Gujarat High Court
Gujarat Industrial Development ... vs Graphite India Ltd on 21 April, 2023
Author: Ashutosh Shastri
Bench: Ashutosh Shastri
C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2080 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI Sd/-
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE Sd/-
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1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
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GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION (GIDC) LTD
Versus
GRAPHITE INDIA LTD.,
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Appearance:
MR. M. B. GANDHI, SENIOR ADVOCATE WITH MR RUTVIJ M
BHATT(2697) for the Appellant(s) No. 1
MR. S. N. SOPARKAR, SENIOR ADVOCATE WITH MR. UNMESH
SHUKLA, SENIOR ADVOCATE WITH MR.SHASHVATA U SHUKLA(8069)
for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 21/04/2023
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(PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI) [1] By way of this First Appeal under Section 96 of Code of Civil Procedure, 1908, the appellant - Gujarat Industrial Development Corporation has challenged the legality and validity of the judgment and order passed by the learned District Civil Judge, Bharuch dated 26.03.2016 passed in Civil Misc. Application No. 209 of 2014 under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred as to the "Act") by virtue of which judgment, an application of present appellant came to be rejected.
[2] The facts which has given rise to filing of this appeal are that the appellant - Gujarat Industrial Development Corporation had invited a tender for providing and laying down 1200 mm dia GRP water supply line from Angareshwar Intake Water Works to GIDC Compound at Bhersam. The said invitation of tender was in or around April, 2005. The Corporation had invited the sealed tenders for such work in two separate sealed covers i.e. technical bid and price bid. Since the rates were found to be Page 2 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 competitive of respondent, the same was accepted and an agreement came to be executed with regard to the said work. The terms and conditions of the contract also accepted by both the sides i.e. appellant as well as respondent. The contract to that effect was executed between the Executive Engineer, GIDC and the opponent claimant herein. The said contract was also having a specific clause with regard to the dispute relating to contract how to be resolved and for that Clause-20 was in detail mentioned indicating the procedure and terms of such resolution.
[2.1] It is the case of the appellant that a work order was issued in favour of respondent company on 18.10.2005 but from the beginning appellant - corporation has found that the respondent
- claimant remained throughout negligent and the work progress was also not satisfactory and it was found too poor. [2.2] On account of such, the appellant had repeatedly served notices but till the termination, no progress was found to be satisfactory. The appellant had also drawn the attention of the Page 3 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 respondent that sufficient ROU is available for laying down pipelines. But it is the matter of record that respondent could not procure sufficient quantity of pipe at the site. The period which was mentioned was requiring 82.44% progress in the work but till that moment namely when corporation informed about poor progress in the work only progress was made to the extent of 18.43% (6175 ruit pipe) and this slow progress and process was despite notices having been served which ultimately compelled the corporation to terminate the contract on 29.07.2006.
[2.3] It is the case of the appellant - corporation that despite aforesaid situation, the respondent has submitted its final bid and statement of demand for illegal termination and alleging various breaches of GIDC and then claimed an amount of Rs.14,41,42,629/-. The respondent issued notice for recovery of the said amount on 15.05.2010 to the Deputy Executive Engineer, Bharuch and not to the Executive Engineer and 30 days period was mentioned for such payment otherwise it was informed that claimant would resort to arbitration for resolving the dispute.
Page 4 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [2.4] It is the stand of the appellant - corporation that immediately within four days of issuance of notice for recovery without waiting for full tenure of the notice within a period of four days only the arbitration clause was invoked without waiting even for the response to the notice by present corporation. In fact, it is the grievance of the appellant corporation that without proper appreciation of noticing the entire material, the Arbitration Proceedings have been carried out mainly on the basis of notice.
[2.5] The respondent - claimant feeling aggrieved by the termination of contract invoked Arbitration clause under Section 102 of the Contract Agreement and referred the matter to the Indian Council of Arbitration. The Arbitral Tribunal was constituted and the appellant nominated Mr. Sanat Pandya as an Arbitrator whereas respondent nominated Dr. Vandna Bhatt as an Arbitrator and the ICA appointed Mr. Justice C.K.Thakkar (former Judge Supreme Court of India) as a Presiding Arbitrator. The Arbitral Tribunal had framed issues and Page 5 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 ultimately adjudicated the proceedings and finally the claim of respondent was allowed against the GIDC to the extent of Rs.9,02,16,045/- which the Arbitral Tribunal directed the appellant - corporation to pay the same to the respondent. The said amount was consisting of Rs.5,97,62,078/- with regard to Claim No.1 i.e. work done but not paid form 20.11.2007 till the date of award i.e. 20.04.2014 which means 2342 days which works out Rs.4,60,15,163/- and the Arbitral Tribunal directed the respondent to be paid with the said amount. The Arbitral Tribunal in terms of the direction has further issued consequential certain direction to make the payment and the total payment which was directed to be paid comes to Rs.13,62,31,208/-
[2.6] Feeling aggrieved and dissatisfied with the said award passed by the Arbitral Tribunal, the appellant preferred Civil Misc. Application under Section 34 of the Act which was numbered as Civil Misc. Application No.209 of 2014 challenging the order of Arbitral Tribunal by raising multiple contentions. In the said application, both the parties have submitted their Page 6 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 reply and rejoinder and completed respective pleadings and the application was pending. By that time, the respondent herein filed a Special Civil Application No.16206 of 2015 for seeking expeditious disposal of aforesaid Civil Misc. Application No.209 of 2014 and as such by framing time schedule, this Court has disposed of the petition by expediting the proceedings. The said application then came up for consideration before the learned 2nd Additional District Judge, Bharuch who after hearing was pleased to dismiss the application filed by present appellant by giving a brief background and without entering into the real controversy and without dealing with the contentions, the application came to be disposed of. It is this order which of the learned 2nd Additional District Judge, Bharuch dated 29.03.2016 is made the subject matter of present First Appeal under Section 96 of the Code of Civil Procedure and read with the provisions contained under the Act.
[3] The present appeal was entertained by the Division Bench of this Court vide order dated 03.10.2016 and while admitting the appeal in stay application i.e. Civil Application No.9284 of Page 7 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 2016 after hearing both the sides, the directions have been issued, which the Court would like to reproduce hereunder:
"1. RULE. Shri Shashvata Shukla, learned advocate waives service of notice of rule on behalf of the respondent - original claimant.
2. In the facts and circumstances of the case and with the consent of the learned advocates appearing on behalf of the respective parties, the present application is taken up for final hearing today.
3. The present application has been preferred by the applicant herein - appellant - original opponent for an appropriate interim order /relief to stay further execution and implementation of the impugned judgment and award passed by the learned Arbitral Tribunal confirmed by the learned District Court.
4. Having heard learned Counsels appearing on behalf of the respective parties and the controversy in the main First Appeal and considering the fact that the judgment and award declared by the learned Arbitral Tribunal, confirmed by the learned District Court, can be said to be a money decree, if further implementation and execution of the impugned judgment and award is stayed on condition that the applicant shall deposit the entire amount, as awarded by the learned Arbitral Tribunal together with interest and cost with the Registry of this Court and on such deposit the original claimant is Page 8 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 permitted to withdraw 50% of the amount together with proportionate interest and cost on furnishing the bank guarantee to the satisfaction of the Registrar General of this Court and the balance 50% of the amount together with proportionate cost and interest is permitted to withdrawn by the original claimant unconditionally, the same shall be in the interest of both the parties and the same shall meet the ends of justice at this stage. The learned Counsels appearing on behalf of the respective parties do not invite any further reasoned order while passing the aforesaid interim order.
5. In view of the above, the present application is allowed. Further execution, implementation and operation of the impugned judgment and award passed by the learned Arbitral Tribunal, confirmed by the learned District Court, is hereby stayed during pendency and final disposal of the main First Appeal on condition that the applicant shall deposit the entire amount, as awarded by the learned Arbitral Tribunal with cost and interest with the Registry of this Court within a period of six weeks from today and on such deposit the respondent - original claimant shall be permitted to withdraw 50% of the amount so deposited with proportionate cost and interest on furnishing the bank guarantee to satisfaction of the Registrar General, High Court, which shall be continued to be renewed till final disposal of the main First Appeal and the balance 50% of the amount together with proportionate cost and interest is permitted to be withdrawn by the respondent unconditionally. However, the aforesaid shall be without prejudice to the rights and contentions of the respective Page 9 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 parties in the main First Appeal.
