Delhi District Court
Up Industrial Consultants Ltd vs Gail (India) Limited on 12 February, 2021
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
ARBTN No. 1839/2018
UP Industrial Consultants Ltd.
Through its Managing Director
Having office at:
(i) 5th Floor, Kabir Bhawan, GT Road,
Kanpur-208002;
(ii) 512, 5th Floor, Shri Ram Tower,
13th Ashok Marg, Hazaratganj,
Lucknow, Uttar Pradesh ...Petitioner
vs
1. GAIL (India) Limited
Through its Executive Director
Having its office at
GAIL Bhawan, 16, Bhikaji Cama Place,
New Delhi-110066
2. Sh. Padam Kant Saxena, Retd. AD & SJ
Sole Arbitrator
R/o 261, Royal Residency, Plot No. 5,
Sector-9, Dwarka, New Delhi-110077 ....Respondents
Date of Institution : 21/05/2018
Arguments concluded on : 14/01/2021
Decided on : 12/02/2021
Appearances : Sh. S.S Sisodiya, Ld. Counsel for petitioner.
Sh. Ashim Shridhar and Sh. Ratan Kumar, Ld. Counsel for
respondent no. 1.
JUDGMENT
1. Petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (herein after referred as the Act) seeking setting aside of the arbitral award dated 25/01/2018, alleging to have received on 26/02/2018 passed by Ld. Sole Arbitrator Sh. Padam Kant Saxena, Former Additional District & Sessions Judge, Delhi, in the matter titled as GAIL (India) Ltd. vs Uttar Pradesh Industrial Consultants. In ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 1 of 20 impugned award Ld. Sole Arbitrator had directed the present petitioner to refund to present respondent no. 1 the principal amount of Rs. 45,00,000/- alongwith interest @ 12% per annum i.e., @ 12% interest on Rs 30,00,000/- with effect from 21/03/2014 and @ 12% on Rs. 15,00,000/- with effect from 05/05/2014 i.e., the dates of two payments made till the date of actual payment besides arbitration fees and reimbursement of costs.
2. Petitioner is a company incorporated in the year 1974, under the Companies Act, 1956 by the Government of Uttar Pradesh as a consultancy organization and is a joint venture of Government of UP, SIDBI, IFCI, ICICI and other nationalized banks. The respondent no. 1/claimant is State owned natural gas processing and distribution company incorporated under the provisions of the Companies Act, 1956.
3. Proposal dated 17/02/2014 was put forth by the petitioner before respondent no. 1, pursuant to which the petitioner and respondent no. 1 entered into agreement dated 04/03/2014, which was for supply and installation of 150 units of hand pumps in and around Kanpur City, as per the specifications, between March 2014 and December 2014 at a total cost of Rs. 60 lacs. As per the agreed payment plan/schedule, sum of Rs 30 lacs was released by respondent no. 1 to petitioner on 21/03/2014. Petitioner intimated to the respondent no. 1 that the installation work was further awarded by it to M/s Satya Rekha Constructions and Suppliers Private Limited. On requisition application of petitioner, a further sum of Rs 15 lacs towards the second installment was released to petitioner on 05/05/2014 by respondent no. 1, making the total payment made to petitioner as Rs 45 lacs. Thereafter, seeing the slow pace of work, respondent no. 1 sent various communications to petitioner to expedite the work and thereafter ultimately requested the petitioner to close the project and refund the amount of respondent no. 1. The petitioner however assured the respondent no. 1 that the work would be completed by 31/03/2015. On inspection carried out on 23/03/2015, the ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 2 of 20 officials of respondent no. 1 found that no progress had taken place. Vide e- mail dated 19/05/2015 the petitioner submitted the completion report of 9 hand pumps, which too did not meet the specifications of said agreement. Respondent no. 1/claimant alleged that petitioner agreed to refund the amount to claimant vide communications dated 29/04/2015 and 25/08/2016 but when nothing was done by petitioner in this regard, respondent no. 1 got issued legal notice dated 10/08/2015 calling upon the petitioner to refund the amount within 15 days.
