Delhi District Court
M/S Ravindra Kumar Yadav vs M/S Telecommunications Consultants ... on 10 May, 2023
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH
EAST DISTRICT SAKET COURTS, NEW DELHI.
OMP (Comm) 47/2019
M/S Ravindra Kumar Yadav
Through its Proprietor
Sh. Ravinder Kumar Yadav
S/o Sh. Lala Ram Yadav
R/o MIG-4, Goodluck Apartments
Narmada Road, Jabalpur-482001 ........Petitioner
VERSUS
1. M/s Telecommunications Consultants India Ltd.
(A Govt. of India Enterprises)
TCIL Bhawan, Greater Kailash-I
New Delhi ....Respondent
2. Sh. P.K. Mandal, Sole Arbitrator
Room No. 402, 4th Floor, TCIL Bhawan
Greater Kailash-I,
New Delhi-110018 ...... Performa Respondent
Date of Institution : 07.05.2019
Date when final arguments heard : 03.05.2023
Date of Judgment : 10.05.2023
OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 1/12
Announced on 10.05.2023
JUDGMENT
1 By way of present petition U/s 34 of the arbitration and conciliation Act, the petitioner has challenged the impugned award dated 14.02.2019 passed by Ld. Sole Arbitrator.
2. Brief fact of the case is the respondent awarded the work of strengthening/ rebuilding the stretch at NH 12 A vide work order dated 21.12.2009 at a bid price of Rs. 4,83,67,800/-. The time allowed for completion was seven months. The claim of the claimant that even after issuance of completion certificate the respondent not paid the balance amount. The respondent indicated that due to poor performance of the claimant in other infrastructure awarded to the claimant the respondent suffered huge loss. The claimant then invoked arbitration clause of the PO. The sole arbitrator decided the claim as well as counter claim vide award dated 14.02.2019.
3. Ld. counsel for the petitioner submitted that he filed a present petition u/s 34 for modifying/amendment of the award dated 14.02.2019. The Ld. Arbitrator under claim no. 1 passed the award of Rs. 17.86 Lakhs in favour of the claimant/petitioner. As per the condition of the respondent the interest is payable @ 11 per cent per annum quarterly till the amount is fully recovered from agencies. Therefore, interest is payable from 30.10.2010 to the date of award i.e. 14.02.2019 but the ld arbitrator has awarded the OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 2/12 Announced on 10.05.2023 interest for a period of 33 months i.e. from 30.10.2010 to 31.07.2013 to the tune of Rs. 5,40,265/- under claim no. 3. On the ground of morality, the interest against the awarded amount under claim no. 1 required to be amended with effect from 30.10.2010 to 14.02.2019 and further, from the date of award till the actual payment. (Relied upon Indian Railways Construction Company ltd vs M/s National building construction corporation Ltd. 2023 (1) RAJ 423 (SC) and NEPA Ltd through its senior manager legal vs Manoj Kumar Aggarwal, 2023 (1) RAJ, 103 (SC) ).
4. Ld. counsel for the respondent submitted that the claimant has not performed the work within the time awarded. The claimant right from the beginning gave lot of tensions, troubles and problems to the respondent. There is delay of 89 days in execution of work. Ld. counsel submitted that this court in petition U/s 34 of Arbitration and Conciliation Act cannot modify the arbitration award. This power was with the court u/s 15 and 16 of the old arbitration act 1940, but no such express provision is in the Arbitration and Conciliation act 1996 (Relied upon Mcdermott International Inc vs Burn Standard Co. Ltd., Appeal (civil) 4492 of 1998 dated 12.05.2006 (SC) and The project Director, NHAI vs M. Hakeem & Anr. SLP (civil) No. 13020 of 2020 dated 20.07.2021 and NHAI vs Sri P. Nagaraju @ Cheluvaiah SLP (civil) No. 19775 of 2021 dated 11.07.2022.)
5. Ld. counsel submitted u/s 31 (7) (a) of the Act, interest OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 3/12 Announced on 10.05.2023 can be awarded by the arbitrator for pre award period for the whole or part of the sum or for limited period and not necessary to till the date of the award. The arbitrator may award pendente lite interest or may simply award the principal amount or may just award interest and not principal. If there is an agreement then the said agreement is applicable not section 31 (7) (a) of Arbitration and Conciliation Act. In present case, there is no such agreement between the parties. Clause 4 of the work order is not the agreement however, as per this clause TCIL/respondent is entitled for interest from the contractor /claimant when it gives advance payment to the claimant. This clause do entitled interest to petitioner. This is not the agreement regarding the payment of interest to the petitioner. Section 31 (7) (b) is regarding the post award interest the power is again discretionary and not mandatory. The arbitrator may or may not award interest from the date of the award however, if he awarded without specifying the rate of interest then the statutory date of interest at the rate of 18 per cent shall apply ( Relied upon Hyder Consulting (UK) Ltd. Vs Governor, State of Orissa through Chief Engineer, Civil Appeal No. 3148 of 2012 dated 25.11.2014 and Delhi Airport Metro Express Private Limited vs Delhi Metro Rail Corporation, SLP (Civil) No. 4901 of 2022 dated 05.05.2022 and Morgan Securities and Credits Pvt. Ltd vs Videocon Industries Ltd., Civil Appeal No. 5437 of 2022 dated 01.09.2022.)