6. With this, the present application is allowed. Rule is made absolute accordingly to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs."
[4] Later on, it appears that amount has been deposited in view of aforesaid order which fact is noticeable from the Office note date 29.06.2022 and with this background of facts the main appeal proceedings have come up for consideration before this Court in which both the learned senior advocates, Mr. M. B. Gandhi and Mr. S. N. Soparkar have placed their respective submissions and after conclusion of their respective submissions, the order kept reserved.
[5] Mr. M. B. Gandhi, learned senior advocate assisted by Mr. Rutvij Bhatt, learned advocate appearing for the appellant - corporation has vehemently contended that the award passed by the learned Tribunal is not in consonance with the material on record. A close perusal of sequence of events would indicate that respondent who generated the claim to such an extent is Page 10 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 not entitled at all to claim. While passing the order by learned 2nd Additional District Judge a serious error is committed in examining the documents and no proper evaluation is made though the issues were framed but while concluding on the same issues proper appreciation of the facts which are already available on record is not undertaken. Learned Judge has merely relied on the version of jurisdiction and disposed of the application without assigning detailed reasons. [5.1] Mr. Gandhi, learned senior advocate has further submitted that learned Court below has failed to examine the award which has passed contrary to law, facts and evidence and also the award if to be looked into is not matching with the terms of the contract. Even awarding also not in conformity with the provisions of Act and the resultant effect is that the award is clearly inflicted with a public policy, contrary to justice and morality and as such the learned Judge has seriously erred in exercising jurisdiction by not appreciating the aforesaid conflict, which is visible on record.
Page 11 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [5.2] Mr. Gandhi, learned senior advocate has further submitted that the time was not an essence of the contract which fact is repeatedly mentioned in the documents and the respondent - claimant was supposed to complete the work within the stipulated period itself but this material aspect has been completely not examined by the learned Judge by passing the impugned order, even the award becomes unsustainable on this issue if to be properly dealt with. Hence, such a serious error which is crept in deserves to be corrected and for which the Appellate Court has sufficient power to examine and deal with. It has been further contended that the learned Arbitral Tribunal itself has erred in law in coming to the conclusion that before the contractual period the appellant has terminated the contract itself but then Tribunal ought to have considered that the respondent had completely failed to supply the material and has merely progress the work to the extent only 18.43% as against the requirement of 82.44%. The reason which has been assigned by the respondent for low progress in the work is not at all digestible in view of the fact that well in advance when it was noticed about such conduct of respondent about proceeding Page 12 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 ahead with the awarded work, time and again, notices including several reminders as well as warning letters were also issued by appellant - corporation. Learned Tribunal failed to appreciate then when the pipes are not manufactured how would the claimant keep promise of laying down pipes in absence of materials. These inter se correspondence which took place between the parties, which is very much available on record, is completely lost sight by the learned Tribunal and unfortunately the learned Judge in an application has not considered these aspects.
[5.3] Mr. Gandhi, learned senior advocate has further submitted that the Arbtrial Tribunal has failed to properly examine the issue of slow progress of work and issue pertaining to Right of Use. The issue with regard to delay in liquidated damages is also not properly examined by the learned Arbitral Tribunal and as such this fact which is apparently having not even gone into by the learned 2nd Additional District Judge, the order becomes vulnerable, deserves to be corrected by setting aside the same. Page 13 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [5.4] Mr. Gandhi, learned senior advocate has also submitted that one material issue has not been gone into more particularly when the Arbitral Tribunal committed an error in holding that termination was pre-matured and relied upon on the version by ignoring or clarifying as to how the Tribunal has not erred in holding that GIDC is responsible merely exposing the issue of jurisdiction has compassed the entire claim and as such these material issues having not been gone into by the learned 2 nd Additional Session Judge, the order apparently seen to be laconic in nature. Hence, appropriate order requires to be passed. Mr. Gandhi, learned senior advocate has further submitted that Arbitral Tribunal has erred in considering the claim of respondent for Hydra testing and thereby held that the deduction were not as per the schedule of GWSSB rates and ignored the provisions contained under the contract. The Arbitral Tribunal has also specifically erred in coming to the conclusion that there was a breach of contract and GIDC is responsible to make the payment to respondent of Rs.14,42,41,629/-. So, according to Mr. Gandhi, learned senior advocate, over all error which is apparent has not been Page 14 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 examined nor dealt with by the learned 2nd Additional District Judge.
[5.5] Mr. Gandhi, learned senior advocate has further submitted that in fact the claim putforth was clearly time barred and though there is no provision in the contract itself to award the interest amount, the interest of exorbitant amount is awarded and though the contract was containing the specific period of 11 months with a schedule prescribed attached with it, time was surprisingly treated as not the essence of contract, which is a clear error. A term is also specifically provided about the liquidated damages to the extent of 1% but the said issue has also not been properly gone into. On the basis of admitted circumstances which are prevailing on record about strike in the factory, non availability of material etc. and repeated reminders sending warning to the complainant, the termination was treated as pre-matured is clearly an error since terms of the contract are specifically empowering appellant corporation to terminate the contract. In fact a lame excuse was tried to be made that site was not provided but in fact the site was very Page 15 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 much open and still the work was not done. Further fact has also not been appreciated that once the claimant has accepted an amount of Rs.6 crores around now were not entitled to raise the claim by virtue of principle of estoppel as well. [5.6] In summarized form, Mr. Gandhi, learned senior advocate has submitted that the contentions which are specifically taken before the Court below in Civil Misc. Application have not been dealt with at all and the contention with regard to liquidated damages point, though urged, not been touched at all. In respect of ROU availability was not considered. Thus, these facts material in nature have not been examined at all as is clearly visible from the record. Certain admitted facts which are prevailing and though pointed out have not been touched at all and as such the points which have been canvassed having not been dealt with is a ground for remand of the matter back for re-examination and re-adjudication and as such Mr. Gandhi, learned senior advocate has submitted that by setting aside the order passed by the learned 2nd Additional District Judge, the application deserves reconsideration afresh in the light of Page 16 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 aforesaid situation, which is emerging from the record. Hence, has requested to pass a suitable order in the interest of justice. [5.7] To substantiate his claim, Mr. Gandhi, learned senior advocate has drawn the attention to various documents available from the record since the record of the case from the beginning is made available by the office along with this appeal and after drawing attention to various aspects, as indicated above, a request is made to set aside the order with consequential direction to re-examine.
[5.8] To substantiate his contentions, Mr. Gandhi, learned senior advocate has placed reliance upon following decisions:-
(i) Associate Builders versus Delhi Development Authority reported in (2015) 3 SCC 49.
(ii) Banarsi Das versus Seth Kanshi Ram and Others reported in AIR 1963 SC 1165.
(iii) Swan Gold Mining Limited versus Hindustan Copper Limited reported in (2015) 5 SCC 739.Page 17 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023
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(iv) Oil and Natural Gas Corporation Limited versus Western Geco International Limited reported in (2014) 9 SCC 263.
(v) Oil & Natural Gas Corporation Ltd. versus Saw Pipes Ltd. reported in (2003) 5 SCC 705.
(vi) Perry Kansagra versus Smriti Madan Kansagra reported in (2019) 20 SCC 753.
(vii) Rajasthan State Mines & Minerals Ltd. versus Eastern Engineering Enterprises and another reported in AIR 1999 SC 3627.
(viii) Gujarat Industrial Development Corporation (GIDC) Limited versus Graphite India Limited passed in Civil Appeal Nos.4229-4230 of 2022 (Arising out of SLP (Civil) Nos.9826-9827 of 2022) (Diary No.5983 of 2022).
(ix) Ramesh B. Desai & Ors. versus Bipin Vadilal Mehta & Ors. reported in AIR 2006 SC 3672.
(x) Mohanlal versus State of Madhya Pradesh and others reported in AIR 1980 Madhya Pradesh 1 Full Bench.