4. Respondent no. 1 filed Civil Suit No. 182/16 against the petitioner wherein the Court of Sh. Surinder S. Rathi, Ld. Additional District Judge-03, Patiala House Court, New Delhi District, New Delhi passed the order of date 26/05/2016 wherein both the parties i.e., petitioner and respondent no. 1 amicably agreed to get the dispute adjudicated before Ld. Sole Arbitrator, respondent no. 2, in terms of Clause 8 of Agreement inter se parties dated 04/03/2014 and the parties agreed to firstly approach the present Sole Arbitrator for undertaking arbitration in this matter. Accordingly, the arbitration proceedings were conducted by respondent no. 2 in this matter, which finally culminated in the impugned award, signed copy of which was delivered to Ld. Counsel of present petitioner on 23/02/2018. The petitioner had impugned the arbitral award in question on the following grounds:
(i) The award is unintelligible, passed in vague manner without considering the clauses of the agreement and the Ld. Arbitrtor misconducted himself, deviated from the terms of reference and arbitration agreement per contra to Section 34(2)(a)(v) of the Act.
(ii) Clause 8.1 of the agreement between the parties stipulated that if the parties are unable to reach on the agreement on the meaning of interpretation of any of the clause, then the matter shall be referred to the Director (HR) of respondent no. 1, which was not resorted to by respondent no. 1 and not considered by ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 3 of 20 Ld. Sole Arbitrator.
(iii) Nowhere in the agreement it was stipulated that on the termination or breach of the agreement, the petitioner was liable to pay the interest on the principal amount but in the impugned award Ld. Sole Arbitrator/ respondent no. 2 awarded the interest, as detailed above in violation of the agreement.
(iv) The impugned award is against the public policy under Section 34 (2) (b) (ii) of the Act. Clauses of the agreement were overlooked by the Ld. Sole Arbitrator, who passed the vague and omnibus award.
(v) The impugned award was against the rule of natural justice as evidences and facts presented by petitioner were not considered but award was passed by Ld. Sole Arbitrator, which is clearly biased and none of the witnesses of respondent no. 1 supported its case.
(vi) Though respondent no. 1 had submitted that they had paid the petitioner Rs 45 lacs after deducting the taxes for installation of hand pumps and witness RW3 of petitioner before Ld. Sole Arbitrator clearly mentioned of payments made by respondent no. 1 were after deducting the Work Contract Tax probably @ 4% but no certificate of deduction of tax was delivered to petitioner even after many attempts and the Ld. Arbitrator awarded repayment of said amount to respondent no. 1.
(vii) It was clearly mentioned in Clause 5.4 of the agreement that respondent no. 1 shall duly compensate the petitioner for the work done till the date of termination of the agreement and RW1, witness of petitioner mentioned in his statement with respect to installation of 9 hand pumps and the same was accepted by the respondent no. 1 whereas Ld. Sole Arbitrator did not consider the Clause 5.4 of the agreement and the impugned award finds no mention about the compensation for ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 4 of 20 the hard work done by the petitioner.
It was prayed to set aside the impugned award.
5. In filed reply, respondent no. 1 controverted the submissions and grounds of petitioner. It was averred that nowhere in the petition, the petitioner even once had taken defence of not breaching the agreement dated 04/03/2014. It was averred that from the beginning of the project itself, it was observed by respondent no. 1 that the progress of the work was very slow and various communications were made to petitioner to expedite the work in terms of the agreement, which was to be competed by 31/12/2014. On 23/03/2015, senior officials of respondent no. 1 visited the site for inspection of installation of the hand pumps and found that no progress had taken place. The goodwill and reputation of respondent no. 1 was tarnished by the petitioner as it had failed to fulfill the terms of the agreement to do the work awarded despite receipt of 75% of the total project cost. It was averred that the composition of the Arbitral Tribunal and/or the arbitral procedure was in accordance with the agreement and both the parties had agreed on the name of Ld. Sole Arbitrator mutually. No premise is available with the petitioner to assail the impugned award for non existence of any available grounds for setting aside the impugned award. It was averred that the arbitration proceedings were invoked to resolve the disputes that arose between the parties to the agreement dated 04/03/2014 and not to resolve any ambiguities in the interpretation of the agreement. So, Clause 8.1 of the agreement in question was not applicable to the case in hand. It was averred that the agreement in question had no expressive condition in the agreement, which bars the Ld. Arbitrator to award interest to respondent no. 1 in the interest of equity, justice and good conscience. It was averred that the petitioner had miserably failed to disclose any fact to substantiate for setting aside the impugned award whereas the issues framed in the arbitration proceedings were dealt and disposed of with detailed reasons after careful examination of the subject matter by Ld. Sole Arbitrator and his findings are supported by ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 5 of 20 cogent reasons and impugned arbitral award is reasonable, speaking and passed after considering the evidences on record submitted by the parties to the arbitration. Leveled allegations are stated to be baseless. It was averred that petitioner miserably failed to comprehend that as the parent agreement from whose transaction the TDS originated was breached by the petitioner, the petitioner was liable to refund the whole amount to respondent no. 1 and compensate for the losses emanating from the breach of agreement, let alone exploiting respondent no. 1 for TDS certificate on which the petitioner had no right as the amount on which TDS was deducted had to be refunded back to respondent no. 1 under the arbitral award. It was also averred that it was crystallized in the impugned award vide para nos. 14.14 and 14.15 that the petitioner had not filed even a single completion report in regard to the alleged installed hand pumps. Also was averred that the petitioner had never even taken a defence vide statement of defence or in the submissions in the course of arbitral proceedings that any such compliance was made in respect of even a single hand pump; therefore, the petitioner cannot be said to have done any work till the date of termination of the agreement. It was submitted that the petitioner miserably failed to disclose any fact to substantiate grounds for setting aside the impugned award. It was prayed to dismiss the petition.