6. Ld counsel submitted that the judgment as relied by the OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 4/12 Announced on 10.05.2023 Ld. Counsel for petitioner are of no help as issues in those cases are different and there is no discussion over power of modification of award U/s 34 of Arbitration and Conciliation Act nor about section 37 (b) of the Act.
7. Arguments heard. Record perused.
8. The main grievance of the Ld. Counsel for the is that the Ld. Arbitrator has awarded the interest from 30.10.2010 to 31.07.2013, however, not granted the pendente lite interest as well as interest after passing of the award, therefore, the interest amount requires to be given with effect from 30.10.2010 to 14.02.2019 and thereafter. The petitioner thereby seeking amendment/ modification in the award, however, the main plea of the respondent that this court has no power to amend/ modify the award.
9. Delhi High court in case titled Sharda Kapur vs M/s Angel Booking Ltd. 2017 SCC Online Del 8211, dealt with the similar issue in which the award has been modified by granting interest and compensation. The relevant pars of the said judgment are reproduced as under :-
5. The interest claim and compensation has been awarded by the court below in favour of Ms. Sharda kapur by observing as under :
"16. Be that as it may, one fact which has come on record quite crystaly clear is that the Stock Broker was found at fault of not only doing unauthorised trading in the account of its client but unauthorisedly sold the client's portfolio. I have no hesitation in concluding that OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 5/12 Announced on 10.05.2023 the impugned award passed by Ld. Appellate Tribunal dated 27.09.2013 and the additional order of 13.01.2014 did not do complete justice to the objector herein. This ration can be simply drawn from the fact that that Ms. Sharda is expected to feel satisfied by receiving the value of the shares which the broker got four years ago without taking into account the loss suffered by her during this period. Also no compensation was provided to her for not being able to enjoy her any interest for four years and rather at her age of 74 years she was constrained to do litigation. Also no adverse consequence ever reached the respondent Broker despite being guilty.
6. The sole issue in this case is that whether the court below or this Court has a power under Section 34 of the Act to modify the Award and grant additional reliefs not granted by the Award or grant the alternative reliefs which were prayed for in the arbitration proceedings but were denied by the Award.
7. In my opinion, the issue is no longer res integra and this issue has been decided by a judgment of this Court in the case of Puri Construction P. Ltd. and Ors. Vs. Larsen And Toubro Ltd. and Anr., 2015 SCC OnLine Del 9126. The Division Bench of this Court has considered the two divergent views as regards the power of the court to modify the Award by granting reliefs which are not granted by the Award, and this Court held that courts do not have the power to modify the Award and grant additional or alternative reliefs which were not granted by the Arbitration Tribunal. It was held that civil courts hearing objections under Section 34 of the Act have only power to set aside the Award and thereafter parties are free to again invoke arbitration proceedings to seek the reliefs which have been denied to them. The relevant observations of the Division Bench of this Court in the case of Puri Construction P. Ltd. (supra) are contained in paras 117 and 118 of its judgment and which paras read as under:-
"117. The Allahabad High Court in Managing Director v. Asha Talwar, 2009(5) ALJ 397 held that the Court under Section 34 does not have the power to grant the original OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 6/12 Announced on 10.05.2023 relief prayed for before the arbitrator. This was relied upon by a learned Single Judge of this Court in Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt. Ltd., 188 (2012) DLT 172 to hold that the Court cannot correct the arbitrator's errors or remand the matter to the arbitrator. It was held that: "51. The view of the Allahabad High Court in Managing Director v. Asha Talwar appears to be consistent with the scheme of the Act, and in particular Section 34 thereof which is a departure from the scheme of Section 16 of the 1940 Act which perhaps gave the Court a wider amplitude of powers. Under Section 34(2) of the Act, the Court is empowered to set aside an arbitral award on the grounds specified therein. The remand to the Arbitrator under Section 34(4) is to a limited extent of requiring the Arbitral Tribunal "to eliminate the grounds for setting aside the arbitral award". There is no specific power granted to the Court to itself allow the claims originally made before the Arbitral Tribunal where it finds the Arbitral Tribunal erred in rejecting such claims. If such a power is recognized as falling within the ambit of Section 34(4) of the Act, then the Court will be acting no different from an appellate court which would be contrary to the legislative intent behind Section 34 of the Act. Accordingly, this Court declines to itself decide the claims of CNPL that have been wrongly rejected by the learned Arbitrator."