Page 18 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 (xi) Rathnavathi and another versus Kavita Ganashamdas reported in (2015) 5 SCC 223. (xii) Himachal Pradesh Housing and Urban
Development Authority and another versus Ranjit Singh Rana reported in (2012) 4 SCC 505.
(xiii) Hyder Consulting (UK) Limited versus Governor, State of Orissa reported in (2015) 2 SCC
189.
(xiv) Sree Kamatchi Amman Constructions versus Divisional Railway Manager (works), Palghat and others reported in (2010) 8 SCC 767.
(xv) Chandradhoja Sahoo versus State of Orissa and others reported in (2012) 13 SCC 419.
(xvi) Welspun Specialty Solutions Limited versus Oil and Natural Gas Corporation Limited reported in (2022) 2 SCC 382.
(xvii) D.S.Thimmappa versus Siddaramakka reported in AIR 1996 SC 1960.
(xviii) M/s. China Cotton Exporters versus Beharilal Page 19 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 Ramcharan Cotton Mills Ltd. reported in AIR 1961 SCC 1295.
(xix) Sri Rathnavarmaraja versus Smt. Vimla reported in AIR 1961 SCC 1299.
(xx) D.S.Thimmappa versus Siddaramakka reported in AIR 1996 SC 1960.
(xxi) State of Bihar and others versus Samsuz Zoha etc. reported in AIR 1996 SC 1961.
[5.9] By referring to a later part of the award passed by the Arbitral Tribunal, Mr. Gandhi, learned senior advocate has submitted that very surprisingly though the contract is not providing a term for awarding interest the learned Tribunal has awarded the interest in the manner which tentamounts to be compounding interest. The claimant had claimed interest at the rate of 2% per month from 29.07.2006 till the date of actual payment and by considering Section 31(7)(b) of Act, the Tribunal concluded that is granted maximum interest at rate of 18% per annum in the absence of any agreed rate as per the agreement from date of award and by observing the said Page 20 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 provision, the interest amount which has been awarded on Claim No.1 i.e. work done and not paid for a period commencing from 20.11.2007 till the date of award i.e. 20.04.2014 (2342 days) to the extent of Rs.5,97,62,078/- and worked out and then at the rate of 12% towards the claim of interest an amount of Rs.4,60,15,163/- is awarded by holing it that respondent is entitled to claim such an exorbitant interest. If the figures which are narrated and the conclusion reflecting in paragraph 37 of the award of Arbitral Tribunal, it clearly transpires that practically tantamounts to be a compounding interest especially when even there is no term of interest containing in the contract and then by referring to paragraph 9 further amount has been mentioned and ultimate direction is given directing the appellant to pay the amount by holding that respondent is entitled to claim said amount. This part is clearly in conflict with the terms of the contract and as such this patent illegality which has crept in deserves to be corrected. In substance, Mr. Gandhi, learned senior advocate has submitted that a serious error is committed even in respect of awarding of interest as indicated above and by referring to the aforesaid issue has Page 21 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 submitted that a perusal of the order impugned in the present appeal ex facie is laconic and non dealing of the submission is a good ground for setting aside and consequential re- consideration which would meet the ends of justice and has requested to entertain the appeal by considering his stand. [5.10] Mr. Gandhi, learned senior advocate has further submitted that question of giving interest does not arise especially when there is no term contained in the contract itself and as such by relying upon the decision delivered by Hon'ble Apex Court, a contention is reiterated. A serious error is committed also in view of the fact that interest has been awarded as if it is a compound interest and as such by making reference to the decision delivered by Hon'ble Apex Court, a contention is raised that so far as that part of award is concerned, the same is absolutely unsustainable and perverse to the record. Mr. Gandhi, learned senior advocate has further submitted that once the awarded amount is already deposited the interest run will stop, the same has not been considered at all and stoppage of interest accumulation is to be considered in Page 22 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 view of the fact that pursuant to the order passed by the High Court the amount was deposited in the year 2016 and further by referring to an order dated 27.11.2019 passed in Civil Application No.1 of 2018 has submitted that there would be no interest moment the amount is deposited. It has been submitted by virtue of series of decisions, it is trite law that if the exercise of discretion is suffering from the vice of perversity it is always open for the Court to correct or set and naught the said irregularity which has taken place and here is the exact situation where the Court can take cognizance of such serious inadvertence. Apart from that the question of limitation is also in a situation like this is a pure question of law, can be raised at any point of time. Here in the instant case, the cause of action arose somewhere in the month of July 2006 when the termination took place whereas for the first time the notice which has been issued by respondent is in November 2010 and ex facie in view of the said issue also the award passed by Arbitral Tribunal is unsustainable and that having not considered by the Court below, the order impugned deserves to be corrected.
Page 23 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [5.11] Mr. Gandhi, learned senior advocate has further pointed out that if there is a patent illegality or apparent perversity then the same is also in the realm of public policy and as such by referring to few decision delivered by Hon'ble Apex Court since the award is contrary to law, based on material irregularity and patent illegality being reflected keeping in view of the principle underlying on public policy it is always open for Appellate Court to examine and correct the error which has been committed. Mr. M. B. Gandhi, learned senior advocate has further submitted that on the issue of ROU, it is incorrect thoroughly to conclude that appellant - GIDC did not provide the site but finding recorded is outside the purview of contract itself and this issue has also been not properly considered. By referring to the conclusion on three major issues that work done not paid, loss of profit and charging of interest, the view taken by the Arbitral Tribunal cannot be said to be even a possible view by virtue of relevant record exist on the file. So far as liquidated damages are concerned, the said issue has also not been gone into properly and in an ipse dixit manner the Page 24 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 proceedings appears to have been disposed of. It is the exclusive domain of GIDC which has retained its dominance to terminate the contract at any time on the eventualities which are spelt out in the contract and as such at what particular time, the termination is to be effected or not the function of appellant corporation and cannot be said to be a pre-matured has also in any manner and therefore overall consideration of the award of the Tribunal as well as the order passed under Section 34 of the Act in Civil Misc. Application deserves to be quashed and set aside. There is no law which can suggest that apparent illegality can also be perpetuated looking to the circumscribed jurisdiction howsoever it may be the apparent patent illegality as well as in view of public policy, the award ought to have been set aside. No other submissions have been made. [6] As against this, Mr. S. N. Soparkar, learned senior advocate assisted by Mr. Shashvata Shukla, learned advocate appearing on behalf of the contesting opponent has vehemently contended that neither any error is committed by Arbitral Tribunal nor by the Court below keeping in view the scope Page 25 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 contained under the relevant statute and no fault can be found of the learned Additional District Judge, who dealt with Civil Misc. Application precisely under Section 34 of the Act. The scope of the Section 34 of the Act, jurisdiction is well defined by catena of decisions. Hence, keeping those salutatory principle propounded on the issue of jurisdiction under Section 34 of the Act, the apparent well reasoned order passed by the Court below may not be disturbed more particularly when the scope of present appellate forum is also very very limited and circumscribed even from Section 34 of the Act. Hence, it is urged that the appeal being meritless, deserves to be dismissed. [6.1] Apart from this, Mr. Soparkar, learned senior advocate has submitted that the issue of limitation is not deserving to be considered at this stage of the proceedings, it is mentioned that this issue has never been canvassed either before the Arbitral Tribunal or before the Court below under Section 34 of the Act. The said is also not pleaded and not even raised in present First Appeal memo itself and therefore, the issue which has not been canvassed at all, the same cannot be allowed to be taken or Page 26 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 agitated at this stage of the proceedings. Here is the case where this issue of limitation cannot be said to be a neat question of law because