6. I have heard Sh. S.S Sisodiya, Ld. Counsel for petitioner; Sh. Ashim Shridhar and Sh. Ratan Kumar, Ld. Counsel for respondent no. 1. and perused the relied upon precedents and records of the case as well as filed arbitral proceedings record and given my thoughtful consideration to the rival contentions put forth.
7. Ld. Counsel for petitioner argued in terms of the grounds of the petition. It was argued that impugned award was against Section 28(3) of the Act as Ld. Sole Arbitrator had gone beyond the terms and conditions of the agreement by awarding interest and pendent-line interest by ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 6 of 20 overlooking/ignoring the terms of the agreement. It was also argued that Ld. Arbitrator overlooked the important fact that the amount of Rs 13,80,000/- was to be adjusted towards the work completed by the petitioner. Also was argued that Ld. Arbitrator declined the request of petitioner in the application filed under Section 30 of The Act filed before Ld. Sole Arbitrator. Also was argued that Clause 5.5 of the agreement was overlooked by Ld. Sole Arbitrator and no amount was awarded to petitioner for the work done till the termination of the agreement. Also was argued that Ld. Sole Arbitrator overlooked the Clause 6.3 of the agreement wherein respondent no. 1 had the obligation to reimburse the petitioner for expenses towards the payment to the sub contractors for purchase of the raw materials for the installation work. It was also argued that Ld. Sole Arbitrator failed to consider that the said work could not be completed in the stipulated time due to sudden announcement of the General Election, which was not in the control of the petitioner and the clause of Force Majure was applicable since 05/03/2014 to June 2014. It was also argued that the impugned award is illegal, erroneous and arbitrary.
