mentioned that this amount is admitted. Where is such admission and which are the exhibit in which the invoices are seen and which are certified etc are also not stated. Apart from this the claim put forward by the claimant before the learned Arbitrator was for Rs.6,89,71,023/ whereas the learned Arbitrator has held the claimant entitle for Rs.7,01,33,671/ which is in excess of Rs.11,62,648/. How this amount is arrived is not clear. After giving this finding in issue No.1. The learned Arbitrator further proceeded to hold that the claimant is entitle for 8% interest on this amount and then gives an obligation on the plaintiff to make payment of overdue to the sub suppliers of the claimant with the concurrence of the claimant. It is also mentioned that wherever the respondent has already paid to the sub suppliers the same is to be reduced from the payment to be made. Though, amount is held to be payable to the 22 CT 1390_Com.A.S.1802018_Judgment .doc claimant, again it is subject to deduction for payment already made to sub suppliers. Again the learned Arbitrator has directed that a detailed meeting be held between the parties and the sub suppliers. This finding on issue no.1 do not take the parties any where. Entitlement of the claimant itself is not clear and how the amount is arrived is not clear and again holding the meeting between the parties with the sub suppliers would show that the dispute is not resolved. As rightly argued, the Arbitrator has not resolved the dispute and has kept the issue open to be decided mutually. This finding on issue No.1 is disputed by the present plaintiff. For the discussion made above, finding on this issue is without appreciation of evidence lead before the learned arbitrator and is cryptic and is not supported by reasons. As held in the decision referred above an award which is without reasons is perverse and patently illegal and is liable to be set aside
21. With regard to the counter claim the learned Arbitrator has considered in issue No.8. The counter claim made by the plaintiff was for Rs.31,13,82,821/ and then it is brought down to Rs.19,18,07,354/. However, the learned Arbitrator has held that the claimant and respondent have to equally share cost of Rs.7,51,04,302/. How this amount is arrived and on what basis the other counter claims are rejected are also not clear. In issue No.8 there is no such discussion for rejection of the other counter claims made by the plaintiff. Even in respect of part of the counter claim 23 CT 1390_Com.A.S.1802018_Judgment .doc amounting to Rs.7,51,04,302/, how the same is arrived and why it is to be equally shared as mentioned in the award is also not clear. It is only mentioned that considering the case for Sl.No.1 to 6 i.e. civil work etc for road, pathways this amount is arrived and tribunal is of the opinion that this cost is to be shared equally. Therefore, only 50% of this amount appears to have been awarded to the plaintiff as counter claim. On looking to the entire award, basis for such rejection of the counter claim and directing both the parties to share the cost equally cannot be made out. Even the 1 st defendant who is not happy with the award contends that when the learned Arbitrator has held that the termination of the purchase order is not justified the counter claim could not have been allowed. The defendant contends that after holding the termination as not proper, learned Arbitrator ought to have awarded other claims of the 1 st defendant which are loss of profit, value of the theft articles etc.
22. On looking to the entire award finding given by the learned Arbitrator is not supported by reasons. On reading the award one cannot make out that the finding is given by considering evidence and voluminous documents that were placed before the learned Arbitrator by the parties. There is no finding on any of the issue with reasons. When the award is without reasons, such an award cannot be accepted and it would be perverse and patently illegal and is liable to be set aside. Similarly the finding given by the learned Arbitrator is without reason and cannot be clearly understood and there is 24 CT 1390_Com.A.S.1802018_Judgment .doc no clarity on any of the issues. Moreover, the award even do not finally decides the dispute between the parties, as it directs the parties to hold meetings among themselves and also with third parties to arrive t final figure. Such an award is even against the fundamental principles of Indian law and is against the well established principles of justice and as such is against public policy of India and is liable to be set aside.
23. As held in the decision in Associate Builders referred above, when the Arbitrator does not decide in accordance with the terms of the contract or the award is without reason, such an award is liable to be set aside. As held in other decisions when the decision of the learned Arbitrator is found to be perverse or so irrational that no reasonable person would have arrived at the same and when view of the arbitrator is not even a possible view the award is liable to be set aside. For all these reasons, award passed by the learned Arbitrator is without reasons and is patently illegal and is perverse and is against the public policy of India and is liable to be set aside. Accordingly, point No.1 is answered.
24. POINT No.2 : For the discussion made on above point, following order is passed:
ORDER This Arbitration Suit filed by the plaintiff under Section 34 of the 25 CT 1390_Com.A.S.1802018_Judgment .doc Arbitration & Conciliation Act, challenging the award dated 23/5/2018 is allowed.
Arbitral Award dated 23.05.2018 passed by the learned arbitrator is set aside.
In the circumstances of the case, there is no order as to costs.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 20th day of December 2021] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
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