on the background of facts this question of limitation even if to be considered, the same reflects a combination of facts and law which can never be allowed to be agitated in the absence of any pleadings and for this purpose, Mr. Soparkar, learned senior advocate has made a reference to the observations contained in paragraph 15 of a decision of Hon'ble Apex Court reported in AIR 1963 SC 1165. Further a reference is made to yet another decision delivered by Hon'ble Apex Court reported in (2006) SC 3672 and thereby contended that the issue of limitation, for the first time, in the absence of pleadings or contentions not taken at three stages can never be allowed to be agitated. Apart from that, even if it is to be considered this claim put-forth by the respondent is well within a period of limitation. A contract came to be terminated per- maturely on 29.07.2006. The respondent raised a third RA Bill which was paid on 20.11.2007 i.e. after the termination of contract (page Nos.476-497) and as such by virtue of Section 19 of Limitation Act, the claim cannot be said to be barred by law Page 27 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 of limitation. On the contrary, the appellant - corporation actually paid in between an amount of Rs.1.12 crores on 25.06.2008 which can be seen from page 324 of paper book compilation and on 23.07.2009, the notice for arbitration was given by the opponent and immediately thereafter on 19.05.2010 a claim statement was already submitted so if these sequence of events to be seen, the claim cannot be said to be barred by limitation, it is well within the period of limitation and as such, even in the absence of pleadings about limitation these dates are clearly indicating that stand taken on the issue of limitation is unsustainable, deserves no consideration. [6.2] At this stage, Mr. Soparkar, learned senior advocate has further submitted that the scope contained under appeal against an order passed under Section 34 of the Act is very very circumscribed and this appeal though mentioned as appeal under Section 96 of the C.P.C. but virtually it is under Section 37 of the Act and scope of Section 37 is well defined by very recent decision delivered by the Hon'ble Apex Court reported in (2022) 4 SCC 116 and by referring to paragraphs 18, 22 and 23 Page 28 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 a contention is reiterated that when the Arbitral Tribunal has passed an exhaustive award dealing with all contentions and submissions which have been raised before it and the same having been examined even under Civil Misc. Application filed under Section 34 of the Act. Such well reasoned exercise of discretion at two stages may not be disturbed in the interest of justice more particularly when apart from error of law even an error of fact also cannot be disturbed. A possible view in the absence of any distinguishable material is impermissible to be substituted or distributed. So when this be the scope under lying under Section 37 of the Act, there is hardly any justification made out by the appellant to call for any interference. Even, the Court has gone to the extent that even perversity if reflected to some extent cannot be interfered with. So when this be the scope, the appellant - corporation has not made out any such circumstance by virtue of which the exercise undertaken by the Court below can be substituted. [6.3] Mr. Soparkar, learned senior advocate has further submitted that it appears from the submission of learned senior Page 29 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 advocate appearing for the appellant - corporation that basically what is aggrieved is relating to interest amount which has been awarded, now this can well be considered by the Arbitral Tribunal in view of certain reasons which are projected by him hereunder. To explain this, a Chart in a tabular form is submitted, which is taken on record after serving a copy to the other side just to consider as to whether awarded interest is just or not and since the same is placed without any resistance, the Court deems it proper to reproduce the said Chart hereunder:-
"DETAILS OF AMOUNT OF INTEREST AWARDED Sr.No Details of Claim Page Principal Interest Total No. Amount (In (In Rs.) (In Rs.) Rs.)
1. CLAIM NO.1 (Work 66-70 5,97,62,078 4,60,15,163 10,57,77,241 done and not paid) (Interest @ 12% p.a.)
(a) Liquidated Damages Deducted This is interest from the bill by the pending Respondent arbitration [Rs.4,51,03,504.08] proceeding Under
(b) Wrongful sec.31(7)(a) deduction for not carrying out hydrotesting [Rs.1,11,44,216.00] Page 30 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023
(c) Wrongful deduction for non-
laying & joining of pipe and not carrying out hydrotesting i.e. only supply of pipe [Rs.35,14,321.00]
2. CLAIM NO.2 (Claims 70-73 3,04,53,967 Not Awarded 3,04,53,967 due to breach of Contract) Total 77 9,02,16,045 4,60,15,163 13,62,31,208 Re Post Award Interest : Under section 31(7)(b) Date of Award 20-4-2014 & Upto 23-10-2015 Permissible rate of Interest 18% Tribunal has stated "In case the Respondent failed to make the payment within 90 days from the date of the award, the claimant shall be entitled to recover and the respondent shall pay the future interest (simple) at the rate of 15% p.a. on the awarded amount of Rs.9,02,16,045 (Rupees Nine Crore Two Lacs Sixteen Thousand Forty Five Only) from the date of the award till the realisation of the payment." [@ 79 of the Award]. So no interest awarded on Rs.4,60,15,163 though it could have been added to the Principal amount."
[6.4] In view of aforesaid particulars which are reflecting in the Chart, by drawing attention to sub-section (7) of section 31 of the Act, it has been submitted that the Arbitral Tribunal has all the powers to consider the claim with regard to interest and as Page 31 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 such it is ill-founded in the mouth of appellate corporation to suggest that though there is a specific power in the statute but if contract does not permit then as such the Arbitral Tribunal has no jurisdiction to award. He further submitted that a reasonable interest always can be awarded and there is no cap on it. Here Clauses- (a) and (b) of sub-section(7) of Section 37 would clearly indicate that interest pending arbitration can also be given. Here is the award which is passed on 20.04.2014 and the amendment has taken place in Clause-(b) on 23.10.2015 so this proceeding will govern by unamended provision and unamended provision would clearly indicate that a sum directed to be paid by an Arbitral award shall unless the award otherwise directs carry the interest at the rate of 18% per annum from the date of award to the date of payment and as such 18% interest is in the mandatory form provided in unamended Clause-(b) which exist prior to October, 2015. So instead of 18% interest, only 12% interest has been awarded which cannot be said in any way either impermissible or unreasonable and if we see the interest post the award has been provided to the extent of only 15% and as such though the unamended provision has a Page 32 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 mandatory form prescribed 18%, the Arbitral Tribunal has awarded 12% and 15% respectively and as such it cannot be said that charging of interest is either irregular or impermissible in any form. By referring to certain judgments, the learned senior advocate has tried to substantiate these submissions. The judgments, which are reported in (2015) 2 SCC 189 (majority view) which deals with no unfairness on the awarding of interest and (2012) 13 SCC 419 which is an aspect of no case is made out for remand, has been relied. Since the main contention about public policy has already been dealt with and as such also, the order which is challenge cannot be said to be erroneous in any manner.
[6.5] In respect of, time is the essence of contract or not the learned senior advocate has referred to the judgments, which are reported in AIR 1961 SC 1295, AIR 1996 SC 1960 and (2022) 2 SCC 382 and by referring to certain observations made in the relevant paragraphs, it has been contended that this issue can be seen on facts to facts basis and there cannot be a blanket proposition. Hence, keeping in view of the scope of Section 37 Page 33 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 of the Act, the said issue cannot be gone into as an attempt is made by appellant. Further decisions have been referred to on the issue of interest, which are reported in (2010) 8 SCC 767, (2015) 2 SCC 189 and (2012) 4 SCC 505 and by referring to these decisions which Mr. M. B. Gandhi, learned senior advocate has also referred to, it has been contended that once the payment is deposited, the interest stopped running can be considered by executing court which has nothing to do with the validity of award and as such these points would have been raised had there been the proceedings relating to execution of the award and as such on this issue, the award which has been passed, cannot be set at naught.
[6.6] Further whether error of law is a ground for setting aside the award or not the learned senior advocate has made a reference to AIR 1980 MP page 1 and on the issue of limitation which has never been pleaded nor raised, nor the contention contained in memo of First Appeal, learned senior advocate has made a reference to the decisions reported in (2015) 5 SCC 223 as well as AIR 1963 SC 1165.