8. Ld. Counsel for petitioner relied upon the following precedents:-
1. In Sayeed Ahmed & Company vs State of Uttar Pradesh & Ors, (2009) 12 SCC 26;
2. Rajasthan State Mines & Minerals Ltd., vs Eastern Engineering & Anr., (1999) 9 SCC 283;
3. Sikkim Subba Associates vs State of Sikkim, (2001) 5 SCC 629;
4. G.M. Northern Railway & Anr. Vs Sarvesh Chopra, (2002) 4 SCC 45;
5. Sri Chittaranjan Maity vs UOI, (2017)9 SCC 611;
6. Bhai Panna Singh & Ors vs Firm Bhai Arjun Singh & Ors, AIR 1929 PC 179;
7. Steel Authority of India Ltd. vs J.C Budharaja, Government & Mining Contractor, (1999) 8 SCC 122;
8. Bharat Coking Coal Ltd. vs Annapurna Construction, (2003) 8 SCC 154;
9. M.B Patel & Co. vs Oil and Natural Gas Commission, (2008) 8 SCC 251;
10. Vijay Kumar vs Bathinda Central Co-operative, FAO No. 2161/2012 2013 SCC Online P & H 9476.
9. Ld. Counsel for respondent no. 1 argued in terms of filed reply. It was ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 7 of 20 argued that in terms of Clause 8.1 of the agreement, disagreement on interpretation of clause was to be referred to HR Department of respondent no. 1. The referred matter was dispute inter se parties to the agreement and not disagreement on interpretation of the clause of the agreement. Also it was argued that in terms of law laid in the case of Perkins Eastman Architects DPC & Anr. vs HSCC (India) Ltd., 2019 SCC Online SC 1517, the bar was created under 7th Schedule of the Act and matter could not be referred unilaterally for arbitration to Director (HR) of respondent no. 1. The jurisdiction of Ld. Sole Arbitrator was not challenged as per the procedure laid in the Act as the matter was referred to Ld. Sole Arbitrator with consent of both the parties, whereas no plea on this facet was raised in the statement of defence by the petitioner before Ld. Sole Arbitrator and no new plea can be raised in this petition now. It was argued that only in case agreement between the parties prohibited grant of interest, then Ld. Sole Arbitrator cannot grant interest in favour of claimant, whereas in the agreement in question there was no prohibition for claim of interest by claimant and grant of interest by Ld. Sole Arbitrator. It was argued that the award in question is not in conflict with the public policy or against principal of natural justice as the parties to arbitration were given all opportunities to lead evidence which was considered and cogent reasonings was in the impugned award in the finding arrived at. It was also argued that no plea with respect to deduction of TDS @ 4% and not giving of certificate was raised in statement of defence by petitioner before Ld. Sole Arbitrator, so no new plea can be raised. It was argued that as per Point 12 of Section IV of Agreement between the parties, petitioner had to give tax exemption certificate in form 80G/35 AC certificate to claim exemption from deduction of tax at the time of payment otherwise tax was to be deducted at source. It was argued that admittedly petitioner did not give any such certificate, so TDS was deducted on payment of Rs 30 lacs on 21/03/2014 and petitioner availed benefit of said TDS and no counter claim was raised by petitioner concerning TDS certificate in arbitration proceeding; so deposition of RW3 that TDS certificate was not given was without ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 8 of 20 supporting pleading or the material and evidence beyond pleading is not entertainable, so there could not be finding of Ld. Sole Arbitrator in that respect. It was argued that no plea was raised by petitioner based on Clause 5.4 or 5.5 of the agreement in entire statement of defence before Ld. Sole Arbitrator and no new plea is tenable in present petition. Also was argued that Point 8 of Section IV of Agreement between parties showed that petitioner was required to inter alia submit monthly, quarterly progress report of the project and as was evident from the records, there was no compliance of said condition by petitioner in respect of alleged installation of 9 hand pumps. Also was argued that as per requirement set out in e-mail dated 21/03/2014, petitioner was required to mention logo and serial number of beneficiary on each hand pump installed with photograph with beneficiary/nearby building to be submitted as part of competition report and submit with respondent no. 1, but petitioner did not comply with the same and therefore, there was no installation of even single hand pump, as per requirements. Ld. Counsel for respondent no. 1 drew attention to para nos. 14.13 to 14.16 and 14.21 of the award. It was argued that neither findings of Ld. Sole Arbitrator are perverse nor capricious. It was argued that findings of Ld. Sole Arbitrator are pure findings of the fact, but are based on due appreciation of evidence and material admissible in law, which are correct and plausible one, which are not liable to be interfered in this petition.
10. Ld. Counsel for respondent no. 1 relied upon the following precedents:
1. Perkins Eastman Architects DPC & Anr. vs HSCC (India) Ltd., 2019 SCC Online SC 1517;
2. Brick Steel Enterprises vs The Superintendending Engineer, Public Works Department, 2006 (5) CTC 519;
3. Sayeed Ahmed & Company vs State of Uttar Pradesh & Ors., (2009) 12 SCC 26;
4. Sree Kamatchi Amman Constructions vs Divisional Railway Manager (Works), Palghat & Ors, (2010) 8 SCC 767 and
5. Associate Builders vs Delhi Development Authority, (2015) 3 SCC 49.
11. An Arbitral Award can be set aside on the grounds set out in Sections ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 9 of 20 34(2)(a), (b) and (2A) of the Act.