This view was subsequently adopted by this Court in Bharti Cellular Limited v. Department of Telecommunications, 2012 (4)ARB LR 473(Delhi), State Trading Corporation of India Ltd. v. Toepfer International Asia PTE Ltd.,2014(3) ARB LR 105, and Delhi Development Authority v. Bhardwaj Brothers AIR 2014 Delhi 147. A Division Bench of the Madras High Court in Central Warehousing Corporation v. A.S.A. Transport, (2008)3 MLJ 382 also held that once an award has been set aside, consequential relief's cannot be granted under Section 34. The Court noted: "17. Though we are not in a position to concur with the reasoning of the learned Single Judge, we are in complete agreement with the ultimate order of the OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 7/12 Announced on 10.05.2023 learned Single Judge in setting aside the award. However, the further direction given by the learned Single Judge directing the appellant to appoint an arbitrator at Chennai and for conducting the arbitration are to be set aside as it cannot be given as an order of the Court. Useful reference can be had to the judgment of the Supreme Court in the case of Mcdermott International Inc. v. Burn Standard Co. Ltd. (2006) 11 SCC 181, wherein it was held that the 1996 Act makes provisions for supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. Hence, in an application taken out under Section 34 of the Act, the Court can set aside the award leaving the parties free to begin the arbitration again if it is desired."
118. This Court is inclined to follow the decisions in Central Warehousing Corporation, Delhi Development Authority, State Trading Corporation of India Ltd., Bharti Cellular Limited, Cybernetics Network Pvt. Ltd. and Asha Talwar. The guiding principle on this issue was laid down by the Supreme Court in McDermott International Inc. (supra), where the Court held: "The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it." Although the Madras High Court in Gayatri Balaswamy (supra) appropriately noted that these observations in OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 8/12 Announced on 10.05.2023 McDermott International Inc. were not in the context of the specific issue being dealt herewith, this Court is of the opinion that it is determinative of the Court's approach in an enquiry under Section 34 of the Act. Indeed, a Court, while modifying or varying the award would be doing nothing else but "correct[ing] the errors of the arbitrators". This is expressly against the dictat of McDermott International Inc. Further, if the power to remit the matter to the arbitrator is read into Section 34, it would render inexplicable the deliberate omission by Parliament of a provision analogous to Section 16 of the Arbitration Act, 1940 in the present Act. Section 16 of the 1940 Act specifically armed courts with the power to remit the matter to arbitration. Noticeably, the scope of remission under the present Act is confined to that prescribed in sub-section (4) of Section 34. Besides the Division Bench rulings of this Court in Delhi Development Authority, State Trading Corporation of India Ltd., this was also noted by a Full Bench of the Bombay High Court in R.S. Jiwani v. Ircon International Ltd., 2010 (1) Bom CR 529, where the Court held:
"An award can only be set aside under the provisions of Section 34 as there is no other provision except Section 33 which permits the arbitral tribunal to correct or interpret the award or pass additional award, that too, on limited grounds stated in Section 33... It is also true that there are no parimateria provisions like Sections 15 and 16 of the Act of 1940 in the 1996 Act but still the provisions of Section 34 read together, sufficiently indicate vesting of vast powers in the court to set aside an award and even to adjourn a matter and such acts and deeds by the Arbitral Tribunal at the instance of the party which would help in removing the grounds of attack for setting aside the arbitral award." On the other hand, the Calcutta High Court in Snehasis Bhowmick did not analyse this distinction, or the specific observations of the Supreme Court in McDermott International Inc. quoted above. Further, the decisions in Numaligarh Refinery and Harishchandra Reddy (supra) did not discuss the Court's power to modify, vary or remit the award under Section 34 of the Act. Therefore, in light of OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 9/12 Announced on 10.05.2023 the dictum in McDermott International Inc. and the difference in provisions of the 1940 Act and the present Act, this Court holds that the power to modify, vary or remit the award does not exist under Section 34 of the Act." (underlining added)
8. It is therefore clear that the court below while passing the impugned judgment could not have granted interest and compensation which was granted inasmuch as this would result on the court modifying the Award by granting reliefs which were not granted by the Award. In view of the ratio in the case of Puri Construction P. Ltd. (supra) the Award could only be set aside and the parties thereafter had to invoke arbitration proceedings for seeking reliefs which were denied but held by the court hearing objections under Section 34 of the Act to be wrongly denied. Therefore, I hold that the court below has wrongly granted interest and compensation to Ms. Sharda Kapur by the impugned judgment and also that this Court cannot grant the relief in FAO No. 492/2016 that the Award of the Arbitration Tribunal be modified in that instead of granting monetary relief Ms. Sharda Kapur should be held entitled to return of her share holdings illegally traded by M/s. Angel Broking Limited.