Page 34 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [6.7] Mr. Soparkar, learned senior advocate on the issue of scope has made a reference to few decisions which are reported in (2015) 3 SCC 49, (2015) 5 SCC 739, (2014) 9 SCC 263 and (2003) 5 SCC 705 and by referring to these, it has been contended that there is no scope for interference precisely under Section 37 of the Act. The stand taken by mediation of either of the party can never be gone into when the proceedings are to be dealt with on merits in accordance with law and for that purpose, a reference is made to the judgments reported in (2019) 2 SCC 753 as well as AIR 1999 SC 3627 and then has submitted that claim which has not been made cannot be considered nor the stand which has been taken in mediation deserves any consideration. On the contrary, at this stage, a reference is made to Section 81 of the Act which has clearly pointed out that party shall not rely on or introduce as evidence in the judicial proceedings the views which were expressed or suggestions which were made by party in a possible settlement of dispute and as such the said submission appears to be mischievous cannot be accepted. Hence, to summarize, learned Page 35 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 senior advocate has submitted that there is neither any error of jurisdiction nor the award or the order passed under Section 34 of the Act by the Court below is in conflict with public policy, no case is made out by the appellant to interfere with. [7] As against this, Mr. M. B. Gandhi, learned senior advocate appearing on behalf of the appellant made a valiant attempt in rejoinder practically to re-argue the matter to suggest the remand of the matter. It has been further submitted that on question of limitation even if point is not taken, the said issue of limitation being pure question of law, can be raised at any point time and for that he made a reference to Section 3 of the Limitation Act. Further Mr. Gandhi, learned senior advocate has submitted that rate of Fixed Deposits somewhere in the year 2014 was prevailing 9% and therefore it is always reasonable to award the rate which was prevailing and that yardstick having not been observed by the Arbitral Tribunal and having not considered by the Court below, the issues raised in the appeal deserves reconsideration. On the contrary, by virtue of amendment which took place, an amount of Rs.3.04 crores was Page 36 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 already deposited and as such even if remand order is passed, the respondents are not going to be prejudice in any manner. Hence, has submitted that the contentions which are taken and not dealt with is a circumstance which is very relevant to remand the proceedings back. Hence, has requested that by setting aside the impugned order, the Civil Misc. Application filed by present appellant deserves to be reconsidered. No further submissions have been made.
[8] Having heard the learned senior advocates appearing for the respective parties and having gone through the material on record, before dealing with the rival submissions, we may first of all observed our limitations which are prescribed by the Hon'ble Apex Court while dealing with the proceedings under Section 37 of the Act in appellate jurisdiction. [9] We may first point out certain relevant provisions contained under the Arbitration Act as well as the recent pronouncement of Hon'ble Apex Court in respect of scope underlying under Section 37 of the Act appeal which is akin to Page 37 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 Section 96 of the Code of Civil Procedure. The Hon'ble Apex Court in the case of Delhi Airport Metro Express Private Limited versus Delhi Metro Rail Corporation Limited reported in (2022) 1 SCC 131 propounded that scope contained under an appeal against the order passed under Section 34 of the Act is very very narrow and cannot be exercised in a routine manner. Since we have considered the said proposition and for empathetically submitted before us, we deem it proper to quote relevant observations hereunder:
"27. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under: -
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Page 38 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 Indian law would be relegated to "Renusagar"
understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)
(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under Page 39 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on Page 40 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 the ground of patent illegality. Additionally, a finding based on 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 characterised as perverse."
28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions." [10] Further that the substantial issue which has been the subject matter of controversy about awarding of interest amount, we may observe that Section 31 of the Act which has Page 41 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 prescribed the form and contents of the Arbitral award has made a specific provision with regard to the payment being made. Sub-section (7) since governing the field, we may deem it proper to quote hereunder sub-section (7) of section 31:
"31(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment."
[11] The aforesaid original Clause-(b) has been undergone a change by virtue of Act No.3 of 2016 with effect from 23.10.2015 and therefore since here the original arbitration proceedings were prior to this amendment and the award is dated 20.04.2014 the earlier Clause-(b) would governed the field and as such we deem it proper to quote the said original Clause-(b) which was existing prior to 23.10.2015: Page 42 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023
C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 "(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment"
[12] The aforementioned pre amended Clause-(b) was making it mandatory that payment should carry the rate of 18% per annum from the date of award to the date of payment and as against the said 18% interest what has been awarded is less which in our opinion cannot be said to be harsh or disproportionate. On the contrary, considering the overall situation, the learned Arbitral Tribunal has awarded reasonable rate of interest and the said issue has been considered looking to the situation which was prevailing on record. Since one of the submission which was made with regard to some commitment made before mediation but the said deliberation would took place and which has not attained finality and mediation having failed, we cannot considered the said deliberation to strengthen submission made by learned senior advocate appearing for the appellant and this is in view of statutory provision contained under Section 81 of the Act which reads as under:Page 43 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023
C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 "81. Admissibility of evidence in other proceedings.--The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,--
(a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;
(b) dmissions made by the other party in the course of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator."
[13] So aforesaid provision is clearly indicating that the views expressed and the suggestions made by the party in respect of possible settlement of dispute cannot be relied upon or introduced as an evidence either in arbitral or judicial proceedings.
[14] In view of aforesaid proposition and the provision of law, we may now proceed to examine the submission made by the Page 44 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 appellant. Mr. M. B. Gandhi, learned senior advocate has tried to persuade us to remand the proceedings back to the learned District Judge as some of the points have not been dealt with. However, a perusal of the order passed by the learned 2 nd Additional District Judge, Bharuch while exercising jurisdiction under Section 34 of the Act has dealt with what was required looking to the scope contained under Section 34 of the Act. Learned Court below has not only considered the scope contained under Section 34 of the Act but has examined the stand of the appellant in the context as to whether the award passed by the learned Tribunal can said to be suffering from patent illegality or a public policy is being violated, if the award is allowed to be existed. So this material circumstances which are required to be examined by the Court below appeared to have been considered at length and not only that the order also clearly suggest that the points canvassed by the appellant in Section 34 of the Act proceedings have been dealt with and as such looking to the scope propounded in respect of jurisdiction under Section 34 of the Act is dealt with and as such we are not impressed by the submission made by Mr. Gandhi, learned Page 45 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 senior advocate and as such we are not inclined to accept the submission that matter requires to be remanded back. If the suggestion which has been made by learned senior advocate if to be considered in the absence of any public policy being violated or in the absence of any patent illegality being projected, we may frustrate the object underlying in the mechanism which has been provided under the Act of arbitration. The efficacy of the object would be defeated if on the hyper technicality in the absence of any aforesaid element, would be loss if we may consider the request for remand and as such we outrightly reject the same.
[15] At this stage, we may point out that not only the learned court below while exercising jurisdiction under Section 34 of the Act has considered and dealt with the submissions but also come to a conclusion on the basis of analysis of fact and proposition of law and as such the very exercise of jurisdiction is not possible to be branded as perverse in any form. We deem it proper to quote hereunder the relevant observations made by the learned court below while passing the impugned order:- Page 46 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023
C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 "14. First of all, for the sake of argument, if it is considered that the dispute between the parties has been agreed to be referred to the Tribunal under Clause 30 then it is important to peruse 8 disputes as stated above for which the disputes have to be referred to the Tribunal with reference to present dispute between the parties. As I have reproduced Clause 30, it is not required to again reproduce 8 disputes enumerated in that Clause. I have minutely perused and appreciated the said 8 disputes in Clause 30 and also perused the disputes between the parties. In the present case, for which the dispute has been referred to the Council, this Court is of the firm opinion that the present dispute between the parties is not within the 8 disputes specified in Clause 30 on which the Ld. Advocate for the applicant relied, therefore, also, there is no substance in the argument of Ld. Advocate for the applicant and matter can be referred to the Tribunal.
15. It is also important to note that the Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992, provides to refer the disputes between the parties for works contract and word "Works contract" has been defined U/s.2(k) of the said Act which reads as under :
"Works contract" means a contract made by the State Government or the public undertaking with any other person for the execution of any of its works relating to construction, repairs or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory or work shop or of such other work of the State Government or, as the case may be, of the public undertaking, as the State Government may, by notification in the Official Gazette specify, and Page 47 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 includes-
(i) a contract made for the supply of goods relating to the execution of any such works,
(ii) a contract made by the Central Stores Purchase Organization of the State Government for the purchase or sale of goods.
16. Here, the work tender was given to the opponent for providing 1200 mm dia meter pipe and GRP Water Supply Line from Angareshwar intake water words to GIDC Compound at Bhersam, Dahej. I have gone through the definition of work contract and it only includes the work relating to construction, repairs or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory or work shop or of such other work of the State Government. Therefore, the work which was handed over to the opponent in the present case, does not fall within the definition of work contract of the Act. Thus, when it does not fall within the said definition, then in that circumstance, the matte cannot be referred to the Tribunal.