12. Section 34 (1), (2) and (2A) of The Arbitration and Conciliation Act, 1996 read as under:
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 10 of 20(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
13. Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are those mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 11 of 20 interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
14. Supreme Court in case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
15. Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
16. In the case of Swan Gold Mine vs Hindustan Copper, MANU/SC/0849/2014, the law laid in the case of Oil & Natural Gas ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 12 of 20 Corporation Ltd v. Saw Pipes Ltd. (2003) 5 SCC 705 was discussed and inter alia held that when the parties have entered into concluded contract, agreeing terms and conditions of the said contract, they cannot back out and challenge the award on the ground that the same is against the public policy and the Court was precluded from re-appreciating the evidence and to arrive at different conclusion by holding that the arbitral award is against the public policy.
17. In the case of M/s Arosan Enterprises vs Union of India & Anr., MANU/SC/0595/1999, it was inter alia held that reappraisal of evidence by the Court is not permissible in the proceeding under the Arbitration Act. In the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on wrong proposition of law. In the event, however, two views are possible on a question of law as well, the Court would not be justified in interfering with the award. Also was held that the Court as matter of fact , cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of arbitrator is a possible view the award or the reasoning contained therein cannot be examined. The decisions in the cases of State of Rajasthan vs Puri Construction Co. Ltd, MANU/SC/0865/1994 and Sudersan Trading Company vs Government of Kerala & Anr., MANU/SC/0361/1989 were relied. Also was held therein that where an Aribitrator makes a mistake either in law or in fact in determining the matters referred, but such mistake does not appear on the face of the award, the award is good notwithstanding the mistake, and will not be remitted or set aside.
18. In the judgment titled as G. Ramchandra Reddy v. Union of India, ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 13 of 20 (2009) 6 SCC 414, Supreme Court asserted that Courts should not normally interfere with the award of an Arbitrator, unless there was a gross error apparent on the face of the record.
19. In the case of M/s Sudarsan Trading Co. v. Government of Kerela & Anr. AIR1989 SC 890, the observations of the Supreme Court have been that Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the Arbitrator in this case. By purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
20. Supreme Court in the case of Dyna Technologies Pvt Ltd vs Crompton Greaves Limited, MANU/SC/1765/2019 inter alia held that the requirements of reasoned order were that to be proper, intelligible and adequate. In the absence of reasoning, when there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Act.
21. Supreme Court in the case of Sayeed Ahmed & Company (supra) inter alia held that where there is express bar in contract against claim for interest, it operates only till the date of award, not thereafter.
22. In the case of Rajasthan State Mines & Minerals Ltd. (supra) while appreciating the provisions of Arbitration Act 1940, Supreme Court inter alia held that if agreement specifically bars certain claims from being raised and yet an award has been made then court must not uphold such award.
23. Supreme Court in the case of Sikkim Subba Associates (supra) inter ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 14 of 20 alia held that award of arbitrator cannot be opposed to law and it cannot grant what is not permissible in law.
24. Supreme Court in the case of G.M., Northern Railway & Anr. (supra) while appreciating Arbitration Act, 1940 inter alia held that if any claim comes within an 'excepted matter clause' then such claim cannot be referred to arbitration.
25. In the case of Sri Chittaranjan Maity (supra), Supreme Court inter alia held that if agreement prohibits award of interest for the pre-award period, the arbitrator cannot award interest for such period.
26. In the case of Bhai Panna Singh & Ors (supra), Privy Council held that plaintiffs must prove the damages they have suffered for recovery of liquidated damages or penalty or interest. Effect of Section 74 of Indian Contract Act of 1872 was appreciated therein.
27. Supreme Court in the case of Steel Authority of India Ltd. vs J.C Budharaja (supra) while appreciating Arbitration Act, 1940 held that Arbitrator cannot exceed his jurisdiction or go beyond the terms of agreement. Arbitrator may be prohibited by terms of contract to pass award on a specific item.
28. Supreme Court in the case of Bharat Coking Coal Ltd. (supra) inter alia held that Arbitrator cannot act arbitrarily, irrationally, capriciously or independent of the contract.
29. Supreme Court in the case of M.B Patel & Co. (supra) inter alia held that interest awarded by the Arbitrator was in violation of the agreement clauses between the parties.
30. In the case of Vijay Kumar (supra), it was held that normally the scope ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 15 of 20 of interference with respect to an award passed by an Arbitrator is very limited and only if it attracts any of the grounds enumerated in under Section 34 of the Act, then the award can be set aside, whereas if the award passed is wholly illegal and unjust, it will be an Act done against the public policy, equity and rules of natural justice.