9. Learned counsel for Ms. Sharda Kapur relied upon paras 49 and 50 of the judgment of the Division Bench of this Court in the case of M/s. Chennai-Ennore Port Road Co. Ltd. vs. M/s. RDS Project Ltd., FAO (OS) No. 426/2015 decided on 15.3.2016 and it was accordingly argued on the basis of those paras 49 and 50 that the court hearing objections under Section 34 of the Act has power to grant additional reliefs which are not granted by the Award. For the sake of convenience paras 49 and 50 of the judgment in the case of M/s. Chennai-Ennore Port Road Co. Ltd.(supra) are reproduced below:-
"49. The only argument advanced on this issue is that under Section 34 of the Arbitration and Conciliation Act, 1996, unlike the Arbitration Act, 1940 there is no power vested in a Court to modify an award and thus any error in an award must result in the award being set aside as a OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 10/12 Announced on 10.05.2023 whole, leaving it to the parties to work their way forward.
50. Now, if an error in an award is of a kind which needs modification by giving reasoning which is akin to a core reasoning the argument advanced may be considered. But where the error is akin to one of computation, the correction would not be a modification strictly so called. To correct means to make something free from an error. To modify means to make partial changes to."
10. In my opinion, the aforesaid paras cannot be read as setting aside the ratio of the earlier Division Bench judgment dated 30.4.2015 in the case of Puri Construction P. Ltd. (supra). Also in paras 49 and 50 reproduced above of the judgment of M/s. Chennai- Ennore Port Road Co. Ltd. (supra) there was only a correction of a computational error i.e the court did not give additional reliefs which were not granted by the Arbitration Tribunal. Therefore, the judgment in the case of M/s. Chennai-Ennore Port Road Co. Ltd. (supra) does not help Ms. Sharda Kapur to successfully contend that courts under Section 34 of the Act while setting aside the Award can grant the reliefs which were prayed for in the arbitration proceedings but not granted by the Arbitration Tribunal.
11. Learned counsel for Ms. Sharda Kapur then in support of his argument sought to place reliance upon certain observations made by a Division Bench of this Court in para 8 of the judgment dated 1.10.2015 in FAO (OS) No. 448/2014 titled as National Highways Authority of India Vs. M/s. Sricon Infrastructure Pvt. Ltd., but I do not find anything in para 8 of this judgment by which it has been in any manner held by the Division Bench of this Court that the Award of the Arbitration Tribunal can be modified by granting the relief which is not granted by the Arbitration Tribunal. In para 8 of the judgment in the case of National Highways Authority of India (supra) the court has only granted the claim as prayed for in the arbitration at Rs. 4100/- per cu.metre instead of a sum awarded of Rs. 4900/- per cu.metre by the Award. Accordingly, the judgment in the case of National OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 11/12 Announced on 10.05.2023 Highways Authority of India (supra) does not help Ms. Sharda Kapur to contend that a court hearing objections under Section 34 of the Act can grant reliefs which were not granted by the Arbitration Tribunal when the Award is set aside by the court hearing objections under Sections 34 of the Act.
12. In view of the above discussion, FAO No. 435/2016 is allowed and the reliefs granted by the impugned judgment of interest and compensation as per paras 22 and 23 are set aside and quashed. FAO No. 492/2016 of Ms. Sharda Kapur will stand dismissed as neither the court below nor this Court can grant the relief of return of the shares as is being prayed by Ms. Sharda Kapur and which relief though prayed for in the arbitration proceedings was denied and Ms. Sharda Kapur was only granted a money decree Award.
10. In the above judgment, Hon'ble High Court held that this court U/s 34 of Arbitration and Conciliation Act have no power to grant the interest and compensation which was not granted by the Ld. Arbitrator as it will amount to modification of the award which is impermissible. Even otherwise, the power to grant interest by the Ld. Arbitrator as envisaged U/s 31(7) (a) and 31(7)(b) of the Act is discretionary particularly when there is no agreement to grant the interest. The Ld. Arbitrator exercised its discretion in not granting the pendente lite and post award interest do not constitute patent illegality. The clause 4 of the work order do not in any manner confer any right for the petitioner to have an interest during the arbitration proceedings or post award.
OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 12/12 Announced on 10.05.2023
11. In view of the above discussion, I do not found any ground to interfere in the impugned award passed by Ld. Arbitrator. The present petition U/s 34 of Arbitration and Conciliation Act therefore stands dismissed and disposed of accordingly.
12. File be consigned to record room after necessary compliance.
Announced on even date (Ajay Kumar Jain)
on 10.05.2023 District Judge, Comm-03
South-East, Saket Courts, Delhi
OMP (COMM.) 47/19 M/S Ravindra Kumar Yadav Vs. M/s Telecommunication Consultants India 13/12
Announced on 10.05.2023