17. Ld. Advocate for the applicant has also relied section 21 of Arbitration Tribunal Gujarat State which provides for Arbitration Act to cease to apply. But when the work which was handed over to the applicant does not fall within the definition of work contract then any of the provision of Arbitration Tribunal Act Gujarat State, is not applicable and therefore, this section 21 is also not applicable. Thus, the jurisdiction of the Council does not cease to apply and the matter cannot be referred to the Tribunal.
Page 48 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023
18. Now, it is also important to note that as reproduced above Clause 102 of general condition of the agreement and special condition of contract between the parties, does not necessary to again reproduce those Clauses and conditions as it is already been reproduced above. But both the conditions i.e. 102 of general condition and 31.0 of special condition specifically provides to refer the dispute between the parties to the Council. Moreover, 1.1 and 30.0 of special condition has been incorporated to remove any doubt with regard to Clause 30 of Form B-2 of the contract on which Ld. Advocate for the applicant has heavily relied. Clause 102 of general condition and special condition of contract specifically provides that special condition is to be read in conjunction with B-2 agreement and general condition of contract on which Ld. Advocate for the applied relied. Therefore, Clause 30 of Form B-2 can be read with in conjunction of special condition. It is also specifically provided that special condition of contract very clearly removes doubt, if any, with regard to Clause 30 of Form B-2 of the contract on which Ld Advocate for the applicant has heavily relied on. Thus, when Clause 30 of Form B-2 has been supercedes by special condition of contract then it can be said that it has no value and the said condition cannot be taken into account or consideration to refer the dispute between the parties to the Tribunal and the dispute between the parties in the present case, has to be referred to the Council and therefore, there is no substance in the argument of learned advocate for the applicant."
Page 49 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [16] Since the aforesaid conclusion is not suffering from any patent illegality or any perversity, in the absence thereof, we are not inclined to disturb the possible view which has been taken by the learned court below. Even while going through the award which has been passed by learned Arbitral Tribunal also an exhaustive award has been passed upon proper adjudication of all the issues which have been raised and as such sitting in jurisdiction under Section 37 of the Act over the decision of Section 34 of the Act proceedings, we are not rather entitled to appreciate or re-examine the contentions which have been dealt with by the learned Arbitral Tribunal as well as by the Court below. Hence, we do not inclined to examine the issue as if the conclusion is suffering from any patent illegality. [17] At this stage, we may also notice that claims which have been raised before the learned Arbitral Tribunal, a specific findings have been arrived at after dealing with all respective submissions by both the parties and the conclusion arrived at on each claim and as such while perusing the said conclusion arrived at by the learned Tribunal also independent of Section Page 50 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 34 of the Act proceedings, we are not in a position to examine the issues or substitute the possible view which has been arrived at by the learned Arbitral Tribunal. Hence, no case is made out even for remand the proceedings back to the learned court below.
[18] Mr. M. B. Gandhi, learned senior advocate has tried to canvass the submission that time is the essence of the contract and the learned Arbitral Tribunal has erroneously considered the same to the contrary but a mere error even if the same cannot be disturbed in view of the scope of Section 37 of the Act which has been analyzed. Apart from that, even while perusing the arbitral award also, the said issue has been considered at length and such possible view when taken by the learned Arbitral, it would not be just on our part to substitute the views since said possible view is expressed by the learned Arbitral Tribunal. Several authorities have been pointed out which may deal with at an appropriate place in the present order but the said issue with regard to time is the essence of contract is not made out by the appellant successful enough to dislodge the Page 51 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 finding or question the award passed by the learned Arbitral Tribunal.
[19] From the submission of Mr. Gandhi, learned senior advocate it has also been reflected that the substantial grievance is revised with regard to awarding of interest and according to Mr. Gandhi, learned senior advocate in the absence of any term in the contract, such interest amount could not have been awarded. Now to understand and examine this issue, we may peruse the statutory provision stated about dealing with such issue of awarding of interest. As said earlier, sub-section (7) of section 31 of the Act has undergone a change only after 23.10.2015 whereas here in the instant case, the award is of 2014 undisputedly prior to the amendment and as such the original Clause-(b) of sub-section (7) of section 31 would govern the field which indicates that "a sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of 18% per annum from the date of the award to the date of payment" so what is emerging is that the award shall carry 18% interest till the payment whereas Page 52 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 here a perusal of the award clearly indicates that instead of mandatory awarding 18% interest the learned Arbitral Tribunal has awarded a reasonable amount of interest as can be seen apparently.
[20] In the context of this issue, an impression is tried to be generated that a cumulative interest has been awarded but the Chart which has been projected by learned senior advocate appearing for the respondent indicates that such is not the case and there is no embargo under the relevant provisions that interest pending arbitration proceeding cannot be awarded. In fact, the discretion is very much available by virtue of sub- clause (a), sub-section 7 of section 31 and as such this issue regarding interest when statutorily is permissible, in considered opinion of this Court, the said issue cannot be a ground for setting aside the entire arbitral award by exercising jurisdiction under Section 37 of the Act and neither any perversity nor any patent illegality nor any public policy is getting violated. Hence, we are of the opinion that issue raised is not possible to be accepted.
Page 53 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [21] In addition to the Chart, which has been provided by Mr. Soparkar, learned senior advocate to justify that there is no irregularity in respect of in awarding of the interest and the learned Arbitral Tribunal has analytically examined the said issue and then after considering each head has come to the conclusion that the interest amount deserves to be awarded and the finding to that effect is clearly narrated in paragraph 36, which we would like to reproduce hereunder:
"36. Issue No.11 Whether the Claimant is entitled to interest? If yes, at what rate.
(A) CLAIMANT'S SUBMISSION:
i) The Learned Advocate submitted that the Claimant is entitled to get interest both under Interest Act 1978 and under section 31 (7) of the Arbitration and Conciliation Act 1996 and submitted that it has claim interest at 2% per month on the amount claimed from 29/7/2006 till the date of actual payment. Referring to Section 31 (7) (a) of the Arbitration and Conciliation Act 1996, the-Learned Advocate submitted that the Arbitral Tribunal is empowered to grant interest on whole or any part of the Page 54 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 money for whole or part of the period between the date of cause of action and the date of award. Referring to Section 31 (7) (b) of the Arbitration and Conciliation Act 1996, the Learned Advocate submitted that the Arbitral Tribunal is empowered to grant interest at 18% per annum from the date of award til the date of payment.
(B) RESPONDENT'S SUBMISSION:
i) The Learned Advocate submitted that the Claimant is not entitled to any claim therefore, the question of interest on the claim amount does not arise. | (C) ARBITRAL TRIBUNAL'S FINDING:.
i) The Claimant has claimed interest at the rate of 2% per month from 29/7/2006 till the date of actual payment. The Claimant has also referred to section 31(7) (b) of the Arbitration Conciliation Act 1996, wherein the Arbitral Tribunal is empowered to grant maximum interest 18% per annum in absence of agreed rate as per agreement from the date of award.
ii) In deciding this issue, the Arbitral Tribunal has considered provision of section 31 (7) (a) (b) of the Arbitration and Conciliation Act 1996. The terms and conditions of the contract do not prohibit payment of interest. Thus, the section 31 (7) (a) (b) becomes a guiding parameter in awarding interest. It empowers the Arbitral Tribunal for awarding reasonable rate of interest and the period for which interest is to be granted i.e. the period Page 55 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 between the date on which cause of action arose and the award is made. In the present case, the Claimant is involved in activities of business and thus involved commercial transaction. In deciding the interest rate, the Arbitral Tribunal has considered this aspect and prevailing interest rate during the relevant period. Thus, the Arbitral Tribunal considered 12% simple interest per annum as a reasonable rate of interest to be paid by the Respondent on claim No. 1 from date of final bit the date 20/11/2007 till the date of award.
iii)Accordingly, the interest on awarded amount Rs.5.97,62,078.00 of claim no 1 work done and not paid for the period 20/11/2007 till the date of award i.e. 20/4/2014 (2342 days) works out to be Rs.4,60,15,162.74 (Rs.5,97,62,078.00 x 12% x 2342/365). The Arbitral Tribunal award Rs.4,60,15,163.00 towards the claim of interest.
iv) The Claimant is entitled to a sum of Rs.4.60,15,163.00 from the Respondent against claim of interest."