31. In the case of Brick Steel Enterprises (supra), it was inter alia held that in petition under Section 34 of the Act parties are not entitled to file a fresh document or raise a new plea for the first time before the Court.
32. Supreme Court in the case of Sree Kamatchi Amman Constructions (supra) inter alia held that in view of specific bar against payment of interest under Clause 16 (2) of General Condition of Contract (GCC), the Arbitral Tribunal rightly refused to award interest from the date of cause of action and from date of award.
33. Adverting to the facts of the case, it is revealed that the matter was referred to Ld. Sole Arbitrator with consent of both the parties. No challenge to jurisdiction of Ld. Sole Arbitrator was laid before Ld. Sole Arbitrator by the petitioner in the statement of defence. No new plea can be raised in this petition now on said facet of the matter.
34. Project in question was for "Supply and Installation of 150 numbers of INDIA Mark II Hand Pumps in and around Kanpur City, Uttar Pradesh". It was to be executed by the petitioner. Total cost of the same was Rs 60,00,000/-. Rs. 45,00,000/- were paid by claimant/respondent no. 1 to petitioner. Ld. Sole Arbitrator in the impugned award referred to e-mail Ex A1 sent on 21/03/2014 by an official of claimant/respondent no. 1 to official of petitioner and alongwith it a list of the beneficiaries to be followed for implementation in respect of GAIL's CSR works to be executed through petitioner also embodying the other instructions for compliance. Aforesaid e-mail is also Ex CW1/6 before ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 16 of 20 Ld. Sole Arbitrator and it also embodies that on completion of each hand pump a photograph is to be taken with beneficiary/nearby building to be submitted as a part of completion report and on each hand pump the described logo of GAIL with matter specified therein, for GAIL's visibility is to be printed.
35. During the course of appreciation of evidence, Ld. Sole Arbitrator held that no such compliance as reflected in Ex A1 was made by the present petitioner nor any completion report was sent to the present respondent no. 1 nor any such document was filed in the record of the case before Ld. Sole Arbitrator. It was held by Ld. Sole Arbitrator that present petitioner did not install 150 hand pumps as per agreement Ex C2 nor communicated any such completion, in terms of Ex A1 to the claimant/respondent no. 1 either by the initial stipulated date nor by the extended period. It was also observed that infact it was not even the defence of the present petitioner that any such compliance of Ex A1 was made by it in respect of even a single hand pump. Ld. Sole Arbitrator then reached the finding that there was breach of agreement Ex C2 by the present petitioner. Ld. Sole Arbitrator also took note of the fact that agreement Ex C2 was entered into between the parties and signed on 04/03/2014, whereas notification dated 05/03/2014 published the schedule for the General Elections in 2014, one day later to execution of Ex C2; so the on going projects were not effected nor did they get hit by the promulgation of code of conduct subsequent to issuance of notification for conducting of elections.
36. Ex CW1/13, the visiting report of officials of respondent no. 1 to the project site was in evidence before Ld. Arbitrator, wherein those officials reported that they could see some positive response for two locations at Kidwai Nagar, where at first location one hand pump new was installed (without GAIL's Logo/CSR matter and platform) and at second location another hand pump was found installed and functional with platform (but ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 17 of 20 without GAIL's Logo/CSR matter). Before Ld. Sole Arbitrator was another letter Ex RW3/1 dated 02/12/2014 sent by petitioner to its supplier with clear mention that not a single pump was installed by the said supplier till November 2014. It was also appreciated by Ld. Sole Arbitrator that on 23/03/2015, on an inspection by three officials of respondent no. 1, they had found that there was no progress of work.
37. It was also observed by Ld. Sole Arbitrator that the amounts paid by the petitioner to its supplier/vendor was an issue between the present petitioner and its vendor and had nothing to do with the dispute inter se present petitioner and respondent no. 1 and alleged amount spent on installation of 9 pumps i.e., Rs. 13,80,000/- supplied by the vendors cannot be given adjustment of. It was also observed by Ld. Sole Arbitrator that since present petitioner was clearly guilty of committing breach of contract and in such a case when the other party is deprived of the use of its money then it is rightfully entitled, has a right, to be compensated for the deprivation, either in the form of compensation or interest. It was also observed by Ld. Sole Arbitrator that agreement in question was containing no prohibition for award of interest. Ld. Sole Arbitrator relied upon the case of Secretary, Irrigation Department Government of Orissa vs G.C Roy, (1992) 1 SCC 508, eliciting that Supreme Court enumerated the aforesaid proposition of law on the powers of the arbitrator, to award interest pendent-lite, where the agreement is either silent or contains no prohibition on the said power. Ld. Sole Arbitrator had reached finding of present petitioner to be clearly guilty and committed the breach of contract and sum of Rs. 45,00,000/- was received by present petitioner from respondent no. 1 for which the impugned award was passed.