Hence, on this substantial grievance which has been voiced out about awarding of interest, we are of the opinion that no case is made out to call for any interference. [22] Yet another submission which has been tried to be emphasized is the issue of limitation, the said issue of limitation Page 56 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 has also been not deserving to be permitted in view of the fact that issue of limitation in view of settled position of law is a mix question of law and fact and here in this case, this issue has neither been raised by the appellant before the Arbitral Tribunal nor has been raised before Section 34 of the Act proceedings and nor before the present first appeal by raising any specific contention in the memo of appeal as well and as such when the said issue throughout the proceeding has not been raised now at the stage of final submission such issues of facts and law is not possible to be entertained by this Court. Had there been a case that such issue has been raised by the appellant before the learned court below or before the Arbitral Tribunal, the said issue if erroneously would have been considered probably this Court might have considered as to whether the same has been dealt with in the order under challenge but having not raised at all in specific terms as stated above. Such issues of facts and law cannot be permitted to be raised and as such we are of the clear opinion that this point is also not available to the appellant.
Page 57 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [23] With regard to the other contentions, which have been raised by Mr. M. B. Gandhi, learned senior advocate, the same are touching to the merit and facts which are outside the purview of the jurisdiction of this Court especially when the detailed arbitral award is passed and the learned court below has also exercised jurisdiction under Section 34 of the Act with proper application of mind and after assigning appropriate reasons, the said possible view adopted cannot be set at naught in present proceeding and as such we are of the view that no case is made out by the appellant to call for any interference. [24] In light of aforesaid overall conclusion now dealing with the decisions which have been pointed out, we may try to consider as to whether the same are applicable to this peculiar background of facts or not. Mr. Gandhi, learned senior advocate has first of all referred to the decision on the issue of seeking remand for want of dealing with the each submissions and for that a reference is made to a decision delivered by Hon'ble Apex Court reported in (2012) 13 SCC 419. In this case, in exercise of jurisdiction under Article 226 of the Page 58 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 Constitution of India, the High Court did not deal with all issues arising in the matter and answer only one of the issues and thereby disposed of the petition and in that background, the Hon'ble Apex Court has propounded the necessity for courts whose orders are not final and appealable to decide lis on all issues raised though in its comprehension it can be decided on a single issue without going into other question raised. In this peculiar background, the Hon'ble Apex Court has propounded the proposition which in the present proceeding in considered opinion of us is not applicable for the simple reason that the Arbitral Tribunal has exhaustively passed an award which was made the subject matter of challenge under Section 34 of the Act proceedings before the learned District Court and learned District Court keeping in view the peripheral jurisdiction of it, has considered relevant issues namely the public policy, breach of public policy and the patent illegality or perversity and from that angle if we see the order passed by the court below, the ratio laid down by Hon'ble Apex Court as indicated by learned senior advocate appearing for the appellant may not be applied as a straightjacket formula. It is settled position of law that if Page 59 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 the facts are different even one additional fact would make a world of difference in applying the ratio as a precedent and here a perusal of decision of 2012, indicated above, is quite on a different background of facts then what is on the hand of this Court. Hence, in our considered opinion, this judgment is not of any assistance to the appellant.
[25] In respect of an issue as to whether time is the essence of contract or not, the said issue of facts and law has been taken into consideration by the learned Tribunal while passing an award and has come to a definite conclusion and as such, such possible view cannot be set at naught sitting in jurisdiction under Section 37 of the Act. A perusal of the decision delivered by Hon'ble Apex Court reported in AIR 1961 SC 1295, it has been observed that in a commercial contract ordinarily time is the essence but then the same is depending upon the background of facts. Here, the learned Arbitral Tribunal has clearly concluded on the basis of critical analysis of terms of the contract and the conduct of the parties that there is a merit in the contentions raised by the claimant that time is not the Page 60 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 essence of the contract and thereby decided Issue No. 5 in negative and while deciding this the learned Arbitral Tribunal has considered the relevant clauses contained in the contract document and after considering the various clauses including the clause which relates to extension of time, has categorically found that time is not the essence of the contract and this finding on the issue is based upon a peculiar circumstances which are existing in the terms of the contract and as such when the facts are different, this proposition which has been made in respect of peculiar background of fact that existed before Hon'ble Apex Court, we are of the opinion that this decision is not available or come to the rescue of the appellant. [26] Yet another decision which has been brought before the Court which is reported in AIR 1996 SC 1960, the said decision was in respect of the specific relief act. The suit was filed for the purpose of specific performance of the agreement and in the context of such circumstances about the said agreement, it has been observed by Hon'ble Apex Court that unless the deed of agreement of sale stipulated a date for performance time is not Page 61 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 always the essence of the contract. So in our opinion that the point of limitation is not made out and as such this decision is also not in any way assist the case of the appellant. [27] Yet another decision which has been brought on the issue is a decision reported in (2022) 2 SCC 382 wherein also in respect of performance of contract whether time is the essence of contract or not, the Hon'ble Apex Court has propounded the entirety of contract and the conduct of party is relevant and the same can be culled out from the reading of entire contract as a whole including the surrounding circumstances and merely having an explicit clause may not be sufficient to make the time of essence of the contract. So in the background of facts when the learned Arbitral Tribunal on critical analysis of the terms of the contract has come to a conclusion that the said finding is not assailable or permitted to be reexamined in proceedings under Section 37 of the Act and as such challenge to the award on that count is impermissible and as such this judgment is not any assistance to the appellant. Page 62 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [28] Similar are the decisions tried to be projected but as discussed above, the issue has been examined at length by learned Arbitral Tribunal, the same cannot be a subject matter of challenge either under Sections 34 and 37 of the Act unless it is shown that public interest is being affected or there appears to be any patent illegalities which are not visible in the present case. Hence, the judgments cited on the issue are not of any assistance to the appellant.
[29] In respect of the issue related to interest, the learned senior advocate has referred to the decision to canvass the submission that in the absence of any term in the contract, no amount of interest can be awarded and for that, the decision reported in (2010) 8 SCC 767 is placed for our consideration in first point of time. While reading this judgment, we found that it on the contrary not in favour of the appellant, the Court has on the contrary propounded that where the Arbitral Tribunal has exercised its discretion to refuse to award the interest for a period pendente lite even if the principles on two cases which are referred to the award of the Arbitrator could not be Page 63 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 interfered with whereas here as discussed above, at length, a statutory provision is investing a discretion in the learned Arbitral Tribunal to consider the claim of interest either during the period of pending arbitration or till the payment being made after award and as such considering Section 31(7) of the Act and the effect thereof would indicate that the learned Arbitral Tribunal was justified to consider the interest claim made by the claimant and as such the decision referred to is not of any assistance to the appellant.
[30] Yet another decision which has been brought to our notice is a decision reported in (2015) 2 SCC 189 to canvass the submission that compounding interest cannot be awarded but here as discussed above and the Chart clearly indicates that there is no such compounding interest. On the contrary, the prior to amendment the Tribunal was under an obligation to award 18% interest instead of a reasonable amount of interest is awarded. Hence, looking to sub-section (7) of Section 31 and the effect thereof two clauses i.e. Clause - (a) and (b), we are of the opinion that the decision is of no assistance to the appellant. Page 64 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [31] Similar are the proposition reflects in the decisions reported in (2009) 12 SCC 324 and (2012) 4 SCC 505. While considering the decision reported in (2012) 4 SCC 505, we have noticed that the Hon'ble Apex Court in its jurisdiction available modified the order of the High Court and directed the concerned appellant to pay the amount of interest at 18% for post award period from the date of award until 24.05.2001 and declared that appellants are not liable to pay any interest on the award amount by virtue of Section 37(1)(b) of the Act. Be that as it may, this decision no doubt has propounded but looking to the explanation which has been put-forth by the learned senior advocate appearing for the respondent - claimant and clarified by way of Chart and in consonance with the conclusion on the interest reflecting in an award passed by learned Arbitral Tribunal, we are of the view that this issue may be agitated at the time when execution is taking place of the award but on this issue, the entire award cannot be set at naught. Hence, we are of the view that when the Arbitral Tribunal is empowered to include the pre-award interest "in sum for which award is made"
at the time when execution may take place this factum of Page 65 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 deposit of amount on 03.10.2016 may be taken into consideration and necessary effect be given but this is not the issue on which the award can be set aside under Section 37 of the Act proceedings. Hence, the judgments cited on the issue are not available to the appellant.
[32] Yet another issue based upon which an attempt is made to challenge the award in this proceeding is the issue of limitation by treating the same to be a pure question of law and can be raised at any point of time and for that submission, Mr. M. B. Gandhi, learned senior advocate has placed before us a decision reported in AIR 2006 SC 3672 but as discussed above, this issue of limitation has not been canvassed before the learned Arbitral Tribunal and the appellant has throughout submitted to the jurisdiction and allowed the entire award to be published after proper adjudication and the issue has also not been raised under Section 34 of the Act proceedings before the Court below nor a point is taken in the memo of appeal. So at this stage when the issue has not been agitated throughout, this issue of limitation in the background of present facts is a mix question of Page 66 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 law and fact and as such the judgments which have been cited does not help out the appellant in any manner more particularly when in the recent time also, the Hon'ble Apex Court has observed that issue of limitation is a mix question of law and fact and for that purpose, we may refer to a decision reported in (2020) 1 SCC 260. Considering the aforesaid decision of recent time, we are of the opinion that this issue is not possible to lean in favour of the appellant. Apart from that, even perusal of sequence of event that termination of contract has taken place on 29.07.2006, third R. A. Bill was paid on 20.11.2007, a further amount of Rs.1.12 crores has also been paid on 25.06.2008 and having not paid the entire amount a notice for arbitration was given on 23.07.2009 and the claim statement was then submitted on 19.05.2010. So if this sequence of event would be considered the issue of limitation is not possible to be accepted in favour of appellant as tried to be raised. Hence, such issues of facts and law since outside the purview of scope of Section 37 of the Act proceedings, we are of the opinion that the said issue would not help in any manner to the appellant.Page 67 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023
C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 [33] At this stage, as we have referred to the scope as propounded by Hon'ble Apex Court reported in (2022) 4 SCC 116, we are of the opinion that the judgment cited by learned senior advocate to support his submission on the issue of limitation is of no avail. Same is the case with other decision as well since without explaining the facts just the said decisions were in a brief manner tendered on record without explaining as to whether the facts are similar to the present controversy or not when the issue of limitation has not been taken throughout the proceeding except at the final stage, the decisions cited are not possible to be applied in favour of the appellant. A valiant attempt is made by Mr Gandhi, learned senior advocate to just emphasis the issue of limitation but as said earlier, the said issue being a mixed question of law and fact, we refrain ourselves from examining as if we are entertaining original proceedings. Hence, the decisions cited to that effect are of no assistance to the appellant.
[34] At this stage, we may also refer to the decision which have been cited on this issue by learned senior advocate appearing Page 68 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 for the respondent - claimant, it has been propounded in a decision reported in AIR 1963 SC 1165 wherein it has been clearly propounded that plea of limitation involving mixed question of law and fact, should not be allowed to be raised for the first time in the argument and that is what exactly it is happening on the case on hand. Since we have considered this decision to dislodge the contention of the appellant, we deem it proper to quote hereunder the relevant paragraph of the said decision which reads as under:
"15. The High Court has overlooked the fact that even upon the argument addressed before it on behalf of Kanshi Rain, the question of limitation was not one purely of law but was a mixed question of fact and law and, therefore, it was not proper for it to allow it to be raised for the first time in argument. We are satisfied that what the High Court has done has caused prejudice to some of the parties to the suit and on that ground alone, we would be justified in setting aside its decision. If the High Court felt overwhelmed by the provisions of s. 3 of the limitation Act, it should at least have given an opportunity to the parties which supported the decree of the trial court to meet the plea of limitation by amending their pleadings. After allowing the pleadings to be amended, the High Court should have framed an issue and remitted it for a finding to the trial Court. Instead of doing so, it has chosen to Page 69 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 treat the pleading of one of the defendants as conclusive not only on the question of fact but also on the question of law and dismissed the suit. It is quite possible that had an opportunity been given to the defendants, they could have established, in addition to proving the dates on which the summonses were served, that the suit was not barred by time because of acknowledgment in the course of the discussion, the High Court had said that it was not suggested before it by anyone that the claim was not barred by reason of acknowledgments. Apparently, no such argument was advanced before it on behalf of the plaintiff and the defendant Banarsi Das because the counsel were apparently taken by surprise and had no opportunity to obtain instructions on this aspect of the case. We are clearly of opinion that the High Court was in error in allowing the plea of limitation to be raised before it particularly by defendants who had not even filed a written statement in the case. We do not think that this was a fit case for permitting an entirely new point to be raised by a non-contesting party to the suit."
[35] Yet another decision which is reported in (2015) 5 SCC 223 the commencement of limitation period to be culled out from the fixed date of performance, the limitation starts from the date when the plaintiff had noticed of refusal of performance etc. and the said issue of limitation can be raised from such details which are being projected in the proceedings whereas Page 70 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 here on the present case on hand, the issue of limitation has not been raised and canvassed at all nor even raised in the memo of appeal and it is only at the fag end of argument this issue is tried to be canvassed and as such looking to the scope of appeal under Section 37 of the Act, we refrain ourselves from expressing any conclusion on this issue and the same can never be a subject matter of Section 37 of the Act appeals as it requires examination of facts and law. Hence, we are of the opinion that on this issue of limitation no case is made out by the appellant.
[36] So the overall consideration of the material on record would lead to a situation that in Section 37 of the Act proceedings, we may not examine or adjudicate the stand as if it is the original proceedings and even if there is a perversity to some extent, then also the same cannot be examined as held by Hon'ble Apex Court in the case of UHL Power Company Limited versus State of Himachal Pradesh reported in (2022) 4 SCC 116. A conjoint effect of the aforesaid discussion is that even if there is any patent illegality in the Page 71 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 award or order involving public interest in any manner and as such looking to the scope contained under Section 37 of the Act, we are of the clear opinion that neither the award nor the order passed under Section 34 of the Act by the court below deserve to be interfered with in any form. Though, Mr. Gandhi, learned senior advocate had made an attempt to argue as if it is proceedings under Section 34 of the Act but then whatever relevant circumstances to be examined in such proceedings when the due application of mind is already made by the court below just for the sake of remand of the proceedings, the matter cannot be sent to reconsideration. On the contrary, recently, the Hon'ble Apex Court has also propounded that remand of the proceedings may not be made in a routine or casual manner and as such, we may deem it proper to quote hereunder the relevant observations contained in paragraph 25 in the case of Nadakerappa Since Deceased by Lrs. and Others versus Pillamma Since Deceased By Lrs. and Others reported in 2022 SCC OnLine SC 387:-
"25. The Division Bench, without assigning any cogent reasons, has set aside the order of the learned Single Page 72 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023 C/FA/2080/2016 CAV JUDGMENT DATED: 21/04/2023 Judge and has remanded the matter to the Land Tribunal. It is settled law that the order of remand cannot be passed as a matter of course. An order of remand cannot also be passed for the mere purpose of remanding a proceeding to the lower court or the Tribunal. An endeavour has to be made by the Appellate Court to dispose of the case on merits. Where both the sides have led oral and documentary evidence, the Appellate Court has to decide the appeal on merits instead of remanding the case to the lower court or the Tribunal. We are of the view that, in the instant case, the Division Bench has remanded the matter without any justification."
[37] From the aforesaid proposition and in view of aforesaid discussion even the alternative request which has been made to remand the matter back to the Court below is also not possible to be accepted by us and since no case is made out to call for any interference, we hereby deem it proper to not to entertain the appeal. Accordingly, the present First Appeal stands dismissed.
Sd/-
(ASHUTOSH SHASTRI, J.) Sd/-
(NISHA M. THAKORE, J.) DHARMENDRA KUMAR Page 73 of 73 Downloaded on : Wed Apr 26 20:36:13 IST 2023