38. Ld. Counsel for petitioner could not point out any provision in the agreement inter se parties containing any bar or prohibition of grant of interest by Ld. Sole Arbitrator. The jurisdiction of Ld. Sole Arbitrator was not challenged as per the procedure laid in the Act as the matter was referred to ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 18 of 20 Ld. Sole Arbitrator with consent of both the parties, whereas no plea on this facet was raised in the statement of defence by the petitioner before Ld. Sole Arbitrator. No plea with respect to deduction of TDS @ 4% and not giving of certificate was raised in statement of defence by petitioner before Ld. Sole Arbitrator. No counter claim was raised by petitioner concerning TDS certificate in arbitration proceeding. No plea was raised by petitioner based on Clause 5.4 or 5.5 of the agreement in entire statement of defence before Ld. Sole Arbitrator. No new plea is tenable in present petition. Reliance placed upon the case of Brick Steel Enterprises (supra).
39. It had also been the premise laid by petitioner that their application under Section 30 of the Act before Ld. Sole Arbitrator for directing the claimant/respondent no. 1 to first explore the possibility of settlement through mediation process; had not found favour. Section 30 of the Act with respect to settlement inter alia embodies that only with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement. Order sheet of proceeding dated 14/01/2017 before Ld. Sole Arbitrator finds mention that aforesaid application under Section 30 of the Act was then considered and it was the Ld. Counsel for claimant/respondent no. 1, who had opposed the said application on the ground that despite efforts the dispute could not be settled earlier and the said application was an effort by the present petitioner to delay the arbitral proceedings. It so reveals that in the course of the arbitral proceedings before Ld. Sole Arbitrator, Counsel for claimant/respondent no. 1 did not agree for use of mediation. The use of mediation can only be done with the agreement of the parties in terms of Section 30 of the Act and not otherwise. No fault can be found with the order of Ld. Sole Arbitrator for no use of mediation in view of opposition of the Counsel for claimant/respondent no. 1 accordingly and it cannot be premise to set aside the impugned award.
40. The impugned award was passed by former learned Additional District ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 19 of 20 and Sessions Judge, whose name as Sole Arbitrator was concurred upon by the parties. The findings were given by Ld. Sole Arbitrator based on appreciation of facts, evidences and law after giving all reasonable opportunities to the parties to lead their evidence. Not only the reasoning of Ld. Sole Arbitrator are logical but all the material and evidences were taken note of by the Ld. Sole Arbitrator. The Court cannot substitute own evaluation of conclusion of law or fact to come to the conclusion other than that of the Arbitrator, as per the law laid in the precedents, elicited herein above. Cogent grounds, sufficient reasons have been assigned by the Ld. Sole Arbitrator in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. This Court cannot re- appraise the evidence and it is not open to this Court to sit in the appeal over the conclusion/findings of facts arrived at by Ld. Sole Arbitrator. No error is apparent in respect of the impugned award. I do not find any contradiction in the observations and findings given by Ld. Sole Arbitrator. The award is not against any public policy nor against the terms of contract of the parties. No ground for interference is made out. None of the grounds raised by the petitioner attract Section 34 of the Act. The precedents relied upon by Ld. Counsel for petitioner, elicited herein above, embody facts and circumstances entirely different and distinguishable to the facts and circumstances of the case in hand and are in no way of any help to the petitioner for getting the impugned award set aside.
41. For the foregoing reasons, the petition is hereby dismissed.
42. The parties are left to bear their own costs.
43. File be consigned to record room.
ANNOUNCED IN (GURVINDER PAL SINGH)
OPEN COURT District Judge (Commercial Court)-02
on 12th February, 2021. Patiala House Court, New Delhi.
(Deepika) ARBTN No. 1839/2018 UP Industrial Consultants Ltd. Vs GAIL (India) Limited & Anr. Page 20 of 20